Earnings Call Transcript - FDP Q1 2020

Operator, Operator

Good day, everyone, and welcome to Fresh Del Monte Produce First Quarter 2020 Conference Call. Today’s call is being broadcasted live over the Internet and is also being recorded for playback purposes. At this time, participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. For opening remarks and introductions, I would like to now turn today’s call over to the Vice President, Investor Relations with Fresh Del Monte Produce, Christine Cannella. Please go ahead, Ms. Cannella.

Christine Cannella, Vice President, Investor Relations

Thank you, Joanne. Good morning, everyone, and thank you for joining our first quarter 2020 conference call. As Joanne mentioned, I’m Christine Cannella, Vice President, Global Corporate Communications & Investor Relations with Fresh Del Monte Produce. Joining me in today’s discussion are Mohammad Abu-Ghazaleh, Chairman and Chief Executive Officer; and Eduardo Bezerra, Senior Vice President and Chief Financial Officer. I hope that you had a chance to review the press release that was issued earlier this morning. This conference call is being webcast live on our website and will be available for replay after this call. Please note that our press release includes reconciliations of any non-GAAP financial measures we mention today to their corresponding GAAP measures. I would like to remind you that much of the information we will be speaking to you today, including the answers we give in response to your questions, may include forward-looking statements within the provisions of the Federal Securities Safe Harbor laws. We ask that you review the forward-looking statements information included in the press release we issued this morning and in the company’s most recent filings. With that, I am pleased to turn today’s call over to Mohammad.

Mohammad Abu-Ghazaleh, Chairman and CEO

Thank you, Christine. I want to take a moment to acknowledge each of you for joining Fresh Del Monte Produce first quarter 2020 earnings conference call. It has been a very difficult few months for the world. Our thoughts go out to all the heroes working to keep people safe and healthy during this unprecedented evolving global pandemic. I want to extend my best wishes to you and your families that you stay safe and healthy. I also want to extend my gratitude to our frontline team members for their commitment to providing healthy convenient fresh and prepared food products during this crisis. I will go directly to what is likely top of mind for all of us. The impact of the COVID-19 pandemic and the actions we have taken to support our team members and their families, customers, suppliers and our local communities. At the outbreak of the pandemic, we immediately activated our global and regional executive crisis management teams to respond accordingly. At our production facilities, where food safety has always been our top priority, we introduced additional operating procedures and safety protocols to include social distancing, thermal screening and increased cleaning cycles to protect our production teams. We activated our supply chain contingency plans to mitigate any disruptions in our ability to service our customers. Most recently, we voluntarily closed a distribution and fresh-cut facility in Boston, Massachusetts for 10 days, due to team members being diagnosed with COVID-19. We shifted inventory and production from our Boston facilities and continued to meet demand and deliver uninterrupted service to our customers in the Northeastern U.S. As of today, our Boston facility is back in operation. Other preventive actions included having as many global employees as possible working remotely. Our worldwide team members have rallied around maintaining business continuity during this critical time. I am pleased with how quickly they adapted to the circumstances, especially our frontline teams that have kept our farms, lands, and distribution centers running, allowing us to maintain our commitment to providing healthy, convenient and safe Del Monte branded products around the world. We are also collaborating in a number of ways with our local communities during this time of uncertainty, adding support wherever we can. Regarding our business, while we saw an increase in demand for our banana business, we did experience reduced demand for fresh-cut or fresh and value-added products as stay-at-home orders impacted the restaurant and food service industry. We anticipate this trend continuing in the near future as consumers adapt to social distancing. Households manage unprecedented economic hardships and unemployment rates soar. I would like to add that our Mann Packing subsidiary had shown improved results in January and February, as they were recovering from their fourth quarter 2019 voluntary recall. However, the COVID-19 impact to the food service channel also reduced demand for Mann’s meals and snacks and fresh-cut vegetables product line. We expect the trend to continue in the second quarter of 2020 if conditions remain the same. Over the coming three months, we will be moving our operations to our new Gonzales California facility, which will allow us to streamline and improve our production capabilities, customer service and reduce costs. In addition, early in the quarter, we saw a reduction in our business in Asia as a result of supply and demand imbalances brought about by the closures and restrictions put in place in China logistics operations. This trend turned around in March as the Asia region showed signs of recovery and we began to see demand increase especially for bananas. While we did experience a number of challenges in the quarter that softened top-line sales, we took several actions to fortify our business and conserve liquidity, including halting our share repurchase program, reducing our dividend by 50%, postponing non-critical capital investments to the second half of 2020 and establishing measures to reduce selling, general and administrative expenses going forward. All of these measures give me confidence that we will come out of this crisis stronger than ever. What will the new normal be? I believe we will see behavior changes in the market. One such example is the surge in e-commerce category sales. While online grocery shopping rose at a rapid pace during the pandemic, I believe consumer usage has just begun, which is why in April of 2020 we broadened our distribution channels by introducing our online store in the United Arab Emirates with plans to roll out the concept to other countries soon. Now, I would like to turn the call to Eduardo to talk about the first quarter financial results. Eduardo, please.

