Hi everyone, welcome to Alpek's fourth-quarter and full-year 2023 earnings webcast. I'm Bárbara Amaya, the recently appointed Investor Relations Officer. Joining us today, we have Jorge Young, our CEO, and José Carlos Pons, our CFO. On today's call, Jorge will provide a high-level overview of full-year performance and review 2023, including actions taken to position Alpek for success in the current environment. José Carlos will then cover quarterly and annual financial results in greater detail. Finally, Jorge will outline our strategic initiatives, outlook, and expectations for 2024. We will then open it up to questions. Please note that the information discussed today may include forward-looking statements regarding the company's future financial performance and prospects, which are subject to certain risk and uncertainties. Actual results may differ materially, and the company cautions the market not to rely unduly on these forward-looking statements.
Alpek undertakes no obligation to publicly update or revise any forward-looking statements, whether it is as a result of new information, future events, or otherwise. We express our financial results in U.S. dollars unless otherwise specified. For your convenience, this webcast is being recorded and will be available on our website. Jorge, I'll turn the call over to you.
Thank you, Bárbara, and we're very glad to have you as our Investor Relations Officer. Good morning everyone, and thank you for joining us. As we reflect on the past year and look ahead to 2024, Alpek is focused on optimizing performance through near-term market conditions while continuing to advance our long-term strategic goals. Similar to the first three quarters of 2023, the fourth quarter remained challenging for the petrochemical industry. However, throughout the year, we took decisive actions not only to mitigate these effects but also to strengthen and position our company to maximize resiliency across the cycle. These actions, which I will cover in more detail shortly, fall within two key categories: one, achieving structural cost reductions, and two, strengthening our balance sheet. Before going into the details of these initiatives, let me walk you through our full-year 2023 financial results.
Volumes were 4.64 million tons, down 8% year-over-year, which was in line with our most recent expectations. Comparable EBITDA of $734 million, which is 47% below year-over-year and is due to a compression of PET, polypropylene, and EPS reference margins. Operating free cash flow was $408 million, with net working capital recovery of $596 million, a year-over-year improvement of 244%, mainly from lower raw material prices and inventory management initiatives. CapEx was $277 million, 38% lower than our original guidance provided at the start of 2023, as we proactively paused CapEx-intensive projects. Total debt at year-end was $1.73 billion, down 7% year-over-year as we continue to prioritize reducing debt.
During the third quarter, Alpek and its joint venture partners announced that Corpus Christi Polymers (CCP) decided to pause construction of its integrated PTA/PET plant in Corpus Christi, Texas, due to an increase in capital requirements. In the fourth quarter, Alpek recorded a non-cash impairment charge of $557 million related to this decision. Just to be clear, and independently of the accounting impairment, the project is on a pause and the site is being preserved for a potential future start. As decisions on the project are made, the owners will communicate accordingly. On slide seven, I would like to update you on the progress we made throughout the year to maintain our competitiveness as we navigate the complex and challenging environment. We sharply focused on achieving structural cost reductions that not only benefit our business now but that also position us to be resilient over the long term.
Over the course of 2023, we undertook actions to reduce both fixed and variable costs. Some of these actions required difficult decisions. We focused on optimizing our footprint. We halted production at the Cooper River site and shifted all the production to more competitive plants. We also shut down the filament site in Monterrey, and with this decision, we are no longer in the filament business. These closures are expected to have a benefit of approximately $40 million on an annualized basis. Additionally, we developed a plan for organizational restructuring that includes, among other actions, a headcount reduction mainly in our polyester business to be carried over the first half of 2024. Furthermore, this restructuring also focuses on operational efficiency through investments in integration and standardization of new systems. This will help us reduce redundancies across geographies by creating centers of excellence.
Finally, during fourth quarter 2023, we signed power supply agreements with more competitive rates for some of our facilities. We anticipate these actions combined will generate savings of approximately $35 million. All told, the footprint, the restructuring, and the improved power contracts we expect will deliver at least $75 million in annualized basis. We estimate that more than half of these savings have already been realized, with the remaining portion scheduled to accrue by year-end. We're continuing to identify cost-saving opportunities while still investing strategically in Alpek's future, and we're confident in the incremental profitability these efficiencies will provide when markets normalize. In addition to our working capital and CapEx optimization initiatives, we made significant progress on strengthening our balance sheet. We successfully secured our first sustainability-linked loan of $200 million.
