Alumina (OTC:AWCMY) Limited (ticker: AWC) has announced a significant proposed transaction with Alcoa (NYSE:AA) Corporation, which will see Alcoa acquire Alumina Limited, offering a premium to Alumina shareholders and aiming to unify the ownership of AWAC.
Despite a challenging financial year for Alumina Limited, with a net loss after-tax of $92 million in 2023 and no final dividend declared, the company anticipates high margins from operating refineries and a moderate recovery in aluminum demand in 2024.
The company also highlighted its commitment to environmental, social, and governance (ESG) performance, achieving a substantial reduction in carbon emissions and compliance with tailings management standards.
Key Takeaways
- Alcoa proposes to acquire Alumina Limited with a 19.5% premium over the past year's average exchange ratio.
- Alumina shareholders to hold a 31.6% stake in the merged entity.
- Alumina Limited reports a net loss after-tax of $92 million for 2023.
- No final dividend declared by Alumina Limited.
- AWAC's EBITDA stands at $165 million with a net loss after-tax of $318 million.
- Alumina production is expected to be around 9.4 million tonnes in 2024.
- Alumina Limited improved ESG performance with a 47% reduction in carbon emissions.
- Global primary aluminum demand grew by 1% in 2023, driven by China.
- The merger is viewed positively for shareholders, offering a diversified aluminum value chain.
Company Outlook
- Alumina Limited expects ongoing operating refineries in WA to deliver high margins.
- Anticipates a moderate recovery in aluminum demand in 2024.
- Alumina shipments projected to range between 12.4 million and 12.7 million tonnes.
Bearish Highlights
- Net loss after-tax of $92 million for 2023.
- AWAC's net loss after-tax of $318 million in 2023.
- No final dividend declared for shareholders.
Bullish Highlights
- The proposed transaction with Alcoa is expected to bring strategic benefits and financial flexibility.
- AWAC achieved approval of its five-year mine plan and took actions to reduce losses at refineries.
Misses
- Lower bauxite grades, reduced production levels, and increased costs contributed to financial challenges.
- Aluminum prices fell due to weaker demand after an early rally.
Q&A Highlights
- Mike Ferraro believes the proposed merger with Alcoa is the right step for the future.
- The Kwinana closure is expected to be fully funded, and the profitability of third-party purchases is generally balanced.
- Tax synergies and production cost guidance for 2024 were not provided, with suggestions to direct tax-related questions to Alcoa.
Alumina Limited is navigating through a transformative phase with the proposed merger with Alcoa. The transaction aims to simplify corporate ownership and offer shareholders a stake in a more robust aluminum industry entity.
Despite the financial setbacks in 2023, the company remains optimistic about its operational refineries and the aluminum market's prospects. Moreover, Alumina Limited's commitment to ESG initiatives and the recognition of aluminum as a key commodity in the global transition to net zero underscores the company's forward-looking approach amidst the evolving industry landscape.
Full transcript - Alumina Ltd (AWC) Q4 2023:
Operator: Thank you for standing by, and welcome to the Alumina Limited 2023 Full Year Results Conference Call. All participants will be in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Mr. Mike Ferraro, Chief Executive Officer. Please go ahead.
