Telesat Corp Q1 FY2024 Earnings Call

Good morning, ladies and gentlemen, and welcome to the conference call to report the first quarter 2024 financial results for Telesat. Our speakers today will be Daniel Goldberg, President and Chief Executive Officer of Telesat, and Andrew Browne, Chief Financial Officer of Telesat. I would now like to turn the meeting over to Mr. Michael Bolitho, Director of Treasury and Risk Management. Please go ahead, Mr. Bolitho.

Thank you and good morning. This morning, we filed our quarterly report for the period ending March 31, 2024, on Form 6-K to the SEC and on SEDAR+. Our remarks today may contain forward-looking statements. There are risks that Telesat's actual results may differ materially from the results contemplated by the forward-looking statements, as a result of known and unknown risks and uncertainties. For a discussion of known risks, please see Telesat's annual report and update filed with the SEC. Telesat assumes no responsibility to update or revise these forward-looking statements. I will now turn the call over to Dan Goldberg, Telesat's President and Chief Executive Officer.

Hey, thanks, Michael. My opening remarks were quite short this morning. Given we hosted an earnings call just six weeks ago when we released our Q4 and full year numbers. I really just wanted to note that we're tracking to the 2024 guidance we gave earlier, and we're moving out as quickly as we can on Telesat Lightspeed. Now that we have understandings in place for all the financing we need for our first 156 satellites. Our CapEx guidance this year is for between CAD 1 billion and CAD 1.4 billion or around USD 750 million to USD 1 billion, which is pretty much entirely for Lightspeed. And you'll see that unfold as we report our results throughout the year. So with that, I'll hand over to Andrew, who will speak to the Q1 numbers in more detail, and then we'll open the call up to questions.

Thank you, Dan, and good morning, everyone. I would now like to focus on highlights from this morning's press releases and filings. In the fourth quarter of 2024, Telesat reported consolidated revenues of $152 million, adjusted EBITDA of $111 million and generated cash from operations of $76 million, ending the quarter with $1.8 billion of cash. For the fourth quarter of 2024 compared to the same period in 2023, revenues decreased by $31 million to $152 million. Operating expenses decreased by $6 million to $47 million, and adjusted EBITDA decreased by $28 million to $111 million. The adjusted EBITDA margin was 72.8% as compared to 75.7% in 2023. The revenue decrease for the quarter was primarily due to a reduction in services and a low rate on the renewal of a long-term agreement with a North American direct-to-home customer, as well as lower revenues from certain mobility and Latin American customers and lower equipment sales to Canadian government customers. Looking at OpEx, the decrease in OpEx is primarily due to lower non-cash share-based compensation and higher capitalized engineering expenses relative to the prior period. Interest expense decreased by $4 million during the fourth quarter when compared to the same period in 2023, primarily due to the repurchase of notes and term loan B. The decrease in interest expense was partially offset by an increase in interest rates on the US dollar term loan B facility itself. In the fourth quarter, we recorded a loss on foreign exchange of $68 million compared to a gain of $10 million in Q4 2023. The loss was mainly due to a stronger US dollar Canadian dollar spot rate as of March 31, '24, compared to the spot rate as of December 31, 2023, and the resulting unfavorable impact on the translation of US-denominated debt. Our net loss for the fourth quarter was $52 million compared to net income of $28 million for the same period of the prior year. The change was primarily due to the loss on foreign exchange. For the quarter ended March 31, 2024, the cash inflows from operating activities were $76 million, and the cash flows used by investing activities were $20 million. In terms of capital expenditures incurred that were primarily related to the lower orbit constellation Telesat Lightspeed. As highlighted in our earnings release this morning, we reaffirmed our 2024 guidance, which assumes the Canadian dollar to US dollar exchange rate of $1.35. For 2024, Telesat still expects its total full year revenues to be between $545 million and $565 million. In terms of operating expenses, excluding share-based compensation, we are still looking to spend between $80 million to $90 million attributed to the Telesat Lightspeed project. In terms of total adjusted EBITDA, Telesat expects to be between $340 million and $360 million. We will begin the process of showing GEO and LEO separately, as we set out in all four of our financial statements. Expected capital expenditures, as we disclosed last quarter, continue to expect our 2024 cash flows used in investing activities to be in the range of $1 billion to $1.4 billion, nearly all related to the expected Telesat Lightspeed capital expenditures. To meet our expected cash requirements for the next 12 months, we have approximately $1.8 billion of cash and short-term investments at the end of March, as well as approximately USD 200 million of borrowings available under our evolving credit facility. Approximately $1.25 billion of cash was held in our unrestricted subsidiaries. We continued to generate a significant amount of cash from our ongoing operating activities. Leverage at the end of the fourth quarter was 5.7 times. Telesat has complied with all covenants in our credit agreement. We were active subsequent to quarter-end and up to May 8, '24, where we purchased principal amounts of USD 219.5 million in exchange for an aggregate cost of USD 98.9 million. Combined with debt repurchases completed in '22 and '23, Telesat has now reported the cumulative principal amount USD 806.5 million at an aggregate cost of USD 438.3 million. Overall, our debt has now been reduced by approximately 24% or USD 1.1 billion. In addition to interest savings of approximately $55 million annually. A reconciliation between our financial statements and financial covenant calculations is provided in the report we filed this morning. Our 6-K provides the unaudited interim condensed consolidated financial information in the MD&A. The non-guarantor subsidiary shown are essentially the unrestricted subsidiaries of minor differences. So with that, I think we will conclude our prepared remarks for the call and very happy to answer any questions that you may have. We will now turn back to the operator. Thank you.

