Mercer International (NASDAQ:MERC) Inc. experienced a decline in EBITDA during the fourth quarter of 2023, reporting $21 million, which was down from $38 million in the previous quarter. The company's fiscal year EBITDA saw a substantial drop to $17 million from the previous year's $537 million, attributed to weaker market conditions. However, the company noticed an uptick in pulp sales realizations with rising prices across all markets in Q4. Mercer International is anticipating a modest increase in lumber prices in the US, while expecting European prices to remain steady. The company is also preparing to divest its sandalwood business and is focusing on expanding its mass timber operations. With a strong emphasis on cost management, Mercer International is looking towards a gradual market recovery in 2024.
Key Takeaways
- Mercer International's Q4 EBITDA fell to $21 million from $38 million in Q3.
- Fiscal year EBITDA plummeted from $537 million in 2022 to $17 million in 2023.
- Pulp sales realizations improved in Q4 with higher prices in all markets.
- US lumber prices are expected to see a modest rise, while European prices should hold steady.
- The company plans to sell its sandalwood business to focus on growing its mass timber operations.
- Mercer is committed to reducing carbon emissions by 2030 and sees sustainable products like lignin as future sales drivers.
Company Outlook
- Mercer projects a gradual market recovery in 2024.
- The mass timber market is anticipated to grow significantly, with the company aiming to double 2024 revenue compared to 2023.
- Investments will be channeled into facilities for cost competitiveness and increasing lumber and mass timber production in Torgau.
Bearish Highlights
- The company faced a significant year-over-year decline in EBITDA.
- Weaker market conditions have been a challenge for the fiscal year.
Bullish Highlights
- Pulp pricing improved, with lower fiber costs contributing to positive results in Q4.
- The mass timber industry is growing at 20% annually in North America, presenting opportunities for expansion.
- Mercer has a strong mass timber order book, extending into 2025.
Misses
- The full-year EBITDA for 2023 was markedly lower than the previous year.
Q&A Highlights
- The company is continuously working to build its order book throughout the year.
- Tight supply in the lumber market could lead to stronger price recovery.
- Freight costs for lumber delivery from Europe to the US eastern seaboard stand at around $100 per thousand board feet.
Mercer International (MERC) is gearing up for its next earnings call scheduled for May, where it will further discuss its financial performance and strategic initiatives. The company's focus on sustainable products and carbon reduction targets reflect its commitment to environmental responsibility while navigating the current market landscape.
InvestingPro Insights
Mercer International Inc. (MERC) faces a challenging financial landscape, as reflected in the latest data from InvestingPro. With a market capitalization of $557.02 million, the company's financial health shows signs of strain. The Price to Earnings (P/E) Ratio stands at a negative -2.44 for the last twelve months as of Q4 2023, indicating that the company is not currently generating profits relative to its share price. Moreover, the Gross Profit Margin for the same period was reported at 6.43%, underscoring the weak gross profit margins that the company is dealing with.
An InvestingPro Tip highlights that Mercer International operates with a significant debt burden and is quickly burning through cash. This is particularly concerning as analysts do not anticipate the company will be profitable this year. On a more positive note, another InvestingPro Tip points out that Mercer's liquid assets exceed its short-term obligations, providing some financial cushioning.
Investors looking for a deeper dive into Mercer's financials and future outlook can find additional InvestingPro Tips at https://www.investing.com/pro/MERC. With 7 more tips available, users can gain a comprehensive understanding of the company's financial health and market position. For those interested in subscribing to InvestingPro, remember to use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Mercer International's next earnings date is set for May 9, 2024, where the company is expected to address its financial performance and strategic plans. As the company navigates the current economic environment, these InvestingPro Insights and Tips can provide investors with critical information for making informed decisions.
Full transcript - Mercer International (MERC) Q4 2023:
Operator: Good morning and welcome to the Mercer International's Fourth Quarter 2023 Earnings Conference Call. On the call today is Juan Carlos Bueno, Mercer's President and Chief Executive Officer, and Richard Short, Mercer's Chief Financial Officer and Secretary. I will now hand the call over to Richard.
