Vale S.A. (VALE3) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to Vale's Third Quarter 2026 Earnings Call. This conference is being recorded, and the replay will be available on our website at valle.com. The presentation is also available for download in English and Portuguese from our website. [Operator Instructions] We would like to advise that forward-looking statements may be provided in this presentation, including Vale's expectations about future events or results, encompassing those matter listed in the respective presentation. We caution you that forward-looking statements are not guarantees of future performance and involve risks and uncertainties. To obtain information on factors that may lead to results different from those forecast by Vale, please consult the reports Vale files with the U.S. Securities and Exchange Commission, SEC, the Brazilian Comissão de Valores Mobiliários, CVM, and in particular, the factors discussed under forward-looking statements and Risk Factors in Vale's annual report on Form 20-F. With us today are Mr. Gustavo Pimenta, CEO; Mr. Marcelo Bacci, Executive Vice President of Finance and Investor Relations; Mr. Rogério Nogueira, Executive Vice President, Commercial and Development; Mr. Carlos Medeiros, Executive Vice President of Operations; and Mr. Shaun Usmar, CEO of Vale Base Metals. Now I will turn the conference over to Mr. Gustavo Pimenta. Sir, you may now begin.

Hello, everyone, and thank you for joining Vale's Third Quarter 2026 Conference Call. Let me start by saying how proud I am of the progress our teams have been able to make on our strategic priorities, even under very volatile market conditions. We continue to consistently execute on our plans with discipline focusing on operational excellence and unlocking the enormous potential of our endowment and unique supply chain. All these actions are translating into tangible results. protecting our margins and helping us build a more resilient and valuable company. Let me now turn to the highlights of the quarter. Starting with iron ore, production declined 6% year-on-year, mainly reflecting Serra Norte's performance. Despite lower production, sales remained solid at 86.3 million tons, slightly above last year, supported by strong performance at S11D and the Southeastern System, along with the sale of inventories built in previous quarters. At Serra Norte, which has been operating since 1985, production has gradually declined in recent years as run-of-mine availability has decreased. This reflects the natural evolution of the ore body together with the operational constraints in areas close to cave related exclusion zones. In addition, the quarter's mine plan was impacted by a lower quality session of the ore body, which temporarily affected processing efficiency across our plants. We have taken a series of actions to mitigate these impacts, including the increased access to hematite ore in newly licensed areas and expect these initiatives to increase our availability and support year-on-year production growth in the fourth quarter. Combined with the resumption of fabric and Viga and a solid performance across the rest of our asset base, including S11D, we remain well positioned to deliver at the low end of our production guidance for the year. Looking further ahead, we remain confident in our operational performance and more importantly, in our ability to generate value for shareholders. Projects such as Capanema, S11D [ +20 ] and the Compact crushing plant are adding flexibility while improving the resilience of our portfolio. At the same time, we remain fully committed to our value-over-volume strategy. Our focus is not simply on producing more tons but on delivering the right volumes at the right cost and quality to maximize value creation. On the next slide, I would like to spend a few minutes on freight and explain how our strategy has protected our business. The spot freight market rose sharply in 2026, affecting the entire iron ore industry. In this context and in order to understand how our freight strategy has created substantial value, it is important to look at 2 main variables: the cost of the vessels or time charter and the cost of fuel or bunker. Each has different market dynamics, and our initiatives address both. On the time charter side, our medium- to long-term vascular contracting strategy provides