Knot Offshore Partners LP (KNOP) 2020 Q4 法說會逐字稿

Good day, and welcome to the KNOT Offshore Q4 earnings conference call. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Gary Chapman. Please go ahead.

Thank you, and welcome, everybody, to our fourth quarter earnings call. You can find our earnings release and this presentation on our website at knotoffshorepartners.com.

Our call today includes non-U.S. GAAP measures of distributable cash flow and adjusted earnings before interest, tax, depreciation and amortization, EBITDA. Our earnings release includes a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures. And please remember that any forward-looking statements made during today's call are subject to risks and uncertainties that are further discussed in our annual and quarterly SEC filings.

Actual events and results can differ materially from those forward-looking statements, and the partnership does not undertake a duty to update any forward-looking statements. I refer you to Slide 2 and our other SEC filings for further details.

On to Slide 3, the third -- fourth quarter 2020 highlights. The partnership is yet again able to report a very good and very stable set of quarterly results. Total revenues in the fourth quarter were $69.9 million. Operating income, $30.4 million. And net income, $24.6 million. Adjusted EBITDA was $52.9 million. Distributable cash flow was $28.6 million, and our coverage ratio was 1.58. This is all driven by scheduled fleet utilization of 98.6% in the quarter, allowing us to maintain and pay our 22nd consecutive quarterly distribution of $0.52 per common unit.

Our crew and our operations have remained materially unaffected by the COVID-19 pandemic to date and we've established many new procedures to do all we can to keep our colleagues safe despite the many challenges that have arisen since this time last year.

At the end of the quarter, the partnership had $738 million of remaining firm contracted forward revenue, excluding options, up from $585 million at the end of the prior quarter. We completed the dropdown of the Tove Knutsen in December without needing to issue new equity, and I'll give more information on that later in the presentation.

Also in December 2020, we agreed terms for sale and leaseback transaction for the Raquel Knutsen, and this completed in January 2021 with a net contribution of cash to the partnership of $38 million. In the quarter, we secured new firm charters for the Tordis, Vigdis and Lena vessels. And again, I'll give more details shortly on that. The Windsor Knutsen was eventually redelivered to us from Shell on December 7, 2020. And subsequently, we have agreed commercial terms with a major oil company for a 1-year fixed time charter contract for the vessel to commence in the third quarter of 2021 with further options to extend by up to a further 18 months.

In December 2020, the Windsor Knutsen reported a crack in its main engine block and was placed off-hire. However, we expect that our insurances will cover both the repair cost and the vast majority of the loss of hire during the period of the repair, which may take as long as 6 months due to the manufacturing of parts, logistics and repair itself. The loss of hire insurance is expected to provide [income] at approximately the level earned during the vessel's prior long-term charter, excepting the 14-day deductible period under the policy which fell entirely in December 2020.

Equinor did not take its next option on the Bodil Knutsen by the due date, and so we expect that the vessel will be redelivered to us on or around April 9, 2021. Whilst the vessel has worked well for Equinor, they're not in a position at the moment to commit to a new charter. In particular, the effect of the COVID-19 pandemic and lower oil prices haven't helped in this regard. However, we remain in close dialogue with them and other charterers, and we're optimistic of finding new employment for the vessel in the near future.

To Slide 4, where we set out some of the unique aspects of our business that may not always be fully appreciated or which new investors may benefit from knowing. We're a market leader with more than 30 years of experience and investment in this business. We're classified as a corporation for U.S. federal income tax purposes. Therefore, we issue Form 1099 to report our distributions and not Form K-1.

Our vessels are specialized assets with limited replacement risk, and they represent critical infrastructure required by our customers to deliver oil production from projects that have significant upfront investments, long life spans and offer them low marginal production costs.

Most of our vessels have operational flexibility and are capable of servicing many different fields. There are high barriers to entry due to the specialist nature of our vessels, the additional capital cost required, technical specification and crew training required over and above a conventional tanker. We have a diverse set of financially strong contractual counterparties. Our contracts are fixed rate and typically 1 to 7 years. Once in operation, they do not depend on oil price fluctuations and it's our customers that bear the risk of vessel utilization and operational fuel costs.

