Good day, and thank you for standing by. Welcome to the Hyliion Holdings Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management’s prepared remarks, there will be a question-and-answer session.

I would now like to turn the conference over to Kellen Ferris, Hyliion's Director of Investor Relations. Kellen, please go ahead..

Thank you and good morning, everyone. Welcome to Hyliion Holdings' third quarter earnings conference call. On the call today, are Thomas Healy, our Chief Executive Officer and Jon Panzer, our Chief Financial Officer.

A slide presentation that accompanies this conference call and is available on Hyliion's Investor Relations website at investors.hyliion.com. Please note that during today's call, we will make certain forward-looking statements regarding the company's business outlook.

Forward-looking statements are predictions, projections and other statements about anticipated events that are based on current expectations and assumptions, as such are subject to risks and uncertainties. Many factors could cause actual results to differ materially from forward-looking statements made on this call.

For more information about factors that may cause the company's results to differ materially from such forward-looking statements, please refer to our presentation and press release as well as our filings with the Securities and Exchange Commission.

You are cautioned not to put undue reliance on forward-looking statements and we undertake no duty to update this information unless required by applicable law. Thank you. And now I will turn the call over to Thomas..

Hello, and welcome to Hyliion's third quarter 2023 earnings call. I appreciate everyone joining us today for a business update and third quarter financial report.

Last month, we announced that with the support of strategic expert advisers, we were exploring a range of strategic options for our powertrain business including engaging with a number of strategic and private equity partners regarding a possible sale or industry merger.

In parallel, we also engaged industry experts to help us evaluate the market opportunity and competitiveness of the KARNO generator. As a result, today, we are announcing that we have decided with the support of our Board of Directors to wind down the powertrain business while preserving the technology for potential later use or sale.

Going forward, we will focus the company's capital resources and efforts on our KARNO generator business, an innovative new generator solution. Although this is a difficult decision to make, it is a decision we believe to be in the best interest of the company and its shareholders.

We are proud of the progress we've made with the development of our Hypertruck ERX powertrain. As we have regularly publicized, we have made consistent progress achieving the development milestones that we laid out almost two years ago.

In fact, with the recent receipt of CARB certification, the beginning of extended fleet trials with customers and building of production trucks, we have completed all the prerequisite steps on our path to commercializing our Hypertruck ERX powertrain.

Since I founded the company, Hyliion's mission has been to provide innovative solutions that reduce emissions from semi trucks, which was in line with the interest from fleets in adopting electrified trucks and with the development we've accomplished to date.

Despite this progress, the environment for companies in the electrified commercial vehicle space has become challenging. Slower than initially expected fleet adoption of electrified vehicles, higher component costs and evolving regulatory frameworks that have put significant pressure on companies like Hyliion.

As an example, I was recently speaking with a fleet owner, who shared that the cost to buy a conventional natural gas drop has increased by around 45% in the past few years. We have seen increases for nearly all powertrain parts, some by more than $10,000 each.

While this is partly due to inflation, it is also driven by the limited number of suppliers and low production volumes for key components, as a result of the immature nature of the electrified powertrain market.

Last June, at our Investor event, we described additional development work that was necessary to align with changes to the regulatory environment.

This included integrating and obtaining CARB certification for the new Cummins 15-liter natural gas engine, developing a daycab variant of the Hypertruck ERX powertrain and reducing the cost and weight of our powertrain.

While we believe our electric powertrain is the right solution for long-haul trucking and avoid some of the hurdles associated with other electric solutions, such as charging infrastructure, range anxiety and the high cost of hydrogen.

We are now faced with an adoption cycle that is longer than we expected as fleets are delaying orders until mandates force the adoption of electric trucks. The primary one being CARB ACF, which starts in 2027 and requires additional investment in expense such as integrating into a daycab and a new engine.

Given these various reasons, it is clear that further development of our powertrain business would require us to raise additional capital at some point, partly driven by higher interest rates but also due to the recognition of the industry challenges I have described, our third party experts have advised that the capital markets are not currently supportive of additional fundraising by companies developing electric commercial vehicles.

This has caused financial difficulties for many companies and some including Proterra, Lordstown, DLMS and recently Volta Trucks have entered bankruptcy. Therefore, we believe it is important to act now while we are in a position of financial strength to discontinue spending on the powertrain segment of our business.

