NEWS

Frontline Ltd (FRO) CEO Lars Barstad on Q1 2022 Results - Earnings Call Transcript

May 24, 2022

Frontline Ltd (NYSE:FRO ) Q1 2022 Earnings Conference Call May 24, 2022 9:00 AM ET

Company Participants

Lars Barstad - Chief Executive Officer

Inger Klemp - Chief Financial Officer

Conference Call Participants

Jon Chappell - Evercore

Chris Tsung - Webber Research

Chris Robertson - Jefferies

Operator

Good day and thank you for standing by. Welcome to the Frontline Q1 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator instructions] Please be advised, today's conference is being recorded. [Operator instructions]

I would now like to hand the conference over to your first speaker today, Lars Barstad. Please, go ahead.

Lars Barstad

Thank you very much. Good morning, and good afternoon, everyone, welcome to Frontline's first quarter’s earnings call.

I think I'll start off with saying its safe to say that this has been a busy quarter in many respects. The conflict in Ukraine has been demanding on our organization. First of all, in order to support our crude, both Ukrainian and Russian nationals, in some instances, working together on our ships.

Our legal and compliance team have worked relentlessly in an ever-changing sanctions environment, making sure we are staying compliant. But it's also very satisfactory to see Frontline has managed to maneuver all these challenges and traded our ships very competitively at the same time.

To top it all, we announced the proposed combination with Euronav early April, and we’ve since then been working diligently together to finalize and appropriate transaction structure for this combination.

So let's move to slide three and look at the highlights. In the fourth quarter, Frontline achieved $15,700 per day on our VLCC fleet. We achieved 19,900 -- sorry, $16,900 per day on our Suezmax fleet and $19,000 per day on our LR2/Aframax fleet.

So far, in the first quarter of 2022, we booked 74% of our VLCC days at $22,600 per day. We booked 70% of our Suezmax days at $32,700 per day and 58% of our LR2/Aframax days at $46,300 per day. All numbers in this table are on the load to discharge basis as usual for Frontline.

Also, this quarter, I would like to draw your attention to slide four to explain the differences in returns depending on the vessel characteristics. You can clearly see on the figures on the right-hand side of this slide, that the earnings differentiate a lot in respect of what type of ship we're trading.

As you can see on the left-hand side, Frontline has a young fleet, 88% of our fleet is regarded ECO vessels, and we have 53% scrubber penetration. And as you also can see all the scrubbers are focused on the VLCC and Suezmax assets that have the highest consumption.

But we're up now to $17,100 per day premium for a VLCC between an ECO with scrubber compared to a traditional non-ECO VLCC or vessel. For the Suezmaxes, the premium is $9,500 compared to non-ECO and for the LR2s it's $8,500 a day premium compared to a non-ECO.

So, basically, this high oil price environment is affecting us a lot. This does not tell the full story though. As the technical, operational, and commercial performance we managed to achieve is also very much dependent on our talented team and we work more like asset managers, optimizing a portfolio of multi-million dollar investments than traditional ship owners.

With that, I'll let Inger take you through the financial highlights.

Inger Klemp

Thanks Lars and good morning and good afternoon ladies and gentlemen. Let's then turn to slide number five and look at the income statement. Frontline achieved total operating revenues of $104 million and adjusted EBITDA of $53 million in the first quarter of 2022 million.

We reported net income of $31.1 million or $0.15 per share and the adjusted net loss was $1.6 million or $0.01 per share in the first quarter. The adjustments that we have made this quarter consist of $24.9 million gain on derivatives, a $0.3 million gain on marketable securities, a $6.1 million gain on sale of vessels, a $0.4 million gain on insurance claims, and a $1.3 million amortization of acquired time charters, partially offset by a $0.1 million share of losses of associated companies.

The adjusted net loss in this quarter decreased $3.1 million compared to the fourth quarter and the decrease in adjusted net loss was driven by an increase in our time charter equivalent earnings due to the higher TCE rates in the quarter, partly offset by other movements in operating gains and expenses.

Then let's take a look at the balance sheet at slide six. Total balance sheet numbers have decreased with $56 million in the first quarter compared with the fourth quarter 2021. The balance sheet movement in this quarter are primarily related to the sale of the LR2 tankers from Frontline and Front Panther in addition to ordinary debt repayments and depreciation.