Our management strategy remains to operate the business with a focus on long-term stability as far as possible and providing our unitholders with an attractive distribution. We have diversified revenue streams, meaning we are not disproportionately dependent on any single contract. Our debt repayment profile means we are paying down around $90 million each year, and we have access to attractive debt finance through a wide portfolio of lenders.

On Slide 5, the income statement, where I will highlight just a few relevant points. For the fourth quarter of 2020, we recorded total revenues of $69.9 million, which is slightly lower than quarter 3, mainly due to the off-hire of the Windsor Knutsen in December.

Vessel operating expenses for the fourth quarter were slightly better than the third quarter, but much of that relates to timing across the fleet. And full year costs were materially on budget despite higher crude costs as a result of the COVID-19 pandemic.

Depreciation held steady and on track. And general and admin costs rose slightly due to transactional activity in the fourth quarter. Interest expense for quarter 4 was $6.1 million, a further decrease from the prior quarter, again, driven by lower LIBOR across -- on average, across all our credit facilities that are not hedged.

On Slide 6, adjusted EBITDA. Adjusting for some of the noncash volatility that comes into the income statement, we are able to report another consistent adjusted EBITDA of $52.9 million, down only slightly from $53.3 million in the second quarter.

Slide 7, distributable cash flow, or DCF, was $28.6 million in the fourth quarter, and the distribution cover at the end of the quarter showed a modest decrease to 1.58 from 1.60. And we again maintained our distribution level of $0.52 per unit, equivalent to an annual distribution of $2.08.

Slide 8, balance sheet. At the end of the fourth quarter the partnership had $73.3 million available liquidity, which consisted of cash and cash equivalents of $52.6 million and $20.7 million of capacity under our revolving credit facility. The revolving credit facilities mature in August 2021 and September 2023.

The partnership's total interest-earning debt outstanding at December 31, 2020, was $1.036 billion and the average margin paid on the partnership's outstanding debt in the fourth quarter was approximately 2.04% over LIBOR.

As of the end of the fourth quarter, the partnership had entered into various interest rate swap agreements for a total notional amount of $516 million, to hedge against the interest rate risks of its variable rate borrowings. In the quarter, we received interest based on 3- or 6-month LIBOR and paid a weighted average interest rate of 1.88% under the interest rate swap agreements, which have an average maturity of approximately 4.3 years.

On to Slide 9. I'm pleased to give you a few more details related to the dropdown of the Tove Knutsen, a picture of the new vessel is on the left-hand side of this page. The vessel is a 153,000-deadweight ton DP2 shuttle tanker, delivered from the shipyard on September 28, 2020, where it then sailed to Brazil and [underwent] a series of approval tests for Equinor and Petrobras as are required for Brazilian operations. It then commenced on its 7-year fixed charter to Equinor on November 27, 2020. And there are a further 13 years of charterer's options attached. And KNOP closed the purchase from KNOT on December 31, 2020.

As stated, this was financed through a combination of internal cash and debt, thus being non-dilutive to our existing equity unitholders. The purchase price was $117.8 million, less $93.1 million of outstanding indebtedness, plus or minus other items typical at closing, such as working capital and fees. We also repaid $6.9 million of the indebtedness at closing, leaving an aggregate of $86.3 million outstanding of the secured credit facility related to the vessel. Given the nondilutive nature of the financing, the [bottom-line] cash contribution from the vessel will directly assist the partnership in maintaining our distribution.

From an EBITDA perspective, EBITDA contribution is to be less than 10% of total partnership EBITDA, keeping our vessel concentration risk down. And I can say that whilst we're satisfied with the projected [figures] from the vessel, its EBITDA contribution will be slightly lower than some of our other vessels, but in return we received a 7-year commitment from the charterer.

On to Slide 10, an update on our contracted revenue and charter portfolio. At the end of the quarter, we had $738 million of contracted forward revenue remaining to the partnership. An average remaining charter period of 2.9 years. Customers have options to extend these charters by a further 3.1 years on average.

I've already talked about the Windsor Knutsen, but here is the situation graphically. You'll see that we currently expect to have no material gaps in the vessel's income until mid-2022 at the earliest and possibly up to the end of 2023, as we expect today.

Bodil, I have also covered already, but it is perhaps also worth mentioning that the vessel is currently undertaking its scheduled drydock, which is going well, and the work is due to complete throughout the end of March 2021.

