Welcome to Sendai Growers Second Quarter 2021 Financial Results Conference Call. If you are participating online, you can submit a question using the Ask a Question tab on your screened. Yesterday afternoon, Sendaiel issued a press release announcing their financial results for the Q2 ended June 30, 2021. This press release is available on the company's website at smdlgroup.com filed on EDGAR and SEDAR as well. Presenting on this morning's call, we have Zach George, Chief Executive Officer Jim Keogh, Chief Financial Officer and Andrew Storter, President and Chief Operating Officer.
Before we start, I would like to remind investors that certain matters discussed in today's conference call or answers that may be given to questions participants constitute forward looking statements. Actual results could differ materially from those anticipated. Risk factors that could affect results are detailed in the company's financial reports and other public filings that are made available on SEDAR and EDGAR. Additionally, all financial figures mentioned are in Canadian dollars unless otherwise indicated. I'd also like to note that we are conducting the call today from our respective remote locations.
As such, there may be brief delays, cross stock or minor technical issues during this call, we thank you in advance for your patience and understanding. We will now make prepared remarks and then we'll move on to a question and answer session. I would now like to turn the call over to Zack George.
Good morning, and thank you everyone for joining us on our Q2 2021 earnings call. The first half of twenty twenty one has been a transitional period for Sundial. And following our aggressive restructuring in 2020, We've been able to rapidly reshape our business model to focus on a 2 pillar strategy that we believe will position our shareholders for future success. The first pillar consists of our core cannabis operations, where we are leveraging our strong financial position to align our operations with what we expect to be a healthier and more profitable Canadian cannabis market in coming years. With the post quarter acquisition of Inner Spirit, Which we will refer to moving forward as Spiritleaf in keeping with the recognition of the brand in the retail marketplace, Sundial is now vertically integrated.
The acquisition of SpiritLeaf enables SunDao to directly manage and influence all aspects of production, distribution and sales channels, which we believe will result in increased sales Most importantly, the Spiritleaf acquisition demonstrates our commitment to owning the relationship with the consumer. As we remain focused and committed to our cultivation and processing activities, our upstream cultivation results within our indoor modular facility continue to improve Amidst the intentional curtailment of activity in response to market conditions. I'm excited to highlight that we continue to improve our cultivation results And have achieved our strongest harvest outcomes in May June of 2021 with THC potency consistently above 20%. We continue to invest time and effort into our expanded library of strains, which have yielded average THC potency in the mid-twenty percent range during the research and development phase and commercialization of these strains is expected to occur in early 2022. The second pillar of our business is our investment operations, where we are putting our liquidity position to work by strategically providing our investors with exposure to the rapidly growing global cannabis industry.
Much of our capital exposure to date has been committed to our joint venture, Sunstream Bancorp. The Sunstream Bancorp team is focused on deploying capital within the cannabis sector on an attractive risk adjusted basis and is exploring a broad spectrum opportunity within the financial sector. Sundial's investments in cannabis related credit facilities participants and the Sunstream joint venture totaled $253,000,000 as of June 30, 2021. These investments are currently 13%. Our balance sheet remains strong and we remain debt free.
We have a total capital base, including liquid securities, loan assets and unrestricted cash of more than $1,200,000,000 Sundal expects to benefit from a growing interest income stream as more of our capital is deployed and the resulting cash flow has materially buffered our pre profit are in the range of core cannabis operations to date. We've also made a small number of select equity investments in businesses that we believe can enhance our upstream and downstream capabilities. Our 2nd quarter performance continued to be impacted by retrenchment in our cultivation activities and our refusal to push suboptimal product into the market. As we mentioned in the past quarter, SunDao has no interest in pursuing unprofitable revenue growth, and we are unwilling to seek the maintenance of market share at all costs. We have been focused on restructuring our cultivation activities, which has included changes to our processes as well as workforce and other cost reductions.
This has allowed us to continuously improve our cultivation outcomes and remain focused on best practices to deliver great results in potency, yield And terpenes, as mentioned previously. We are committed to excellence and cultivation in our modular indoor facility and our brand promise to consumers are fundamental to our strategy. We are focused not only on affecting change in the challenging and unstable Canadian cannabis industry landscape today, participants are charting the characteristics of a dominant and profitable business model in a more healthy and stable environment that we expect to evolve to within the next 3 years Following necessary regulatory reform, industry consolidation and a greater balance between supply and demand. We remain focused on continuous improvement in our quest Thank you all, and I'll now pass
the call to Jim for commentary on our financial results.