Mike Ferraro: Welcome everyone. Thank you for joining Alumina Limited's presentation of our full year results for 2023. Before I proceed further, please refer to the disclaimer. Also note, all references to dollars refer to U.S. dollars unless otherwise specified. I would like first to take you through the proposed transaction with Alcoa, the details of which were announced yesterday, before I move to discuss the 2023 results. The transaction involves Alcoa acquiring Alumina for a script consideration of 0.02854 Alcoa shares per Alumina share. The proposal implies a 19.5% premium to the average exchange ratio over the last 12 months and represents a 31.6% ownership stake for Alumina shareholders in the merged entity. This proposal follows earlier engagement with Alcoa in a period of negotiation, which included commercial, financial, and legal due diligence information. As a next step, Alumina has entered into an exclusivity deed, which grants Alcoa 20 business days of exclusivity with an intention that both parties will negotiate and execute definitive transaction documentation within this timeframe. We believe the proposed transaction is in the best interest of Alumina shareholders and provides a number of strategic benefits. First, it's a logical combination the unified ownership of AWAC, with Alumina shareholders exchanging their 40% interest in a minority nonoperating JV for a 31.6% direct interest in the operating entity. The unified ownership of AWAC would simplify corporate ownership, streamline decision-making, and remove duplication of corporate costs. Second, the proposed transaction provides Alumina shareholders exposure to a leading global pure-play upstream aluminium company with a geographically diversified portfolio across bauxite, alumina, and aluminium. Alumina shareholders will benefit from increased exposure to aluminium, a key commodity for energy transition and decarbonization, whilst maintaining significant ownership in AWAC assets. Third, the merger will enhance capital structure and eliminate inefficiencies embedded in the JV structure, resulting in financial synergies. Finally, the combined entity would have increased financial flexibility and greater strategic optionality, providing a better platform for growth. In summary, we believe it is a logical combination that unifies the ownership of AWAC, provides vertical integration and diversification benefits, and enhances capital structure for our shareholders. Turning to the results. Alumina Limited recorded a net loss after-tax of $92 million, excluding significant items, and made a large equity contribution to the AWAC joint venture. As a result, no final dividend was declared. While the results were disappointing, AWAC has recently achieved a number of milestones fundamental to improved performance for Alumina Limited. In December, the WA government announced it had approved AWAC's latest five-year mine plan for 2023 to 2027. This approval, together with an exemption allowing AWAC to continue to operate during any EPA assessment of the mine plan, provides increased confidence for our WA operations until the next mine move to Myara North and Holyoke. Also in December, Alcoa announced it was taking action at the San Ciprian refinery to reduce losses and to work towards a longer-term solution. More recently, in January, the curtailment of the Kwinana refinery in WA was announced. The combination of these actions provide AWAC with a strong foundation to create a significantly higher-quality refining portfolio. The other two refineries in WA, Pinjarra and Wagerup, are first quartile on the global alumina refinery cost and emissions curves and they remain strongly cash flow-generative at current API prices. In addition to these actions, AWAC management is focused on profitability improvement across all aspects of the portfolio. Near-term improvements are underway, including reduced caustic soda and lime costs. Actions to reduce controllable operating costs are expected to deliver benefits in 2024 and 2025. Now, I'd like to provide an update on the current alumina market. The API averaged $343 a tonne in 2023. With the optimism of China's post-COVID reopening and supply disruptions at Kwinana, the alumina price spiked in February 2023 to $371 a tonne. However, prices retraced due to a weaker aluminium market. The API LME ratio was trading within a narrow range last year. The API surged from November lows of $326 a tonne to $372 a tonne by mid-January this year. This increase was primarily driven by bauxite supply concerns in Guinea and Chinese refinery curtailments due to bauxite shortages and environmental audits. This year-to-date, the API has averaged $367 per tonne and is currently $364. As mentioned earlier, our ongoing operating refineries in WA are first quartile on the global cost curve, and at current API, we expect them to deliver high margins this year. Any further supply disruptions such as the Kwinana curtailment could create more upside for alumina prices. Now, Galina will take you through the financials.
