Aspen Aerogels, Inc. (ASPN) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and thank you for joining us again for our second installment of RBC's Battery Value Chain Conference. And interestingly, I think we can all agree that quite a lot has changed over the last 12 months since we were last sitting up here on stage. There have been many ups and downs, particularly for the battery manufacturing space itself. And whilst there remain a number of independent gigafactories across both North America and Europe with ambitious plans to bring significant capacity online over the next decade, we are yet to see many be successful. Northvolt, as we all know, continues to lead the charge with facilities being developed in Sweden, Poland, Germany, Canada. And off the back of securing offtake contracts from both BMW and VW, they continue to raise significant amounts of capital. In fact, over the last 12 months, they've managed to raise a further $5 billion in project financing and a further $1.2 billion in convertible equity. Verkor, the French battery manufacturer continues to progress its first facility in Dunkirk. And they've recently been able to raise EUR 2 billion in capital comprising of EUR 850 million in equity from credible investors, including Macquarie, Sibanye, who are here today and EQT Partners. And in addition to that, have raised EUR 650 million in project financing from the EIB and a further EUR 600 million in government subsidies. But this, again, is off the back of securing an offtake contract from Renault, who's also a 20% shareholder on their register. But it hasn't been sunshine and roses for everyone. And unfortunately, some of the independent battery manufacturers that were sitting up here on stage 12 months ago are no longer in existence. And that boils down to mainly the time it's taking to get through A and B sample testing in order to secure offtake contracts from OEMs and also the challenges associated with being able to raise the significant amounts of capital required to build these capital-intensive projects. But I'm honored today to have on stage 2 companies that we believe will successfully transform this sector. Firstly, Ricardo, as Sarah mentioned, from Aspen Aerogels, a tech platform listed on the New York Stock Exchange, market cap over $1 billion, focused on the -- improving the operational performance and safety of electric vehicles. And thank you very much, Ricardo, for coming all the way from New York across the pond to speak with us today. Pleasure to have you here. And then Balbanuz Benavides is, as Sarah mentioned, VP of Operations at Basquevolt. Basquevolt focusing on developing the next generation of solid-state lithium batteries, and we'll hear more about what exactly a solid-state battery is as well. But -- so maybe I'll start with you, Balbanuz. And if you don't mind for our audience's benefit, just providing a brief overview of what you and your team at Basquevolt have been up to.

Okay. Thank you, Paul. Thank you for the introduction. Thank you to RBC to welcome Basquevolt to this conference. So Basquevolt is the result of more than 10 years research from a research center in the Basque Country in Spain. And we've developed a proprietary electrolyte, which allows us to manufacturing solid-state batteries. We're benefiting from the experience of a very well-known professor in the lithium-ion industry working since the 70s in this field, Professor Michel Armand. And Basquevolt was established in 2021. Our main goal is to keep on developing this proprietary electrolyte with better and better performance in order to make a technological transfer to cell manufacturers, and on the other side, to produce cells on our own.

Excellent. Thank you. Ricardo, you guys are up to some exciting stuff at Aspen. Can you give us a quick overview of what you guys are up to?

Yes, definitely. So at Aspen, our team in Boston of about 500 people, then further supported by over 600 people that we have in 2 facilities in Mexico. We are a materials technology company centered around aerogels. And aerogel is basically the lightest material in the world. And we're -- over 20 years ago, our company actually started developing the first type of aerogel-based insulation, and we've been selling that into the energy industrial market where we'll do over $150 million of revenues this year. But with this being a battery conference, I think the main area for us to discuss is our EV cell-to-cell thermal barrier business, where we will do over $200 million of revenue this year, supplying General Motors on the Ultium battery platform, where we have anywhere between $700 and $1,400 of content per vehicle. We are also supplying Toyota. We've been supplying them since the fourth quarter of 2021. And the benefits of aerogel is that with a very thin profile and very little material, you could have a cell like the one in an EV going into thermal runaway, heating up to over 700 degrees Celsius. And on the other side of 2 to 3 millimeters of our material, you would basically have room temperature. And if you recall the Samsung nodes that we were catching on fire, those tablets in 2018, 2019 on planes, that's basically thermal runaway. In essence, when the anode and the cathode of a cell get close to shorting for multiple reasons and you have a fire that runs a lot hotter than a barbecue fire when you least expect it. And so that's a problem that a lot of the automakers are starting to realize the EVs become more prevalent. And it was a natural extension for our aerogel material that we've been selling to the energy industrial market to now be used inside of the battery packs of a lot of these EVs that are launching today.

