Carvana (CVNA) Q1 2025 Earnings Call May 07, 2025 05:30 PM ET Speaker0 afternoon, ladies and gentlemen, and thank you for joining us on Carvana's first quarter twenty twenty five earnings conference call. Please note that this call will be simultaneously webcast on the Investor Relations section of the company's corporate website at investors.carvana.com. The first quarter shareholder letter is also posted on the IR website. Additionally, we posted a set of supplemental financial tables for Q1, which can be ...

Financial Data and Key Metrics Changes - Total net sales for Q1 2025 were $42.6 million, down from $77.4 million in the same quarter last year, primarily due to minimal purchases by distributors in China [26][27] - Adjusted EBITDA for Q1 2025 was a loss of $26.4 million compared to earnings of $5.3 million in the prior year, reflecting a $33 million decrease in gross profit [27][28] - Gross margin for Q1 2025 was 65.8%, down from 78.9% year-over-year, impacted by higher manufacturing costs and increased inventory reserves [29][30] Business Line Data and Key Metrics Changes - Sales in China were $389,000 in Q1 2025, a significant drop from $38.5 million in the same quarter last year, as distributors consumed existing inventory [14][26] - Net sales excluding China were $42.2 million, representing a 9% growth year-over-year, driven by growth in APAC sales outside China [26][28] - The company expects to recognize $27.5 million in sales associated with a prior order in Q3 2025, which will help normalize reported sales in China [14][28] Market Data and Key Metrics Changes - The demand for ICL procedures in China is improving, with expectations for a strong second half of 2025 as inventory levels are managed [10][13] - The company is seeing growth in APAC markets outside China, with Japan, South Korea, and India contributing positively to sales performance [28][29] - The global prevalence of myopia is increasing, which is expected to drive demand for lens-based vision correction solutions [7][41] Company Strategy and Development Direction - The company aims to return to sustainable growth by addressing short-term tactical issues and focusing on strategic growth initiatives [8][10] - A new management structure has been implemented to enhance operational efficiency and drive shareholder value [9][10] - The company is expanding its manufacturing capabilities in Switzerland to mitigate tariff impacts and support future growth [19][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in China and the overall market for ICL procedures, despite global economic uncertainties [33][105] - The company is committed to transparency and aims to build trust with investors by delivering consistent results [60][68] - Management believes that the unique proprietary technology and first-mover advantage will sustain competitive advantages in the market [34][35] Other Important Information - The company has withdrawn its previous guidance due to economic uncertainty and evolving tariff situations, but remains optimistic about future performance [33][60] - The restructuring efforts are expected to continue into Q2, with additional charges anticipated as the company rightsizes its operations [27][28] - The company ended Q1 2025 with $222.8 million in cash and equivalents, with expectations to maintain cash above $140 million through the year [31][32] Q&A Session Summary Question: Can you elaborate on ICL sellout in Q1 2025 and trends for Q2? - Management noted that sellout rates were consistent across January, February, and March, and they are pleased with the pace of sales [46][47] Question: What is the competitive impact of Ibrite on ICL? - Management indicated that competition has been minimal so far, and they welcome it as it raises awareness of alternatives to glasses and contacts [48][50] Question: How does the consignment inventory strategy mitigate tariff impacts? - Management explained that consignment inventory is owned by the company and is positioned with distributors in China to avoid tariffs [17][71] Question: What is the pricing strategy for EVO ICL? - Management stated that there are no major changes in pricing strategy, emphasizing the high value of the EVO ICL to patients and surgeons [76][78] Question: How does the new leadership in China inform the broader strategy? - Management highlighted the importance of having experienced leadership in China to capitalize on opportunities and address challenges effectively [101][102]

