Good day. And welcome to the Third Quarter 2023 Flowserve Corporation Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Jay Roueche, Vice President, Investor Relations and Treasurer. Please go ahead.

Thank you, Melinda. Good morning, everyone. We appreciate you joining our conference call to discuss Flowserve's third quarter 2023 financial results. On the call with me today are Scott Rowe, Flowserve's President and Chief Executive Officer; and Amy Schwetz, Senior Vice President and Chief Financial Officer. Following our prepared comments, we will open the call for your questions. As a reminder, this event is being webcast and an audio replay will be available. Please note that our earnings materials do and this call will include non-GAAP measures and contain forward-looking statements. These statements are based upon forecasts, expectations and other information available to management as of October 26, 2023, and they involve risks and uncertainties, many of which are beyond the company's control. We encourage you to review our safe harbor disclosures as well as the reconciliation of our non-GAAP measures to our reported results, both of which are included in our press release and earnings presentation and are accessible on our website in the Investor Relations section. I would now like to turn the call over to Scott Rowe, Flowserve's President and Chief Executive Officer, for his prepared comments.

Thanks, Jay, and good morning, everyone. It was great to see so many of you in person at our Analyst Day a few weeks ago in New York City, where we outlined our 2027 financial targets and our strategies to achieve them. We discussed our new operating model and how it has enabled the company to improve our speed, accountability and cost efficiency in our operations. We also highlighted our belief that the intersection of energy security and energy transition has Flowserve well positioned for accelerated growth driven by the success of our 3D strategy, which we'll provide further updates and progress on today. For anyone who hasn't reviewed the Analyst Day materials, I'd encourage you to access them on our Web site in the Investor Relations section. Let's now turn to the quarter. I'm extremely pleased with the continued strong operating performance that we demonstrated again this quarter. This performance drove admirable financial results, including the adjusted earnings per share of $0.50, which exceeded our internal expectations. Our execution continued to improve during the quarter, evidenced by our highest quarterly revenue since 2015 with an adjusted gross margin of nearly 30% despite the higher mix of original equipment revenue. Our markets remain healthy and supportive and we delivered over $1 billion in bookings for the seventh consecutive quarter. With a book-to-bill of nearly 1 times, we largely maintained our near-record backlog of $2.8 billion. This backlog provides a strong foundation to our 2024 revenue and earnings growth expectations. Our third quarter results, coupled with our improved execution provided us the confidence to raise our full year 2023 revenue and adjusted EPS targets for the third consecutive quarter this year. While our operating performance was certainly strong in the third quarter, both our reported and adjusted earnings per share were…

Thanks, Scott, and good morning, everyone. Reviewing our financial results in greater detail. I'll start by reiterating how pleased we are with our operational performance and backlog conversion, both of which helped drive results above our expectations for the third quarter. We generated our highest quarterly sales level in nearly eight years at $1.1 billion. And from that, we produced adjusted earnings per share of $0.50. The annual actuarial assessment of certain long-term liabilities slightly muted our results that would have otherwise been even stronger. This accrual resulted in a $10.7 million noncash expense to SG&A reducing both our reported and adjusted earnings per share by roughly $0.06. Based on our strong year-to-date performance and continued execution, we raised our revenue and adjusted EPS guidance ranges for the third consecutive quarter. This confidence comes from the improved and consistent operating performance of both segments, ongoing supportive end markets and the early benefits of our new organizational design. Third quarter reported earnings per share were $0.35, which includes $0.15 of net adjusted expenses, primarily realignment charges and below the line FX impact, but this was partially offset by the release of tax valuation allowance benefits. Revenue in the third quarter increased over 25% from the prior year, representing growth in nearly all aspects of the business. Original equipment and aftermarket revenues increased 28% and 23%, respectively, compared to the prior year. At the segment level, FPD's original equipment sales were particularly buoyant, delivering 45% year-over-year growth, while FCD contributed a solid 14% increase. While we maintain a near record aftermarket backlog at over $1 billion, third quarter aftermarket revenues increased markedly compared to prior year as well at 28% and 22% in FCD and FPD. All of our regions contributed double digit sales growth as well with notable year-over-year improvement in…

