Earnings Call Transcript - CPA Q3 2023

Operator, Operator

Thank you for joining us. Welcome to Copa Holdings Third Quarter Earnings Call. This call is being recorded on November 16, 2023. I will now hand it over to Daniel Tapia, Director of Investor Relations. Please go ahead.

Daniel Tapia, Director of Investor Relations

Thank you, Avy and welcome, everyone, to our third quarter earnings call. Joining us today are Pedro Heilbron, CEO of Copa Holdings; and Jose Montero, our CFO. First, Pedro will start by going over our third quarter highlights, followed by Jose, who will discuss our financial results. Immediately after, we will open the call for questions from analysts. Copa Holdings financial reports have been prepared in accordance with International Financial Reporting Standards. In today's call, we will discuss non-IFRS financial measures. A reconciliation of the non-IFRS to IFRS financial measures can be found in our earnings release which has been posted on the company's website, copaair.com. Our discussion today will also contain forward-looking statements, not limited to historical facts that reflect the company's current beliefs, expectations and/or intentions regarding future events and results. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially and are based on assumptions subject to change. Many of these are discussed in our annual report filed with the SEC. Now, I'd like to turn the call over to our CEO, Mr. Pedro Heilbron.

Pedro Heilbron, CEO

Thank you, Daniel. Good morning to all and thanks for participating in our third quarter earnings call. Before we begin, I would like to extend my sincere gratitude to all our coworkers for their commitment to the company. Their continuous efforts and dedication have kept Copa at the forefront of Latin American aviation. To them, as always, my highest regards and admiration. As you can see in our third quarter earnings release, once again, Copa reported strong financial results for the quarter. We were able to deliver industry-leading operating margins while continuing to grow our capacity by double digits year-over-year. The third quarter results were driven by a robust demand environment in the region and our focus on delivering low ex-fuel unit costs. Now, I'll summarize the main highlights for Q3. Passenger traffic grew 13.3% compared to the same period in '22, outpacing our capacity growth of 12.1%. As a result, load factor for the quarter increased 0.9 percentage points compared to Q3 '22 to 87.8%. Passenger yield came in at $0.134 resulting in unit revenues or RASM of $0.122. Unit costs decreased by 11.2% compared to Q3 '22, mainly driven by a lower jet fuel price per gallon and lower sales and distribution costs. Excluding fuel, unit costs or CASM-Ex came in at $0.058, a 2% decrease compared to Q3 '22. And our operating margin came in at 23.6%, 5.9 percentage points higher than in the third quarter of '22. On the operational front, Copa Airlines delivered an on-time performance of 89.4% and a completion factor of 99.8%, once again among the best in the world. With regards to our network, in the last 2 quarters, we have started service to Austin and Baltimore in the U.S. and Manta, Ecuador. And more recently, in October, we started flying to Barquisimeto in Venezuela. With these additions, we now serve 81 destinations in 32 countries in North, Central, South America and the Caribbean. As we continue strengthening and solidifying our position as the most complete and convenient connecting hub in Latin America. With regards to our fleet; during the third quarter, we took delivery of two 737 MAX 9 ending the quarter with a total of 103 aircraft. Turning now to Wingo; in the third quarter, Wingo continued its network expansion with the start of 3 new routes from Bogota to Caracas, Venezuela; a Panama domestic flight from Panama City to David and one seasonal route from Cali to Aruba. Additionally, in October, Wingo started service from Medellin to Cartagena and announced one additional domestic route in December from Medellin to Santa Marta. With these additions, Wingo expects to end the year operating 37 routes with service to 23 cities in 11 countries. Now, turning to our current expectations. We continue to see a robust demand environment in the region. And as you can see in our earnings release published yesterday, we expect strong financial results for full year '23 and preliminary in 2024, we plan to continue growing our capacity in the low double-digit range and further reduce our unit costs. As always, Jose will provide more details regarding the 2023 and 2024 outlook. To summarize, we delivered strong third quarter results while growing capacity 12% year-over-year. We continue to see a robust demand environment in the region. We achieved low fuel unit costs during the quarter and we continue to deliver on our cost execution strategies. We continue growing and strengthening our network, the most complete and convenient hub for travel in the Americas. And as always, our team continues to deliver world-leading operational results. Lastly, we remain as confident as ever in our business model. We continue to deliver low unit cost, high margins and a great product for our passengers, including the best connecting network in Latin America making us the best positioned airline in our region to consistently deliver industry-leading results. Now, I'll turn it over to Jose, who will go over our financial results in more detail.