The first question is from Edison Yu from Scotiabank.

Hey, good morning and thank you for taking our questions, mainly just some housekeeping ones. On the cash flow was quite strong in the quarter despite the EBITDA declining. Were there any one-time benefits here? And how do you think this can trend for the rest of the year?

And now, I think our cash flows underscore the high margins that we've got. If you look at our GEO business, margins are approximately 80%. I think some of the great things over existing business, notwithstanding the fact that indeed we've identified that we will see drops this year, but that's the underlying cash flow.

And then appreciate the obviously the breakdown of GEO and LEO, and you've got some consulting revenue in the LEO side is the 1Q a good run rate to take for the rest of the year, the contribution from some LEO consulting?

I don't think so, and it's not a big part of our business at this stage. Obviously not until LEO is up and in service in late 2027 are we going to see meaningful revenue. Up until then, there might be some more kind of incidental stuff. We're doing some work with the US government that's sort of lumpy in nature. This came from a contract that we have with NASA that we've talked about before, where we're demonstrating some features on LEO's ability to communicate with other in-orbit spacecraft. It's kind of low to no margin stuff too. It's a good thing for us to be doing to demonstrate capabilities and tighten the relationship with the important US government user. But yeah, it's not going to be a big driver of our top-line results or certainly our adjusted EBITDA for the year.

The next question is from Arun Seshadri from BNP Paribas.

Yes, hi. Just a couple from me. First, just wanted to understand. So the government of Canada is planning to take senior equity, I guess, above lenders and shareholders. Is that right? Like so they're equity in LEO is going to be structurally senior equity ahead of existing lenders and shareholders?

So maybe a couple of things. I mean there, what we announced six weeks ago is that the government of Canada, we reached terms with the government of Canada on a roughly CAD 2.1 billion loan. The terms of that are 15 years; it kicks in during construction, and it carries a rate of core plus 475 basis points. So it's fundamentally a loan and the government of Canada will be the funded alongside the government of Quebec and our vendor financing that we're getting. It will be the sort of senior secured lender in connection with the Lightspeed constellation and in the unrestricted group where we're building Lightspeed. So that's kind of number one. But yes, as part of the deal, there is an equity feature. The government of Canada is getting a 10% warrant covering 10% of the equity in the Lightspeed project, and those warrants are struck at an equity value of $3 billion USD up for the Lightspeed project. So can you I'm just trying to be responsive to your question about senior equity. It's kind of a form of equity participation in the Lightspeed project itself as opposed to the common shares of Telesat Corporation. So effective...

Thank you for that, Dan. That was kind of... what you say is that it is effectively equity that's first preference on Lightspeed and then residual equity would be what flows through the equity of...?

Yeah, I wouldn't think about it as first preference. I think about it that right now, you know, Telesat owns 100% of Lightspeed. In the future, if the government can exercise these warrants, they would be an equity participant alongside of Telesat.

Okay. You're saying that it's non-structurally senior equity then?

No.

Alongside whatever equity there is.

That's right. Yes, that's exactly right.