Financial Data and Key Metrics Changes - Total net sales for Q1 2025 were $42.6 million, down from $77.4 million in the same quarter last year, primarily due to minimal purchases by distributors in China [24] - Adjusted EBITDA for Q1 2025 was a loss of $26.4 million compared to earnings of $5.3 million in the prior year, reflecting a $33 million decrease in gross profit [26] - Gross margin for Q1 2025 was 65.8%, down from 78.9% in the year-ago quarter, impacted by higher manufacturing costs and increased inventory reserves [28] Business Line Data and Key Metrics Changes - China sales were reported at $389,000 for Q1 2025, a significant drop from $38.5 million in the same quarter last year, as distributors consumed existing inventory [14][24] - Net sales excluding China were $42.2 million, representing a 9% growth year-over-year, driven by growth in APAC sales outside China [27] - The company expects to recognize $27.5 million in sales associated with a prior order in Q3 2025, which was not recognized upon shipment [14] Market Data and Key Metrics Changes - The company noted an improvement in ICL procedures in China, with end market demand strengthening despite the low reported sales [14] - In the Americas, sales growth was 9% in Q1 2025, while EMEA saw a 10% increase, and APAC sales excluding China were up 8% [27] - The prevalence of myopia is increasing globally, which is expected to drive demand for lens-based vision correction solutions [39] Company Strategy and Development Direction - The company aims to return to sustainable growth by addressing short-term tactical issues and focusing on strategic growth initiatives [7][8] - A new management structure has been implemented to enhance efficiency, including the promotion of key executives and the introduction of a Chief Development Officer [9][10] - The company is expanding its manufacturing capabilities in Switzerland to mitigate tariff impacts and increase production capacity [20][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in China and the potential for improved sales in the second half of 2025 [32][102] - The company is committed to transparency and aims to build trust with investors by delivering solid financial results [66] - Management acknowledged the challenges posed by global economic uncertainty but remains confident in the long-term growth potential of the EVO ICL technology [32][39] Other Important Information - The company has withdrawn its previous guidance due to tariff uncertainties and economic conditions but remains optimistic about achieving growth targets [31][60] - The restructuring efforts have resulted in significant charges, but the company believes these actions will lead to improved long-term profitability [25][30] Q&A Session Summary Question: Can you elaborate on ICL sellout in Q1 2025 and trends for Q2? - Management noted that end market sales were consistent across January, February, and March, and they are pleased with the pace of recovery [46] Question: What is the competitive impact of Ibrite on ICL? - Management indicated that competition has been minimal so far, and they welcome it as it raises awareness of surgical options [49][50] Question: How does the company view the current economic trends compared to previous guidance? - Management acknowledged global uncertainty but expressed confidence in hitting revised targets based on improving trends in China [57][60] Question: Can you quantify the consignment inventory in China? - Management stated they have enough inventory to mitigate tariff impacts through early 2026 and are working to align inventory levels with contractual obligations [71][92] Question: What is the pricing strategy for EVO ICL in China and the U.S.? - Management confirmed no major changes in pricing strategy, emphasizing the high value of EVO ICL to patients and surgeons [78]

Cerence (CRNC) Q2 2025 Earnings Call May 07, 2025 05:00 PM ET Company Participants Kate Hickman - VP - Corporate Communications & Investor RelationsBrian Krzanich - President & CEOTony Rodriquez - EVP & CFONick Doyle - Vice President Conference Call Participants Daniel Hibshman - Research AnalystMark Delaney - AnalystItay Michaeli - Equity Analyst Kate Hickman Hello, everyone, and welcome to Cerence's second quarter twenty twenty five conference call. I'm Kate Hickman, VP of corporate communications and inv ...