Richard Short: Thanks, Abigail. Good morning, everyone. Thanks for joining us today. I will begin by touching on the financial and operating highlights of the fourth quarter before turning the call to Juan Carlos to provide further color into the markets, our operations, and our strategic initiatives. Also, for those of you that have joined today's call by telephone, there is presentation material that we have attached to the investor section of our website. But before turning to our results, I would like to remind you that we will be making forward-looking statements in this morning's conference call. According to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, I'd like to call your attention to the risks related to these statements, which are more fully described in our press release and the company's financial filings with the Securities and Exchange Commission. This quarter, our EBITDA was $21 million, compared to Q3's EBITDA of $38 million. Higher pulp sales realizations and lower fiber costs were more than offset by the sale of inventory in Q3 that had previously been impaired, as well as increased major maintenance downtime in Q4. In the 2023 fiscal year, we had EBITDA of $17 million compared to EBITDA of $537 million in 2022 due to significantly weaker pulp and lumber markets, lower spot energy prices, and higher fiber costs that impacted the entire industry. Our pulp segment contributed quarterly EBITDA of $32 million and our solid wood segment EBITDA was negative $6 million. You can find additional segment disclosures in our Form 10-K, which can be found on our website and that of the SEC. In Q4, both our NBSK and NBHK sales realizations increased compared to Q3. We had higher prices in all our markets as customers were restocking, and in Europe, we are benefiting from a modest increase in paper demand. In China, the Q4 average NBSK net price was $748 per ton, up $68 or 10% relative to Q3. European NBSK list price averaged $1,245 per ton in the current quarter, an increase of $85 or 7% from Q3. In China, the Q4 average NBHK net price was $643 per ton, up $113 or about 21% compared to the Q3 average price. The North American average Q4 list price was $1,083 per ton, up $60, or 6% from Q3. As a consequence, the market price gap between NBSK and NBHK in China narrowed to about $105 per ton in Q4 from $150 per ton in Q3. We had increased scheduled maintenance downtime in Q3 when compared -- sorry, increased maintenance downtime in Q4 when compared to Q3. In Q4, we had 23 days of downtime, while in Q3 we had 13 days. The increased scheduled maintenance negatively impacted EBITDA by about $11 million in Q4 when compared to Q3, which was partially offset by the impact of not having any production curtailments in Q4 relative to Q3. After adjusting for planned shuts and Celgar's Q3 logistics-related curtailment, pulp production was up approximately 11,000 tons from the third quarter. Total pulp sales volumes in the fourth quarter were 491,000 tons, which was flat compared to the third quarter. For our solid wood segment, modest lumber pricing improvements in the US market were more than offset by lower pricing in the European market. Despite the price increases in the US, overall lumber demand remains subdued due to high-interest rates. The random length US benchmark for western SPF number two and better was $422 per thousand board feet at the end of Q4, compared to $407 at the end of Q3. Today, that benchmark is around $428. We are expecting a modest increase in US lumber prices in the near term, driven by increased house-building activity and low housing inventory levels. For the European market, we are expecting prices to remain flat as demand remains weak. Lumber production was 112 million board feet in the quarter, up almost 20% from Q3 due to less scheduled annual maintenance work. Lumber sales volumes were also approximately 112 million board feet, which was essentially flat compared to the prior quarter. Electricity sales totaled 252 gigawatt-hours in the quarter, which was about the same as Q3. Pricing in Q4 decreased to about $98 per megawatt hour from $113 in Q3 due to lower spot prices in both Germany and Canada. In Q4, our pulp and solid wood segments had lower fiber costs than Q3 as supply remained stable and the solid wood segment benefited from the availability of lower-cost beetle-damaged wood in Germany. We currently expect beetle-damaged wood to be abundant into 2024, but strong demand for this fiber will likely keep prices from falling significantly. Our solid wood segment continues to ramp up its mass timber operations, resulting in a modest positive EBITDA contribution in Q4. Revenues decreased to $15 million in Q4 from $19 million in Q3, due to the timing of projects. This business has grown its order book to almost $100 million, and we expect to fulfill the majority of these orders over the course of the coming year. Into the fourth quarter -- in the fourth quarter, we made the strategic decision to pursue the sale of our sandalwood business, which resulted in the net assets for this business being valued at estimated fair market value and the recording of a non-cash impairment of roughly $34 million or $0.51 per share. Juan Carlos will have more to say on this shortly. We reported a consolidated net loss of $87 million for the fourth quarter, $1.31 per share compared to a net loss of $26 million, or $0.39 per share in Q3. For the full year, we are reporting a consolidated net loss of $242 million, or $3.65 per share compared to net income of $247 million, or $3.74 per basic share in 2022. We consumed about $30 million of cash in Q4 compared to the usage of about $70 million after adjusting for the $200 million senior note offering in Q3. The improved cash usage was driven by a smaller increase in working capital and reduced CapEx. The fourth quarter working capital increase was primarily the result of increased receivables due to higher pulp prices. In Q4, we invested about $26 million of capital in our mills. Looking ahead, we currently expect capital spending to be between $75 million and $100 million in 2024. At the end of Q4, our liquidity position totaled $610 million comprised of $314 million of cash and about $296 million of undrawn revolvers. Finally, as you would have noted from our press release, our Board has approved a quarterly dividend of $0.075 per share for shareholders of record on March 27th, for which payment will be made on April 4th, 2024. That ends my overview of the financial results. I will now turn the call over to Juan Carlos.