The Fortaleza, Recife, Carmen, Hilda, Torill, Dan Cisne, Dan Sabia, Ingrid and Raquel are all unchanged on their fixed contracts.

In December 2020, as I mentioned earlier, the partnership secured new 3-year fixed contracts for the vessels Tordis, Vigdis and Lena with a major oil company. The commencement of these new time charters range between May and December 2023. What is hard to show on this diagram, however, is that it is the partnership's choice which of the 3 vessels will be put forward and used under each of the 3 charters. This gives us much more chartering flexibility than seeking opportunities in the intervening periods. So for example, the charter that is currently showing as starting in Q2 2023 against the Tordis Knutsen could instead be matched with the Lena Knutsen.

All 3 charters offer fixed period of 3 years. However, the third charter grants cancellation options to the charterer at the end of the first and second years with penalties payable to the partnership if exercised.

We're now marketing the vessels for short to midterm charter business in the intervening periods shown between the end of the vessel's current fixed charter periods in 2022 and the commencement of the abovementioned new fixed charters in 2023. And this period, on average, is currently estimated to be 15 months for each vessel. Finally, the Brasil and Anna are unchanged, and we have covered the Tove previously already.

Slide 11. Our sponsor, KNOT, now have 6 vessels that could be acquired by the MLP. These have an average fixed contract period of 5.3 years with an average of a further 7.3 years extension options. This high-value list of contracts continues to demonstrate the market's trust in our management team and sponsor and shows that the market is still active.

Given where our unit price is still today, we have no firm plans for acquiring another vessel at this time. However, we are beginning to consider options for later in the year to assess whether a further internally financed vessel is possible. That is without relying on raising new equity.

Our sponsor, KNOT, has shown flexibility in this regard, and we will take a prudent approach to this issue, taking into consideration the long-term stability of the business. And as always, the acquisition by KNOP of any dropdown vessels in the future would be subject to the approval of our independent Conflicts Committee as well as the Board of Directors of each of KNOP and the sponsor, KNOT.

Slide 12. The next couple of slides are to give a little wider context to our business. Our vessels are integral to the long-term offshore-producing assets of our customers. These projects have significant upfront costs to construct and initiate. However, thereafter, marginal production costs tend to be low and field life is typically measured in decades. Our shuttle tankers are critical infrastructure, without which production cannot continue. And shuttle tanker charters are typically only a small component of customers' field operating costs.

The newbuild vessels firm charter periods are typically 5 to 7 years, and the fixed charter rate is not impacted by our customers' utilization of the vessel. Provided the vessel is fully functioning and made available, the fixed rate applies. Also, voyage expenses are a charterer's cost, and this includes all fuel, while the vessel is on-hire. We don't have any direct exposure to the price of oil, and you can see our list of customers are some of the biggest names.

On Slide 13, the total global fleet of shuttle tankers today is 75. If you consider that there are over 800 VLCCs or very large crude carriers in the world and some up to 90,000 commercial ships, this is in part why we say shuttle tankers are a niche business.

There are 2 main geographies, broadly 29 vessels operate in the North Sea, Barents Sea and 37 in offshore Brazil. A few operate in Canada and West Africa, but they're not significant in fleet terms. I also set out on this slide some of the characteristics of the 2 main markets, such as high operational standards and the types of contracts that are most prevalent.

On to Slide 14. This is designed to demonstrate why we are confident about demand and growth in the shuttle tanker market in the coming years and why we think our business has a strong long-term outlook. The main takeaway is that we expect startups to outpace declines. And with very competitive production and lifting costs, we see both Brazil and the North Sea as not only staying in the game, so to speak, for many years to come, but actually growing.

The impact of the COVID-19 pandemic has slightly flattened the growth curve in 2021 and maybe into 2022 through project delays, but growth is still expected. And oil is perhaps rebounding faster today than was predicted even just a few months ago, meaning growth may yet come back sooner than we anticipate. This is also notwithstanding the energy transition and significant forecast growth in other forms of renewable energy.

Whether we reach peak oil around 2030 or not, oil is not about to leave as quickly even after this date. In acknowledgment of this, we are already taking many actions to reduce our own environmental impact and we're working to be among the best in the global shipping industry in terms of minimizing our impact and operating with the highest standards in quality. You can read more on this in our latest ESG report covering 2019, which you can find on our website, and we hope to have our 2020 report completed soon.