Are there any, I mean, I guess, like is there anything specific either direction. As you finish off the financing would you from the government of Canada's perspective would it make sense for them to have the entire Telesat cash flow also be as credit support or that financing or is, you know, I guess on the flip side would be insist that Lightspeed be separated from Telesat in order to sort of finish off the financing and I guess if the latter in the case how would you manage solvency requirements to make sure that it happens?

So maybe I'll start answering this. First of all, and just so everyone understands how this works. The government of Canada is lending us money. It's going to be in the unrestricted group, and the cash that Telesat Lightspeed generates is going to be used to support the borrowings in that unrestricted group. Again, we've mentioned that our funding sources beyond our own CAD 1.6 billion equity contribution is going to be borrowings from the government of Canada, the government of Quebec, and some vendor financing. Those borrowings are going to be supported and secured by our Lightspeed activities. So yes, could we in the future... could in the future, others potentially be behind the government of Canada in terms of being supported by Lightspeed cash flows? That's kind of how it's set up.

Yes, I think that's very helpful. Like can I ask one last thing and that is notice that the restricted payment hasn't fully been made yet. Just would you, I guess the expectation is that restriction would be made and then once that's done. Are there any other things that need to be done to put a bow on, I guess what else needs to be done from the timing standpoint to put a bow on all of the financial requirements? Thanks.

So the restricted payment, I think it's CAD 125 million.

And yet there's a remaining restricted payment of CAD 120 million to be made under the CAD 150 million general basket.

Yeah, and we expect that will get done in the coming days. Yes, correct. Beyond that, again, we've got all of the financing lined up for the 156 satellites. We do need to conclude definitive funding agreements with those sources that I've described—the Government of Canada back then and the vendor financing. We've already kind of started down that road and are highly confident that we're going to get there. That’s the final bow that needs to be tied on, but we are moving forward. As we said in our remarks, we have meaningful cash on our balance sheet at this point in time, and we're going to start spending that money so that we can move this program forward as quickly as we can because we are hugely bullish on the opportunities that are out there in the market and we want to come to market and get in service as quickly as we can.

The next question is from Chris Quilty from Quilty Space.

Thank you. So Dan, just to follow up and I'm not going to hold you to it, but on the government of Canada, Quebec, and the vendor; is that something that, you know in the next three to six months, sort of...?

Yeah, Chris. No, we believe that should get done before the end of the summer. Hopefully, yeah, we've got a lot of momentum with the government of Canada as you can imagine and the government of Quebec, which are the big contributors here. So yeah, we're talking about the coming months.

So I was going to say the summer ends in October in four of them.

Well, I'm working on a auto with summer, which are a little bit earlier. There are some... anyway, yeah, anyway.

So and also the CapEx in Q1, I mean, obviously, you just closed the financing deal, but CapEx in Q1 was a little bit lower than I was expecting. Is it fair to assume you're probably more towards the CAD 1 billion and CAD 1.4 billion? And Andrew, typically in these large-scale long-term programs, is it fair to assume, you know, year one, 30% year two, 40% year three, 30% type of how it falls out in timing or should we look at this as sort of a longer, slower climb? It's just general framework of how you expect to pay that?

Yeah, I think, Chris, that given the nature of the program, you know, it's a supply chain and getting everything sort of moving forward. In this year, with our guidance of CAD 1 billion to CAD 1.4 billion, we think that's a solid number and by implication, that means we'll see kind of more payments upfront as we get all of the suppliers in place. That's probably the best way I would characterize it and then thereafter, as we go through the different milestones of the next two to three years, it would be more of a kind of a flow tied to the contract and the PLD operational milestones.

Great. And one other question for you, Andrew. You had given the expected OpEx for the Lightspeed program; I'm assuming that is OpEx that's running through the P&L and stripped out whatever is getting capitalized? Can you give us a sense of what is getting capitalized in as part of the program? And is that again, if and as the construction goes and more gets capitalized, do we see that Telesat OpEx staying flat because everything gets rolled into capitalization? Or do you expect it to grow in the out years? I mean, it's going to grow in the out years.

But yeah. So in terms of the sources and uses, we tried to make it a little clearer in terms of the CapEx spend as third-party CapEx spend with vendors. Labor is in the operational uses, whether it's capitalized or not, just so you can see the outflow of funds and what the purpose of the outflow of funds is. So in that regard, and you know, the capitalized costs in terms of the overall level of effort, the amount of capitalized stuff we build up, we ramp up our staffing infrastructure quite rapidly, and therefore you get to sort of a constant state relatively quick into Pro in terms of de-levering.

