Select Harvests Limited (SHV) Earnings Call Transcript & Summary

Good morning, and welcome to the 2022 Select Harvests Results Presentation. My name is Paul Thompson, I'm the MD of Select Harvests. Joining me today is our CFO and Company Secretary, Brad Crump; and Andrew Angus from Overland Advisory. Brad and I will present the 2022 result and an outlook on the 2023 crop end market. And after that, we'll be available to take questions. At the end of the session, if you use the raise hand function to acknowledge to Andrew that you have a question, then he'll enter you into the room to ask questions. At the moment everybody's microphones are on mute. In addition to the presentation information, there is information in the appendix that may be interest to people. I said, when it gets time to ask questions, we'll let you know. Please note the disclaimer and the basis of the preparation of these accounts. As I said, it is the full year. So let's get started. Again, we had a challenging year. The almond industry continued to be disrupted by the COVID overhang, international logistic constraints and the overhang of the larger U.S. crop. Disappointingly, market pricing continued to bounce along at the 10-year low. There were some significant positives in the 2022 year, executed by the team. They include the integration of the Piangil orchard, the closure of the Thomastown facility on budget where staff being able to exit with dignity, increasing the capacity of the Carina West value-adding facility, upgrading our sorting and packing facility at Carina West, over 40,000 tonnes of compost was returned to the orchards. Orchards lost an additional development of the co waste alternatives was continued. 73% of the crop has been sold and committed as we sit here today. As you will see from the chart, volumes were up on last year, pricing has not moved since last year. U.S. growers are still clearing their large carryover crop, which is like ours due to growing conditions. The U.S. crop consisted of less inshell and less industrial style -- more industrial style grades. The 28.3% reduction in lost time injury frequency rate can be attributed to our proactive approach to safety by focusing on injury prevention by identifying hazards and eradicating them. The weather conditions did have one positive, a dramatic drop in the temporary entitlement water pricing, which directly impacted our cost and in part, offset some of the negative impacts, the largest being along the harvest and having to mechanically drive 25% of the crop. The business has also impacted on Boxing Day by hull fire to compromise their fumigation and warehousing capabilities and capacities. The COVID overhang had a negative impact on cash flow with logistic cost increase dramatically and lead times extended. Pleasingly, yields were above the industry average. In summary, we control what we could control and we measure what we're unable to control. I'd now like to hand over to Brad to provide you with a detailed review of the financial performance.