Slide 15. So to begin to wrap up, our near-term priorities for the next 1 or 2 quarters are as follows: to continue to operate our vessels safely and efficiently and to ensure the health and safety of our crew and employees, goes that goes without saying; continue to progress discussions with our lenders for refinancings that are due in August and November 2021; secure new charter contracts for the Bodil Knutsen where discussions are already ongoing, and management are confident in the prospects for the vessel; complete the Bodil's drydock on time and on budget; begin to consider options and possibilities for a further internally financed dropdown later in 2021; and continue ongoing close dialogue with our customers concerning operations and chartering and rechartering options and opportunities.

Slide 16. Closing with a brief summary. Another strong and stable operational quarter with 98.6% utilization for scheduled operations. Distributable cash flow of $28.6 million, with coverage of 1.58 and $73.3 million in available liquidity, which continues to give the partnership a degree of flexibility to manage any short to midterm headwinds. We maintained our quarterly distribution of $0.52 for the 22nd consecutive quarter.

We completed the dropdown of the Tove Knutsen in December without needing to issue new dilutive equity. We have $738 million of remaining contracted forward revenue, excluding options at the end of the quarter, up from $585 million. And the partnership's operations are not exposed to short-term fluctuations in oil prices, the volume of oil transported or global oil storage capacity.

Oil production in Brazil and the North Sea from shuttle tanker serviced fields is expected to grow significantly in the coming years. And we remain confident that the partnership is experienced enough to navigate through any short-term market uncertainty, and that the shuttle tanker market's fundamentals and growth prospects remain strong and very supportive over the mid to long term.

Thank you very much for listening, and that concludes the formal presentation, and I'll be happy to take any questions.

(Operator Instructions) The first question comes from Liam Burke with B. Riley.

On the Bodil Knutsen, as it comes off a drydock, would you anticipate it operating in the short-term charter market? Or are you confident that you could secure a longer-term charter?

I think at this moment, Liam, we're looking at all options, and that also includes the contract of affreightment market in the North Sea, which is actually the more prevalent contract type in the North Sea. We obviously have [more] time charters than bareboat charters at the moment. But the North Sea does tend to favor contract of affreightments normally.

So to answer your question, we're actually looking at all of them. And clearly, we've got a preference for a long-term charter. Sometimes they can take a little bit longer to negotiate and close. In which case, we'd be comfortable taking short-term charters in the meantime. But yes, we're targeting long term, but we're not concerned if we also have to take short term.

So on that bridge period between the period of time where you're on a short-term contract until you secure another long-term charter, you're comfortable that generally, the contribution of the vessel will be fairly consistent?

I think that's hard to say right now. I think it would be unfair if I said there's going to be full utilization of that vessel in 2021. I think that's probably unrealistic to say that. I think probably, what I can say is that looking at the math and taking all the moving pieces into account, not just Bodil and absent something catastrophic, I think based on what we see today, we think 2021 is looking okay. And stronger oil prices will really help our customers to make commitments on their tonnage. So I think we're looking at our business in the round. And whilst Bodil is in a challenging position as we sit here today, we're optimistic about it. And as a business as a whole across our entire fleet, as I say, we think 2021 is looking okay based on what we see today.

Great. And obviously, you've got the current debt due. It's nothing new. You've got -- as you mentioned earlier in your prepared comments, options on the lending side. Is there anything different this year than in the past when you've had to refinance current debt?

No, I would say not. The indications and the early discussions we've had with our typical lending group, which is quite broad. No particular new issues are coming out of that for us. Early indications are good. It's progressing, and we obviously will hope to have something more to report as soon as we can. And we'd like to get that closed as early as we can to put that to bed.

The next question comes from Igor Levi with BTIG.

This appears to be the first time I've seen where you guys are using cash on hand as opposed to issuing equity to take a dropdown. So I was hoping you could talk about the upcoming dropdowns in the pipeline and how you guys are thinking about the decision to either issue new equity versus use cash on hand?

Yes. Igor, thank you for that. I think it's not a secret. We want to maintain the preexisting methodologies that we've used in this MLP over the years. The unit price is not there for us right now. Equity markets, too expensive, but it's still our preference. And I think we've seen an upturn in our unit price just recently, which has helped, but it's certainly not got us over the line at this stage.

