Kaiser Aluminum Corporation (KALU) Q3 2023 Earnings Report, Transcript and Summary

Greetings, and welcome to the Kaiser Aluminum Corporation’s Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kim Orlando, with ADDO Investor Relation. Please go ahead.

Thank you. Good morning, everyone, and welcome to Kaiser Aluminum's Third Quarter 2023 Earnings Conference Call. If you have not seen a copy of our earnings release, please visit the Investor Relations page on our website at kaiseraluminum.com. We have also posted a PDF version of the slide presentation for this call. Joining me on the call today are President and Chief Executive Officer, Keith Harvey, and Executive Vice President and Chief Financial Officer, Neal West. Before we begin, I'd like to refer you to the first four slides of our presentation, and remind you that the statements made by management and the information contained in this presentation that cause forward-looking statements are based on management's current expectations. For a summary of specific risk factors that could cause results to differ materially from the forward-looking statements, please refer to the company's earnings release and reports filed with the Securities and Emission, including the company's annual report on Form 10-K for the full year ended December 31, 2022. The company undertakes no duty to update any forward-looking statements to conform the statement to actual results or changes in the company's expectations. In addition, we have included non-GAAP financial information in our discussion. Reconciliations to the most comparable GAAP financial measures are included in the earnings release and in the appendix of the presentation. Reconciliations of certain forward-looking non-GAAP financial measures to comparable GAAP financial measures are not provided because certain items required for such reconciliations are outside of our control, and/or cannot be reasonably predicted or provided without unreasonable efforts. Any reference to EBITDA in our discussion today means adjusted EBITDA, which excludes non-run rate items for which we have provided reconciliations in the appendix. Further, Slide 5 is a new slide, which contains definitions of terms and measures that will be commonly used throughout today's presentation. At the conclusion of the company's presentation, we will open the call for questions. I would now like to turn the call over to Keith Harvey. Keith?