Thank you, Zack, and good morning to all who are listening in. I'd like to remind everyone that all amounts that I mentioned this morning are denominated in Canadian dollars unless otherwise stated. As Zach discussed, the first half of twenty twenty one was a transitional period for Sundal, where we've raised and deployed significant amounts of strategic capital participants and realigned our business into 2 segments for operational and reporting purposes, cannabis operations and investment operations. Will start with our cannabis operations results and adjusted EBITDA. In the Q2 of 2021, adjusted EBITDA from continuing operations was a loss of $200,000 compared to earnings of $3,300,000 in the prior quarter.
Decrease in adjusted EBITDA was primarily due to the following factors: lower realized gains on marketable securities increased SMG and A Associated with the cost of 2,400,000 shareholders of record for Sundial's AGM and lower average sales prices. This was offset by improved cost of goods sold per gram. Comparing first half year over year results, We're pleased that adjusted EBITDA from continuing operations was $3,100,000 year to date compared to a loss of $15,500,000 for the 6 months ended June 30, 2020. The $18,700,000 increase was due primarily to the following: revenue from investments, interest and fees, including the Sunstream joint venture of $22,100,000 participants are subject to the financial results, offset by reduced adjusted gross margin on cannabis operations of $5,300,000 from the combined effects of lower sales volume, lower prices And reduced cost of goods sold per gram. Net revenue from branded cannabis products increased slightly in the 2nd quarter to $7,300,000 from $7,200,000 in the previous quarter, despite provincial boards reducing inventory levels, challenging retail market conditions and continued price compression across the industry.
These market dynamics impacted all of Sundial's formats and brands in the 2nd quarter. Revenue from licensed producer sales was $1,900,000 in the 2nd quarter compared to $2,700,000 in the 1st quarter. Average gross selling price per gram equivalent of branded products, net of provisions, was $3.19 per gram in the Q2 of 2021 compared to $3.15 per gram in the prior quarter despite continued price compression and a consumer shift to value products seen across the industry. General and administrative expenses were about 42% higher at $10,100,000 compared to $7,100,000 in Q1. This increase was primarily due to mailing and distribution costs related to conducting our AGM for approximately 2,400,000 individual Sundial shareholders.
In Q2 2021, sales and marketing expenses increased by 37% to $1,300,000 from $950,000 for the previous quarter. Sundial continues to follow cost discipline, specifically when it comes to brand development and promotion expenses. However, we have resumed targeted sales and marketing investments on certain of our strains and formats. Adjusted gross margin before inventory impairment and fair value adjustments for the 3 months ended June 30, 2021 was negative $400,000 compared to negative $1,600,000 for the previous quarter as a result of Sundal's ongoing focus on cost optimization and offering the most competitive and profitable strains and brands to its customers Gains the backdrop of industry wide price compression and higher comparative operating costs associated with our premium facility. Total capital expenditures in the Q2 of 2021 were $1,600,000 compared to an immaterial amount in the Q1.
We have budgeted $5,700,000 in capital expenditures for full year 2021 related to processing automation, minor facility improvements And maintenance capital. Sundal's net loss in the Q2 of 2021 was $52,300,000 Compared to a net loss of CAD134.4 million in the previous quarter. Net earnings in the Q2 of 2021 were negatively impacted by a are in the range of $60,000,000 long lived asset impairment charge on the Olds facility. The company determined that indicators of impairment existed during the 6 months ended June 30, 2021, when utilization of capacity in the facility was curtailed to align cannabis production with current demand estimates. Excluding this noncash impairment provision, Sandal would have had net income of $7,700,000 for the quarter.
Let's review our liquidity and capital structure during the quarter. Closed the Q2 of 2021 with $885,000,000 of unrestricted cash on hand. And as of August 9, 2021, the company had an unrestricted cash balance of approximately $760,000,000 in addition to restricted cash, long term investments and marketable securities at a market value of $447,000,000 for a total of $1,200,000,000 when combined. Outstanding share count was $2,030,000,000 at the end of Q2 and sits at $2,060,000,000 today. During the Q2 of 2021, Sundial issued 252,900,000 common shares Pursuant to at the market equity or ATM programs and warrant exercises for total proceeds of $327,400,000 participants are in the range of CAD1.30 per share.