Jose Montero, CFO

Thank you, Pedro. Good morning, everyone. Thanks for being with us today. I'd like to join Pedro in acknowledging our great team for all their efforts to deliver world-class service to our passengers. I will start by going over our third quarter results. We reported a net profit for the quarter of $187.4 million or $4.72 per share. Excluding special items, our adjusted net profit came in at $174.4 million or $4.39 per share. Third quarter special items are comprised of a net gain of $12.2 million related to the company's convertible notes which we retired during the quarter and an $800,000 unrealized mark-to-market gain related to changes in the value of financial investments. We reported a quarterly operating profit of $205 million and an operating margin of 23.6%. Capacity came in at 7.1 billion available seat miles or 12.1% higher than in Q3 2022. Our load factor came in at 87.8% for the quarter, a 0.9 percentage point increase compared to the same period in 2022, while we achieved passenger yields of $0.134. As a result, unit revenues came in at $0.122, mainly driven by lower jet fuel prices, unit cost or CASM decreased to $0.093 or 11.2% lower than our CASM in Q3 2022. And finally, we continue with our initiatives for maintaining our costs low. For the quarter, our CASM ex-fuel came in at $0.058, a 2.1% decrease versus Q3 2022, mainly driven by lower sales and distribution costs due to the higher penetration of both direct sales and the lower cost travel agency channels which were launched by Copa Airlines in September of 2022. I'm going to spend some time now discussing our balance sheet and liquidity. As of the end of the third quarter, we had assets of close to $5 billion. As to cash, short- and long-term investments, we ended the quarter with over $1.2 billion which represents 34% of our last 12 months' revenues. And in terms of debt, we ended the quarter with $1.7 billion in debt and lease liabilities and came in with an adjusted net debt-to-EBITDA ratio of 0.4x. Our debt now is comprised solely of aircraft-related debt and I'm pleased to report that our average cost of debt is currently in the range of 3.4%. As we've previously announced, in the month of September, we completed with the redemption of the 4.5% convertible senior notes due in 2025. To summarize the transaction, holders of $349 million aggregate principal amount converted their notes in accordance with the terms of the inventory while holders of outstanding notes in the aggregate principal amount of $1 million redeemed at a price equal to 100% of the principal amount of each note call. This was paid in cash plus accrued and unpaid interest. As a result, the transaction generated a total cash payment of $350 million in addition to approximately 3.7 million shares. Turning now to our fleet; during the third quarter, we received 2 Boeing 737 MAX 9s to end the quarter with a total of 103 aircraft. In November, we received 2 additional 737 MAX 9s to bring our total fleet to 105 aircraft. With these additions, our total fleet is now comprised of 68 737-800s, 28 737 MAX 9s and 9 737-700s. These figures include one 737-800 freighter and the 9 737-800s operated by Wingo. Two-thirds of our fleet continues to be comprised of owned aircraft and one-third of our aircraft are under operating leases. During the remainder of 2023, we expect to receive one additional aircraft of Boeing 737 MAX 9 to end the year with a total fleet of 106 aircraft. As for our 2024 fleet plan, preliminarily, next year, we expect to receive 15% 7% of MAX aircraft, including 3 737 MAX 9s and 12 737 MAX 8s. We've published an updated fleet plan in our Investor Relations website and we have already secured JOLCO financing for 10 out of the 15 deliveries in 2024. Turning now to a return of value to our shareholders. In October, we finalized the execution of our existing share repurchase program. And as published in our earnings release yesterday, our Board of Directors approved a new share repurchase program of $200 million. Additionally, I'm pleased to announce that our Board has ratified the fourth dividend payment of the year of $0.82 per share to be paid on December 15 to all shareholders of record as of November 30th. As to our outlook, we can provide the following guidance update for full year 2023. We expect to increase our capacity in ASMs versus 2022 by approximately 13% and we expect to deliver an operating margin within the range of 23%. We're basing our outlook on the following assumptions: load factor of approximately 87%, unit revenues within the range of $0.124, CASM ex-fuel to be in the range of $0.06 and we are expecting an all-in fuel price of $3.02 per gallon. In anticipation of 2024, we are projecting a year-over-year capacity increase between 12% and 14%. Additionally, we anticipate our CASM ex-fuel to be in the range of $0.059, aligning with our goal to achieve a CASM ex-fuel of $0.058 by 2025. This outlook reflects our continuous commitment to our operational excellence. Thank you. And with that, we'll open the call for some questions.