greater predictability and supports a more competitive cost base. Over the coming years, around 75% of Vale's shipping needs are covered by long-term contracts at fixed rates. Most of the remaining 25% is managed through shorter-term contracts, generally lasting 1 to 2 years. This structure provides flexibility while limiting direct exposure to the spot market. For the fourth quarter, we are fully covered on our freight needs. And for 2027, we have already secured over 80%, giving us time and flexibility to capture opportunities for the remaining requirements. The fleet composition also provides an important advantage, larger and more efficient vessels, including Valemax and Guaibamax ships consumed last few per ton transported and operate at structurally lower cost. On the fuel side, our hedging program provides another layer of protection and reduces our exposure to fuel cost volatility. Marcelo will discuss this in more detail shortly. To put all of this into perspective, since the first quarter, spot freight rates on the Brazil-China route have increased by $12 per ton while rates on the Australian China route have risen by $4.9 per ton. Over the same period, Vale's realized freight cost increased by [ only $4.7 ] per ton. This shows that despite the increase in spot freight rates, our relative margin position has been preserved. Altogether, our freight strategy is generating a total benefit of more than $3 billion vis-a-vis the spot market in 2026. Overall, the message is clear. The freight environment has become more challenging, but our scale and strategy provided meaningful protection and preserved our competitiveness. Turning now to Base Metals. I'm very pleased with the progress we continue to make at VBM. Copper production declined 6% year-on-year, while sales were 4% lower, reflecting the planned maintenance at Sossego, as expected. At the same time, Salobo delivered its highest third quarter production on record. This is a very positive result and reinforces the strength of our copper platform as we prepare for further growth. In nickel production increased 6%, while sales grew 16% year-on-year. The Sudbury refinery delivered its highest quarterly output since the fourth quarter of 2013. Onca Puma also achieved its strongest third quarter performance, supported by the commissioning of the second furnace. Year-to-date copper production has increased 4%, while nickel production has grown 8%. Based on these results and on the operational performance we are already seeing in October, we are confident in reaching the upper half of the production guidance for both metals. In October, we also completed the Thompson transaction Vale Base Metals retained an 18.9% interest and secured a multiyear offtake agreement for nickel concentrate, allowing us to preserve strategic exposure while maintaining access to nickel units for our downstream assets. Looking ahead, we continue to advance our corporate growth strategy with the approval of the course particle flotation or CPF project at Salobo. The project is part of the new Carajas program, and we will add 6 million tons per year to Salobo core processing capacity, bringing the total to 42 million tons. Once fully wrapped up, it is expected to add approximately 30,000 tons of copper per year, containing concentrate as well as approximately 15,000 ounces of gold as a byproduct. Start-up is expected in the first half of 2028. Together with Bacaba and our productivity initiatives in Canada, this project reinforces our confidence in achieving our production target of up to 500,000 tons of copper by 2030. We have also quadrupled our drilling meters in Carajas compared with 2 years ago. The results we are seeing give us even greater confidence in the copper potential, and we look forward to sharing more of this at our Vale Day in December. We believe Vale is well positioned to deliver above-average copper growth over the coming years. Much of this potential comes from brownfield opportunities that leverage our existing assets, infrastructure and technical capabilities allowing us to pursue growth with low capital intensity and attractive returns. This creates a strong foundation for long-term value creation. With that, I'll hand over to Marcelo Bacci to discuss our financial performance. I'll return later for my closing remarks before the Q&A session. Marcelo, please?

