NanoXplore Inc. (GRA:CA), a leader in graphene production, has announced a record-breaking third quarter for the fiscal year 2024. The company reported significant growth in revenues and adjusted EBITDA, with the Advanced Materials segment generating approximately $34 million in revenue and $1.3 million in adjusted EBITDA. NanoXplore achieved an all-time high gross margin of around 21%, attributing this success to improved efficiency measures.
The company is also expanding its capacity, particularly in the United States, and is in discussions with partners for its battery material facility and the VoltaXplore gigafactory project. With strong demand for its graphene-enhanced composite products, NanoXplore is poised to close the fiscal year with robust momentum.
Key Takeaways
- NanoXplore's Q3 fiscal 2024 revenues in the Advanced Materials segment hit a record $34 million.
- Adjusted EBITDA for the same segment reached around $1.3 million.
- The company achieved a record gross margin of approximately 21%.
- Demand for graphene-enhanced composite products remains strong.
- NanoXplore is investing in new equipment and expanding capacity in the U.S.
- Discussions are ongoing with an offtake partner for a new battery material facility.
- The company signed a letter of intent with a construction company for the facility.
- NanoXplore plans to start the VoltaXplore gigafactory project upon securing a deal with a strategic investor.
- Total liquidity at the end of the quarter stood at $35.1 million.
Company Outlook
- NanoXplore ended the quarter with $29.8 million in cash and cash equivalents.
- Secured a new credit facility with the Royal Bank of Canada to fully finance its 5-year strategic plan.
- Expects capital expenditures of $3 million to $5 million in each of the next four quarters.
- Confident in delivering a record Q4 and starting 2025 with strong momentum.
Bearish Highlights
- The company faced headwinds in the first half of the year.
- The finalization of discussions with a strategic investor for the VoltaXplore project remains uncertain.
Bullish Highlights
- NanoXplore is in advanced discussions with a potential strategic investor for the VoltaXplore project.
- The company has secured a power application with Hydro-Quebec for 30-megawatt hour.
- Gross margins for both tooling and parts are expected to remain strong, around 21-22%.
Misses
- No specific timeline provided for finalizing the deal with the potential strategic investor for the VoltaXplore project.
- Final allocation of power from Hydro-Quebec for the VoltaXplore project is pending.
Q&A Highlights
- Gross margins for tooling and parts are projected to be very close, with tooling around 21% and parts around 21-22%.
- Tooling revenue for the quarter was $3 million, expected to rise to near $4 million in the next quarter.
- Revenues from parts are anticipated to eventually replace tooling revenues.
- The company is selling a product called conductive carbon black, which is performing well in the market.
- The market for conductive additives and anode materials is currently undersupplied.
- The company is collaborating with partners to develop high silicon content batteries.
- Non-Volta CapEx investments are split between the U.S. and Canada, with more activity planned in Canada.
- Additional CapEx investments will be made for maintenance, with a larger portion in Canada.
In conclusion, NanoXplore's third-quarter performance has set a promising tone for the company's future. With strong financial results, strategic investments in capacity expansion, and ongoing discussions with potential partners, NanoXplore is well-positioned to capitalize on the growing demand for graphene-enhanced products and the undersupplied market for battery materials. The company's strategic moves and financial health suggest a confident outlook for the upcoming quarters.
InvestingPro Insights
NanoXplore Inc. (GRA:CA) has demonstrated a notable performance in its third quarter of fiscal year 2024, and insights from InvestingPro shed further light on the company's financial health and market position. With a market capitalization of $294.64 million, NanoXplore is navigating the competitive landscape of advanced materials with a strategic focus on expansion and efficiency.
InvestingPro Data highlights that the company's revenue for the last twelve months as of Q2 2024 stands at $92.76 million, marking a growth of 6.27%. This aligns with the company's reported revenue surge in its Advanced Materials segment. However, the quarterly revenue growth shows a decline of -8.39%, reflecting the challenges and volatility in the market.
The gross profit margin for the same period is reported at 20.53%, which is consistent with NanoXplore's announced gross margin of approximately 21% for Q3. This margin underscores the company's ability to maintain profitability amidst its expansion endeavors.
InvestingPro Tips for NanoXplore indicate that while analysts do not expect the company to be profitable this year, its liquid assets do exceed short-term obligations, suggesting a solid liquidity position. Additionally, the company operates with a moderate level of debt, which may provide financial flexibility for ongoing and future projects. However, it's important to note that the company has not been profitable over the last twelve months.