Thanks, Kim, and thank you all for joining us for a review of our third quarter 2023 results. Before we discuss our results, I'd like to remind everyone that we recently released our 2022 sustainability report, which reflects the alignment of our strong corporate governance practices with new and continuing investments to support our key sustainability initiatives that we believe will serve as the foundation of our long-term success. Importantly, aluminum is infinitely recyclable and our aluminum semi-fabricated products uniquely position Kaiser to contribute to efforts to mitigate climate change. We are proud of our employees and the work they have done to advance our sustainability programs and drive our long-term growth. We look forward to sustainability continuing to play a pivotal role in our business strategy and making a positive impact on the environment and the communities where we live and work. Now turning to Slide 7. Operationally, we have continued to make tremendous strides on our strategic plan to reinvigorate longer-term sustainable and profitable growth. While short-term factors such as destocking and persistent inflation have impacted our performance, we were pleased to report third quarter results largely within our expectations. Our third quarter adjusted EBITDA decreased approximately 25% over the second quarter of 2023 to approximately $48 million, slightly above our outlook to be similar to our first quarter 2023 results. The decline was primarily due to continued destocking and inflationary costs, which offset the benefits of our efforts to lower cost across the platform and rising in aerospace demand. As a result, our EBITDA margin declined by approximately 350 basis points sequentially over the second quarter of 2023 to 13.3%. Turning to Slide 8. The demand environment for the third quarter remained mixed. Aerospace demand was once again very strong and has been steadily recovering towards the peak levels we experienced prior to the pandemic. We delivered third quarter conversion revenue in line with our outlook as we continue to benefit from flexing our available capacity in our Trentwood facility to capitalize on strengthening aerospace demand as general engineering demand remains soft. This unique ability to flex our capacity, coupled with our strong customer relationships, high-quality product offering and multiyear pricing agreements, positions us well to service the aerospace market for years to come. In packaging, destocking with our beverage customers persisted but appeared to be slowing. While signs emerged late in the quarter that destocking in our beverage offerings appear to be stabilizing, we saw coated food products, which make up a considerable amount of our shipments and had remained stable through the first half of 2023, enter into a destocking phase. As a result, both our shipments and conversion revenue underperformed versus our expectations in the quarter. Turning to Slide 9. In general engineering, reduced demand for plate along with increased availability from imports continued into the third quarter. While our KaiserSelect products command a premium and are preferred by many OEMs in our markets, we expect pricing for these products will be under pressure until semiconductor demand returns. Destocking for general engineering long products appears to be ending as distributor inventories have began to normalize and align with current demand. The resultant sequential declines in both shipments and conversion revenue came in slightly better than our expectations. And finally, automotive demand continued to be mixed as supply chain issues and now uncertainty due to the UAW strike, continued to offset fairly good demand. Both shipments and conversion revenue were down slightly, more than anticipated versus the prior quarter. Turning to Slide 10. I'd now like to turn to an update on our packaging business at the Warrick facility and our strategic plan to improve our performance as we continue to recover from the various challenges we faced. We have previously shared this slide in the fourth quarter of 2022 and wanted to provide an update with where we were currently on our priorities for Warrick. While we've been successful in our efforts contractually with customers, positioning us for higher margin potential, rising inflationary costs and challenging short-term demand issues continue to impact our ability to improve efficiencies in our operations in a meaningful way. We continue to work with our customers, suppliers and team members at Warwick to normalize our operations and drive consistent longer-term profitable growth. As part of our strategic plan, we remain committed to completing our roll coat capacity expansion project which is expected to convert roughly 25% of our current output to higher-margin coated products. As we've stated previously, coated products drive roughly three times the margin benefit versus traditional body stock products. This investment remains on track to be operational and qualified by the end of 2024 with substantial new customer commitments already in place. When we initially announced our acquisition of Warrick, the capital investment for our fourth roll coat line called for an approximately $150 million of investment. However, as we have previously alluded, impacts from increased inflationary pressures on labor, material and other costs have led to higher spending required to complete the investment. As a result, we now expect an additional $100 million of incremental cost will be required for the completion of this project for a total expected outlay of approximately $250 million. To date, we have invested approximately $140 million, with the remaining expected to complete the project to be spent over the next nine months. While this exceeds our initial expectation from two years ago, the returns on the total investment are still expected to exceed our cost of capital. This project remains an important component of our focused higher-margin packaging strategy. In addition, we are continuing to make progress with the physical separation of our Warrick facility from the adjacent Alcoa smelter and power plant, which we anticipate finalizing sometime in early 2024. This long-planned separation provides us the opportunity to significantly improve the sustainability of our products at Warrick by increasing our use of recycled materials as a percentage of raw materials. Although destocking has created short-term headwinds, as we seek to stabilize and grow our packaging operations, we maintain a very positive longer-term view on the business. Our already strong position in the higher-margin coated products for food and beverage markets will only improve once the additional coated capacity comes online. The secular shift to aluminum as a substrate of choice in the North American beverage and food industry continues to flourish. And as market forces shift, Kaiser remains very well positioned to be a significant beneficiary. In summary, I'd like to thank our strong team at Kaiser for their commitment to serving our customers and for their execution of our strategic plan as we continue to navigate a challenging market. Despite current headwinds, we remain optimistic our long-standing reputation, strong customer relationships and competitive position in the markets we serve will provide strong near and long-term tailwinds. In particular, we are uniquely positioned to service the growing aero and high strength market with the recovery significantly surpassing our initial expectations. That, coupled with our ongoing cost-reduction efforts and efficiency improvements will help ensure we are well positioned for future growth. I'd now like to turn the call over to Neal for more detailed analysis on the quarter. Neal?