Thanks, Ricardo. Like some good name drops there with GM and Toyota. And I think as I was saying at the start, trying to get traction with OEMs as customers is challenging. Balbanuz, I talked about the challenges. I guess, in your view, what do you think the biggest challenges are facing the sector that companies like yourselves and other battery manufacturers need to overcome?

Well, I think at this stage or at this stage, Basquevolt now is definitely the finance is something that is a big challenge for us. If I see the industry as a whole, safety is obviously a nonnegotiable challenge we need to face. And for that, we have the solid-state batteries we are developing allows us to have -- they are less prone to thermal runaway because our electrolyte is nonflammable, and we are already making tests that are proving to be safer. And cost is definitely something that is a must if we need to go for the energy transition as a whole, yes.

Interesting to hear the first point you mentioned around raising capital. And obviously, that's the biggest standout for us financiers. I guess, how does that influence your strategy? And how are you positioning yourself in the market as it relates to a capital-intensive industrial company versus a battery technology company?

Okay. So coming back to our 2 streams in the business, first, cell manufacturing is very CapEx intensive, as we all know. And on the other side, the technology transfer is much less capital intensive. So our plans as a company is first to prove that our technology is scalable. So we are now producing cells out of an A-sample production line, which is able to produce up to 80 per hour capacity. So basically, the range of EVs. But we need to prove that, that is scalable. And for that, we need -- we have a plan to go for a pilot plant at a range of 1 gigawatt hour. So basically 20x the capacity we have now in the A-sample production line and then go for a Gigafactory. So that is very CapEx intensive. But on the other side, we know as well that technologies transfer with our proprietary electrolyte would allow other cell manufacturers to benefit from that technology and keep the CapEx they have already invested. So our technology is, let's say, at 90% compatible with existing gigafactories. We can easily retrofit a Gigafactory, which is producing standard lithium-ion batteries into a solid-state battery with our technology. So I think there is -- they're both compatible, and that's something which is quite interesting for us.

And maybe for those in the audience that are less familiar with the various acronyms around the battery space, can you maybe just explain the difference between a solid-state battery and a standard lithium-ion battery?

Okay. So very easily, any battery has 2 terminals, the positive or cathode side and the negative or anode side. And in between, we have an electrolyte, which allows the electrons to go from one -- from the anode to the cathode and vice versa, whether you charge or discharge. In the solid-state battery, this electrolyte is no liquid. It is a solid, okay? So this is basically the main difference we have.

And we're obviously here to talk about batteries and specifically the EV market itself. But obviously, solid-state batteries can be used for a variety of purposes, e-mobility, stationery storage, portable devices. What target markets are you currently spending most of your time on? And what are you focusing on in the near term?

So the key advantages of our technology is that the energy density is much higher. So we are achieving 50% more energy density in our cells. There is -- they are safer. As I explained, we have already proved our technology to be safer because we are using non-flammable electrolyte, and we have already run some tests as well at cell level, which are proving that. And on the other side, cost is something we also are good at, okay? So our main target, let's say, is around EV vehicles and e-mobility and particularly electric vehicles.

And Ricardo, I guess your materials can also be used for a wide range of applications. But from what I understand all the comments that you've put out to the market that the biggest growth segment available to you is the EV market. Can you perhaps just touch on the role you're playing as we transition towards EVs?