Company's ATM facility has been inactive for 49 days prior to yesterday's news release. Subsequent to quarter end, Sundial issued an additional 26,900,000 shares related to the Spirit Leaf acquisition and settlement of related Spirit Leaf debt. As of today, the company remains debt free. Asset value per share at June 30, 2021, including cash, loans, Marketable securities in the Olds facility at net book value was approximately $1,340,000,000 or $0.66 per share. Now let's turn our focus to our investment operations.
As mentioned earlier, Sundial's investment income has been classified as income from operations Sundial intends to continue to deploy significant capital, targeting a portfolio of attractive risk return opportunities in the cannabis industry In Debt Equity and Hybrid Investments, Sundal continued to strategically deploy its capital throughout the Q2 and subsequent to quarter end. Summarize our deployment of capital in our Investment segment to date. Through the end of the second quarter, The company had funded several cannabis related debt and equity investments totaling $354,500,000 Including $187,600,000 to the Sunstream joint venture. These investments generated $9,400,000 revenue in the 2nd quarter, including interest, fees and realized and unrealized gains on marketable securities. On July 7, 2021, the company announced that it had increased its commitment to the Sunstream joint venture to $538,000,000 In the Q2, the company's portfolio of credit related investments generated an annualized rate of return of approximately 13%.
Sundial continues to strategically deploy its capital with a focus on maximizing cash flows and shareholder value. For example, on May 4, 2021, Sundial announced it had acquired 10.1% of the issued and outstanding common shares of the balanced company. Now I would like to invite Andrew Storter, President and COO of Sundal, to provide remarks related to cannabis operations.
Participants are now ready to begin.
Thank you, Jim. Throughout the first half of this year, our top priority within cannabis operations has been on improving our cultivation have a focus on the premium and Hay Level segment. While progress has been substantial, we continue to see tremendous opportunity for increased improvements with our are participating in the balance of 2021. Let me review some of the progress we have made over the Q2 of 2021. Sunnal's commitment to cultivation excellence and our small batch at scale approach has been developed around 3 pillars of focus: people, process and plants.
In terms of people, we continue to configure our supply and operations teams to adapt to the industry dynamics. Participants recently implemented a new pod structure inside of our Oils facility to increase efficiency and effectiveness across all functions. One of the primary objectives of our supply chain moving forward will remain on driving a simplified SKU assortment with a focus on core inhalable offerings. Year to date, we have taken a different approach on product innovation versus our industry peers as we have simplified our SKUs nationally by 65%. We are excited about our revised innovation pipeline for the balance of the year and remain focused on margin accretive offerings that supplement our existing core portfolio.
Participants are in the process. We have implemented several improvements inside of our grow rooms, primarily focused on room environment, In Q2, we achieved the company's strongest cultivation results in May June are in the range of 2021 with an average THC potency greater than 20% and yields above target. These products will be available to consumers in Q3 2021. We have completed commissioning on our new fully automated pre roll machine, which has allowed us to double our annual production capacity while significantly reducing costs. Current capacity sits at 14,000 units per shift with further opportunity to increase over time.
Through a comprehensive review of our sundial portfolio, we launched 3 new palmetto cultivars in the Q2 of 2021 and shipped approximately 9,300 cases across the country. The initial consumer feedback on all three strains has been positive. During Q2 2021, Sandoz also launched are in the province of Quebec, a sativa hash and an indigash. Our 3rd cultivation pillar is around plants. Participants Now I'm very proud of our team inside of our old facility as they have been working hard over the past year on fully revamping our genetic R and D capability.
Early results from this work are promising, particularly around potency terpene profiles and plant yield. We entered the commercial flowering stage for are selected for limited release by year end. Subsequent to the Q2, Sunvell has begun final packaging and is expected to launch a 28 gram LA Cushcake format out of the top leaf brand in select provinces. We believe a large format premium offering in flower will provide consumers the choice and quality as expected from our top leaf brand, which is hang dried, slow cured, individually inspected, hand manicured and hand bottled for a differentiated experience.
Participants I'd like to turn our
attention to SunDao's acquisition of SpiritLeaf. SpiritLeaf has done a tremendous job in growing the banner network to over 100 locations. We believe an optimal assortment of top selling products coupled with a consistent premium shopping experience will continue to differentiate the Spirit Leaf store network. Our integration work continues to progress as we look to unlock further growth opportunities and strong partnerships with our franchisee leaders across the country. Will also be launching the Spirit Leaf Franchisee Advisory Council to engage our franchisees and to obtain feedback and collaboration on strategic initiatives participants are expected to drive the continued growth and
success of the Spirit Week banner.