Thank you, Keith, and good morning, everyone. I'll begin on Slide 12 with an overview of conversion revenue. Conversion revenue for the third quarter 2023 was $357 million, an increase of $35 million or 11% compared to the prior year period. Looking at each of our end markets in detail. Aero, high strength straight conversion revenue totaled $134 million in the third quarter of 2023, reflecting a 72% improvement on a 69% increase in shipments over the prior year quarter. Compared to the second quarter of 2023, we delivered a 3% improvement in conversion revenue as expected on a modest increase in shipments as demand continue to strengthen towards peak levels. Packaging conversion revenue was $118 million in the third quarter, down 9% year-over-year. While shipments reflect a 5% improvement over last year's period, which, as a reminder, was impacted by our magnesium-related declaration of force majeure, ongoing destocking in the market, primarily for coated fruit products in the third quarter negatively affected our results. On a sequential basis, third quarter conversion revenue was down 12% on a 5% decline in shipments over the second quarter of 2023 as the mix was more heavily weighted towards lower body stock versus coated products. General engineering conversion revenue for the third quarter was $75 million, down 16% year-over-year due to a 24% reduction in shipments as destocking, primarily for plate products persisted. Sequentially, conversion revenue was down 8% on a 6% reduction in shipments compared to our second quarter results which as noted by Keith, was slightly better than our expectations. Automotive conversion revenue was $28 million, up 16% over the third quarter of 2022 and a 6% increase in shipments due primarily to higher pricing. Compared to the second quarter of 2023, conversion revenue and shipments both declined by 8% due to the impact of industry supply chain issues and uncertainty around the UAW strike. Additional details on conversion revenue and shipments by end market application can be found in the appendix of this presentation. Now moving to Slide 13. Reported operating income for the third quarter of 2023 was $19 million. After adjusting for corporate restructuring costs and other non-run rate items of approximately $1 million, adjusted operating income was $20 million, up $17 million year-over-year and down $17 million sequentially. Our effective tax rate for the third quarter of 2023 was 2% compared to 33% in the prior year period due to discrete items taken during the quarter. For the full year 2023 and over the long term, we continue to expect our effective tax rate before discrete items to be in the low to mid-20% range under current tax regulations. We anticipate that our 2023 cash taxes, for foreign and state taxes, will be in the $2 million to $3 million range with no US federal cash taxes until we consume our federal NOLs, which as of year-end 2022 were $161 million. Reported net income for the third quarter of 2023 was $5 million or $0.34 per diluted share compared to a net income of approximately $3 million or $0.16 per diluted share in the prior year quarter. After adjusting for a total of $3 million of pretax non-run rate items, adjusted net income for the third quarter of 2023 was $7 million or $0.46 per adjusted diluted share compared to an adjusted net loss of $3 million or a loss of $0.21 per adjusted diluted share in a prior quarter. As a reminder, in the third quarter of 2022, we recorded a $13 million of pretax other income, primarily related to a sale of a non-strategic legacy land asset. Now turning to Slide 14. Adjusted EBITDA for third quarter 2023 was $48 million, up approximately $19 million from the prior year quarter and down $16 million sequentially, which was slightly ahead of our expectations. Adjusted EBITDA as a percentage of conversion revenue was 13.3% in the third quarter of '23, an improvement of approximately 440 basis points from the third quarter of 2022. On a year-over-year basis, the improvement in adjusted EBITDA was primarily the result of stabilizing operations following the significant supply chain issues we experienced at our Warrick growing mill last year, in addition to improved pricing to capture the higher cost of alloys and other inflationary costs with a higher mix of aerospace product shipments. On a sequential basis, as Keith discussed, adjusted EBITDA was pressured primarily by destocking and inflationary costs, minimizing our cost reduction efforts across our platform. Now turning to a discussion of our balance sheet and cash flow. As of the end of September 2023, total cash of approximately $45 million and approximately $529 million of borrowing availability in our revolving credit facility provided total liquidity of $574 million. There were no outstanding borrowings under our revolving credit facility as of September 29, and it remains undrawn. We continue to believe that our total liquidity position remains strong. As a reminder, our senior notes interest costs have fixed at $48 million annually, and we have no debt maturing until 2028. As of September 2023, our net debt leverage ratio improved to 5.4 times from 7 times at the end of 2022. We continue to target a leverage ratio of 2 to 2.5 times by way of improvements to our profitability over time. Further, we are working through our previously discussed higher cost metal inventory overhang resulting from the 2022 supply chain issues at our Warrick operation. While we continue to expect our efforts through service as a positive source of cash, the destocking we have been experiencing in the packaging market throughout 2023, will prolong this endeavor until 2024. As such, we currently expect to sell the remaining balance of higher cost metal units by the end of Q1 2024. In regards to our capital allocation strategy, our approach is duly focused on supporting our growth while concurrently returning value to our stockholders. We now expect our full year 2023 capital expenditures to be at the lower end of the range of $170 million to $180 million. While the timing of certain capital expenditures primarily associated with our roll coat expansion project at our Warrick facility have shifted to 2024, the project remains on track for startup in the second half of 2024. Additionally, on October 12, we announced that our Board of Directors declared a quarterly dividend of $0.77 per common share which demonstrates our confidence our Board and management team have in our long-term strategy for profitable growth and increasing shareholders value. And now I'll turn the call back over to Keith to discuss our outlook. Keith?

