Hecla Mining Company (HL) Q3 2020 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Third Quarter 2020 Hecla Mining Company 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] I would now like to hand the conference over to your speaker today, Russell Lawlar, Treasurer of Hecla. Thank you. Please go ahead.

Thank you, operator. This is Russell Lawlar, Hecla's Treasurer. Welcome, everyone, and thank you for joining us for Hecla's third quarter 2020 financial and operations results conference call. Our financial results news release that was issued this morning before market open, along with today's presentation are available on Hecla’s website. On today's call, we have Phil Baker, Hecla’s President and CEO; Lindsay Hall, Senior Vice President and Chief Financial Officer; Lauren Roberts, Hecla’s Senior Vice President and Chief Operating Officer; Kurt Allen, Director of Exploration; and Keith Blair, Chief Geologist. Any forward-looking statements made today by the management team come under the Private Securities Litigation Reform Act and involve risks shown on Slides 2 and 3 in our earnings release and in our 10-Q and 10-K filings with the SEC. These and other risks could cause results to differ from those projected in the forward-looking statements. Reconciliations of non-GAAP measures cited in this call and related slides and cautionary language for our use of the term resource instead of reserves are also found in these documents. With that, I will pass the call to Phil Baker.

Thanks, Russell. Good morning, everyone, and thank you, for joining our call. I'm going to start on Slide 4 and I want to start by commending our management workforce to their resiliency and commitment to operating safely, including the way they've dealt with the exposure to COVID. This resiliency and commitment has really allowed Hecla to deliver very strong operating and financial results this quarter. So strong than in our history we've never generated as much EBITDA, this was $75 million this quarter. And only four times in our history has the free cash flow been higher. This reflects the quality of our silver mines, particularly Greens Creek. Part of the reason we generated so much free cash flow is that our capital requirements are generally low. So with the $50 million of free cash flow, what we use that to repay our revolver, we put cash on the balance sheet and we announced 250% increase in this quarter's dividend. That's a 50% increase in the base and the rest is the fact that we triggered the new level for the silver-linked dividend. Before I hand it over to Lindsay, I want to highlight two of our ESG programs that focus on the social element of ESG that supports our communities. And nothing is more important than that support because frankly, Hecla has been part of these communities for decades. The first program is something we call Hecla Bucks, where we support local business by giving employees vouchers that they can spend with the businesses that are in our local business organization, most of them are Chamber of Commerce, which is a big success by providing an injection of spending into the local economy as they deal with the pandemic. The second program which we are doing with core mining is bringing COVID-19 lab that does PCR testing to Juneau. It’s surprising that the capital of Alaska doesn't have adequate testing, but they don’t. When you get tested, the test has to go to the lower 48, so it takes three days to know the results. So we have brought a lab to Juneau. And decision to testing our employees, which is going to allow us to shorten our quarantine time, we are offering key government organizations like first responders the opportunity to get one-day turnaround. And this is going to be critical when the legislative session starts in January. I think we're making a real difference over and above being the largest private employers in these communities. And with that, I'm going to pass it over to Lindsay. Go ahead, Lindsay.

Thanks, Phil, and good morning, everyone. Starting with Slide 6. During the third quarter, our assets performed quite well. We recorded some $200 million of revenues for the quarter at a realized silver and gold price per ounce of just over $25 and $1,929. So we capitalized on the favorable precious metals environment. We found ourselves in capturing much of the increasing margins this quarter. Led by Greens Creek, we produced consolidated free cash flow of $49.7 million, resulting in our cash position of just less than a $100 million at the end of the quarter. Solid cash generation and a record high adjusted EBITDA combined to also reduce our net leverage ratio to less than two, while providing a liquidity position of nearly $350 million. As Phil mentioned, our silver price linked dividend was triggered and our declared quarterly dividend increased by 250% returning some of these cash flows to our investors. Turning to Slide 7. All of our assets generated positive free cash flow this quarter with the exception of Lucky Friday, which was expected given its ramp up activities. The Lucky Friday ramp up is ahead of schedule and we expect to see positive free cash flow generation in the fourth quarter. This is important to us financially because in the first nine months of the year, cash flows from Lucky Friday where a negative $24 million. Net income for the third quarter was $13.5 million driven primarily by improved gross profit at all our assets except Casa Berardi, which was impacted by longer than planned mill downtime early in the quarter for major maintenance activities. Combined our operations generated $53.5 million gross profit with our low cost profile enabling us to capture growing margins in this rising commodity price environment. Cash provided by operating activities was approximately $74 million for the quarter, and we spent some $24 million in capital expenditures as we continue to invest at our mine sites. With no large capital expenditures insight, low cash costs and a positive precious metals environment, we expect to continue to generate significant free cash flows further deleverage the balance sheet, invest in our assets and exploration properties while returning an industry-leading silver dividend to our shareholders. With that, I'll turn the call over to Lauren to go through our operations.