Operator, Operator

Our first question comes from Savi Syth with Raymond James.

Savi Syth, Analyst

Could you provide insight on the revenue outlook for 2023? It appears there hasn't been any decrease in competitive capacity since your last update, and I don't think your capacity has diminished either. What are you observing in the market that indicates this strength? Additionally, are there any regional differences you can share, and how do you see this trend continuing?

Pedro Heilbron, CEO

Savi, it's Pedro. Demand is staying strong in spite of the additional capacity that's coming in from ourselves and especially from other airlines. I don't think there's a specific reason for that. I mean the currencies have stayed strong also in Latin America. So that doesn't hurt. And the U.S. economy is doing well also. So I think all those factors are contributing for demand to remain robust in spite of the capacity.

Jose Montero, CFO

I would say, Savi, only that in general terms and this applies throughout the network and all the different regions that we're at. In general, still very robust.

Savi Syth, Analyst

That's helpful. If I could ask about the share count after the conversion is complete and considering the share buybacks you've executed so far, what does the current share count look like?

Jose Montero, CFO

We're at around 42 million shares right now, Savi.

Operator, Operator

Our next question comes from Duane Pfennigwerth with Evercore ISI.

Unidentified Analyst, Analyst

This is Jake on for Duane. First question, on non-op. Is that the new run rate for non-op? Or were there any one-time benefits this quarter? And then could you just remind us what the actual interest expense through the P&L was given that it was different from what the coupon rate would indicate from the convert?

Jose Montero, CFO

Yes, Jake, I would summarize that excluding the impact of the convertible debt we retired, I expect our finance costs to decrease by approximately $10 million per quarter going forward. That’s how I would suggest modeling it. The other non-operating lines are generally aligned with our current debt levels and the average debt cost, which is about 3.4% at this time, along with the yields from our investments. The significant change moving forward is the reduction in finance costs, which is not linked to the coupon but rather to the accounting treatment of the convertible. This was a non-cash item that affected the profit and loss statement, totaling around $10 million each quarter.

Unidentified Analyst, Analyst

Right. That makes sense. And then just to go a little bit deeper into 2024 capacity growth. Could you just break out the components and the pacing of that seat, stage length, gauge, et cetera?

Jose Montero, CFO

I would say, Jake, that the majority of the growth for next year is going to be frequencies. Here we have it broken down is about, call it, about 70% of the capacity growth is going to be in additional frequencies into markets that we operate already. Then about, let's say, about 25% is going to be around full year effect of growth that we performed throughout 2023, that sort of lapse the year. And then the remainder is, call it, a new service that we're starting in 2024. That's kind of how we're placing it. So the vast majority is just frequencies into markets that we're really present in.

Unidentified Analyst, Analyst

And so with the patient of that be steady here?

Jose Montero, CFO

In general, I would describe it as steady throughout the year. I don't believe there are any particular fluctuations, considering that most of it reflects a full year effect.

Pedro Heilbron, CEO

Our aircraft deliveries in any case are spread throughout the year. So that's another reason.

Operator, Operator

Our next question comes from Guilherme Mendes with JPMorgan.

Guilherme Mendes, Analyst

Two questions as well. The first one is on the fleet plan. You guys mentioned about 15 deliveries next year on MAXs. If you see any kind of bottlenecks come from Boeing or any risk on this 15 aircraft deliveries? I understand that you mentioned that 10% are really secure in terms of financing. So if there's any kind of risk for this additional five? So the second question is regarding to the CASM ex-fuel guidance for next year, cutting price to see lower CASM ex-fuel? And maybe if you could comment on what are the main initiatives thinking that there's any kind of labor pressure, any out of initiatives to sustain this higher efficiency?

Pedro Heilbron, CEO

Yes. So a few things. In terms of the aircraft deliveries, 11 of the 15 deliveries scheduled for next year are already financed with JOLCO. So that's pretty much said. And in terms of delivery dates, this is the latest we have from Boeing, some aircraft passed from one aircraft at least passes from 2023 to 2024. That's why the number increased to 15%. So it's the best information we have right now. And again, most of the financing is already in place.