Thanks, Amy. Let me now add a few comments on the termination of our previously announced acquisition of Velan. We announced our intent to acquire Velan in February of this year. We obtained all the required regulatory approvals in a timely manner, except the approval from the French government. While we engaged in a constructive process to address all of their concerns, the French Ministry of Economy as part of its foreign direct investment review process ultimately rejected the planned acquisition. We are extremely disappointed in the outcome from the French government, while we believe the acquisition would have provided numerous benefits for both companies and our stakeholders. However, the termination does not change our confidence in nor the trajectory of our 3D growth strategy. This includes a programmatic M&A approach, which targets 3D strategy, leverages our existing scale, provides confidence in our ability to integrate and generate returns well above our cost of capital. As we have demonstrated over the past two years, our 3D strategy continues to drive accelerated bookings growth, proving that it is the right approach at the right time. We will continue to invest both organically and inorganically in products to support this strategy. Looking at each of the pillars of the 3Ds, I will start with diversification. We believe the markets and products we are focused on will deliver growth in excess of Flowserve's overall growth rate. Our vacuum pump products, which are a significant component of the diversification pillar have been delivering enhanced bookings growth of a variety of applications and industries in the last few years. In the third quarter, we were selected to supply dry vacuum pumps for a new advanced semiconductor manufacturing facility in the US. Upon completion, the site will manufacture products for a number of applications, including 5G…

[Operator Instructions] And we go to our first question from Andy Kaplowitz with Citigroup.

Scott, can you give us more color into the bookings environment moving forward? I know you mentioned you have a number of larger projects on the horizon, but what's the confidence level that you'd be able to book these over the next quarter or two? And what are your customers saying given all the cross currents out there, either economically or geopolitically, do you see book-to-bill staying above 1 in 2024?

And I'd just say I'll start by saying not a whole lot has changed in terms of our market outlook that we shared last month at the Analyst Day. And so we remain committed to the 5% growth through 2027. And I'd just say the core market activity, we showed that 3.3% number. But if you remember, that was more like a GDP number, and we're actually pretty excited about that in the core existing markets. And then you combine the 3D strategy, which picks up the diversification and the decarbonization generating at least 5% growth going forward. And so again, nothing significantly has changed. We're still committed to that. And then if you break it down between our aftermarket and MRO and our project, the aftermarket and MRO has maintained a super high level of activity this year. We see existing sites and facilities running at very high utilization levels. And I don't see that changing, right? So we're not seeing massive new expansion of refining capability in the US and Europe nor in the chemical side. And so with that, we're seeing these assets being run even harder, generating higher aftermarket and MRO. And so again, I don't see that trend changing. We've been over $500 million now for eight quarters in a row. And I expect that to continue and continue to grow as we work on some of the initiatives that we shared in the Investor Day last month. And then on the project side, what we're seeing there is incredibly healthy. And so the project funnel is up 5% year-on-year, 7% since the beginning of the year. And so we've got great visibility within our CRM system to track these projects. When we look at our customers on the EPC side, many of those customers,…

And then maybe you or Amy, like just could you comment on the incremental margin you recorded in Q3? I think mid-30s and the sustainability of that margin going forward. I know you have an easy comp against more difficult supply chain last year. But as you said, you've been implementing the $50 million cost program that will be reflected more in '24 results, and you're perfecting your new organizational design. So with all that understanding, and I think Amy talked about 100 basis points of margin improvement that dialed in so far for '24. Could that expectation actually be a bit conservative or at least the confidence level given that Q3 is higher here?

So I'll start with, Andy, by saying we're not going to stop there as we hit those targets that we've outlined. We are pretty pleased with where we finished the third quarter and certainly significant improvement year-over-year. As we look across our seven business units, we really saw improvement in each of them year-on-year and we expect to see that trend continue as we make our way into the fourth quarter. One thing that will be a little bit different in this fourth quarter is we're not anticipating a heroic increase in revenue from third quarter to fourth quarter. We really see a nice trajectory of revenue growth but more stable across our run rate business as we look at transitioning from Q3 to Q4 where we are anticipating seeing a pretty significant increase in revenue and accounting for the majority of that increase from Q3 to Q4 is in our original equipment pump area of the business where we've significantly expanded margins over where we were at last year at this time, but it will create a bit of a change in our mix in the fourth quarter. So we're anticipating to see that a bit in gross margins. On an operating margin perspective, we're going to see those margins at around 10% to exit the year with gross margins around 30%, which will give us a really nice base to grow in 2024.

