Subsea 7 SA (OTCPK:SUBCY) Q1 2022 Earnings Conference Call April 28, 2022 7:00 AM ET
Katherine Tonks - Head, IR
John Evans - CEO
Mark Foley - CFO
Conference Call Participants
Michael Pickup - Barclays Bank
Christopher Møllerløkken - Sparebank 1 Markets
James Winchester - Bank of America Merrill Lynch
Haakon Amundsen - ABG Sundal Collier
Guillaume Delaby - Societe Generale
James Thompson - JPMorgan Chase & Co.
Good day, and thank you for standing by. Welcome to the Subsea 7 S.A. Q1 2022 Results Conference Call. [Operator Instructions].
I'd now like to hand the conference over to your first speaker today, Katherine Tonks. Please go ahead.
Welcome, everyone. With me on the call today are John Evans, our CEO; and Mark Foley, our CFO. The results press release is available to download on our website, along with the presentation slides that we'll be referring to during today's call.
May I remind you that this call includes forward-looking statements that reflect our current views and are subject to risks, uncertainties and assumptions. Similar wording is also included in our press release.
I'll now turn the call over to John.
Thank you, and good afternoon, everyone. We will start with a summary of the first quarter of 2022 before passing over to Mark to cover the financial results. Turning to Slide 3. The first quarter unfolded as we had anticipated, and the financial results were in line with our expectations. As we flagged last quarter, both Subsea and Conventional and Renewables were affected by a total of over 250 days of planned maintenance and dry dockings on our fleet. We planned this downtime for the quiet period for offshore activity, and activity will pick up in the second and third quarters.
We continued to see signs of an up cycle in both the subsea and offshore wind sectors. Our clients continued to push ahead with tenders despite challenges related to raw material pricing and pressures in parts of the supply chain. The pace of bidding in both markets remained strong with an underlying improvement in pricing and contractual terms.
Turning to Slide 4. Sustainability is a core value for Subsea 7. And in the first quarter, we continued our transition journey with the publication of our third sustainability report. In it, you will find enhanced disclosures and details of progress we are making against key objectives, along with new targets that expand our environmental, societal and governance goals.
Our sustainability team has been expanded in 2022 with Marcelo Xavier assuming responsibility at Executive Committee level as part of his new role as EVP, Strategy and Sustainability. He will be reinforcing the efforts of our sustainability team and making sure that Subsea 7 continues to drive our strategy forward.
Turning to Slide 5 and an update on 4 of our largest contracts. In Subsea and Conventional, work on the Sakarya project is around 1/3 complete. Significant progress has been made to fast-track material delivery, and 2 vessels have been mobilized for seabed preparation work. Pipelay operations are due to begin in Q3.
In Norway, Seven Vega completed pipelay operations on Johan Sverdrup Phase 2 after a period of waiting on weather and the remaining scope is expected to be completed during Q2.
In Brazil, good progress has been made on Bacalhau project where fabrication works are on track at 3 yards we are using, and the project is 41% complete.
In Renewables, activity remained high at Seagreen, where 21 foundations were installed by the end of 2021. And Seaway Aimery and Seaway Phoenix began installing inter-array cables. Of the 114 jackets, 60 jackets have now been delivered with a further 20 in transit. Delivery of the remaining jackets and cables to the marshaling yard in Scotland remains on schedule.
The next couple of slides will discuss some of the ramifications of the situation in Ukraine. Firstly, to reiterate, we have no direct operations in either Russia or Ukraine. We have around 200 Russian and Ukrainian nationals among our crew and we are providing them the support they need at this time.
The oil industry is used to dealing with sanctions, and we have a well-developed processes in place to ensure we're always compliant. Subsea 7's only exposure is through a small pipeline repair contract in Europe. It is for a Russian client, but it is exempt from sanctions because of the essential nature of the service. It represents less than 0.5% of our revenue in 2022.
Finally, we have operations in the Black Sea, about 34 kilometers from the Turkish maritime border with Ukraine.
We haven't encountered any issues so far, but this is something that we are monitoring closely. Sanctions on Russian gas and oil exports have brought energy security to the forefront of European politics, and this is likely to become a long-term theme in both the subsea and wind industries.