John will discuss the impact of the wind down of powertrain later in the presentation but I want to shift to discussion now on our KARNO generator business and the go-forward plan.

Our goal with KARNO has been to develop and commercialize the generator to address the growing demand for electricity with a distributed generator solution that offers clean, efficient and cost-effective electricity.

KARNO is an innovative new solution that is powered by a linear heat generator and enabled by recent advancements in additive manufacturing. When we initially acquired the KARNO technology, we saw it as a strong solution for both our Hypertruck powertrain as well as the stationary market.

Our team has successfully showcased both the vehicle integration and the KARNO's ability to work in a stationary application by providing power back to the grid.

As we look at the opportunities ahead, the KARNO generator in the stationery market has become even more compelling due to its stand-alone nature and ability to address customers' ever-increasing electricity needs.

Commercial fleets that have expressed interest in BEV vehicles are discovering that they are not able to secure sufficient electric power for their recharging infrastructure. And when they do, they are faced with significant capital investments, long lead times and often encounter above-market electricity rates and incremental demand charges.

Our KARNO generator is currently being configured to solve each of these issues. It is important to highlight that the KARNO generator is unlike conventional internal combustion or gas turbine-driven generators, powered by a heat engine the KARNO generator has distinct benefits compared to its conventional counterparts.

These benefits include greater efficiency across a broad range of power output levels, lower maintenance costs, high power density, less noise and vibration, and the ability to operate on a broad range of fuel sources, including hydrogen, natural gas, ammonia, propane, and conventional fuels.

KARNO utilizes a proprietary flameless oxidation technology that results in significantly lower emissions compared to conventional generators.

We expect its efficiency to surpass conventional generating systems when employing various fuel sources and even outperforming fuel cell efficiency when operating on hydrogen, while generating no carbon emissions.

We believe the KARNO generator can compete across a broad range of prime power applications operating as a substitute for or as a supplement to grid power. We also believe it can compete in markets providing supplemental or backup power, such as peak shaving, electric vehicle charging or renewables matching.

Its ability to operate on a range of fuels, fuel mixtures, or even fuels with impurities is another advantage that enables it to convert waste gases such as flare gas or landfill gas into usable electricity.

Over the past couple of years, we have made significant advancements in its development as we prepare for initial commercial deployments later next year. Recently, we highlighted a major achievement of successfully returning power back into the electric grid from our facility in Ohio using a KARNO generator unit.

In recent months, we have been showcasing KARNO technology to potential customers. Through these discussions, we are garnering valuable insights on how the KARNO generator can address many of the pain points customers face with grid power. One example is maintenance costs.

Internal combustion generators require frequent maintenance like oil changes that require downtime and technician support. In contrast, the KARNO generator has no oil or lubricants and with only one moving part per shaft, we expect maintenance to be significantly reduced.

As we continue these customer showcases, we expect to announce soon that several of these companies will take deliveries of initial KARNO units next year. As we wind down the powertrain business and preserve the technology for potential later use, we have an opportunity to shift certain employees and technology to KARNO development.

As an example, the cloud and infrastructure we have developed to capture and analyze vehicle data is readily adaptable for use in system supporting KARNO generator controls and monitoring. The Hyliion Drive Processor, which is used on the vehicle for connectivity and advanced algorithms can similarly be adapted to the KARNO technology.

We also see significant overlap in electric architectures and battery systems. We plan to maintain operations in Austin, Texas and Cincinnati, Ohio. Austin will remain our headquarters and will assume more activities related to the industrialization of the carnal generator and software development.

The Ohio team will maintain its focus on R&D technology. As we transition the focus on KARNO, we will be able to significantly reduce the amount of cash spent on the business. John will provide financial details, but I want to highlight our initial expectations.

We continue to have a strong balance sheet with $324 million of available capital at the close of the third quarter. Our projection for the full year is to have spent $137 million in 2023, leaving us approximately $285 million at year-end. For 2024, we expect our cash burn to be reduced to approximately $40 million or a 70% reduction.

Our strong capital position gives us financial flexibility well into the future as we begin commercial deployments of our KARNO generator technology next year. I will now turn the call over to Jon to provide a financial update..

Thank you, Thomas, and good afternoon. Starting with our financial results for the quarter, we reported $96,000 in revenue from sales of hybrid systems. Operating expenses totaled $33.3 million compared to $62.9 million in the prior year quarter, which included a onetime charge of $28.8 million related to the purchase of KARNO last year.