Yes. So I mean, if you were to segment the battery market within the EV industry, I mean, for us, the main drivers or the limitants of compatibility are basically the form factor and the chemistry, right? So you really have 3 form factors out there today on the average EV cylindrical cells, which is really what the likes of Tesla and some of the nascent EV automakers have been using. And that was really a decision from 2005, 2006 because those are where the batteries that were easily available to put together and build a roadster. And then Tesla has taken cylindrical cells and evolved them pretty significantly. Then you have prismatic and pouch cells, which is what a lot of the more -- a lot of the established automakers that are rethinking how an EV needs to be put together in order to increase the energy density. They're all going to using primarily your prismatic cells, and these look like a VHS tape made of aluminum and pouch cells, which is what General Motors and Ford uses. And both of those form factors, given that they are much larger and they can store a lot more energy, if they go into thermal runaway, that initial energy release is a lot more significant than it is in a small cylindrical cell. And you also have now space to actually package some material in between that can prevent rising temperature on one cell from propagating to the others. And that's where we play a key role. This really all started with General Motors with several former Tesla engineers as they were developing the Ultium battery platform. They knew of this risk that once you have large form factor cells, yes, they enable a lot higher energy density. Yes, you could end up with more energy density per unit of weight or size and be flexible around the vehicle. But besides a lot of active controls in the battery software to prevent thermal runaway, you kind of need a passive layer in the rare case that you -- where you can't control the probability, right? Things like manufacturing defects, a vehicle getting into a crash, a vehicle used outside of the standard usage range that the battery was designed for. And it's really worth remembering that you never really know what is physically going on inside of a battery. All you have is a theoretical model of how it's supposed to behave. And when you look at the battery control system of any EV, all it's doing is running a simulation versus some theoretical model of how the battery should be used. And so if it's charged way more often at cold temperatures at high rates, its probability of going to thermal runaway is going to be higher, right? And so some of these things, as advanced as these batteries may be, people still cannot control and there is a need for a passive layer so that in the case a cell goes into thermal runaway, you at least don't lose the car or -- and folks have learned the hard way about this. There was a big recall with the first iteration of the Chevy Bolt that cost General Motors over $1.5 billion. General Motors is paying today customers $6,000 to sign away their liability claim in the rare case that a Bolt lights up and burns a house or something around it. And so this is a risk that more OEMs are taking seriously. There's also some UN regulation around providing drivers with a 5-minute warning if the battery control system determines that a cell is at risk of going into thermal runaway. And so that's making OEMs a lot more conscious about safety and they're looking at this and saying, wow, if I give a 5-minute warning, am I just confusing drivers? And how do I provide 5 minutes of protection? To what extent do I provide the protection and so forth. And that's why General Motors, we also announced an award last year with Audi, ACC, Stellantis and Scania, we'll be launching with them here between the second half of this year and next year on various programs. And that's because going back to the segmentation, right now, if you want to launch a vehicle with a high level of range, you have no choice. Like you basically have to put a high nickel content manganese cobalt chemistry, either with a pouch or a prismatic cell. Tesla manages to do it with cylindrical cells, but they've really optimized the rest of the vehicle. If you look at the average Tesla, it's lighter than a lot of the first generation of EVs that have been launched by the established automakers. That makes the energy demand of that vehicle lower and all of that. But now for this next generation of EVs that the established automakers are launching, they're taking the weight out. They're still going with high nickel content chemistries, and that plays very well with what we provide, and we're compatible with. We estimate roughly 75% of the battery market today. And we don't really see any major breakthroughs in chemistry over the next 10 years that could change that trend. The other piece is the OEMs, if you really look at what they're good at, they don't invent much. The OEMs integrate systems that are already on the shelf and ideally that have been used by somebody else already. Like if you're an engineer inside of an automaker, you don't want to take any unnecessary risks. And so for us, the fact that GM sourced us on the Ultium platform, that was really good validation that has helped us now build this market. And we continue fine-tuning the design of these parts and so that we bring value to our customers. But it's been amazing how in 2 years, this market has basically been developed from scratch from some old polyurethane forms that were used to sit in between every single battery cell and that actually added fuel to the fire at a point to now some materials that can actually provide a level of safety and comfort for all of us as we are somehow pushed to buy an EV.