On the upside, NanoXplore has seen a strong return over the last three months, with a 17.42% price total return, which could indicate investor confidence in the company's growth trajectory and strategic plans.
For readers looking to delve deeper into NanoXplore's financials and market prospects, there are further InvestingPro Tips available, providing a comprehensive analysis of the company's performance and future outlook. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to these valuable insights. There are 5 additional tips listed in InvestingPro for NanoXplore, which could be instrumental in making informed investment decisions.
In summary, NanoXplore's recent financial results and InvestingPro Insights paint a picture of a company with strong market potential, backed by a robust strategic plan and the ability to navigate financial complexities. The company's focus on expanding its capacity and capitalizing on the strong demand for graphene-enhanced products positions it well for the future, despite the challenges it may face along the way.
Full transcript - Nanoxplore Inc (NNXPF) Q3 2024:
Operator: Good day, and thank you for standing by. Welcome to the Third Quarter 2024 NanoXplore Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Pierre Terrisse, VP of Corporate Development. Please go ahead.
Pierre-Yves Terrisse: [Foreign Language] Good morning, everyone, and thank you for joining this discussion of NanoXplore financial and operating results for the third quarter of fiscal 2024. The press release reporting these results was published yesterday after market close and can also be found on our website along with our financial statement and MD&A. These documents are also available on SEDAR+. Before we begin, I'd like to remind you that today's remarks, including management's outlook and answer to questions contain forward-looking statements. These forward-looking statements represent our expectation as of today, May 15, 2024, and accordingly are subject to change. Such statements are based on assumptions that may not materialize and are subject to risks and uncertainties. Actual results may differ materially, unless they are cautioned not to place undue reliance on these forward-looking statements. A description of the risk factors that may affect future results is contained in NanoXplore Annual information form available on our corporate website and in our filings with the Canadian Securities Administrator on SEDAR+. On the call with me this morning, we have Soroush Nazarpour, NanoXplore's Founder and Chief Executive Officer; and Pedro Azevedo, our Chief Financial Officer. After remarks from the Soroush and Pedro, we'll open the call to questions from financial analysts. Let me now turn the call over to Soroush.
Soroush Nazarpour: Thank you, PY, and good morning to everyone joining us on the call. We'll first start with the review of the economy and the impact on our business. I will then expand on our capital allocation plan, and I will end my remarks with an update on VoltaXplore. As the central banks, mainly Canada and Europe are making progress towards interest rate cuts. The previously mentioned increased activities with our customers are continuing, especially in transportation markets. Our customers forecast are robust and demand remains strong. The North American economy continues to show resilience, which is giving confidence to our customers. Furthermore, industry headwinds from the supply shortages, inflationary cost pressures and tight labor markets continue to improve and are impacting positively on our business. In this environment, we achieved record results in the third quarter with revenues and adjusted EBITDA in the Advanced Materials segment of around $34 million and $1.3 million, respectively. Steps taken to improve our efficiency, are bearing fruits with gross margin at an all-time high of around 21%. These results demonstrate the strength of our business model, our expanding market share and the value creation of our vertically integrated model. I'm very pleased with the performance of NanoXplore team. We continue to perform at a high level, and we're executing on our capital allocation priority. We foresee this momentum continuing into fourth quarter and the next fiscal year. Now turning to our operations for our graphene-enhanced composite products, demand continues to be very strong, and our current capacity is almost fully utilized. We have made investments in the new equipment's, and we'll continue to invest more as a part of our 5-year strategic plan. A large part of these investments will be in the United States and are supported by booked contracts with existing and new customers. In regards to our direct graphene sales activities, validation and testing are ongoing with new customers, while we continue to supply existing ones. Drilling fluid, foam and battery material market continue to show promise, especially following our recent announcement related to financing of our graphene and anode material facility. We are continuing discussions with an offtake partner for our upcoming facility and have already signed a letter of intent with the construction company to build our facility. In fact, we have underestimated the demand for our battery material, and one of our potential customers has asked if we could accelerate our expansion and move the build-out timeframe forward. The increase in demand for battery material is a result of the Inflation Reduction Act and the need for battery supply chain market participants to be compliant. Again, we want to remind investors and analysts that we are executing this expansion without issuing equity. Turning to VoltaXplore and as discussed before, we have a potential strategic investor presently in its due diligence process. Given the slowdown in the EV space, we believe having a strategic investor is essential for VoltaXplore success. This strategic investor will bring resources, know-how and end market diversification to the project. With that in mind and given the growth we see with NanoXplore, we believe that it's more prudent to only start the VoltaXplore gigafactory project, if and when we close a deal with this partner. In the meantime, we are continuing with validation of our graphene-enhanced batteries along with developing more advanced production methods such as tablets designs and further developing new generations of our graphene-enhanced silicon additives. Taking this approach, even though it pushes out the startup production, ensures long-term success and reduces risks related to the market uncertainty. With that, I will now turn the call over to Pedro, who will provide details about our financial performance. Pedro?