Galina Kraeva: Thank you, Mike and good morning all. I will start with a review of AWAC performance before addressing Alumina Limited results. In 2023, AWAC recorded an EBITDA of $165 million and net of after-tax of $318 million. Excluding significant items, EBITDA was $210 million and loss after-tax was $172 million. AWAC cash flow from operations was negative $10 million. Let's go through AWAC operational performance in more details. Aluminium production of 10.3 million tonnes was approximately 1.5 million tonnes lower compared to 2022. In Western Australia, production volume reduced mostly due to the processing of the lower bauxite grades and curtailment of one digester at Kwinana refinery. Curtailment was initially in response to a statewide shortage of natural gas and then was extended to provide more time to work through the mining approval process. Higher maintenance and outages at Wagerup refinery also contributed to the lower production in WA. At the Alumar refinery, a ship-to-show conveyance system failure and significant maintenance projects for the alumina ship loader affected production volume in the first half of the year. A Brazil-wide electricity blackout and ongoing voltage stock affected refinery production in the second half of the year. San Ciprian refinery operated at approximately 50% of the capacity in 2023 after reducing production in second half of 2022. AWAC cash cost of production averaged $308 per tonne, an increase of $4 per tonne compared to the previous year. Key drivers for the increase in production costs were; unfavorable impact of lower bauxite grades in WA; absorption of fixed costs due to the lower production levels, particularly at San Ciprian and Kwinana refineries; higher maintenance costs and higher costs due to the time lag in inventory flow. These cost increases were offset by lower energy costs at San Ciprian and Alumar refineries. Earlier in the presentation, Mike highlighted the impact of decisions related to the future of Kwinana and San Ciprian refineries. These slides outline the 2023 performance of AWAC portfolio, excluding Kwinana and San Ciprian. Alumina production for the year was 8.1 million tonnes. Production improved in the second half of the year as Alumar recovered from equipment failures and Pinjarra performed better than expected, processing lower grades of bauxite. Production cash costs, excluding Kwinana and San Ciprian, averaged $275 per tonne, resulting in average margin of around $70 per tonne against the one month logged API. Turning our attention to AWAC capital projects. 2023 total capital expenditure of $279 million was similar to the previous year, with majority spent on residue storage areas at Alumar and Pinjarra refineries and tailings dam expansion in Brazil. The Alumar debottlenecking project was the most significant growth project and is still ongoing with some expenditure deferred into 2024. Work on residue storage areas and tailings dams will continue to form a majority of capital expenditure. In addition, planning for the Huntly Mine move will commence this year, and capital allocations are included for the cost savings initiatives in Brazil and longer term water treatment at Kwinana. The current estimated total capital expenditure for 2024 is approximately $360 million. However, similar to the previous years, AWAC will be reassessing the level of required expenditures, especially for the projects that are in planning stages and we'll continue to monitor the cash outlay throughout the year. Moving to the full year outlook. In 2024, we expect alumina production to be approximately 9.4 million tonnes, 900,000 tonnes lower than 2023 as a result of Kwinana refinery curtailment and assuming San Ciprian production remains around 50% capacity. Alumina shipments are expected to range between 12.4 million and 12.7 million tonnes. The difference to production reflects volume that will be sourced externally to cover customer contracts as well as normal level of trading activity. Year-on-year, we expect a modest improvement in the cash cost of production as caustic and energy price benefits will be offset by full year impact of the lower bauxite grade. Similar to last year, the production costs will be higher in the first half of the year due to the seasonal maintenance and impact of the Kwinana curtailment. Aluminium production is forecast to be around 161,000 tonnes, and total third-party bauxite shipments are expected to be approximately 7 million tonnes. As announced in January, AWAC is expected to incur cash outlays related to Kwinana curtailment of approximately $130 million in 2024. Environmental and asset retirement obligation payments, including restructuring-related items for closed visits increased by $34 million, mostly reflecting higher rates of mine rehabilitation in Western Australia and Brazil. There will be no tax payments related to the prior year in 2024. Now, turning to Alumina Limited's results. Alumina Limited recorded a net loss after-tax of $150 million. Excluding significant items, net loss after-tax was $92 million. This reflects an underlying performance of AWAC joint venture and challenging market conditions in 2023. With significant portfolio announced, a mine plan approval secured in Western Australia, AWAC will continue to focus on operational improvement across all assets, positioning to benefit from market improvements and medium term opportunities such as an improved bauxite grade following mine moves in Australia. With that, I will hand you back to Mike.
Mike Ferraro: Thanks Galina. AWAC has continued to improve its ESG performance despite the financial challenges faced June 2023. Last year, there were no fatalities at AWAC facilities and we have maintained fatality-free operations since 2017. While AWAC's goal is zero fatalities and serious injuries, last year, there was one serious injury in our operations. AWAC achieved compliance with the global industry standard on tailings management in August 2023 for all its very high and extreme consequence dams. This required significant effort and is aligned with Alcoa's commitment to the ICMM requirements. Alcoa is continuing to work on the remaining facilities with lower consequence category ratings, which are due to be in conformity by August 2025. As at December 2022, AWAC had reduced its carbon emissions by 47% from a 2010 baseline, exceeding its target of 45% reduction by 2030. Alumina Limited is now a signatory to the Aluminium Industry Greenhouse Gas Initiative, launched by the IAI inter-transparently and publicly track the ambition and progress of its member companies' greenhouse gas emissions reductions. During the year, the Australian government released a new strategic materials list. This includes aluminium, among other materials, as an essential commodity for the