APA Group (APA) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the APA Group 2021 Full Year Results Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. Rob Wheals, Chief Executive Officer and Managing Director. Please go ahead.

Good morning, everyone, and thank you for joining this morning's call. I want to start by acknowledging the traditional custodians of country throughout Australia and pay my respects to their elders, past, present and emerging. Because of COVID restrictions, I'm joining you today from my home on the Gadigal lands of the Eora Nation in Sydney, where like all Sydneysiders, unfortunately, I've been in lockdown since June. APA's CFO, Adam Watson, is joining us from his home on the Wurundjeri land in Melbourne. So where are we at? Well, once again, I'm pleased to report that APA delivered another solid financial performance in financial year '21. Compared with last year, our revenues were marginally higher. Underlying EBITDA was relatively stable and within guidance range, and full year distributions are up 2%. This underscores a [Audio Gap] thanks to securityholders. And I call it a no-surprises set of results, with a reliable, solid performance that you've come to expect from us even in these challenging market conditions. We further strengthened our balance sheet with the debt refinancing activities we undertook earlier. And this has resulted in lower ongoing interest costs and higher ongoing free cash flow. And reflecting our confidence in the outlook, we have upped our distribution guidance for financial year '22 to $0.53 per security, a 3.9% increase on financial year '21. And as we said at the half year, we are in execution mode, focused on the more than USD 2.8 trillion worth of opportunities we see before us in our chosen markets of Australia and North America. Let me move to the operational part of the business now. And front and center has been our focus on safety. We have made meaningful improvements in this critical area with an 80% improvement in our total recordable injury frequency rate or TRIFR. Now whilst less positive, safety must and will remain an area of relentless focus, and we have again delivered high reliability operational performance for the year with 99.9% of our customers' gas transmission nominations being delivered. That means 99.9% of the time, our customers are getting exactly what they asked for. And we've made strong progress across all 4 key areas of our strategy, and I'll briefly comment on each in turn. Firstly, we have strong growth now forecast across the portfolio with our organic growth pipeline now in excess of $1.3 billion, and we continue to see the U.S. as an attractive market. And in fact, during the period, we participated in a process where we learned a lot. Above all, we know that we can be competitive, and we will continue to remain disciplined as we seek out opportunities in this market. Secondly, we further expanded our new energy portfolio and capabilities through our Pathfinder program. Thirdly, we've made tangible steps to better support our customers and strengthen our stakeholder engagement. And lastly, we have continued to have a laser-like focus on creating value for all our securityholders. Let me point now to some examples. At $1.3 billion of organic growth pipeline that I referred to earlier includes the 3 projects you see on this slide. The expansion of the East Coast Grid is a critical investment for the country, increasing winter peak capacity by up to 25%. So that's 1/4 through a 2-staged expansion. This will deliver much needed additional energy security for southern gas markets. We're also delivering the Northern Goldfields Interconnect in Western Australia, and we continue to make good progress on project approvals, and our current schedule is to break ground in December. And we're pleased to be working exclusively with Snowy Hydro to develop the pipeline and storage link to the new Hunter Power Station, which was announced by the federal government a few months ago. We make these investments with absolute confidence in the role that gas will continue to play well into the foreseeable future. When it comes to our energy mix, gas is the workhorse of the grid, and it was gas and APA's gas infrastructure that saved the day when the energy system was recently put under enormous pressure by the perfect storm that is created by the recent Callide power station outage in Queensland, the flooding at Yallourn, production issues at the Longford gas plant capped off by a cold snap in Victoria. And it was the flexibility and the storage capability of APA's East Coast Grid that enabled us to step in and keep the heaters and the lights on in Victoria. This point was further underscored just last week when the ACCC highlighted just how important gas storage capability will be in managing supply and demand risks over the longer term. And furthermore, they've highlighted that a gas supply shortfall remains a possibility and more needs to be done to ensure sufficient gas is brought to market. So