On Thursday, Vista Energy (NYSE:VIST) discussed first-quarter financial results during its earnings call. The full transcript is provided below.

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Summary

Vista Energy reported a 67% year-over-year increase in total production, with oil production reaching 117,000 barrels per day.

Total revenues for the first quarter of 2026 were $694 million, a 58% increase from the prior year, driven by higher oil production despite lower oil prices.

Free cash flow was impacted by non-recurring items, but excluding these, free cash flow would have been nearly neutral.

The company tied in 23 new wells, with significant productivity contributing to increased production forecasts.

Vista Energy updated its annual guidance, increasing production expectations and projecting adjusted EBITDA to benefit from higher oil prices.

Management emphasized the company's strategy to use additional cash flows from higher oil prices for deleveraging and maintaining a robust cash position.

The company expects to continue benefiting from favorable oil price dynamics, with updated financial metrics reflecting potential scenarios at varying Brent prices.

Full Transcript

OPERATOR

Thank you for standing by. Welcome to Vista's first quarter 2026 earnings webcast conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, we'll open up for questions. To ask a question during the session you need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised to withdraw your question, please press Star one one again. Please be advised that today's call is being recorded and I'd like to hand it over to our first speaker, Alejandro Chernikov, Vista Strategic Planning and Investor Relations Officer. Please go ahead.

Alejandro Chernikov (Strategic Planning and Investor Relations Officer)

