Earnings Transcript for NETI - Q4 Fiscal Year 2021

Operator: Hello, and welcome to the Eneti Incorporated Fourth Quarter 2021 Conference Call. I would now like to turn the call over to James Doyle, Head of Corporate Development and IR. Please go ahead, sir.

James Doyle: Thank you for joining us today. Welcome to the Eneti's Fourth Quarter 2021 Earnings Conference Call. On the call with me are Emanuele Lauro, Chief Executive Officer; Robert Bugbee, President; Cameron Mackey, Chief Operating Officer; Hugh Baker, Chief Financial Officer; David Morant, Managing Director; Sebastian Brooke, Chief Operating Officer of Seajacks. Earlier today, we issued our fourth quarter earnings press release, which is available on our website, eneti-inc.com. The information discussed on this call is based on information as of today, February 23, 2022. It may contain forward-looking statements that involve risk and uncertainty. Actual results and events may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the forward-looking statement disclosure in the earnings press release issued today as well as the Eneti Inc's SEC filings, which are available at eneti-inc.com and sec.gov. Call participants are advised that the audio of this conference call is being broadcast live on the Internet and is also being recorded for playback purposes. An archive of the webcast will be made available on the Investor Relations page of our website for approximately 14 days. We will be giving a short presentation today. The presentation is available at eneti-inc.com on the Investor Relations page under Reports and Presentations. The slides will also be available on the webcast. After the presentation, we will go to Q&A. Now I'd like to introduce our Chief Executive Officer, Emanuele Lauro.

Emanuele Lauro: Thank you, James. Good morning and afternoon to everyone. Welcome to this fourth quarter 2021 earnings results call, and the first with a fully integrated Seajacks. Starting on the commercial side, we have seen the contract backlog on our existing fleet growing substantially. Since November last year, we've added nearly $90 million of additional revenue backlog, bringing the total to $193 million, if we include the options. We anticipate this important metric to continue to strengthen through the year and beyond, as the market tightens further. On the debt front, we recently announced our new $175 million green multicurrency term loan. This facility reduces our interest cost, welcomes new lenders and complete the repositioning of the company's balance sheet. As per the operational side, during the fourth quarter, we have executed our option to construct a second international WTIV vessel, DSME for delivery in 2025. This is in addition to the previously announced original order. And more recently, Seajacks has opened its operational base in Virginia Beach. This office will provide support to our partner, Dominion Energy in the construction and the operation of their vessel. Their vessel will be the first Jones Act-compliant wind turbine installation vessel. We continue to believe that the U.S. will be a high-growth market for offshore wind and the lack of an additional Jones Act-compliant vessel on order will further tighten an already undersupplied international markets for the remainder of the decade. This is our view. The best years remain ahead of us from a supply and demand perspective, and tenders from new regions reaffirm our confidence in the demand for offshore wind through the end of the decade. That said, as far as we are concerned, this year, we will install 145 turbines, which will generate over 1,000 megawatts per year of renewable energy and have a lasting contribution to a greener future. We remain excited about the outlook for offshore wind, and that we are rolling the transition to a cleaner and more sustainable future. I will now turn the call over to James Doyle, who has recently been promoted to the role of Head of Corporate Development and IR. He will go through a brief presentation. James, congratulations, and the floor is yours.