Thanks, Paul, and welcome, everyone. The combination of an ongoing low almond price, along with higher weather-related operating costs and increased logistics related costs have led to a lower than FY '21 NPAT result of $4.8 million. Note that this is made up of continuing operations NPAT of $6.2 million and a discontinuing operations loss of $1.4 million. Discontinuing operations relate to the sale and closure of the Branded Consumer Foods business and includes the 6-month packing contract for Prolife Foods, which is concluded and the exit of the Thomastown facility, which finished on June 2022. There are no further revenues or costs related to discontinued operations. NPAT was achieved through the delivery of a continuing operations EBITDA of $40.4 million and an EBIT of $12 million. Net debt to equity was 25.9% and earnings per share was $0.039 and a fully franked dividend of $0.02 per share has been declared. The above has been achieved for $26.8 million of operating cash flows for the FY '22 year. Moving on to Slide 9. This slide provides a visual impact of Select's key profit drivers, volume, almond price and production costs. Overall, volumes were 2.7% higher, the almond price remained flat at $6.80 per kilo and cost per kilo increased by 4.4%. There were a couple of other factors that reduced the NPAT from last year's $15.1 million to $4.8 million, and I'll go through those a little later. On Slide 10, which runs through our income statement, moving through the FY '22 income statement, I'd like to point out the following. Revenues were down by 12.7%. This was due to the 12 full months in FY '22 with an average almond price of $6.80 per kilo in our sales number. This compares to the first half of FY 2021 that had the benefit of FY '20 sales at $7.50 per kilo. Note that based on the fair value accounting standards, FY 2022 profit is based fully on the 2022 crop at $6.80 per kilo. The 2022 fair value profit was 19% lower than the 2021 crop, and this is due to increased harvesting costs due to the wet weather delays and increased handling requirements, higher processing charges due to increased drying requirements and higher insurance, increased recognition of immaterial orchard costs. This was higher than the number of equivalent tonnes produced, which the benefit was received earlier in the cycle of the [ freeze ]. This was partially offset by lower water costs of approximately $8 million year-on-year. Third-party processing profits were lower as Select reduces this line of business to focus on its own crop. Old profits were lower due to a lower demand for supplementary livestock feed. Value-add gross margins were negatively impacted by using prior period higher-priced raw materials while finished goods sales prices decreased in line with the almond market. Lower yields and throughput levels were also impacted in value-add as a result of transition capacity and capability from the Thomastown facility. Interest costs were higher due to increased rates and a higher average net debt level. Discontinuing operations made a loss of $2.2 million before the reversal of $1.2 million of provisions raised in FY '21 due to the improved result on the sale of nonrequired equipment. Slide 11 gives a visual impact of the previous points I just raised. An additional point I'd like to point out on this slide is corporate costs were higher due to the write-back of previously capitalized project costs, increased training and system development of people and culture activities and the commencement of a dedicated sustainability function. Cost of production per kilo increased by $0.25 per kilo to $5.88 per kilo. Material movements for the year were horticulture costs excluding water increased by $0.24 per kilo or 9.5%. This was predominantly due to higher labor costs, higher electricity costs and higher costs for these. Additionally, the write-off of 500 metric tons post harvest due to the wet weather quality issues also increased the cost per kilogram. Water costs dropped by 33% to $0.61 per kilo due to the reduction in the price of temporary water entitlements. Harvest costs increased by 17% to $0.63 per kilo due to the delay in difficult wet conditions during this period. Processing costs increased by 34% to $0.86 per kilo due to the increased requirement for mechanical drying required for approximately 25% of the crop and also due to the fact that we had less inshell production. Additionally, due to an early hull fire, Select's insurance charges increased materially. Moving on to the balance sheet. Select's balance sheet remains in solid shape. There are a few points to note. Inventory levels are higher as we're holding high levels of stock with a delayed shipment program and less inshell produced. There's no Thomastown facility consuming some of our internal stock. Biological assets, that's been the -- what we're spending on the 2023 crop [ hull ] fire due to increased input cost and labor. The delayed sales program and the removal of Thomastown has also led to a lower receivables balance. Property, plant and equipment has increased due to watch equipment purchase, particularly for Piangil as was as plant. Additionally, CapEx was dedicated to the upgrading of the Carina value-add facility to increase capacity and capability from the closure of Thomastown. Select's net debt position increased by $36.4 million to $134.6 million as at the end of the year due to the capital program mentioned above and a full year of receipts amounting to $6.80 per kilo. Debt levels averaging $140 million are expected for FY '23. Importantly, our current debt facilities remain adequate for our ongoing operations. All covenants are well within the required levels, and the company's gearing ratio of 25.9% remains within the targeted range. I'd like to move to the next slide to discuss the next point relating to the balance sheet. All Select's assets are recorded on the balance sheet at their book value. In August and September of this year, Select engaged Herron Todd White to conduct the valuation of the company's property assets. This valuation showed Select's processing and Orchard assets of $458.4 million or $119 million higher than their book value. Additionally, management performed a mark-to-market analysis of Select's water assets at 30 September 2022. This showed that our water assets valued at $128.6 million, a $70 million higher than their book value. In summary, Select's assets are valued $189 million or 47.4% higher than the value carried on the balance sheet. By referring to Slide 15, which we're in now, you can see that by taking this into account -- taking into account the market value of the assets, Select's NTA per share increases from $3.58 to $5.14. Capital expenditure increased above operational CapEx requirements due to the requirement for equipment for Piangil and the value-add upgrade. This is expected to reduce in FY '23. Working capital balances were higher due to the delayed sales program, including the less inshell produced, leading to higher levels of inventory on hand. Operating cash flows were $11.4 million lower in FY '22 compared to FY '21. This was predominantly due to lower receipts as the company had a full 12 months of sales at the lower almond price of $6.80 per kilo. Other factors were the delayed harvest, lower inshell yields, which is normally the first product out to market and a transition period of Thomastown to the Carina value-add facility. The lower operating cash flow and increased capital expenditure was funded by the $36.4 million increase in debt. Thanks, Paul. Back to you.