Thanks, Lindsay. First and most gratifying is that our safety performance continues to be exemplary despite the distractions caused by the pandemic. As you can see on Slide 9, we have a year-to-date all-injury frequency rate of 1.02, which is a 78% reduction over the past six years and a 14% reduction compared to the same metrics last quarter. I am very appreciative of the hard work and focus from our operations teams that delivers these results. At the Greens Creek mine, we saw silver production of 2.6 million ounces and 13,000 ounces of gold at an all-in sustaining cost of 784 per ounce. As shown on Slide 10, that generates a margin of 223% when compared to the realized price of 25.32. As Phil mentioned earlier, we partnered with a COVID lab to provide real-time testing services for our employees. We expect this service to shorten the quarantine period, save money and reduce the burden on our employees. We envisioned this being a short-term solution until local testing capacity increases. This will be the first commercial laboratory established in Juneau, while the capacity is dedicated to Hecla, there is room in the agreement to work with local authorities to address community needs as well. I am pleased to announce that ramp up activities at the Lucky Friday continue to be ahead of schedule and we anticipate hitting our full production rate in the fourth quarter. At this pace, we expect production in excess of 3 million ounces of silver in 2021. Grade is expected to improve as we mine deeper, increasing the projected production to around 5 million ounces annually over the next three to five years. The best part is that no significant planned capital outlay is required to achieve this goal. In addition, we are looking at various mining method changes and other initiatives to improve safety while increasing the productivity of the mine. At the Casa Berardi Mine, we saw a production of 26,000 ounces of gold at an all-in sustaining cost of $1,868. Lower gold production and higher cost in the quarter were due to planned mill maintenance activities and delayed access to two high grade underground stopes. Work to improve the reliability of the mill was in full swing throughout the quarter. In July, we took about 12 days to conduct planned heavy maintenance on both of the grinding mills. The work was scheduled for about nine days, but ran long primarily due to some complications with the in-situ machine work and night shift coverage from some of the support contractors. As you can see on Slide 12, the work was extensive. It included machining to feed in trunnion flange and replacing the trunnion on the Sag Mill, replacing Babbitt bearing and seals by both mills, maintaining the gear shaft or related work best conducted while the mills aren't operating. Work was conducted in parallel on the crushing and conveying systems, the CIL train and the detox system. As we said before, this is not a short-term exercise, but it's an important one to set ourselves up for the future. We are through the biggest jobs and we are starting to realize the fruits of our labor. In October, the mill delivered 90% availability, including scheduled maintenance outages. Gold production also was impacted by geotechnical challenges that delayed several high-grade stopes in the West Mine, which now will be produced in the fourth quarter. To mitigate this risk in Q4, we redirected development resources to focus on stope development to have more stopes available to secure the underground production. High-grades also are anticipated from the East Mine for the balance of the year. Stripping is underway and progressing well at the new 160 pit. Initial ore production is expected from the pit late in 2021. Unfortunately, the permits necessary to start were received about a month later than expected. We utilized the contractor to strip the extension of EMCP pit during this time, which resulted in higher operating expenses compared to budget. At San Sebastian mining concluded in the third quarter and we anticipate the milling to be complete in the fourth quarter. San Sebastian with its very low capital demand has been a successful operation for Hecla, and I want to take this opportunity to thank the San Sebastian team for a job well done. In Nevada, we have substantially completed mining of the developed oxide ore, and currently are mining the refractory ore bulk sample, which we anticipate delivering to a third-party for processing. I'm happy to report that the mining has progressed well with the ground conditions, water inflow, productivity and cost all being better than planned. The ore is more structurally controlled and less disseminated the model which we view as positive. We anticipate recognizing this mine to ores produced in 2021 once it is processed. Both San Sebastian and Nevada provide rich exploration opportunities. I'll now turn the call over to Phil to give more detail on how these exploration programs are progressing.