James Doyle: Thank you, Emanuele. I'm going to start on Slide 7. Revenue backlog and project pipeline. Since November, Eneti has increased its revenue backlog by $76.4 million and $86.6 million, including options. The increase was driven by several new contracts on our NG2500 and securing employment in Scylla in 2023. This also excludes any contracts we are currently tendering for in 2022 and 2023. The contracting cycle for the NG2500 is shorter and closer to the project start time. If you recall, at the end of last year, we had yet to secure any firm contractual backlog for the NG2500. Sebastian, Blair, and the Seajacks team have done a great job securing contracts for these vessels. We're optimistic about the outlook and future employment of these assets. In February, the Seajacks Scylla arrived in Taiwan to start work on Orsted's Greater Changhua Offshore Wind Farm. The Scylla is expected to install 111 Siemens Gamesa 8-megawatt turbine, after which the vessel will begin its 2023 contract in Europe again. Zaratan is contracted to install 22 4.2-megawatt turbines at the Akita Noshiro offshore wind farm in Japan. The start date of the Zaratan has been moved back from April to July this year. Slide 8. Significant growth in the offshore wind and limited WTIV supply. One of the most attractive parts about this industry is the outlook. Offshore wind is expected to grow at a compound annual growth rate of 18% through 2026. This year, we have seen additional tenders in new regions, which support our view of a continued increase in demand for offshore wind beyond 2026. As Emanuele mentioned, the best years are ahead, but we are pleased with the contract coverage we've added for 2022 and 2023, and there's still more to go. While demand for offshore wind has increased, supply has remained relatively subdued when compared to future demand. We are optimistic, especially on pricing and how it evolves by 2024 when there is demand for 19 vessels against supply of 20. As turbines have increased in size, the [indiscernible] vessels capable of installing larger turbines has been modest. After 2024, the demand for 12-megawatt plus capable vessels exceed supply, and this sets up nicely with our 2 new builds delivering in the second half of 2024 and 2025. Slide 10. Fourth quarter revenue was $16.6 million, a decrease from $65.7 million in the second quarter, but expected given the conclusion of contracts in our largest vessels, the Scylla and Zaratan in Asia. We were expecting slightly higher revenue for the first quarter -- for the fourth quarter related to a payment on the Zaratan, which is expected to come at some point in the first half of this year. Daily vessel operating expenses increased on the Scylla and remained elevated on the Zaratan. This is primarily due to higher crewing and travel costs, which increased around 50% due to COVID. We expect these costs to decline as COVID eases, but we recommend using a daily OpEx of $50,000 a day for Zaratan and Scylla and $20,000 per day for the NG2500's in the first half of this year. G&A came in higher than expected due to certain onetime expenses related to employee severance, accelerated restricted stock amortization, higher G&A from the integration with Seajacks and unaccrued employee bonuses to Seajacks and Eneti. The cash G&A is expected to be $7 million to $7.5 million per quarter going forward. To the right, you can see the estimated contracted revenue by quarter for 2022. This excludes contracts under discussion and project costs. In addition, we provided a breakdown of expected project costs by quarter. Project costs are not rebuilt to the client. They are included in the overall contract amount. The cash flows in our business can be lumpy and often pertain to a milestone of a specific project. While this does not change the full year revenue figure, it does impact the timing which can move between quarters. We've tried to simplify and improve the transparency of this by providing quarterly estimate. Slide 11, our new loan facility. Our new $175 million loan facility completes the restructuring of the balance sheet inherited from Seajacks. The facility has many positive features. It's green, multicurrency, has a revolver, performance bond component and it amortizes, which allows the company to delever over time. In addition, it reduces the interest cost of the company. After drawing on the new loan, we will repay the remaining $53 million in redeemable notes and it will be the company's only credit facility. To the bottom right, you can see the expected CapEx payments on our 2 new building vessels by year, as well as the expected debt drawdown on the vessels upon delivery. We expect the new builds to be financed at 60% of their contracted value. Slide 13, investment highlights. Eneti is a leading owner of the wind turbine installation vessels and the only listed in the U.S. We have an experienced managed team and a developed global platform with operations in Europe, U.S. and Asia. Since November, the company increased the contractual backlog in our existing asset base by $86.6 million, including options, and there is still more to go. Our two high specification new builds offer attractive returns and allow the company to install the next-generation wind turbine. The outlook for offshore wind is significant. Demand for offshore wind has increased while supplies remain relatively subdued. As turbines have increased in size, the growth and vessels capable of installing larger turbines has been modest, creating a favorable supply demand outlook for the industry. We are excited about the future of the company and our role in the transition to a cleaner and more sustainable future. With that, I will turn it over to Q&A.

Operator: [Operator Instructions]. Our first question comes from Ben Nolan of Stifel.

Benjamin Nolan: That was -- well, anyways, so the -- I have a couple for you guys here. The first is on Zaratan. I know that you said that the contract start-up date has moved from April to July. So there's still a decent amount of time between now and July. Any ability for that vessel to win any short-term business between now and then?

Emanuele Lauro: Sebastian, do you want to take this?

Sebastian Brooke: Yes. So the delays in that contract startup are actually due to client delays. So I think that the most likely result is that we will stay on that project, and we'll definitely be claiming client delays for those first 3 months. And then we'll continue to, so we won't be going elsewhere.