Thank you, Brad. I'd now like to walk you through the people, planet and platforms and then look to the future and outline our priorities as an organization. As I said earlier, our success is the result -- as I said earlier, our success in the area of safety is a result of the team's acute engagement by identifying hazards and resolving them before they fully become injuries. The wet conditions, market stress and the hull fire didn't mean this result was achieved in a tough condition, something that needs to be acknowledged. Our safety culture is strong with our 2 leading convictions in our culture survey being food safety and workplace safety. We recognize and enjoy our role in regional Australia, which we -- in the regions in which we operate. We are 100% committed to being a model, leader and citizen financing effectively in these communities. To achieve this, we've invested in our team's leadership skills, we've committed to increasing the female participation in our senior management levels of our organization, we've set a similar commitment about attracting young people to select and our industry. Like many organizations, we formalized the work from home arrangements. We now turn to the plant. As you would all know, the almonds we eat is the seed of the fruit and the most of the nutrition is in the rest of the fruit. Historically, our industry has treated the fruit or 75% of the biomass as waste, effectively clearing it to the softer industry. Select Harvests, among others have commenced an extensive series of projects to extract value from the hull and the shell and the other biomass. I'll discuss these projects in a minute. What I'd like you to understand these have huge environmental with financial benefit and looking to create value from everything we grow, not just from the almond kernel. Our commitment to the planet touches every part of our business and not just our orchard. We are developing and implementing plans across the entire business. In February, we'll be publishing our sustainability report. It will provide a broad update but in particular, provide an update on our plan to be carbon neutral by 2050 or earlier, explain how we measure water efficiency, the importance of air and land stewardship and how it is at the core of our business and our heart, not just a compliance objective. I will outline the potential challenges we face with resources in the regional Australia. As I said, there was a lot of opportunity from our nutritious cohorts. Our philosophy is to recycle, return [ new trends ] to the Orchard in a liquid or a solid form. Today, we have only -- we are the only stand-alone power plant running on almond Carina West, and we hope to lead other innovative opportunities, including making them proprietary. Now if we turn to the more important market. The almond market continues to focus on supply. The large U.S. crop in 2020 and the COVID disruptions have caused an especially large carryover and a [indiscernible] low-grade product. Low consumer confidence caused by geopolitical tensions in Europe and inflationary pressure has dampened global snacking demand -- [ normal ] slacking demand. The result is the almond market is entirely focused on the carryover, not the future lower crop supply environment. Buyers are willing to take -- are unwilling to take positions undermining confidence whilst growers have had -- had to absorb significant cash cost increases, pollination, agrichem, fertilizer and energy, all they want is cash and are prepared to forgo profit. On top of this, the nature of the COVID lockdowns and the logistic disruptions are only giving guys more strength. Unfortunately, at the moment, there's seller resistance. If we look at the 2023 crop, after a wet harvest, we're looking for a less challenging year. Unfortunately, due to the prone marked incursion, this was not to be the case. Pleasingly, our whole team was able to secure sufficient hires to meet the minimum requirements. Many growers were not that fortunate. Even with less than ideal weather conditions, our assessment is that we had a solid crop. Since pollination we've had been subjected to significant ongoing wet conditions, several launches, in particular, irrigation and infrastructure, Orchard access have been impacted by this volume of water. It's too early to understand the impact. Once we haven't understand the implications of these conditions, we will provide advice to the market. The initial impacts of operational access not declined in tree health. On the cost front, we continue to benefit from lower water prices, generating and partly offsetting -- generating [ part of ] energy internally and lower input programs due to composting. Unfortunately, this is not -- has not offset the significant cost inflation in fertilizer, energy and insurance and bringing more growing costs to the balance sheet to the P&L. Some of these costs like fertilizer and international freight to returning to normal levels but we will not see the benefit in the 2023 crop base. Please be assured management continues to focus on cost where we're in a fixed cost industry. I'm confident our cost position remains at the bottom of the industry curve. As you can see, the situation has been challenging for the last 2 years. As I said, many U.S. growers are selling below their cash cost, this is unsustainable. It has been painful for all. Select Harvest has avoided some of this pain by maintaining a low cost per kilo, focusing on price realization and prioritizing markets where we have market access advantages and free trade agreements. Clearly, the comeback cannot continue to sustain these prices especially with the additional costs I've just outlined. With 80% of the crop produced in the U.S., the lightly triggers of price movement are the U.S. carried over 2021 crop being sold down, ongoing supply constraints in the U.S., as a combination of tree removals which are happening in continued drought conditions, a poor bottom in February and a market shore. The argument the market cannot sustain higher prices is a fallacy. You can see that the market has sustained higher prices with similar supply for many years in the past. If I look to our priorities. Our priorities are the safety and the well-being amount of employees and other stakeholders. The horticultural program for the 2023 crop. Input security, so in these times, we've had to buy ahead on some of the inputs, particularly fertilizer. The marketing program to sell out the remainder of the '22 crop and keeping our eye on the market to optimize the '23 crop. Value-add optimizing our investment in our processing facility. Looking through the cycle of strategic growth opportunities. Sustainability investing further in understanding our carbon footprint and co-recycling opportunities, the critical management of cash and the maintenance and the management of our capital program. In summary, demand for almonds and almonds as an ingredient remains strong. Select Harvest has state-of-the-art assets and are operating at the bottom end of the cost curve and are able to sustain in this environment with greater strength in many other organizations. Currently, the issues -- the current issues largely relate to orchard access. To date, we don't believe the damage is material. Carryover the U.S. crop is being consumed, and this will create downward -- upward pressure on price. Global supply is under pressure with the drought in the U.S. and the Northern Hemisphere and it has a potential impact of the rainfall in Australia. And as you would all be aware, there's an orderly transition going away as I step down from the business in the first quarter next year. I'd now like to open the floor for questions, Andrew.