Thanks, Lauren. And we will turn to Slide 15. We’ve increased our guidance for exploration to $16 million for the year with about $8 million of that being spent in the fourth quarter and $16 million is about what we had intended to spend at the start of the year, but backed off because of COVID. So in the fourth quarter, we'll spend about a $1 million at Casa, $1 million at San Sebastian, and in San Sebastian, we’re following up on the new veins that have been discovered with ore grade mineralization. You can see that on the left hand part of the slide that shows San Sebastian, and you see that’s not very far from where we've been mining. Now more than half of the fourth quarter spending will be in Nevada, and with the majority of that being at Midas, which is shown on the slide on the left or on the right rather. We can easily drill the Midas targets from surface, so that's one of the reasons why it's been prioritized. And we have already started drilling to the North and the South of Colorado Grande vein, where most of Midas’ production has come from and we've expanded the plan of operations, so we can drill the East Graben Corridor, which has never been explored. So now looking to Slide 16. This is our update on guidance and this is a little different – shows this a little differently than press release because here we are comparing the current guidance to what our guidance was before the pandemic. Because our silver assets are in the United States, we've never had to shut them down and with the better grades at Greens Creek and the strong performance at the Lucky Friday, we are producing about a 1.5 million more ounces than, than we thought we would at the beginning of the year. Costs are slightly higher because of COVID, but the volume more than covers it. Gold is about 10,000 ounces less about what we lost with the Quebec shutdown and costs are about a $100 per ounce higher and capital is down for the year, but up from last quarters guidance. Overall, I'm very, very happy with the progress we've made this quarter. The results that company has just reflects that. And I expect the fourth quarter to be similar to the third quarter with more gold production and about the same level of silver production. With that, I'd like to open the line for questions.

[Operator Instructions] Our first question comes from the line of Heiko Ihle with H.C. Wainwright. Your line is now open.

Hey guys. Thanks for taking my questions and congratulations on progressing through all this pretty well.

Thanks.

I guess part of that is also common, but just building a little bit on what Lindsay said earlier in regards to pricing. I mean, I noticed your average gold and silver prices year-to-date through September are 19.72 and 17.45 an ounce as per Page 5 of the 10-Q. Both of those prices are obviously well below what we currently create even with today's COVID vaccine decreasing prices. You do have some hedging in place in your Q lays up pretty well, what it is? But just thinking ahead, should we expect more hedging in your future? And building on that, as your willingness to hedge increase given the high volatility we faced this year?

Well, the short answer is, Heiko, we've had a hedging program in place or precious metals for lead and zinc rather since 2009, and we've been very consistent with that program. And I don't see any major change happening in that program. We've also consistently hedged the shipments when they're leaving Greens Creek in order to take the revenue that has been booked and make sure that we don't lose that revenue, should we have a drop in the future. The thing that we've done just for a short period of time was the purchase of pits or gold and silver. We started that in 2019. We did it in anticipation of the need to do the refinancing. We did that refinancing and we have not put in really any positions since the second quarter of this year. So is it possible that we'll put in more pits in the future? It's possible, but the volatility in the precious metals is quite high. So the cost of those pits are very high. So it's not a fundamental piece of our strategy. It is something that we will do if we see – I realized Heiko, we don't have big capital outlays, we've got low costs. We've got cash on the balance sheet. We have an undrawn revolver. So we have a lot of financial flexibility now that we didn't have when we put those pits in place a year ago.

Great. That makes a lot of sense. I can't help myself to ask another question related to COVID. Assuming a vaccine starts getting distributed in the next, whatever it is, 90 or 120 days, will these do anything to your outlook at any of the sites on an asset-by-asset basis? I mean this whole topic dominates news that dominates politics even, what impact do you think we'll see asset-by-asset please?

Well, I don't think there'll be much impact from a production standpoint. I think we've been very, very successful at putting in protocols that work. I think where we'll see some benefit is a reduction in costs. We won't have to incur all of the – for example, the quarantine process that we go through at Greens Creek. At this point, we have people that are having to quarantine for a week, and of course, they get paid during that quarantine period. And so that would be a cost that would be eliminated. Lauren, anything to add to that?

No, the most significant cost is that at Greens Creek and there are also some management costs at Casa that it would be a pleasant reduction in cost. But I think basically the only other thing I would add is that it derisks our business a bit more.

And arguably [indiscernible] a little bit. Sorry, go ahead.

Yes. No, I just – any other questions Heiko?