while we remain confident about the ongoing role of gas, we are also very much focused on the challenge of the energy transition. And this energy transition offers enormous opportunity for APA to utilize our existing capabilities and to broaden our business into other growing energy infrastructure markets. It's about making our vision to be world-class in energy solutions a reality. One of the exciting projects is the development of our first hybrid microgrid alongside the Gruyere Power Station in Western Australia, and there's strong demand from the mining sector for these types of energy solutions that both lower costs and emissions. Elsewhere, we are active in discussions with our customers in the Mount Isa region to bolster energy supply solutions and energy security. And back over in the West, we continue to make good progress on our project to potentially convert a section of the Parmelia Gas Pipeline to be 100% hydrogen-ready. And this is a really important project because we know that as technology develops, our existing gas infrastructure will be vital to connect Australia to the energy solutions of tomorrow. Also vital to our ongoing success is our relationship with communities. Through our national footprint, we have a presence in more than 170, that's 170 local government areas across the country, and working with and strengthening those local communities is core to our purpose and the execution of our strategy. And I'm proud to say that right across our operations, our teams work hard to build strong and enduring relationships. And they do that through projects like the Gibson Island rehabilitation project, which is adjacent to the Roma Brisbane Pipeline. And there, our Queensland staff donated volunteer hours to planting more than 1,000 native plants and cleanup events during the year. We've also established a new community sounding board for the business, which is in industry-first, and that's through our stakeholder advisory panel. The panel includes a broad cross-section of senior leaders in the industry and will convene regularly to provide input and advice to APA on policy matters, strategic programs and plans. The panel will help us identify matters that are of importance to our stakeholders and communities and importantly will ensure that we now have a critical community voice at the decision-making table. The execution of our strategy is underpinned by our commitment to a sustainable future, which includes our ambition for net zero operations emissions by 2050. And we unveiled this ambition at the half year and, at that time, committed to announcing interim targets in financial year '22, and I'm pleased to say that work is well underway for that. We also launched our Sustainability Roadmap to create a further step change in the way we look at sustainability. At the same time, we've enhanced our approach to social performance. We're dialing up local content on our projects and taking a more involved and inclusive approach to working with our stakeholders. We've also strengthened our focus on engagement with First Nations' communities, and I'm really proud of the work the team is doing with communities on the Northern Goldfields Interconnect project over in Western Australia and also the care and effort shown by our people on the Victorian Northern Interconnect expansion project, which has included returning more than 2,000 cultural artifacts uncovered during work there during the project. And First Nations engagement will be an ongoing focus for APA into the coming year. We also continued to invest in the broader community and our people. More than $700,000 in support was delivered to communities in need during the year. This is through organizations like the Red Cross, Rural Aid and the Business Council of Australia's [Audio Gap] further strides forward in our efforts to make APA an employer of choice. We did this by increasing our senior leadership female representation by almost 7%, maintaining our place in the top 100 graduate employers, making the top 40 for our refreshed intern program and launching our new national apprenticeship program. Our people. Our people are the key to our success. And without their commitment, resilience, adaptability and capability, we simply would not have been able to achieve what we have during this challenging year. They tackled ongoing border closures, lockdowns and other health restrictions. I've been so impressed by how well they have responded and kept delivering both on our strategy and for our customers. I want to take this opportunity to publicly thank each and every one of our nearly 2,000 people as well as our myriad contractors and partners who support us around the country and for the hard work and dedication they've shown to make the results we've announced today possible. So as I wrap up my opening remarks, I think you'll agree we're a business very much in execution mode on the strategy we unveiled just 6 months ago. I'll now hand over to Adam Watson to take you through a deep dive into the financials.

