Mountain Province Diamonds Inc

TSX:MPVD

Earnings Call Analysis

Earnings Call Transcript 2023-Q4

[Operator]

Good morning, ladies and gentlemen, and welcome to the Mountain Province Diamonds Inc. Q4 and Full Year 2023 Webcast and Conference Call. [Operator Instructions] Also note that the call is being recorded on Tuesday, April 2, 2024. I would now like to turn the call over to Mr. Mark Wall, President and CEO. Please go ahead, sir.

[Mark Wall, executive]

Thanks very much, Sylvie. Good day to everyone who's dialed in to listen to our Q4 and full year 2023 results call. My name is Mark Wall, and I'm the President and CEO of the company. Also present on this call is Steve Thomas, our CFO; Reid Mackie, our VP, Diamond Sales and Marketing; and Matt Macphail, our Chief Technical and Sustainability Officer. At the conclusion of this presentation, the team will then be available for any questions that you may have. Firstly, I would like to draw your attention to our cautionary statement regarding forward-looking information. This presentation will be posted on our website for anyone who needs need additional time to review this statement. Mountain Province Diamonds produces Canadian diamonds to the high standards of corporate social responsibility, and that is something that we continue to be proud of. We own 49% of the Gahcho Kué mine in the Northwest territories with the De Beers Group, a division of Anglo American plc owning the remaining 51%. In addition to the 5,025 hectares of joint venture ground containing the existing mining operations, Mountain Province is the 100% owner of more than 113,000 hectares of ground that surrounds the Gahcho Kué assets, and we refer to these as the Kennady North project. Today, I will speak to our Q4 and full year 2023 results, provide some insights into our strategy as we enter 2024. Following that, Steve, our CFO, will discuss the Q4 and full year financial performance of the company, and Reid will comment on the overall diamond market. I will then make some closing remarks to complete the presentation and we will answer any questions that you may have. Firstly, I'll turn to safety. With 2023, our results with safety remain a key focus area with one of our main safety metrics, the TRIFR or total recordable injury frequency rate, showing a 43% improvement in 2023 relative to 2022. Additionally, I'm pleased to report that the site has recently celebrated the achievement of going 1 year without a single lost time injury. As is always the case of safety, the work is never done. The terrible wildfires that impacted the Northwest territories in late summer and caused the evacuation of Yellowknife did cause significant hardship for the communities which the operation relies upon. Despite these terrible fires, the mine continued to operate with limited impact to production, and we are pleased that employees were kept safe, both in home network during these unprecedented events. I'm now going to run through some highlights from our fourth quarter and full year 2023. Firstly, during the fourth quarter, the company achieved a quarterly adjusted EBITDA of CAD 39.8 million, an increase relative to our Q3 adjusted EBITDA of CAD 25.1 million. For the full year, the company generated adjusted EBITDA of $165 million, down some $12 million from the 2022 record high of $177.2 million. These reductions were primarily driven by a softening of the rough diamond market in H2 of 2023 as previously reported. Q4 2023 delivered revenue of $79.8 million generated by the sale of some 918,000 carats at an average price of $87 per carat. For the full year in 2023, we sold approximately 2.7 million carats at an average price of $121 per carat for total revenue of $328.6 million. On to production. Fourth quarter 2023 production saw around 9.8 million tonnes mined, slightly behind quarter 3 where 10.1 million total tonnes were mined. For the full year, we saw total tonnes mined of 36.9 million tonnes. Ore tonnes mined in quarter 4 at 1.9 million tonnes was an improvement over quarter 3, 2023 with the higher ore tonnes mined as a result of planned ore release from 5,034 pit bottom. For diamond production in Q4, the mine produced 1.57 million carats from the processing of 855,000 tonnes. For the full year, the mine produced 5.57 million carats. Another highlight I would like to point out is that during 2023, the mine showed year-over-year improvements on key production metrics showing a 9% and 5% increase in total tonnes mined and total homes treated, respectively. On the processing side of things, the plant continues to run well after an extended maintenance shutdown mid-2023, which was focused on replacing and improving parts of the plant that have been driving maintenance downtime. Operating plant utilization or OPU, as we call it, showed significant improvement in half 2, 2023 relative to half 1. Moving into 2024, the company faces a lower production year due to the effects of mine sequencing and great profile changes, all normal occurrences in open pit diamond mining. This lower production year was anticipated and the mine remains on track to achieve the previously stated 2024 production guidance of 4.2 million to 4.7 million carats at the 100% level and 2.3 million to 2.6 million carats sold at the company level. On the costs, our full year 2023 cash cost of production, including capitalized stripping costs were $129 per tonne treated which was at the lower end of our public guidance of $127 to $137 per tonne treated. Our full year 2023 cost per carat recovered was $75 which was at the midpoint of our guidance of $70 to $80 per carat recovered. Mining companies need to be able to demonstrate the ability to control costs, and this was an area of focus for us in 2023. Looking briefly towards 2024, this will remain a key focus area. We've been working collaboratively with our joint venture partner and a budgeted costs that are essentially the same as in 2023 against the headwinds of inflation and labor pressures seen across the mining industry. Our focus on managing costs will remain a key area for the company moving forward. Turning to the diamond market. Diamond market continues to underperform as a result of various factors, which include a slowing market in the U.S., low Chinese demand and the uncertainty in the diamond supply chain related to lab grown diamonds and continued supply of Russian diamonds following the invasion of Ukraine. We continue to monitor developments closely as many factors are integrated in the market dynamic. Initial stages of the G7 sanctions banning imports of Russian-origin rough diamonds could yield a positive impact on demand for Canadian-origin goods. And we hope to capture this value should the opportunity arise. These sanctions and their implementation remain in the early stages and evidence of enforcement action has been seen by the authorities. Our share price continues to underperform. Our actions to reverse this are to focus on the underlying production and cost aspects of the business to deliver underlying profitability. We are working closely with our joint venture partner on both of these areas through detailed labor reviews, mine to mill cost reduction opportunities as well as reviewing the design of the mine itself to seek step-change opportunities. I'll now pass the call over to Steve, who will go over our financial results in detail. Steve?