No, that was all mine. Thank you very much. Stay safe.

Thanks a lot. Appreciated.

Our next question comes from Trevor Turnbull with Scotiabank. Your line is now open.

Hi, Phil.

Hey, Trevor.

I just wanted to ask about – a little bit of a follow-on, on what Heiko was asking with respect to costs. In your press release, you had a nice breakdown of your 2020 cost outlook, cost of sales by asset in millions of dollars. And that's actually very helpful. So when you look at something like Greens Creek, going forward you’re budgeting, I guess, $215 million this year. I'm just wondering, say in a year without coronavirus, what does that number look like going forward? I mean, have you seen something like 5%, 10% of your costs attributable to what you've had to do to mitigate the virus? Or can you just speak a little bit to that 250% number and how that looks say going forward into the future?

Sure. Lauren, why don’t you answer that.

Sure. Thanks, Phil. And Trevor at Greens Creek, I think, one way to look at this is its round numbers, it’s about a $1 million a month for us to do manage COVID the way we're managing it, additional costs, and at Casa Berardi, it's around $300,000. You lump in the rest of the mines, there's probably some knock on effect, call it a $1.5 million a month. This should come out of the cost structure. I think the only other thing I would add is that it does impact our ability to operate as flexibly as we like. So I think once the restrictions are removed, you'll see us be able to capitalize on opportunities more effectively.

Okay. So then just looking at that, like, say you take Greens Creek, which they might had a pretty normal year other than having to introduce these protocols and Casa. Are those numbers fairly steady? I mean, are they a good proxy moving forward to think about for run rates?

Yes. I mean, in fact, if you go back and you look at us historically, the cost structure in terms of the dollars that we have spent has been pretty consistent in the aggregate, including everything and capital, the whole ball of wax. And Russell, you can help me with this – this is roughly around $0.5 billion is what we have spent.

That's correct.

Okay.

So I think you can anticipate it's going to be something in that range in the future.

Okay. And I appreciate you're trying to speak a little bit high level and not get too granular. But maybe just one last question on this. It looks like kind of backing into your guidance and what's left to spend in Q4 that Lucky Friday – seems like it's about $17 million or so for Q4. Is that number kind of move around as you get to the full run rate in terms of having to bring on more people or anything or is that a pretty good number as well for the Q4 number for Lucky?

We have a bit more capital than we would typically have in the quarter and we have just maybe slightly less production than we would typically have. We are still – well, we’re up to sort of historic levels of production. I mean, we'll be somewhere around 700 tons to 800 tons per day. We can probably get to 800 tons to 850 tons a day in the future. And what happens as we get these sand cycles where we don't have the sand availability to do the backfill, which slows down the production and so we experienced that in the fourth quarter. And it takes a bit of time of being in operations for that to smooth out. We always had a little bit of that, but it's exacerbated when you restart.

Understood. Okay. That's all I had. Thank you, Phil.

Sure. Trevor.

[Operator Instructions] Our next question comes from the line of Mark Mihaljevic with RBC. Your line is now open.

Hi. Thanks. Good morning, guys. Nice quarter to view. I guess first off, can you kind of walk us through how you're thinking about the longer-term potential at San Sebastian and in Nevada all these year kind of expanding the exploration programs now, kind of when do you think we could get an update on potential restart to both of those operations and again, kind of how you're thinking about them in the medium-term?

So with respect to San Sebastian, it's much like where we were in 2013, 2014, we're in an exploration phase. We have a base of known resource, but we don't see it being economic enough to move what we know forward. So we're going to add more to the base. And how long that will take is unclear. Certainly, the vertical RC drilling that we do, where we go through the first 10 to 30 meters, Kurt, of top soil and hit the bedrock and sample it where we're identifying veins in a way that we were not able to do five years ago. So those veins that have been discovered had been discovered just in the last quarter, quarter and a half. So we're optimistic that we'll find more mineralization. We've hit with the drilling that we've done. There's been an ore grade hits, but we've not been able to piece together something that is an orebody. So it’ll get us time, but we think it will be faster than it was the last time we went into the exploration mode there. With respect to Nevada, we haven't stopped mining there. We're continuing to mine the Type 2 ore. We've got the stockpile. It's now ready to go to Nevada gold mines. We're working through the process of doing that. We would anticipate that that material will be shipped before the end of the quarter and we’ll be testing. We’ll get the results of it. We'll have another shipment that will be prepared to ship in 2021 and we'll see where we are once we do that. We're also doing – there is some continued exploration that's occurring. We've got some development to do to be able to really put ourselves in position to the exploration that we need to do at Fire Creek. So just in term, if we knew what the future would be with this Type 2 ore, we would tell you, but it's still open. We got to see what the results are, and actually processing the ore before we make a commitment as to where it's gone.