Through this arrangement, we efficiently refinanced our outstanding balance and extended our 2023 bond, which was due last August, to 2028, improving our average debt maturity to 5.2 years. Further, this financing aligns and supports our ESG strategy. Delving into ESG, we continue to advance our goals. First and most importantly, we maintain our dedication to keeping our people safe and achieve a total recordable incident rate that was 27% lower than the prior year. It is worth highlighting that our polypropylene business recently achieved four years and 5 million man-hours without recordable injuries. Moreover, 15 of our sites were injury-free during 2023. We also made very strong progress towards meeting our SBTi carbon emission goals, with a 27% reduction in CO2 emissions compared to our 2019 baseline. This is partially due to carbon-free energy now supplying 27% of our electricity consumption.
Our recycled PET production volume grew 17% year-over-year, and in the plastics and chemical segment, we developed six new products made from recycled and bio-based materials. Finally, we reinforced our commitment to gender equality by pledging to the Women's Empowerment Principles from the UN Global Compact and UN Women. I am proud that we were able to continue to make progress on our ESG, sustainability, and circularity initiatives while taking action to strengthen our business. With that, I will turn the call over to José Carlos to cover our financial performance in more detail.
Thanks, Jorge. Good morning everyone, and thank you for joining us. Let me provide you a deep dive in fourth quarter performance. Volumes for the quarter were 1.1 million tons, in line with expectations, and down 7% quarter-over-quarter. Volumes were impacted by continued influence from Asian imports, softer demand, as well as abnormal seasonality and scheduled maintenance in some of our production facilities. Reported EBITDA was $53 million and was impacted by a non-cash effect derived from respecting full-year Argentina results under IFRS Hyperinflation Accounting, which was present throughout the year, with a greater impact in December as there was also a significant domestic currency devaluation. Alpek generated $67 million in comparable EBITDA. In line with our standard practices, these figures consider hyperinflation and currency devaluation as extraordinary effects, given their non-cash nature.
Looking ahead, we anticipate no further material impacts from hyperinflation as we plan to transition to U.S. dollar as our functional currency in Argentina in 2024. I will start by discussing the results from our polyester business. Volume was 907,000 tons, 5% lower quarter-over-quarter as we continue to see impact from Asian imports. Asian integrated PET reference margins increased by 5% quarter-over-quarter, averaged $285 per ton, recovering slightly as raw material prices decreased. Meanwhile, Chinese integrated PET reference margins averaged $155 per ton, increasing by 6% as there seems to be some temporary capacity rationing. In terms of feedstock dynamics, Europe's reference paraxylene prices decreased by 16%, with the spread between North American and Asian prices becoming more favorable, decreasing by 46% to $180 per ton, yet still above historical levels. Comparable EBITDA was $122 million, up 7% quarter-over-quarter.
Turning to our Plastics and Chemicals segment, volume was 193,000 tons, down 13% sequentially as the polypropylene segment saw slightly lower demand levels amid seasonality and high supply in North America. EPS demand continues to be impacted by a downturn in the construction industry and, as our polyester segment, sustained imports. Polypropylene margins remain flat from the continuation of market conditions in North America. They remain at $0.17 per pound, as expected, and for EPS, North America reference margins improve at year-end, returning to historical levels at an average of $0.27 per pound, 45% higher quarter-over-quarter. In terms of feedstock dynamics, average reference propylene prices increased to $0.46 per pound, up 28% quarter-over-quarter. Meanwhile, average reference prices for styrene declined to $0.47 per pound, a 12% decrease compared to the third quarter, with only a slight disconnection to Asian reference prices.
Comparable EBITDA was $43 million, up 3% quarter-over-quarter, as high reference margins for EPS offset seasonality. Turning to free cash flow, which had an extraordinary result in 2023, CapEx for the fourth quarter totaled $112 million, comprising scheduled maintenance, a payment for costs already incurred from the CCP construction, and a $28 million earnout payment from the OCTAL acquisition. Net working capital improved by $163 million in the fourth quarter, totaling $596 million for the year, resulting in operating free cash flow for the year of a year-over-year improvement of more than 250%. As Jorge mentioned earlier, one of our ongoing priorities is strengthening our balance sheet, and we made significant progress in 2023. We reduced our net debt to $1.7 billion, equivalent to 7% year-over-year, as our efforts to improve working capital and optimize our CapEx yielded results.