[Operator Instructions] And next, we go to the line of Mike Halloran with Baird.

So a couple of questions. First on the cash usage from here and how you're thinking about it. Obviously, you're in a really good position on the cash side. So is there a pipeline of activity that you think you can move on towards now that the Velan deal didn't close or are buybacks at all in the picture as you think about the forward -- the usage of cash on a forward basis?

So I'll start by saying it's a nice position to be in to have a cash and liquidity position that we can talk about meaningful allocation of capital. And we outlined some of our strategies in more detail at the Analyst Day. So I'll start by saying that we start that with thoughts around our commitments. And one of the things that we outlined at the Analyst Day is an expectation that we would return to the practice of buybacks to offset dilution from equity comps. So I think that's something that you can start to expect to see in terms of our cash usage going forward. From there, we're really weighing our choices between reinvestments in the business, inorganic growth, as well as larger scale buybacks or dividend increases. I will tell you right now, we see abundant opportunities out there in terms of both reinvestment and a pipeline of kind of bolt-on complementary M&A that would help bolster our product portfolio and lead us into markets that we like from a 3D perspective. So we continue to work through that potential M&A portfolio to manage our products. But at the same time, I think we -- I like to use the word agnostic when I describe this, we have to always weigh those choices with the opportunity to create long term value through shareholder returns as well.

And then just to add on the programmatic M&A funnel. Obviously, we are in pursuit of the Velan transaction. And so some of those got put on hold. We've now kind of revamped that. There are -- it is a highly fragmented coal control space. And so we're excited about the potential to do something. We don't have anything in the immediate term, but I would certainly expect us to continue to progress this in 2024. And ideally, we're acquiring one to two programmatic M&A style businesses every year that support the 3D strategy.

And then on the pricing side of things, obviously, you're very comfortable with the margins that you're pulling into the backlog here, but maybe give some context to the market pricing environment. How much of that confidence in the margin, in the backlog and the pricing that you're specifically getting, is more Flowserve specific in your -- and you're just being diligent about what kind of pricing we receive versus how competitive the marketplace is, and if there's any variation that you're seeing out there?

Let me -- I'll split that question between kind of our project business and our run rate MRO business. On the run rate MRO aftermarket parts, seals, replacement valves, all of that, we typically go with the price list strategy. We're doing our best to balance price costs. And I think this year, we finally got in a more positive position than we've seen over the last 12 or 18 months. And so we did a 5% price increase at the beginning of this year. I don't remember exactly it was like the fourth one we've done in two years, but we feel really good about that. We'll announce our new price increase for 2024 at the end of this year and we'll move pricing up again. And so I feel very good on kind of the run rate business on where our pricing is. We're seeing basically our raw materials, the inflation is subsided. And so we feel like we can kind of take another step up on price cost with that side of the business. Now let me switch to project pricing. And I would say this is still an area that I'm not satisfied with in terms of kind of the global marketplace. It's still very competitive with the larger projects and the more kind of attractive projects potentially in one of the energy transition lanes or some of the very large ones in the Middle East. And so given our current backlog and given kind of how we view the world and the outlook going forward, we've been incredibly selective. And in fact, we walked away from a very large project in the third quarter that didn't meet our pricing expectations. And so the discipline, while it's gotten tremendously better than a year ago, it's still not exactly where we would like to see it. Now hopefully, we'll start to see a little bit more disciplined behavior in some of the larger projects as we turn the corner into 2024 as most of the peer group, certainly on the engineered pumps is now significantly fuller in terms of capacity. And so I would say the environment will improve in 2024. We're very close to being at the expectations that we believe we deserve given the risk of execution and the technology that we put into these projects. And so again, I feel good about the pricing environment, it's dramatically better than a year ago, our margins in backlog are higher across the board within Flowserve. And I believe that our discipline in the new focus with the org design will allow us to price effectively as we go into 2024.

Out next question or comment comes from the line of Damian Karas with UBS.

I mean obviously, you guys are reiterating those '27 targets a month later. Good stuff.

Appreciate that.

I was just curious, you talked a little bit about some of these projects in the funnel that kind of continues to grow. Is there any sense you could give us for the cumulative size of these projects that are lining up and how we should think about the timing there, whether more first half, second half of next year, really any color -- any additional color you can provide?