Thanks. Good morning everyone. We are happy to welcome you to Vista's first quarter 2026 results conference call. I am here with Miguel Gallucho, Vista's chairman and CEO Pablo Verapinto, Vista CFO Juan Garobi, Vista's CTO and Matthias Weisel, Vista COO. Before we begin, I would like to draw your attention to our cautionary statement on slide 2. Please be advised that our remarks today, including the answers to your questions, may include forward looking statements. These forward looking statements are subject to risks and uncertainties that could cause actual results to be materially different from the expectations contemplated by these remarks. Our financial figures are stated in US Dollars and in accordance with International Financial Reporting Standards ifrs. However, during this conference call we may discuss certain non IFRS financial measures such as adjusted EBITDA and Adjusted Net Income. Reconciliations of these measures to the closest IFRS measure can be found in the earnings release that we issued yesterday. Please check our website for further information. Our company is Asociación Anónima Bursátil de Capital Variable, organized under the laws of Mexico, registered in the Bolsa Mexicana de Valores and the New York Stock Exchange. Our tickers are VISTA in the Bolsa Mexicana de Valores and VIST in the New York Stock Exchange. I will now turn the call over to Miguel. Thanks Ale Good morning and welcome to this earning call. During the first quarter of 2026 we made solid progress in our annual work program on the back of a robust new well productivity. Total production was 135,000 boes per day, up 67% year over year. Oil production was 117,000 barrels per day, an increase of 68% vis a vis the previous year. Total revenues during the quarter were $694 million, 58% above the same quarter of last year. Lifting cost was $4.30 per boe, 8% below year over year. Capital expenditure was $391 million driven by a strong progress in new well activity during any quarter. Adjusted EBITDA was $451 million, an interannual increase of 64%. Net income was $108 million, leading to earnings per share of $1 during the quarter. Free cash flow was minus $341 million, impacted by $331 million of non recurring items of which $206 million corresponded to the initiation of BESA operations on a delivery basis. Without these non recurring items, free cash flow in the quarter would have been almost neutral. Finally, our net leveraging ratio at quarter end was 1.7 times adjusted EBITDA. During Q1 2026 we tie in 23 wells, 12 in Baja del Palo Este, four in Baja del Palo Este and seven net wells in La Marga Chica. This represents very good progress compared to our guidance of 80 to 90 wells for the full year. Solid well productivity of the tying wells drove a material production increase from 127.4 thousand boes per day in January to 143.2 thousand boes per day in March. Total production during Q1 averaged 134.7 thousand boes per day. This represents an interannual increase of 67% reflecting organic growth and our largest scale after the acquisition of La Marga Chica. Oil production was 116.7 thousand barrels per day, 68% higher year over year. Gas production increased 62% on an interannual basis in Q1 2026. Total revenues were $694 million, 58% above the previous year driven by a solid increase in oil production which more than offset lower oil prices. Oil exports more than doubled year over year reaching 7.2 million barrels in the quarter representing 67% of our total sales volume. Realized oil price in Q1 was $60.10 per barrel on average, down 12% on interannual basis and up 2% on a sequential basis in both cases driven by Brent, we sold 100% of oil volumes at equipment parity prices both domestically and internationally. Higher oil prices owing to work in Middle east has a minor impact in Q1 revenues as we have mostly locked in March prices when the conflict started in February 28th. We expect higher oil prices to significantly boost adjusted EBITDA and free cash flow during Q2 2026 and onwards. In Q4 lifting cost was $4.30 per boe, 8% below the same quarter of last year reflecting our low cost asset base fixed cost dilution. As we continue to gain scale selling expenses were $3.80 per boe, down 41% on interannual basis, mainly driven by the elimination of oil tracking as of then of Q1 2025. Adjusted EBITDA during the quarter was $451 million, 64% higher interannually, mainly driven by the consolidation of 50% working interest in La Marga Chica and organic production growth in our core development hub which more than offset lower oil prices. On a sequential basis. Adjusted EBITDA increased 2% driven by higher realized oil prices. Adjusted EBITDA margin was 65% up 3 percentage points compared to the same quarter of last year driven by lower export duties, selling expenses and lifting costs which offset lower oil prices. In Q1 2026. Cash flow from operating activities was $86 million mostly impacted by two one off negative items. First, a working capital impact of $206 million as a consequence of of ramping up our trading operation which move a large part of our export from FOB to deliver basis and at a higher Brent price. Second, an outflow of $46 million corresponding to a tax payment in Mexico which has been booked in previous quarters. Cash flow used in investing activities was $427 million reflecting accrued CapEx of $391 million, a decrease in CapEx related working capital of $53 million and the $80 million deposit related to the Equinor acquisition. As a result, free cash flow was minus $341 million during the quarter net of the working capital one off impacts and the equinor deposit. Recurring free cash flow was minus $10 million during the quarter. These impacts were expected and do not change our positive free cash flow forecast for the year including payment to Equinor. Additionally, as we will show in the following slide, free cash flow is forecast to be materially higher than our original expectations. Cash flow from financing activities were $118 million driven by proceeds from borrowings for $590 million, partially offset by the repayment of borrowings for 130 million and the interest payments of $27 million. Finally, our cash position remains very strong standing at $615 million. At the end of the quarter our net leveraging ratio stood at 1.7 times adjusted EBITDA. Today we are updating our annual guidance to reflect the impact of robust production performance as well as a more contracted view of oil prices based on the solid progress of our new well campaign with 23 tying to date and robust productivity, we are increasing our full year production guidance from 140,000 to 143,000 boes per day, more than a million barrels of oil equivalent for the year. Importantly, our CAPEX guidance remains unchanged. We forecast to spend between 1.5 and $1.6 billion of capex in 2026. Considering the current oil price volatility, we are showing different scenarios for Q2 through Q4 75, 85 and $95 Brent. Based on this new production and oil price assumptions, we are forecasting a material increase in our financial Metrics. In the $85 per barrel scenario, our adjusted EBITDA guidance increased to $2.6 billion, an improvement of $700 billion from our previous guidance. Assuming $95 Brent for Q2 through Q4, adjusted EBITDA will be $2.9 billion and at $75 Brent it will be $2.3 billion. Our 2026 free cash flow guidance increase to $700 million. Assuming our best case of $85 Brent in Q2 through Q4, this is half a billion dollars more than in the original guidance. Assuming $75 for the same period, free cash flow for the year will be $400 million, whereas at $95 it will be $1 billion of free cash flow for the year. This updated guidance does not reflect the closing of Equinox Argentina acquisition. Last week we completed all the conditions precedent to close the transaction. We expect closing to occur in early May and guidance will be updated probably after on a preliminary basis. After consolidating the acquired Asset, we forecast 2026 adjusted EBITDA guidance to increase to $3 billion assuming $85 Brent for Q2 to Q4. To conclude this call and before we move to Q and A, I will make some closing remarks. Solid execution of our annual work program delivered material production growth during the quarter Based on our production performance and a more contracted view on oil prices, we have updated our 2023 guidance which now reflects more production as well as a material improvement to adjusted EBITDA and free cash flow projections. Our new scale following the execution of two important MA transactions that add up to our 70,000 boes per day place us in an excellent position to benefit from this positive oil pricing cycle. We expect a significant boost to adjusted EBITDA and free cash flow as of Q2 2026. This additional cash generation will allow us to strengthen our balance sheet by significantly reducing our leverage ratios during 2026. Emerging from this price cycle as a strong and more flexible company. Before we move to Q and A, I would like to thank all our employees for their hard work during the Quarter operator. We can now move to Q and A.