I understand. I had another question. You've predicted the data side of the business being down about $75 million as some of those contracts roll off. Have you programmed in being able to resell some of that capacity? And what sort of lock have you seen on the data side and reselling?

Yeah, for sure. We assume that there's some capacity that has come back in inventory that will resell. I suspect we've already resold some of that on, and the guidance that we gave for this year will have captured our assumptions at least about all of that. Was there another part to your question, Chris?

No, that was it was.

Okay.

But I will ask you a difficult question, which is the elephant in the room question, Intelsat SES panel, you probably have Lightspeed on order before the regulators get done with that, but what are your general thoughts on that transaction and how it impacts you?

Yeah. Well, first off, I mean, we all know that those were conversations that have been taking place between SES and Intelsat for some time ago, and they both confirmed that there had been discussions and then they both have each announced that those discussions had come to an end. I was never persuaded that that was the end of it, so it wasn't a big surprise to us. I'd say that announcement fits within the same framework that we've been talking about for a little while, which is to say the industry is changing quickly. There are these new entrants in the StarLink and the future hyper that are impacting the industry, and we all believe that industry consolidation would be a response to that. And we've seen some already with ViaSat and Inmarsat and Eutelsat and OneWeb. Now this big transaction as companies kind of organize themselves to remain competitive in this changing landscape. For us, I don't think it's going to have any real impact in terms of how we compete in the market, but the prospects of Lightspeed and the like are we've been competing against each of them for decades now. They each are hitting each meaningfully larger than Telesat coming together—obviously, they'll be larger still—but I don't think there's anything that should be too dramatically different in the combined competitive profile versus us competing against each of them individually. That said, we weren't surprised if it fits with our expectation that consolidation would happen in the industry. It's probably not the last deal and certainly there will be there are fewer players as more consolidation takes place, but I suspect that there could be more consolidation still in the future. So anyway, that's how we think about it. Again, actions speak louder than words; we’re convinced our addressable market is focused on enterprise customers, government customers, and the aero and maritime customers that are seeking affordable, high-throughput, low-latency, distributed, resilient, and seamlessly connected connectivity, and we'll be able to deliver that in Lightspeed.

The next question is from Marcello Chermisqui from Ares Management.

Hey, guys, thanks for taking the question. You said earlier in response to a question that you will be making a CAD 120 million restricted payment in the coming days. Given that you already have such a significant amount of cash at the LEO entity and are waiting to spend the money until once you finalize terms later this summer, what is the rush to make the cash transfer so soon?

So hey, Marcello, thanks for the question. First off, I think the—

It's CAD 150 million—it's CAD 120 million.

As far as urgency: look, we're moving forward with Lightspeed in advance, and by moving forward with Lightspeed, I mean, we are going to be spending meaningful amounts of money this year. You've heard the CapEx guidance that we've given in advance of completing these definitive agreements. We have a sufficiently high level of confidence on the one hand that we'll conclude those definitive agreements. On the other hand, we have a strategic urgency to get going with the Lightspeed program. We're opening the spigots now and MDA is going to be contracting with the supply chain, ordering parts, and hiring people. We're moving out here. That’s the plan.

That makes sense. And in terms of discussions regarding an extension on your revolving line of credit. I know it's due later this year. I know today you're in compliance with the revolver covenants, but if I roll forward your leverage ratio at year end based on the guidance, I understand you're not tested today since there's no revolver usage, but I think the company may not be in compliance by year end. Do you think that could impact it like the revolver? Do you think it's fine without having a revolver? How are you thinking about discussions?

Yes, Marcello. It's certainly something that we look at, we review. We have a business that generates our GEO business, which I talked about earlier a few minutes ago. Our GEO business is still generating cash. In terms of a revolver in 17 years, I believe we have drawn our revolver once.

Yes, totally makes sense. And then just one last question on utilization that has declined so much sequentially. I know there's an interplay between utilization and then just like what you're pricing per transponder. Can you talk about just linked to how we think about utilization? Like are you targeting a certain utilization? Or how do you think about where utilization is worth versus where you want to be?