Eduardo Bezerra, Senior Vice President and CFO

Thank you, Mohammad, and good morning. I want to begin with a few words regarding the confidence we have in our cash and our current debt positions as we renewed our credit facility. As you are aware, we had considerable availability in our $1.1 billion credit line. Our leverage ratio for the first quarter of 2020 was below 3.2 times EBITDA. In addition to availability on our credit line, the decision to halt our share repurchase program, reduce the interim cash dividend and postpone non-critical capital investments, we have strengthened our cash flow position for the second quarter. In terms of liquidity, our lenders assured us that we have no issues with drawing down if needed. We generated cash this quarter and kept our level almost flat to the end of fiscal year 2019. So this speaks to the strength of our business. We continue to focus on reducing our debt, while we continue to invest in critical high-margin capital projects to drive efficiency in our operations and expand our value-added business. While we see pressure on revenue and earnings in the short-term, we see much opportunity for us to be ready for future growth when this crisis has passed. Given all of our capabilities as Mohammad declared, I am confident Fresh Del Monte will weather these difficult times and emerge stronger from this challenge. With that, I will now get into the results for the first quarter of 2020. Adjusted earnings per diluted share were $0.34 compared with adjusted earnings per diluted share of $0.46 in 2019. Net sales were $1.118 billion compared with $1.154 billion in first quarter 2019, with unfavorable exchange rates negatively impacting net sales by $8 million. We estimate that the COVID-19 pandemic impacted net sales during the first quarter of 2020 by approximately $27 million. Adjusted gross profit was $77 million compared with $95 million in 2019. Adjusted operating income for the quarter was $24 million compared with $41 million in the prior year, and adjusted net income was $16 million compared with $23 million in the first quarter of 2019. In regards to the product lines for the first quarter of 2020, in our fresh and value-added business segments, net sales decreased $29 million to $661 million compared with $690 million in the prior year period. And gross profit decreased $19 million to $43 million compared with $62 million in the first quarter of 2019. The decrease in net sales was primarily the result of lower net sales of fresh-cut vegetables, pineapples, and meals and snacks, partially offset by higher net sales of avocados. As compared with our original expectations, the COVID-19 pandemic affected our net sales of fresh and value-added products by an estimated $21 million during the quarter. Also, the continuing effect of November’s Mann Packing voluntary product recall affected our net sales in the first quarter of 2020. In our pineapple category, net sales were $102 million compared to $111 million in the prior year period, primarily due to lower sales volume in North America, Asia and Europe, as a result of lower production in our Costa Rica and Philippines operations, primarily due to unfavorable growing conditions. Also contributing to the decrease in net sales was the impact of the COVID-19 pandemic, which resulted in lower demand for pineapples across all of our regions. Partially offsetting this decrease were higher selling prices in North America and Europe and higher sales volume in the Middle East. Overall volume was 16% lower, unit pricing was 9% higher, and unit cost was 6% higher than the prior year period. In our fresh-cut fruit food category, net sales were $118 million in line with the prior year period. Net sales were impacted by lower demand in our food service distribution channel as a result of social distancing measures imposed by governments around the world. Overall volume and unit pricing were in line with this prior year period, and unit cost was 1% higher than the first quarter of 2019. In our fresh-cut vegetable category, net sales were $103 million compared with $119 million in the first quarter of 2019. Decrease in net sales was due to the COVID-19 pandemic, which resulted in a significant reduction of our food service business during the month of March, mainly in our Mann Packing subsidiary. We also faced the continuing effect of our voluntary product recall announced in November 2019. Volume was 12% lower, unit pricing was 2% lower, and unit cost was 5% higher than the prior year period. In our avocado category, net sales increased to $94 million compared with $89 million in the first quarter of 2019, primarily due to higher selling prices in North America as a result of lower industry supplies from Chile. Also contributing to the increase in net sales were higher sales volume and selling prices in Asia due to increased demand. Partially offsetting this increase were lower sales volume in North America. Volume decreased 