Excluding this charge, expenses in 2022 were $34.1 million. Using this more comparable basis, total expenses were down about $1 million in the third quarter, driven by a $2 million reduction in SG&A expenses partly offset by $1 million increase in R&D expense.

Total cash consumed in the third quarter was about $31 million compared to $45 million in the third quarter of 2022 including $15 million of cash that was paid as part of the KARNO acquisition and compared to cash spend of $31 million in the second quarter of this year.

We finished the third quarter with $324 million of cash, short-term and long-term investments on our balance sheet. I want to remind everyone that we maintain a significant share of our capital and longer-term investments to take advantage of higher interest rates on longer-dated securities.

For example, we currently have about 43% of our capital or $141 million categorized as long-term investments. For the first nine months of 2023, revenue from hybrid-related sales was $672,000, down about $300,000 compared to the first nine months of 2022.

Year-to-date operating expenses in 2023 were $103.7 million compared to $120.8 million for the same period in 2022 or $92 million, excluding the KARNO acquisition charge. Year-to-date, SG&A expenses were down about $2 million, and R&D expenses, excluding the KARNO charge, we're up about $14 million.

This increase is entirely due to the expensing of powertrain components that were purchased for the first 30 production trucks that we previously planned to sell to customers this year.

Most of the cost and cash expenditures we expect for the wind down of powertrain will be incurred in the fourth quarter of this year, including payments made for truck chassis and other components for the initial 30 production trucks.

We estimate that total expenses for the fourth quarter will be around $35 million, including expenses that will be incurred to recognize future payments for contractual component purchases employee severance agreements and other expenses related to the wind down of the powertrain business.

Total operating expenses for the year will be approximately $140 million, including expenses for discontinued operations. This is a little higher than our previous guidance of $130 million because of the additional powertrain wind-down costs.

We expect to finish the year with a total cash and investment balance of around $285 million or about $10 million higher than our previous guidance, even though we expect no revenue from Hypertruck ERX or hybrid systems for the rest of the year.

We expect to begin receiving payments from customers for early KARNO generator stationary deployments in late 2024. And as Thomas noted, we expect a significant decrease in our cash spending after we wind down powertrain operations.

We estimate that total cash expenditures will drop from approximately $137 million this year to approximately $40 million next year. This amount excludes some cash expenditures for powertrain wind-down activities that we will incur in 2024 and potential proceeds from powertrain asset sales.

It is important to know that with the cash and investments we have on hand today, along with a slower burn rate for KARNO development, we expect to be able to commercialize the KARNO Generator business without the need to raise additional capital.

To provide investors with more details on our future plans, we will be hosting a technology fireside chat later this quarter to further highlight the unique capabilities of the KARNO Generator, business opportunities for near and long-term deployments and key development milestones. We will update you about this event in the coming weeks.

With that, I will turn the call back over to Thomas for closing remarks..

I want to express my sincere appreciation and gratitude to the entire Hyliion team that has worked tirelessly and passionately on our powertrain solutions. The development of these products is taking great effort, many long nights and exceptional dedication from our extremely talented team.

We take great pride that trucks outfitted with our Hypertruck ERX powertrain have been on the road logging thousands of miles with great success. During extended fleet trials, we received overwhelmingly positive feedback about our powertrains performance.

We have not had a single truck breakdown and a fleet was able to drive over 1,000 miles in a day, which speaks to the great potential of this technology and the robustness of the product. This is the reason we plan to maintain the technology for potential later use or sale.

Although, we are confident that the winding down of the powertrain business is the right move at this time, we are preserving the technology such that if the opportunity arises in the future, it may be reintroduced and utilized to its full potential as the industry matures. For now, we look forward to the great potential of the KARNO Generator.

Now, we will take your questions..

[Operator Instructions] And your first question comes from the line of Donovan Schafer from Northland Capital Markets. Your line is open..

Hey, guys. So my first question is just on the incremental movement of initially talking about, looking at strategic alternatives for the Hypertruck ERX business, and then now committing to a path of winding it down.

First, just is this a case where you did go through conversations or solicit or engage with potential buyers, folks signed NDAs and went through things and weren’t able to, I guess, see the eye to eye on value? Or was this a case where you didn't even actually get to that point and maybe you ran some numbers on a rough valuation or something and decided to not take that next step.