Pedro Azevedo: [Foreign Language] Good morning, everyone. Today, I will begin with a review of our Q3 financial results followed by an update on financing for our 5-year plan and conclude with some commentary on near-term CapEx spending and outlook for fiscal year 2024. Total revenues in Q3 were 7% higher than Q3 2023 at $33.9 million, which was a record for NanoXplore. The increase in revenue was directly attributable to progress billings on new tooling being manufactured for three different customers. Tooling revenues will continue to be higher than normal for the next two quarters due to the previously announced expansion of an existing program and the launch of two new programs. Once the tooling for these programs are completed, part revenues will increase as the additional capacity and the new programs come online. With regard to gross margins, gross margins as a percentage of sales increased by 260 basis points from 18.3% to 20.9% year-over-year, driven by improved productivity, resulting in part from manufacturing cost benefits of producing graphene-enhanced products, higher-margin product mix and various manufacturing efficiency improvements put in place over the last year. This year-over-year margin improvement has been a trend over the last seven quarters, and we are pleased that it is continuing. As a reminder to our shareholders and analysts, as the proportion of sales of graphene powder or graphene-enhanced materials increased, gross margins as a percentage of sales will also increase. Adjusted EBITDA was $574,000 and was comprised of $1.26 million in the Advanced Materials, Plastics & Composite Products segment, a record achievement and improvement of nearly $800,000 versus last year and negative $688,000 in the battery cell segment, which encompasses the VoltaXplore initiative. Since VoltaXplore was a share cost with Martinre until the end of Q3 2023 and largely excluded from EBITDA, therefore, no comparable in Q3 2023. Looking at our year-to-date numbers, while sales were lower than expected in the first half of the fiscal year, Q3 was fairly strong and in line with expectations. For the first nine months of fiscal 2024, we are now 2% above the same period of the prior year. While sales are now higher than last year, the noteworthy performance in our year-to-date results have been in gross margins and EBITDA. Gross margins as a percentage of sales have increased from 16.1% to 20.1%, leading to an increase of $4 million of margins and EBITDA in Advanced Materials, Plastics and Composite products segment has increased from minus $1.4 million last year to a positive $1.9 million year-to-date this year. With regard to our balance sheet and cash flows, we ended the quarter with $29.8 million in cash and cash equivalents, an increase of $2.2 million during the quarter. Cash flow from operating activities was positive $4.6 million, mainly due to advanced payments from customers on tooling contract and continued close management of accounts receivable and inventory levels. Cash flows from financing activities were negative $1.1 million, resulting mainly from repayment of lease liabilities and also included two offsetting items. During the quarter, stock options nearing expiry were exercised. This generated $1.2 million of cash, which was used to repay an outstanding loan that was coming due during the quarter. Finally, cash flows from investing activities were negative $1.2 million, mainly related to capital expenditures. Our cash along with the $10.3 million of unused space on our credit lines, resulted in total liquidity of [$5.1] million at March 31. Moving now to the financing of our 5-year strategic plan. As a reminder, this does not cover the battery Gigafactory initiative, which is being done separately and through different financing. As was recently announced, we completed an agreement with the Royal Bank of Canada in April to provide NanoXplore with a significant increase in our borrowing capacity versus the old credit facility with the National Bank. The new credit facility will provide the financial support to fully finance the graphene-enhanced FMC (NYSE:FMC) lightweighting expansion and in conjunction with the anticipated but not yet finalized government support for the anode material initiative will finance -- will fully finance the capital needs of our 5-year strategic plan. Turning now to our near-term CapEx spending and the outlook for fiscal year 2024. With regard to CapEx spending, we expect to spend $3 million to $5 million in each of the next four quarters as we increased the spending of the graphene-enhanced SMC initiative of the 5-year strategic plan. This amount will be updated once the government support for the NanoXplore's material initiative is finalized and the anode material plant moves forward. Despite the headwinds during the first half of the year, Q3 delivered solid results, and we are confident Q4 will continue this momentum with strong revenues and associated margins. Based on the visibility we have today, our total revenue guidance for the full year fiscal 2024 remains at $130 million. In conclusion, we are on track to deliver a record Q4 and start 2025 with good momentum. With that, I will pass back to Pierre-Yves.
