TMC the metals company Inc. (TMC) Q2 2024 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to the metals company Second Quarter 2024 Corporate Update Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Craig Shesky, CFO. Please go ahead.

Thank you. Please note that during this call, certain statements made by the company will be forward-looking and based on management’s beliefs and assumptions from information available at this time. These statements are subject to known and unknown risks and uncertainties, many of which maybe beyond our control. Additionally, please note that the company’s actual results may differ materially from those anticipated and, except as required by law, we undertake no obligation to update any forward-looking statements. Our remarks today may also include non-GAAP financial measures, including with respect to free cash flows, and additional details regarding these non-GAAP financial measures, including reconciliations to the most directly comparable GAAP financial measures can be found in our slide deck being used with this call. And you can also follow along with our slide deck or, if joining us by phone, you can access it at any time at investors.metals.co. I will now turn the conference call over to our Chairman and CEO, Gerard Barron. Gerard, please go ahead.

Thanks, Craig, and thanks to all of you for joining our second quarter conference call. During this call, we’re going to spend time setting the record straight on some exaggerated claims picked up by media on the topic of so-called dark oxygen. It’s funny that studies like this similar to the nonevent of alpha radiation in 2023 are usually coordinated to come out around ISA meetings. We believe this is another example of activism disguised as science. Rest assured that we have the data to counter on this topic, and we look forward to filing our rebuttal soon. And we’re pleased to see that other scientists have really begun doing the same. We’ll also spend some time discussing the progress achieved and the progress they had from the ISA Council on the mining code, and what the draft review process looks like when TMC expects to launch its application for an exploitation contract prior to the next ISA meeting in March. But I’d like to start with our improved liquidity position. We had liquidity of $40 million at the end of June, but this liquidity has increased in August due to the upsized borrowing limits on our credit facilities. We also used our ATM opportunistically in the second quarter, raising $2.6 million, an average share price of $1.61, and we will continue to be judicious if we elect to use this in the future, depending market on conditions. Borrowing capacity from our unsecured credit facilities has increased by $7.5 million by $2.5 million each from myself, Allseas, and ERAS Holdings, the family office of our Director and largest shareholder, Andrei Karkar. We believe we’ve shown in the last few months that we can reliably draw on these facilities whenever needed, and we intend to draw several million more from Allseas facility this month. Our credit facilities are being used as intended, as a bridge to what we believe will be attractive financing options after we are able to share more information on some of the strategic developments our team has been working on. We appreciate the further support from our largest shareholders to keep our progress on track and minimize dilution amidst a difficult market. This next slide is a summary since our last quarterly update in mid-May. This quarter, I was very pleased to welcome two new directors to our Board, both of whom are leaders in their respective fields. Steve Jurvetson brings invaluable expertise in disruptive technologies, including investments in pioneering technology companies like Tesla, Planet Labs, SpaceX and Commonwealth Fusion Systems that fits well with our mission to revolutionize how critical minerals are sourced and ultimately recycled. We also welcomed Sustainability Leader, Brendan May, whose counsel has been sought by leading companies to help them build bridges with the environmental community. And as a former CEO of the Marine Stewardship Council and the Europe Chair of the Rainforest Alliance, we look forward to his help engaging key stakeholder communities. Geopolitical tailwinds continue to create a favorable environment for our industry, as evidenced by the U.S. house proposed allocation of defense department funding to assess the feasibility of refining nodule products domestically. Keep in mind that we are eagerly awaiting a response to our application for a defense department grant for $9 million for similar feasibility work. And my dance card in D.C. has certainly been filling up, including an invitation to speak at a congressional briefing on Capitol Hill in September regarding critical minerals. As the U.S., China, India, Norway and Japan, intensify their focus on seafloor resources, we see a growing recognition of the strategic importance of diversifying supply chains away from single jurisdiction terrestrial sources. Additionally, the International Seabed Authority recently progressed the consolidated text draft of the mining code. And we will also see a new Secretary General in January following the election of Brazil’s Leticia Carvalho. On a personal note, I had a chance to meet with Ms. Carvalho, and I really like her. And I’m pleased that she, like us, believes that adopting the regulations is the best way to fulfill the ISA’s mandate under UNCLOS. Now on to the agenda. During this call, we’re going to touch briefly on our value proposition before reviewing industry headlines. And we will then provide an update on our NORI project progress as well as regulatory progress before ending with financial highlights and answering any questions. So why nodules as opposed to other resources on land or sea. While we believe we’ll need many new types of sources of metals in the coming decades, but nodules in particular, are special. Sourcing battery metals from nodules requires no digging or blasting or drilling while producing no tailings or near zero solid waste. And these little rocks contain high grades of 4 metals in one ore body. And given that they’re far offshore, we also don’t have to displace any human communities nor build the costly fixed infrastructure necessary to access mineral resources on land. And this is why we can take a capital-light approach, which is a rarity in the world of resource projects. As we’ve said many times before, our resource is an outlier among the world’s nickel projects. Not only our NORI and TOML ranked by mining.com as the largest two undeveloped nickel projects in the world, that the nickel equivalent grade of roughly 3% with our four key metals in one resource means we can achieve profitability across the metal price cycle. There is also a remarkable correlation between a nodules mineral composition and the composition of EV battery cathodes and wiring. Richer nickel, copper, cobalt and manganese, these nodules closely fit the requirements for the majority of electric vehicle battery cathodes being sold today, and many of those that are expected to be sold in the future. Some studies estimate that fully autonomous vehicles will require as much battery power for computing as they will for the powertrain. And that means nickel batteries with higher energy density to alternatives like LSP should come to be in high demand. And while EV demand estimates are changing all the time, the metallic composition of nodules means that they are also remarkably suited for use in diverse and other applications across the energy, infrastructure and defense sectors. And despite short-term price softening, copper is expected to be a key beneficiary not just as part of a clean transition, but also a beneficiary from the data center needs of AI-focused industries. This is where it’s so advantageous to have a basket of metal products each of which has exposure to sectors which will be geopolitically critical in the coming decades. And I’d now like to turn the call over to our CFO, Craig Shesky, to discuss some headlines around the industry.