Next, turning to Slide 7 and the supply chain issues faced by the industry today. By the end of 2021, pricing of some key components had already increased 25% to 30% and the supply chain was tightening. In recent months, as a consequence of sanctions placed on Russia and the disruption to supply from Ukraine, raw materials prices have become extremely volatile. Two key raw materials for Subsea 7 are steel and copper and both of these have seen price volatility.
Our exposure can be roughly defined by 2 categories: that for contracts already awarded and that for ongoing and future tenders. For contracts already awarded to Subsea 7, as we mentioned last quarter, we are generally protected from raw material inflation and supply chain tightness by various contractual mechanisms. Either we have back-to-back contracts in place at time of award, index-linked pricing or the contract has a specific mechanism to pass through inflation as an escalation. Fuel costs are mainly hedged or passed on to clients. We have a small exposure to fuel cost relating to vessel standby and transits.
Moving to tenders where the environment has become more complex. First, we note our clients in both subsea and wind industry remain positive and are pushing ahead with the tendering process. Clearly, though, with increased volatility of raw materials pricing, it has become more difficult to get firm pricing and delivery dates from suppliers to allow us to fix our own bids to clients.
Where we are a preferred bidder, we're working collaboratively with each of our clients to implement suitable contractual protections to cover this level of uncertainty.
This environment has really reinforced the benefits of early engagement with our clients and our collaborative relationship with our suppliers, which is crucial to navigate this complex issue.
Turning to Slide 8. We continued to make good progress on our long-term strategy. In the first quarter, the Salamander floating wind joint venture made progress in attracting a cornerstone investor. You may recall at the time we announced this project with Simply Blue that we plan to bring in a major operator to fund and help develop the project, and we are very pleased that Ørsted has acquired an 80% stake.
Our objective in being part of this group is to build know-how and experience in planning and executing this type of floating wind development and to help establish the local supply chain in Scotland. We are now at an advanced planning stage and expect to participate in the INTOG leasing round later this year before participating in the contract for difference allocation round in 2025.
And now I'll pass over to Mark to run through the financial results.
Thank you, John, and good afternoon, everyone. I'll begin the financial results with you with some details of group performance in the first quarter before turning to the business units.
Slide 9 summarizes the solid backlog position at the end of the first quarter. Order intake was $1.2 billion, equating to a book-to-bill of 1 in and backlog at the end of the first quarter was $7.3 billion. Over $3 billion in backlog is expected to be executed over the remainder of the year and $2.6 billion in 2023. As with Q4 2021, the level of escalations was high at over $500 million. This comprised variation orders and contractual price escalations across several projects.
Turning to Slide 10 and the headline results for Group. Revenue was $1.2 billion, an increase of 20% year-on-year as we made good progress with some of our large EPCI projects in both Subsea and Conventional and Renewables.
Adjusted EBITDA of $86 million was broadly flat compared to 2021. excluding the impact of an $80 million restructuring provision credit in the prior year period. Adjusted EBITDA margin fell to 7.2% from 10.2% or from 8.6% excluding the prior year credit.
I will discuss the drivers of this change at the business unit level on Slides 11 and 12. Slide 11 presents the key metrics for Subsea and Conventional. Order intake in Subsea and Conventional was $1 billion, equating to a book-to-bill of 1.1x, resulting in a healthy backlog of $6.2 billion. Revenue was $902 million, up 23%, reflecting progress on major EPCI projects, and in particular, the procurement phase on Sakarya. Adjusted EBITDA was $76 million with a margin of 8.4%, down from the 11.6% in Q1 2021.
This low profitability reflects planned vessel maintenance on key enablers, as previously communicated, execution of contracts won at lower margins and the rollover of Seven Waves onto its new contract.
Selected Renewables performance metrics are shown on Slide 12. Order intake in Renewables was light at $93 million, taking the backlog to $1 billion. As we've highlighted in previous quarters, awards of fixed offshore wind projects do tend to be lumpy as they are often linked to licensing rounds and contract for difference auctions. John will discuss the outlook for the new awards shortly.
Revenue from Renewables was $266 million, up 10%, reflecting good progress in the delivery and installation of jackets and cables for the Seagreen project as well as activity on the Kaskasi and Hornsea Two projects. Adjusted EBITDA of $5 million equated to a margin of 2%.
Although this is an improvement from the prior year quarter, it remains depressed by slow progress in Taiwan and planned maintenance on Seaway Strashnov.