The project funnel is healthy and we're seeing a lot of awards, and I would say the Middle East is where we're seeing the largest size project. So obviously, Aramco is investing substantial money to meet some of their big commitments that they've made in terms of driving a mix shift in their economy. But I would say the whole Middle East looks really, really good right now. And so we've got visibility to several projects there. And then in addition to that, and we talked about this last month at the Investor Day, LNG and nuclear are both very attractive markets and those projects can have pretty sizable content in them, call it, somewhere between $40 million and kind of $80 million. And so we're seeing a nice lineup on the LNG side and on the nuclear side. And then I'd just say on the timing comment, gosh, it is really hard to predict when these projects get awarded. We get visibility to them and just inevitably, they slide to the right. And so committing first half versus second half becomes very difficult. I did mention in the prepared comments, though, we had a few of the projects slide from Q3 into Q4. So we do expect to see kind of a little bit of an uptick. None of the bigger projects above kind of $50 million to $100 million, but very nice sized projects over the $20 million mark get booked in Q4. And then I'd just say our expectations for next year would be, certainly, when we look at the full year, we're going to have improved project bookings in 2024 over 2023, timing is uncertain, though, in terms of which quarter they show up.

And then as you highlighted earlier, Scott, that vacuum technology -- on the 3D, the semiconductor manufacturing vacuum technology. So that caught my attention. I'm just curious, when you bid on a project like that, that nature, kind of what kind of profit margin do you -- are you anticipating on a project like that?

The vacuum technology is a really good product for us. It's differentiated and the competition is relatively smaller than some of our other products. And so this is an area where we can get good margins on the OE side. But I'd say more importantly, the vacuum technology has substantial aftermarket capability. And so when a new customer is putting in a greenfield facility for semiconductors, they obviously -- uptime and reliability would be front and center in terms of what they expect from their OEM. And so we really like the OE business, it's at what I'll call normal levels for the pumps division. But then that aftermarket drives substantially accretive margins as we start to replace spindles and upgrade and repair those vacuum products. But I also just want to add, vacuum has been on our list of areas to grow. We haven't done a great job in the semiconductor market historically. And so we've now really made an effort to get into this growing market, especially as companies look to reposition their supply chain and their production closer to the regions where the consumer is. And so this is an area that we're very excited about. Again, limited competition compared to some of the other applications and we're very excited about the technology that we can put into this end market.

We'll go next to the line of Saree Boroditsky with Jefferies.

Congrats on the quarter. You highlighted some moderate destocking in the distribution channel. Where are inventory levels today, and what was the catalyst for destocking, given what seems like a pretty positive outlook?

The destocking really for us, impacts our valve division and again, very modest. And so we've seen some of the public comments with the distributors and some of the comments directly that our teams had, there's just a lot of pressure on their inventory levels, and they're being cautious about it. But I would say, overall, like it's been very minor to our bookings. And when you look at the general industry side of our bookings, we're seeing tremendous growth year-over-year. And so I actually expect them to start ordering more inventory as we close out the year and they transition to revenue growth in 2024. So while we've seen it modestly, not a major concern for us, and again, we remain very positive about our ability to grow not only the valves business but the overall business within the general industries category.

And you had a nice step-up in margins in FCD sequentially. Is there anything onetime that we should contemplate here? Would you expect margins to improve sequentially into 4Q per normal seasonality?

I'll start by saying that we are really pleased with the trajectory that we see FCD on. They've done a nice job and they particularly did a nice job in the third quarter leveraging that incremental volume to see the drop down to operating margins. And that's actually something we see continuing into the fourth quarter. We'll see some modest revenue growth and very modest as we make our way into the fourth quarter. But we're going to continue to see that margin expansion, both at the gross margin level and at the operating margin level. So I think what is particularly pleasing about that as we think about those long term targets for FCD at sort of 16% plus on an operating margin line, we're really going to exit this year with clear line of sight to those targets going forward.

We go next to the line of Deane Dray with RBC Capital Markets.

This is Kenny Sim on for Deane Dray. Just following up on the earlier question, you talked about some big projects and orders in the pipeline. But as you work through the backlog in the space of the macro geopolitics, oil price volatility, how does that impact the way you approach and stay disciplined in this space?