Financial Data and Key Metrics Changes - The company reported strong growth in net revenue, maintaining the rapid pace achieved in 2024, with income from operations growing faster than revenue, particularly in Argentina [4][5][23] - Monthly active users reached 64 million, growing over 30% year on year [7] - EBIT margin improved by 70 basis points year on year, from 12.2% to 12.9% [96] Business Line Data and Key Metrics Changes - In Argentina, GMV growth was 126% year on year, with items sold increasing by 52% [20][23] - The supermarket category grew 65% year on year, outpacing other categories [31] - The fintech segment continues to expand, with a focus on democratizing financial services and increasing user engagement [7][11] Market Data and Key Metrics Changes - Brand preference metrics for the marketplace reached all-time highs in Brazil, Mexico, Argentina, and Chile [5] - The credit book in Argentina grew significantly, with assets under management increasing by 69% year on year [23][56] Company Strategy and Development Direction - The company aims to enhance its value proposition through strategic investments in both commerce and fintech, focusing on long-term growth opportunities in Latin America [5][4] - The rebranding of MercadoPago to align with the company's ecosystem is intended to strengthen user relationships and improve brand recognition [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the stabilization of the macroeconomic environment in Argentina, which has positively impacted credit performance and profitability [22][24] - The company is cautious about competition but sees opportunities arising from new entrants in the e-commerce space, which could bring new users online [116][118] Other Important Information - The company is focused on logistics as a key enabler for growth, with ongoing investments in fulfillment centers [44][45] - The fintech sector is expected to continue growing, with a strong emphasis on user retention and engagement through innovative financial products [59][90] Q&A Session Summary Question: Sustainability of trends in Argentina - Management noted strong growth in Argentina driven by recovery in demand and market share gains, with a focus on enhancing the value proposition [20][24] Question: Growth drivers in 1P GMV - The company highlighted strong performance across various categories, with supermarket growth being particularly notable [30][31] Question: Contribution margin evolution in Argentina - Management attributed the high contribution margin to growth in commerce and fintech, along with improved efficiencies [50][51] Question: Asset quality trends - The company reported strong asset quality in Argentina, with low delinquencies and a growing credit portfolio [56][57] Question: Strategy regarding deposits in Brazil - The focus is on marketing and positioning as a leading digital bank, with a recent campaign to enhance brand awareness [59][62] Question: Credit business appetite and funding strategy - Management confirmed a healthy credit portfolio with no deterioration, while also being cautious about risk [65][69] Question: Impact of competition from TikTok and other platforms - The company is monitoring new entrants closely but believes they may bring new users to the online marketplace [116][118]

Financial Data and Key Metrics Changes - In Q4, the company achieved record revenue exceeding $1,000,000,000 for the first time, with full-year revenue surpassing $4,000,000,000 and royalty revenue exceeding $2,000,000,000 [7][8] - Total revenue for Q4 was $1,240,000,000, with royalty revenue growing 18% year-on-year to a record $607,000,000 [13][14] - Licensing revenue increased over 50% year-on-year to a record $634,000,000, driven by demand for ARMv9 technology [14][15] Business Line Data and Key Metrics Changes - Smartphone royalties increased by 30% year-on-year, significantly outpacing the 2% growth in shipments, indicating a rising value per device [10][14] - The company launched its first ARMv9 Edge AI platform, which has been adopted by major players in the industry [10][11] - Custom silicon demand is driving both licensing and royalty growth, with significant contributions from data centers, automotive, smartphones, and IoT [8][10] Market Data and Key Metrics Changes - The company expects up to 50% of new server chips at hyperscalers to be ARM-based this year, reflecting strong momentum in the data center market [8][62] - The automotive sector has shown strong double-digit growth, with ARM gaining market share in advanced driver-assistance systems (ADAS) [60] - IoT and embedded markets have seen some slowness, but growth is expected to continue, albeit at a slower pace compared to other sectors [61] Company Strategy and Development Direction - The company is focusing on customization of silicon to differentiate performance and unlock unique features, particularly in automotive and hyperscaler markets [42][44] - There is a strategic shift towards direct relationships with OEMs, which may impact traditional fabless semiconductor companies [42][45] - The company plans to aggressively invest in R&D to support customer needs and capitalize on the growing demand for AI technologies [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in healthy growth despite macroeconomic uncertainties, citing strong visibility into customer design pipelines and contracted royalty rates [20][21] - The