As of March 31st, 2022, Frontline has $179 million in cash and cash equivalents including undrawn amounts under our senior unsecured loan facility, marketable securities and minimum cash requirements.

Short-term debt includes total balloon payments of $267.1 million for two existing loan facilities with maturity in the first quarter of 2023, which is expected to be refinanced priority maturity.

Let's then take a closer look at slide six. Keeping costs down has always been in Frontline's DA and core values of the Frontline platform is keeping it simple and focused and maintain lean and efficient management team.

This slide shows that Frontline outperformed peers in the first quarter of 2022 on OpEx, GA and interest expense. This, together with our performance of peers on revenues this quarter explains the superior operational performance of Frontline in the first quarter of 2022.

Then, I think you should take a look at slide 8. We estimate average cash cost breakeven rates for the remainder of 2022 of approximately $23,700 per day for the VLCC segment, $19,800 per day for the Suezmax tankers and $16,600 per day for the LR2 tankers. The fleet average estimate is about $20,100 per day, and includes drydock of 13 vessels in the period from the second quarter to the fourth quarter of 2022 with an impact of $750 per day. The distribution of the 13 vessels is three VLCCs, five Suezmax tankers and five LR2 tankers.

We recorded OpEx expenses including drydock in the first quarter of $8,200 per day for VLCCs, $7,000 per day for the Suezmax tankers and $7,900 per day for the LR2 tankers. In the first quarter with drydock to one VLCC, which was completed in the second quarter and two LR2 tankers where one was completed in the second quarter.

The graph on the right-hand side of the slide shows the free cash flow per share after debt service and free cash flow yield basis current fleet and share price of 23rd of May at alternative TCE base. Based on historic tracks in TCE rates for non-ECO vessels in the period 2000 to 2021, adjusted for premiums on scrubber and ECO vessels, Frontline has a free cash flow per share of $2.43 and a free cash flow yield of 27%. The free cash flow yield potential increases with higher assumed TCE rates and on a fully delivered basis.

With that, I leave the word to Lars again.

Lars Barstad

Thank you, Inger. So the headline for my Q1 tanker market report is basically volatility is back. And if you look at the graph on the bottom left side on slide 9, you'll see that after coming through a period, almost 18 months, where we've been hovering between 10,000 and 30,000 on a good day, we're suddenly rocketing up. The quarter was fairly quiet as global oil demand was estimated to have averaged around 98.8 million barrels. Q1 is historically our seasonally a shoulder quarter and the demand was down 1.7 million barrels compared to Q4.

Supply came in at the same number, in fact. So this is the first quarter for a long time we've not grown significantly on inventories. But if you compare it to Q1 last year, we start to see some significant changes. Demand was, in fact, up 4.5 million barrels per day compared to last year and supply was -- had increased by a whopping 6.3 million barrels per day.

As we enter the year, oil in transit stabilized around one billion barrels and as I mentioned, inventory draws dwindled. The invasion of Ukraine sparked volatility as trade lanes started to change. And what we saw towards the end of the quarter and into Q2 is high product demand growth in both US and Europe starting to open arbs from Asia. COVID-19 continues to affect in particular Chinese demand, more so due to their zero tolerance policy and full lockdowns. This is predominantly what's affecting VLCC utilization.

Let's move to Slide 10, and I'll try to do some explanations to what's going on with regards to the Russian flows. So, new trading patterns are evolving. And Russian in oil and product exports from Black Sea and the Baltic was, in fact, not down more than 360,000 barrels per day since February 2022, compared to May. European imports from Russia are down 1.4 million barrels per day in the same period. This has been replaced by imports from Asia, Africa and Americas to Europe.

Asia has increased their import from Russia by about 850,000 barrels per day, an Unknown, which is seen on the top right corner on the graph at the top here, that's another 1.1 million barrels. Unknown is basically because this is tracking and the vessels have yet to reach their destination port. So as we move forward, this will become more and more known to build that way.

So in essence, 2 million barrels of oil per day is diverted compared to what's regarded the global trade of oil or seaborne oil, which is around 38 million barrels per day, this amounts to 6%, and 6% of oil is now traveling at least 50% longer, if not twice the distance and some even argue 2.5 times the old distance. So geographically, Europe is obviously close to Russia. And now significant amounts of crude oil and products are selling post Europe to clients in predominantly Asia. Post Europe needs to replace those same barrels from either Middle East to West Africa or US.