And then did you get a valuation from a third party of any kind, and if you could share that? That would be the first question..

Sure. So I appreciate the questions, Donovan. So we did run a process.

We engaged Evercore as our bankers to assist us with this process, and we went on and had discussions with dozens of different groups out there and explore what strategic options there could be that included looking at potential buyers, that included looking at potential industry roll-ups or mergers, and upon conclusion of the process and looking at what came of it, we decided the best interest for all stakeholders was this wind-down path in preserving the IP for potential later use.

With that, I mean I think that speaks a lot to just where the market is at right now through these discussions, as I'm sure you can imagine, we had a lot of discussions with potential strategic partners or acquirers.

And what we found was they themselves were even assessing if they pull back their own spend internally on electrification, just as we're seeing the slowdown in this electric market. People are expecting adoption to take a lot longer.

That also equates to people pulling back on their spend on electrification In terms of others that are in the space, other parties that would be comparable to highly on new entrants into the space where we've seen a lot of them file bankruptcy recently.

And then other ones are out trying to actively raise financing, and in many instances, have not been successful with that. And so all those factors led us to the decision of this wind down..

Okay. And then turning to the KARNO, I guess, first, would there be the way you've done in the past for Hypertruck ERX, do you see yourselves -- maybe this is something you plan to have at the time of the fireside chat.

But now that it's a focus maybe giving us a more granular and detailed kind of time line on that path to commercialization? Any particular tests or certifications, if there's the EPA stationary source required stuff.

Whatever is involved that, do you think you'll give us -- are you planning on giving us a more granular breakdown there? And one more there on KARNO, is just how do we not repeat the same situation where with Hypertruck ERX, we talked a lot about excitement from customers. And of course, that changed.

Is there - do you have any thoughts around a different approach that could make that stickier this time with KARNO, any color there would be great? Thank you..

Yes, absolutely. So let's start with the first one around milestones around KARNO. So I just want to highlight a couple years. We expect that by end of this year. We'll start having some discussions around who the initial adoption partners are going to be with the KARNO.

And then as we go into next year, middle of the year, we'll be kind of final validation of the system that then brings us into actually starting customer deployments in the second half of next year. So we probably will come back with some more granularity around that.

And whether that's in the fireside chat, we'll probably share some more details there. And then as we go into next year just to set expectations. So those initial customer deployments, we're looking at low single million, so a couple of million of income that would be coming from those -- or up revenue that would be coming from those deployments.

So I just want to kind of set expectations that those will be the initial entrance into the market. As we think about how to not repeat the situation that we're in with powertrain.

So I think as we look at kind of the customer discussions on the powertrain side of things, the shift is kind of focused to -- since the cost of electric vehicles are higher upfront, their thought is now they're going to wait to until government mandates really come into place in order to force them to adopt it.

I think where we were a couple of years ago was even though the costs were more upfront that it was a strong freight market and fleets were saying, yes, we're going to get ahead of this. We want to focus on ESG, and we want to start adopting electric now there's more of a pullback.

It's a weak freight market, and the weight is -- or the push is let's wait until government mandates are there. As we look at the generator market, this is already an existing market that we're stepping into, right, versus electric vehicles. There are a very few number of electric semi trucks that are out on the road versus generators.

It's a pretty established market already that we're stepping into. And we're bringing a very competitively differentiated solution. This isn't a standard generator. It's not an internal combustion engine.

It gives a lot of flexibilities like fuel agnostic, high efficiency, low emissions, low noise, low maintenance and so it really brings forward a lot of what -- the benefits of what a power plant has, but bringing it into a solution that's the size of a generator.

So going after an already existing market and one where there are pain points from the customer's end where people need electricity now and they just can't get it from the grid, and they're being told they can't get grid hookups for one, two, three or even more in some instances, years.

And that's a market that we feel like we can step in and address, which has a very prominent need right now..

Okay. Thank you. I'll take the rest of my questions offline..

Your next question comes from the line of Bill Peterson from JPMorgan. Your line is open..

Hi. Good afternoon, and thanks for the questions. I'd like to get a little more details on the history that led to the decision to kind of wind down the efforts here. I mean, I think back over the last few years, there indeed was a lot of excitement.