I think absent that equity, we will look to replicate what we've done on the Tove Knutsen in December. I think for us, that's not something where we can pick up all of the 6 vessels that are in the pipeline. I think that's unrealistic because we will always face the situation of leverage. But in this year for 2021, our first focus is on our refinancing. And then also secondly, making sure that we maintain a sensible leverage. And I think that may allow us later in the year -- late in the year to maybe replicate what we've done with the Tove Knutsen. But at this stage, whilst there are more in the pipeline, it's not something that we can easily do more than probably 1 vessel in 2021.

Okay. And how low are you comfortable drawing down your cash on hand?

Well, we obviously have covenants in our loan agreements, which we're very comfortable with at the moment. I think where we are today, we've got very good liquidity. I don't think there's this specific number that I have to hand -- to give to you. But the covenants in our loan agreements are very comfortable right now. We've got very good liquidity for the business to see us through.

I think I'd rather give you a nonquantitative answer and just say, we'll let our cash flow drop to a point where we still remain comfortable. It's something that has been a hallmark of this business since the IPO back in 2013. But it's been run on a fairly conservative basis to try and maintain that stability. And that's really -- it goes to the heart of everything that we try to do.

The next question comes from Jim Altschul with Aviation Advisory Service.

A couple of things. First of all, the sale-leaseback of the Raquel Knutsen, if that -- that actually -- I know you said that in the Slide 3 that the funds were realized in the first quarter. But I was under the impression that the actual transaction closed at the end of December. But if you look at the balance sheet, I don't see a change in lease liabilities or the corresponding asset figure. Please explain.

Yes. I mean, the accounting is following where we were. And obviously, we've had discussions with our auditors about this. But the arrangement in December were to enter into it, and then we entered into it in January. And the accountant's allowed us to therefore book it in January. To be honest, Jim, there's no deliberate accounting going on there. It's just what happened. We didn't deliberately keep it out of our December numbers. It's just how it happened to fall.

Okay. I didn't mean to imply anything improper, I just...

No. No. No, that's fine.

So I'm -- when we see the March 31 balance sheet, we will see an increase in lease liabilities and in right-of-use assets?

Yes. The disclosures will come in the Q1 numbers.

Okay. And talking about the refinancing of the debt facilities that you have coming due later this year, are those facilities floating or fixed?

The facilities themselves are floating, and then we separately have interest rate swaps against proportions of the debt.

Well, I'm assuming that when you -- I don't know when you entered into those arrangements, but interest rates were somewhat higher than they are today. Do you anticipate -- I mean I don't know how this -- whether you get the same spread on the float - on the underlying floating rate liability. But do you anticipate that because of the general decline in interest rates, you may be able to achieve some savings through the refinancing? I mean, obviously, there are a lot of moving parts that go into it and it's a few months away from closing a deal, but...

Yes. I mean I think we anticipate similar or paying similar margins on our debt. And then underlying that is obviously LIBOR, floating LIBOR. So to the extent that, that's lower, then yes, the total cost of our new debt may be lower than the total cost of our existing debt. But to get to that answer, you have to take into account the swaps that we've got. So I think you've seen over the last few quarters that our interest expense has come down because we don't swap out and fix 100% of our debt today. So we've taken advantage of falling interest rates over the last several quarters.

So I think when we look at the refinance, we'll also look at our hedged position as well. And if we hedge less or if our hedging position changes as a result of that refinancing, then we may be able to carve out some extra benefits.

(Operator Instructions) The next question comes from Ted Lou with Valley Financial Group.

Gary, I just wondered if Shell has any liability with regards to the Windsor?

Ted, the short answer is no. We were -- it's a time charter contract. So we had our own crew on board. We -- and that crew was taking instructions from Shell as to how to operate the vessel, where to go, et cetera. But in actual fact, it's our responsibility to provide a vessel in working order and the crew. So the short answer is no, which is why we are claiming on our insurance.

The last question comes from Robert Silvera with R.E. Silvera & Associates.

Gary, in relation to the dropdowns that you've just done with the Tove acquisition and future ones, I'm trying to get a feeling for it. The Tove when it was brand new, purchased by the parent, how much was that ship -- did it cost?

I'm not sure I can give you that information, Robert, because it's obviously a private contract between our sponsor and the yard. And also, there are various numbers in there that relate to other confidential contracts as well.