Thanks, Rob, and good morning, everyone. It has certainly been a challenging year for our communities and for many of our customers, and the impact of COVID and the associated lockdowns are well known to all of us. And it's with this backdrop that we see our FY '21 results, where we've been able to hold our revenues and EBITDA largely flat year-on-year as evidenced of our strong financial foundation, delivering stable, reliable returns for our investors. I'll talk to the detail behind the results in the coming slides. And importantly, we've made sure we call out significant items and other nonoperational impacts on our results so you get a clearer picture of our underlying performance. What is worthy of an early call-out is our FY '21 distribution of $0.51 per security, which is up on last year by around 2%, as Rob said, and it continues APA's proud record of delivering strong returns for our investors. We've also guided to further growth in distributions in FY '22, a demonstration of the confidence we have in APA's long-term future. I don't intend to go into the detail of our statutory results, but I will call out our profit after tax before significant items at $282 million, which is down on last year because of the flat EBITDA and the uplift in depreciation, owing to the expanding asset base. Our profit after tax as reported at $3.7 million was impacted by 2 significant items. The first was the noncash impairment of Orbost, which was communicated to you back in February. And the second was the one-off bond note redemption costs associated with our March refinancing activities, and I'll touch on that later in the presentation. Our EBITDA waterfall chart is designed to highlight the key movements that occurred during the year. I'll start with tariff escalation. It was up $22 million for the year, once again reflecting the continuation of low levels of inflation. We haven't seen the recent increase in inflation materially flow through to our results yet because for the majority of our contracts, there is a delay from when the escalators kick in. Operating revenue was down $41 million. However, it's important to point out that this is an extrapolation of what you saw in the first half with no evident deterioration in the second half. The negative impacts to operating revenue were driven by 3 primary factors, which all reflect the challenging market conditions our customers are facing. First, we have seen weaker contract renewals in some parts of our business. The best illustration was a large customer in Queensland who was temporarily sourcing gas from the Northern Territory but can now source its gas again from Queensland, thereby reducing its transport costs. Now that makes perfect sense. And they remain a customer of APA, but in the first half of this year, they took advantage of changes in gas supply when we're rolling over our existing transportation contract. Secondly, we also noted in the first half that a number of our customers, in particular, the retailers, have chosen to reduce their contingency arrangements including, for example, a major customer who reduced their contract with our Dandenong storage facility. And this just simply reflects the challenges they are under to maximize their earnings in these difficult market conditions. And thirdly, we have been impacted by the lower volume demand from the commercial and industrial sectors who were impacted and continue to be impacted by the COVID lockdown. This was most notable in Victoria, where we have a greater exposure to volume fluctuations. The shining light for the period continue to be the performance of our business along the West Coast, where we have seen ongoing strong demand from our resources customers. In summary, again, against the backdrop of a $1.6 billion EBITDA line, whilst we don't like to see a net negative in our operating revenue year-on-year, we see the FY '21 performance as a solid result, again, given the challenging circumstances. Moving to some of the other items. We had new assets contributed $21 million from the Orbost processing plant, which commenced operations in late August 2020. We generated good returns from our asset management division. And finally, we had lower energy investment earnings because of the one-off dividend and shareholder loan note interest received from SEA Gas in the prior year in FY '20. Energy investment earnings were otherwise stable. Moving on to our costs. I'll firstly call out Orbost again, which had cost of $12 million in its first year of operations. Operations and maintenance costs were broadly in line with inflation, reflecting another solid performance from APA's operations team. Asset management costs have reduced this year, primarily due to some one-off system upgrades that were made in the prior year. Our corporate costs reflect the intentional investment we are making to strengthen our capability. This is critical to ensure we are positioned to execute our growth opportunities and ultimately create sustainable, long-term value for our investors. Our Investor Day in May was designed to share with you our areas of strategic focus and to give you confidence that we are on the right path to make sure we have the necessary capability in place to grow. Our recent investments are consistent with that focus. We've established our Pathfinder Program, and we have a team on the ground in Houston to support our ongoing focus on North America. We have enhanced our capability for our corporate and commercial development teams, which is already paying dividends, evidenced by the progress we have made with our organic growth pipeline. And we have increased our project evaluation costs, having participated in several organic and inorganic growth opportunities during the period. We've also seen an increase in other corporate costs during the year. Some of this increase has been driven by market factors, such