Tenaris S.A. (NYSE:TS) Q4 2022 Earnings Conference Call February 16, 2023 9:00 AM ET
Giovanni Sardagna - IR, Director
Paolo Rocca - Chairman & CEO
Gabriel Podskubka - President of Eastern Hemisphere
Luca Zanotti - President of United States Operations
Conference Call Participants
Marc Bianchi - Cowen
Alessandro Pozzi - Mediobanca
Stephen Gengaro - Stifel Nicolaus
Frank McGann - Bank of America
Luke Lemoine - Piper Sandler
Luigi De Bellis - Equita
Good day, and thank you for standing by. Welcome to the Q4 Tenaris S.A. earnings conference call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your speaker today, Giovanni Sardagna. Please go ahead.
Thank you, Gigi, and welcome to Tenaris 2022 fourth quarter and annual results conference call. Before we start, I would like to remind you that we will be discussing forward-looking information in the call and that our actual results may vary from those expressed or implied during this call.
With me on the call today are Paolo Rocca, our Chairman and CEO; Alicia Mondolo, our Chief Financial Officer; Guillermo Vogel, Vice Chairman and Member of our Board of Directors; Gabriel Podskubka, President of our Eastern Hemisphere Operations; and Luca Zanotti, President of our U.S. Operations.
Before passing over the call to Paolo for his opening remarks, I would like to briefly comment our quarterly results. During the fourth quarter of 2022, sales reached $3.6 billion, up 76% compared with those of the corresponding quarter of the previous year and 22% sequentially, mainly driven by further increases in shipments and realized prices.
Our EBITDA for the quarter was up 34% sequentially, close to $1.3 billion, reflecting higher volumes, better pricing and a good industrial performance with increased levels of activity and utilization of production capacity. Our EBITDA margin for the quarter rose above 35% despite higher raw material and energy costs.
Average selling prices in our Tubes operating segment increased 50% compared to the corresponding quarter of 2021 and 9% sequentially. During the quarter, cash flow from operation was $524 million, our net cash position at the end of the year increased to $921 million, following the payment of an interim dividend of $201 million in November last year, and capital expenditures of $108 million during the quarter.
Now I will ask Paolo to say a few words before we open the call to questions.
Thank you, Giovanni, and good morning to all of you. We closed 2022 with a quarterly record of net sales, EBITDA and net income to kept a year in which we were able to take advantage of the favorable market conditions, particularly in North America to generate strong increases in sales and margin through the year.
Taking deal as a whole, our sales grew 80% to $11.8 billion. Our EBITDA rose to $3.6 billion, and our net income rose to an annual record of $2.5 billion or 22% of net sales. With a solid balance sheet and good prospect for an increasing cash flow in the year ahead, we are proposing to raise our dividend for the 2022 year by 24% to $0.51 per share.
These results were made possible through the efficient deployment of our global industrial system, where we produced a record volume of over 3.1 million tons of seamless pipe worldwide, sustain an ongoing ramp-up of our facility in the U.S. Despite the use of longer and more complex production in logistic routes, we were able to maintain high standards for safety, quality, and consumption of materials.
During the year, we hired 6,500 new employees. And in our induction in training routines, we payed close attention to the importance of having a safety mindset with awareness and behavior suitable for the industrial environment of our shop floor. We empower all our employees to be proactive in taking preventive safety action at all times. With this action, we were able to reduce our lost time injury frequency rate for the year by 10% to 0.9 per million manhours work. We are grateful to our people working in the plant for their contribution to this result.
As we increase production and sales, our logistics operation have reached a substantial magnitude. To give you an idea of the efforts involved between interment transportation and delivery to customer, we moved around 10 million tons of material over around the world. We are strengthening the reliability of our supply chain through the digitalization of our material flows and made good progress over the year in this respect.
We increased the deployment of our Rig Direct services. We are now serving close to 600 rigs worldwide. Our unique service platform allow us to integrate our operations more closely with our customers and provide digital and technical services that can further differentiate us from our competitors. 2022 marked a turning point in our deployment in the United States. The country accounted for more than 40% of our total sales, most of which are now produced locally.
We brought the Bay City mill to full production capacity and ramped up production in the rest of our U.S. in data system, including the restart of production of weather pipes and of heat treatment and finishing at our Baytown in Koppel facilities. We hired more than 1,500 new employees during the year in the U.S. and now employ 3,600 people in the cloud.