OPERATOR

Thank you. And as a reminder to ask a question, you need to press Star 11 on your telephone and wait for a name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q and A roster. One moment for our first question. Our first question will come from line. Leonardo Marcondes from Bank of America. Your line is open.

Leonardo Marcondes (Equity Analyst)

Hi everyone. Thank you for picking my questions. So my question here is regarding the revision of the guidance for production. Could you walk us through the main drivers behind the increase in this year's production guidance? Given that CAPEX remains unchanged, what is effectively enabling this uplift? Should we attribute it mainly due to better than expected, well, productivity? Thank you very much. Hi, Leonardo, thanks for the question. Yeah, look, I think there's two things. One, and the more important is that we feel super confident due to the results of the 23 wells that we connected in Q1. All of them have very robust productivity. So we decide basically that we will update the guidance, as you saw, from 140 to 143 barrel of oil equivalent per day. That basically add 1 million barrels during 2026. If you go and try to understand a bit the quarter breakdown, I think you have to expect that Q2 will be around the production level that we are recording now in March. And then progressively you see increases in Q3 and in Q4 that will lead us to a total of 143,000 barrels per day average for the year. And as I mentioned in the presentation, not include the consolidation of equinor assets. Thanks for the question. Thank you.

OPERATOR

One moment for our next question. Our next question comes from Guillerme Martins from Goldman Sachs. Your line is open.

Guillerme Martins (Equity Analyst)

Thank you. Thank you for taking my question. I have a quick one on capital allocation. I understood you guys have maintained your CAPEX guidance for the year despite the scenario of higher oil prices since your last investor day last year. Year. Right. Having said this, what should we think in terms of capital allocation this year? Miguel, you mentioned the company could use this additional cash flow from higher oil prices to pay down debt. Right. What is the target net debt? EBITDA we should think of. Thank you. Thank you, German for the question. And the answer is in line, what you mentioned. You should go back and we should go back to the capital allocation framework that we've been basically commenting for the last few years. We use our balance sheet to close 70,000 barrels of oil per day. In acquisitions, when you take in consideration the acquisition of Petronas and equinor now that we enter in a higher oil prices scenario and that we almost doubled the production in the last year, we believe that we should deleverage using that momentum that we are leaving and regain financial flexibility the one that we have prior to the acquisition. That means for us going back to around the 1 net leverage ratio we set by year end. Additionally, we said on Tuesday we announced that the shareholders approved the extension of the share buyback plan for $150 million for 2026. So you also should assume that we will use the cash during this year to complete that acquisition of the buyback. So that is pretty much how you should think of the year. So you correct. I mean our priority now will be deleveraging. Understood. Thank you. You're welcome.

OPERATOR

And our next question will come from line. Bruno Montanari from Morgan Stanley, your line is open.

Bruno Montanari (Equity Analyst)

Good afternoon everyone. Thanks for taking my question. I wanted to explore a little bit more the pricing situation. Miguel, you mentioned that you were unable to capture the full benefits in the first quarter because you closed the prices ahead of the March rally. So can you comment on what you have been able to secure now in the beginning of Q2 and if there is any commercial strategy change that could allow you to capture more spot prices without eventually fixing the prices one month ahead? Thank you very much. Thank you Bruno for the question. A lot of noise in the line, but I think I managed to catch the question. So first I would like to say that we are not changing our commercial strategy. You are going to see that we capture 100% of the higher oil prices starting in Q2. There is always part of the oil sales, as you know of the next month, which have locked in in advance. We've been doing that for many years. The rationale is always being working capital management. As we said in the presentation, we sold essentially all the March volume before the conflict in Middle east started. And the price of such a sale was locked in previous to the ban. As of Today, less than third of Q2 production is priced at an average price of around $90 Brent while the rest of the production will continue to price at the current and future price levels. So summarizing, I mean for that we are exposed to full Brent volatility for the rest of the volume that we have not yet closed. So basically no change in the strategy and also no change in the practice of locking in one man ahead that we are selling. Very clear. Thank you very much. You're very welcome.