Benjamin Nolan: I see. I see. So there could be some compensation for the delays. Is that how we should think about it?

Sebastian Brooke: Yes, I should say so.

Benjamin Nolan: Yes. Okay. Good. That's helpful. And then, James, I was going to come back on the G&A side. I think you had said $7 million to $8 million of cash G&A. As I look at sort of what's normal for the rest of the industry, most other companies, their full in G&A on a quarterly basis is $3 million, maybe $3.5 million. So that's quite a bit higher. Is it -- what's -- can you walk me through what's the difference, like why your's might be more elevated?

Emanuele Lauro: I think -- it's Emanuele here. I think it's difficult to say why or compare, because I'm not familiar with other companies. So we are only telling you what we are ourselves. I don't have the means to compare myself with other companies operating in the same space. As we discussed, we are just opening. This is the first quarter that we announced as a fully integrated company after the merger with Seajacks, so there may be changes going forward, but this is what it is today. So we're guiding you to where we are.

Benjamin Nolan: Okay. That's helpful. And I was just really trying to understand if there was an apples and oranges kind of a thing, but I appreciate that it's hard to sort of...

Emanuele Lauro: Sure. No, no. It may well be. It may well be. I just don't know, but I'm very happy to discuss this further and more in-depth whenever you want.

Benjamin Nolan: Okay. Okay. That's helpful. And then lastly for me. James, you mentioned that in the first half of the year, OpEx, the 2 larger vessels was $50,000, and then the smaller ones is $20,000 or $25,000. I didn't get it. But the -- as we move into the back half of the year and things begin to normalize a little bit, can you maybe just -- what is the right way to think about sort of the run rate OpEx those after repositioning and so forth?

James Doyle: I'll take a stab and then Sebastian feel free to add. Pre-COVID the Zaratan and Scylla OpEx was around $35,000 a day. And so the increase is really due to crewing and travel costs of the crew, most of the crew is European, and we have to get them to Asia. And also, we've been running an additional crew to help us deliver on projects and timing, which is hopefully going to stop, but obviously, it depends on the restrictions of COVID in Asia. Sebastian, do you have more to add?

Sebastian Brooke: I think that, that's a fair guidance. I mean, it's been, as we all know, rather a fluid situation with regards to COVID and certain countries, restrictions and policies. We had Scylla working in China for a bit, which is very unpredictable, as you might guess, involve renting trains and all sorts of things to get crews backwards and forwards. But yes, I would expect it to settle down going forward. But again, trying to peg a date to that is difficult. Again, so it was the logistics on 1 side, the other pieces in order to meet the quarantine restrictions in certain countries. We've been running 3 crews instead of 2, because they've obviously got to be -- they got some unproductive time. So it's -- but as soon as that situation settles down, we will expect the cost to settle down, too.

Benjamin Nolan: Okay. All right. That's helpful. I appreciate it.

Emanuele Lauro: Ben, 1 of the things that I wanted to add on your previous question is actually that the -- Seajacks is the largest WTIV business currently existing. And as you know, we do have a global presence, Asia, U.S., et cetera. So we probably have more offices than most or than anybody else already having the largest fleet operating by a number of units compared to our second competitor. So that could be 1 of the items for which you see the discrepancy.

Benjamin Nolan: Sure. No, that's a good point.

James Doyle: And I do think that it's a fair point as well and I would just add on to that. The organizations we have in Japan and in Taiwan are kind of fully functional and have actually delivered projects. So it's not like it's a shell company that is actually -- and it's actually substance to those which adds real value to us as a company, but obviously incurs overheads.

Operator: Our next question comes from Turner Holm of Clarksons.

Turner Holm: Just wanted to dig a little bit more into the contracting outlook into the backlog. So just first, for this year, it sounded like maybe you thought there's some optionality for additional contracts on the NG2500. Did I kind of understand that right? Or should we just kind of look at the backlog as it is and assume that's what we got for 2022?

Sebastian Brooke: James, do you want me to cover that or would you want to?

James Doyle: Yes, go for it, Sebastian.

Sebastian Brooke: No, we're currently in discussions about additional contracts and in fairly advanced stages about additional contracts this year, but they haven't included in the forecast to date.