With the $460 million, we will avoid spending on the Benteler acquisition. We will reorient our investment plan in the United States to achieve through organic growth, the objective of strengthening our local industrial and logistics system that we had planned with the acquisition.
As we look ahead, we view the tightness in oil market and high demand for LNG will support oil and gas price cash flows and investment in the oil and gas sector. We expect that the number of oil and gas well drilled around the world in 2023 will increase, and this will drive global OCTG demand to exceed 16 million tons and reached its highest level since [indiscernible]. This environment will support further sales growth in 2023, when we expect an increase in sales for the offshore development in the Middle East and in the pipeline infrastructure buildup.
Our achievement over the past year that will support this growth include our multiyear agreement with ExxonMobil to supply their offshore operation in Guyana, our agreement with Petrobras to supply their Pre-salt operation. The renewal of our long-term worldwide agreement with NAI, the renewal of our long-term agreement with Qatargas, the consolidation of our long-term agreement with Vietnam.
We also extended our long-term agreement with YPF and with Pemex. Pipelines will drive a relevant increase in our sales of welded pipes. In Argentina, we are supplying a number of pipelines that will stimulate further investment in the Vaca Muerta shale by expanding capacity to transport the gas and liquid to domestic and export market. We will deliver a major offshore pipeline for the North Field expansion in Qatar, and we are seeing increased demand for offshore pipelines to bring gas to Europe.
Our cash flow in 2023 will benefit from the stabilization of our working capital requirement. Our CapEx will increase to around $650 million. A relevant part of this CapEx will be directed to project that will contribute to our 2030 target for reducing the carbon emission intensity of our operations. In addition to our wind farm in Argentina, we will make investments, which will contribute to improving energy efficiency in Italy and Argentina.
Over the past year, Tenaris has made good progress on many fronts and produced record financial results. We have been able to achieve this only thanks to the confidence our customer has placed in us and the constant effort and the outstanding performance of our diverse and United team all around the world in a volatile and fast-moving environment.
We are now open for any questions you may have.
Thank you. [Operator Instructions] Our first question comes from the line of Marc Bianchi from Cowen.
Hi. Thank you. I'm curious about the margin progression from here. It seems like there's some cross currents North America pricing on the leading edge is starting to roll over. Raw materials are increasing. I understand that your business would lag that. So maybe that's what's kind of keeping things in good shape here in the first half. But I'm curious how that looks as you go to the second half? And then is the international improvement enough to perhaps offset that?
Thank you, Marc. The -- as far as -- let's say, the overall environment that you can anticipate with a vision to 2023. First of all, I think that there is tightness in the oil and gas market. And there are reasons to justify expectation of a price of oil that may stay stable or higher where it is today. The economic expectation, the perspective of the economy with some recovery in China is probably more positive today than a few months ago. The U.S. production, in my view, will remain above 12 million barrel a day. In some moments, also the strategic reserves will have to start to build back its position.
So on the side of demand, there could be some traction in this area. The reduction of the exports from Russia will wait into this. So I think there is a reasonable expectation of sustained price of oil. In the case of gas also, beyond the short-term issue like some closure of the LNG mill, LNG plant in the U.S. the gas price in the U.S. also in my view, we'll have some support for the project that will come in gradually over the year. And so, also in the gas, I think there are reasonable expectation of, let's see, some recovery from the present level and a reasonable price of gas.
In these conditions, if you look at the cash flow of the oil companies, we can expect an increase in investment, an increase in investment in CapEx drilling in North America. This should be supporting increased demand, as we were saying in our press release, increased demand of OCTG worldwide and particularly in North America. The level of drilled and completed wells is very low, probably is at the minimum in the last three years in terms of relation with the wells drill.
This also, to some extent, will contribute in supporting drilling activity in the U.S. On the side of the supply, as we're saying, prices of some of the factor of the costs are increasing in the hot-rolled coils start to recover, iron ore went up since the last quarter. So there is also -- there will be some support, this quarter only partially affecting us, but are affecting the production, the cost efficiency of our competitor.
So in my view, the level of pricing may have adjusted slightly now. But in the end, we have no reason to think that the price of types, especially for complex heat treated application seamless in the United States should adjust substantially. There will be relatively tight equilibrium for a while if the drilling activity increase, and we are expecting over the long run.