Slide 13 shows the cash flow waterfall for the first quarter. Net cash generated from operating activities was $39 million, including a $38 million building working capital. Cash conversion, measuring the conversion of adjusted EBITDA to adjusted operating cash, was 66%.
Net cash used in investing activities was $51 million, mainly attributable to purchases of property, plant and equipment associated with vessel maintenance and upgrades. Free cash flow in the period was negative $14 million.
Net cash used in financing activities was $90 million. This comprised $37 million used to repay Seaway 7's revolving credit facility; $25 million of lease payments, mainly related to charter vessels; and $21 million relating to the share repurchase program.
At the end of the quarter, cash and cash equivalents was $500 million; and net debt was $98 million, which included lease liabilities of $219 million. The group's liquidity was $1.5 billion, which included $956 million of undrawn borrowing facilities.
To conclude the financial review, Slide 14 shows our expectations for the full year. Revenue is expected to be broadly in line with 2021. And adjusted EBITDA and net operating income are expected to be broadly in line or better than 2021.
As we announced last quarter, our capital expenditure in 2022 is expected to fall within the range of $420 million to $440 million, inclusive of approximately $280 million related to Seaway 7's newbuild vessel program.
As announced in March, we will pay approximately $30 million in dividends. This payment will be made on the sixth of May. This represents the NOK 1 per share regular dividend payment, and we have allocated $70 million to share repurchases, of which $21 million was utilized in the first quarter. After the quarter end, we've acquired approximately $2 million of additional shares.
I will now pass you back to John.
Thank you, Mark. On Slide 15, we have a reminder of the capital allocation framework that we outlined last quarter. Earlier this month, at the AGM, shareholders approved a NOK 1 per share dividend, and it is our intention that this will form a regular base level of payout. We expect that Seaway 7 will be self-financing with the 2 newbuild vessels funded by debt and internal cash flow. This leaves any excess cash from Subsea and Conventional business to return as a special dividend, or as in 2022, a buyback on top of the NOK 1 regular payout.
We believe this framework offers investors in the Subsea 7 group a good balance between a subsea business with potential for high cash generation and returns to shareholders and the wind business with a potential for high long-term growth.
And now we'll wrap up with our usual outlook slides, starting with the prospects for the subsea market on Slide 16. Tendering remains very active, and we are optimistic that the next 12 months will see us win a good level of new awards. At the core of the recovery, the most active markets remain Brazil, where we have a long list of prospects for both Petrobras and the IOCs; the Gulf of Mexico with a sustained level of tieback activities; and Norway, where we are very pleased to have been selected as the preferred bidder for both the Aker BP and Equinor sites of the NOAKA field development.
Outside these core regions, there continues to be notable prospects in West Africa, Canada and Turkey as well as carbon capture prospects in the U.K.
Overall, we are encouraged by the way the recovery is progressing and remain confident in the outlook for Subsea and Conventional.
On the next slide, we have the wind prospects. I'll leave the detail to Seaway 7 to discuss, and we continue to see strong demand centered on the U.S. and the U.K. with awards expected to the industry this year and beyond.
To wrap up, we'll turn to our final slide on Page 18. We believe we are seeing the continuation of the recovery we experienced in our core markets towards the end of last year. In Subsea and Conventional, tendering activity is high for large greenfield projects and smaller tiebacks alike. Since 2021, this has been driven by the recovery in oil and gas prices. And looking ahead, we expect to see Europe's desire for greater energy security as a further stimulus for renewed interest in projects.
In fixed offshore wind, there was a hiatus in awards in '21, but we have a tendering pipeline of $6 billion and the market for installation capacity is firming up for '24 and '25. We continue to work on tenders for floating wind in Korea as well as progressing with Salamander.
Overall, we believe that Subsea 7 is well placed to capture opportunities in today's evolving and dynamic energy markets.
And with that, we'll be happy to take your questions.
[Operator Instructions]. Our first question today is from the line of Mick Pickup from Barclays.
John, Mick here. A couple of questions, if I may, about your tendering situation at the moment given there's a lot of details there on trying to work with your clients. Can you just talk about what sort of schemes you're looking at precisely for getting projects to go ahead? And the follow-up would be are you seeing the costs that, I think, being quoted in any way hindering projects actually going ahead? Or does the oil price offset all of that?