Last 12 months' reported EBITDA was $514 million, resulting in a Net Debt-to-EBITDA ratio of 3.4 times. If we exclude the effect of the Argentine devaluation and the extraordinary costs from the two plant closures we performed in 2023, the pro forma leverage would have been 2.9 times. I want to reaffirm that Alpek is completely committed to reducing leverage. We will continue to execute the necessary measures to achieve our target of 2.5 times or below. We expect to return to a leverage close to that level by year-end. We will continue to improve our free cash flow through working capital optimizations and CapEx rationalization. Additionally, we will not be issuing a dividend payment this year to prioritize our cash flow and achieve a prudent level of leverage. Furthermore, as Jorge mentioned, we took actions to refinance our debt facilitated by securing our first sustainability-linked loan.
This extended our debt maturity to 5.2 years. Finally, I'd like to highlight that our liquidity remains strong at over $1 billion, comprising $457 million in cash on hand and $584 million in our committed credit facilities. With that, I'll turn the call back to Jorge.
Thank you, José Carlos. As 2024 gets underway, we will continue focused on improving our overall competitive position throughout our portfolio and take advantage of opportunities as market conditions improve. Most importantly, we will continue to diligently work towards achieving structural cost reductions that will benefit our business over both the near and the long term. Our goal is to not only simply adjust to the current market environment but to emerge as a more efficient and more streamlined business. Additionally, we will continue to capitalize our position as a domestic supplier by reliably delivering a broad offering of high-quality, value-added products, recycled content, and outstanding service. Finally, we will continue to maximize cash flow and further strengthen our balance sheet through prudent and disciplined capital allocation, and also looking for alternatives for non-core assets.
As an example, we're currently evaluating alternatives to realize the value from the former filament site that was shut down in 2023. This site has a very attractive location in Monterrey, Mexico, and the zone where it's located has recently gained government approvals for its development in a very attractive real estate market. As we navigate a challenging environment, we continue to prioritize key investments. We will maintain our focus to strategically invest in innovation, operational improvements, and advancing sustainability solutions for our customers to further differentiate the Alpek brand and to position us for future growth with discipline. To summarize our outlook for 2024, we expect the petrochemical industry to continue to experience headwinds in the near term, similar to what we saw in 2023, with gradual improvement over the course of the year.
Our 2024 guidance is based on the following key market and business assumptions: Asian integrated PET reference margins of $270 per ton, PET China margin of $170 per ton, as China remains impacted by continued overcapacity, a slight decline in North America polypropylene reference margin at $0.16 per pound, as the supply in the region has stabilized, slightly higher volume versus 2023 as demand is expected to recover gradually, average container ocean freight costs to remain at normal levels, slightly lower paraxylene spread between North America and Asian prices versus 2023, yet still quite elevated versus historical levels, and this is perhaps one of our most important opportunities going forward. Based on these assumptions, overall Comparable EBITDA for 2024 is expected to be at $600 million. Annual CapEx is expected to be $200 million, in line with our standard figures, allocated mainly to maintenance and strategic investments.
And finally, free cash flow generation remains a high priority in the year. With that, and before we move to the Q&A session, I want to take a moment to thank our close to 6,000 team members around the world for their hard work, dedication, and commitment, to our customers for their loyalty and partnership, to our suppliers for their service and support, and also, I would like to thank our shareholders and analysts for your continued interest in Alpek. I'll turn the call back to Bárbara.
Thanks, Jorge. At this time, we will be receiving your questions. To ask your question live, please raise your hand. We will call on the participants in the order they appear. You may also type your question through the Q&A function. We will attempt to cover as many questions as time allows. Our first question comes from Andrés Cardona from Citi. Andrés, please proceed with your question.
Thank you, Bárbara. Good morning, Jorge, José Carlos. I have two questions. The first one is about the mid-cycle EBITDA that we should think about for Alpek. In the past, you mentioned it was $1 billion, and I was wondering if it has changed, and if it changed, what are the key assumptions that are moving for that revision? And the second one is: is there any particular concern from the credit agencies in the current context for a potential downgrade in credit ratings? Thank you.