Pierre-Yves Terrisse: Thank you, Pedro. Operator, we can now open the lines for questions.
Operator: [Operator Instructions] And our first question comes from Amr Ezzat of Echelon Partners. Your line is open.
Amr Ezzat: Good morning. Thanks for taking my questions and congrats on a very strong quarter. The sales growth was very solid and you're confirming guidance, so it looks like Q4 will even be stronger, what I want to focus on is the gross margin. Like Pedro, you're saying that the sales mix includes lower-margin tooling yet you're at record gross margins. So I just wonder, how gross margins look like without the tooling components. Can you maybe help us like maybe give us a range as tooling comes off, how that impacts the margin?
Pedro Azevedo: In a particular case, the tools that we have right now that are being made and the work that we're doing in the expansion are actually producing margins that are close to what we normally have in parts. So abnormally this quarter and upcoming quarters, the tooling margins will actually be very close to parts margin. So there's no real mix effect in this quarter as we have seen in the past, in past quarters, we do have lower margins on tools. But in this case, in this quarter and upcoming quarters, the margins are going to be very close. Just to disconnect a little bit the two parts, if you exclude tooling, we still are in the 21%, 22% range. That's the goal that we are achieving right now, we intend to increase that over time as graphene-enhanced materials continues to proportionately be higher and so on. So right now, I would answer your question by saying, right now, for the quarter, it's about 21%, 22% for parts and about 21% on tooling.
Amr Ezzat: Fantastic. That's great color. Then I'm not sure how much you are willing to share but could you provide us the sense of -- or maybe I missed it, how much of the Q3 growth was from tooling revenues? And what should we be expecting for Q4. The reason being, I just wonder, as this tapers off, just like the revenues from parts, like takeover more than takes over, like whatever you're losing from tooling or like what you're delivering now in terms of sales is a new plateau that we could sort of like grow from?
Pedro Azevedo: So in the quarter, tooling revenue was about $3 million, and it will probably be close to $4 million next quarter. We traditionally have annually, we traditionally have around $2 million to $4 million depending on the years and launching of new programs. This year, it will be close to $8 million. But what you have to understand is that tooling revenues are a precursor to the parts revenues. So when tooling ends, parts revenue starts kicking in and kind of replaces the revenue. So in the quarter, while volumes generally of our products haven't increased that much, there is an increase, but it's not that big. That's because we do have programs with our customers, and those customers are buying very distant volumes, and they are growing, but on a slower basis. There is one customer that we spoke about in the last quarter that is expanding, and we are currently expanding our facility to allow for that expansion to actually take place. They're actually hoping that we finish our work sooner so that they can be buying and increase their cadence faster. But that's not the case right now until any in a year. So I would say to you, just in summary is that parts revenue will kick in to replace the tooling that will drop off but at least for the next two quarters and possibly until the end of the calendar year until the end of this year, we are going to be producing tooling revenues that will eventually turn into parts revenues.
Amr Ezzat: Fantastic. And the question was, like it more than offsets the drop you're going to get from the tooling.
Pedro Azevedo: That's right. There might be a timing effect, though, but generally speaking, that's exactly right. That's why tooling is important to us because it's just a precursor to coming online with new parts.
Amr Ezzat: No, I fully understand that. It's good for you to come out with the new credit facility and to confirm that no equity is needed for your 5-year plan. I think it alleviates a lot of the risk, I guess. But like on the $80 million non-dilutive government financing, I think the wording you guys used is you're finalizing it. Just wondering if you can give us a sense of where you guys stand and when can we hear something?
Soroush Nazarpour: Yes. So we received the support letters, but we have to go through the full proposal steps. These support letters are commitments for the government. Having said that, we have to -- legally, we have to wait for their announcement at the end of full proposal. So it's going to be a couple of quarters until we get to that stage. And normally, the way these programs -- these are a fund of incurred expenses. So as we invest on the CapEx in the next two years, we're seeing a refund of those investments through the programs like investment tax credit, but also direct programs that governments are providing for this battery materials projects.