OPERATOR

Thank you. And our next question comes to the line of Daniel Guardiola from BTG Pactual. Your line is open.

Daniel Guardiola (Equity Analyst)

Hi, good morning, Miguel and Tim and thanks for the presentation. I have a question on cost inflation, especially considering the current environment of higher prices. I wanted to ask if you're seeing any early signs of service cost inflation in rigs, frackers, logistics, sand, etc. And how should we think about the balance going forward between pricing tailwinds and potential cost pressure and extent you believe your efficiency gains can somehow offset this potential inflation? So that would be my question. Thanks Daniel, for the question. A very good question. So first of all, probably the best things for me to say and to clarify that we have not have any tariff change. Okay. And we will not allow any tariff change. Now, the existing contract, as some of them, I would say many of them are just using gasoline prices. So we are seeing some tariff adjustment on those cases that we could consider inflation. We are also seeing some impact on the peso component due to the flood effects. Now saying all that, and as you mentioned, we have a very solid cost reduction plan in place. So the project that we are executing will allow us to offset most of those effects. So we are on track and we are basically confirming our guidance of $11.7 million for drilling and completion cost per well and also the $4.30 that we mentioned in terms of lifting costs. So we are super confident. Yes, we are seeing some some pressure or assessment on the contract due to the price of gasoline, but the plan that we have in place will allow us to offset that small impact. Thank you, Miguel.

OPERATOR

Thank you. And our next question will come from the line of Alejandro Demicheles from Jefferies. Your line is open.

Alejandro Demicheles

Yes, good morning. Thank you very much for taking my question. Miguel, you just talked about your hedging strategy and how you're dealing with the commercial part. Maybe you can talk about how the new trading vehicle should be operating, how much risk it should be taking and how can that kind of, you know, continue to improve your commercial cost? Thank you Ale, for the question. Yes, so first, I mean the reason why we create a trading company, the main reason, and we explained it before, is to access to new market that basically will generate more demand from the Minanito oil. And also we create an additional margins since we are selling our own oil on delivering basis. I will say, I mean when we look at what we have done, we are achieving both. We are reaching new markets, as an example, Malaysia, Australia, Thailand, Singapore, that we didn't reach before. We are reaching out and we are also, we are also capturing additional margins on the 25 million barrels that basically expect to trade during 2026. So we are not a trading company. So basic goal is not to take any trading risk, that they only take position to cover the volume that we sold and usually also only for the following month until the oil is delivery. So I mean, I think it's super important to clarify because we did BESA for that reason and we should not look at BESA BESA as a trading company. And of course, I mean the two objectives that we put as in line of the creation of besa, we are achieving it. That's very clear. Thank you. You're welcome.

OPERATOR

Thank you. And our next question will come from the line of Enrique Cuna from JP Morgan. Your line is open.

Enrique Cuna

Hi, good morning. Thanks for taking our question here. We have a question on working capital. Could you provide more color on the impact it had on free cash flow in the quarter? Specifically in the report you mentioned around 200 million related to Vesa, which was not included in our estimates here. So could you elaborate on the contract effects from Vesa and what should we expect going forward? Yes, Enrique, of course. I mean, happy to elaborate on that. So basically the ramp up of base operations generate two one offs as we explained. One is related to the fact that base has sold most of its production on a delivery basis in a type of FOB. That was what we were doing before, which is that is what we were doing with all the trading companies that we were using before the creation of besa. This extended the revenue collection cycle by the transit of the ship. So just let me give you an example. An oil vessel that take around 25 to go from Puerto Rosales to West Coast. In US also now we are seeing more demand from the Asian buyers. But also we take that transit time much, much more time. I would say probably 40 days of transit time. And that is basically the change that we have what we did before, what we have today. This is the first one of the second effect is related to BASA Short term we consist on buying physical oil from Vista Argentina and selling a forward contract at the same price to lock in that revenue. So for example, in the month of March, with significant price volatility, our EBITDA reflects the realization of price of $60. But invoice to be collected by VESA reflect the market price that was between 90 and $100, leading to an increase in working capital. So that are the two effects that we have. One is related to the realization of the price and the short hedge that BESA takes take every time they sell. And the other one is the change of us that today we are selling on delivery basis instead of FOB that we were doing before. Hope that answered your question, Henrique.