Thanks, Gustavo, and good morning, everyone. Pro forma EBITDA totaled $3.5 billion in the third quarter of 2026, 20% lower year-on-year. The decline mainly reflected external pressures on the iron ore business, including a 10% decline in realized prices, higher bunker costs and the appreciation of the Brazilian real. At Vale Base Metals, EBITDA reached $1.1 billion, increasing more than 60% year-on-year and representing 31% of Vale's EBITDA in the quarter. This solid performance was supported by higher realized prices across the portfolio, combined with solid and consistent operational execution as Gustavo presented. Let's take a closer look at this quarter's details. Starting with iron ore. Our C1 cash cost, excluding third-party purchases, was $23.1 per ton. This was 12% higher year-on-year and 4% lower quarter-on-quarter. The all-in cost was $60.4 per ton, increasing 21% year-on-year and declining 2% sequentially. The year-on-year increase reflected mostly a combination of currency and energy-related pressures. In the quarter, the stronger Brazilian real affected both the C1 and the all-in while higher diesel and bunker fuel prices had an additional impact on operational costs and freight. Even in this more challenging environment, we expect both C1 and all-in costs to finish 2026 within their respective guidance ranges. Our hedging program continues to play an important role in managing this volatility. Including the cash benefit from the oil hedge, all-in cost was $59 per ton in the quarter. At the same time, we are intensifying our focus on the factors that we can control. We recently launched a company-wide productivity program structured around specific work streams across operations, procurement, maintenance and logistics. The objective is not only to offset short-term pressures. We are targeting sustainable efficiency gains that can structurally improve our cost base. We will provide more details on first results and many opportunities at the Vale Day in December. Together with the ramp-up of lower-cost assets, these initiatives should strengthen value position and improve competitiveness through the cycle. At Vale Base Metals, cost performance remains under control. In copper, all-in cost came at a negative $200 per ton, improving by $1,200 per ton year-on-year. This result was supported by strong byproduct revenues and lower unit expenses even with the planned maintenance carried out during the quarter. Based on year-to-date performance, we expect copper all-in cost to finish 2026 near the lower end of the guidance range. The outcome will also depend on byproduct prices during the fourth quarter. In nickel, all-in cost was $14,600 per ton, 18% higher year-on-year. This increase was expected and mainly reflected planned maintenance at the Canadian operations. With these maintenance activities now completed, we expect nickel costs to decline in the fourth quarter and return to levels broadly in line with the second quarter. We also remain confident in delivering our 2026 nickel cost guidance of $10,000 to $11,500 per ton. Before moving to cash generation, let me provide more detail on our hedging program and how it supports the business. As discussed earlier, hedging plays an important role in managing market volatility. Our objective is not to predict market movements, but to reduce cash flow volatility, improve financial visibility and protect the execution of our business plan. This strategy is already delivering tangible benefits. So far in 2026, our currency and oil hedges have generated over $700 million in cash benefits. Starting with bunker fuel. We have already hedged 67% of our expected 2027 consumption, maintaining a level of coverage broadly consistent with 2026. Our average hedge price stands at $78 per barrel on a Brent equivalent basis through a combination of 4 contracts and 0 cost collars. This gives us greater visibility on an important component of our freight costs as we enter 2027. On currency, our strategy has traditionally focused on protecting BRL-denominated debt and reparation commitments while we also hedge a portion of our operational expenses in reals. So far this year, our current hedge settlements have generated $456 million in cash benefits. And we entered 2027 with a solid hedge position at an average BRL of 5.72, providing additional visibility on our BRL-denominated cash flows. Together with the freight strategy discussed by Gustavo, these positions demonstrate a disciplined approach to managing external risks. They reduce cash flow volatility, improve financial visibility and help protect Vale's competitiveness through the cycle. Now let me turn to cash generation. Free cash flow was solid in the third quarter despite the lower EBITDA. Free cash flow totaled $2.2 billion, supported by working capital release and the cash benefits from the hedging program I just discussed. Capital expenditures totaled $1.35 billion in the quarter, reflecting continued capital discipline and ongoing project efficiency initiatives. Based on the year-to-date performance, we expect CapEx to finish 2026 towards the lower end of the $5.4 billion to $5.7 billion guidance range. Overall, solid cash flow generation and disciplined capital allocation provide value with financial flexibility to execute its business plan, pursue capital-efficient growth and continue delivering attractive returns to shareholders. Expanded net debt ended the quarter at $16.4 billion, decreasing by approximately $200 million and remaining comfortably within the $10 billion to $20 billion target range. Importantly, net debt declined even after the payment of $1.7 billion in dividends and interest on capital in September. This demonstrates the strength of Vale's cash generation and balance sheet even in a more challenging market environment. Before handing the call back to Gustavo, I would like to reinforce that we remain focused on strengthening competitiveness across the company. Despite external pressures, our priorities remain unchanged. We continue advancing productivity and efficiency initiatives, improving asset performance and optimizing the cost structure. The freight and hedging strategies provide an additional layer of protection while the ramp-up of lower-cost assets supports a more competitive cost base. Together, these actions help protect margins support consistent cash generation and strengthen Vale's position through the cycle. Gustavo, please.