Juan Carlos Bueno: Thanks, Rich. Our Q4 results were positively impacted by improved pulp pricing, lower fiber costs, and a modest contribution from our mass timber business. In addition, all our mills run very well this quarter. However, results were lower compared to Q3 due to the impact of non-cash items in Q3 that didn't recur and incremental major maintenance compared to Q3. Overall, even though demand remains weak, we saw small improvements in most of our markets in Q4. The one notable exception was the European lumber market that took a step back after some positive momentum in Q3. Generally speaking, our market dynamics remain unchanged with lower producer inventories and weaker-than-normal demand. These challenging market conditions have led us to keep a tight handle on CapEx. We closed the year with capital expenditures of roughly $136 million compared to an original target of $200 million at the beginning of the year. Looking ahead to 2024, we're currently targeting between $75 million and $100 million of CapEx as Rich mentioned before. This is essentially a maintenance of business budget. However, we will be monitoring our operating results and could greenlight additional high-return projects should market continue to improve as the year progresses. We will also continue to manage our working capital and costs closely. While we're expecting 2024 to be a significant improvement over '23, we believe the recovery will be gradual. Overall, pulp markets remain weak, but we are seeing some upward pricing pressure in Europe at the moment as a result of a slight uptick in demand, while in China, the lunar year holiday has, as expected, limited buying activity. Looking ahead to 2024, we believe that the roughly 1 million tons of softwood production that has been either permanently or indefinitely shuttered will put upward pressures on prices. However, we don't see prices moving significantly until demand noticeably improves. On the demand side, European paper producers have increased production on slightly higher paper demand, but continue to run at lower-than-normal rates as their economy remains weak. Similarly, in China, the government is pushing and pursuing measured economic stimulus steps, but weak economic conditions continue. Looking forward, we expect pulp prices to continue to slowly increase globally as reduced supply chain supports modest price improvements. Our mills ran very well in the quarter. When comparing Q3 to Q4, remember that Celgar took a 26-day curtailment as a result of the British Columbia port strike in Q3 and Rosenthal took a 13-day major maintenance shut, while in Q4, Celgar took a major maintenance shut totaling 22 days and Stendal took one day for maintenance. Looking forward into 2024, we have no maintenance shuts scheduled for Q1 and we're expecting a normal maintenance year with the exception of Celgar that has moved to an 18-month major maintenance schedule. In Q2 of 2024, Peace River will have a 16-day maintenance shut and Stendal will take a 14-day shut, which combined, this downtime equals to roughly 56,000 tons. In Q3 of 2024, Rosenthal will take a 14-day maintenance shut and send Celgar will take a short four-day mini shut, which amounts combined to about 20,000 tons. Moving on to our solid wood segment, our fourth quarter reflected improved lumber and mass timber results. The US market was up slightly on average, while the European market was down compared to Q3. Although high interest rates continue to weigh on housing starts and construction in general, we are expecting US lumber pricing to improve slightly as we move into the spring building season. We're expecting the European lumber market to remain weak in the first half of 2024. We continue to believe that low lumber channel inventories, the large number of sawmill curtailments, relatively low housing stock, wood shortages created by recent Canadian forest fires, and homeowner demographics are still very strong fundamentals for the construction industry, and this will put positive pressure on the supply-demand balance of this business in the midterm. We will continue to optimize our mix of lumber products and customers to current market conditions. In Q4, 39% of our lumber sales volumes was sold in the US market, with the remainder sold in the European and other markets. The integration of Torgau continues to progress well. Shipping pallets remain weak on the back of a weak European economy overall, heating pellet prices were down in Q4 due to warm winter weather. Once the European economy begins to show signs of recovery, we expect pallet prices to return to normal levels, allowing this asset to deliver significant shareholder value. In addition, the integration of the recently acquired Mass Timber assets continues to progress as planned. We now have roughly 35% of North American mass timber production capacity, a broader range of product offerings, and a much larger geographic footprint