Thanks, Neal. Now I'll turn to our outlook for the fourth quarter of 2023. Beginning with aerospace on Slide 16. The strong momentum we've been experiencing in aero and high-strength shipments is expected to continue into the fourth quarter. As a result, we believe the recovery in commercial aerospace should meet or exceed the record levels we experienced in the pre-pandemic 2019 timeframe by the end of this year. It's important to note that we intend to achieve this milestone 1 year ahead of our initial expectations, which is a testament to Kaiser's long-standing strong position in the aero and high-strength markets that we've built over the last 75 years. Our outlook remains strong and is further supported by the build rate increases we've seen this year for both single-aisle and wide-body jets, both of which are beneficial to Kaiser, along with increasing airline passenger miles and load rates. As such, we expect that our fourth quarter shipments will continue to improve by an additional 3% to 5% versus the third quarter of 2023, with conversion revenue expected to decline by approximately 1% to 2% over the same period due to an expected mix shift in products shipped during the quarter. As we look out into next year, initial declarations by the airframers support stronger 2024 shipments than previously anticipated. In addition, we expect demand for business jet, defense and space to remain strong. As I highlighted earlier, our unique ability to flex available capacity out of our Trentwood rolling mill to accommodate increasing market demand enables us to take on additional capacity without the need for incremental investments in the near term. Turning to packaging now on Slide 17. Looking ahead into the fourth quarter, we expect shipments to decline by approximately 5% to 6% compared to the third quarter as destocking has shifted to food products, and we faced typical fourth quarter seasonality. Our resulting conversion revenue is expected to be flat to slightly higher than the third quarter as we work with customers to meet their contractual obligations. As I've stated previously, we do not anticipate these lower levels of demand carrying into 2024, but we will continue to assess the situation. Longer term, we believe our refined strategy, coupled with our strong customer relationships and multiyear contracts and targeted growth investment in the new roll coat line will support margin improvement and future growth prospects. Now turning to general engineering on Slide 18. We expect shipments for general engineering products in the fourth quarter to decline modestly from the third quarter on relatively flat conversion revenue, given continued plate destocking activity as well as the associated seasonal decline typical of the fourth quarter. Shipments are expected to decline approximately 1% to 2% and conversion revenue is expected to decline approximately 2% to 4% versus the third quarter results as distributors continue to right-size their inventories and import plate availability continues to increase. As I indicated, it's important to realize that the available capacity at our Trentwood operation where our general engineering plate products are manufactured, has opened up additional capacity to service the resurgence in aerospace activity. Partially offsetting this pressure are sales of rod and bar products, which has started to reverse the downward trajectory we've seen for the last several quarters, with shipping rates that have begun to stabilize in the third quarter. Short-term hurdles aside, our longer-term outlook for the general engineering business remains solid given the reshoring of certain manufacturing industries back to North America. We believe we hold a key position in the market, given our long-standing customer relationships, broad product offering and highly differentiated KaiserSelect products that effectively reduced processing time and cost for our customers. Next, I'll turn to automotive on Slide 19. Higher build rates for trucks and light vehicles in North America have driven a steady recovery in the automotive market throughout 2023. That being said, we expect our fourth quarter shipments conversion revenue to remain relatively flat with the third quarter due to typical seasonal trends and some anticipated impacts from the ongoing UAW strike. Currently, we don't expect a more meaningful recovery in automotive until at least 2024, which is in alignment with the cautious optimism we have communicated as part of our outlook throughout the year. Now turning to Slide 20. In summary, we're very proud of the progress we made in the first nine months of 2023 to position Kaiser for more sustainable long-term growth. Our strong market position as a key supplier in diverse end markets, multiyear contracts with key strategic partners, strong liquidity position, and flexible nature of our cost structure enables us to execute our strategy throughout changing operating environments. Additionally, we remain highly focused on managing elements within our control, including pursuing cost reductions, improving manufacturing efficiencies as our operations stabilize and continuing commercial actions to improve our margins. That said, we anticipate higher major maintenance and other costs to continue in the fourth quarter, along with continued destocking trends in general engineering and packaging. As a result, we are anticipating further downward pressure on our adjusted EBITDA in the fourth quarter and expect our fourth quarter EBITDA to be in line to slightly higher as compared to the fourth quarter of last year. While market conditions continue to reset, our operations are in a much stronger position to execute at higher levels of efficiencies moving into 2024, where we project market conditions to improve, destocking and packaging and general engineering markets to end and additional cost reductions we are implementing come into effect. Now turning to Slide 22 and a summary of today's remarks. Longer term, we continue to believe that our business can achieve conversion revenue of approximately $2 billion and an EBITDA margin on conversion revenue in the mid to high 20% range. The building blocks to get there will require focused execution against our strategic plan to drive increasingly profitable growth and maximizing key investments in capacity and capabilities in the cyclical growth markets we serve to improve our margin profile and competitive position. With that, I'll now open the call to any questions you may have. Operator?