Thanks, Gerard. This quarter saw yet more momentum created for this emerging industry with the three most populous countries on the planet as well as other leading industrial economies taking notable action on sea floor resources. As concerns over China’s dominance of key critical mineral supply chains continues to garner more U.S. government funding and attention in the media, the U.S. House announced that it had allocated $2 million towards the studying of the processing of nodule derived intermediate products on U.S. shores. China, for its part, is moving forward aggressively on the technology development side and has announced its intention to conduct two separate collector tests next year through Chinese sponsored contractors. And of course, China is playing an assertive role in driving the regulatory process forward at the ISA. Meanwhile, other credible industrial economies, including those with significant offshore industries like Japan and Norway, continue to press ahead with plans for seafloor minerals with Norway announcing it would be opening up part of its territorial waters for mineral exploration applications and Japan acknowledging the discovery of hundreds of millions of tons of nodules in its waters, which it hopes to collect in trials next year. And in another clear win for evidence-based decision-making, we are encouraged to see NGO proposals to support a moratorium on deep-sea mining overwhelmingly rejected by the shareholders of two of the biggest names in the auto business, Tesla and General Motors. Shareholders agree with both Boards with a tally of around 90% rejecting the proposal as both Boards noted that they have been engaging with third parties making science-based evaluations on seafloor resources. We also pride ourselves on being driven by science, and we question the motives of those pushing companies and major metal consumers to adopt activist positions before environmental impact assessments have been completed and then that data reviewed. All projects, whether in our tropical rainforests, deserts or on the deep sea floor, must be judged on merit, and we are confident that nodules can provide the metals we need with a fraction of the environmental impacts compared to land-based alternatives. And as Benchmark found in their recent life cycle analysis of our NORI-D project, we now know nodules would outperform key land-based production routes for nickel and copper in every impact category analyzed. On the onshore side, we have made great strides in collaboration with our partner, SGS. And at their facility in Ontario, our pilot scale module processing program has produced both nickel and cobalt sulfate, indicating our resource is suitable for battery markets. Given the mining industry is by far and away the single largest producer of solid waste on the planet, this program proved that a highly few flow sheet can process high-grade nickel-copper-cobalt matte into key raw material inputs for batteries while producing fertilizer byproduct instead of solid waste or tailings. Considering what we’ve accomplished since 2021 alone, it’s frustrating for us, and I’m sure for many of you to see our market cap sitting at about just 60% of the nearly $0.5 billion we spent already since inception to de-risk these projects and never mind what might be tens of billions of underlying asset value based on the resource itself. While the public markets might still be getting it wrong, we are confident that this work will generate significant value as countries and companies increasingly turn their focus to nodules in the Clarion-Clipperton Zone, as recent headlines clearly indicate. Going back to the beginning of 2021. We laid out what we wanted to achieve as a public company, and then we got to work. In early 2021, we put out two SEC compliant resource statements and an initial assessment on the NORI-D area signed off by AMC Consultants, noting at the time a net present value of $6.8 billion. In late 2021, we completed our pyro-metallurgical processing pilot, derisking our flow sheet in advance of future onshore operations. In 2022, we completed the first successful integrated pilot system test in the Clarion-Clipperton Zone since the 1970s, lifting 3,000 wet tons of nodules and helping to de-risk our future offshore operations alongside our partner, Allseas. And as discussed earlier this year, we also finished the last of our 22 preproduction offshore campaigns, including the completion of late February of our environmental campaign of 1 year following our pilot collection test. And as noted, we’ve also successfully pivoted to a capital-light approach with the support of key partners like Pacific Metals of Japan onshore and Allseas offshore, which can provide production assets to us for our exclusive use and then reduce the preproduction CapEx requirements to a bare minimum. On to the environmental impact assessment. Our environmental impact assessment will draw on this wealth of data gathered over the past 12 years and is tightly focused on assessing the potential impacts of our operations on marine biodiversity and overall ecosystem function. Based on discussions with stakeholders, our team has honed in on six primary concerns related to our operations. And with those 22 offshore research campaigns under our belt, including our pilot