OPERATOR

Thank you. Our next question comes from Tasso Os Cancelos from ubs. Your line is open.

Tasso Os Cancelos (Equity Analyst)

Hi Miguel. Hi Ali. Miguel, you already mentioned a little bit about your pricing, the discount or premium to brand prices, Medanito and so on. But can you also comment on that agreement that you had with the local refineries in Argentina in terms of setting some kind of limit on pricing when oil prices are too high, but also some kind of protection when it moves to lower indeterminate periods. That's good for us to understand how we should think about this agreement. Looking forward.

OPERATOR

Thank you.

Miguel Gallucho (Chairman and CEO)

Kaitasso. Thank you very much for the question. So. So first, prices in the domestic market continue to fully reflect parity. And I think that is super important to understand. There was no agreement to fix prices. Now what we did was to discuss an agreement to mitigate the financial impact of raising crude oil prices resulting from the conflict that we have in Middle East. So that agreement was that the buyer will recognize full export parity but paying up to $95 to $100 Brent for April and May. So any positive difference between the price that they paid and the international market price will be deferred and paid no later than July 31st. This agreement does not have any material impact on our cash flow, as you know. And it's only applied to a third of our local sale equivalent to 15,000 barrels of oil per day or around 10% of our total sale. The rest of the volume continued to be priced and paid at export parity. So that is what we did I think was very smart. It took the consensus of very few people. And again we are continuing receiving and reflecting full parity in the local market. That's very clear. Thank you Miguel.

OPERATOR

Thank you. And our next question will come from the line of Andres Cardona from Citi. Your line is open.

Andres Cardona (Equity Analyst)

Good morning Yale and team. The province of Buenos Aires of Neuquén, Sorry. Is considering to a new round of some 15 blocks as per what I see on the media. Could you share your thoughts about this opportunity timing? If the assets are located in a relatively core acreage or it's more type of frontier. Any color that you could share is appreciated. Thank you Andres. Yes, I see. Look at. I mean very good timing of the province to put this, to put this out. We always going to look into anything that is on the basin that we can participate nevertheless, I mean when you look at what basically they are offering. I would say there's a lot of border areas of the basin and gas. Okay. As you know, our strategy is very concentrated in oil. There could be some oil blocks that. We will look at it, but I mean very early to tell you if we will do anything, but we believe very good initiative from the province. Miguel, do these blocks have the same royalties scheme or are they introducing an incremental rate? Could you repeat? Sorry, yes. If the new blocks may have the same royalties rate that the traditional shale acreage has in. Yes, Andres, I understand it's the same. Okay. And to be honest, I cannot give you detail. We will look how the process evolved, but there should not be any change on the. On the scheme.

OPERATOR

Thank you. One moment for our next question. Our next question comes from Michael Furrow from Pickering Energy Partners. Your line is open.

Michael Furrow (Equity Analyst)

Hello and thanks for taking our question. Look, we were just hoping to get a quick update regarding the Equinor deal. I know it's still a bit early for the company to issue pro forma guidance until that deal closes in early May, but what do you see as a good run rate for annual net turning lines on the Bandurria Sur assets and what could the associated capex look like? Yes, Michael, thank you for the question. So as we mentioned, we now received pending approval that we have from the Chilean antitrust authorities. So all conditions present basically has been met and we are planning to close this deal early May. Regarding the CapEx, it will be around 200 million. And also assuming that the deal closes in May, the consolidation will be as 1st of May. The assets are producing around 20,000 barrels per day at Vista working interest. And I think there could be a little upside on this on the coming quarter with that production assumption. You should assume that we generate around $3 billion of EBITDA. Thank you. You're welcome.

OPERATOR

And our next question will come from the line of George Costout from Latin Securities. Your line is open.