Okay. That's helpful, Paolo. I guess my other question relates to Benteler and you alluded to this in your commentary. I think there was going to be some pretty substantial CapEx in maybe '24 and '25 for a steel shop. With that now not happening, what should we be looking for spending from you for your North America operations to maybe replace what was going to come from Benteler?
Well, I think we need to adjust and redefine our strategy in North America. We need to strengthen our industrial system, debottleneck some of the value-added process and also increase our capacity of welded product of differentiated welded products. So we will direct our investment in this direction. There will be an increase overall, as I comment on the overall investment during 2023 compared worldwide to the level of 2022. And part of this investment will be focused on the debottlenecking and strengthening our production and logistic capability in the United States.
Okay. Thank you for the answers. I’ll turn it back.
Thank you. One moment for next question. Our next question comes from the line of Alessandro Pozzi from Mediobanca.
Hi, there. Thank you for taking my questions. I think in the outlook, you mentioned a further increase in revenues and EBITDA with stable margins. I was wondering, if you can maybe give us a bit of a view of where do you see sales going up maybe in Q1. And also, I think in your opening remarks, you mentioned a number of pipeline projects and I was wondering, if there is maybe some lumpiness in the volumes throughout the year, potentially big pipeline projects coming in, in any specific quarters. But also, I think in the Middle East, if you can give us a view of where sales might go in the Middle East throughout the year.
Thank you, Alessandro. In fact, you're saying, we expect in the first quarter of 2023, further increase in sales in the range of 10%, with still relatively stable margin. Then I mean for the rest of the year, this is -- there are uncertainty on many issues. There is volatility in the world on many aspects. We will have also to see, if the assumption that I was mentioning before on the level of economic activity in the U.S. in recovery of China so are going and where the price of oil, if it remains stable or even higher or what it is. This will have an influence in the second part of the year. But for the first part of the year, this is what basically we can anticipate.
Now, when we go to the pipelines, I would divide in two big different areas. One is the development of infrastructure for the gas in South America, development of Vaca Muerta integration to some extent of the infrastructure network that is taking place now in Argentina for oil and gas. These are mainly welded product. Welded product will increase in its share on our sales overall. For the pipeline in the offshore and Middle East, I will ask Gabriel to give an outline of what we can expect in 2023.
Sure. Thank you, Paolo. Good morning, Alessandro. Indeed, the business in Middle East, we expect to continue to grow. The drilling activity is growing steadily at the most relevant NOCs have announced expansion of capacity, and they are following through. And we are seeing them pursuing a multi-year investment cycles. And Tenaris is well positioned to capitalize on that.
For example, in the UAE, last month, we achieved a record of delivering OCTG to 65 rigs of ADNOC following our rig direct model. This is a new level of activity that we are seeing in the Emirates after many months of ramping up the operation. We are also there moving full speed ahead with the construction of the state-of-the-art trading facility.
In Qatar, we are also consistently supporting drilling needs of Qatargas as they want to expand their gas production capacity. And this month, going back to your point of pipelines, we are starting the first delivery of this massive North Field pipeline order that we have. We will probably take the whole year, but this is happening this month, the first shipment. So we will expect sales of Qatar to ramp up as well strongly during the year.
Saudi Aramco (ph) is also growing steadily in the drilling activity. We have booked several orders in all business segments in the quarter with a strong backlog already going well into 2024. So overall, we expect a growing trajectory in Middle East that we have seen already in the second half of 2022, but this will strongly accelerate, especially in the first of '23 and continue into the second half of the year.
Touching on offshore very quickly. This is a segment that is also very dynamic demanding pipelines and OCTG, rig counting offshore already worldwide has recovered to pre-pandemic levels, and we expect the number of FIDs in 2023 to be the best in the last 10 years. And this is something that will support new projects. So this is something that we are seeing in several basins. We talked about the Middle East. We see North Sea very active. There are projects being developed looking for additional capacity to be connected to Europe.
We see also Sub-Saharan Africa moving very, very strongly. Angola, Ivory Coast are two particular areas where we're booking projects in OCTG and in line pipe as well. And also the Mediterranean, North Africa, the Black Sea are areas where new projects are being sanctioned and some others are in the making, but that also will give some important prospects of pipeline activity as well.