21%. Pricing was 33% higher. And unit cost was 44% higher than the prior year period impacted by start-up costs from our new processing facility in Europe and Mexico. In our vegetables category, net sales decreased to $39 million compared with $42 million in the first quarter of 2019, primarily due to lower sales volume and selling prices as a result of Mann Packing and voluntary product recall, and lower sales as a result of the COVID-19 pandemic. Volume decreased 6%, unit price was in line with the prior year period, and the unit cost was 9% higher. In our non-tropical category, which includes our grape, berry, apple, citrus, pear, peach, plum, nectarine, cherry and kiwi product lines, net sales increased to $62 million compared with $61 million in the first quarter of 2019. Volume increased 9%, unit pricing decreased 7%, and unit cost was 8% lower. In our prepared food product line which includes the company’s prepared traditional products, and meals and snacks product lines, net sales decreased primarily due to the impact of the COVID-19 pandemic, product rationalization in our Mann Packing business and the continued impact of the 2019 voluntary product recall. The decrease in net sales was partially offset by higher net sales in the company’s prepared traditional product line. Gross profit was impacted lower sales volume in our meals and snacks product line. In our banana business segment, net sales decreased to $427 million compared with $432 million in the first quarter of 2019, primarily due to lower net sales in Asia, Europe and North America, partially offset by higher net sales in the Middle East. Asia was impacted by lower sales volume and port closures in China related to COVID-19. Europe banana net sales decreased due to lower industry supply in the beginning of 2020, and the impact of COVID-19 selling prices in March. As compared with our regional expectations, the COVID-19 pandemic affected banana net sales by an estimated $6 million during the quarter. North America was also impacted by lower supplies from our Central America production area. Overall volume was 1% higher than last year’s first quarter. Worldwide pricing decreased 2% over the prior year period. Total worldwide banana unit cost was 1% higher. And gross profit decreased to $25 million compared to $35 million in the first quarter of 2019. Now moving to selected financial data. Selling, general and administrative expenses during the quarter were $53 million compared with $54 million in the first quarter of 2019, mainly due to lower advertising administrative expenses. We expect our recent actions to reduce selling, general, and administrative expenses to have a positive impact beginning in the second quarter. The foreign currency impact at the gross profit level for the first quarter was unfavorable by $6 million compared with an unfavorable effect of $3 million in the first quarter of the previous year. In the month of March, we entered into several fuel hedges that extend through the end of 2021 to take advantage of lower fuel prices to reduce the exposure of our shipping costs in the Americas and Asia. Similar to our foreign currency hedges, we have in place to reduce our exposure in different countries that we market our products, these fuel hedges are intended to minimize our financial exposure to volatility in the market. Interest expense, net for the first quarter was $5 million compared with $7 million in the first quarter of 2019 due to lower debt levels and interest rates. Income tax expense was $300,000 during the quarter compared with the income tax expense of $9 million in the prior year. The decrease in the provision for income taxes was primarily due to lower earnings in certain taxable jurisdictions. The tax provision for the first quarter of 2020 also includes a $2 million benefit related to net operating losses carry back provision allowed through the recently enacted Coronavirus Aid, Relief, and Economic Security Act. For the first three months of 2020, our net cash provided by operating activities was $2 million, compared with net cash used in operating activities of $7 million in the same period of 2019. The increase in net cash provided by operating activities was primarily attributed to higher balances of accounts payable and accrued expenses, partially offset by lower net income. Our total debt increased from $587 million at the end of 2019 to $599 million at the end of the first quarter of 2020. As it relates to capital spending, we invested $17 million on capital expenditures in the first quarter of 2020 compared with $34 million in the same period of 2019. As announced this morning in our financial results press release, our Board of Directors declared an interim cash dividend of $0.05 per share payable on June 5, 2020, to shareholders of record on May 13, 2020, reducing by $0.05 our interim cash dividend from $0.10 per share. This concludes our financial review. We can now turn the call over for Q&A.