George Costout (Equity Analyst)

Good afternoon, Miguel, and thank you for taking my question. Clearly it's a very volatile oil environment, but I was wondering if you could comment on the Medanito discount to Brent. Are you seeing that move? A lot? And how should we think about the differential in two Q and beyond? Yeah, essential for the question and we're happy with this one. So, yes, we have seen significantly stronger Metanito differentials. This is driven by the supply tightness of Asia. And this also contributes to the higher realization price that you saw in Q2. We saw a low volatility in the last month from Basically minus three prior to the Middle east event to a range of plus six to nine. That was more recently. We believe that this trend will continue depending on how the oil market dynamic unfold. I mean there's still a lot of uncertainty there. But I will say you should assume that we will continue selling on a premium price, at least for the near future. Thank you very nk. Thank you Jor.

OPERATOR

And our next question will come from the line of Ignacio Sabelli from Ital bba. Your line is open.

Ignacio Sabelli (Equity Analyst)

Yes. Hi everyone. Congrats on the results and thanks for taking my question. I would like to understand how the new scope of the benefits you foresee are the plans? Are there any block developments that could be targeted here? And maybe understand what are the time frames? When are you going to submit any project? And also until when can you submit any projects?

Miguel Gallucho (Chairman and CEO)

Thanks. Yes, thank you Ignacio for the question. Yes, we are currently preparing the documentation to apply for RIGI for two our future development blocks. One is Aguilar Mora and the other one is Bandura Norte. After closing the Kinor deal, we will have also better understanding of Aguada del Toro, which we believe also could apply to the RIGI. But the application of that in particular has to be submitted by his operator at YPF. But we are quite confident that also that one will apply. Regarding your second question on timing, we plan to submit the documentation by the end of Q2. The Minister of Energy then have to analyze all the information before the approval. Based on what we've seen is happening with others companies that have asked for the RIGI that will take probably a few months. I would like to add that the impact of RIGI is very positive for what we saw on the evaluation that the two blocks that we present it creates fiscal incentives and also move us to accelerate the capex of investment in those blocks that otherwise will be at the tail of our plan. So very good initiative for the government on this one and it will help to bring that block from the north bit closer in our plan. Awesome, thanks. Very clear.

Orianna Cavol (Equity Analyst)

Thank you. Our next question will come from the line of Orianna Cavol from Balance your lines open. Hi, thanks for taking that question. I have a quick one regarding the non-operated assets. Specifically how do you see the contribution from areas evolving through the year? Thank you. Thank you Orianna for the question. Yeah, look at La Marga Chica is performing quite well when we acquire the block. If you remember we were producing around 38,000 barrel oil per day. This is Vista working. Interesting. And in Q1 we produce around 48 barrel of oil per day. So a 25% increase for the rest of the year. I would say we are expecting a flattish forecast or even a slightly growth.

Miguel Gallucho (Chairman and CEO)

Okay. But yes, happy with acquisition, happy with the performance, happy with the relationship that we have today with ypf, the operational level. Everything is working pretty well. Thank you. You're welcome.

OPERATOR

Thank you. And our next question will come from Matthias Catteruzzi from adcap. Your line is open.

Matthias Catteruzzi (Equity Analyst)

Hello. Good day, Miguel and management team. My question is as follows. How would the 2026 EBITDA and free cash flow guidance of 105 or $115 per barrel in the new guidance framework?

Miguel Gallucho (Chairman and CEO)

Thanks, Matthias. I like this question. So I think as a rule of thumb, the way you got it, if you consider that every $10 increase between Q2 and Q4, you have to think that we will capture around $275 million of EBITDA and $250 million of free cash flow. So back to your numbers. I mean, we show early $95, Brent. For Q2 to Q4, EBITDA will be estimated around 2.9 in 2026. And at 115, that same EBITDA will be 3.2, a $115 Brent. It will be almost $3.5 billion. In the case of free cash flow, a $95 Bren scenario, the free cash flow will be around $1 billion for the full year. 105, 1.25 and 115. $1.5 billion of free cash flow during the year. Same for the question. Thanks, Steve. Thank you. I'm not showing any further questions at this time. I will now turn the call back over to Miguel for any closing remarks. So guys, thank you very much for the participation for the good question. Very positive about what is coming up. We are starting the year from the operational point of view and the production point of view in good grounds and very confident for Q3, Q4 and Q4. It should be an excellent year for us. Thank you very much for the continued support and have a good day.

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