Amr Ezzat: Okay. But the support letters that you guys have are for the full $80 million that you guys were talking about?
Soroush Nazarpour: Yes.
Amr Ezzat: Okay. That's fantastic. Okay. So Soroush, like your prepared remarks sounded I want to stay like very optimistic about like anode materials, and you spoke to -- I'm not sure if it's a customer or a potential customer asking if you could bring production forward. So my first question, like is that already signed takeoff agreement? And if it's not, can you maybe give us an update on how advanced you guys are in securing.
Soroush Nazarpour: Yes. So we are -- so we have -- I mean, the whole market of the anode material itself, which is a couple of products. These are active anode materials, plus graphene-enhanced conductive additives plus graphing enhanced silicon additives. These three products together we're seeing quite a lot of interest from the battery makers. Again, the supply chain and the fact that there's a tendency to French shore, especially on the anode material where a majority of this is being produced in east of the world. and also following the IRA announcement, there's quite a lot of interest to buy from North America. And the supply side just doesn't exist today. So what we are hearing from the customers, are they want fast -- to get this product faster because their OEM customers want to get the IRA credit faster, right? So we're looking into all these requests. At this point, I would say we have a very strong visibility of the customers for that facility. We don't have yet signed off the contract, but we're working towards that of the contract at this stage.
Amr Ezzat: Okay. It seems like you're positive enough to sort of speak to it. So I'm assuming this is close. Then maybe like when you first announced the 5-year plan you're saying, okay, we're going to take like graphene production from 4,000 to 20,000. So that incremental 16,000, not all of it was allocated to battery materials, and it seems like the demand side and the lack of supply is driving a lot of potential growth. So is there a potential for you guys to allocate the whole 16,000 tonnes of graphene production towards like the battery materials?
Soroush Nazarpour: So there is a portion of the anode material and there's a portion of the, we call it, low cost or industrial graphene that we're going to have in that facility now. The battery-grade products, they have much higher purity than industrial grade, right? So there's a capital requirements, if you want to expand 100% of the graphene production for the battery material. I think -- at this stage, we have a decent portion of that to be allocated to battery market, but we're open to put more purification system in place when we get clarity and contracts for Ola. So -- but at this stage, I think the graphene -- industrial grade graphene is also needed for a couple of customers that's coming out in the pipeline.
Amr Ezzat: Okay. Then maybe one last one, and I'll pass the line. I don't think the language in your MD&A change on the lead times, like I think it's eight to 12 or eight to 16 months that you guys were speaking about? And you've got a potential customer, need to bring production forward. Well, are you able to bring production forward? Or how should we think about timelines?
Soroush Nazarpour: So while the construction of the physical building will probably take about a year. And some of the equipment's on the anode material side will require close to 12 months of lead time. So there are ways we can do to order at a bit faster those long lead time items. So we can probably save a couple of months. But more than that, it looks unrealistic.
Amr Ezzat: Okay. Well, it's a good problem to have. Congrats again on the quarter. I'll pass the line.
Operator: Thank you. One moment for our next question. And our next question comes from Rupert Merer of National Bank. Your line is open.
Rupert Merer: Hi, good morning everyone. Soroush, you mentioned that with VoltaXplore, you would wait for a strategic investor before you move forward. So I'm wondering if you can give us a little more color on that process. If you have a short list of investors you're talking to? And what are you looking for in a partner? Who would be the ideal partner?
Soroush Nazarpour: Yes. So within the, let's say, last couple of [technical difficulty] months, we all see that EV demand is under pressure. So if you remember, our facility were supposed to be half of the capacity for non-transportation-related application, but there's still an offtake side on the transportation side. So the way we're seeing is going forward, we need to diversify the customer base to make sure that the risk associated to this customer and then also all the OEMs in the EV market, we look at the diversification of the customers and at how that can help us to get there is certainly a battery maker. So that's what we are looking at. We are in advanced discussion and due diligence discussion with one particular one, but we really would like to have that secured before getting to the next step of full VoltaXplore.
Rupert Merer: All right. Great. And then on the benefits of graphene for batteries, you've demonstrated some improvements. Would you say that those benefits are generally accepted by the industry today. And as part of that, where can you take those improvements? And where are you looking at improving performance? And is it best to do those next steps and next steps of improving performance with a partner?