So overall, we see offshore increasing into 2023 and probably beyond that. So this would be a growing segment in Tenaris contributing to a richer mix of the company into 2023 and beyond.
Thank you. Just going back to the line pipes. If you just look at the big projects that you have already been awarded, what is the volume that you're planning to ship during 2023 for those big line pipe projects already in the backlog?
Well, in -- let me tell you, in Argentina, in 2023, we should be delivering in the range of 200 -- approximately 220,000, 250,000 tons international only the North Field expansion is a project in the range of 200,000 tons of welded pipes (ph), all of this are basically welded pipelines. And then there is a sizable number of projects in the international area. There are more seamless pipeline for offshore operation like the one that will feed gas for Europe from different sources.
Okay. That’s very clear. Thank you.
Thank you. [Operator Instructions] Our next question comes from the line of Stephen Gengaro from Stifel.
Thanks and good morning, everybody. Two things for me. I wanted to follow up first on, I think a question Marc asked to start off the Q&A. When we think about the international and offshore markets strengthening throughout the year and in 2024, is that accretive to the current EBITDA margin level?
Well, there are some project that has been acquired almost more than six months or one year ago, in which we still have a relatively limited margin because of the price and the cost increase that we suffered during this year. The new project or acquired a margin that are, let's say, substantially, I would say, positive margin and relatively high margin, but the mix, you have to keep in mind is also considering some of the product that has been acquired some time ago. One example is, North Field expansion is a big project that has very limited margin.
Okay. And is that -- those are clearly contemplated in your expectation that margins are around these levels over the next couple of quarters?
Yes. We are considering this as I was mentioning for the next quarter, we expect to have margin in this level. And also I think this will be sustainable in the first half. Now then volatility is there, and we have to take this into consideration. But the consideration that we made at the beginning are supporting, let's say, a relatively good level of margin for the 2023.
Great. Thank you. And then the other question I have for you was when we think about the balance sheet and the cash generation, I mean, even with your $650 million of CapEx, you're going to generate, it looks like a significant free cash flow this year in 2023, and I don't know if it's give or take, $2 billion, I think, you bumped the dividend somewhat. How do you think about accelerating the amount of cash coming back to investors. I mean that's a big theme in oil services these days is acceleration of capital returns. Investors clearly want that, you don't have the acquisition now that you're spending $400 million plus on. How do we think about your willingness to even increase the amount of capital coming back to shareholders given the free cash flow?
Well, the -- what we will be proposing in terms of dividend, we tend to follow established path and keeping in mind the cash flow generation, the results, the long-term view for the company. We will stick to this policy is also true that we are increasing dividend by 24% this year, even if the cash flow has been an influencer affected by strong increase in the working capital this year.
We will take a decision in consideration next year, and we will propose a dividend according to the policy we are following also in the past. That is also taken into consideration, the results and the cash flow generation.
Okay. Great. Thank you for the details.
Thank you. [Operator Instructions] Our next question comes from the line of Frank McGann from Bank of America.
Okay. Thank you much. A couple of questions, if I might. The first one it would be just in terms of the outlook, you seem pretty confident in the first quarter you have obviously less visibility for the later quarters. But the second quarter, third quarter, as you're looking at them, do you have some indication of the level of strength that you have and related to that, when you're -- as you're rolling things forward now, are you seeing the pricing at which you're being able to roll over contracts starting to go down in the U.S.
Yeah. As I was saying, we see that 2023 the volume in terms of volume, in terms of invoicing, we will have a year higher than 2022. As we expressed in the opening remark in the press release. I also made a comment on pricing. I mean the driver that in my view should support pricing in the different scenario in the U.S. and internationally. But it's clear that for the second part of the year, there are many factors that are creating a certainty on the dynamics, part of this is also basically short. But on the dynamic of pricing for the U.S., I will ask Luca to give us his view on the perception for next quarter and this quarter.
Hi, Frank, maybe you are not on mute.
Frank, there is some noise coming from your side. Maybe you're still not mute.
Okay. I apologize.
All right. Thank you, Frank. Good morning. Look, I need to go back to what Paolo expressed at the beginning. When you look at the different factors, you see that the market absent to a decrease in rig activity should remain pretty balanced. Now there are factors like Paolo was mentioning before, like some imports that we're seeing coming in lately. But we do believe that these are going to be dissipating over time because if you look at the origins of these imports and the supply chain that is behind it, you really see that maybe they are not that sustainable going forward.