global transition to net zero and priority technologies. This is an important recognition for the aluminium industry and demonstrates that aluminium can continue to play an important role powering Australia's economy. Alcoa of Australia received WA approvals for its 2023 to 2027 mine plan and a Section 6 exemption in December 2023. A number of commitments were made to address key environmental factors and respond to community and stakeholder expectations as AWAC transitions to a modern approval framework for the WA operations. These commitments include enhancing protection for drinking water, such as no clearing for mining within one kilometer of public drinking water reservoirs, reducing impacts on forest clearing, which includes capping clearing rates of 800 hectares per annum across Huntly and Willowdale bauxite mines, an increase in current rehabilitation rates by 2027 to more than 1,000 hectares per annum. Additionally, Alcoa is increasing transparency by publishing a five-year mine plan and associated management plans on the company's website as well as increasing community certainty, modernizing approvals, and protecting cultural heritage. Now, a bit more detail on the market. Global primary aluminium demand in 2023 grew by 1%. Aluminium consumption ex-China saw a contraction as a metals-intensive manufacturing sector experienced little to no growth. This was especially true in Europe which suffered steep falls in industrial production as higher borrowing costs continue to be a drag on the demand for aluminium. Demand weakness in the rest of the world was more than offset by strong demand from China. This was driven primarily by the electrical sector, which witnessed substantial growth due to large-scale installations of solar power capacity accompanied by an increase in exports of solar panels. China has recently introduced a series of measures to support the sluggish construction sector, which may stabilize aluminium demand in 2024. Aluminium prices rallied early in 2023 as a result of improved market sentiment following China's post-COVID reopening. Market exuberance quickly fizzled out due to a weaker than anticipated demand, and prices fell in early February before trading within the range of $2,100 to $2,300 for the rest of the year. U.S. Midwest premium reached a high of $0.29 per pound in February before trending down for the rest of the year and ending at $0.19 per pound. European premiums also ended the year lower, while the Japanese premium remained relatively flat through 2023, indicating a subdued market in these regions. Global primary aluminium production reached a record level of 71 million tonnes in 2023, representing a 2% year-on-year growth. Global metallurgical alumina demand mirrored the growth of primary aluminium production. Export-grade [ph] alumina production outside China dropped 1% due to supply disruptions in Australia, Europe, and Brazil, more than offsetting expansions in Indonesia and India. With limited supply growth outside China, the alumina market remained tightly balanced in 2023. This will be more pronounced following the curtailment of Kwinana during the second quarter of this year. Chinese alumina production costs fell by 8% in 2023, driven by lower caustic soda and energy prices. Chinese refineries process lower-quality domestic bauxite and higher-priced seaborne bauxite, which offset some of the cost savings. The average alumina production costs in the rest of the world also fell by 8%, driven primarily by lower fuel and caustic costs. AWAC was impacted by lower-grade bauxite in 2023, and its average cash cost increased by 1% to $308 a tonne. As I mentioned earlier, AWAC is focused on a number of profitability improvement initiatives across the portfolio, which are expected to flow through this year and next. In summary, 2023 was a difficult year for AWAC and Alumina Limited, but the milestones achieved in late 2023 and a positive market outlook provide more confidence going into 2024. Lower input costs, the upcoming curtailment of Kwinana combined with the approval of the mine plan in WA, and Alcoa's decision to take action at the San Ciprian refinery supports improved performance. We expect AWAC's production costs to reduce in 2024. These actions provide AWAC with a strong foundation to move forward to create a higher-quality refinery portfolio. On the demand side, a moderate recovery in aluminium demand is expected for this year, driven by improved industrial production growth and a stabilizing construction sector. Aluminium is an essential material in the decarbonized world due to its lightweight, recyclable, durable, and ductile properties. In the longer term, demand for aluminium, especially green aluminium products, including AWAC's low-carbon alumina, is expected to grow substantially. The proposed transaction with Alcoa creates the potential for our shareholders to have exposure to a fully integrated and diversified aluminium value chain, which includes AWAC. That now concludes our formal remarks. I'll now hand back to the moderator for questions.
Operator: Thank you. [Operator Instructions] Our first question comes from Paul Young from Goldman Sachs. Please go ahead.
Paul Young: Thanks morning Mike, morning Galina. Mike I guess the focus really where it did start on the deal. I mean, it's been a long time coming and it does seem a little bit of a letdown. I think some are probably looking for a bigger premium. But it's all about relative value. But just in your comments, it does seem like you made a call in aluminium here. Can you just talk about, though, how you've assessed the value of Alcoa for AWC shareholders? If you look at, I guess, the near-term multiples, they look fairly aligned our current AWC, and that's EBIT, EBITDA, but surely, you haven't assessed it just on that. So, how actually have you assessed the value of Alcoa for AWC shareholders? Have you come up with a view on NAV? Thanks.