that gives us competitive access to the entire North American market. We continue to see strong customer interest in our mass timber products, which has allowed us to build a significant order file. At the end of December, our order file totaled almost $100 million. In addition, our mass timber business contributed a modest positive EBITDA in Q4 as planned. We expect EBITDA for this business to grow in 2024 as we continue to ramp up. Moving on to costs of fiber. Overall, we experienced a decrease in pulpwood prices in Q4. In Germany, a steady supply of sawmill chips resulted in cost decreases while work done at our Canadian mills, including the ramp-up of Peace River's woodroom and the renegotiation of contracts in Celgar, pushed our fiber costs down in Q4. Looking ahead, we expect further modest declines in pulpwood and saw log cost at our mills in early 2024. In Q4, as Rich mentioned before, we made the decision to sell our sandalwood business in Australia. Although we believe that in fullness of time this business will be a positive cash flow generator, it no longer fits our strategic direction. A process is underway to sell this business and we hope to have more to say about this in the coming months. Our new lignin extraction plant -- pilot plant continues its ramp-up as planned. As a reminder, this new lignin pilot plant is a large step towards Mercer being able to begin commercializing lignin. We are excited about the future prospects of this product as a sustainable alternative to fossil fuel-based products such as in adhesives and advanced battery elements, to name only a few. This aligns perfectly with our strategy which involves expanding into green chemicals and products that are compatible with a circular carbon economy. As the world becomes more sensitive to reducing carbon emissions, we believe that products like lignin, mass timber, green energy, lumber, and pulp will play increasingly important roles in displacing carbon-intensive products, products like concrete and steel for construction or plastic for packaging. Furthermore, the potential demand for sustainable fossil fuel substitutes is very significant and has the potential to be transformative to the wood products industry. We are committed to our 2030 carbon reduction targets and believe our products form part of the climate change solution. In fact, we believe that in the fullness of time, demand for low-carbon products will dramatically increase as the world looks for solutions to reduce its carbon emissions. We remain bullish on the long-term value of pulp and are committed to better balance our company through faster growth in our lumber and mass timber businesses. In closing, we're happy to have 2023 behind us. Although we continue to predict a slow recovery in 2024, we do expect a much stronger financial result. We will remain focused on our cost reduction, CapEx, and working capital initiatives while we navigate this period of relatively low pulp and lumber prices. We will continue to work on rebalancing our assets in line with the execution of our strategic plan and will continue to manage our cash and liquidity prudently. Thanks for listening. And I will now turn the call back to the operator for questions. Thank you.
Operator: [Operator Instructions] Our first question comes from Hamir Patel with CIBC Capital Markets. Your line is open.
Hamir Patel: Hi, good morning. Juan Carlos, could you comment on how you would see wood costs and fiber availability trending across your European fiber baskets for both pulpwood and saw logs in coming years, just as the effects of the spruce beetle play out?
Juan Carlos Bueno: Of course, Hamir. Thank you. Good question, because this is obviously a very significant element of our cost structure. And there's some important developments on that end. We know that calamity wood in Germany is obviously a very significant factor, that we're already seeing some of the benefits of it in the later part of 2023, and we're seeing still some of those benefits in 2024. So we are expecting a continued decrease -- slight decrease on the cost of fiber overall, both for pulp and lumber. It is important to say, though, that obviously this calamity would especially in Germany, it has created quite a significant amount of buzz and demand. So even though there's plenty of it, there's also an uptick in demand, as people obviously prefer to go for this lower-priced wood. So we don't expect necessarily prices to collapse. But yes, there's a positive trend for us with lower prices coming overall. So in that sense, I think it's positive, what we see coming in the months to come, but I'm cautious as to how big that drop will be.
Hamir Patel: Okay, great. Thanks. That's helpful. And just want to ask about, on the lumber side, what impact you would expect the Red Sea disruptions to have on European lumber exports and whether you think some of that -- more of that wood gets perhaps redirected to the US?