But again, absent a decrease -- a significant decrease in rig activity, which at this stage, we don't see. You look at other factors like [indiscernible] the minimum. If you take XTO, for example, big operator in Permian, they are saying that they're going to rebuild the inventory. Then you start looking at the domestic production. When you see a domestic production and you split it seamless in near value. You see that the seamless is capped. Maybe there can be some capacity creeping here and there, but there's not much they can go -- we can go.
And the seamless is limited and constrained by labor shortages. So overall, I believe that, again, absent a decrease in rig activity that we don't see. There are reasons to believe that the market is going to be balanced going into 2023. Obviously, the back half with some more, let's say, volatility that we need to contemplate going forward, and we're going to have time to do that. But overall, I stick to what Paolo said at the beginning.
Okay. Thank you. That's really helpful. If I could follow up just with a question on the pipeline activity. The pipelines in Argentina that you mentioned, the gas pipeline has a number of phases and the first phase obviously seems to be the one that you're talking about, the 200,000 to 250,000 tons this year. Well Phase 2 and then the third of the final big extension, when would you expect to see volumes from that?
And secondly, in terms of the oil pipeline activity in Argentina, the expansions of the main pipeline that goes to the Atlantic Coast, are you involved in that at all? Is it very significant? And I know there are some early discussions about a major additional pipeline that could be built 250,000 barrels a day over the next three, four years. Is that something that looks like it could happen? And when might that affect your volumes?
Thank you, Frank. But for -- I would say that, for sure, Argentina will develop a substantial infrastructure. To bring gas and oil to the coast, but this will happen over the years. Now the timing will be affected by the political volatility and the ability to finance some of these pipelines. It is possible that the second stage of the pipeline from Vaca Muerta to Buenos Aires would be started within 2023.
It's possible, but will require financing for the entire project. This is not sure. I mean, there is movement on this side, but it's not sure that the financing will be organized within the coming few months. For sure, it's a project that makes sense considering the declination of the gas supply from Bolivia and this is one project. Then there are projects of bringing oil and gas to the coast. Again, these are large projects. YPF is, let's say, a major player in this.
Also, this project made a lot of sense, but they will need financing and will not be easy in an electoral year with a situation in which Argentina will be facing difficult economic environment, the financing of this project is not easy. Some of the projects like deal Oldival, there is also an oil pipeline are underway, and we are supplying it. Within this year, we expect to supply 60,000 tons for this.
These are things that are moving on, like the first stage of the pipeline from Neuquen to Buenos Aires. So some is in production and will be the lever during 2023. But the extension and the second stage and the other major pipeline may be delayed in 2024, depending on the financial condition of the country.
Okay. Great. Thank you very much.
Thank you. One moment for next question. Our next question comes from the line of Luke Lemoine from Piper Sandler.
Hey. Good morning. Paolo, I just wanted to clarify the guidance a little bit. 1Q was pretty clear with revenues up 10% and stable margins from 4Q levels. It sounds like the 2Q visibility is good. EBITDA margins remain near the current level, but wanted to see if you could kind of give us a revenue outlook from 1Q or 2Q -- and then on second half, I appreciate the uncertainty, but as you see it now, it seems like maybe margins touched down a bit, but are you still expecting these to remain above 30% in the second half.
Well, we may guide with some more precise indication for the first quarter. And I was saying we can also have a relatively good idea of what is happening in the second in line with what we are saying. The margin should remain pretty stable. In the second part of the year, I mean, it's difficult to make a clear and sound prediction. What we can say is to look at the fundamentals. The fundamentals is that in my view, price of oil remains stable. Gas also will have a positive evolution from where it is now.
Drilling and level of the wells and that will be drilled will increase compared to 2022. And the supply and demand in the pipe business, it may well be differentiated between the heat-treated more complex product or, let's say, value-added product that will remain pretty tight and maybe there could be some more soft market for non-heat treated low-end products. But in this environment, also the cost will -- the cost we are paying now will get into our profit and loss through the third and the fourth Q. So we will have some pressure on margin from this. But still, I'm pretty positive on it.
Okay. All right. Thank you very much.