Jose Montero, CFO

Yes. However, we are still uncertain about Boeing; all aircraft manufacturers are experiencing supply chain challenges. We are in discussions with them. For now, regarding our guidance, I must emphasize that it is preliminary and that we will provide our formal guidance in February. Generally speaking, it aligns with our expectations for aircraft deliveries in 2024. Concerning CASM for next year, the primary areas of opportunity include continuing to enhance our distribution. Our team has been doing an excellent job with the Copa Connect project and our new distribution strategy. Secondly, we are proceeding with the densification of our 737-800 fleet at Copa Airlines, which will yield some CASM benefits. Thirdly, we are working on improving efficiencies in overhead and taking advantage of the growth we anticipate for next year. Lastly, we are on track to address the issues we've faced with the leap engine. This will also be an important consideration in the coming months.

Operator, Operator

One moment for our next question. Our next question comes from Michael Linenberg with Deutsche Bank.

Michael Linenberg, Analyst

Jose, I want to revisit the 12% to 14% frequency for next year. It seems that 5% to 10% of the ASMs will involve new services. Could you provide more details on the plan for new locations? Are we looking at 2, 3, or 4 new cities? Will it resemble this year, where you added around 4 or 5 new cities?

Pedro Heilbron, CEO

Mike, I'll answer that one. We might have more information in February and will make a few announcements. However, right now, there's not much we can share. We're exploring many possibilities, and it should be more than just a few, but we don’t want to set a target because it’s still early, and we are in the planning stage. We typically begin in new cities midyear and at the end of the year, so we have some time ahead of us.

Michael Linenberg, Analyst

Very good. Just my second question, Wingo is 9 airplanes now, in a more frequency or more routes as we move through this year. Is the plan to keep Wingo at 9 airplanes in 2024?

Pedro Heilbron, CEO

That is the plan as of right now, given the dynamics of the Colombian market. So that's the plan right now.

Michael Linenberg, Analyst

Okay. Great. And then just my last question, when I think about you have a significant cost of capital advantage, when I think about some of the other big debt deals that we've seen some of your competitors launched over the last 12 to 18 months. And so that 3.4% cost of debt that's low. As we think about the 10 or 11 airplanes that have already been financed with JOLCOs, does that change that 3.4%? How should we think about your average financing as you reach for '24?

Jose Montero, CFO

Yes. I'll provide you with a data point, Mike. You could argue that an additional aircraft right now is in the vicinity of around 5%, so we're a bit higher. However, 80% of our fleet is financed at fixed rates. Therefore, changes in interest rates have not had a significant impact on us. Given the current environment, our most recent aircraft are on variable rates, so we will benefit when rates decrease. Overall, it's still around the 5% range, which is very good.

Operator, Operator

One moment for our next question. Our next question comes from Rogerio Araujo with Bank of America.

Rogerio Araujo, Analyst

Congratulations on the results. I have two questions. First, regarding RASM. I know you didn't provide guidance for 2024, but can you share what you're observing in the booking curve for next year? Can you indicate if it seems to be declining compared to 2023 due to increased capacity, or is it still uncertain at this point? The second question is about the disparity between jet fuel prices and oil prices in the third quarter. This was not only the case for Copa but also for other peers in the region. What factors are contributing to this, and do you think it will be sustainable moving forward?

Pedro Heilbron, CEO

Okay. So I'll start with the first one. And yes, we're not giving RASM guidance for '24. Still early and our visibility is always like 3 months or 2 months into the future. So what we're seeing so far which would be early 2024, is that the revenue strength stayed robust, it's following the same trend we've seen in Q3 and Q4. So even with the capacity that you mentioned, revenues are staying strong so far.

Jose Montero, CFO

Yes, there has been a fuel mismatch between jet and crude. The crack price for jet fuel increased during the quarter and is currently just over $40 per barrel. While this is not historically high, it is elevated compared to usual levels. However, we have successfully managed our fuel expenses and have been able to recoup some of the additional costs through our unit revenues, which we demonstrated in the fourth quarter with our updated guidance. Ultimately, this is something we are experienced in handling.