Okay. Perfect.

In the meantime, we'll continue to mine it and stockpile it. There's some risk associated with that, but it's not a huge risk.

Yes. No, that makes sense. And thanks for the color on that. I guess just kind of digging into the San Sebastian a little bit more, how do you see – like, obviously you’re able to bring in a price for bringing the initial operation back in for very limited capital of the full milling strategy that you employed there, kind of how do you see that? Do you think that's still a viable alternative or the mill starting to fill up given where the gold prices are? And the bar might be a little bit higher because you need to invest in your own infrastructure or do you still think that that would be a preferred alternative?

I think it's very viable. There are a number of mills that need feed. You double the prices, maybe it’s – I don't know what the number is, but you increase the prices. Maybe you do get to that point, but we are a long way from that point with the mills being filled.

Okay. Perfect. And then moving over to Casa, obviously pretty big maintenance going on through the quarter, and then obviously some of the stope issues kind of – you commented the changes you've made now are going to get over the hump in terms of both getting a little more consistent throughput and both through the mill and making sure you've got good stope availability, obviously you're also moving into the East Mine. So should we really see a big inflection in Q4 or is that a Q1 story? How should we think about that in the near-term?

Well certainly, we feel confident that will hit our guidance that we've given. And we've certainly seen a very strong October, but an October doesn’t make a year. So yes, let's give it some time to see the performance and make sure that we've made the modifications that needed to be made to have the consistency. And that's been the real issue with Casa. It's never been a drag on cash flow, but it's inconsistently providing the positive cash flow. They spend a few years where it's rivaled Greens Creek. But for the most part, it has not delivered the cash flow that we would expect. And we think that by doing these things, we're increasing the potential for that to happen. And we think it could happen in 2021, but let's wait and give it some time to get the – proved itself. Lauren, anything to add?

No, Phil, I think you captured it well.

Okay. And then just a final one for me just down at Lucky Friday. Nice to see the operation coming along and kind of ramping up better than you’re expecting. Kind of how are you thinking about the Remote Vein Miner now? Is that still part of the medium-term plan? And kind of what's the update there?

Well, with COVID, we've not been able to have people on the ground to see the work that's been done. And with COVID, the Swedes have really cut back their work schedule. So the amount of activity has been less. So we are not pushing that where we'll wait for things to kind of clear so that people can get over there, so they can get their work done. And I would anticipate in 2021 that will be completed and we'll be able to bring it over, and then start testing it at the Lucky Friday. But in the meantime, we're testing alternative mining methods at the Lucky Friday that could – on its own make an improvement and could also be beneficial to the RVM, when we bring it over. Lauren, anything to add to that?

No. That’s it.

Yes, perfect. Thanks. That's it for me.

Okay. Thanks, Mark.

Our next question comes from the line of Lucas Pipes with B. Riley Securities. Your line is now open.

Hey. Good morning, everyone. Very good job. And wanted to ask a little bit more about the capital allocation policy. Very good to see the increase in the dividend and also the silver price linked dividend on top of that. But kind of going forward from here is how should we think about your capital allocation priorities? Is that returning more capital to shareholders? Is that for the deleveraging? And of course, you've done progress there too. Could there be room for M&A? I’d just really appreciate your thoughts on this. Thank you.

Sure, Lucas. So what you have seen over the last quarter is I think what you will see in last quarter and what we've guided for the fourth quarter is what you'll see in the future. We'll put more cash on the balance sheet. If you think back of Hecla over the last decade, we have on average, I don't know, had $150 million to $250 million of cash on the balance sheet. I think you can anticipate us having something in that order of magnitude. We've now gotten to just add a $100 million. That's kind of our minimum level that we'd like to have. We have the revolver undrawn. We don't like to utilize the revolver. So anticipate that. Number two, we've got these dividends that we've announced. We'll hopefully see that silver-linked dividend continuing to pay number and maybe in the future, you'll see even more. As Lucky Friday ramps up, if Casa continues to improve, if we see Nevada working, maybe you'll see us be able to increase the dividend yield that we provide. You're going to see us expand the exploration spend. We're now back to about what we thought we would have at the beginning of the year. I think you can anticipate next year a bit more exploration spend. Capital, we’ll get a piece of things, but the reality is we don't have big capital needs at any of our operations. So don't expect a huge sort of capital spend. And then as far as M&A goes, we're certainly always in considering it, but cyclically, we've never had as many opportunities within our own portfolio as we have today. So it's not the highest of priorities.