company anticipates limited direct impact from tariffs on royalty and licensing revenues, with potential indirect effects on end demand [16][26] - Future revenue growth is expected to enable increased investment in next-generation technologies [19][20] Other Important Information - The company signed a significant multi-year agreement with the Malaysian government to develop an ARM-based AI ecosystem, indicating potential for future sovereign-level licensing deals [66][68] - The company is seeing strong demand for its compute subsystems, which are now shipping in volume, boosting both mobile and cloud royalty revenue [11][12] Q&A Session Summary Question: Impact of tariffs on revenue - Management clarified that tariffs do not directly impact costs, and any revenue impact would be indirect, primarily affecting demand elasticity [23][25] Question: ARMv9 adoption rate - The adoption rate for ARMv9 has increased to over 30%, driven by custom silicon solutions [32][33] Question: Strategic direction towards OEMs - Management confirmed a trend towards direct relationships with OEMs for customized silicon, which may affect traditional semiconductor companies [42][45] Question: Licensing performance in Q4 - Licensing revenue growth was strong, with a year-on-year increase of 53%, driven by demand for CSS and AI technologies [76][80] Question: Royalty growth by end market - Management indicated strong growth in smartphones and infrastructure, with automotive also showing double-digit growth, while IoT is recovering slowly [60][61] Question: Future of chiplet technology - Management acknowledged the importance of chiplet technology and its integration with ARM's architecture, emphasizing its role in custom silicon solutions [92][95]

Financial Data and Key Metrics Changes - CSG generated $299 million in revenue for Q1 2025, a slight increase from $295 million in the same period last year, marking the highest first-quarter revenue in the company's history [22] - Non-GAAP operating income for Q1 2025 was $51 million, resulting in a non-GAAP adjusted operating margin of 19%, compared to $45 million and 16.6% in Q1 2024 [23] - Non-GAAP adjusted EBITDA was $64 million, or 23.7% of revenue, up from $58 million or 21.5% in the prior year [23] - Non-GAAP EPS increased by 13% to $1.14 from $1.01 in the prior year [24] - Non-GAAP adjusted free cash flow was $7 million, a significant improvement from a negative $34 million in Q1 2024, representing the strongest Q1 performance in seven years [25] Business Line Data and Key Metrics Changes - CSG's revenue diversification improved, with 33% of Q1 revenue coming from faster-growing industry verticals outside of cable and telecom, up from 30% in the same quarter last year [8] - The company reported a 13% year-over-year growth in its payments merchant base, reaching 135,000 merchants in Q1 [16] Market Data and Key Metrics Changes - CSG's top two customers, Charter and Comcast, represented 37% of total Q1 revenue, down from 49% in 2017, indicating improved revenue concentration [8] - The annual revenue from Charter and Comcast grew by approximately $76 million from 2017 to 2024, reflecting a 2.6% compound annual growth rate [8] Company Strategy and Development Direction - CSG aims for 2% to 6% organic revenue growth and to diversify revenue from faster-growing verticals to over 35% of total revenue by 2026 [10] - The company is committed to expanding non-GAAP adjusted operating margins to a long-term range of 18% to 20% [10] - CSG plans to return over $100 million in share repurchases and dividends combined in 2025, having already returned $32 million in Q1 [11] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing global macroeconomic uncertainty but expressed confidence in the company's ability to navigate challenges and continue growth [33] - The company is focused on becoming a more asset-light SaaS provider, aiming for greater profitability and cash flow generation [17] - Management highlighted a strong sales pipeline and ongoing demand for solutions, with expectations for continued revenue growth [27][76] Other Important Information - CSG's balance sheet remains strong, with $136 million in cash and cash equivalents and a net debt leverage ratio of 1.6 times adjusted EBITDA [26] - The company has entered a new five-year revolving credit facility, consolidating its term loan and revolver into a $600 million facility [26] Q&A Session Summary Question: Insights on customer feedback towards the end of the quarter - Management noted that there was nothing unique in Q1 or the first month of the new quarter, but global macroeconomic uncertainty continues to affect customer decision-making [33][34] Question: Discussion on margin optimization - Management emphasized the importance of operational discipline and continuous improvement in processes to enhance margins, alongside a shift towards higher-margin SaaS solutions [37][40] Question: Revenue trends for Charter and Comcast - Management explained that fluctuations in revenue from these customers are normal and attributed to various factors, including contract terms and new solutions [43][45] Question: M&A strategy and ideal candidates - Management expressed a disciplined approach to M&A, focusing on acquiring companies that enhance CSG's capabilities in integrated solutions and recurring revenue [51][53] Question: Dynamics in the telco vertical - Management indicated that the challenges faced are part of a broader transformation in the global telco market, with a focus on SaaS solutions and cost reduction [66][68]