Operator, Operator

Ladies and gentlemen, we apologize to all those who missed the first few minutes of this call. Your first question comes from the line of Jonathan Feeney from Consumer Edge. Your line is now open.

Jonathan Feeney, Analyst

Thank you very much and good morning. And thanks for all your efforts in this crisis. I think first question will be, the shortages, I would just finally – could you tell us what your market share in North America and Europe is to the best of your guesses in bananas, because the drastic increases in traffic we saw, I mean, somebody seemed – I think people will still buy bananas. It sounds like you are supply constrained. Could you give us a sense how much the market grew as far as your estimation? And that will be my first question.

Mohammad Abu-Ghazaleh, Chairman and CEO

Well, it’s very difficult to say how much the market grew, Jonathan, in the first quarter, because once we started – we just started January, I mean, in February we started facing all these challenges in the market. By almost the end of February, there was like a rush to retail and supermarkets. We saw a spike in banana sales and consumption. But that was for almost like 10 days, 2 weeks. Then all of a sudden, there was a drop in buying and in consumption. On a normal basis, usually, our market share is about 20% of the North American market. We bring about 1.2 million, 1.3 million boxes a week into the North American market.

Jonathan Feeney, Analyst

Okay, thank you. I’ll follow up on that. Ordinarily, you would expect – returning to avocados and pineapples, where you saw some pretty drastic increases in price and, well, what seems to be some supply shortages. I’m guessing a global phenomenon, because in pineapples volumes are down significantly. Has that pricing lasted into the second quarter and would you expect that to help offset volume declines, continue to help to offset volume declines or have those production shortages eased and more say flat pricing has taken hold?

Mohammad Abu-Ghazaleh, Chairman and CEO

Yeah, well, actually what happened with the pineapples in particular during the last six weeks has been catastrophic, because we saw that we were expecting to have the Easter period where pineapples sales usually climb up drastically during that period. Unfortunately, with what is going on right now in the market, supermarkets, retailers didn’t want even to promote pineapples, didn’t want even to put pineapples on their shelves, because they said that this is not an essential item. What we saw is that there was an avalanche of volumes coming into the market with not much buyers. That has really impacted us during the first quarter and the first couple of weeks of this month, April. As we speak today, we see now the trend is moving back to normal, I mean, consumption and buying of pineapples and pricing improving. During this period before Easter and throughout the end of this month, I mean, the pineapple market was in turmoil. It was not a shortage reality. There was no shortage of pineapples. There was no market for pineapples and that’s unfortunate. We noticed this for pineapples, and not only in North America but we saw the same trend in the Middle East, in Asia as well, and Europe, that customer priorities were maybe bananas and other types of certain vegetables. We have to consider also that with unemployment, the way it is going in Europe and North America, that has really impacted consumers’ purchasing power. This will be a factor going forward. However, I believe that we can overcome this with our vertically integrated business and the way we are managing our business, Jonathan.

Jonathan Feeney, Analyst

Great. And last question, more of a financial one, can you make any estimate as to – on an adjusted basis, forgetting about the $8 million write-down of inventory, what impact in terms of gross or operating profit the $27 million shortfall you enumerated to COVID-19 had on your company?

Eduardo Bezerra, Senior Vice President and CFO

Thank you for the question, Jonathan. It’s really hard to precise – we were looking into that. When you see the overall effect in gross profit year-over-year, as we talked about, we had an effect related to foreign exchange that was about $6 million. However, the difference there, there is a portion that’s really related to pricing, as we talked in explaining our results. Starting in Asia, we saw a significant drop in prices because of the port closures in China. This affected not only our operations but other companies that had volumes going to China, they were diverted to South Korea, Japan and Hong Kong where we have the largest market share in the world. That really put pressure on prices there. In addition, starting in Italy and impacting other regions as well, beginning in March, we started to see more fierce competition in both bananas and volume. I would say the majority, but it’s hard to specify that impact of the $27 million net sales translated to the gross profit line.

Jonathan Feeney, Analyst

Wow, thank you very much. That’s all I have. Thanks again for your time.

Eduardo Bezerra, Senior Vice President and CFO

Thank you, Jonathan.