The only way to kind of stopped this trend would be a blockade of Russian exports or direct sanctions on oil itself. This I'll leave you to discuss. But in addition, we have an element of US now arguing to or indicating to lift sanctions on Venezuelan crude for exports to US and Europe. So basically, this whole have changed or diversion or disruption is now causing both but, in particular, Aframaxes, but also to LR2 [ph] and Suezmaxes to basically have much tighter market conditions than we had prior to the Ukraine innovation.

If we move to Slide 11 because there's another thing going on in our markets as well, and look at the products market. We are, in fact, in what's regarded or you can read the headlines coming out more and more on diesel shortages. And this is causing record refining margins and arbs open up. The jury is still out whether if it's all due to disrupted diesel flows or middle distance flows from Russia, because there is also an element of quite strong demand, in particular in Europe as well.

So, basically, what's happened is that refining margins have literally exploded. As you can see on the top graph on the left-hand side there, and this is Northwest Europe, spot refinery margins coming back from May 2020 until now.

These margins are some due to lack of feedstock, but also some due to the high-demand. And this is basically opened up for the first time in quite a while, wide other charges from Middle East and from Asia.

The longevity of the current situation is very hard to call, but this is a structural challenge. Refining capacity in both US and Europe was reduced during COVID-19 pandemic when these -- when they were suffering disastrous refining margins. There is ample refining capacity in Middle East and Asia, and this is growing as well.

Then let's move to slide 12 and the tanker order books. This is the first time since 2018 that we've seen fleet growth turning negative. What we've done in this top left chart is basically to look at the net fleet growth in deadweight terms, year-on-year change and the net recycling of tankers during the same period.

And as we can see, we started this development late in Q4 and throughout Q1 the net tanker fleet growth has actually turned negative. The last few times we've experienced this, so first in 2013, 2014 and secondly, towards the end of 2018, it was followed by a period of high volatility and fairly good market rates. We expect this to continue, just looking at the various order books.

We continue to be in the same situation, if you look at the VLCCs first, where there is a large portion of that fleet that should have been retired and still is floating on the Seven Seas, so 82 VLCCs will come to age, either they are already above 20 years, or they will become above 20 years in 2022.

For the Suezmaxes, this end number is 67 million and for the LR2s, it's a whooping 22. And so, as the order book, as the audience would know, is dwindling. There are no new orders being placed. In fact, for the VLCC and Suezmax segment, we haven't seen one single order placed since September last year. For the LR2s, there is a bit of activity and 6 LR2s have been ordered so far this year, but it's still not putting a dent into basically the outlook for that sector either.

With regards to when you can expect to receive a vessel should you go out an order now?

I think 2024 is more or less out of the question and you need to look into 2025. And it's still the case that for the main yards that build tankers, they're far more interested in building other asset classes as that yields them better margins.

So, to sum it all up, oil demand continues to rise, but global oil supplies issues are swelling with the Russian exports curtail. We got volatility in tankers back in Q1 2022. And as I said a few times through media and with the analysts now, it's too early to call a big cyclical upswing, but we have hopes.

Tanker fleet across the globe is now in negative territory and that's expected to continue at an accelerating pace as long as no new orders are being placed. Ton miles are expanding significantly and in particular, for Suezmax and Aframax as Russian flows are diverted.

There is high product demand and record refinery margins in Europe and this is very supportive of our LR2s which we refer to as the VLCCs of the product market. It is expected though that with these refinery margins, one should see increased refinery runs, which in the end, would support the VLCC.

We're very happy that Frontline is able to quickly capture volatility with what we regard an efficient, diversified fleet, low-cost base, and agile approach to the market.

Lastly, before QA, let me do a few points on the Frontline and Euronav combination. As I mentioned initially, since we went public with this in April, we have been working diligently together. And what we want to achieve is a combined company with a $4.2 billion market cap. This would incur a wider index inclusion. We believe it will attract share liquidity and, of course, broker coverage.

We also believe it could improve access to cap restricted finance resources. Frontline and Euronav alone are actually regarded small cap or borderline small cap. Now, we're moving firmly into the mid-cap if you look at the New York Exchange.