Thanks, Mick. On the second question first, certainly, we are, in the oil and gas sector, not seeing the cost inflation proved to be a blocker for our clients to move ahead on the topic. Our wind clients are a bit more sensitive to it. But of course, they have to bid for contract for difference rounds. And the CFD round for the U.K. is partially underway at the moment. So there's a sensitivity around costs and how that equates to power.
But certainly, the main oil and gas drivers we're seeing at the moment is the clients we are talking to are very interested in finding solutions. It mainly revolves around different indices and indexes for handling the inflation in raw materials. And we're being quite transparent with our clients about what our key vendors are telling us and how we can secure capacity and the commercial model that works for us, our vendors and our clients.
So generally, I would say, Mick, that conversations are positive and everybody is trying to find an answer. Our vendors, of course, want to keep their factories and setups running. We want to be able to deliver projects, and our clients want to go ahead and sanction them. So I think it's an iterative process, but generally everybody is directionally trying to look towards answers.
So there's no talk of this going open book like we saw in the onshore world 10 years ago or more reimbursable?
Not at this stage, Mick. There are certain transparency levels that we're prepared to work with our clients on, on certain elements of our supply chain cost, certainly with our escalations. It mainly revolves around raw material escalation and price of manufacturing inputs such as gas and energy costs into the manufacturing. They are the 2 main areas that we are working with our clients on at the moment.
The next question is from the line of Christopher Møllerløkken from Sparebank 1 Markets.
And keeping the subject the same as Mick here. In terms of these cost inflation clauses, it's well known that both copper and steel prices have increased. But have you seen any increase in the lead times from your sub-suppliers as well here?
I think we went through a period, Chris, where our suppliers were like everybody in a place in the first few weeks post the Russia-Ukraine conflict starting where the metals markets effectively froze, which then meant that the entire chain was impacted. But now there is some level of movement happening in those markets. And we continue to work with our clients on a very transparent basis about how all these pieces fit together.
So after a period of initial disruption, we're starting to see movement happening at the moment, which allows us to see that there will be progress here in the next few weeks on some of our key projects.
And I might have misunderstood this in the past, but in terms of the order intake in Q1, there was -- there were quite a lot of escalations. And on the back of my head, I would normally assume that would typically be a fourth quarter event. Was it anything in particular in first quarter that caused this quite a high amount of escalations on existing contracts?
Yes. Chris, I'll ask Mark to give you some more details on that.
Yes. You're correct. Escalations have been elevated in Q4 2021 and again in Q1 of this year, Christopher. If I look at the $500 million broadly split equally between the variation of those and contractual price escalations, where those contractual price escalations are triggered due to certain anniversary milestones within the contracts which we have, but they've been spread over several projects. So they've been spread over a number of projects as opposed to being concentrated in when they gave a spike in the quarter. So hopefully, that provides some color to the $0.5 billion escalations in Q1.
The next question is from the line of James Thompson from JPMorgan.
You talked a little bit about cost inflation. It comes back to some of these earlier questions actually. We have seen obviously a lot of volatility post-CFD and that makes it quite difficult in the wind space for some of these operators. Do you think there's anything more that can be done to kind of speed up the process from your side there, John?
Sorry, James, speed up the process for what? Sorry, contract is what you meant?
In times of like post CFD into FID of these offshore wind projects, there's obviously a time lag. It's sort of the other way around in many ways to come in the oil and gas developments. And that can make it quite difficult for the operators with raw material costs being very volatile, as you said, versus the power prices they might be bidding. And I just wondered if there's any more that could be done from your side to help the operators from that perspective.
Yes. Your question is a very interesting one. Certainly, at the moment, the U.K. is in the middle of its CFD auction round. So our clients are each bidding for their CFDs now and the results of that should be known around the middle of this year. So the U.K. government will announce which projects have got a CFD and which don't.
Generally, at that stage then, our clients will have a preferred bidder in terms of main contractor for activity and we would expect to get our reasonable share of the U.K. projects that should be awarded. And then those will turn into FID towards the back end of this year, at the very start of next year.
What we're working with our clients at the moment is good transparency on the supply chain costs that come in and the inflation mechanisms that handle there. So we are working with our clients to make sure there's good transparency for them as they make their choices as a way they pitch their CFDs and how that will turn effectively to FIDs.