Juan Carlos Bueno: In the case of the Red Sea, the impacts that we're seeing right now, Hamir, are more on the pulp side than on the lumber side. In our lumber business, when we don't ship to the US, we're usually focusing on the European market to a large extent. So then the impact is much more limited. In the case of pulp, we do have a bit more of an impact. Even though that impact has now translated in probably a small uptick in the actual logistic cost, but it's very relative still, relatively small at this time. And obviously, added transit time, which, if you put it from a flip side, it means more tightened supply into China, which is not at all bad. It creates the sentiment of more tightness in the market if there's delays on shipments. So really, the impact so far is very small, and we hope it stays this way obviously.
Hamir Patel: Okay. Fair enough. Thanks, Juan Carlos. I'll turn over.
Operator: One moment for our next question. Our next question comes from Richard Stevens with Amundi USA. Your line is open.
Richard Stevens: Hi, and thanks for taking my question. I had two questions, just one more housekeeping. I think you mentioned that the revolver availability was $296 million. My sense is that there are no covenant limitations on that availability. Is that correct?
Richard Short: That's correct. Generally, there's a cap on the Canadian revolver, but we factored that into that number.
Richard Stevens: Got it. Okay. And the next question I had was more from a historical perspective, obviously, you're at the bottom of the cycle at the moment. Typically, how long do these cycles last? Have you seen in the past? I know there was a bit of a one, I want to say going back to maybe 2018, '19, and maybe some earlier in the decade there. But typically, when you go through these cycles, you mentioned there's been over a million tons of capacity that's been shut in. And how long, typically, does the cycle last? How many quarters? Just to get a sense.
Juan Carlos Bueno: Normally, when we look at cycles, these pulp cycles, they can easily have four years, three years in duration, and in some cases a bit more than that. So it really we don't -- it's not a mathematical equation behind them, obviously. But, yeah, there's a few years in behind them. So that's why when we think about what the future holds for us, I think we're looking into a recovery, partial recovery in '24, a much healthier '25 and '26, that's a little bit of what we have in our plans. And when we look at some of the analyst's projections, particularly for pulp, we see the same thing that everybody projecting almost in a very coherent way, pricing picking up in the next few years.
Richard Stevens: Got it. Okay, that's very helpful. That's all I had. Thank you.
Operator: One moment for our next question. Our next question comes from Kasia Trzaski Kopytek with TD Securities. Your line is open.
Kasia Trzaski Kopytek: Hey, there. Good morning, everyone. A couple of questions, maybe starting with pulp markets. It seems like pulp mill inventories are decently balanced at this point. Can you speak to where buyer inventories are talking about China and Europe?
Juan Carlos Bueno: Yeah. I think the situation on inventories is quite balanced, probably more to our favor at this time of the year. In terms of producer inventories, when you look at the recently revealed statistics that show 40 days on average for softwood, that's in good levels, relatively low levels and proper. When you think about customer inventory, we believe that the situation in China is a bit more uncertain. There might be more inventory there. And actually, as they came into the New Year celebration, obviously they were stacking up with inventory prior to that. We saw very big swings of product in the last quarter of the year into China in preparation for the new year. So obviously there's a lot of expectations on what will happen demand-wise, once that New Year celebration is past us, and how demand will pick up from that point onwards. What we do see is an important demand uptake in Europe, and this again is coming from a very, very low level. So when we think about our customers that are running their paper machines, they're running at better than they were running before, but again, coming from very low level. So it's far from being what the market traditionally is. And that's why we think there's a very significant upside. If paper -- if the European economy comes back and paper comes back, that would be a very significant factor in what we would believe to be then a much stronger price recovery. Because again, as you all said, the tightness in supply is there. There's so many mills that have closed down, so much capacity, almost a million tons of capacity of software that has been shut, that there's not a whole lot of supply out there to cope with an increment in demand. So it won't take a whole lot to -- for this thing to actually move into a much stronger price schedule for us. But again, we need Europe to wake up strongly and China to come back after the New Year in a better situation.
Kasia Trzaski Kopytek: Okay, thanks for that. And how much -- what are your freight costs right now for delivering lumber from Europe to the eastern seaboard per thousand?
Richard Short: That's a good question, Kasia. It's probably around $100 a thousand board feet.