Turner Holm: Okay. So it's possible. It's not something you ruled out, but not necessarily base case, yes, yes, probable, okay. All right. Good. And then just on Zaratan looking into 2023, after you finish up [indiscernible], is there a natural project that hasn't been awarded yet for that asset, either in Japan or another APAC market?

Sebastian Brooke: Well, it's a very good question, and it's actually quite a hot topic at the moment. I'm not sure how familiar you are with the state of some of the Taiwanese projects, but there is 3 projects which are having significant delays. And if you start looking at what the available supply is in the Asia Pacific, it's very limited. So I would say that the prospects of Zaratan in 2023 are very positive, and we're definitely -- I think we are actually the only available vessel for the periods required during the 2023 period. Don't hold me to that. I mean, that's -- I recognized that's [indiscernible] 1 or 2 vessels, but they're kind of tied up on projects now. And so yes, we are in active discussions about projects outside of Japan, actually in the Taiwan region. I mean, it's also worth noting on that, we've got to understand this relationship for China as well. So that's always an option for us. So yes, there's optionality on Zaratan in '22.

Turner Holm: Okay. Very good. And then -- just with regards to 1 or more contract -- 1 or more of the new builds, just thinking about, I think you said when you placed the first order about a year ago that within about a year that you thought you might have a contract on the first one. So is there any update on timing for your expectations for potential contracts? I understand that it's tough to handicap, but any thoughts on that? And then also -- sure. Yes, I know it's a tender-by-tender issue. But -- and then any thoughts if you have around what you're seeing happening with leading edge day rates for the high-spec WTIV thinking about new builds?

Sebastian Brooke: I think if I take the SME new building first, is it exactly like you said, it's very difficult to gauge the interest. I think the company had previously indicated in the summer, but as you suggested, our focus is actually target projects with kind of highest commercial merits at the moment that can maximize our revenue. And if this means that we elect the folks on a project that's going to come a little later in time and so be it. Yes, but that's kind of where we are and I don't see any reason why we wouldn't, for instance, target something this year, but again, they want to be handicapped by the timing as opposed to being able to be focused on kind of optimizing our returns.

Turner Holm: Sure. Any thoughts on the day rates, from what you're seeing?

Sebastian Brooke: Yes. I mean, without being too granular about it, the market is tight and it's tightening. We announced -- recently announced Scylla contract is at similar day rates to the highest profile contract that was announced in Taiwan for Taiwan Installation works which [indiscernible] on Greater Changhua and it's actually ancillary foundation work. So all I'm saying is that there are opportunities across the value chain for us going forward, and we see those rates headed in the right direction for us. I don't see any reason why that would soften. In fact, based on the tendering activity going forward, I'd expect rates to continue to go up. I mean, that's just a fundamental in my view. Shortage of vessels in the future. I think it's quite an interesting question. Just to add on to that, right. When you're looking at an analyst at the demand side, I have said this once or twice previously, but when you look at Scylla's recent contract, that's an ancillary job on a foundation contract, which isn't assessed in any demand curves going forward. So her history is that this year, she went off to China which is not in any of the demand curves, and she also has gone into kind of ancillary foundation work. And I think that going forward, the mark will be tighter than it actually looks on the kind of 2-dimensional demand forecast because this acceleration work and ancillary work which isn't really provided for.

Operator: Our next question comes from J.B. Lowe of Citi.

Unidentified Analyst: Question was just a clarification. James, did you say that OpEx on the larger vessels would be $50,000 and on the smaller vessels would be $25,000 for the remainder of the year? Or is it just for the foreseeable future?

James Doyle: J.B., look, we hope they come down. I think at this point, $50,000 on the larger, the Zaratan and the Scylla for the first half of the year is reasonable. And $20,000 on the smaller. There's a slight uptick on the smaller vessels just because you'll see that the majority of them will be working.

Unidentified Analyst: Got you. Got you. And then I mean you said part of the reason was because of COVID and getting crews up to Asia. So when -- I believe that Scylla is coming to Europe at some point, right? Do you imagine that, that would be a big driver of cost coming down when that vessel gets closer to where all the crews are essentially?

James Doyle: Sebastian, do you want to take that?

Sebastian Brooke: Yes, I think it's a fair assumption. Most of the complications have come or the additional costs have come from the disparities between trying to get crews from Europe to Asia rather than crews within Europe.