We believe the combination would give enhanced commercial offering. The significant size -- we would have significant size in all relevant trading experience and this would yield efficiency and utilization. There's also significant synergies discovered between the two companies, both on OpEx, GA, and financing. And finally, we -- both companies regard themselves as leading on the ESG, and this will obviously form force in that respect in the industry.

With that, I would like to open up for questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Your first question today is from the line of Jon Chappell from Evercore. Please go ahead.

Jon Chappell

Thank you. Good afternoon. Just want to start where you left off, and I understand that there's probably some limitations around what you can say regarding the potential transaction. But Frontline has obviously historically been a very active company, sale and purchase, et cetera. Also based on your quarter-to-date rates, it looks like you would return to a dividend per your formulaic policy as soon as the next quarter. I just wanted to know, as you're finalizing the terms of this transaction and you're waiting for more clarity or a potential close, are there any restrictions on your normal strategic activity, whether that's operational or financial as it relates to capital return to shareholders?

Lars Barstad

Not at this point. It's not in fact.

Jon Chappell

Okay. And then, I guess, we'll have to wait to see the terms to see if it changes not at this point. I wanted to ask a market question. You did a very thorough job explaining all the different pros and cons of the market. The VLCCs have, obviously, been a pretty big laggard. And I just wanted your view on, what may have the Vs catch up to the rest of the segments? And is it just a function of China opening up from its lockdowns and renewing the import growth of that nation. Is it that combined with kind of the secondary and tertiary fallout of redrawing the crude map, because of what's going on in Russia and Ukraine, or is there a chance that it's just a much stronger market given the geopolitical backdrop for midsize and product carriers and the Vs, although they'll do well, may not return to their top of the leader board across the asset classes?

Lars Barstad

Well, I think, Jon, that -- well, if you look, history has thrown a lot at us throughout the years, if you go back long enough. And there is one cruise that the -- all these asset classes are highly inter-correlated. So, I find it hard to believe that this time will be different. That we’ll have a prolonged period of time where you almost have an inverted relationship on earnings where there are two top performer; Suezmax in the middle and the VLCC at the bottom.

So -- but I think the biggest question here, and I alluded to it in my summary as well is that, the global oil supply situation is a challenge. Oil price is telling us that we are not able to produce or at least not able to export enough oil. So this, together with the China situation is what's holding the VLCCs as far as I can see it. There are a few sources of incremental crude. One being US, if production comes up, they are doing the SPR releases now. I don't -- I'm not sure, if we've seen the full effect of that yet in the market potentially with China back that could become more apparent.

Secondly, we still have Iran on the sideline. Well, I'm not too optimistic. I've been more optimistic earlier quarters than on this quarter on the closure there. But I’m quite optimistic on Venezuela, and there are actually movements in Venezuela that could change the situation. And that would be kind of -- that could -- even though Venezuela end up in a situation where they're limited to export to Europe, it will basically shift the balance, meaning that's what more risks we can go to China, for instance, that would also be for the sea business.

So, I don't think this is a long-term situation. I think you will find -- we're already seeing VLCC is digging into Suezmax cargoes. We have seen Suezmax dig into Aframax cargoes and so forth. So this tends to, kind of, even out. But right now, I -- what will be the trigger here. I think it will be very interesting to see if Beijing avoids big lockdowns in China, and we see China come back kind of full force, I think we'll see more of what this market has to give us.

Jon Chappell

Okay. Thank you very much, Lars.

Operator

Thank you. The next question comes from the line of Chris Tsung from Webber Research. Please go ahead.

Chris Tsung

Hi. Good afternoon. How are you?

Lars Barstad

Hi. Good afternoon.

Inger Klemp

Good afternoon.

Chris Tsung

Hi. I noticed in the report -- just I wanted to ask a little bit more, if you can elaborate on the decisions to end the time charters with SFL and if that loss on termination of $600,000 is this on top of the $4.5 million?

Lars Barstad

Those basically are the adjustment to the balance on the -- when we -- yes, yes.

Inger Klemp

Okay. That's something we have had every quarter for, yes, how many years. It's actually an adjustment we have to make in order to adjust for what happened back in 2015, when the merger between Frontline and Frontline 2012 happened. At that point in time, Frontline 2012 was the accounting acquirer and Frontline Limited was acquired and needed to be fair valued. And at that point in time, we took on the balance sheet and a valuation with relation to this Ship Finance leases. This is the kind of adjustment we need to do compared to what we thought at that point in time was the profit share that we should pay to the -- in connection with these leases.