Kasia Trzaski Kopytek: $100. Okay. And Richard, that includes the land -- over-land transportation as well?
Richard Short: Yes, that would be all in.
Kasia Trzaski Kopytek: Okay, great. One last question. Just switching gears to the mass timber markets, you indicated you expect things to trend favorably going forward over the next year. Any numbers you can put around that, maybe a cadence for how you expect the revenue to grow from here and then any potential EBITDA contributions that you would expect?
Juan Carlos Bueno: Yeah. On mass timber, as I've said, and Richard as well, we're very excited about how this business is progressing. The order book is a great indicator of it. If you think about where our order book was in Q3, we had $54 million of projects locked in, that we would then start executing from that point onwards. In Q4, we not only executed part of those $56 million projects, but we closed with $100 million or almost $100 million of projects in the order book. That gives us a very strong confidence to believe that if we close this year with about $60 plus million in sales, next year it would be at least twice that amount. And when we look at our capacity with the sites that we have, we know that by building up gradually and continuing to run up those mills in a way that we can add more shifts later down as time progresses, this is a business that just with our setup could provide us sales of at least $500 million a few years down the road. So the assets that we have, provide us for that growth trend for us to work on. Margin-wise, this is meant to be -- obviously, this is not a commodity business. This is more of a specialties business. And we look at EBITDA margins around 20%, 25% in the long run. So that's what we expect of this business going forward.
Kasia Trzaski Kopytek: Okay. And just a quick follow-up. So your order book right now is $100 million and appreciating, it takes a while to actually lock in the order. What is the size of the sales that you're going after right now that you haven't locked in yet that you're pursuing? What potential order book size would that be?
Juan Carlos Bueno: No, what we want to do is, for example, for this year, we're very confident that as quarters progress, our order book will continue to increase. We keep on executing on projects, so that reduces the order book, and the same time we lock in future projects, and that makes it -- continues to grow. When I'm talking, that we have $100 million or close to $100 million in order book, not all of that is into 2024. So some of those projects are already looking into 2025. So you have locked in projects that will already go beyond the one year. So that's the way this thing works. You have quite a bit of lead time in some cases, and it's all tied up to the individual schedules of these projects. So we will continue to grow. We will bring more projects into 2024 that will allow us, as I said, to double our revenue this year versus 2023 and for sure keep on the pace that this industry is showing overall. When you look at the mass timber industry in North America, it's growing at more than 20% a year, as a matter of fact. So this is a very significant growth engine for us. And obviously, we intend to ride that wave and do investments in our facilities to make sure they're even more and more cost-competitive so we can take full advantage of those opportunities ahead of us.
Kasia Trzaski Kopytek: Okay, awesome. Thanks, everyone. That's all I had. Have a great weekend.
Juan Carlos Bueno: Thanks.
Operator: [Operator Instructions] Our next question comes from Sam McGovern with UBS. Your line is open.
Sam McGovern: Hi, guys. Good morning. With regard to the sale of the sandalwood business, any plans in terms of what you're doing with the cash that comes in? Is it just reinvest in the business, increase liquidity, or is there anything else that you're planning to do with that?
Juan Carlos Bueno: Sam, as it comes to that, obviously we have some interesting growth projects that were given all the unrest that we went through in 2023, a lot of projects that we kind of put on hold, and we're very eager to bring them back in. So that is obviously part of the equation. As we see the year progresses and we see what we believe to be an improvement overall in how the market prices behave, obviously this will be something that we will be keeping an eye on so that we can bring some of our -- more of these CapEx projects to fruition. The sandalwood sale process will obviously add to that picture. So we see ourselves looking into what other potential projects we can bring forward that can have a good and quick return for a company. And we have quite a bit lined up. There's so many things that we want to do in Torgau to increase our lumber production there with a very quick payback and obviously, mass timber to increase the competitiveness over there. So, yeah, there's plenty of things that we can work on if we have -- hold additional cash in hand.
Sam McGovern: Awesome. Thank you very much. I'll pass it along.
Operator: Thank you. That concludes the question and answer session. At this time, I would like to turn the call back to Juan Carlos for closing remarks.
Juan Carlos Bueno: Okay. Thank you, Abigail. And thanks to all of you for joining our call. Rich and I are available to talk more at any time. So please don't hesitate to call any one of us. Otherwise, we look forward to speaking to you again on our next earnings call in May. Bye for now.
Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
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