Financial Data and Key Metrics Changes - Revenue for the first quarter was $29.8 million, reflecting a 6% growth from the first quarter of the previous year [6][21] - Recurring revenue grew 20% year-over-year to $22.7 million [7][22] - Non-GAAP gross margin was 37.6%, an increase of 650 basis points from 31.1% in the prior year [9][22] - Non-GAAP operating loss was $13.4 million, 40% lower than the previous year, marking the lowest level since the company went public [24] Business Line Data and Key Metrics Changes - Console revenue grew 23% sequentially, reaching $7.1 million [21] - Consumable revenue was $14.2 million, contributing to a total product revenue of $21.3 million, which grew 4% from the prior year [21] - Service and other revenue increased by 9% to $8.5 million [22] Market Data and Key Metrics Changes - The company saw strong utilization across the Tableau installed base, contributing to recurring revenue growth [7][10] - The installed base performed over 1 million treatments annually, with significant potential for additional recurring revenue [17] Company Strategy and Development Direction - The company is focused on three priorities for 2025: growing console revenue, increasing gross margin, and driving towards profitability [18][19] - The strategy includes expanding the installed base and leveraging operational efficiencies to achieve a gross margin milestone of 50% [19][25] - The company is optimistic about its competitive advantages in both acute and home settings, emphasizing the clinical and financial benefits of insourcing with Tableau [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the pipeline and market demand, noting that insourcing with Tableau remains compelling for healthcare providers [12][20] - The company is closely monitoring the economic environment but has not observed any negative impacts on hospital capital spending to date [48][50] - Management remains conservative in guidance, expecting revenue growth to build throughout the year [68] Other Important Information - The company successfully completed a recapitalization and is focused on aligning employee interests with those of investors [14] - The company has received tariff exemptions for its medical devices, ensuring no impact from proposed tariffs [15] Q&A Session Summary Question: Details on the turnaround in the console selling process - Management noted significant progress in the sales transformation and strong customer demand, with expectations that the transformation will be complete in the first half of 2025 [30][34] Question: Risk of macro headwinds affecting hospitals - Management indicated that there have been no observed changes in hospital capital spending and emphasized the tangible savings Tableau provides [48][50] Question: Guidance adjustments and business momentum - Management chose not to adjust guidance despite a strong quarter, maintaining a conservative approach while expecting sequential revenue growth [64][68] Question: Console installed base growth - Management confirmed console revenue increased by 23% from the previous quarter, with strong performance in treatments [74]

Financial Data and Key Metrics Changes - The company reported first quarter revenue of $361.6 million, representing a 34% year-over-year increase, and adjusted EBITDA of $58.4 million, resulting in a 16% adjusted EBITDA margin, marking a "rule of 50" quarter [32][33] - Quarterly active customers increased by 29% year-over-year to over 8 million, with send volume per active customer growing by 9% year-over-year, the highest growth rate since 2021 [33][34] - Send volume grew 41% to $16.2 billion, outpacing revenue growth, with a gross take rate of 2.24% [34][35] Business Line Data and Key Metrics Changes - The U.S. revenue grew 35%, accelerating from 33% in the previous quarter, while revenue from regions outside of India, the Philippines, and Mexico grew 45% year-over-year [35][36] - The company launched remittance services to Nigeria, Burkina Faso, and Mali, expanding its geographic footprint and increasing pay-in and payout options [15][16] Market Data and Key Metrics Changes - Revenue from the rest of the world grew 41% year-over-year, indicating strong performance outside of traditional markets [36] - The company reported that over 93% of transactions were dispersed in less than an hour, and more than 95% of transactions proceeded without customer support contact [25][26] Company Strategy and Development Direction - The company aims to diversify its business across various dimensions, including geographic expansion and new product offerings, to capture more growth and reduce risk [14][15] - The focus on building trust with customers is central to the company's strategy, as evidenced by high transaction reliability and customer satisfaction metrics [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of remittances amid macroeconomic uncertainties, highlighting the essential role of remittances in household stability [11][29] - The company raised its full-year outlook for both revenue and adjusted EBITDA, reflecting strong customer engagement and retention [9][44] Other Important Information - The company has embedded resilience into its foreign exchange management, which has become a competitive