Mohammad Abu-Ghazaleh, Chairman and CEO

Thank you, Jonathan.

Operator, Operator

Your next question comes from the line of Mitch Pinheiro from Sturdivant. Your line is now open.

Mitch Pinheiro, Analyst

Yeah, hey. Good morning, everybody. Hope everybody is well.

Mohammad Abu-Ghazaleh, Chairman and CEO

Hi, Mitch.

Eduardo Bezerra, Senior Vice President and CFO

Hi, Mitch.

Mitch Pinheiro, Analyst

Hey, I missed the beginning of the call. I was just curious, Mohammad, whether you spoke about to the extent you can, sort of the outlook for the second quarter as it relates to all the disruption. I mean, are you back on track to any extent? Is there anything – I mean, how should we approach putting our estimates together for the second quarter?

Mohammad Abu-Ghazaleh, Chairman and CEO

I’m always honest, and I am very honest in saying that the first part of April was challenging. As we go now, in April – the first part of April was challenging regarding pineapple and the fresh vegetables as well, because of foodservice. Foodservice is a major, major consumer or major buyer of vegetables at fresh-cut vegetable. With the foodservice out of the picture, mostly, that has impacted our fresh vegetables in Salinas and Mann Packing and to a slight way, the fresh-cut fruit as well. As we speak today, I see a much better market going forward. We see a lot of more normalcy in the market. We see pineapple coming back to normal behavior. Demand is picking up, as we see even during this week that things are changing. I believe that we are in a very strong position, Mitch, and let me be very clear on that. As far as Fresh Del Monte, we believe that we will come out of this crisis stronger than before because during this crisis we have identified our weak spots. We are consolidating our operations that will bring us, hopefully by the end of June, around $13 million in savings annually. There is more that we are doing in other locations that will support our operations.

Eduardo Bezerra, Senior Vice President and CFO

If I may add, Mitch, a couple of additional comments. So we started in the month of April, because Asia was the first market that faced the impact of the coronavirus and was the first to come out. We’re seeing in April much stronger gross profit margins than what we saw a year ago. Either on bananas or some of our other products that see us gaining higher margins than what we saw last year. At this time consumers also looked into destocking traditional prepared business. We saw a significant increase in our demand for our prepared traditional business that last year had a very minimum contribution to our bottom line and it was almost breakeven. This year we expect a very strong contribution between our branded, our private label business and our concentrates, because all of those saw a significant increase in prices due to last year. With new production coming in from Kenya, we anticipate much more favorable yields that will drive down costs in Q2 and throughout the end of the year.

Mitch Pinheiro, Analyst

Okay. Thank you. What does the banana market look like for you globally in terms of the supply and demand picture?

Mohammad Abu-Ghazaleh, Chairman and CEO

Today, as we speak, I think supply and demand are more or less in line, Mitch. I don’t see a shortage of bananas. I see consumption and demand are very much in line. We don’t see big disruptions like we saw in pineapples or in vegetables or in the value-added products. But bananas have been steady and consistent. What I would like to comment as well, which I mentioned in my script, is that we just started actually an e-commerce platform. I would encourage you to visit it. It’s www.myfreshdelmonte.com and I want you to see our new site. It has been a fantastic start, and we see repeat orders because the feedback has been extremely positive.

Mitch Pinheiro, Analyst

Okay. A couple of other questions. By the way, just going back one question regarding the fresh veggie business, fresh fruit, where you talked about challenging, obviously, the challenging environment for foodservice. What percentage, how big is foodservice either within all of Fresh Del Monte or just in the veggie, fresh-cut veggie area, fresh-cut fruit? Can you give us some sort of context there?

Mohammad Abu-Ghazaleh, Chairman and CEO

Yeah. I’ll tell you as far as our business with the fresh-cut fruits and related other items that we produce ourselves, it’s about 30% foodservice, about 70% other items. It’s the reverse with the Mann vegetable business. It’s usually about 70% foodservice and 30% retail. The foodservice was mostly hit in the Mann vegetable business rather than in our own category of fruits. All in all, however, fruits and vegetables were impacted negatively during the last 6, 7 weeks, because the foodservice almost came to a standstill. I feel very sad for them.