So this is -- this means in a way that we took too much profit share on the balance sheet compared to what we actually paid then. So that's why we had to do this. Sorry about long explanation, but.

Chris Tsung

Okay

Inger Klemp

Yes, Chris.

Chris Tsung

Okay. Yes. Thanks. And just kind of related to the earlier question on if there's any restrictions regarding the merger. Just -- I know there are about four vessels under commercial management. And I just want to know that would continue if the merger goes through or yes, that's the question. Thanks.

Lars Barstad

Yes, yes. No, sure, Chris. That's a fair question. And the answer is yes. We would -- because the merger wouldn't change any of our kind of commercial arrangements.

Chris Tsung

All right. That's it. Thanks, Lars. Thanks, Inger.

Lars Barstad

Welcome. Thank you.

Inger Klemp

Thank you.

Operator

Thank you. Your next question is from the line of Chris Robertson from Jefferies. Please go ahead.

Chris Robertson

Hey, good morning and thanks for taking my questions.

Lars Barstad

Hi, good morning.

Inger Klemp

Good morning.

Chris Robertson

So on the 12% of the fleet that's non-ECO, I guess, how are you thinking about these vessels in context of, of course, IMO 2023 and beyond? But then in context of the merger with Euronav that's pending, are these sales candidates in your minds, or are they more likely to be incrementally upgraded to comply with the new regulations?

Lars Barstad

It's a good question. It's -- they're not regarded sales candidates to be quite honest. But that's more related to where we think we are in the curve. I or we firmly believe that we were entering a period now where actually tanker -- global tanker capacity or carrying capacity will be slipping at the same time, as we believe oil will flow and demand will be, if not fantastic, at least maintain. So basically, having kind of assets on water has a value going forward. That's kind of our main thesis.

These vessels that are non-ECO would -- kind of, we looked at the extent of CapEx needed to -- in order for these vessels to be challenged by energy efficiency from 2023 and it's extremely little. I don't know if you're familiar with the term of de-rating and basically it's limiting the engines power capacity and then you actually fall in line. And you can do other adjustments as well, which is low CapEx investments.

So as I've kind of covered on earlier quarters, the Frontline fleet is, in fact, in quite good shape to face EEXI and the following CII over the next years. Our average rating is, A, when it comes to the sign. And we're quite confident we'll be able to maintain that for a long period of time. And this has to do with the simple fact that these vessels have the capabilities of reducing power and output.

Chris Robertson

Okay. Yes. Thanks for the color on that. That was really in depth. My second question is related to the strong quarter-to-date rates that Frontline has booked here. So it seems that you have come in above some of your peers.

So I was wondering if you could talk about, is that just due to the way Frontline accounts for these, or is there an operational or maybe positional advantage that you had during the quarter that allowed you to outperform?

Lars Barstad

Well, we -- obviously, we report according to US GAAP and the -- on a load-to-discharge basis. Overtime, this basically makes no difference from a reporting on a discharge-to-discharge basis. But when we guide, one should assume a certain portion of open days at the end of the quarter where no income can be accounted for.

So -- but I think what we've seen over the last few quarters post-guiding, yes, the earnings have reduced, but maybe more so on the bigger vessel classes that have longer voyages than on the smaller vessel classes.

So I would expect, or we can at least fingers crossed that the LR2s and Suezmaxes will fall more in line with kind of the guidance. On the VLCCs, there is room for a potential adjustment, depending on what the market does from here in.

Chris Robertson

Okay. Thank you very much for your time.

Lars Barstad

Also on your question, you'll find that amongst our peers, most are reporting on a load to discharge -- no sorry, discharge-to-discharge basis, but there are also -- at least one, that reports in a similar manner.

Inger Klemp

At least two, I would say.

Lars Barstad

Yes.

Inger Klemp

I mean, load to discharge is actually the US GAAP standard. So this should, in a way, report on that basis. But -- we know probably that at least one, as you say, do on the discharge-to-discharge basis. Yes.

Chris Robertson

All right. Fair enough. Thank you very much.

Operator

Thank you. There are no other questions at the moment. [Operator Instructions]

We have a question from the line of Nick Lenihan [ph] from [indiscernible]. Please go ahead.