Thanks, Marcelo. Before we move to the Q&A session, let me go over the key takeaways of today's call. First, we remain on track to deliver our production guidance for the year across our portfolio. highlighting the continuous focus on operational excellence and asset reliability. Second, cost competitiveness remain a clear priority, and we are confident in delivering on all of our 2026 cost guidance. We are also accelerating efficiency initiatives, improving operational performance and a locking further value across the portfolio. At Vale Day, we'll provide further details on our cost efficiency program and the opportunities ahead. Third, we continue to strengthen our business resilience. Our freight and hedging strategies provide meaningful protection in a more volatile market environment, helping preserve competitiveness and free cash flow generation. We also continue to advance our corporate growth strategy. The approval of the Salobo CPF project brings us closer to producing around 500,000 tons of copper in 2030 and on track to double our copper capacity to 700 kilotons by 2035. And finally, we remain disciplined in capital allocation. We continue to balance investments in operations and capital efficiency growth with strong and consistent shareholder returns. Now let's open for the Q&A session. Thank you.

[Operator Instructions] Our first question comes from Mr. Leonardo Correa from BTG.

So a couple of questions on my side. First, maybe moving back to the Serra Norte discussion at Carajas, right? I mean we've been -- I think it was to you mentioned, right, this has been a multiyear process, right, of or grade degradation and depletion. And I think the cave issue, the market has been following for quite some time. Maybe over the past quarters, I think the issue was probably less of a focus, right? And we saw several headlines on a potential new cave decree in Brazil, which I think brought some expectations, some hopes. So just on this theme, right, which probably remains one of the biggest challenges right operationally for the company. What have you been doing over the past, let's say, weeks and months? And what are expectations going forward on how to navigate these challenges at Serra Norte? And if this level of production is low, it would be great to hear you on those factors and maybe [indiscernible]. And the second question, still on iron ore, 2 questions on iron ore, back to iron ore focus. Just on the supply rationalization, right? I think some weeks at Vale came out with a message saying that the company wasn't ready to adjust production levels even with these, let's say, very weak iron ore prices and very high freight rates. I think everyone knows that you guys work quite significantly on third-party purchases, right, which probably economics are reduced. You also have some higher cost mines in your portfolio. So I just wanted to review those if there's any decision on potentially streamlining your iron ore operations and adjusting to this much tougher reality that we've been living in. So those are the 2 questions.

Gustavo here. Thanks for your questions. Let me start with the northern range with Carajas. I'll have Carlos also help me here with what we've been doing there. But at a bigger picture, as you all know, we have 3 systems there. So we have S11D, which is doing very well, should be doing about 90 million tons with the potential to get to 100 million tons as we bring plus 20 online. So this is a system that it's operating and delivering quite strongly. Serra Leste, which we don't talk much, but we see potential for further growth there. We are doing about 8 million tons, should be getting to 10 million tons in the shorter term with the potential to get to 20 million to 30 million tons. So making sure those 2 systems continue to expand is very important for us in the Carajas province, and we are accelerating the development of those 2 systems. On another range, the key challenge, as I pointed out in my prep remarks is the caves related restriction. We continue to be hopeful that this will come. It is -- as you know, it is not only beneficial for mining, for Vale, but for infrastructure investments in Brazil, we see an opportunity for that, for the caves to be more than is. So we continue to monitor that closely. But internally, we work and guide you guys and guide the market independently of having the caves released or published. So we developed plans, assuming the caves who take substantially longer to make sure we continue to have alternatives in our plans, and that's the way we've been working on. But I'll hand over to Carlos to cover what we've been doing there. And then he can send me back for the market comment as well.

So a bit of an update on Serra Norte. First, on Q3, we had, I think, 3 points that are important to share with you. So the first one was reliability issue related to our fleet. So mechanical problems, but most importantly was the startup of 28 new autonomous trucks. So as of today, we have 42 autonomous trucks up and running in Serra Norte. And all of these problems are behind us, everything is back to normal in terms of performance. Second, we also were mining at the bottom of the pit. And therefore, due to some rains that we had during this period, we lost a few days, and now we are back on track. And third, reminding in an area where the contact or they had a high content of manganese and alumina. And therefore, these 2 elements carry with them a lot of clay, which end up clogging our hopes. So all in all, all these 3 factors combined together led us to a lower performance. Today, during October, we are already operating at a 15% higher daily average production at Serra Norte. So we're totally back to normal. Now when we think further ahead, I would say for next year, we should move sideways in Serra Norte as far as volumes are concerned. And by 2028, I think there are 2 important steps that you all should have in mind. The first one is this expansion at Serra Leste where we should move from the current 8 million tons a year to 10 million tons a year and also a new body called, N3. That is expected to produce around 6 million tons per year. And the combination of these factors give us confidence that Serra Norte should be in the near future back to its normal production levels. So I hand back to Gustavo.

Thanks, Carlos. Leo, your second question on the market, you've heard us say our view today is that about 10% of seaborne or 160 million tons is actually losing money and should be over time, shut down or adjusted. We've seen some of that capacity going off the market. In our particular case, in the case of Vale, every single vessel that we sell has some margin, right? So we are very focused on the value of the volume strategy. And I would say that sitting where we are today for next year, we probably have about 5 million tons between third-party and on production at risk that could be eventually adjusted down. But we'll provide more details at Vale Day.