Mitch Pinheiro, Analyst

Just two more questions, quick questions…

Eduardo Bezerra, Senior Vice President and CFO

Just one correction, Mr. Abu-Ghazaleh, because I think your numbers include some other channels. Specifically, on what we call foodservice that represents about 15% to 20% of our overall sales, used 2019 as the basis via for Mann Packing specifically that’s about 45% to 50%. So a little bit less of that. In January and February, we saw a recovery from the previous recall, but then March is when we saw a huge impact because the foodservice suddenly shutdown, and so almost half of our demand went away from one day to the other. That caused a significant portion of the other charges that we mentioned on our adjustments regarding inventory.

Mitch Pinheiro, Analyst

Okay. Thank you. I had just two more quick questions. One, on the fresh-cut veggie business and the recall, is there any way to gauge what business you didn’t recover?

Eduardo Bezerra, Senior Vice President and CFO

I would say, Mitch, a couple of things. There are a couple of customers that they were concerned about the issues that we faced. We assured them that with the new Gonzales plant up and running by the month of July. We are very confident to come back to have business with us. We believe that a lot of the cost and inefficiency that resides on Mann Packing is going to go away. We are combining almost four different plants into one single facility. This is going to drive a lot of savings and operational efficiency. We expect this to start becoming evident by July. The only struggle we haven’t been able to ramp up is due to limitations on water usage imposed by the city of Gonzales.

Mitch Pinheiro, Analyst

Thank you for that. Last question on the avocado market. I was surprised – I mean, looking at the volumes in the United States, I didn’t see volumes decline 21%. Your volume decline seemed a little larger. And also your pricing up 33% in the quarter was a little bit stronger than I would have anticipated. Can you talk about your avocado business a little bit?

Mohammad Abu-Ghazaleh, Chairman and CEO

The avocado business, Mitch, has been with us for so many years now. We had always been buying through third parties. Since about two, three months back, we started our state-of-the-art plant for avocado packing. I can tell you it’s one of our best plants in the world. Now we are packing almost everything in our plant. We are very confident going forward. Our market share and our presence in the market will be very significant through the new streamlining of our avocado business in North America, Europe and Asia.

Mitch Pinheiro, Analyst

So what happened in the quarter though? I mean, I just – I mean, volume is down 21%. It was in the – I didn’t see that in terms of like supply changes into the U.S. market. I just thought you would see flattish kind of volume. And then, with your plant, unit costs were 44% higher. I guess you’d see that come down with your packing plant efficiencies. But it just seems like the quarter was – it’s sort of opposite of what I was looking for in the avocado line.

Mohammad Abu-Ghazaleh, Chairman and CEO

Yes, but don’t forget that we saw the first week, 10 days once the government said there would be a closure and lockdown. There was a huge rush to retailers, to clubs, with people waiting in line. We saw a very big spike in avocado sales in the first 10 days. Then, all of a sudden, like 10 days later, 2 weeks later, buying and consumption dropped, not as bad as pineapples, but in avocados, we did see a drastic drop in sales. Stocks in the pipeline or cold storage were impacted. We cannot put so much volume for so long in storage.

Eduardo Bezerra, Senior Vice President and CFO

Just to complement that, Mitch, we have the ramp-up plan for our plant this year. We started with higher costs due to the startup of the plant, but in April, we are running our plant at high utilization, preparing for Cinco de Mayo. While we’re talking about pineapples with sudden demand drops, we’re seeing now the opposite; an uptick on the avocado volume preparing for Cinco de Mayo. We believe that some of the challenges faced in Q1 will be adjusted and corrected for Q2.

Mohammad Abu-Ghazaleh, Chairman and CEO

I’d like to add that we are not only packing in Mexico. But we do have our packing plant as well in Los Angeles. We are packing California avocados too.

Mitch Pinheiro, Analyst

Okay. Thank you. Thanks for taking the questions.

Mohammad Abu-Ghazaleh, Chairman and CEO

Pleasure.

Operator, Operator

There are no further questions at this time. I will turn the call back over to Mr. Abu-Ghazaleh.

Mohammad Abu-Ghazaleh, Chairman and CEO

Thank you very much. I appreciate having you join this virtual call, which is the first time that I have done that. It went very nicely and I can assure you that we are very confident about our immediate future and the long-term future. I hope to talk to you in person on our next conference call. Best of luck and stay safe. Thank you. Good day. Bye.

Operator, Operator

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.