Yes, Andrés, let me take a shot at your questions. I'll do the first one. Maybe José Carlos can get to the second one. Yes, compared to that figure of $1 billion, I would say the two key variables that we think right now are on an extreme point, on the low side, that are impacting our businesses, and relative to that midpoint are Asian margins and also the relative cost of paraxylene in this region, again, to what we call normal times. And those two probably account for close to halfway or maybe more than halfway between our current estimate and that level. And I think the balance would be somewhat higher volumes in general. That would be a way to close that gap.
Perhaps we would see more in the range of 800-900, but those would be the two key variables that are creating a gap relative to our normalized long-term expectation. Again, reference margins remain at levels we had not seen before, especially in polyester, especially in EPS. And second, the relative cost of paraxylene. Paraxylene has an alternative value that is higher in this region, but also, and most recently, the shipping cost of liquids has remained elevated, which is one of our tools to keep this key raw material competitive. And right now, they remain temporarily elevated, and in our guidance, we are not factoring yet relief in paraxylene shipping costs. I hope that answered the question.
Yeah, yeah. So just to clarify, the mid-cycle normalized EBITDA remains at $1 billion, and you very clearly detailed the difference with the guidance, but long-term mid-cycle remains at $1 billion?
You know, we probably would say $800 million-$900 million. I mean, again, these businesses are volatile in margins, and you have seen historical results at that level. The $1 billion level can be surpassed as some conditions align, but I would say more in the $800 million-$900 million at this time.
Thank you, Jorge.
Okay, let me try to answer the second question related to credit agencies. I'll say, Andrés, first, we're totally committed to reaching our 2.5 Net Debt-to-EBITDA target, which is a higher part of our range. We're expecting to be very close to that by year-end, so we don't see that this will be this high leverage, which is reasonable leverage still, but higher leverage to our target, let's say, it's only a temporary effect, and therefore, we don't see that Alpek would remain at that level for the long term. We have focused on having a strong free cash flow. You saw the rationalization we did on CapEx, we did on working capital. We've also worked on cost reductions. Jorge already indicated there are more opportunities to reduce costs.
We have a strong liquidity of close to $1 billion available to us, and those are elements that I'm sure our credit agencies will review. We're planning to meet with them in the next weeks and go through our short-term and long-term perspectives. In addition, as already indicated, we will not be paying a dividend in 2024, which also improves our free cash flow for the year. Finally, I would say they reviewed our ratings in the last part of 2023, so they are familiar with our performance, and hopefully, with a stronger performance in 2024, they'll be supportive of our ratings.
Thank you, Jorge, José Carlos.
Our pleasure.
Our next question comes from Pablo Ricalde from Santander. Pablo, please proceed with your question.
Hi, Jorge, José Carlos. Thanks for taking my questions. I have a question on the polyester chain, especially on the volume side. I know there was a seasonality effect, but volumes reported the lowest since 2019, and they include OCTAL. So what's going on there? It's a matter of the market is getting smaller, market share losses against the Asian imports. So just trying to understand what's going on on the volume side.
Yeah, Pablo, that's a very good question. Fourth quarter was particularly soft in demand. Fortunately, we're seeing some of that effect being reverted in the first quarter, but it was particularly soft. We also had maintenance in some of our facilities. And if you look at the spreads, especially Chinese spreads, month-to-month, the last part of the third quarter and the very early days of the fourth quarter was the low point, and at that moment, we withdrew our volume from certain markets that we are now recovering. But it was a combination of low margins and a particularly soft fourth quarter of 2023.
Okay. Another question now on the dividend side. You're not paying a dividend, but you want to approve a buyback program. I don't know if you can talk a little bit on the buyback program.
Pablo, thank you. How are you? Yes, we have decided not to, or ALFA and our main shareholders will propose not paying a dividend in the assembly in the next days. The reason is to protect our cash flow and our balance and, in the end, Net Debt-to-EBITDA. We will still have an open buyback program. Depending on our liquidity, depending on the performance of the company, we will access that program.
Okay.
In the end, I'll indicate to you that the priority, it's reaching 2.5 times by the end of the year.
Okay, perfect. Thanks.
Next question comes from Federico Galassi from Rohatyn Group. Federico, please proceed with your question.
Hello, guys. Thank you for taking my question. Two questions if I may. The first one is related with CapEx. The $200 million that you announced in the guidance is more related with maintenance CapEx, or do you have something in the offing strategic CapEx?