Our next question comes from Mr. Rodolfo De Angele from JPMorgan.

I have -- my 2 questions are on iron ore. The first one, I wanted just to do a follow-up on the discussions on the Northern range. So clearly, there were unique situations in this quarter. But there is a declining trend in Serra Norte, which is I think it's fair to say that it's an order mine and there's an effect of depletion. So can you talk a little bit more when I talk about the additional hematite that we could see in the coming quarters? And is there without a change in KU's legislation, a strategy that could at least maintain production incurring levels? Or what is the status for the future of those operations? And the second question, we were, of course, given where prices are of iron ore and given that especially the stronger currency we saw during the quarter, there is an increased concern on what can be done on the cost side. We had the impression here that there were a few items that surprised us a little bit to the upside. And I just wanted to hear from you, how do you feel about costs? Is there something that can be done just overall, thinking about 2027, I know guidance is going to be given on Vale Day, but just at least a framework for us to take out cost.

So Rodolfo, this is Carlos, on the [indiscernible] the reason our performance improved in October is because we are back on mining on the hematite front. And we expect to remain on this front until the end of the year. That's why we are confident that our guidance projection will be met. So what we saw was type of ore that jeopardize a bit our performance in Q3, but it's back to normality, as I mentioned. And going forward, on the -- I think our main project outside the [indiscernible], the National Forest is the expansion of Serra Leste. So Shales, as I mentioned, is today producing 8 million tons. First step will be to move it to 10 million. And the second step will be taking this capacity to 30 million. So the combination of all these numbers will restore the Northern performance to levels that we expect. So I will hand over to Marcelo to talk about the cost.

Thank you, Carlos. Rodolfo, the cost, we've been working very hard on compensating some of the inflationary effects that we see on the cost. You saw some effects already on with costs at the C1 level, a bit below the previous quarter. For Q4, we expect to see both at the C1 level and all-in level relatively stable costs in relation to this quarter within the guidance range. C1 probably a bit below and all in a bit above, but within the range of the guidance. For 2027, I would prefer to leave this discussion for Vale Day. We have a series of initiatives that we're going to discuss there to further enhance our cost position. The idea is to continue to have counter measures in relation to the inflationary effects that we have. And I would like also to mention that on the CapEx side, we've been working very hard in bringing the number closer to the lower end of our guidance for this year, also working on efficiency on the CapEx as well.

Our next question comes from Mr. Rafael Barcellos from Bradesco BBI.

So first question on iron ore, but a bit connected with capital allocation. So given the pressure that the iron ore market has been facing, I just wanted to understand whether the company could consider any sort of tactical M&A initiatives, I mean we saw recently the announcement of the acquisition of [indiscernible]. So I just wanted to understand there your thoughts on these M&A given the market situation. And second question then moving to base metals. If you could provide any updates on Alemao, which is the most important project here, particularly on the timing could be interesting as well.

Gustavo here. I'll do the first one and then Shaun will add on the [ BBM ] and Alemao. Look, we continue to have very constructive views on iron ore despite the recent challenges we are seeing in the marketplace. If you look in terms of global population growth, industrialization, there's a serious of long-term macro trends that support the iron ore industry from our perspective. So we are certainly looking into opportunities. You've seen us doing some. We've done [indiscernible], but also had done before the acquisition of 15% of Minas-Rio. So those type of transactions that create value and leverage existing infrastructure are certainly something we are excited about, and we are exploring. So stay tuned, hopefully to be able to -- to consider to continue to look for those type of opportunities going forward.

It's Shaun. On your question on Alemao, I mean you've seen the progress on the first 2 projects where we've been able to accelerate them. On Alemao specifically, we're seeing good cooperation with Obama the engineering and the work on the project is well on track. So Obama has completed the review and published the project's environmental impact report. So that is set up the groundwork for the public hearing, which will happen next month that was delayed slightly because of the election. I think the key thing for us is the timing for the we believe, is on track. And we're looking for our FID next year and should be tracked for what we've been targeting, which is 2030 on production.

Our next question comes from Mr. [ Carlos Gala ] from Morgan Stanley.