Unidentified Analyst: Okay. And then another clarification was, so I know that we talked about 1 of the new builds potentially getting a contract or having a contract announced here in the next however many months. But you're saying now that we should not essentially expect a contract to be signed for the first new build necessarily this year just because we want to get to, obviously, the most favorable contract terms. Is that kind of the message that you guys are sending now? Is that just -- it's kind of a wait and see right now, but don't expect necessarily anything in 2022? I just want to make sure that's kind of the message.

James Doyle: Actually, for me, personally, based on experience, I'm not saying that we won't announce anything in 2022, there is a possibility and probability we will. It's just that going forward, I'd like precedent that we really are trying to achieve optimal day rate and not put ourselves in with kind of the date. It's more of a principal thing than whether or not it's relevant to this particular -- to the new build that's coming out now.

Unidentified Company Representative: Okay. I would add, James, that it's important for us not to create -- we're focusing on what Sebastian is saying and correct execution on this, and we have a balance sheet that allows us to do that. There are obviously projects that we're working on that can come quite early in this year as well as quite -- others that can come late in this year, but we don't want to get boxed into, especially with negotiating with customers with promises to people like yourselves or the market at the moment, that's not constructive. So we're going to choose to -- as we've done with the NG2500's and the other recent revenue, we're going to choose to sort of err on the just announcing what we've done as opposed to suggesting what we will do.

Unidentified Analyst: Right. Got it. Okay. And last question from me was just on -- now that the Jones Act vessels, you guys decided not to move forward with that. What -- how do you guys view -- or how do you think the U.S. market is going to play out over the next several years? Because I mean, there's a ton of projects in the backlog. Obviously, there's constantly delays on projects, but there's also a lack of vessels. So I guess just kind of from the 30,000-foot view, how do you think the U.S. is going to kind of play out in terms of bringing vessels in from the international market when necessary and how you guys can capitalize on those opportunities?

Sebastian Brooke: I think it's a really good question. And I think that the lack of Jones Act vessels means that the U.S. will be less U.S.-centric than it's kind of planned to be as it were and they are going to be subject to the vagaries of the international market and demand and supply and they're ultimately going to help drive rates for us because it is additional demand of high-end vessels. It will play out. I mean, people find solutions, but those solutions will inevitably require international tonnage.

Operator: Our next question comes from Greg Lewis of BTIG.

Gregory Lewis: Sebastian, I wanted to follow up a little bit on your comments around the work for the Scylla. The Zaratan -- does the Zaratan have operational capabilities that potentially enables it to go find work in foundation or something beyond the traditional installation work that it's accustomed to doing?

Sebastian Brooke: Yes. So she has, in her time, installed transition pieces on projects, both on a time charter basis and on the kind of lump sum, of what you say, a P&I basis. And the logic behind that is if you want to install your foundations in 1 season, then obviously having 1 vessel doing monopiles and the other doing transition pieces could be an efficient solution. She's also going to be able to do O&M work, and she's also going to be available to do geotechnical work which is coring -- kind of the preplanning coring before the foundations are designed and put into these wind farms.

Gregory Lewis: And otherwise you want to talk about pricing, just given the tightness in the market and I guess it's -- we'll see how things play out over the next 6, 12 months, but there is the potential that this rate could almost be as good as the seller or is it something where the market just can differentiate between the quality of vessel and really push the rate lower for a less qualified vessel?

Sebastian Brooke: So that totally depends on what it's being used for. Typically, it can be used for acceleration demand. You're talking about offsetting the spread costs of the developer which might be $1 million a day or whatever that number is, which is storage of components, putting other vessels on standby. And so it's really what's the value of that vessel and acceleration capacity is pretty high. So I would say that it is -- yes, I mean, honestly, it's a nice place to be having some available capacity in Asia for next year.

Gregory Lewis: Yes. Understood. Understood. And then just 1 more from me. You -- I'm not sure if you're on the call, but maybe James can help me with that. You announced previously the commitment for the $175 million facility. Is there any way to think about the asset base behind that facility, i.e., should I be -- should we be thinking about this as the conventional loan-to-value model? And if so, is there any way to think about what type of borrowing we are doing against those, I guess, core Scylla and Zaratan assets?