advantage [12][13] - The company continues to innovate and explore adjacent offerings, such as faster cross-border payments and fund storage solutions [21][22] Q&A Session Summary Question: What is driving the increase in send volume per active user? - Management indicated that increased engagement, higher send limits, and growth in high dollar senders contributed to the increase in send volume per active user [53][54][55] Question: Are there any environmental factors affecting the numbers? - Management noted that the majority of revenue comes from prior quarter cohorts, providing high visibility and confidence in future growth [62][63] Question: Can you elaborate on direct partner integrations? - Management highlighted that direct integrations lead to faster transactions, lower costs, and improved reliability, contributing to customer satisfaction [66][67][68] Question: What is the strategy for high dollar senders and micro business customers? - The company plans to tailor products and marketing strategies to effectively serve high dollar senders and micro business customers, capitalizing on existing demand [82][83][84] Question: What is the significance of the WhatsApp partnership? - Management expressed excitement about the WhatsApp integration, viewing it as a significant opportunity for customer acquisition and improved service delivery [86][87][88]

Financial Data and Key Metrics Changes - Century Aluminum generated $78 million of adjusted EBITDA in Q1 2025, a modest decrease from Q4 2024 primarily due to polar vortex-related weather conditions impacting energy prices and one-time alumina costs [20][24] - Net sales for the quarter were $634 million, reflecting a $3 million increase due to higher metal volume and all-in metal pricing, partially offset by lower third-party alumina sales [22] - Net income was reported at $30 million or $0.29 per share, with adjusted net income at $37 million or $0.36 per share [22] - Liquidity increased to $339 million, up nearly $100 million quarter over quarter, and net debt declined by $55 million to $442 million [24] Business Line Data and Key Metrics Changes - First quarter shipments rose slightly to nearly 169,000 tonnes, an increase of 1% sequentially, with all smelters operating at targeted utilization levels [21] - Jamalco produced its highest quarterly volume in Q1 since acquisition in 2023, while Grundartangi returned to full production levels in March [21][14] - Billet orders from Grundartangi were lower than anticipated in Q1 due to demand weakness in the European market, but a small uptick was noted as Q2 began [15] Market Data and Key Metrics Changes - Realized LME prices averaged $2,553 per ton in Q1, up $91 per ton from the prior quarter, while the Midwest premium averaged $6.00 per ton, up $165 per ton [25] - Global market is expected to face a deficit of approximately 400,000 tonnes in 2025 as China reaches its production cap, with global inventories at new lows of only 46 days [11] - U.S. shipments increased by 6.7% year over year in March as downstream customers shifted supply chains back to the U.S. [12] Company Strategy and Development Direction - The company is focused on achieving lower production costs through capital improvement programs, particularly at the Jamalco facility, which aims to return to nameplate capacity of close to 1,400,000 tonnes [17][21] - The new smelter project is expected to double the size of the existing U.S. aluminum industry, creating over 1,000 full-time jobs and 5,500 construction jobs [38] - Management emphasized the importance of the Section 232 tariffs in stabilizing the U.S. aluminum market and supporting domestic production [35][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for aluminum, particularly in the U.S., despite some weakness in Europe [62] - The company expects Q2 adjusted EBITDA in the range of $80 million to $90 million, with anticipated benefits from lagged pricing and reduced energy costs [30] - Management remains cautious about market volatility but believes that aluminum prices will continue to rise in the near to medium future [66] Other Important Information - The company is on track to complete a major capital improvement project at Jamalco by year-end, which will enhance self-sufficiency in power generation [17] - A one-time increase in maintenance spending of about $10 million is expected in Q2 due to planned maintenance at the Sebree facility [18] Q&A Session Summary Question: Confirmation on one-time OpEx cost in Q2 - Management confirmed that the incremental OpEx cost of $10 million to $15 million in Q2 is a one-time expense [40] Question: Clarification on alumina costs - Management explained that higher alumina costs were also one-time due to timing of vessel sales, with no expected benefits in Q2 [42] Question: Update on Jamalco operations and cost improvements - Management indicated that Jamalco is operating well and is expected to improve further with the introduction of a new steam generation turbine [54] Question: Expectations on aluminum market and inventory replenishment - Management projected that global inventories will continue to decrease, supporting higher aluminum prices in the future [66] Question: Key milestones for the new aluminum smelter project - Management highlighted that finalizing power arrangements and site selection are the next key milestones before significant capital expenditure begins [76]