Yes, I will take it. We target a 110% utilization, to be honest with you. I mean, that's where we'd like to be. Probably everyone does, but barely anyone really gets there. I still think even with the decline in utilization that we've had, we still probably have one of the highest asset utilization numbers in the sector. It concluded this quarter at 77%, but it is down meaningfully from where we ended Q4, which was up at around 85%. What's driven that? The biggest culprit has been the business we've lost in the maritime space. Fundamentally, we talked about that on our last call that there were some renewals that we did not secure, particularly in the maritime space, moving mostly, as far as we can tell, over to StarLink. I'm not going to guide right now on what we think utilization will be in the future. But we're focused on remarketing that capacity. From a pricing perspective, there's been downward rate pressure in the industry for years now. The slope of that decline has varied throughout those years. We've seen significant downward pricing pressure. I'm looking at one of my colleagues probably six years ago, it moderated. There’s still downward price pressure, but the extent of it has moderated some—and again, I'm speaking as if we're living in a margin-sensitive world. It really varies by region. We've noted before that the steepest declines were in Africa and Latin America. Things started to moderate a little bit, and I’d say on the slope of the downward pressure is probably picking up a little bit again, but not dramatically. The laws of supply and demand are alive and well in our industry, like in others.

The next question is from Matt Lapides from ABRY Partners.

Hey, guys. Thanks for all the color here. I wanted to follow up on the maritime comments. Can you talk about what type of maritime customers—you've been diesel or the cruise lines, or the large global shipping companies, and both for the personal in our large yacht segment? Any color you can provide on the type of maritime customers producing the most defection mentioned?

Yes, the biggest has been in the cruise space, particularly for us in the Caribbean. We just had a meaningful amount of capacity there. So I'd say that accounts for the lion's share of the losses on cruises in the Caribbean. And then there's probably on the margins, there's been some erosion, I don't know, maybe in maritime transport and stuff like that, but the driver has been crews.

Okay. And then can you talk about how much of that business. If you look back three years ago, how much of that is now gone? And is it more of it to come? I'm really trying to get at.

Yes, we've been staring at that. I'll ask my colleague, John. We've swapped a lot of the head. John, do you want to offer any thoughts around that?

If you go back three years, that's probably not the right time to go back to because in the past two years, we had some significant increases in maritime but closed. From the past two years to this year, we're expecting roughly half revenue decline from where we were over the past couple of years.

That's helpful. And then just one follow-up to the earlier question about the yield on government of Canada as our equity position in video. I just wanted to make sure I understand the flow of funds: if 5, 6 years from now Lightspeed will generate lots of cash in the LEO subsidiary business, if there's excess cash flow after servicing the debt, we have $1 of excess cash flow. Does it go to the equity holders of the LEO subsidiary or is it shared ratably amongst on up into the ultimate holding company such that all stakeholders would get their pro-rata share of that?

There's something in the contemplated definitive documents that we're talking about that would relatively share that between the equity holders at Telesat Corporation and Telesat LEO? No.

The next question is from Evan McFadden from Cormark Securities.

Okay, thank you. And now a couple of questions on. So if I understand right, I think you said that you expect to conclude definitive agreements with the government and it could take as long as until the end of the summer. Is that correct?

Yes. Again, I mean, we're dealing with the government of Canada here, so I can't be too precise about the timing on when exactly it will come to a close, but that's our expectation given the momentum and the extensive blueprint we have in terms of what the terms are. We think that having this done by the end of the summer is a realistic timeline.

Okay. So even though you may not have those agreements concluded until the end of the summer, you're still going to spend CAD 1 to CAD 1.5 billion. I guess you can do that because you have all that cash and non-restricted says, is that what gives you the confidence to just spend where you are?

It gives us... I mean, what gives us the confidence to spend that money before having the definitive agreements concluded is just a lot of conviction that we'll get those definitive agreements done, given all the good work that we've done with these funding sources and how much these funding sources wanted to see this project move forward. We need to get going, and we've got pricing locked in with our suppliers. Our customers want us to have this service available to them as quickly as we can. If they had their way, they'd want it available now. We need to move, and waiting around for another three or four months knowing as we do and we believe that, again, a high degree of confidence that we're going to get all this funding we need, it just doesn’t seem right to sit on our hands.

Okay. And so I would imagine that the vast majority of that spend on Lightspeed will be on satellite build and design or anything like that?