The founders program even four months ago, you're still -- I mean, still talking about cost of as advantages and infrastructure advantages. So just trying to get a feel for how did this evolve and apparently coming -- I'm not saying it's going to come out of nowhere.

I mean, obviously, the fleet decisions are understandable given their own challenging times. But just the evolution of that? And then at this stage, looking ahead, how do you see the fleets really adopting many new technologies? Is it really going to be a 2027 story what do you think about the mix between the various options they have.

Again, like the nat gas generated option you had -- did have advantages in that there was a lot of infrastructure versus lack there other others -- infrastructure, especially given the student, you've actually provided such great information across the landscape, whether it be bad fuel cell, hydrogen and so forth.

How do you -- how should we figure this evolving from here?.

Sure. So a little history on it of kind of getting to this decision. So we still have customer interest and engagement and even fleets -- we're doing fleet trials. And one thing I want to really reiterate is -- this was not a decision based on product performance or having reliability issues or things like that.

Actually, we've been very, very pleased with how the product was outperforming in fleet hands, and we were seeing -- hearing that same feedback from fleet.

But I think this -- what has really happened is the market has shifted to fleets are saying, with these vehicles costing a lot more upfront than diesel trucks and as shared, we've been experiencing those price increases as well in our components and having discussions with fleets about passing those costs on fleets are expressing that they're going to really slow down their rate of adoption until they wait for the government mandates to force the adoption.

And as you pointed out, that probably is a later this decade type of a situation. And one other thing that gives us concern is there's a lot of discussions out there right now about those government mandates potentially even softening or changing or becoming elongated as to when fleets really need to adopt electric.

And so as we look at the position we were in, we're more approaching this from a position of strength as opposed to a position of weakness where we're fortunate that we have a strong balance sheet and a strong cash position. And we have two really strong technologies within the company.

We had powertrain and KARNO, and powertrain is facing some of these hurdles that we mentioned of the demand changing, the cost components going up in the regulatory side of things. And as we look at the KARNO market opportunity, we see it as a more capital-efficient path to market.

We're going to be delivering initial customer units next year in the second part of the year. So that's what led us to look at. We've got -- as we closed out last quarter, $324 million of cash available to us.

And we feel like it's the best decision to put focus on the KARNO go-forward, take the powertrain technology, preserve it, put it on the shelf for potential later use and then for the time being focused on KARNO..

Okay. Yes. Okay. Well understood. On KARNO, just trying to get a more bigger picture view on how you're viewing the competitive landscape for the stationary power market. We're hearing early use cases like around EV charging. We've heard people talk about data center backup.

There's different business models and later approach it, whether it be Turkey solution is generated plus to trying to get a feel for how you see the landscape for this and where you're going to be focusing on over the next few years?.

Sure. So there's a couple of different markets, anything about the power generation side of things. And maybe to start off with just clarifying.

So we're looking at being a generator of electricity versus some of these solutions that you mentioned like a battery is more going to help with saving conserving electricity and then being able to use it at a later date.

As we think about what is really needed, we think it is both, but there's a lot of demand for just more electricity production -- especially as you think about the EV space, more chargers are being deployed, substations don't have the electricity available to actually service some of these charges and in some instances, and we're enabling an opportunity where we could just bring a generator out and actually produce electricity locally at that site.

There are a lot of other companies in this space. Some are using more conventional internal combustion engines in order to produce that electricity. And then some others are using things like fuel cells in order to produce electricity.

What we see is our advantage is an internal combustion engine does not have great efficiency, requires a lot of maintenance.

And from an emissions and pollution standpoint, many are still running on diesel fuel, and that's not great for our environment, right? I don't think we want EV chargers that are sitting there being powered by a diesel generator.

So, we're looking at the KARNO solution is bringing many benefits from an emissions and pollution standpoint, similar to what a fuel cell brings forward, but we're bringing it with low maintenance and the cost that we are looking at coming in a lot less than where fuel cells are at.

So as mentioned before, it's kind of bringing forward many benefits that normally you see in a power plant, but bringing it forward in a size like a conventional generator that can be deployed locally and produce your own electricity at a cost affordable rate..

All right. Thanks. I'll drop back in the queue..

[Operator Instructions] Your next question comes from the line of from Andres Sheppard from Cantor Fitzgerald. Your line is open..