Our balance sheet strength allows us to position ourselves for the normalization of market conditions that is expected to evolve over the next few years without pursuing a short term market share and unsustainable margins and all costs approach. Participants remain focused and have momentum around our cultivation excellence aspirations. While we need to balance cost and return, we continue to invest in capability and improvement inside our cannabis operations as a key enabler to unlocking value for consumers and customers across the country. With that, I'd like to turn the call back to Zack for closing remarks.
Thank you again for joining us today. This is an exciting time to be in the cannabis space. We remain very optimistic as we continue to execute against our strategy. I hope that you and your families remain safe and healthy and have had an opportunity to enjoy this summer season. We look forward to updating you on further progress that Sundial makes as the year progresses.
I'll now turn it back over to the operator for the question period.
Participants will be The first question comes from Tamy Chen with BMO Capital Markets. Please go ahead.
Thanks. Good morning. First question is, I wanted to go back to the increase in your commitment to Sunstream, pretty meaningful increase in the capital commitment. So do you mind just elaborate a bit more? I mean, what are you seeing, I guess, in the pipeline that prompted you to raise the commitment so meaningfully.
Hey, Tammy. Thanks a lot for the question. So, yes, this market has been evolving very quickly and we actually see A target pipeline well north of $1,000,000,000 in front of us. Of course, no certainty that we can execute and close on that quantum of transactions. But our increased commitment is very much in line with, the expanded opportunities that we see in front of us.
And this pipeline of well north $1,000,000,000 I presume that wouldn't just be in Canada anymore. Is that correct? Are you broadening out beyond Canada for these opportunities?
Participants That's right, Tammy. That wouldn't just be in Canada. There are international credit and other opportunities that we're seeing.
Got it. Okay. And just a follow-up is, any additional color you can provide on how we should think about the potential uplift
participants Yes. So I'll hand it to Andrew to give a little bit more color, but obviously, Tammy, we don't give forward guidance at this point in time, Given the general lack of visibility in the industry, but I'll let Andrew share a bit about our excitement around Cultivars and Select Innovation.
Participants Thanks, Zach, and thanks, Tammy, for the question. So, yes, we're very excited, very optimistic around what we've got in the market currently. And I think participants The 3 that we're seeing very good traction on and some of the highest velocity sales that we put in the market, particularly around LA Cushcake, which is on our Top Leap brand, Romulan and Platinum Cookies under our Palmetto brands, we're are continuing to see that move in all markets that we have those products launched. I did also mention that We're in the commercial flowering stage of 13 new genetics that we've been working hard on over the past year, and we're going to be harvesting those in quarter 3. And depending on those results, we'll look to potentially put some small batch in the select provinces this year.
But as we noted in the opening remarks, we'll scale most of those that we decide to bring to market in the early part of 2022, we're very excited and optimistic about that. So exciting kind of news coming on that front for cultivation for sure.
Okay, great. Thank you.
The next question comes from Vivien Azer with Cowen. Please go ahead.
Participants are ready to take questions.
Hi, good morning. Thank you. In terms of the new cultivars that you have hitting the marketplace in 3Q 2021, can you just talk about the wholesale commitments that you've already received around that product? Is it accounted for?
It's Andrew. Thanks for the question. Just so I'm clear, regarding the current ones we have in the market or the ones that referenced as far as the 13 new genetics? Okay, perfect. Yes.
So, actually, we have been communicating with our customers around kind of our R and D plan. And part of our R and D plan going back a year ago was really around what our consumers looking for and that was inputted from our research as well as kind of the feedback from our customers. What I can say is, once we harvest these, obviously, we got to go through the process and look at the results and make sure they meet the spec that we're requiring to launch. But this currently is not in our plan year to go as far as our revenue and mix goes. So we look at that as potential upside And we certainly have great feedback and a customer commitments from the boards that we have presented into the retailers we have presented on these.
So yes, it is something that we would have incremental to the plan a year to go participants And we're just going to have to wait for those results as they come down this quarter.
Understood. And a similar question on the pre roll, given that you have the new manufacturing equipment in place, do you feel confident that there is appetite in the marketplace for more pre roll capacity?
Participants Yes. Look, I think it's a great question. I would view our commissioning of the new equipment and the automation that we've brought into the facility over the last 6 months has been substantial. It starts with a pretty simple view from our end that better sales requires better cannabis and that's inclusive of all the formats you put in there. So, we look at Things like potency and quality improvements and good yields per square foot and sellable products and COGS are kind of key success factors.