Unidentified Analyst

Sorry, I think it was on mute. Thanks for taking my questions. Can you give me some color or maybe concrete examples on where you draw the line between crude that you will transport that has or may have Russian content versus what you won't do? So, I'm assuming you won't do anything in the Black Sea, but would you load any crude in the Baltic? Would you carry crude to Asia that maybe has been sort of loaded in the Black Sea or Baltic on smaller ships and then wants to STS onto a VLCC? Would you load crude in Fujairah that may or may not have Russian crude blended into it in part, kind of where do you draw the line? And do you think you're drawing the line in exactly the same places all the other kind of publicly-listed companies were not?

I'm basically trying to understand kind of how much of the Russian crude will effectively kind of move to gray market ships or whatever you call them kind of similar to the way Iranian, Venezuelan crude is carried currently?

Lars Barstad

Hey it's a very good question and it's a difficult question to answer because this has basically been the theme here in our company ever since kind of the situation started. So, basically, what we have decided to do and is basically to follow the sanctions. So, basically, what EU or the US, what the UK, what they decide, we follow.

So, basically, we're not taking a moral high ground to put it that way, but we're following what the politicians want us to do. And I think one has to keep this in mind that ever since this war started, EU have been importing large amounts of gas and oil from Russia. These are actually molecules that the world needs.

So, basically, this is what -- this is Frontline's position. So, basically, we work within the framework that is, kind of, given to us. And -- but with that, effectively due to kind of the web of sanctions, this is prohibiting us from doing a lot of business with Russia. And it also -- there is also something called breaking sanctions or risking breaking sanctions.

And basically, what has happened then is that most of the publicly-listed owners that obviously have a lot to lose should they fall into like a sanctions issue with either US, UK, or EU, they've basically refrained from taking the risk. And this is where we have landed as well.

But -- you mentioned like a gray market, still Russian crude is allowed to trade. If you're allowed to load and you're allowed to transport it. So, what happened is that owners that don't feel they risk kind of that much and this is then independent owners that kind of they measure their risk and they feel like can live with it against kind of the premium they can make. They have moved into this trade.

So -- and I'm obviously not going to criticize or do anything for how owners decide to conduct our business. But the matter of fact is that, we've seen them -- this isn’t highly inefficient trade, because you're actually down sailing long distances and the nearby ports. So this is then pulling tonnage out of normal bread and butter non-Russian trade, meaning that for us, on our Suezmaxes, we're experiencing then tighter markets in West Africa, in US Gulf and so forth. So you get basically -- you have the same effect on the tank market as is almost as if you were going to Russian lifting the barrels yourself.

How this is going to evolve? It's very difficult to say as it is right now, it's -- and we're already seeing it. Russian crude is actually able to flow pretty freely into the market and predominantly then to Asia, both for oil and products. We have to a fairly small decrease in STX and activity like that. It's more or less the ships that are sailing direct.

I think in order to -- and if this is what the kind of the political world wants, if you want to stop Russian exports, one needs to do something with the way the sanctions are structured. And that seems to be -- well, it's not off the table, of course, and I'm not a politician. But it seems to -- they seem to refrain from that at least until now. So I mentioned in my presentation that Russian exports out of Baltic in Black Sea for only 360,000 barrels per day since February. So that tells you that this oil is moving still.

Unidentified Analyst

Have you picked up any cargoes in the Baltic in the last month?

Lars Barstad

We have on one occasion, yes, but that's been under contract. So basically, when the ship is commercially contracted to third-party, we -- that has happened, yes. But, obviously, we have a very tight policy on looking at all the implications. We would, for instance, never ever send the Ukrainian National to a Russian port and making sure that the crew matrix and so forth is okay. But this has been a challenge for all owners throughout this period is that due to the way the sanctions are put up, you are sometimes not in a good legal position to refrain from calling. It's a contractual issue.

Unidentified Analyst

Yeah, yeah. Okay. Thanks. Thanks for taking my question.

Operator

Thank you. We have no further questions from the phone line. So I'll hand back to the speakers.

Lars Barstad

Thank you. Thank you so much for listening in. And, obviously, thank -- I'd like to thank my organization for doing a fantastic job this quarter. Thank you.

Operator

Thank you. This does conclude the conference for today. Thank you for participating, and you may now disconnect.

Lars Barstad

Thank you.

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