Mike Ferraro: We've done a lot of work on valuation. And Paul, we're not new at this because there's been a range of negotiations and discussions with Alcoa over the years, and it's been really hard to settle on relative value depending on where the share prices were at the time. It's like trying to pin the tail on the donkey. And this time, it's basically aligned and now I think there could be some feedback that, well, we're at the low point of the cycle and our share price is relatively low. We should be doing better. But the reality is the relativities are aligned, not only in the short-term, but also in the long-term. But more importantly, we really see this as makes logical sense. I've been of the view for some time now, as is our Board, that being part of a larger, fully integrated supply chain is really important, particularly as the rest of the industry is moving in that direction. Bringing the two assets together into 1 and giving our shareholders exposure to the aluminium segment that we don't have, I think, is really important for the longevity of this venture going forward and its success. And so we have taken into account long-term value on an NPV and other valuation metrics. We've looked at historical contribution, potential forward contributions, done a lot of assessment, but really, the key message here, Paul, it's not just about the short-term. It's the upside in the long-term for our shareholders holding Alcoa shares.
Paul Young: Okay. So, just to confirm, Mike, you're saying on a price to NAV basis, do you think they're aligned as well?
Mike Ferraro: I think they're largely aligned, yes.
Paul Young: Okay. Thanks. And then, Mike, if this didn't come along, what was option two? Was option two a capital raising?
Mike Ferraro: Listen, Paul, as you know, our debt level is about $300 million and we've got a $500 million facility. So, it all depends on how the year pans out. We've given guidance on what the CapEx will be and likely cost per tonne. But what really is a wildcard here is what API will do. If we get an upswing in API due to supply disruptions such as Kwinana, then the prospects of a capital raising reduce. So, that could be a possibility. As I've said in the last year, we've been monitoring this closely, but it's not in the short-term.
Paul Young: Okay. Thanks, And just a quick 1 on the market and more specifically around the 3 million tonnes or so of spot purchases that Alcoa has to make this year to make up for shortfalls across Kwinana and elsewhere. Can you just expand on where you're buying it from? Which market is it at, Pacific or Atlantic?
Mike Ferraro: Yes, it will be all over because it's not just a straight purchase. There will be swaps and so forth, so it's really all over the market so that it provides full flexibility.
Paul Young: Okay. All right Mike. Thank you. I'll pass it on.
Mike Ferraro: Thanks Paul.
Operator: Our next question comes from Adam Baker from Macquarie. Please go ahead.
Adam Baker: Morning Mike and team. It sounds like you answered my question, the last question. But just more of a question on the why now for the non-binding deal with Alcoa. It sounds like discussions have been going for a long period of time, but just wondering if it has been more driven by the management changes at Alcoa?
Mike Ferraro: Well, you probably should ask them that, but we've certainly been negotiating this time for quite some time. But certainly, Bill Oplinger and I have a view that the two entities would make sense logically to be merged. It was just a question of timing and relative value as I discussed before. So, I think you can't say that the size and the moon and the sun is always fully aligned, but it was pretty close to that this time, so it made sense to do it.
Adam Baker: Thanks. And consensus plans should Alcoa pull the bid. You mentioned a balance sheet, almost $300 million of net debt, another $200 million headway there plus large profile for this year. How are you thinking from that perspective?
Mike Ferraro: At the moment, we're pretty comfortable. As you know -- as you can see, we've got headroom notwithstanding the CapEx. And as I mentioned before, the API is an important swing factor here. So, we're monitoring it regularly. Right now where we sit, we're pretty comfortable.
Adam Baker: Thanks.
Mike Ferraro: Thank you.
Operator: Our next question comes from Glyn Lawcock from Barrenjoey. Please go ahead.
Glyn Lawcock: Morning Mike. Maybe a similar question I asked Bill yesterday. I mean, did you -- they all discussed the potential for any cash element that like a dividend and try and release any of the franking credits or is that something you think just reached too far?
Mike Ferraro: No, there are a whole range of discussions and a whole range of permutations. You just don't start with a clean deal and close it with a clean deal, Glyn. But at the end of the day, collectively, and we came to the view that we thought there was more upside for our shareholders in holding Alcoa shares. And so we decided that, that was the best approach, taking into account the potential for our shareholders going forward in that way.