Again, we feel very good about the health of the project funnel right now. And so despite all of the noise and the rhetoric out there in the marketplace, these are big projects, they're big commitments from governments, they’re big commitments from companies, and they have to plan these years in advance. And if you go backwards, 2020, 2021 and into 2022, there is a substantial lack of investment on some of this big infrastructure spending. And so again, feel very confident that what they've laid out and where these things are moving, and if we look at FID levels, which is funding of the projects, we look at the EPC backlogs, all of those point to awards for OEMs as we put equipment into these big projects.

And then looking into the implied fourth quarter, any seasonality that we should be mindful of in terms of, say, free cash flow growth for the segments or any other metrics that you can talk about?

So just from a seasonality perspective, I think as you can see, our revenue for the full year is up significantly. We're seeing more modest revenue growth against a pretty tough comp from last year in the fourth quarter. That said, we would anticipate that we'll expand our operating margins as we move from Q3 to Q4 to provide us a really sound exit point to build upon within 2024. And from a cash flow perspective, we've been much more ratable with our cash flow over the course of 2023 with positive operating cash flow in each of the first three quarters. We would anticipate that, that will ramp up as we exit the year, and we'll see stronger free cash flow in the fourth quarter as we generally do.

And then I'd just add, we're working very hard to provide more of a balanced view on results every quarter. And so you saw this year a relatively strong first quarter, a second and third quarter that were pretty similar. And I'd just say, unlike years in the past, where we’re saving everything to the fourth quarter, we're doing a much better job making sure that we're getting healthy revenue and margins in all of our quarters. And I would certainly expect to see that as we turn into the first quarter of next year.

Next, we go to the line of Joe Ritchie with Goldman Sachs.

Scott, maybe you just answered my last question because like historically, when you've taken -- you've taken a look at the seasonality in the fourth quarter versus the third quarter, you've seen a pretty big uptick in revenues, particularly in FPD. And Amy, I've heard you say a few times on this call that you're only expecting a modest improvement. So just help us understand why it's modest because I mean go back to several, several years, and it's typically like a pretty nice uptick.

And I'll just reiterate what I just said. We are really focused on our material planning, scheduling and really trying to take out the variability quarter-over-quarter. And you said it, Joe, like if you go back in history, especially on the FCD side, we got some pretty wild swings on revenue and margins. And so again, the teams are doing a really nice job planning their work, planning the supply chain and progressing that work more continually throughout the year. And what you should see and expect from us as we go forward is Q1 is always going to be slightly lower than the rest of the quarters. But you'll see, call it, down in the first quarter a bit but then relatively strong on Q2 and Q3, which should be about the same, and then just a modest uplift in Q4. But Amy can provide a little more color on that.

And Joe, I'd say the backlog is in place with FCD. We had a positive book-to-bill within that segment. Again, this quarter, the backlog is in place, and we've been able to make our way through the year in a really rational way that makes the operations be able to operate in a normal trajectory, avoid the swing. Really the big increase that we've seen is from Q1 to the third quarter where we increased revenue nearly $50 million for the segment over that period of time. So going about it the way that we are, what we see is we're hoping to avoid that Q4 to Q1 reduction that we see and really trying to reduce that shrinkage in revenue that we've traditionally seen between Q4 and in Q1. And as I've said a couple of times, I'm really pleased with what we've seen in terms of the conversion of that backlog from the valves portfolio over the course of 2023.

I guess, my other follow-up question, I guess, as you kind of think through, clearly, like the margin expansion has been great, remains on track. I'm trying to kind of think through the dynamics of the cost to achieve going forward beyond 2023. And then ultimately, what that means for your free cash flow conversion, right, because there's a cash component to the restructuring cost that's impacting your free cash flow -- but clearly, getting adjusted out of the earnings component. So how do we think about that beyond 2023?

So we've put in the -- I mean, we put in the forecast the things that we're aware of at this point in time. We're obviously going to continue to look for opportunities to reduce our cost structurally as we move forward. And certainly, of the restructuring that we've taken this year, there is a fairly sizable component of that, I think around $13 million that's actually noncash. We've continued to see some of that make its way through, although of the restructuring that we've taken this year, certainly, some of that will -- the cash outlays for that will occur over the course of 2024.

And is the cost to achieve in 2024 going to be like a similar size to 2023, or is there any quantification of what that number is going to look like?