[Steven Thomas, executive]

Thank you, Mark, and good morning, everyone, and welcome to our results call, which is being held somewhat later than usual. By way of context, the 2023 financial statements include 2 particular matters, which required careful consideration between management and KPMG through the audit process, and hence the brief deferred of this call to today. Noting that all numbers discussed will be in Canadian dollars unless otherwise stated. Specifically, I will first address the going concern language reintroduced into Note 1 of the financial statements and secondly, the noncash impairment charge booked in Q4 2023, which materially impacts the company's reported operating income and earnings per share. Given the impact of the noncash impairment charge, it is important to focus also on those financial metrics such as earnings from mine operations, cash generated from operating activities and adjusted EBITDA, which are important indicators of the company's performance during 2023, not impacted by that impairment charge. The going concern note in the financial statements emphasizes that should the company not substantially achieve the carat production or price per carat underpinning the forecast revenue then it would need to seek alternative plans to meet its liquidity needs. This assessment considers a time horizon of 12 months. And given the volatility seen during parts of 2023, we view this note as providing an appropriate cautionary statement. In respect to the impairment charge booked this year, the company similarly booked a charge in year-end 2019 and 2020 and then book to reversal or write-back for the year-end 2021. For year-end 2023, in accordance with accounting standards, the company assessed evidence of triggers of impairment and specifically in considering the carrying amount of the net assets of the entity being more than its market capitalization determined that a trigger existed. The calculation then undertaken confirmed that the carrying value of the company's assets were greater than the net present value of future net cash flows and the delta booked as a reduction to the value of the property plant and equipment in respect of the Gahcho Kué assets. A similar assessment was carried out in respect to the Kennady North project, and it was determined that no evidence of a trigger of impairment existed. Turning to an overview of the business itself. In respect of turnover, Q4 2024 delivered $79.8 million in sales being approximately 24% of the 12-month turnover of $329 million. And for earnings from operations in Q4 of $25.6 million. That was approximately 25% of the 12 months earnings of $102.4 million. In 2023, the company sold 2.71 million carats at an average price of CAD 121 per carat compared to 2022 with 2.66 million carats were sold but at an average price of CAD 146 per carat, reflecting the unprecedented high sales prices achieved in H1 of 2022. In respect of the balance sheet comparison between year-end 2023 and year-end '22, in addition to the movement in several account balances in line with normal operating activities or mark-to-market valuations driven by underlying assumptions, which I will expand upon, the largest change arises in respect of the property, plant and equipment carrying value, which has been written down by the noncash impairment charge. Turning to the long-term liabilities. The long-term debt balances reflect the repayment of USD 18 million against the 9% senior secured notes and the accrual of approximately $8 million in deferred interest in respect to the Dunebridge Junior secured credit facility, which I will expand upon also. Turning now to the balance sheet in more detail. I will highlight certain material balances and those for which there have been notable changes when compared to the comparative periods for 2022. In respect of current assets, we have seen closing cash for 2023 increased to $29.7 million from an opening position of $17.2 million. For the derivative asset balance at the year-end 2023 of $14 million, this compared to a balance of $2.2 million at year-end 2022. The increase of $11.8 million is in respect of 2 distinct derivative assets. Firstly, there is a $2.3 million increase in the derivative asset value calculated in respect of currency hedge