Well, I'll just wait for questions to come up. Apoorv from UBS is on the line, I believe.

Guys, can you hear me?

Yes.

A few questions from me. Number one, on cost per kilo into FY '23. I guess it's more probably for Brad this question. But I think in the past, you've said kind of $0.50 to $0.60 per kilo step up in FY '23. Do you still see it that way, taking into account your comments that you made that you're expecting some further savings and water costs as well in '23?

We will see an uplift in '23. Even though there's some further savings in water, that will only be sort of $2 million to $3 million. Fertilizer and chemical costs will sort of be around about the $20 million mark uplift. So that will more than offset any savings that we get on water.

Understood. Just on the FY '23 crop marketing program. I think historically you normally start marketing, correct me if I'm wrong, from November, December. On this occasion, given where prices are and the uncertainty, are you looking to potentially delay that to kind of January, February and maybe take advantage of a better environment then?

Yes. Look, there's -- Apoorv, Paul here. In 2 weeks' time, there's the U.S. California almond conference there, where a lot of the buyers and sellers will be. Obviously, we'll see what the mood of the market is while we're there. But it'd be fair to say at the moment that we're not keen to sell at current prices, recognizing that the potential shortage of crop in the U.S. and some of the other market dynamics, for instance, some of the key consumption the groups still have, purchase that need to be purchased on things like Diwali -- not Diwali, sorry, Ramadan.

Yes, yes. Okay. And then just on the value-add almond business. Is it fair to say I think is what you said last time, probably a small loss in FY '22 EBITDA loss. Is that right? And then into FY '23, it sounds like you're more positive on gross margin. Should we expect some sort of positive EBITDA contribution from that business next year?

Yes, we're expecting a positive result for the '23 year for value add. We're moving into utilizing 2022 stock raw material next month, and that will start providing an uplift in our gross margin position.

Understood. One final question before I put someone else. Just on corporate costs, up a little bit in FY '22. Are you able to say would it fall down sort of in '23 a bit of normalization?

I don't expect the sort of pretty far with CPI.

Paul, we've got another question from Taylor Guyot of Barrenjoey.

Can you hear me?

Yes, just if you could speak up, that would be great.

Sure. Could you just talk a bit more on your costs rolling into next year, in particular, clarifying the ag chemicals and the leasing costs, please?

Yes. So we've got -- it's missed mainly -- so there's 2 uplifts for next year. One is around fertilizer. So the fertilizer and ag chem piece, as I mentioned, will be approximately an uplift of circa $20 million. The leasing cost, the additional leasing or recognition of capitalized lease costs will be approximately an additional $6 million into next year. That's -- just to be aware, that's a noncash item, too, by the way.

Okay, cool. And then just on the key sales periods for Select and how long you can hold off on current pricing before having to sell?

Yes. Look, the product has a shelf life of 18 months to 2 years, but the reality is with warehousing and that particularly our inshell product, we like to clean that as we harvest it. So if you look at probably the latest we can hold off is February as part of infill crop.

Okay. And then the last question for me is just on what you're saying with trading markets and momentum, which export markets are you seeing the most activity in, where is the most risk in terms of demand?