Rogerio Araujo, Analyst

Sounds great. And one follow-up on that last one. Is the fuel guidance, it includes the current curve?

Jose Montero, CFO

Yes, absolutely. It's a current jet curve from about two days ago. It's all in our average fuel price. We see an increase of $0.06 above the last guidance we provided in August.

Operator, Operator

One moment for our next question. Our next question comes from Stephen Trent with Citi.

Stephen Trent, Analyst

I definitely appreciate the color on 2024. As you think about that build-out, are you content with maintaining those 6 daily flight banks at Tocumen? Or do you think you could make some possible adjustment to that with the 2024 growth?

Pedro Heilbron, CEO

Yes. Not in '24. I mean we could make adjustments in the future but that's not the plan in '24. We think we can still strengthen our 6 bank structure. There are opportunities, there are gaps that we can fill and further strengthen our whole network. So that's the plan for now.

Stephen Trent, Analyst

Perfect page. I appreciate that. And as my follow-up, looking at this, a very good ex-fuel, CASM color for 2024 to what degree do you think some of that might be coming from tilt towards more direct channel sales, for example?

Jose Montero, CFO

Sure. No, absolutely. That's a big portion of our strategy for having a multiyear CASM target, clearly sub-6; it's been driven in large part through our Copa Connect strategy. It's been working great over the last several months. So that's certainly a big portion of our continued track towards 5.9% in 2024 and 5.8% 2025.

Pedro Heilbron, CEO

And also, Stephen, it's holding overhead, holding fixed costs tight, so we benefit from the growth in ASMs. That's another way we're achieving our numbers.

Jose Montero, CFO

Yes. And look, I mean we're talking about CASM, there's always headwinds of items that we might not control. There might be whatever, aerospace, charge increases in different countries, et cetera and that's the sort of thing or inflationary pressures because of ARB. As partners we try to counter those with our own internal efficiencies and with projects such as Copa Connect or diversification, et cetera. So we always have our guard up in terms of keeping our costs as low as they can be.

Stephen Trent, Analyst

Okay. That's very, very helpful. And see you in a few weeks.

Operator, Operator

One moment for our next question. Our next question comes from Daniel McKenzie with Seaport Global.

Daniel McKenzie, Analyst

I guess following up on that last question, going back to Copa Connect and to lower distribution costs. I'm wondering if you can just help us put some numbers around what that means exactly. So what you're seeing on cost savings and specifically from this initiative? And how the change in the distribution strategy is helping you to drive more revenue. So maybe just related to that, what percent of the passengers coming to copa.com are actually purchasing a ticket with an upsell feature, for example?

Pedro Heilbron, CEO

Let me begin with some general comments before handing it over to Jose for additional insights. As mentioned, our direct distribution strategy, Copa Connect, has proven very effective. Currently, over 70% of our sales come from direct channels, which includes our agency connections through the NDC channel. This marks a significant shift compared to last year when the situation was reversed, and we've exceeded our projections for this year. By selling directly through channels such as the NDC and our website, we provide more options for our passengers. This approach allows us to focus on upselling, and a notable percentage of customers using our website or the NDC channel are opting for upsells. While we don’t have the exact figure right now, it's an important aspect to consider since our lowest fares are often accompanied by additional fees for services like seat selection and baggage. Upselling, therefore, remains a crucial revenue stream for us.

Jose Montero, CFO

Yes, Dan, I would say that in terms of cost, the channel shifting and Copa Connect strategy have provided us with $0.001 of cash this year. Regarding the value of ancillaries, we have likely quadrupled it since 2018. In terms of revenue, there is an upsell of products from customers purchasing tickets through our channel, and yes, it's actually grown significantly. Compared to 2019, it's now four times the level it was then. We shared this information during our Investor Day a couple of months ago.

Daniel McKenzie, Analyst

Yes, very good. And then second question here. Historically, Copa has targeted 18% to 20% operating margins. And in light of this year's results, I guess my next question is how investors should really think about steady-state margins? Are the initiatives in place today enough to help you punch above what you've done historically?

Pedro Heilbron, CEO

Well, now you're asking for 2024 guidance in a direct way. So we have to wait until February for that. But we have the wind in our back right now. And what that means for steady state in the future. It's going to depend on how external factors change, fuel capacity from competitors et cetera, et cetera.