contracts in place at the year-end, which reflects a change in the factors used to derive the fair value of the embedded derivative within those hedges. The second derivative asset component arises in respect of the repayment features attached to the 9% second lien notes, which is a -- which are assessed at fair value and for which the assumed interest rate volatility used in the respective year-end calculations has changed notably down from 78% at the end of 2022 to 40% at the end of 2023. The other large current asset balance is in respect of inventories which comprises our share of ore in stockpile, rough diamonds transiting the valuation and sales pipeline process and physical supplies inventory on site. The total inventory balance of $197 million at year-end 2023 is $26.5 million higher than the balance of $161 million at year-end 2022. And $25 million of this increase is due to the increase in the ore stockpile for which our proportionate share has grown from 862,000 tonnes to 1.14 million tonnes, in line with the strategic business plan. The rough diamond balance at year-end 2023 of $50.4 million represents 745,000 carats held at cost compared to a value of $56.7 million for 732,000 held at the year-end 2022. To note that in Q3 2023, we adjusted down the carrying value of the rough diamonds held at cost to reflect their assessed net realizable value, but no such adjustment was required at the year-end for either the stockpile or rough diamond balances. In respect of current liabilities, the increase in the account payable and accrued liability balance from $42.5 million at the end of 2022 to $56.8 million at year-end 2023 is due purely to the timing issue of when payments are made in respect to mine liabilities. The other notable current liability movement is in respect to the fair value attributed to the 41 million warrants issued with the Dunebridge Junior credit facility in March 2022. The calculated fair value of 2023 year-end is $2.4 million compared to $7.2 million at year-end 2022. This reduction reflects the change in the estimated fair value components of expected volatility, risk-free interest rate and liquidity discount. The resulting summation of current assets and current liabilities at the 2023 year-end derives a working capital position of $171 million compared to $155 million at the end of Q3 2023 and $130 million at the end of 2022. In respect of long-term assets, the carrying value of property, plant and equipment at $591 million is after the $104.6 million impairment charge mentioned earlier. This effectively accelerates future depreciation for the Gahcho Kué assets into this year. And this value compares to a carrying value of $686 million of the 2022 year-end.

The carrying value of the Gahcho Kué assets include capitalized waste stripping at $157 million, which at the end of 2022 was only $102 million. We expect to see the continued growth in the capitalized waste stripping asset in '25, '26 and '27 as that activity continues in respect of the Tuzo ore body and a pace which will exceed its rate of depreciation in those years. In respect of long-term liabilities, the year-end total long-term debt of CAD 306 million comprises the translation of USD 177 million of 9% senior secured notes due in 2025 and USD 58 million for the Dunebridge Junior secured credit facility due in 2027. During the year, we paid down USD 18 million against the 9% notes, and accrue the deferred interest in respect of the junior credit facility, which itself is calculated in line with the requirement to recognize a cash yield of 14%. For these U.S. dollar-denominated debt liabilities, their translation to Canadian dollars was at the year-end 2023 closing Canadian dollar rate of 1.3243 compared to the translation at the year-end 2022, for which the closing rate was 1.3554. Lastly, the decommissioning and restoration liability recorded at fair value of $85.3 million at 2023 year-end is similar to the balance of $81.2 million recorded at 2022 year-end. These fair values hang off of the respective undiscounted values of $92.9 million and $90.3 million for 2023 and 2022 year-end, respectively and there has been minimal movement in the nominal discount rate applied to derive the fair value calculation. Turning now to earnings and cash flow.