Yes, Federico. The $200 million guidance for 2024, it includes maintenance CapEx. I mean, that's our priority that our facilities have outstanding uptime, so we are conducting all the normal and expected maintenance CapEx. That probably is about half or maybe even north of half of our guidance figure. The balance includes items like our continuation of projects in the recycling of PET, the recycling of expandable polystyrene, in improvement and modernization of systems. We still have some spillover, I would call them, expenditures or CapEx in relation to preserving the Corpus Christi facilities that are going to be incorporated also in the early part of 2024. But that is the and some other efficiency projects in our system, and that's mainly the guidance. So it's maintenance, just more than half, and the balance, this list of areas that I just mentioned. Hope that's that answered.
Perfect, great. And the second question, you have now one year of the entire operation of OCTAL. Can you give us a guidance of some rough number of how was the EBITDA of OCTAL this year, just to try to understand how is the volatility of this business?
Yes. Look, we don't disclose the very specific performance beyond what we do in our polyester and plastics and chemicals division. However, I can tell you that the OCTAL acquisition has been meeting and initially exceeding, and today is still meeting and slightly exceeding our objectives for the project acquisition, and the operation is performing very well. The key product from OCTAL is PET sheet rolls, and we have been able to confirm with the market that those provide quality and consistency advantage. We can also say that we have achieved very good synergies from the acquisition, and especially market synergies in finding better raw material sources. OCTAL is very strong procuring raw materials, and we benefit from that in the rest of the system. So all in all, we are very happy with that project.
Okay, great. Thank you so much again.
Our next question comes from Regina Carrillo from GBM. Regina, please proceed with your question.
Hi, good morning. Thanks for taking my question. I would like to ask about the CCP impairment charge. Can you give us more color on what's behind this impairment? And we see that it represents almost all of the investment you had made on the project. So anything color on that would be great.
Yes, Regina. I mean, I would say we just wanted to be very conservative with our balance sheet and have that accrual and that impairment done. I think we discussed that very carefully among ourselves, with our auditors. And again, that will not tell us about what's going to happen with the project. The project, again, is being prepared for a potential future restart, but I think at the end of the day, we just wanted to be conservative in our balance sheet.
No, maybe, Regina, just maybe a call. This is basically 100% of the investment that we had on our balance sheet, and as Jorge indicated, was just to be prudent. And in the end, this might come in the value as we decide the future of Corpus Christi, but we thought that would represent the most conservative approach towards our balance sheet.
Perfect. Thank you. If I may ask a follow-up or related question with Corpus, is a cost increase the only reason behind the halt of this project, or do you think it might be related to the timing and where the market is right now?
It was mostly a budget issue.
Perfect. Thanks.
We have a question through the Q&A function. Could you provide more color on the impairment size nature to reach the reported EBITDA for 2023?
Impairment?
I think we just covered the Corpus Christi impairment, which is the money.
It was long.
Just to clarify, this impairment did not go through our EBITDA. It went below EBITDA, and it's a non-cash impairment. Hopefully, that answers. If not, please let us know.
I would add also to that question that in our reported EBITDA, we had two impairments that had an effect in our reported EBITDA due to the shutdown of the Cooper River and the Monterrey filament plants.
We have another question from Tasso from UBS. Tasso, please proceed with your question.
Hi, everyone. Hi, Jorge. Hi, José Carlos. Maybe just a follow-up question here on dividends and capital allocation. I know that you guys already said that you wouldn't pay this year, aiming to reduce the leverage level and focus would be on buybacks and so on. But I was just wondering if, by any chance, the scenario during the year improves in maybe an unexpected way, and you guys are able to reduce the leverage or have greater visibility that the leverage will be reduced by year-end, could dividends be reevaluated during the year or only by early 2025? Thank you.
I mean, the decisions can be reevaluated at any time, right? The dividend decision is reviewed with the board of directors of the company. Again, if conditions would change significantly, yes, these decisions can be reviewed. But I like to be clear that right now, our priority is to bring our leverage back to our target level of not exceeding 2.5 times.
All right, that's clear. Thank you.
You're welcome.
We have another question from the Q&A function. Could you explain further the decrease expected in PP and PET margins versus current levels, and how are you seeing EPS margins moving in 2024?