as seeing more than $3 million of higher insurance premiums year-on-year, and there's also been a step-up in compliance costs to facilitate obligations such as our regulatory reporting requirements. But most of the corporate cost increase has been driven by our intent to build the capability of the business to take us into the next generation of growth. We are strengthening our investment in areas such as sustainability, community engagement and cybersecurity, and we had a number of one-off costs associated with the development of the new APA leadership team. But again, all of these are important investments to ensure we can deliver growth over the long term. As I discussed at our Investor Day, we've moved our distribution guidance to be based on a targeted 60% to 70% payout ratio of free cash. This was designed to ensure, firstly, that we cover our stay-in business CapEx and then to balance our payment of healthy distributions with ensuring we are largely funding our organic growth projects from internal cash flows. When assessing our free cash flow performance, you need to firstly back out the $39 million we received last year in FY '20 from SEA Gas as a one-off distribution. We've had higher tax payments this year owing to the higher taxable income in the prior years. The additional interest payments relate to Orbost interest no longer being capitalized to the project. Our working capital was very positive. This was partly due to the timing impact from FY '20, which included a number of prepayments made last year for items such as our insurance premiums. We also received an $11 million contribution from a customer for capital works at the Orbost plant this year. And more broadly, though, I'd like to thank the team at APA for their strong focus on working capital during the year, especially the procurement team, which has been focused on improving our collection arrangements with our suppliers. Finally, you'll see that we had significantly higher stay-in business CapEx in FY '21, and this is owing largely to the scheduled overhaul of the Diamantina Power Station. Whilst on the topic of capital expenditure, we have seen CapEx grow across all markets this year, but for the East Coast, where FY '20 was influenced by the construction of Orbost. And if we were to ignore Orbost, it shows that all of our markets are growing, which is obviously a very positive sign. Looking forward, you can see that we continue to make progress with our organic growth pipeline. It has grown a further $300 million since the first half, now at $1.3 billion for the next 3 years. And for some good context regarding the progress we made, when measured based on the value of the projects that achieved financial investment decision or FID during the period, we've progressed $600 million of projects this year compared to around $150 million in FY '20. That's a fourfold increase, which will no doubt pay dividends in future years. We know that a strong balance sheet is essential to support growth and to protect the financial interest of our investors. Against the backdrop of an already strong balance sheet, we executed a significant refinancing project in March this year, which has made our balance sheet even stronger. The project, which included raising $2.2 billion of new debt to replace a number of existing facilities, increased the average tenor of our debt to nearly 8 years, it reduced our average interest rate to around 4.8% and it created balance sheet capacity of around $1.9 billion, as measured by our cash and undrawn committed facilities. There was a significant one-off interest charge associated with the bond note redemptions. However, when you take into account the ongoing savings from the lower fixed interest rates, the initiative was NPV positive and delivered a step-up in our free cash flow generation. Our balance sheet puts APA in a very strong position to execute our strategic growth agenda. Now looking forward into FY '22 and beyond. Importantly, we expect free cash flow to continue to grow in FY '22 despite the expectation that the challenging market conditions are likely to continue. As such, we expect FY '22 free cash flow growth will largely be driven by lower tax and interest payments. FY '22 distributions are guided to $0.53 per security, which will be almost 4% higher than FY '21. We have developed a distribution policy that is designed to get the balance right between paying healthy distributions as well as funding growth. And as I said at Investor Day, our securityholders have overwhelmingly communicated their desire for APA to continue to focus on funding organic growth CapEx from our internally generated cash flows. In the longer term, our recent investment in growth CapEx will translate into earnings growth as the new assets come online. And supporting our pursuit for sustainable growth, we will continue to invest in building the capability of our business. We know our success in the past doesn't guarantee success in the future, so we are making sure we have the right people, the right systems and the right processes in place to ensure we stay efficient and we can grow at scale. To wrap up, our investment fundamentals remain strong. We're focused on delivering stable and reliable cash flows. We're focused on balancing strong distributions with the internal funding of our organic growth CapEx. We strive to be transparent and insightful with our investor communications. We maintain high levels of liquidity and are committed to our investment-grade credit metrics. We have low cost of capital. We ensure we have a diversified pool of funding sources, and we remain disciplined with our investment decisions, as Rob said before. And we remain focused on ensuring our balance sheet that supports this growth agenda. As always, I'd like to thank you for your time. And with that, I'll hand you back to Rob. Thanks, Rob.