In 2023, the company sold approximately 2.7 million carats at an average price of USD 90 per carat or CAD 121 to generate $329 million in turnover. This compares to 2022 when approximately 2.66 million carats were sold at an average price of USD 112 per carat or CAD 146 for turnover of $389 million. Although 2023 saw our second highest average annual selling price per carat since sales began, the exceptional peaking prices in the first half of 2022 significantly drives the comparative reduction between the 2 years. Q4 2023 saw 918,000 carats sold at a U.S. dollar price of only USD 64 per carat or CAD 87 compared to 758,000 carats at USD 94 per carat in Q4 2022. It's worth noting that in Q3 2023, the company only sold 479,000 carats but an average selling price of USD 95 per carat. And the variance in sales volume and price between quarter 4 and quarter 3 reflects the decision by the company to withhold a large volume of low-value goods from the September sale when the market was performing [indiscernible] and then we sold a proportion of these in Q4, thereby tending to drive down the average selling price. Production costs for the year were largely in line with plan despite continued high inflation across various consumables and labor costs and us choosing to incur additional operating costs and undertake capital investment to address required improvements in the process plant, which have impeded its performance in the first half of the year. For the 3 and 12 months ended December 31, 2023, production costs, net of capitalized stripping costs were $33.4 million and $138.4 million. Depreciation and depletion on the GK mine assets at $19 million for the 3 months and $70.6 million for the 12 months. And during that period, the cost of acquired diamonds was $1.8 million for the first -- for the 3 months ending 31 of December '23 and $17.2 million for the full year. For the equivalent 3 months and 12 months ended December 31, 2022, production costs were $38.4 million and $131.6 million, respectively, and depreciation, $17.7 million and $56.9 million. And for the cost of acquired diamonds, $8.5 million for the 3 months of Q4 and $29.8 million for the full year. As such, production and depreciation charges in Q4 were consistent with the prior 3 quarters in 2023 and close to those incurred in 2022. The exception is in respect of depreciation, which reflects the impact of accumulated capitalized waste stripping being incurred and depreciated. It is notable that whereas the cash production cost per tonne treating and carat recovered is comparable in respect to the full year 2023 versus 2022. For Q4 '23, there is a significant drop compared to Q4 2022. This arises because in Q4 2024, there was a significant build in the ore stockpile as it grew by 1 million tonnes whereas in Q4 2022, it reduced by 123,000 tonnes. In hand with this change, a larger proportion of the cash production costs incurred in the Q4 period are capitalized into the ore stockpile rather than released as in-period expenses. Resulting earnings from operations for Q4 2023 of $25.6 million compares to $31.6 million earned in Q4 2022. The reduction reflects the lower selling price in Q4 2023 versus that achieved in Q4 2022 described earlier. Offsetting this is a lower average cost of production per carat in Q4 2023 compared to Q4 2022 with the net effect being the earnings margin in respect of Q4 2023 at 32% is consistent with 33% achieved in respect of Q4 2022. For the full year 2023, earnings from operations are $102.4 million compared to $170.5 million for 2022, with the difference attributable to the average selling price in 2023 being $25 less per carat, over approximately 2.7 million carats sold and also a 4% increase in year-on-year total cost of sales. Before discussing net income, it is worth noting that 2023's adjusted EBITDA at $165 million is only behind the record of $179 million achieved in 2022. The resulting EBITDA margin on sales is 50% for both Q4 2023 and the full year 2023 compared to 46% for the full year 2022. This non-GAAP measure is formulated to normalize for certain flows, which impact the net income number for which 2023 is actually a net loss of $43.7 million. The adjustments in respect of noncash impairment of $104.6 million and depreciation at $71 million account for a combined $176 million of the total adjusting cap flows of $209 million. For 2022, from net income, depreciation accounts for $57 million of the total adjustments of $129 million needed to derive adjusted EBITDA. Consistent with the above EBITDA comparisons, we saw cash flow from operating activities after allowing for adjustments and changes in working capital, of $143.4 million for 2023 compared to $172.6 million in 2022. This cash generated from operating activities enabled the investment in 2023 of $83 million in property, plant and equipment which primarily represents the waste stripping activity undertaken to release future ore. This compares to an equivalent investment of $60.4 million in 2022, which, again, is primarily in respect of waste stripping activity. The net loss of $43.7 million for the full year 2023 when compared to the profit of $49.2 million for the full year 2022 incorporates several large balance differences between the 2 years, which are worth highlighting. Specifically, the derivative gain of $11.8 million in 2023 compared to a loss of $2.5 million in 2022, and that comprises the 2 elements described in the balance sheet discussion. To note that in respect of the increase in the fair value of currency hedges outstanding at 2023 year-end compared to 2022, we continue to use those hedges to deliver assurance over a proportion of the Canadian dollar costs being funded from U.S. dollar revenues. For 2023, there were USD 45 million of foreign currency hedges outstanding at the year-end, which benefited from more favorable mark-to-market conversion factors, than was the case for the USD 48 million of hedges outstanding at the end of 2022. For the gain in 2023 of $9.5 million in respect of the embedded derivatives, derivatives pertaining to the second lien loan notes, this can vary significantly from one period to next as the attributed risk-free interest rate, interest rate volatility and credit spread on those notes changes. And we note that for the first 9 months of the year, the cumulative gain was only $521,000 to emphasize this point. The second large difference impacting the respective reported net income for 2023 compared to 2022 is in respect of foreign exchange. For the year-end 2023, there was a foreign exchange gain of $6.6 million compared to a foreign exchange loss of $28 million for year-end 2022. The foreign exchange gain in 2023 is almost entirely unrealized, relating to the change in the translation of the U.S.-denominated debt balances primarily the U.S. dollar-denominated long-term loan notes at a slightly stronger Canadian rate of 1.3243 versus the year's opening rate of 1.3554.