We have not quantified that number yet, Joe. I think that that's a rational assumption to make it going forward. But those particular initiatives and what that might look like have yet to be identified.

We go next to the line of Brett Linzey with Mizuho.

This is Peter Costa on for Brett Linzey. So there's really impressive growth in the Middle East and Africa. Are you guys seeing any emerging risk or throttling back of future activity in the region given the current geopolitical environment?

It's a good question. It's something that we're watching very closely. And so geopolitics today is a little bit of a wildcard, right? We still have war in Ukraine with Russia. We've got the Middle East now with lots of concern with Israel and Palestine. So it's just something that we're watching. I'd say any conflict drives uncertainty and so I'd say it's not a net positive. However, given kind of where things are and what's going on in the world, we remain confident that the projects that we have visibility to in Saudi Arabia, in the UAE, in Qatar that those continue to progress forward. And so I think there's always an element of geopolitical risk in our business, given the significant international exposure that we have. But again, today, we feel confident in our projections, in our plans given everything we know and that we're watching in the world.

And then you also noted that 100 basis point impact of noncash adjustments to the long-term liabilities. I'm just curious if you'd potentially move that out of the adjusted results moving forward?

It's certainly something that has been presented to us by a number of the analysts. We've tried to be consistent from year-to-year in terms of how we presented this. But obviously, as we start each new year, we think about how we take a look at these things. And it's certainly something that we'll consider going forward. Obviously, what we hope is to avoid charges of this size going forward. And when we've not adjusted it, we intend to be transparent about what those have been.

We go next to Nathan Jones with Stifel.

I guess I'll ask my second question first seeing that it's a follow-up to the last one. There's a pretty well-defined playbook for getting those liabilities off the balance sheet. Several other companies have done it. Now that you have a little bit more flexibility in the balance sheet, what are your thoughts about actually moving that liability off the balance sheet, so we don't have to worry about these charges anymore.

So it's certainly something that we continue to monitor and talk about internally. The liability is an undiscounted liability that we have on our balance sheet. We also have a receivable that partially offsets it. So the net size of the liability is about $60 million. We believe it's manageable. Many transactions that have been executed around liability management have been much larger than that as we look at what's happened in the market. So as we think about this, it's the same decision that we're making around capital allocation for other opportunities, where is the greatest long term return to our shareholders. And currently, given the way our legal team has been able to manage this liability and the insurance proceeds that we've received to date to net against this, we viewed higher and better uses for capital allocation, but that will continue to be under consideration.

We'll look at it every year and make the best decision at the time that we can.

Second question I wanted to ask about is the visibility on the project pipeline. Scott, you're talking about a number of these large projects and EPC backlogs and certain things moving into the FID stage. And so I think that Flowserve's visibility is pretty good here. I mean once projects get into EPC backlogs, they're pretty much going to be executed on. And once they get to being awarded to Flowserve they pretty much always get executed on. The projects behind that, the ones that haven't got to FID out are the ones that are probably more at risk in your pipeline. If we think about how far away they are -- like is that a year from now that we might see some disruption if we assume the market turns down, is it two years away that we might see some disruption if the market turns down? Just maybe you can give some more color around your visibility into that pipeline and your level of confidence that those get executed on?

No, I think that's a really good point, Nathan, and I'll kind of reiterate some of the things that you said. And so if we think about, let's just call it our near term pipeline one year out. Why do we have confidence in that? We've got our own internal funnel and opportunities. We know these projects have passed FID, and they're now showing up with orders within the EPC backlog. And I'll just -- from a historical perspective, once you get FID and once you see it in the EPCs, very, very rarely will you see a project stopped or canceled unless something dramatically goes wrong. And so we have very good visibility in our one year funnel in terms of larger projects and outlook. I would say beyond the one year mark that's when you start to see some uncertainty that could be driven by cost inflation or interest rates in terms of how they lever up some of these projects and project financing or potentially some of the geopolitical risks, which we referenced earlier. On the positive side, though, again, we've had substantial underinvestment, we've got in market pricing on the oil and gas side that is incredibly constructive and we also have the dynamic of energy security and energy transition. And so very similar to my comments a month ago at the Investor Day, like we still feel really good about that long term view of activity around the world, given the dynamics of energy security and energy transition.

And this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.