But certainly to answer your question, Pre roll continues to be a segment that's continuing to grow. We're growing with that segment and we've obviously got some new cultivars that we're putting in the market And the corresponding consumer customer feedback has been really good on that. So we're well positioned, Vivien, participants On meeting the demand as our pre roll and as the segment continues to grow.
Understood. Thank you very much.
The next question comes from Federico Gomez with ATB Capital Markets. Please go ahead.
Thank you. Good morning, guys. Just wanted to touch on the retail market. We're seeing many stores opening in Canada. There's a lot of pressure coming, especially from the value segment in retail.
So could you give us some color on your strategy there? How do you think
Yes, maybe I'll tackle that first. Thanks very much for the question. Look, there's no question that the retail landscape participants are highly competitive and we actually expect a significant amount of attrition in the space. So not all operators are going to be successful here. I think on one of our previous calls, we talked about hitting a saturation point in retail.
And so participants We think about the premium in store experience and connection point with the consumer, which is really exciting to us in the phenomenal platform that Spiritleaf has built out along with financial stability has been key ingredients to success. And when you combine that with best in class technology capabilities, we think we'll be in a great position to not just weather the storm, but also be successful. We expect participants Significant consolidation and actually quite a bit of bloodshed in the retail segment in Canada. And so participants We're excited to be competing.
Okay. That's helpful. And then just maybe if you could talk about the in terms of the mix of owned stores versus franchises, how do you see that mix evolving? What's the strategy there for your And also if you could maybe describe what's the value proposition there for franchisees that you guys have? What are the main
Sure. I'll pass part of that question to Andrew. Participants We're not going to specifically guide to a mix or split between corporate and franchise locations. It's worth noting that we're also open minded when it comes to managing multi banner retail. Participants But in terms of the value proposition and the brand attributes, Andrew, do you want to shed a little light with your perspective?
Yes, I think we view this as obviously a great opportunity to ensure that the Sundial portfolio is well positioned inside the SpiritLeaf network. But we're also we're going to be really partnering well with our franchisees, and I think I mentioned that in my comments with regards to the Franchisee Advisory Council. These operators, participants have been doing this for a while now. They understand what works. And we're going to be leveraging some of the research and the data participants And certainly the actual insights that we have to make sure that we've got the right portfolio and that doesn't mean 500, 600 SKUs.
The Pareto rule does not discriminate in cannabis. So I think that's the value proposition we're going to bring. It's certainly listen first, understand what's working, what's not working. The answers are there at the franchisee partners and I think we can add a ton of value as we have a different hat that we can wear and certainly looking at some of the brands that are out there, we want to make sure we have the right assortment in place. And of course, we're going to make sure that we can augment that accordingly with the Sunbelt portfolio because we do think we've got a great assortment as well to supplement what
The next question comes from Sean Mehr with Canaccord. Please go ahead.
Hi, good morning and thank you for taking my question. The first one, I just wanted to touch on the revenue line here, specifically as it relates to excise taxes and the spread between gross and net revenue in the quarter. Participants I was hoping you could help us understand some of the underlying components and the moving parts that went into that calculation, especially as we look at how the excise
participants Yes, Sean, this is Jim. Let me just take that one. And it's it really just relates around the mix Between branded sales and LP sales and LP sales clearly don't have the excise tax attached to them. And so it's just a function of that shift and increase quarter over quarter to more branded product In Q2 over Q1.
Okay. Thank you. And my second question, So on vapes, that's been our core part of the inhalable strategy for Sundown. So I wanted to touch on that a bit. This is now the 2nd quarter where vapes are showing some weakness in the product mix.
And you previously noted that was a result of some increased competition in the segment. I was just are wondering what your views are on your ability to attack and drive sales in that segment and how Sundial plans to recapture some of that momentum, whether it be through product innovation or participants are increased marketing, whatever it may be. So what's the attack strategy here and what do you think are the catalysts needed to see those vape sales start
It's Andrew. Thank you for the question. I think it's Good one in regards to kind of what we're seeing in the segment. And obviously, our strategy first, our focus is on premium inhalables. Vape has been a big part of that strategy from day 1.