Unidentified Company Representative: Greg, I think that the conventional loan-to-value model is not necessarily relevant here, because the $175 million is secured by assets with quite a high value above that $175 million. So I mean, I think we can characterize the loan as being a relatively low loan to value. I think the banks who finance us look at -- they look at a number of things when they finance the assets, including the asset value, which is perhaps the traditional way of doing it, but also they're looking at the cash flow of the company and the underlying business. And so I think we're very happy with the facility in pretty much every way without being too sort of -- I don't want to promote it too much, but it's $175 million. We can borrow 50% of that in euros, which is very helpful to us in terms of managing our revenues and the currencies that our revenues come in at. It covers us for performance bonds. It really is -- it's revolving, which helps us manage our working capital. And it's -- and we've got 5 really experienced banks in there who are really sort of providing a lot of validation to our future financing needs. I mean, these banks are going to support us -- they're supporting us now and they're going to support us in the future. And it makes me very comfortable about the discussions we're going to have in the second half of this year about the finance for our new buildings. So generally speaking, we're really happy with the loan. I'd also like to point out, it's a green term loan. We -- the loan is accredited by the governance group in Norway as being essentially a green loan and or at least the assets are green assets. And that's something that, again, the banks are taking very seriously and they're very comfortable with. But look, we like the pricing, we like the terms, we like the relationships, and we're really happy with it.

Operator: Our next question comes from Randy Giveans of Jefferies.

Randall Giveans: Two questions. I guess, first, how should we think about utilization for the smallest WTIVs this year? Is it kind of ramping by quarter or basically full employment, maybe 2Q, 3Q and nothing really 1Q, 4Q?

James Doyle: Randy, we have the slide in our presentation. So I think for utilization for the full year, right now, we're at somewhere around 30% and then higher with options. And so if you look at what we've contracted so far in our table, I think it's the third or fourth slide in the presentation, you can see which vessels are available, and which ones are booked. And I think you're probably right that most of the additional contracts that could arise would be later in the year.

Randall Giveans: Got it. Yes. I see the table here you're seeing for upside possibility. And then on Slide 5, you mentioned you -- in close, I guess, discontinued discussions with the U.S. shipyards to construct the Jones Act-compliant WTIV. So I guess, why not continue these talks and then does this mean now that any new Jones Act projects would be 2025, 2026 at the earliest?

Emanuele Lauro: The second part of your question -- go ahead, Robert.

Robert Bugbee: I think that clearly, the -- with the yard capacity where it is and the ability to -- or lack of ability for the United States shipyards to deliver Jones Act vessels within, let's say, 2024 now, clearly, it's going to be into 2025. And we would most probably -- the earliest opportunity would be the second half of 2025. And I think that's partly what Sebastian was alluding to that you've now as far as international ships are concerned, the U.S. market itself either has got to cancel projects, which I don't think is going to happen, we're not hearing that from customers or they're going to have to go the international route, which also goes back to the conversation we had with James earlier from Citi that we're very reluctant for commercial reasons to show any of our cards because we see this market is really tightening up for the international fleet, partly because of what's happening in the U.S.

Operator: Our next question comes from Liam Burke of B. Riley.

Liam Burke: There's been a lot more offshore oil production activity. How has that or has that affected or tightened the supply of available vessels?

Sebastian Brooke: If I take a stab at that, I'd say that as a general commentary, yes, even in our home market, which is the North Sea for the small vessels which are involved in kind of infrastructure maintenance and what have you, is that there have been increased levels of activity. So supply of those vessels, availability of those vessels has actually decreased which -- yes, which is obviously a positive for us as we market these vessels in both offshore wind primarily, but also kind of oil and gas infrastructure projects.

Liam Burke: Now does that change your view on what utilization rates will be for the smaller vessels as -- depending on how long the price of oil stays that high and offshore activity continues?

Sebastian Brooke: So I think that -- I actually think that supply in the North Sea had decreased anyway, because the number of vessels have moved out to the Middle East, while the oil and gas price was down. And so I think that even kind of regardless of the oil and gas market, the market dynamics here have improved significantly over the last year or so. And that, in turn, has tightened up the accommodation requirements on the substation work that we look at and also on the offshore maintenance of the wind farms. So it's difficult to be more specific than that, but I think from a kind of high level, I think that the market is just tightening.

Operator: I would now like to turn the conference back to Emanuele Lauro for closing remarks.

Emanuele Lauro: Thank you very much, everybody. We do not have anything to add at this stage, but thanks for your time and look forward to speaking to you soon.

Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.