collection system test, we now have a far clearer picture of our expected impacts which does contradict much of the speculation by activists in the media to date. For example, we now know that sediment plumes at the seafloor form a turbidity current hugging the seafloor and settling quickly. In fact, between 92% and 98% of sediment stays within 2 meters of the seafloor, a far cry from some of the modeling put forward by opponents to this industry, and it just shows that infield observed data needs to trump speculation. Likewise, while it was claimed that organisms impacted by the sediment plumes would never recover, the pair of campaigns we wrapped earlier this year have proved and provided visual evidence that organisms in these areas most heavily impacted by plumes, and even those right next to the collector tracks, were still present and alive 12 months on. And nodules that were covered in sediment only a year before were uncovered and visible. While it can be very frustrating to see the media get whipped up into a frenzy over certain extraordinary theories, as publication is often almost conveniently timed to coincide with meetings with the regulator, we must be cautious in their interpretation and demand equally extraordinary proof. Last year, they warned of dangerously radioactive nodules. And this year, it’s dark oxygen. But the scientific process always dilutes the hyperbole and tames down those wild claims. We will continue to address each and every one of these through rigorous scientific study by leaning on the world’s most comprehensive deep-sea data set. As you can see on the next page, we have just made a huge submission of data to the ISA in May based on our offshore research campaigns. And I will not claim to understand all of this, but our science team certainly does and they’re excited to continue work on the key pillar of our application, the environmental impact statement. Now some may wonder why NORI hasn’t submitted its application already. While our top priority is to get it right the first time, ensuring the most accurate and reliable assessment of our expected impacts. And this means waiting for the highest resolution data to be validated. We’re currently co-leading and analyzing the extensive data collected during our post-collection monitoring campaigns, and the results expected later this year will be crucial to our submission. All of this data will continue to be shared with the ISA and made freely available to the global community via open-source databases. Some of you did likely see the global media cycle focused around dark oxygen, the notion that nodules on the abyssal plain created oxygen through electrolysis. On one hand, our science team was surprised to see a paper with such clear methodological flaws and sensational claims get published in the first place. We should know because some of our science team was aboard the TMC research campaign where the author began making such claims. And the flaws in the methodology were as obvious as they are now. It also backs up what we’ve been saying for years. TMC does not sensor or edit the content of the scientists that are part of our research campaigns despite what some NGOs claim. But on the other hand, we are pleased at the conversation that this has started, with those in the scientific community increasingly beginning to push back on the media hype. In particular, a recent review of the paper by scientists at a depth noted that the paper lacked the data need to support its claims, where we have the data, and we agree that it certainly does not support those claims. Ultimately, extraordinary evidence – excuse me, ultimately, extraordinary claims must be backed by extraordinary evidence, and we look forward to sharing the data that these scientists took issue with as part of their own rebuttal, which we expect to be available in just a matter of days. Once we file our rebuttal, we’ll be running a series of panels and presentations to help people understand the flaws of this paper and why the topic has been completely overblown by the media. But on to the regulatory update. The ISA recently wrapped its latest a session in Kingston, Jamaica. And as with every session, our full team on the ground was looking for progress and progress is what we got. If the publication of the consolidated regulatory text earlier this year marked the transition to the final phase of negotiations, the ISA Council’s completed first reading brings us one large step nearer to bringing the whole process to a close. After multiple draft regulatory texts, dozens of technical studies and thousands of hours of in-person meetings, we have a very good idea of what the final mining codes looks like. We believe that regulations are the best way to protect the marine environment and in-line with the ISA’s road map for adoption in 2025, our submission prior to its March session next year and the expected 1-year review process that would follow, provide ample time for the regulator to adopt regulation ahead of first commercial production. And while some of these ISA meetings can admittedly be quite dry, this year, there is quite a bit of excitement over the election of the new Secretary General, Brazil’s Leticia Carvalho. While the Secretary General will play a major role in ensuring the ISA’s primary