Soroush Nazarpour: So looking at -- well, two parts are pretty clear. One is on the conductive additive side with the graphene, that's a product that is being sold as conductive carbon black; normally about 2% of cathode material, they have that. So we have performance benefit and cost benefit versus that product. So the two together, the testing that the customers do is the checkout conductivity of the product and they look at your business. So -- they're not looking at the graphene or any particular material at this point, they're looking at any sort of additive that can give them the conductivity that they need. So this product I would say will gain market share. The dynamic of the market on the conductive additive also the same as the anode materials. There's -- it's undersupplied in a sense. When we look at silicon-type additive and graphene-enhanced silicon, that's more of a high-performance niche products. So it's a lot of one-by-one customer validation needs to be done in those type of products. Silicon is not used in a large concentration today. So I would say that that's more of a codevelopment. There's a couple of companies out there that are trying to achieve high silicon content batteries -- you know the names. And we are along with them trying to get that product into the hands of users and buyers of the batteries.
Rupert Merer: I'll leave it there. Those two for me. Thanks.
Operator: Thank you. One moment for our next question. And our next question comes from Michael Glen of Raymond James. Your line is open.
Michael Glen: Good morning. Soroush, just to go back on the VoltaXplore, the strategic investors that you are referencing is -- I think before you had indicated that you were -- you're in a process, you're going to be submitting some due diligence papers to them, I think the time line was something like the end of April. Is that the same strategic investor that you're still in discussions with? I'm just trying to get an update, get some sense as to, is it the same person or has it moved on to somebody else?
Soroush Nazarpour: No, it's the same.
Michael Glen: Is the same person -- and then this one company -- what's that?
Soroush Nazarpour: It's the same company.
Michael Glen: Same company. And then this one might be tough for you to answer, but like how do we answer the question as to, okay? Like what -- how should we think about timing on this now? I'm just trying to make sure everybody is consistent and everybody is answering the question sort of the same way as to how we think about timing of this finalization?
Soroush Nazarpour: Hard for me to tell you the timing, they're advanced, they have been through many rounds of questions back and forth. But it's just hard for me to tell you how long it's going to take. We don't control the strategy's time line. That's the best I can say at this point.
Michael Glen: Okay. And just one more on Volta. There's been a fair amount of news in Quebec about power supply, some capacity constraints facing Hydro Quebec. Is power -- can you talk about the power requirements of VoltaXplore? And is that an area that has been secured, is the power needs for VoltaXplore?
Soroush Nazarpour: Yes. So on the Nano side, we are looking at close to 10-megawatt hour and on the Volta side, we're looking 20-megawatt hour. Our application is already in Hydro-Quebec for, I think, more than a year for a total of 30-megawatt hour of power. Of course, the final allocation requires us to go forward with those projects. But look, the power is limited but supported projects will get the powered thing.
Michael Glen: Okay. And then just on the CapEx that you're talking about, how is the CapEx split between the U.S. and Canada exactly?
Pedro Azevedo: Are you talking about the non-Volta CapEx that I brought up?
Michael Glen: Yes. Yes. I'm talking about the non-Volta. The reference you made to over the next four quarters, how does that split between U.S. and Canada?
Pedro Azevedo: So the investments in Canada are going to be probably around $3 million before the end of the calendar year. So let's say, $1 million [technical difficulty] quarters. The larger part will be in the U.S. as we invest in the SMC initiative, like weighting initiative with presses and other equipment and that will be the balance. So probably about, give or take, $2 million to $4 million in the U.S. over the next three to four quarters.
Michael Glen: Okay. Okay. I just want to make sure that it's $3 million to $5 million -- so near-term CapEx, $3 million to $5 million in each of the next four quarters -- about $1 million is in Canada and then the rest will be in the U.S. then?
Pedro Azevedo: Correct.
Michael Glen: Okay.
Pedro Azevedo: Michael, just to correct, this is mainly for the investments. There's another CapEx that are more for keeping the lights on type of thing, and those will be done in the location that they required some. Since we're proportionately more in Canada, you might have more activity beyond $3 million to $5 million or is it going to be part of the $3 million to $5 million that will be in Canada versus the U.S. But largely, the numbers that I gave you is generally correct.
Michael Glen: Okay. Thank you for taking the questions. Thank you.
Operator: Thank you. I'm showing no further questions at this time. I'd now like to turn it back to Pierre Terrisse for closing remarks.
Pierre-Yves Terrisse: Thank you, operator. We would like to thank everyone for participating in this call, and we wish everyone a great day. Thank you very much.
Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.
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