Can you give a general figure as to the type of ship and those kinds of -- what kind of numbers take place for that type of ship? I mean you must have a feel for that, even though it's not specific to that contract.

Yes. I mean, I think it completely depends on the specification of the ship, obviously, and the equipment on board. And so it's very difficult to say this ship should have been $115 million, and that ship should have been because actually, unless you understand the specifications, you don't know the starting point. But if I was just -- as a starting point, a sort of basic ship, you might be looking at $100 million without any predelivery finance, without any equipment on board, without any costs of -- transactional costs. That's the sort of starting point in today's market for a shuttle tanker. That's -- I would describe it as basic.

Okay. I'm trying to get a feel because, obviously, the ship was used by the parent for a while, right?

Just for a month, yes.

One month, I didn't realize that we're getting basically a brand-new ship for 100 and -- basically, $118 million. Okay. That better explains it. I'm trying to get a feel for future dropdowns and what they might be in the neighborhood of, and that answers that.

Okay. We've got about $730 million in booked sales, contract sales, with about $1.2 billion in debt, round numbers. How do you see us matching up to the -- to covering the debt? Do you see it with no problem? It's going to be relatively easy? Or do you think the competition with what's going on is going to make that kind of difficult?

I think our -- the average age of our fleet is 7 years, and we expect our vessels today to operate until 25 years. So although we've only, "only" in inverted commas, got $738 million of forward revenue, we've got many years left of life in the fleet. And I think whilst COVID has potentially pushed back a little bit of growth anywhere, 12, 18, 24 months maybe, and you can argue where that line starts and stops. But although it pushed it back, we've got very strong forecast for demand growth for shuttle tankers over the next 10 years, as I showed on the graph. So in actual fact, we are very optimistic about not only closing that gap, but also far exceeding it.

Good. I know because we are a well-run company. And the customers, large customers we have are obviously satisfied with us. You have a 1.58 coverage. Have you given any thought to accelerating debt repayment, which makes borrowing easier in the future, et cetera?

And from what I've seen from some VLCC companies, they have aggressively -- when their rates were higher in the earlier part of 2020, aggressively went after extra debt payments and it made their balance sheets really shine and the price of the stock began to move up nicely as well. So I was curious, are you anticipating any possibility that you might go more aggressively toward debt?

I think the short answer is no. I think we're paying down faster than a straight-line basis today, around $90 million. And that brings our EBITDA leverage down at a better pace. So I think we don't need to do that. And I think in terms of leverage itself, we look at our cash flow. We don't get hung up by sort of arbitrary rules of thumb, if you like. And we're interested in what's a sensible leverage for the business. And I think that's the most financially efficient way to do it.

Okay. Do you see the acquisition, the Tove acquisition as accretive or simply as replacement for ships that might disappear in the future?

No, I don't think any of our ships are about to disappear. So yes, I would definitely describe it as cash accretive to the business because, again, we haven't had to issue any new equity in order to do it, and the cost of debt is quite low. So yes, I'd say, definitely cash accretive to the business.

Okay. Then being cash accretive and building cash, I haven't heard any indication that you want to change the dividend to a higher dividend and you don't want to accelerate debt. What do you anticipate using the buildup of accretive cash, the use for it?

I think when you look at our cash profile over the last few quarters, I mean, it's very healthy. It hasn't grown substantially. We pay out a very healthy yield at the moment. We pay off a lot of debt. And we also need -- we're conscious as an MLP. Our secondary objective is to grow the business.

So I think in the current climate, I don't think it's right for us to increase the distribution. That's not to say we wouldn't in the future. But given the short-term headwinds that we've got, principally because of COVID and lower oil prices and some of the growth being pushed to the right, a lack of access to equity, new equities is something that we have to just all bear in mind is the whole picture. And I think whilst having a very prudent outlook and a healthy cash balance, I think is what will see us through this sort of next few quarters.

Okay. Well, I'm very glad that you did it without the issuance of any equity. I was very pleased by that decision on your Board's part and your part. And thank you very much, Gary, for doing a good job. I really enjoy the dividends and look forward to the business growing by your accretive acquisition of Tove.

Yes. Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Gary Chapman for any closing remarks.

Thank you very much, and thank you, everybody, for listening. And if -- please do reach out to us if you have any further questions. Otherwise, have a good day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.