Scary stuff. I remember as a student running my tank to absolute empty going well beyond the red flashing light. So hopefully, students obey the 5-minute warning in the battery.

So that's a good point. I mean, actually, when you look at the -- how much range you have in your EV, it's really interesting, but theoretically, a battery should be able to give you 30% more range. But the OEMs as they control for thermal runaway actually give you less of the available range, right? So a battery pack that would theoretically give you 450 miles of range, the OEM actually gives you an advertised range of maybe 350 miles to keep it safe. But then what consumers are now realizing is there's the advertised range and then there's the real range, right? And the real range may be something like 280 miles. And so that's where the opportunity is. If you're providing a battery pack that could theoretically do 450 miles of range, how do you, as a system, make that the real driving range, right? So yes, I mean, even though you think you're running on empty, you probably are in that. But the OEM won't let you truly drain the battery down because that's where the risk of thermal runaway is. Yes.

And you and your team spent a lot of time and money in R&D. Can you walk us through what else you have in your pipeline, I guess, where you see the most growth going forward?

Yes. So going back to this idea of the aerogel material as a platform, right? So our insulation products are all using silica-based aerogel formulations. Now several years back, our team started thinking, well, what if you use carbon as the basis for this aerogel structure? And within the anode and the cathode that you mentioned, if you look at the anode side, right, so the anode side is the piece that is supposed to store the electrons that get sent over from the cathode through the lithium. There are some pretty serious limitations right now in terms of how much energy you can store on the anode because it's usually made up of 2 materials, graphite and a little bit of silicon. When you load it up with electrons, both of these materials heat up and expand at different rates, and then they contract at different rates. But silicon expands a lot more than the graphite does. And so even in the first 10 charge cycles of a battery, you could have the anode break down pretty significantly. And so our team started working on a material to provide a better scaffolding for silicon than carbon or than graphite basically. And with the open structure that an aerogel formulation gives you, we're testing different loadings of silicon on some graphite like a silicon-rich anode material. And with that, you can deliver 30% plus energy density. We have to do some work to validate that we can retain that energy density over time. And as many -- if you can retain something in as many as 300 charge cycles, you're golden. And then you need to demonstrate that. You're able to repeat that improved performance across thousands of cells. And so we're going through that process now. We want to validate all the results internally and ideally bring that to our automotive customers who have already been very clear to us on what the milestones are. And we're hoping to be able to get there here in the not-too-distant future. But I think around this whole idea of -- it's worth stepping back and looking at the battery market today and realizing that as profound and deep as this transition to EVs will be, like the current chemistries are kind of what we have to play with for the next 5 to 10 years at least. And there's a bunch of us working around solutions of how do we make this viable for the OEMs today, right?

And I think maybe just switching slightly. Obviously, another challenge facing the EV market is the affordability of vehicles, right? And OEMs having to pass on costs as it relates to inflationary pressures on commodity prices and the like. But at some point, the car becomes unaffordable to the end user. I guess Balbanuz, in terms of solid-state batteries, there are a lot of claims around them being more cost efficient than standard lithium-ion batteries. Can you give us a feel for the sort of quantum in terms of cost savings that solid-state batteries provide for the likes of passenger vehicles, heavy-duty vehicles and the like?

Sure. So let me clarify first one thing. Not all technologies for solid-state batteries are cost effective, okay? So if we are talking about oxide or sulfides, which is a different technology, they are targeting premium cars, whereas gel polymer where Basquevolt is standing, allows us for around 30% cost reduction.

And can you give us maybe a feel for what's driving the cost efficiencies? Material prices? What gives rise to those benefits?