Jose Montero, CFO

But we are really pleased with our operating margin guidance of 23% for the full year 2024. It's a pretty good result. I think it's certainly been a very, very good year so far.

Operator, Operator

Our next question comes from Bruno Amorim with Goldman Sachs.

Bruno Amorim, Analyst

I have a follow-up on this question on margins. I'm not asking for '24 guidance but just wanted to hear from you what were in your view, the big changes that could eventually have led to those higher margins? We can understand to what extent they are sustainable. I understand there are some cost efficiencies, ex-fuel CASM is performing. But if you look on a total CASM perspective, it is still higher versus 2019, right? Because that ex-fuel is much higher. So maybe the answer comes from the revenue side. And then on the revenue side, maybe one could argue there is less competition now post-pandemic? Is that the main change? Or is there anything else that you believe could justify much higher unit revenues on a sustainable basis?

Pedro Heilbron, CEO

So Bruno, I'll say 3 things, 3 general concepts that are important coming out of the pandemic. And they are playing in different directions. So the number one surprise out of the pandemic was that demand came back a lot quicker than what anyone expected. And it has remained strong overall in our region, in the Americas and it is still robust through the day. So, of course, demand has been a positive change. The other, I would say, surprise coming out of the pandemic which works in a different direction in the opposite direction. It's how much growth there has been in aviation, in our region, how much growth by the airline industry in general, that also surprised us coming out. So capacity came back quicker than what we would have expected and it's actually above pre-pandemic levels. And then the third concept I want to share which is more a Copa-specific is that we worked really hard during the pandemic, even while we were shut down for almost 5 months, we never stopped working on 2 things and one was working on our cost, on the cost side, on doing all the investments and changes that were going to make us more efficient going forward, including Copa Connect, a lot of technological enhancements and same thing for revenues which, in a way, some are related to Copa Connect, others are not. So we've worked very hard in our revenue-related technology, on the revenue team and we are a much more efficient, competitive airline from the revenue side and from the cost side. So I would say those are 3 general concepts that have a lot to do with where we are today. The competitive landscape is dynamic, strong, and experiencing growth, primarily with low-cost carriers or ultra-low-cost carriers in our region. Most of our competitors are either originally designed as ULCCs or LCCs or have transitioned to that model. This situation has pushed us towards greater efficiency, which has been part of our vision for some time. We anticipated this change and have been preparing accordingly, effectively meeting the challenge. We possess the necessary tools, a robust network, a hub, and are continuously working on enhancing efficiency. We believe there is enough opportunity for everyone, as our success does not rely on the downfall of others, especially if the market remains healthy. Our focus is on improving Copa into a more competitive airline. While competition has increased, many of our rivals are currently growing at a faster pace than we are.

Operator, Operator

Our last question comes from Savi Syth with Raymond James.

Savi Syth, Analyst

If I might, just curious if you can hone in on business demand. It seems like there's a slight pickup in other regions. And I'm wondering if you're seeing that in? And particularly in Panama, I'm wondering if the drought is having any impact or the economy is still pretty strong?

Pedro Heilbron, CEO

Business demand has remained relatively stable over the last two quarters. While it used to exceed 30%, it now hovers around 25%. However, we have seen a shift, with leisure travel, particularly among higher-end travelers, compensating for the decline in business demand. We're performing better in business class revenues compared to pre-pandemic levels, despite this lower demand. We’re not feeling the absence of business travel too acutely, and we look forward to potential growth in this area in the future. The Panama Canal has indeed been impacted by the drought caused by El Niño, which has limited ship transit. Nevertheless, this situation hasn't significantly affected Panama's economy, which is anticipated to remain one of the fastest-growing in Latin America. The adjustments necessary for the canal due to El Niño won't drastically impact our overall economy, and the revenue affected is a small percentage; media reports may be overstating the situation.

Operator, Operator

That concludes the question-and-answer session. At this time, I would like to turn the call back to Pedro Heilbron for closing remarks.

Pedro Heilbron, CEO

Thank you. Thank you, operator. So thank you to all. This concludes our earnings call. As always, thank you for participating and special thanks for your continued support to Copa Holdings. So I hope you have a great day.

Operator, Operator

Ladies and gentlemen, thank you for your participation. That concludes the presentation. You may now disconnect and have a wonderful day.