Yes, I think when you see at the guidance table, you see reductions in PET, Asia PET, China, and polypropylene on a year-over-year basis. In the case of the PET, both Asia and China, there is actually a 2023 story of two halves. The first half of 2023, both reference margins on PET, China, and Asia were much higher than those in the second half. So that's why, on the average year-over-year, you see that decline. When we discuss about some mild recovery, it's mostly from the current levels, which the current levels have already improved from the low points in 2023.
We have another question from Alejandro Azar from GBM. Alejandro, please proceed with your question.
Alejandro?
Hi, Jorge, José Carlos. Good morning.
Morning.
My question is on your comment on monetization of assets. I don't know if you commented about another one apart from the filament plant as land or real estate, but if you could comment on different monetization strategies and also thinking as if I am ALFA, are the proceeds from those monetizations going to be distributed to your shareholders, or the priority would be to reduce debt at Alpek? Thank you.
Yes, Alejandro. Thanks for the question. Look, that's a process that is constant for us. We're looking into that. The timing of those monetizations will depend on the strategy we define for—I think the main one is the real estate asset I mentioned. We normally look at the whole portfolio, but those are the main ones from the assets that we did shut down. There is real estate and some things to rescue. The most relevant one is the one in the site that is in the city of Monterrey. And that one, we're just beginning the process. We could have a decision to do a short-term, pursue the monetization in the short term, or we might stay longer and realize more value. So once we have those definitions, we'll share.
We just wanted to make the point, not necessarily because there is a short-term cash flow opportunity, but just to make you all aware that those are relevant things that we also look and constantly assess. Hope that answers the question, Alejandro.
Yes, Jorge. And if you were to monetize an asset, regardless of what are the priorities on the cash flow uses, is that reduce debt at Alpek or distribute a part as dividends to your shareholders, including Alfa?
No, any specific cash flow from one of those decisions to monetize an asset will improve the general situation of Alpek, and then Alpek will look in how to deal with cash distributions or allocations separately and independently of any specific I mean, we would not tie a decision on any specific project at this time. So it will go to the general coffers of the company, let's say.
We just reinforced our target of 2.5 times, and we're looking at these monetizations as a way of reaching that goal as soon as possible.
Thank you. Thank you, Pons.
We have a question through the Q&A function from Alejandra Andrade from JPMorgan. Hi, when looking to reduce net leverage, would you look to reduce the debt balance with cash generation or simply reach that target by keeping more cash?
Well, thank you, Alejandro, for the question. Well, as you saw in 2023, we used some of our cash to pay down debt. We reduced more than $100 million in the total balance of debt. We have decided to maintain a portion of bank debt in our profile so that that debt, it's prepayable. So if we have a good 2024 and cash generation comes, we might evaluate the possibility of reducing debt and using that cash for that purpose. So yes, I think we will do the two things, trying to improve our EBITDA so that the leverage reduces by that sense, but in the end, also use any cash surplus to pay down debt. That's the reason that we have this profile of debt. I hope that answers the question.
We have another question through our Q&A function. What are the biggest opportunities for Alpek in 2024?
I think in that regard, we are focusing on our cost reduction, and I think we can deliver that in schedule. I think we have in our system the ability to respond to improvements in demand. I think we have in our system significant focus on other cost reduction opportunities. Should certain market conditions materialize that allow us to improve our margins that we are not factoring in the guidance, we will definitely pursue those. One more item as an opportunity, I would say, is we also look into areas where there can be unfair trade practices in the markets that we serve. Last month, the government of Mexico initiated an investigation of anti-dumping practices of PET resin from China into Mexico. The industry applauds that process. I mean, it's just beginning, and the outcome is still unknown.
That would be, again, an example of an area of opportunity in our system.
Thank you. That was our last question in the queue. I would like to remind you that you can find a video recording of this webcast as well as a transcript at our website. Feel free to contact us for any additional information. Now, I would like to turn over the call to Jorge for final remarks.
Thank you, Bárbara, and thank you, everybody, for joining us today. I want to reiterate our focus on ensuring that Alpek is well-positioned today to navigate the current challenging macro and capture opportunities in the future when demand improves. We're harnessing the progress made in 2023 and executing with purpose and a sense of urgency to continue to achieve structural cost reductions, to strengthen our balance sheet, and to improve our global competitiveness. We thank you all for your participation today.