Okay. So I think there are 3 main cost drivers. The first one is coming from materials. The second one is coming from the manufacturing cost. So if we think about producing solid-state batteries, we are less CapEx intensive. So we don't have a production line for the anode because we buy the anode from lithium metal manufacturers. And we are less energy intensive. So the formation, so the creating that this battery is active is very energy demanding, and we have less -- much less time to make the formation in the cell, okay? And last but not least is that as we have greater energy density in the cell, we have smaller and lighter cells. So that means for the OEM that the integration of these cells is easier from an architecture point of view, but as well less expensive because they need to integrate less mass, let's say, into the vehicle.

And so obviously, cost is one benefit. Can you walk us through some of the other benefits of a solid-state battery?

Yes, safety, energy density, as I mentioned. So we achieved 50% more energy density in our technology. Safety is, for sure, one of the benefits we are having. And we need no cooling system to run the battery in our technology.

Great. Ricardo, maybe coming back to you, I guess you've obviously had a lot of traction with the OEMs, which is great. Presumably, those are still sort of in the infancy in terms of sample testing and the like and proving the technology, but -- and you're confident in the technology works. But what assurances do you have that when this actually becomes manufacturing at scale that you don't face any challenges in terms of ramping up?

Yes. I mean, frankly, relative to the work that has to go on industrializing the making of the cells, putting together modules and then assembling the pack, not to undermine what our team does, but what we do is pretty straightforward. Like we basically make rolls of insulation. We make it thinner for the EV market. We cut it into rectangles, we encapsulate it and we sandwich it with other materials to end up with a thermal barrier part. Where we have seen the struggle and where we're now on the 13th, 20th iteration of the design with a couple of customers is as they actually work to put together the modules, right? So I mean it's no secret that there was a significant delay in the Ultium ramp and that a lot of it stems from either the cell assembly or the module assembly. We see some of the cell companies here in Europe undergoing through the same thing. And so it's really industrializing the manufacturing of the cells and the modules is pretty complicated. And then if you actually think further downstream, a lot of these EVs are also incorporating all new electrical architectures and software, like simplified software development, again, trying to replicate a lot of what Tesla did a few years ago. And a lot of these new EVs have been mirrored with software issues. And so that can also make it tricky for all of us who are supplying into that space, right? But our piece, I think we've got the most complex of the industrialization of these parts, frankly, behind us. Right now, it's really all about ramping up capacity. We actually -- the demand on our current capacity was so high that we actually had to find a contract manufacturer and develop that partner to make our energy industrial insulation products. And then our plant in Mexico is now through literally a second iteration of automated equipment to make the cell-to-cell barrier parts. And we're starting to see that in the financial results of the company as well as those processes are way more efficient and the equipment has higher uptime, we have higher yields, et cetera. So I think our parts are simple, fortunately, yes.

Well, and I spoke at the beginning about -- I think one of the key challenges for most independent gigafactories is the time it takes to get through sample testing A and B cells to be able to secure an offtake contract with an OEM. You mentioned many iterations. Can you give us a feel for what is the process like with GM in terms of how much testing they do and how much time it takes from day 1 to actually secure a commercial contract?

Yes. I think initially, as we were developing the initial designs, it took some time. And we have a lot of war stories of our employees literally going back to their hotel room after being in a meeting with General Motors and shaving material off to make the next iteration of the prototype part and then these parts are all tested to the point of failure in enclosed chambers where you have to demonstrate the results. The mechanical properties of our material are very important as well. So they're put in kind of a dynamometer environment where they're just constantly pressured to see if they actually recover their original dimensions after so many cycles. And -- but the interesting piece is that we've actually been able to leverage a lot of our own data with new customers to the point that, that initial convincing that initial sales process is a lot shorter. The part that is actually tricky is that there are only so many logical introduction points inside of an OEM's product road map, right? So if you're trying to sell something to an OEM, the only time to really get it in there is when there's a meaningful mid-cycle refresh on the vehicle, on the vehicle platform, on the battery pack, like whatever the largest underlying thing is. And today, we're working with customers that have very serious thermal runaway problems. They would love to be able to fix it immediately. But given how difficult the overall industrial machine of making a car is, you kind of have to wait 2 years until the scheduled refresh is put online. And so I think there's quite a few technologies that even if they're on the shelf, you're sitting there waiting for that introduction point. And I think we just need to be patient. It actually -- it'd be great if some of these OEMs were more forthcoming giving the offtakes agreements because that would allow all of the stuff to get financed. But ultimately, it kind of is what it is and these Tier 1 supplier agreements have evolved to be as vague and noncommittal as possible. And so that does pose a challenge, but I think patience and having, again, that baseline design validated will get us through it.