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Your first question comes from Timna Tanners with Wolfe Research. Please go ahead.

Yeah. Hey, good morning, everyone.

Good morning, Timna.

Just wanted to try to understand and piece apart the guidance a little bit more. If I recall, the commentary in the release was really guiding, I thought, more to some of the weakness you're starting to see outside of the traditional bev can, but in food can business. And I know you've said it's material, but would love any more detail on how material? And is this the beginning of an extended destocking like we've seen in bev cans? Or is this something that could be a quick fix?

Yeah. Hey, good morning, Timna. So with regard to what we're seeing, and we started to see this in the third quarter, we did see beverage can destocking. So we delineate between the two. At Kaiser, we have a very large mix of our total capacity that goes into the food can market. And that's animal food, that's human food and other applications. So we have seen that be fairly steady all of last year, all through the first half. And in the third quarter, we started to see some of the pull outs for the second half in that particular product mix. So as that started to change, we started to investigate a little bit with our customers. And I think if you were to see some of the customer responses that have been out on the earnings call today, they reinforce the fact that the third quarter caught them by surprise a little bit. They saw some of their customers, even though demand was fairly good, destocking continue at the OEM level. So we actually think that that's going to be a shorter term than what's transpired with beverage. Some of the dialogue and color they provided says that it's more of a end-of-the-year balance sheet issue as compared to just total demand requirements. So with that, we're still assessing what that means, but we're looking at really a second half of '23 with demand propping back up in 2024. But we're going to continue to assess that and see. So as a result, we're getting a -- even with contractual obligations, we're seeing a less mix than we would have anticipated. So more bare products versus coated. And so that's an impact to the third quarter and expected for the fourth quarter for our results.

Got you. Okay. So we'll see because if it's as long as the bev can side, it could last for a while. That's why I was trying to get some color. So thank you for that. On that -- it's interesting also because you guided more conversion revenue downside actually in the other segments outside of packaging. So just trying to understand, obviously, is this broader-based weakness? Or is this kind of, as you said, maybe on a correction more for seasonality?

Yeah. We typically get very lumpy results, especially in the fourth quarter, Timna. A lot of our general engineering products go through service centers. So our distributors really look at getting their inventories in place generally on a calendar year basis. So the end of the year is always iffy as opposed to what they've done now. In some areas, on rod and bar, for instance, we don't believe that there will be a lot of correction in the fourth quarter. But we'll continue to see some of that with plate. We've also built in a little bit of price erosion. We are seeing a little bit more import available out there. And so we're making sure that we're being somewhat conservative with our outlook for the fourth quarter. And the other part that also impacts us on the mix side is that we'll be getting more bare versus the higher-margin coated product from our customers as they really focus on trying to meet their minimum contractual obligations to us. So that by itself is going to be roughly, I would say, half of what we're looking at, the downside. The other part is we expect, Neal talked about those higher metal costs, which are going to continue to be extended, okay? And then -- so what we have those two together will be about $10 million to $12 million of that bridge to what we did in the third quarter. And then finally, the higher major maintenance spending this year due to the -- just the timing of some of the spending of the year, as compared to the third quarter, we'll have about a $6 million increase in major maintenance spending in the fourth quarter. So when you bridge that all together, that's about a $16 million to $18 million difference, which really leads us to the outlook we're looking for the fourth quarter as compared to the third quarter.

Okay. Helpful. I'll just ask one more and hand it over. But on the $100 million increase in CapEx, obviously, pretty big amount it seemed like to us. So just -- can you clarify, I think in the past, we've kind of assumed flattish CapEx from 2024 to 2023. Should we just add like $100 million or more to that number? Or how should we think about the cadence of that spending?