Thanks, Adam. To wrap up, APA has again delivered a solid financial performance in financial year '21 despite the challenging market backdrop. And we're very, very much in execution mode. Our organic growth pipeline is now $1.3 billion, up from $1 billion at the half year. Our balance sheet is strong, and we remain confident in the outlook for APA and determined to keep delivering for you, our securityholders, with distributions expected to increase again in financial year '22 to $0.53 per security. So in summary, we see enormous opportunities for this business to grow and prosper in the energy transition, and I'm confident that we have the strategy and the capability to deliver our vision and to keep APA always powering ahead. And with that, we'll now move to Q&A.

[Operator Instructions] Our first question comes from Ian Myles with Macquarie.

Well done on the results. A couple of different questions here. Maybe first on NGI. Maybe give us an update on how you're doing on the contracting of the pipeline itself.

Thanks, Ian. It's Rob here. And I'll take that question, and thanks for your comments on the results. It is another solid performance and one in which we're very pleased about. In relation to your question on NGI, we continue to engage with customers. There's still strong demand. And you will recall that the reason we've gone down that path of building the NGI is because the Goldfields Gas Pipeline is currently fully contracted, and we've got ongoing demand from customers. So we continue to engage. The contract book, if you like, is just as good as it was when we started this process, if not strong. And we make good progress on both the contracting but also the project approvals. And I think I mentioned earlier in my comments that we're expecting to be breaking ground in the December month, which will put us into a pipeline being available to be commissioned in the first quarter of financial year '23.

And just as an aside on that. Inflation, I think people were talking about being getting labor in WA has actually been pretty difficult. Are you finding the same challenges that you're having cost impacts as a result of that?

Yes. Look, the market is tight. But there's -- I think it's fair to say that we did a lot of work ahead of time on that project to get our costing for the project well understood, engaged with construction parties well in advance. We got the long lead items, in terms of pipeline and compressor as well, well understood, and so we remain confident around the costs associated with that project.

Okay. And look, we saw yesterday [ they were ] talking about a gas import terminal in Victoria. I was just wondering if you could give us a bit more color, you re-signed Origin, and they made the suggestion of the threat of import terminals and increasing competition, and how you're seeing the opportunities and threats of those import terminals emerging.

Yes. Look, it's an interesting one. And as we know, the -- there's been talk of import terminals for -- I've lost track of how many years, mostly at least 5 years now. We haven't seen any yet being commissioned. Certainly, there's been lots of talk up and down the coast on different opportunities. But as a general comment, with the outlook for gas, and I think in my earlier comments, I made the point that the outlook is that the southern markets, in particular, will be tight in terms of supply with the decline in production in Victoria. We see more gas coming into the system as a net positive, and the development of a project like the one you mentioned is effectively like another production source into the market. I think there's always going to be a challenging business case around these import terminals, particularly with those that might be looking to seek long-term offtakes on LNG contracts. But certainly, I think there's that opportunity to provide swing gas capability into market arbitraging the Northern Hemisphere cheaper summer gas into the Southern Hemisphere winter market down here.

One final question. You talked about opportunities in Mount Isa around your power station up there. Just wondering if you maybe give us -- is it similar to what Alinta is doing in WA where they can put in solar with their gas-fired plants and batteries? I guess why you haven't put a battery up there? And finally, what you're seeing with CopperString 2.0 and the threat there?

Yes. Look, I think the first thing, Ian, is we've been supporting that market for a very long time. We know it well. We've invested about $1 billion of capital in pipelines and generation over the time. The market is well served, and we've got a strong track record of reliable supply. One of the other things, of course, we're proud of is that the emissions intensity of the power station there is half or less than half than it was in the rest of the NIM. But we continue to work with customers around different solutions that not only help to lower their cost, but also help to lower their emissions. And I'll explain that in just a moment that, obviously, if a customer is needing 24/7 energy, which is a reliable supply coming from a gas generator but if they can take some of the energy supply from solar during the day, that can reduce the gas offtake. And you'll recall that most of what we do is toll other people's gas through our systems. So we -- that's an opportunity for customers to lower their cost but obviously lower the emissions intensity further for their overall supply. In terms of CopperString, we're watching that one closely. Obviously, what we are most wanting to see is a transparent process develop. As you know, a number of years back, we competed in a competitive process against CopperString 1.0, and we won that competitive process. We're not afraid of competition. What we do want to see is transparency in what will develop in front of us, and we are encouraged by the fact that it appears the government will be running a consultative risk process, and I think that's going to be important to the costs, and benefits can be understood for any bit of infrastructure like this, $2 billion and more. Or the question is always going to be who's going to pay, and we'd hate to see all of Queenslanders having to be slugged with additional costs in this instance.

Our next question comes from Rob Koh with MS.

My first question just goes to, I guess, revenue quality and if you could just provide us some color on the kind of number of contract renewals that went into the year and the kind of result in weighted average tenor if you have that data handy.