Very good to hear. Thank you for that additional color Phil. And then you touched on exploration, that's my second question. You mentioned you have a quite a few opportunities internally. And if you had to rank the exploration opportunities either at existing operations or non-developed ones, can you do that? Would really appreciate your thoughts on that. Thank you.

Yes. I'll just say that we've got the challenge of having a number of things that are almost of equal attractiveness to us. We're fortunate that we – the exploration that we have at our existing operations are building off of existing infrastructure. And so those are attractive for no other reason then the capital efficiency is so high. But why don't I let Kurt respond from, I guess, a geologic perspective.

I think from a geologic perspective, Nevada obviously ranked high its location, whether it's Midas, Fire Creek, Hollister, and even Aurora. San Sebastian has – it’s located right in the heart of the Mexican Silver Belt and geologically it is very exciting and some of the things that we've been finding are going to go forward in the future. .:

And the last thing, I'll mention Lucas on the exploration is we're anticipating receiving the authority to be able to go underground at Rock Creek and Montanore are really on the Montanore side. And if that occurs then what you'll see us do is develop the incline to allow us to do drilling there. And while you might not view that as pure exploration because it really is moving the resource into reserves, I just think we'd even miss not mentioning that.

Yes. That's good to hear and appreciate that. Everybody, best of luck and keep up the good work.

Thanks, Lucas.

Our next question comes from [indiscernible]. Your line is now open.

Hi, Phil, Lindsay, Lauren. I have a question and then two comments. What did you say about CapEx at Casa Berardi, I didn't hear it clearly?

I didn't say anything specific about CapEx at Casa Berardi, but all of our operations have a pretty minimal amount of capital expenditures in the future including Casa Berardi.

Okay. And two comments, one, I picked up from a conference call before you, a fertilizer company, called Mosaic. And they had the shot for $100 million of savings and expenses. I got so many useful suggestions from their employees that they're not only going to overshoot the $100 million. For the next two years, they think they can find another $200 million. So my point is, ask your employees at Casa Berardi for some ideas, you'd be surprised. They said these things have a very little or no capital costs. You might be surprised by – in fact, I know you'll be surprised by what the employees suggest to save money at Casa Berardi. And the second is, as to hedging gold and silver, when it goes down after the fact people ask why you didn't do it. And then if you did hedge, people ask why are you hedged? You missed all the upside. So don't be sensitive to second guessing questions about hedging, either you do or you don't, you can't have it both ways.

Yes. So let me respond to the second thing first. And that is when you do not sell upside on our [indiscernible], we just don't do it with respect – with the exception of stuff that's on a ship. Otherwise there is no real hedging of where we sell. So we don't do a costless…

[Indiscernible]

We don't do a costless caller because it's not costless if prices go up. We don't sell forward the precious metals, so that's number one. Number two, with respect to asking the employees and improvements at Casa. We certainly do that. And in fact, we have a very structured program, but we're still, I don't know, we're probably halfway through the implementation of it. And we'll see what we conclude the results will be and we'll inform everyone of that in the next – if not next quarter or the following quarter I would expect on midyear next year, one way or the other.

There'll be lots of little suggestions and that don't have to be massive, but when they add up the way these people at Mosaic said, you’ll be surprised – they were surprised. So none of them requires big CapEx, so it sounds like a double win for you guys, when these people are incentivized.

Yes. We've got that. Thanks.

You're welcome. Thanks guys.

There are no further questions in queue at this time. I'll turn the call back to Phil Baker for closing comments.

Okay. Well, thanks everybody for participating on the call. As I said, this was a very good quarter for the company. I anticipate the fourth quarter to look similar to this quarter. And so with that, I'll obviously be very pleased to be talking to you again at the end of the quarter to announce that. So thanks very much for your participation. And if you do have any questions, feel free to give me a call or Russell a call, and we'd be happy to walk through things. Thanks everybody.

This concludes today's conference call. You may now disconnect.