No, no. It won't be. And we'll come out with those numbers in February. But we -- there will be additional spending that goes on in the fourth quarter, Timna. So that $100 million won't just parlay over. And we've only spent -- we spent $140 million year-to-date.

Actually over two years.

Total, over two years, we spent over $140 million on it. So that spending will come, as Neal said, over the next nine months. So we'll give you more outlook for that, but there will be additional spending in the fourth quarter for that line. Now let me talk a little bit about the spending on that, Timna, because I agree with you. I mean I don't like cost overruns. But I think with every major player that's making major investments, especially during these last couple of years of high inflation, it's really been a challenge to bring these projects in. If you take a look at that $100 million bucket, a significant part of it is material cost which have gone up. And then labor constitutes another percentage of that, so higher labor costs, all associated with inflation. And then finally, just getting the scope and engineering changes to match exactly what we need and our customers' need really led to that overall $100 million, but the majority of that is material and labor.

Okay. So you're not prepared to give us guidance for what CapEx might be at in 2024?

No. We'll do that in February.

Got it. I'll hand off. Thank you again.

Thank you, Timna.

[Operator Instructions] Your next question comes from Bill Peterson with JPMorgan. Please go ahead.

Hi, good morning, and thanks for taking the questions.

Yeah. Good morning, Bill.

Yeah. Good morning. I wanted to follow up on the packaging side. So I guess, can you give us a rough split or ballpark on what the exposure between bev can and coated food would be? And I guess maybe on the bev can side, I guess, how confident are you that, that portion of the business has bottomed?

Well, we don't give out specific breaks on what we provide, but it's a fairly large percentage of what we do, Bill. So it's -- I'd say it's greater than 40% of what we do out there. And with respect to the beverage side of it, we started to see business stabilize and actually bounce back as we got in toward the end of the third quarter. And so as we talk with our customers, we look at what's happening with us, it gives us some comfort that beverage is continuing to grow. If you look at some of our end customers, the can makers that have been out already, they're talking about continued growth moving into 2024. So that gives us a good feeling that the destocking has occurred and that we'll get back to more normalized growth levels in '24. I also reflect on the longevity, and Timna brought this up, longevity on the coated products, especially on food. Again, the information that we have is that this will not be as prolonged as what took place with the beverage can overall. That one was more associated with demand and higher cost pass-through. This seems to be more around the end users and year-end balance sheet issues. So I have a feeling here that this will be much shorter perhaps through the end of this year. And -- but we'll give you a more update when we talk in February.

Okay. Thanks for that color. And then on more -- I'd like to get more context on the separation from Alcoa in terms, like, what does that mean in terms of physically separating? I guess, should that result in more greater recycled scrap usage and less materials from Alcoa? What's the mix between the two? How is that going to evolve? And I guess most importantly, how does that impact the financials?

Yeah. So again, we expect that separation in the first part of next year. Part of the obligation that we had in our agreement with Alcoa was that we had a three-year commitment to purchase a portion of our metal needs from their smelter, the primary smelter there. And that ends at the end of this year. And we are intent on moving toward more secondary/recycled material content, and we have that in place moving into 2024. Most definitely will improve the financial wherewithal. It will improve the sustainability of that business. And so we're very excited about moving that amount of material over to recycled content. It's also going to satisfy a lot of requirements from our customers who are looking for higher sustainable material -- input material. The other parts of the separation though, and as you might imagine, Bill, this has been a distraction for our teams up there for the last couple of years. We're separating power from the coal-fired plant there. We'll be moving on to the grid. That's pretty much getting close to completion. And there are other things around steam, water and how we separate those two facilities. So overall, it's been a quite a distraction, quite an endeavor by that team up there. They've -- as they manage and all the other challenges we've had with supply chain issues. So in regards, it's going to be better for us from a financial perspective, better for us from a sustainable perspective and definitely less distraction so that folks can get back to focus just on managing the growth of the operation there.

Okay. Thanks, Keith, for the color, and we'll look forward to following the progress in the year-end and next year.

All right. Thanks, Bill.

Thanks, Bill.

Thank you. I would now like to turn the call over to Keith Harvey for closing remarks.

Okay. Well, thanks for being with us today, and I look forward to updating you on our fourth quarter and full year '23 results in February. Have a good day.

There are no further questions. You may disconnect your lines at this time, and thank you for your participation.