The most significant portion of the CapEx that we'll be investing this year is yes, it's going to go towards satellites. There'll be some launch payments, and some other stuff for user terminals and landing stations. But with the big E will be our friends at MDA, giving them the cash they need to turn on their supply chain and move forward.

Right, so because MDA's prime contract, all that money is going through MDA, right?

I wouldn't say all of it, but I'd say a very meaningful portion of it.

Right. Okay. And then just a question on the fact that you lost some business to maritime. It's kind of styling. It's my understanding that StarLink doesn't offer any SLAs, and you when you have like enough, you would offer SLAs. So wouldn't that give you a competitive advantage?

Yes, we think it will, but we need to be constellated to deliver the service. That's why we're bullish about our prospects to take the market share that we need for that project to be successful. There are a number of features of the Lightspeed constellation that will give us a competitive advantage, allowing us to present a tremendous value proposition to the customer community, including the ability to provide SLAs and CIR, which will give our customers an enormous amount of autonomy to manage the bandwidth they will be contracting from us. I think all of those things will allow us to be successful. Yes, that's one of the features for sure—we'll be offering our customers SLAs on, and we think that's important to some subset.

The next question is from Alex Nolan from Invesco.

Thanks. My question was answered. I wasn't able to take myself out of the queue.

Thank you.

The next question is from Walter Piecyk from LightShed.

I apologize if this is kind of a redundant question, but I've kind of heard this and we'll make sure that this is put to bed. This MDA will start constructing these satellites prior to you finalizing the agreements with the government of Canada, correct?

Correct.

And then in terms of the overall market, now that you've seen a little bit more of what StarLink has been doing different verticals, they've gone into Russia, many people into at least initially expected them to have to go from maritime. I know that there were some of your peers that were claiming they couldn't do airplanes that are on airplanes. Just curious when you look at the market opportunity for your LEO constellation, has it changed at all or as you approach construction now?

I don't believe so. Listen, StarLink is having a big impact on the market, and they're having an impact on our business, which, I don't love. But what I do love is it is 100% validated the strategic direction that we took Telesat in going some years back. You're right; there were folks that doubted whether they penetrate the maritime market and the backhaul market and doubts about the aero market. We were convinced that a LEO architecture was not only a good infrastructure to support those services but one that would have a significant competitive advantage. StarLink is demonstrating that in real-time. Our market plans, business plan is intact. We're seeing validation from customers that LEO is the best way to address so many of their requirements. They are taking services from StarLink and it provides a pretty good service, but it doesn't give everyone everything that they want. We’ve talked about the SLAs; we’ve talked about their ability to manage their own bandwidth pools and whatnot. Customers don't want to put all of their requirements with one supplier; they want multiple providers. There's huge opportunity here. Nothing we've seen in StarLink causes us to question our various assumptions; if anything, all of our thinking around the intensity of the opportunity and why LEO will have a competitive advantage has been validated by everything we've witnessed over the last 12 plus months.

The next question is from Marcello Chermisqui from Ares Management.

If I can just say one last one on EchoStar. I mean, they're facing some financial distress, particularly as they approach the end of the year, which is I think the time for renewal. Have you had any preliminary discussions? Any thought on that and how that may play out?

Well, you know, we talked about one of the headwinds we're facing this year is an expectation that the renewal we have coming up in October is on our Nimiq-5 satellite, which they do the exclusive user of that satellite. The guidance we gave for this year captures all sorts of different outcomes that we might get there. We've started the conversation with EchoStar about their thoughts on whether they're going to want to renew or not. We haven't advanced that much since our last call just six weeks ago, so it's not clear to me where we'll end up. I think regardless of the scenario, we're going to see a meaningful reduction in the amount of revenue that we recognize from Nimiq-5 post-renewal date in October, whether they renew all of it, some of it, or none of it. It's still not clear to us at this point in time. We have a great relationship with EchoStar. We've worked with them for years, and we know that Nimiq-5 is being used to distribute content today that their subscriber base relies on. They do have a lot of other things that they're focused on, and saving cash is pretty high on that list. We'll give an update once we have one.

Thank you. At this time we will turn the call back over to Mr. Gober. Please go ahead.

Well, operator, thank you very much, and everyone, thank you for joining us this morning, and we look forward to chatting with you when we release our Q2 results. So thank you all, and have a nice weekend.

Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.