decision-making organs can fulfill their mandates, it’s important to remember that it’s ultimately the council that is the main driver of the negotiations over the mining code. To that end, the council, led by its Norwegian President, has already set out a thorough agenda of eight intersectional working groups, which will meet over the coming months to address outstanding issues ahead of its publication of an updated consolidated text this November. As for the process governing the submission and review of an application for an exploitation contract, let me describe how it works as envisioned in the draft rules. Upon submission of our application before the ISA’s next session in March 2025, the ISA secretary will briefly review it for completeness, and then hand over to the 41-person body of experts at the Legal & Technical Commission. The LTC reviews the application in whole, including the wealth of environmental baseline and impact data we’ve gathered over more than a decade before making a decision on whether to approve our project, either by consensus or a simple majority vote. With approval from the LTC, only a two-thirds majority from counsel could overturn a positive LTC recommendation, which would also require a simple majority of each of the individual groups of the council. One element not highlighted here is the stakeholder consultation component of our application submission, which will be shared by the ISA for extensive public review and consideration as we fit the comment heritage resource. And now on to the project economics. In March 2021, AMC Consultants issued our SEC SK1300 initial assessment and that arrived at a net present value of $6.8 billion. And running the same level solely updated for current metal prices, the NPV of NORI-D would today be about $8.5 billion, and our current market cap would represent just 4% of that number, representing a substantial discount to pure nickel or copper developers at this stage of preproduction. Beyond that, our market cap today, as we said earlier, is a significant discount to the money already spent on our projects. And in that time, we’ve achieved historic derisking milestones, and this is at a time when many other large countries are clamoring for access to seafloor resources and expertise in this area. And that puts TMC in a very strong position. As far as our financial results, TMC reported a net loss of approximately $20.2 million or $0.06 per share in the second quarter of 2024 compared to a net loss of $14.1 million or $0.05 per share for the same period in 2023. Exploration evaluation expenses during the second quarter of 2024 were $12.4 million compared to $8.1 million for the same period in 2023. The increase was primarily due to an increase in mining and technological and process development, resulting from increased engineering work by Allseas and share-based comp due to amortization of [indiscernible] options granted to directors and officers in the second quarter of 2024 and higher personnel costs. This was partially offset by a decrease in environmental studies as the cost to complete Campaign 8B in the second quarter of 2024 was lower than the cost of environmental work seen in quarter of 2023 to complete the NORI pilot nodule collection system test. General and administrative expenses were $7.9 million for the quarter ended June 30, 2024, compared to $5.1 million for the quarter ended June 30, 2023. The increase in G&A expenses was mainly due to an increase in share-based compensation due to amortization of the fair value of RSUs and options granted to the directors and officers in the second quarter of 2024, higher personnel costs and an increase in legal and consulting costs. The second quarter 2024 results included a gain of $0.6 million for the change in fair value of warrants liability and $0.5 million of fees and interest on the credit facility. In the comparative quarter of the prior year, the loss due to the change in the fair value of warrants liability was $0.8 million – was of $0.8 million. And fees and interest on the credit facility was $0.3 million. In the second quarter of 2024, the net cash used in operating activities amounted to $12.1 million compared to $8.4 million for the second quarter in 2023. The gap between the net loss for Q2 2024 and the net cash used in operating activities for the same period is due to share-based compensation and expenses that have been settled in equity and the change in working capital due to some increase in accounts payable and accrued liabilities. The free cash flow for the second quarter of 2024 was negative $12.2 million compared to negative $8.5 million in the second quarter last year. Free cash flow is a non-GAAP measure. And I’d point you to the non-GAAP reconciliation table included in the slide deck, which is also on our website. We do believe that our cash on hand, the undrawn $27.5 million unsecured credit facility from an affiliate of Allseas, the undrawn $20.8 million capacity on the unsecured credit facility from Gerard Barron as well as ERAS Capital will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months from today. During the second quarter of 2024, the company had drawn $5.9 million from the credit facilities and short-term debt. And with that, we will turn it back over to the operator for some Q&A.