Glyn Lawcock: I appreciate that, but I mean, no thought to like a partial amount of cash just to try and release some of the franking because I guess we're going to lose that and then bid again?
Mike Ferraro: No, you're right. There's quite a lot of thought and discussion around that, but ultimately, we landed on the share exchange.
Glyn Lawcock: And is that a reflection then -- I'm just looking at the CapEx guidance for this year, $650 million out the door on a 100% basis. I mean, probably a fair bit above what everyone was thinking in the market. Is that partly the reason as well? This business is going to be quite cash-consuming this year and I guess, next year, too, depending on what happens with San Ciprian?
Galina Kraeva: Glyn, you're adding up all the cash items, I'm too. CapEx and -- because CapEx is $360 million on 100% level AWAC.
Glyn Lawcock: Yes, then $130 million Kwinana and $160 million --?
Galina Kraeva: Yes, -- on all the items. Yes, with Kwinana curtailment, 2024 is quite a cash-consuming year. And that's why $360 million is just the guidance and every single project has been looked at very carefully.
Mike Ferraro: But to the basis of your question, Glyn, no, that was not the reason to do the deal. We didn't feel under pressure that our cash outflow position will be such that we needed to do a deal. We did a deal on the right terms at the right time.
Galina Kraeva: Because as Mike highlighted, the underlying business is generating cash and we expect Kwinana closure to be fully funded. So, yes, the outlays -- cash outlay is higher this year, but the generation is better as well.
Glyn Lawcock: Yes. But I guess $650 million in CapEx is $50 a tonne based on your sales plus another $300 of costs. Pretty much AWAC is not making any cash, I would imagine, on this sort of cash outflow. So, that's why it has to be a shared deal because there's just not enough cash for Alcoa to fund everything once they take control.
Mike Ferraro: Well, that might be a possibility you'd probably need to pass on that question.
Glyn Lawcock: Yes, definitely I'm Bill's best friend at the moment. And then just a final question. Just a final question. Just on the third-party purchases, do you make much of a margin, if anything, or is it sort of a wash at the moment?
Mike Ferraro: Well, it depends on when we buy them and when we sell, and that will have to be worked through. It probably is a wash.
Galina Kraeva: It's a wash.
Glyn Lawcock: Could you tell me what it was in 2023? Was there a loss or a gain made on the third-party purchases and sales in 2023?
Galina Kraeva: It's the same. It's -- on a net basis, it's pretty much a wash.
Glyn Lawcock: Okay. Thanks very much.
Mike Ferraro: Thanks Glyn.
Operator: [Operator Instructions] Our next call comes from Paul McTaggart from Citigroup. Please go ahead.
Paul McTaggart: Morning. So, in your consideration of the value to AWC -- sorry, to Alcoa, what estimate did you have of the kind of tax synergies from step-up? I mean, I know in the past when your share price was much higher, it was kind of a substantial number of benefit, tax benefit to Alcoa, but obviously, it's much lower share price now. So, did you incorporate in that in kind of your negotiations?
Mike Ferraro: We incorporated a range of factors. Some of them were assumptions, some not, but really that's probably better a question directed to Alcoa because we don't know how the tax and fiscal structures arrangement are arranged. There may or may not be some step-up depending on the underlying value of the assets.
Paul McTaggart: And just lastly, -- thanks, if I can just ask. So, I couldn't see it in the slide show. Did you -- have you given guidance for calendar 2024 production costs?
Galina Kraeva: We did got to say that it will be modest improvement, so we don't expect a huge difference because as Kwinana stepped down in the production, you will have a cost input.
Paul McTaggart: Thanks Galina.
Mike Ferraro: Thanks Paul.
Operator: There are no further questions at this time. I will now hand you back to Mr. Ferraro for closing remarks.
Mike Ferraro: Thank you, everyone, for joining the call this morning. And obviously, the front of mind is the proposed transaction. As I indicated, it's -- well, as the press has indicated, it's been a long time coming. But certainly, we genuinely believe this is the right future for our company and our shareholders to be part of a vertically integrated chain. That's where the industry is moving. It will make the combination much stronger to go forward, create a lot more optionality. So, thank you for listening and taking the time today.
Operator: That concludes our conference for today. Thank you for participating and you may now disconnect.
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