I think the process is the process. It's a government-set process, certainly here in the U.K. And that machine is running. It's a well-oiled machine, has worked many times. This does cause some challenges for our clients in the midst of it. But again, they will make their commercial decisions accordingly.
Okay. Just in terms of China. Obviously, there's been some lockdowns in Shanghai and that may well spread. I was just wondering if you could comment at all about whether there is any impact for you or more broadly for the industry in terms of delivery of newbuilds and things like that?
Yes. For us, I guess, China sort of goes into 3 different groups. The first is Seagreen, where we have 2/3 of the jackets being fabricated in China. But we're on the last knockings. The very last delivery batches will be out of China in the next few weeks. So our Chinese fabricator, to be very complementary to them -- well, in fact, all our fabricators on Seagreen have managed to make good progress despite COVID over the last 2 years and have kept the schedule that we needed. So we don't expect Seagreen to be a major impact in terms of China.
Secondly, we have the Alpha lift and the VIND1 under build and we will continue to monitor the impact on the lockdowns and such like there and see what impact that may or may not have on those vessels.
And thirdly, then China is a key workshop to the world on certain raw materials and areas there. We haven't as yet seen any major impact on China on our supply chain. Our main impact has been raw material pricing and the effect on the indices.
Okay. That's very clear. Last one for me. Just wanted to quickly check on Sakarya. I mean thanks very much for the additional color there. I mean it's obviously a progress with a very, very accelerated schedule, but it's clearly a delicate situation. Any other risks or things that we should sort of take into account as that kind of moves into the offshore phase this year?
I think, Sakarya, all the materials are ordered. Everything is in place in terms of bringing it all together. So it's a very fast-track project, very highly focused with our client there, the Turkish government, on that project. But it's going fine. It's on track.
The only thing is where it is geographically, as we raised in one of our comments there, it's 34 kilometers away from the Ukraine-Turkish border. So at the moment, it doesn't affect us and we continue to work and our ships are working there, and it's all green for go at the moment. But geographically, it is where it is and we felt it's important for everybody to understand that.
The next question is from the line of Haakon Amundsen from ABG Sundal Collier.
First, a follow-up on the question from Christopher on the escalations. You mentioned that it was driven kind of broadly on the -- across the project portfolio. I was just wondering if you -- if this is really kind of special issues related to each project? Or if you think this is related to an improving market? And that we're going to see a higher level of an announced contract going forward as we kind of would expect if the market is picking up. So that's my first question.
Yes. So I think, Haakon, generally, it's probably just worth looking at the escalation mechanisms that Mark talked about in our contracts. As you may recall, all Brazilian contracts by law have escalation contract mechanisms. And in all, we have Mero-3 and Bacalhau very, very large, significant EPCI contracts in Brazil, which get the benefit of those escalations as well as our PLSV contracts, which get the annual escalation mechanisms in them. And they're designed to protect us for the cost inflation we see in Brazil, which is a high inflation environment in any case.
So that's probably the change is the fact we've now got more Brazilian large EPCI contracts in our mix. And as Mark says, when the anniversary of certain events occur, there are mechanisms in those contracts to escalate those. I think the variation orders, as Mark touched on, it's just where we land in the sequence of projects and there is changes in agreements we make with our clients. So I wouldn't read too much into that. But I think the escalation mechanism in Brazil will cut in at various times along the next few years.
Yes, right. Yes, I was thinking more about the level of variation orders really and if there is kind of a general trend that oil companies tend to expand projects now that the market has improved. But yes, I think I got the message.
Second question is around the kind of profitability. You're mentioning that you're seeing improved terms in the contracts you're bidding for. And the market, I guess, is tightening if we look a bit further out in time. Can you give some color on what we should think about the long-term potential in your margins compared to the historical level here? Is there any reason why we shouldn't come back to a more historically kind of normal margin level?
Yes, Haakon, maybe I'll remind everybody of the commentary I made. I can't remember if it was the last quarter or the quarter before. But we've said that we see our market picking up from late '23 into '24 and '25. Every bid that we put in is a better margin than the last one as the market generally tightens. And we do expect to see our margins improve in '24 and '25, for certain, towards more historical averages.
Although I did, at the last quarter, remind everybody that in 2016 and '17 we had quite a spike in our EBITDA because we had something that is not happening this time, which was a large set of awards to Subsea 7 and then the market and the supply chain collapsed underneath us. And we gained quite well profit-wise there from a supply chain that was falling rather than a supply chain that's rising.