In respect to 2022, $6 million of the foreign exchange loss was unrealized for the same reason, reflecting the Canadian dollar weakening over that period, whereas $23 million of the loss in 2022 was realized as repayment of the debt took place during that year during a period when the Canadian dollar was weakening. The last item of note impacting net income in 2023 differently to the impact in 2022 arises in respect of the deferred income tax charge for the respective years. The growth in the deferred tax liability from year-end 2021 to year-end 2022 reflects the continued utilization of tax calls as the company generates taxable profits which will be taxable under the mining royalty regime. This applies similarly in 2023 which absent the impairment charge would have seen taxable profit for tax purposes and the deferred tax liability would have grown accordingly. However, the impairment charge had the effect of reducing the deferred tax liability by approximately [ $30 million ], leaving the deferred tax liability relatively unchanged and hence, a charge of only $2 million. For 2023, the other element of tax is a current tax charge of $1.2 million compared to 0 in 2022. This represents the recognition of an election to pay in April 2023, $600,000 in respect of the 2022 mining royalty which was not accrued in 2022, plus a further $600,000 accrued in respect of 2023 year-end that will be cash paid in April 2024. These voluntary advanced cash payments are efficient as they protect several million dollars of tax pools to be offset against future taxable profits. 2023's net loss after tax of $43.7 million equals a loss of $0.21 per share on a basic and fully diluted basis. Excluding the impairment charge and related deferred tax effect, this would have been a gain of approximately $0.22 per share which is close to the $0.23 per share achieved for 2022. In conclusion, 2023 saw headwinds in relation to the U.S. dollar selling price but with signs of price stabilization by the year-end. Despite this impact on revenue and costs continuing to be subject to inflationary pressures, the company managed to grow its closing cash position by $12 million, and we paid USD 18 million against the senior loan notes principal. The improved operating efficiencies in mining and notable improvement in plant throughput in H2 will remain the center of our attention in 2024 to ensure that the operator delivers to plan in respect of carats recovered and costs incurred. This is critical to ensure we can continue to service our operating and financing requirements and maintain future option value across our total endowment, including the Kennady North project. With that, I will turn the presentation over to Reid Mackie, our VP, Diamond Sales and Marketing. Reid?