And I'm just conscious of time as well. I want to talk about capital raising and your experiences to date. And I guess maybe starting with you, Balbanuz, as a private company, I think you've learned a lot of lessons from some of the other gigafactories that have focused on the manufacturing side of things themselves and doing everything, which often requires having to raise billions of dollars of capital. I think you guys have done a good job in terms of positioning yourselves more as an intermediary that fits within this ecosystem and more tech like than anything else. So obviously, not looking to raise as bigger checks or some of the gigafactories. But how has the capital raising process gone for you to date in terms of the traction and interest you've been getting from investors?

Okay. So Basquevolt has been funded by private and public institutions. So within our stakeholders, we have people in the energy sector as Iberdrola, so the main energy company in Spain or Enagas fitting on the gas, a company from the automotive like CIE Automotive. And we do have as well [indiscernible] coming from the finance sector, and as well the national and regional state. So the Spanish government through one of these agencies and the Basque Country as well. At this stage, we are looking forward to get the A-Series by end of this year to go on with the plans to develop and scale up to the pilot plant and then go to the Gigafactory. The environment, what we are seeing is that the environment is getting tougher as if we compare to what happened last year, but we are -- this is one of the challenges we have ahead of us for 2024.

We hopefully, there's some eager investors in the audience today that will come and chat to you during the coffee break.

Sure.

Ricardo, I guess, completely different kettle of fish, publicly listed company. To some extent, actually, I think the public equity markets have been more challenged than private capital markets over the last 2 years. But in terms of funding your future growth strategies, are you seeing support from your current investor base?

Now definitely. So we went public in 2014, and we're lucky that a lot of our investors from back then have stuck around with the company and been very loyal supporters of it since then. And it's really interesting how many of our largest holders are from way back then. But at the same time, I think in 2022, we all got a very tough lesson on what our cost of capital now is. And for us, that was actually -- that in combination with the fact that General Motors was a bit delayed, frankly, was a big blessing in disguise because when we struggle to -- or I mean, we didn't really struggle. We just didn't like the pricing of it, which is kind of the same thing, but we didn't like the pricing of capital in 2022. And that really forced our team to say, okay, let's push out all CapEx. We had broken ground on almost a project in Georgia that was going to cost us $710 million to increase our capacity. And we decided to right time that and basically slow down the spend on it. And then we said, okay, let's really accelerate our path to profitability here. And if you were to compare the projections that we're looking at now versus what we were looking at, at the end of 2021, when our stock hit an all-time high, and we were worth twice as much as we are today, the company is now actually being profitable and generating positive cash flow 2 years ahead of what we were expecting. And that's factoring in a 2-year -- almost 2-year delay in General Motors volumes. And we're also deploying about half the amount of capital within the first 3 years of the projections. And that reset took quite a bit of explaining with the markets almost exactly a year ago. But then fortunately, our investors quickly got it. They understood that we -- in some ways, we're calling that this EV exuberance just could not hold up, particularly in the second half of 2022 and 2023. And actually, in our last earnings call, we told our investors that things really aren't as bad as they seem, even though there's all these obvious issues of affordability. But if you look at the overall EV production trends, I mean, these OEMs need to meet the regulatory requirements when it comes to emissions here in Europe and the CAFE standards in the U.S., which even under a different administration would take quite a bit of time to undo. And so as we've accelerated our path to profitability, we found some momentum to the point that last year, the week before Christmas, we did a quick registered direct deal with our most -- some of our most loyal investors, they reached out to us and they said, "Look, we think the stock is going to run. Take the capital here 4 days before Christmas. And if you don't take it before Christmas, it's gone. And so while we didn't feel great selling equity at those prices, their support has been extremely validating. And we really mean it like we want to pay all this capital back and some. And even some of the investments that were made by Koch Industries and us in 2021 and 2022, right now, they're all at higher value than what they invested in. And so we take pride in that. I think we've been prudent stewards of capital. And it's easy to get caught up in this sustainability movement and craze like we define sustainability as being around, right? And we really mean that. And so we're pretty focused on that. And I think the movie for the next couple of quarters is fairly straightforward for people. And as we found a stable base, we've been able to attract a new set of investors. And it's actually very encouraging here in Europe to see how some funds have specific mandates where they ask you, okay, what percentage of your CapEx is going towards energy transition? Over 80%. Okay, great. You check this box, right? What percentage of your sales are into batteries? And okay, it's over 50%, you check that box. That is actually, I think, very supportive of the -- what we're all trying to accomplish here, developing the right ecosystem to develop all of these technologies to curb global warming. And -- but yes, I think remembering what your cost of capital is at all points in time is very important. And I think some of the decisions that we made last year that were really tough are now finally paying off. And unfortunately, there's a set of investors still there to support us.