If you look at the totality last year, the Indian market was very strong. In the last 3 months, it hasn't been as strong, which is an important market to the industry. The China market has been pretty solid. From an Australian perspective or [indiscernible] down from the U.S. and the European market has grown at about 2% for the -- versus the previous year. The other one is that our recent reports are that the Spanish crop, which is a similar size to the Australian crop is likely to be down as much as 50%. So that will mean that, that gap has to be fulfilled by the U.S. and Australian crop.

Well, it doesn't look like we've got any more questions at this stage. Actually, just hang on we've got another one from Apoorv Sehgal.

Can you hear me?

Yes.

Okay, perfect. I will ask a couple more than -- well, I've got the chance. Just on D&A, sorry if I just missed the [indiscernible] somewhere in the accounts. It looks like that restated in FY '21 from -- I think it was $21 million before but now it's $27 million. And so this year looks a lot different to expectations. What sort of happened there?

I have to come back to you on that one, but I'm not -- I have to go back and have a look for the accounts on what you're pointing there. I'll come back to you on the call that we have later on.

Yes, no, that's all. I'll just ask a housekeeping question. Any color on FY '23 just on CapEx, D&A, net interest, just to the extent you can share?

Yes, it will be down a bit on what it was this year. So we finished -- we've got a little bit of expenditure to go on the value-add facility, but that's less than $1 million. And we've completed most of the Piangil equipment acquisition. So it will be a number lower than it was this year.

That's the CapEx?

That's the CapEx, yes.

Got it. Okay. Maybe one final one just on FY '22 mature yield, I think normally, you talked about 1.35. Is it fair to say this year it might have been a touch below that?

I think the yields were there, but we also -- we lost a bit through the wet harvest. So we only project more of the crop than we anticipated. So that's a net result.

Got a question from Mark Topy of Select Equities.

Just wondering if you can just talk about the -- I know it's a little bit difficult talking about the Australian -- the almond price in Aussie dollar terms. And just looking at the currency where it is, can you give us some sense or feeling as you look forward in terms of where that price range might be or some guidance around that?

Well, we don't really give guidance on pricing, but you have to look that chart, pricing is sort of below the $7 mark, and we're looking for it clearly to move back over $7.

I'm just trying to think for the currency benefit then as you go forward.

Well, last year, we covered at 72%. We don't -- hopefully, we get a cover that's below 70% -- that we can't cover already.

Okay. And just then any comments around interest expense going forward on the debt levels? You said averaging around $140 million. Can you tell us about the profile of your depth moment and high risk rate fading through?

Yes. So it will obviously -- our interest rates -- our interest costs for next year obviously far than they were this year. We'll have an average higher debt profile and our rates obviously have been adjusted as rate increases have come through -- throughout the year. So we'll have a peak debt position as we normally do around that sort of February, March, April period. And then we would expect it to come down over the second half of this year. But our average debt position will be higher than it was this year. Our interest rate will be higher than it was this year. So the combination of both those will see it. You'll definitely see an uplift in interest costs.

And the other comment I'd make is that assuming we're comfortable with the prices we're selling, the freight costs have dropped dramatically in the last month and availability is a very different story to the same period we had last year.

[ How get solved ]?

Vastly improved, I mean, just to be clear.

Okay. And then just lastly, just on the Indian market, just to understand a little bit better what's driving demand there or in terms of the sort of swings in demand factors there.

Look, I mean, I think I know that some American growers ship product to America -- to India without a sale. And then -- so there was a lot of availability of product in the market. Our understanding is the market at the moment is pretty empty of inventory. So we're expecting them to participate back in the market. The one thing with elevated interest rates and the nature of the industry that we've got to be very careful about credit -- people's ability to pay. We don't release the stock until they pay. But it's -- you got to have the right partners in the market that can be as volatile as that.

Sure. And then, maybe, also in terms of the China market, I think you're saying that the shipping is freed up. How do you read the possibility of further COVID lockdowns? Or how do you see the situation at the moment in terms of that China demand?

China demand because -- and look, the other thing with India, sorry, I must mention is that the FDA commenced in December. We're not sure if it's the start of December or the end of December, in the middle, but that will give us no advantage. I mean, I think the one thing with the China market is -- the impact of lockdown is more likely to be felt by the U.S. crop because they don't have an FDA. We've seen all of the lockdowns. And really the only disruption we have seen has been more from a court disruption and delays as opposed to actually lack of demand in the market because the Chinese are seeing Australia as the first port of call when they're seeking almond as a result of the trade dispute between [ U.S. ] and China -- sorry, India and -- America and China.