[Reid Mackie, executive]

Thank you, Steve. As we've all heard, 2023 was a challenging year for the Diamond pipeline, especially following the record-breaking highs of 2022. Following the midstream's enthusiastic purchasing in 2022, the diamond market was met with lower than hoped for consumer demand in the U.S. and also in China, where in the case of the latter, the much anticipated restocking of diamond inventory and a consumer rebound did not materialize. Looking back to Q1 2023, polish prices weakened, which had the knock-on effect of eroding prices in the rough diamond market, which materialized by early Q2 [ yellow ] rough diamonds bucked the trend a while longer and outperformed larger goods, but by April, these also started to slide. During our April sale, lower bidding prompted Mountain Province to withdraw some rough diamond categories from sale in order to defend price. These goods were eventually reintroduced from our July sale after prices firmed and we achieved a premium on the highest bid projected back in April. This apparent recovery was unfortunately short-lived as post summer break, the rough diamond market and prices fell back again. Being low bid levels at our September sale, we again withdrew certain categories from sales to defend price. By the close of Q3, the diamond pipeline had seen more than 6 months of consecutive polish price decreases that reduced average polished diamond prices by more than 10% and diamond inventories in the key Indian cutting centers were reported to be at unsustainably high levels. This led to a self-imposed 2-month import ban by Indian manufacturers from the 15th of October to the 15th of December, which achieved its desired effect and significantly reduced supply volumes, imports of rough diamonds in November 2023 were down 76% compared to the same month the year before. Major rough producers canceled or postponed most sales events during the same period. These supplies tightening measures appear to have met their intended outcome, reducing manufacturing inventory as polished goods were sold downstream during the retail holiday season and the following restocking period. Though 2024 started cautiously. From December, we did see the return of relatively stable pricing in the rough market. With this firming of prices, some inventories of rough held over from last year were released, but these are so far being well absorbed into the cutting centers. For 2024, rough supplies from producers are expected to stay steady. Though the volume of Russian supply continues to be unpredictable, we are seeing increased barriers being put in place via tightening G7 sanctions, which should reduce the instability Russian stocks have brought to the market. Global political unrest has appeared to reinforce consumer demand for ethically and sustainably sourced goods, which is driving the rollout of digital provenance and traceability platforms through the diamond pipeline down to retailers. MPD, Mountain Province is currently testing chain of custody via distributed ledger blockchain and continues to encourage customers to develop branding programs, which highlight the positive origin story of our natural Canadian source diamonds. The lab grown diamonds market share reached a high in 2023, their wholesale prices continue to fall drastically. And this is prompting jewelers and retailers to reassess the long-term viability of factory-made diamonds within the traditional natural diamond jewelry sectors such as bridal. Further, the major luxury jewelry brands appear to be redoubling their commitment to natural diamonds over the long term. Closer to home, the company's rough diamond tenders continue to attract strong customer interest and high levels of competition across all product segments. With close management of our goods at sale, and strategic short-term stocking, we weathered a turbulent year for the diamond industry. Strategic stock held back from sale to defend price has now all been sold at an overall premium to high speeds received at their original sale. Though MPD's average sales price achieved in 2023 was USD 90 per carat, well down on 2022s USD 112. It's important to keep in mind that this still represents the second highest average price achieved by the company to date. And we look forward to continued deployment of our nimble and competitive sales strategy to consolidate further market successes in 2024. And with that, I'll pass you back to Mark for his closing remarks.

[Mark Wall, executive]

Thanks, Ray. Once again, it's been a tough quarter in the market. But to reiterate, in 2023, we've reported an adjusted EBITDA of CAD 165 million. We've completed extensive processing plant works that have improved processing plant performance. We've delivered operating costs at the middle to lower end of our guidance. We've responded to the moratorium on diamond imports by India and the overall market downturn by focusing on cost reduction opportunities. We've worked through a devastating period of wildfires in the Northwest territories with a focus on employee well-being and safety, while continuing to deliver Canadian diamonds into a market where purchases are more and more focused on diamond origin. Our focus remains on safely producing diamonds while doubling down our cost reduction opportunities, while also looking for opportunities to change the very design of the mine in search of additional efficiencies. With that, I'll end our presentation and take any questions.

[Operator]

[Operator Instructions] And at this time, Mr. Wall, we have no questions registered. Please proceed, sir.

[Mark Wall, executive]

Matt.

[Matthew Macphail, executive]

No questions recorded on the webcast either.

[Mark Wall, executive]

Okay. If we have no questions at all, you have nothing at all, Matt.

[Matthew Macphail, executive]

Nothing from the webcast, no.

[Mark Wall, executive]

Then I very much thank everyone for their attention, and I look forward to speaking to you and talking through the Q1 2024 results. Good day.

[Operator]

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.