[Operator Instructions] I am showing no questions at the time. I would now like to turn it back to Gerard Barron, CEO, for closing remarks.

Well, we are actually going to wait for a minute or so to see the Q&A questions compile just to ensure that some of them on the webcast chat have a chance to type that out. So, please stay tuned for just a minute, please. Thank you.

Our first question comes from the line of Rich Wolinsky of – Rich Wolinsky, your line is now open.

Hello Rich.

Yes. Can you hear me?

Yes, we can.

I was wondering how many nodule collection machines that you own?

Well, TMC does not own the nodule collection machines. What we want to do as a resource company is explore and develop the resource itself. And thankfully, we are blessed to have partners like Allseas who are able to provide the collection technology such as the Hidden Gem vessel as well as the collectors themselves. So, for TMC, it’s really less about a technology play or focusing on patents or the ownership of resources and more about ramping up production in a very capital-light way. And that capital-light production is something that we can achieve by using existing assets offshore, such as those provided by Allseas as well as using existing facilities to process those nodules such as those that exist in Japan with Pacific Metals, or other RKF lines [ph] that we know are available in India – or excuse me, Indonesia, China, Malaysia and other locations. So, while we don’t own the collector, we feel very good that by developing this resource on which TMC has exclusive rights to explore. And then once we move with commercial production, exclusive rights to collect the nodules commercially for a period of 30 years. We think that’s the right place to be in the value chain. But thank you for the question.

[Operator Instructions] I am showing no questions at this time and I…

Okay. I am sorry, operator. We now have some questions that are populating in the chat. Given that it’s the middle of August, I imagine a lot of people are taking it from the road, so we will get them from here. So, Gerard, from Dmitry Silversteyn, the Water Tower Research analyst, what do we expect in terms of PAMCO completing the trial run of 2,000 tons of nodules?

Yes. Hi Dmitry. Look, we are making good progress. Our Head of Onshore has been up in Japan and in Indonesia over the last weeks, and we will be doing another run there on August 27th, and we are very pleased with the progress. And PAMCO, an amazing partner to have given the wealth of experience being – having processed nodule material, poly metal material, particularly nickel laterite since the 1960s. And so we expect those trials to be completed during the third quarter and results coming out soon after that. But you are there when it’s happening, we are getting learnings. We are getting refinements and having those nodules that we could complete these trials has been a tremendous benefit as we prepare to move into commercial production.