Rob, and yes, just in terms of revenue quality, I don't have to hand the exact details of -- to be able to answer your question specifically. But I think as you've heard me say on many occasion, in our business with $2 billion -- in excess of $2 billion worth of revenue, we've got hundreds of contracts. And during any 1 year, there's going to be multiple contracts coming up for renewal. And as Adam said, whilst we always like to see a net positive, in this particular year, we've seen a net negative. The -- as a general theme, and this will come as no surprise to you, on the East Coast, there's a general theme of shorter-term contracting. And that's just reflective of the market and where customers can source their gas, but that's to be compared and contrasted with over in the West where we continue to see long-term contracting and certainly for new infrastructure. We're always looking for longer-term contracts to support new investment aside from the example which Ian Myles talked to or raised the question around earlier with the Northern Goldfields Interconnect, which is a particular case and example.

Yes. Okay. That makes sense. And then if I turn to OpEx, and I really don't want to make too much of OpEx because I take on board your comments about investing, but you have called out that there'll be continued investment in FY '22. Could you just get some comments on, I guess, what you think is the right level of expenditure?

Rob, it's Adam here. Look, we will always continue to focus on the long-term growth. So -- and you know our style, which is not to try and skimp today to impact tomorrow. So we'll continue to invest in the areas which creates value. I think there's been an obvious shift over the last year or so into areas around community engagement, as I said before, and development and trying to drive growth and support our sustainability agenda. So we'll keep going on at that level. There's also opportunities to potentially take cost out as well. So look, I don't want to put an exact number out to you. I'm not trying to suggest that it's going to grow materially next year. But if the opportunity is there to invest in growth, then we will do that and we won't hide from that.

Okay. Mr. Watson. And just one last question, if I can, on the ESG front. You've talked to the target for net zero emissions for the company interim targets. Now I guess your current Scope 1 and 2 emissions is only about 1.5 million tonnes a year or not even after the measurement adjustments. I guess at the current cost of carbon, that would cost about $30 million to $35 million to offset. Should we be thinking about the carbon reduction targets as kind of earnings neutral? Or is that a cost that we should be trying to think about?

Yes, a very good question, Rob. The short answer is we'll know that answer when we finish doing our work over the course of this year. And there's a number of different ways, obviously, to get to a particular outcome. Putting a price on it and think of it in terms of offsets is one, but our starting point is always to see how we can reduce emissions and mitigate in the types of investments we make and the infrastructure we've already got in place. So some of what we will do will naturally come through rethinking how we run particular systems, reducing those emissions, and so we'll see some of the change. I've no doubt expect to come through some investments we'll make through our stay-in business CapEx, which might come with a smaller price tag. So look, I think let's wait until we've done that work, rather speculate as to what the overall cost is going to be.

And Rob, just going back to your first question, the weighted average contract life, still at around about that 11 years. So it hasn't moved much.

[Operator Instructions] Our next question is from Tom Allen with UBS.

There's a number of midstream infrastructure sell-in opportunities, obviously, that are emerging across the upstream oil and gas sector at the moment. If I recall correctly, APA has said that you won't pursue those opportunities where the interest is purely financial, and that there needs to be a strategic case to leverage your expertise as an owner/operator. Can you just elaborate on your criteria for these investments and whether or not that requires majority ownership, operatorship or some other broader benefits?

Tom, I'll take that question. It's Rob here. Look, I think you've almost answered your own question because we own and operate energy infrastructure, and that's one of the things that I think has been -- the secret to our success over the last 21 years is the skills that come with operating and leveraging the infrastructure into new areas. So our financial interest is not of particular interest to us, and I think that goes to probably more fully answer your question.

But if there are opportunities, Rob, to -- that might include a minority or a passive ownership stake that still somehow provide you the ability to leverage that expertise, is that an opportunity that you would pursue?

Look, I think you can never say never. I'm trying to sort of paint the picture of where we start. But there's always a case-by-case situation which you have to have a look at and see whether there is a benefit. And as you know, we have sold down some infrastructure over the years and put them into unlisted vehicles, where we do continue to operate because there have been lower growth investment opportunities. So I think I've just provided some examples where on a case-by-case basis, we have done things like that. But as a general rule, we'll always look to want to focus on full ownership and operatorship. I think also, Tom, there's going to be lots of opportunities out there in the future. We've been very clear and transparent at the half year with our strategy and more so over the last number of years around our focus on growth in North America. So we don't really want to be commenting on particular opportunities that might be in the marketplace just in a minute.