So I would expect to see a more normal gradual return in profitability in the out years rather than the big spike we saw in '15, '16, '17 period.
The next question is from the line of Guillaume Delaby from Societe Generale.
Yes. Two questions, if I may. First, could you maybe try to provide a little bit of timing regarding, I think, it would -- it might be a right issue on Seaway. Is it 6 months' time, 12 months' time? So what do you have in mind today?
And maybe if we try to put ourselves maybe in a longer period of time, what might be -- I know that you will remain extremely qualitative, what might be the vision post 2025 or 2026? Do you expect to totally split the 2 businesses? Or what could you say about that going forward?
Yes. Thank you. Just on the question of timing, I guess, what we would see as we look ahead here is that we should expect the U.K. governments, hopefully, to announce its contract for difference around the middle of this year. We would expect to see the half a dozen major U.K. projects that are in the market at the moment get awarded to market, and we would expect to get a reasonable share of that. We would also expect to see Seaway in the next year pick up some U.S.-based work on some of the larger U.S. projects. So I think we would see ourselves really fill ourselves out in terms of where we go from there.
We will also be doing the topics that Mark touched upon about debt and getting the balance sheet in order for Seaway 7 in the next 12 months to start to put it on its own foundations, which links into your second question.
For us, there is a very clear linkage today between the 2 businesses. They use common processes and systems. We move people, we sometimes move assets backwards and forwards. We do want to create the ability that the 2 businesses are measured separately, an oil and gas business, a new energy business in the Subsea side. And then Seaway 7 would be the fixed wind business.
Our aim at the moment is just to make sure that we can address what those 2 very different markets need and structure ourselves in terms of leadership and focus on those markets in the near term. Where we can take it to, that will work out in time, I think, is the answer to the question. We will see it from there.
But the aim is that Seaway 7 will have its own balance sheet and will have enough strength in due course to stand on its own 2 feet. As we said in the capital allocation slide, our aim would be to be a 51% or greater owner of Seaway 7 in the medium to long term.
The next question is from the line of James Winchester from Bank of America.
I was just wondering if you could help bridge your guidance for the Renewables segment. You've kind of got revenues are expected to come in $1 billion with EBITDA margin towards 10%. And then if you kind of take the first quarter, it came in at around $5 million EBITDA. So if you kind of take the simplest case and expect $100 million EBITDA for the full year with only $700 million in the backlog to be executed this year would require like a 14% EBITDA margin. So of course, you'll be expecting some from kind of a book and turn from new orders, but could you just provide a bit of color on this dynamic? And could you also provide a kind of a similar bridge for the Subsea segment?
Well, the Subsea side, it's 2 things. It has elements of seasonality and we had flagged quite clearly that the first quarter will be lower and that's where we are today. So we're very clear that the Subsea piece fits together pretty clear to us. We know where we're at. We've got a very high level of backlog for this year, so we know what we have to liquidate. And barring any major, major unseen global changes here, we should be liquidating the Subsea business in line with our plans.
Renewables, we build out renewables with a big push on Seagreen in the second half of this year with its cable lay, it has more jackets to go in. And of course, as those major projects get towards a close, you have opportunity to look at the allowances and contingencies on the project as well as just the inherent profitability as we liquidate project performance on the jobs.
We also have Hollandse Kust in Holland, a major project, which we are just starting now in Q2, and we'll be liquidating 100-pile project there. We hopefully should have Taiwan behind us in January towards the middle part of this year and our cable lays should be active as well. Our heavy-transport vessels in that fleet as well are also pretty busy now in the next 3 quarters.
So I will let Stuart and Mark Hodgkinson, when they do their call later in the day, provide a bit more color. But that's the way to look at it. It's around the fact that the main assets are now all back to work having had their winter break. And then they'll be out working when a period allows them to go to work.
There are no further questions at this time. So I'll hand back to John for closing remarks.
Well, thank you very much for joining us. We know today is a very busy day for everybody with lots of other companies reporting. But we look forward to catching up with everybody again when we announce our Q2 results. So we look forward to talking to you then. Thank you very much. Goodbye.
Thank you. That does conclude the conference for today. Thank you for participating, and you may now disconnect.
Thanks very much.