We were one of the first to launch and obviously, you mentioned increased competition that's come into the segments has been aggressive. Maybe just I'll double click on that a little bit. When you think about looking at the mix components inside of vape, we have broad spectrum as kind of the anchor that we decided to go to the market with. The lion's share of what we're seeing in the vape segment is really distillate, flavored distillate to be specific. Participants And we're monitoring that accordingly.
Obviously, Health Canada has got a consultation out with regards to how that's going to be viewed moving forward. So we're very are aware that the potential regulations could change over time and that's going to impact distillate, flavored distillate to be specifically as far as the relevancy goes On that front, however, all that to say, I think a couple of things that we're focused on with regards to continuing to build awareness on our great portfolio of vape offerings. And we're certainly looking at larger formats, particularly in 1 gram. We think that's going continue as far as consumer preference goes on that sizing. And we're also going to be launching in the back half of this year Under the Top Leaf brand, some innovation with regards to lab resin.
We think that's also another great differentiator. We've mentioned that in previous calls And we're excited to do that. And I think that's going to create the right awareness that Top Leaf is here to stay when it comes to premium inhalables. Participants And we'll continue to focus on that side of it as well too. So fully holistic approach on it.
Maybe certainly been pressured certainly by competition, but we've got participants, some opportunities in the future here to go that are going to really add some relevancy there for us.
Thank you, Andrew, and that's it for my questions. Congrats on the quarter once
The next question comes from Pablo Zueinic with Cantor Fitzgerald. Please go ahead.
Good morning. Look, when I look at your company, I appreciate all the efforts you're making on the cannabis side, but you still have only about, on my math, about less than 2% market share on brand direct, right? And of course, you have those $1,200,000,000 there on the balance sheet that you talked about. So it's more how you deploy that capital going forward that creates value than necessarily going from 2% to 2.2% market share, incorrect. So if I'm right about what I'm saying, and I have to say a comment here, you've been very disciplined about how you're using that Right.
You didn't go and spend $350,000,000 on the CBD brand like some of your peers. But I guess the first question would be, How do you decide when you're making minority equity investments, whether it's through Sundial or through Sandstream? Participants Because I mean, I suppose that I mean, Sandstrom is not just lending, right? It's also equity and hybrids. Can you comment on that first, please?
Thanks.
Participants are ready to take questions. Hey, Pablo, it's Zach. Thanks for the question and happy to clarify. So the vast majority of the focus for Sunstream right now and this are really driven by the robust opportunities that we see, is really focused around credit, Structured credit and some hybrid instrument opportunities. So when you're thinking about minority investments specifically, I would say that it's a very small part of what we're focused on and you're never going to see more than a small handful of names where we have minority equity positions, generally speaking, we don't see that as an area where the best risk adjusted returns would be.
We're very focused internally And we believe that the credit opportunity in cannabis is quite large and very attractive. So, when it comes to minority equity investments, those would will typically be done off the Sundial balance sheet and not through our joint venture relationship and Sunstream Bancorp. I hope that helps.
That's helpful. But just to follow-up on that, when you talk about structured credit and hybrids, I suppose that may include warrants or compares That eventually could be converted into equity, right? Am I right about that or not?
You're potentially correct, but that doesn't necessarily mean that we would end up owning the underlying equity. There are structured means of are earning that return, receiving cash. There's a lot of different ways that those economics can accrue to a lender or an investor.
Okay. Thank you. And the very last one, again, you have been very disciplined in my opinion, but the industry is consolidating. Some of your peers Are making a lot of acquisitions, so you cannot wait too long, I would say, right? So is it about growing more in Canada?
Is it about investments overseas, Latin America, Europe? Can you just remind us about that on the equity side? Because I appreciate, again, yes, Canada has potential, But you know $1,200,000,000 is going to go into Canada equity investments? Thanks.
Participants It's a great question, Pablo. Yes, so just for perspective, in terms of that total capital balance, do we expect it To be entirely or the vast majority be deployed in Canada? No, not necessarily. But we are highly focused on the Canadian market And working on better understanding the evolution of the sector, you'll notice that many of our peers will direct investor attention away from Canada, focused on Europe, focused on the U. S, bigger markets, we're going to take advantage of opportunities and that will largely be expressed through capital that's deployed through Sunstream Bancorp when it comes to international markets, but we are laser focused on understanding where we're going in terms of consolidation, Attrition and business failure and also common sense regulatory reform, which we're starting to see and it's a key part of the equation as well.
I would like to turn the conference back over to Zack George for any closing remarks.
Thanks everyone for joining us today. We appreciate your time. Be safe.