Thank you. We have a question from Ryan Bolle. Wondering if we can clarify the statement about the ISA council groups. Yes. Certainly, Ryan, the point is if the LTC recommends the approval of the NORI application for a plan of work. In order to, I guess stop commercial production, in order to overturn that positive LTC recommendation, one would need to see the ISA Council states in a majority above two-thirds vote to overturn that, in addition to a simple majority of each of the ISA Council groups. So, said another way, it’s quite a high bar to return – overturn what would otherwise be a positive LTC recommendation. I also see a question from Eric Goldstein, one of our shareholders. Can you clarify, it looks like you raised $11.6 million in the first half of 2024 and $9 million was from the registered direct offering. Yes, Eric, the GAAP represents the funds that were raised during that period from the use of the ATM. 1.6 million shares issued at an average price of $1.61. So, over the course of the time that the ATM has been out since the end of 2022, I think we have shown quite a bit of discipline in waiting to use it. And when we saw a market opportunity and ensuring that we are keeping the project on time and on track as we continue to have strategic discussions, we felt like the right time to use it in a very judicious way. But certainly, market conditions are going to dictate that. And we have no desire to be using that anywhere close to where the share price is now. Gerard, a question from somebody within Manulife Securities, do you have an indication of where the majority of the council stands on exploitation, should the current draft mining code end up being the final version. Basically, just wondering how do we think the current makeup of the ISA Council sits with respect to their views on the mining code adoption?

Yes. Thank you. The vast majority of member countries support getting the regulations in place. And obviously, it was very pleasing to see the newly elected Secretary General reaffirm her position that she does not support moratoriums. She supports regulations to allow the development of this industry while protecting the marine environment. If we look at the Council, by far, we have a majority of countries that are supportive. And in fact, even if you look at the countries who are supporting our precautionary pause, they are still at the table negotiating those final regulations. And so I think those numbers are safe. And I think as we get more environmental evidence, then that is further helping us secure the support of those member countries who are encouraged by the results they have seen and the rigor of our science program.

Thank you. And we will take one more question here from David Larkam, the analyst at Edison Research. There has been a well-documented slowdown in the rate of EV adoption. We have often spoken of potential partners at the project level. Is the EV adoption slowdown having any impact in the interest of an asset level investment for TMC subsidiaries?

Yes. Look, and I think the asset level interest, we have had primarily comes in the form of either prepay off-take and it all comes in the form from a strategic that is currently in the resource extraction industry. So, I guess no is the answer to that question. I think the – it doesn’t have an impact other than if you are a consumer-facing brand, you are really wanting to see the results of our environmental program before you make long-term commitments. We have seen – you heard us talk about GM and Tesla, the fact that they have resisted any pressure to join moratorium causes, they just want to follow the science, and that’s what they will continue to do. And I think as the science becomes more watertight around the sort of impacts that you incur when you collect nodules and turn them into battery metals, we will find that category of customers, i.e., consumer-facing brands, wanting to get more of the supply because of the lower impact, both from an environmental and a human perspective.

Yes. And just a follow-on to that as well, with nickel, copper, cobalt and manganese, really manganese is focused on steelmaking, carbon steel making and nickel, still over 60% of the demand coming from stainless steel. So, while EVs represent a great growth market, stainless demand is still growing at above GDP rates globally. So, truly, the types of metals that we have here and the materials that we will be selling, it’s really tough to see a scenario where they are all not in much higher demand down the road. Keep in mind that what you see in terms of fluctuations for commodity trading markets is driven by short-term commodity trading accounts, many of which have 3-month to 6-month time horizons. Goldman says quite often – or Jeff Curry, who is formerly at Goldman, commodities are not anticipatory assets, the same way that securities would be. So, oftentimes, you see overhangs from spot pricing that don’t really reflect the long-term secular supply-demand stories. And we think we are seeing a bit of that right now. But look, in terms of EV demand estimates, in terms of EV mix, all of that will work itself out. But keep in mind that the majority of our revenue will be coming from metals that are majority focused on industrial applications. We will take one more question for Cantor Fitzgerald from analyst, Matt O’Keefe. What are we expecting in terms of our feasibility update? And can we expect something this year or perhaps in advance of our application to the ISA? Yes. So, on that point too, it’s important to note that the feasibility work, the PFS and FS, is a key tenet of that application. We feel very good about the coordination on that point. And while we don’t want to give you a timeline, what you can expect is when we next report in November, we are going to have quite a bit more to say on that front, and sort of when the public release can be there. That’s very important for us as well. We think it’s important for a lot of our potential partners. So, we are laser focused on it. And I would just say, stay tuned because that is certainly in the works.

Okay. Well, with that, I would like to extend my sincere thanks to my team at TMC, including our partners and contractors and of course, our sponsoring states. And thanks to everyone who tuned in for your interest and attention today. And for those now in the Northern hemisphere, enjoy the rest of your summer.

Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.