Thank you. One moment for our next question. Our next question comes from the line of Alessandro Pozzi from Mediobanca.
Hi, there. Thank you. I have just a follow-up on CapEx. If you can give us maybe the breakdown of where you're spending CapEx and also if you can talk about your ESG initiatives because as you probably are aware, I mean, especially on this side of the pond, the ESG angle is very felt and strong. So -- but at the same time, I guess, you are increasing sales and therefore, CO2 emissions would probably go up, but I was wondering in terms of carbon intensity, what is the trend and maybe this year, over the next few years, how much you can -- how fast you can decarbonize your industrial footprint?
Thank you, for this thank you, Alessandro. If I should say where our CapEx is going, I will stress. First of all, this year, we will -- in 2023, we will complete our wind farm in Argentina and some other project for decarbonization. This will require investment in the range of $200-plus million. Then we will invest in our facility to also reduce carbon by improving the process, new heat treatment in our facility in Italy is the case, investment in the steel shop in Italy -- in Argentina.
Investment also, the management of scrap to support the decarbonization in the different mill. This will represent also another important part of our investment and then strengthening with that operation in the U.S. because in the U.S., we need, as I was saying, to debottleneck some of the value-add process in which we will need additional capacity to expand through organic growth, our ability to serve our clients in this. This will be basically the structure of it.
The decarbonization will take 35%, 40% of our investment will have, let's say, at least contributing to our decarbonization. In the trend of decarbonization, we started with 1.43 tons (ph) per tons of steel of pipes produced. In 2018, this is accounted with greenhouse gas methodology. In scope 1, 2 and 3 on the 3 scope. Today, we are in the range of 1.17. So we did a very good advance in our decarbonization.
In 2023, we will feel the increase in welded product. It implies that we are acquiring steel from third party. And this steel, in some cases, has let's say, higher content CO2 emission. So the scope 3 will reflect this, but we plan to compensate with a reduction in scope 1 and in scope 2 of our methods. So we are advancing, as you know, our target is 0.98 tons per ton of pipe in 2030. We have done a very big advance.
One of the investment that will not be strictly related to the carbonization, but very much related with NG is the investment in the exhausting fumes of our copper steel shop is a major investment that will transform the steel shop and reduce emission particular dimension in this -- we will also increase capacity of steel. At the same time, today, we are limited exactly by the capacity of managing the fumes from the steel.
Okay. That was very clear. Thank you very much.
Thank you. One moment for our next question. Our next question comes from the line of Luigi De Bellis from Equita.
Luigi De Bellis
Yes. Good morning. Thank you for taking my question. I have one on the pricing trend. So that is two prices in U.S. are down now close to 5% from the peak level. You are seeing a solid outlook for demand supply, but how much do you expect prices to evolve in the coming months or quarters for the market? And what do you expect for Tenaris average prices consider it's also the mix effect and how the duty supplied now on Maersk Argentina are affecting this dynamic and if it could change during the year. Thank you.
Thank you, Luigi. Well, on the first point is the evolution of prices in the U.S. As I was saying before, I think there are two different area of pricing. One is the area of the value-added product seamless, heat-treated material with semi premium or premium thread. This is a market in which situation will remain relatively tight. I don't expect in an environment in which the number of wells drilled increase, I don't expect, let's say, to softening all these price. There could be a softening of price in the low-end product in the United States, wells in particular. But let's say, if the price of oil support and the level of well drilled and drilling continue, this will basically depend from import level. Remember, import is also penalized by the 232 in many cases.
So even in this case, I think the softening should be contained. Cost impact I mean, the increase in hot-rolled coils, I don't know -- I mean, contributed to, in my view, contain April. Now the level of stock in the ground is still within, let's say, a normal ratio, we don't see stock overhang on the ground. So in this condition, that's the reason that are suggesting that we shouldn't be softening beyond a certain level. By the way, our system is less exposed to the low-end product in the United States. And so to some extent, in our accounting, I think we are relatively defended from softening of prices.
Luigi De Bellis
Thank you. I would now like to turn the conference back to Giovanni Sardagna for closing remarks.
Thank you, Gigi. And well, if there are no other questions, I would like to thank everybody who joined us for the quarterly conference call, and we hope to see you soon. Thank you.
This concludes today's conference call. Thank you for participating. You may now disconnect.