Yes, it's interesting. I mean, I think we'll all agree that Europe, I do strongly believe, are well ahead of the U.S. in terms of the investor community being more conscious about climate change and investing in the right types of companies. We heard Gary Nagle from Glencore and Kunal from Glencore sitting somewhere in the audience. So he'll know what I'm talking about. But it was a Melbourne mining dinner last year, and the journalist was asking him about spinning off the coal business, and he was talking about listing that specifically in New York, mainly because there's more appetite from investors in North America for those types of equity stories. Do you feel that there's a changing sentiment from investors? Obviously, everyone will remain focused on financial returns, but how important is ESG and climate change for investors in North America?

We definitely have less people asking us for our sustainability report this year than in 2022. And I think in Europe, it's still top of mind for some of the investors that we've been meeting with. In the U.S., I truly think that when we talk to at least our investors or new investors, they really define sustainability as what I said, just how do we make sure that you're going to get to the point of positive free cash flow and be around in the future without coming back to us for more capital. I mean, even when we did our equity raise in November of 2022, a lot of the investors that participated in that came back to us and said, we really want you to stay with 70 million shares outstanding. And I think the terminology -- like ESG, the fact that a lot of governance initiatives were bundled along with overall sustainability and CO2 emissions roles have -- added politics to it that I don't see in Europe. And I think that's another big element, right? I think it's worth putting the main thing, the main thing and the main thing is reducing emissions of bad stuff around the world and then making sure that we're all around to still do it profitably, right? And I think those 2 can be balanced if we keep the messaging clear. And in Europe, at least from what I learned yesterday, it seems a lot clear.

We're nearly up on time. One very last quick question for you, Balbanuz. Last year at the conference, I think there were a lot of complaints about support from government institutions through Europe. What are you seeing on your side? Is the government doing what they need to be doing to support your initiatives going forward? Can you comment on that?

I mean if we compare the support that is given in the U.S. and Europe, Europe has been a follower. I mean the intention is there, and the policymakers are very clear about sustainability. But in terms of supportive in terms of finance, I think we've been behind the U.S. And the IRA has probably been a wake-up call for Europe because they are seeing that some of the industries are aiming to invest in the U.S. So to some extent, it has been a reaction to that.

Well, we do have Adam here from the UKIB, who will be on one of our panels later. And I think safe to say very good to see how active they've been over the last 12 months since our last conference. But I'm sure this question will come up throughout the day today. That's us for time. Thank you both very much for joining us again, and hope you all have an enjoyable day. Thank you.

Thank you.

Thanks for having us.