Yes. Maybe just on copper. The Salobo CPF project, obviously, is coming about a year ahead of schedule. Well, what does that tell us, is it possible maybe to extrapolate that the entire copper pipeline could be pushed forward and come earlier than expected. Or maybe as you just pointed out, Shaun, on ALM is going to be on a case by case, and we should not get way ahead of our skids on that. And then on iron ore, I guess, freight. I just wanted to see if there was a significant or meaningful impact on cost, C1 cash cost or only cash cost in the fourth quarter from the one-off impact of the fleet issue that Carlos alluded to earlier. And on freight, any views given I guess, a visionary hedging strategy that you guys put in place for next year. Any views on how your freight costs might move in 2026 versus -- sorry, 2027 versus 2026.

Carlos, it's Shaun. Your first question, I guess the way that we've approached this is multifold. I mean copper in the sector as a whole, traditionally under supplies or under delivers by about 5%. And I think this year is probably on track for the first annual declines in something like 2017 on the supply side. So for us, it's been multifaceted and this will time to, I think, hopefully, context on your question. First is, operationally, we've had to deliver. You saw we beat guidance last year. We revised cost guidance at the half year positively. And you heard from Gustavo, we're on track for delivery on that. And importantly, at the upper end again. And that's at a time with obviously the significant planned maintenance activities, particularly at Sossego. I think it's noteworthy that Sossego, even with that, we'll be on track to produce more copper this year than they did last year, and that's including the planned maintenance. Vine and his team have really had a record half year despite that being a pretty [indiscernible]. And at Salobo, you saw the record. We're also bringing on autonomous fleet and what we see with the CPF and the acceleration by year, the course particle flotation, that actually 6 million tons that ability to take Salobo up to sort of 250,000 tons a year in the future, plus additional optionality on Salobo's 1 and 2, which is not really in the plan right now. So I give that to you because at the same time [indiscernible], Gustavo, we quadrupled -- more than quadrupled drilling in Para just over the last 18 months or so. There's more to go, and we keep finding more copper. So I think to answer your question, when you consider the exploration, you consider the operating performance that lowers costs and actually enables projects, capital intensities are low, and we're looking at this on a district scale and that ability to be able to see how in each and every one of these, where is the physical constraint, how do we take advantage of these relatively sort of low capital intensity, quite favorable risk opportunities as a portfolio. And a number of these we've accelerated quite significantly and some we pushed up. And so we'll unveil more at Vale. I think the first thing is building the credibility, which hopefully, the market is now starting to appreciate. And I think the real opportunity is not just giving certainty around that sort of 2030, but not just the current time, that sort of 2030 time frame. But I think there's, as I've said before, significant opportunity beyond that. And the market still is really only pricing in essentially flat copper coming out of this business, which is slightly unusual.

On the cost side, I think at the C1 level, as I mentioned before, we expect to have in the fourth quarter something similar to what we had in the third quarter. which is going to lead us to be within the guided cost that we have closer to the upper range. On C1, on all in, we expect to have Q4 closer or closing the year closer to also the high end of the guidance within the guidance. But for the fourth quarter, it's going to be higher than the third quarter. For 2027 on freight, I think if we were to close our position today, hiring what we have not hired both in terms of the daily rates and in terms of fuel at current market prices, this would lead us to something close to the range of 24 to 25. We are not doing that because we think the market will offer better opportunities to close that gap. But just to give you an idea of where we are.

The next question comes from Mr. Christopher LaFemina from Jefferies.

I have 2. The first one is on iron ore and the second one is on buybacks versus M&A. So in your product mix, you've had pretty significant changes over the last few quarters in the mix. And I'm wondering if that is a function of the restriction of Serra Norte or a function of how the market is changing in order to kind of optimize pricing in a weaker market and how we should expect the product mix to look going forward? That's the question on iron ore. And then the question on buybacks versus M&A. I mean looking at what your share price has done as you're constructive on the outlook for iron ore, it seems like the optimal capital allocation strategy might be to buy back your own shares. You don't have to pay a premium to do that. You're not taking a lot of risk around doing that. If you do that at your own discretion. And your stock is very inexpensive and it's a way to kind of grow volumes on a per share basis. So I'm doing -- you mentioned earlier, just looking at opportunities around M&A. How do you weigh that up against the potential to buy back on very inexpensive shares?