Hey, guys. This is Ananda [ph] on for Andres. Thanks for taking our question.

So we were just wondering with respect to the KARNO Generator, what you would expect revenue to look like into commercialization and prior to commercialization as we're in that period right now?.

Sure. So commercialization will start at the later part of next year. And as mentioned, we're expecting just a couple of million of revenue coming in next year from that solution. As we get further into this transition, obviously, we're just announcing it today.

So as we get into next year, the first half of next year, we plan on coming back and being able to share more on what we think the future projections of it are. The generator space, the production of electricity market is a huge market. So this is not a market size issue by any means.

This is a huge addressable market we're going after, but we plan on coming back in the first half of next year with projections on what we're expecting from an adoption rate standpoint..

Got it. Appreciate the color.

And with respect to pricing and competitors, how do you expect to see pricing for the KARNO Generator and comparable products and services?.

So we'll come back with more granularity on this, but I just wanted to kind of give some directional numbers. So we are going to be more expensive than a conventional diesel engine, an internal combustion engine. But we're looking at being substantially less than some of the other solutions like fuel cells that are coming out to the market.

But as mentioned, bringing forward a lot of the benefits of those other solutions like the ability to run on hydrogen, having that low maintenance side of things. So I think this is going to be a pretty attractive and compelling solution for the space.

Now it's going to be important for us to focus on where do we deploy these, right? In the beginning, it doesn't make sense for us to go by -- go after market opportunities like standby power generation or emergency operation where the generator kicks on for one or two hours a year.

We suspect that the conventional diesel engine is going to still be the solution there, at least for the time being. But we see our opportunity being more prime power applications where someone wants to become less dependent on the grid and actually make their own electricity.

We see peak shaving opportunities, the ability to be able to take flare gas and convert that into electricity take pollution coming off of landfills, produce electricity with that operations where you're going to really utilize the generator and have a high uptime of it. That's where we see the KARNO being significantly differentiated.

And the great news is there's plenty of opportunities that can utilize that. Think about warehouses, hotels, hospitals, those are all applications that we see the KARNO Generator being a great fit..

Got it. Appreciate it. And just a last really quick and easy one, if I could. I just wanted to make sure I have this right. You're not expecting to deliver any of the 30 trucks in the order book or hybrid trucks going forward.

Is that correct?.

Yeah. Yeah. That's correct. So we won't generate any more revenue from the powertrain business from selling average systems or the production trucks we talked about, that business is being wound down..

Got you. Sounds good. Thanks for taking our questions. I will pass it on..

Your next question comes from the line of Shang Kai [ph] from UBS. Your line is open..

Hi, guys. Thanks for taking my questions. So just one very quick question.

What will be your sales outlook for KARNO in 2025?.

So sales of the KARNO Generator in 2025, we'll come back with more information on that in the first half of next year. At this stage, we've given some directional numbers of a couple of million in revenue next year from the KARNO expected in the second half of next year. But as mentioned, we're just starting this transition now.

Obviously, it was just announced today. And so we'll be coming back with more granularity on future projections..

Yeah. Just to add to that, so as Thomas mentioned, the units next year are deployments with initial real customers are going to use them for -- that will provide power benefits. We'll still be doing R&D at the time, but you can imagine after that, we'll start ramping up those deployments.

And as Thomas mentioned, we'll have a little bit better visibility as we make this strategic shift and kind of reevaluate as we're shifting resources over from powertrain to KARNO, what that looks like. But clearly, we're just going to be ramping up from what we expect deliveries to be next year.

That will be a good starting point for continued growth..

Thank you. That's helpful..

And this concludes the question-and-answer portion of today's call. At this time, I would like to turn the conference back over to Hyliion's CEO, Thomas Healy, for some final closing remarks..

Well, thank you, everyone, for joining today's call. Obviously, a lot of news shared on today's earnings call around the discontinuation of our powertrain business, putting that technology on the shelf, preserving it for a potential later use in the pivot to focusing on the KARNO Generator for our go-forward strategy for the time being.

We do believe that this is the right shift for the company, for stakeholders and shareholders, and we're excited to go execute on this path forward and look to share this exciting story as we continue on with our shareholder base. So thank you for joining today and more to come in the quarters ahead..

Ladies and gentlemen, this does conclude today's conference call. You may all disconnect, and have a wonderful day..