And timing of the Chinese New Year is a bit earlier this year. So see that demand on going. If there's no further lockdowns, do you say that was a positive in terms of China demand over the next few months?

I mean, certainly, they've got to set themselves for the end of the year that most of those purchases would be in place. I think the other one is the one that should be more likely to influence a lot of the normalities, Ramadan, which is early. I think it's the first or second week of April, which will be difficult for the Australian crop to support, which will again put pressure on the U.S. crop and wear their inventory down. And this really market pricing is really about getting through this carryover and people acknowledging the fact that we've gone from a 3.2 billion pound crop 2 years ago to 2.6 billion pound crop. And in that period, demand has come back, probably not as bullish as we'd like, but certainly, there's more -- there's a lot less lockdown activities in the market. But there are other pressures such as cost inflation.

Paul, we got another one from Apoorv of UBS.

I have just 2 further questions, please. Firstly, on the FY '23 crop size, I think in a previous release you're saying 30,000 metric tons. Is that still the right way to think about it? Or given your comments on wet weather, is it a case of maybe it's a touch of risk of that number now?

I think, there's more risk in that number. We don't -- we can't -- we don't see a reason why we should drop that number at the moment. But obviously, there's issues around as we talked about orchard access that we need to understand and that access being -- access to deliver the remainder of our horticultural programs, which impact the crop.

I don't know if you can answer this now, but is there a possibility of the '23 crop being down year-on-year based on those risks?

I mean, I can't see it at the moment but you can't rule it out. We're not talking about horticulture crop, we're talking at biological crop, that's very much being harvested same every year.

Yes, fair enough. Just one more question. How meaningful from a price realization perspective could be normalize or could a normalization in inshell production be? From a mix perspective, if that inshell could normalize in terms of mix?

Price is difficult to say. But from a cost perspective, it works out $0.20 a kilo, which is clearly a meaningful number. Price, I mean, pretty much [ probably ] you can do that. Yourself pick a price and multiply by 5% of that crop and that's the impact of it.

Okay. Any more questions, Andrew?

Yes, we've got one from Paul Jensz at PAC Partners.

I think it's a little bit confusing for some of us. We don't know that we've got to send an e-mail through to Andrew to ask questions, but that's okay, we got through. Three quick ones for me. Just on dividends. If you could talk through the difference between 2017, where you had a similar profit and you had a $0.10 dividend. And this one, you've got obviously a lower profit and you've got a $0.02 dividend. Could you maybe talk through those discussions that you had, please?

Well, I mean I think you can appreciate, Paul, that every year, you look at various factors and you need to determine what decision you make. So I mean, I haven't gone back to 2017, and I wasn't here at that time, but to see what the determination was back then. But based on your profit result, based on where our position is, we thought that was an appropriate -- or the directors thought that was an appropriate dividend to declare. But certainly, we don't go back on other years to determine what was done there and what's done now.

Just -- [ part of it ] is market outlook too broad. I mean we don't see the current prices being sustainable. But in 2017, we probably had a much more bullish outlook on market pricing than what we see today, and it was coming from a higher base.

Okay. Well, we'll have to talk about that, I think, this afternoon. Just on the percentage of your 2022 crop to sell, what percentage -- sorry, if I missed the [ number you talked in ] the presentation.

As of today, we're about 20%, just under 20% remaining to be sold.

Right. Okay. And then with the -- we might -- as it says in the announcement, it will take us through to January to keep processing it into a salable condition -- broadly impacting.

Okay. And the final one is just on the orchard removal maybe in California. So with those meetings in 2 weeks' time, the conferences, are we going to see some sort of informal data around the amount of the California orchard that was removed? Or are we going to see a similar sort of thing that they put out in April on a 6-monthly basis?

Well, normally, they would have put one out in the middle of November. So it could well be announced in the next few days. We don't know, but I'd anticipate that they'll give a land IQ update. And I think they did talk about in the announcement that would include abandoned orchards in there as well. And anecdotally, we know that there are significant orchards being removed, particularly on the west side because they're not -- well, they have 0 access to water.

Okay. Well, I think we're in for first moving month also in California.

Paul, there are no other questions.

Great. All right. Thank you very much. I will -- I'll speak to many of you over the next couple of days.