Earnings Call Transcript - LAB Q2 2024

Operator, Operator

Good day and welcome to the Standard BioTools Second Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. Please note, this event is being recorded. I would now like to turn the conference over to David Holmes of Investor Relations. Please go ahead.

David Holmes, Investor Relations

Thank you, operator and good afternoon, everyone. Welcome to Standard BioTools' second quarter 2024 earnings conference call. Leading the call today is Michael Egholm, President and Chief Executive Officer; and Jeff Black, Chief Financial Officer. At the close of market today, Standard BioTools released its financial results for the quarter ended June 30, 2024. During the call, we will review our results and provide an update on our financial and operational performance, 2024 outlook, market trends, and strategic initiatives. During the call, we will be making forward-looking statements about events and circumstances that have not yet occurred, including plans and projections of our business, our outlook for 2024 and future financial results, market trends and opportunities, our expectations related to the combined operations with SomaLogic, including potential synergies, and our business outlook for the combined company. These statements are subject to substantial risks and uncertainties that may cause actual events or results to differ materially from current expectations. The forward-looking statements on this call are based on information currently available to us and we disclaim any obligation to update these statements, except as may be required by law. During the call, we will also present some financial information on a non-GAAP basis. We believe these non-GAAP financial measures are useful in evaluating our core performance and as a baseline for assessing the future earnings potential of the company. We use these non-GAAP measures in our own evaluation of continuing operating performance. We encourage you to carefully consider our results on a GAAP and non-GAAP basis. A reconciliation between non-GAAP measures and their GAAP equivalents are provided in the tables accompanying today's press release and as an appendix to today's presentation slides. Please note that management will be referring to a slide presentation, including updated supplemental financial information within the webcast today. Following prepared remarks, we will host a Q&A session. Today's presentation will be available on the website as well as the webcast on the Investor Relations section of the website. I would now like to turn the call over to Michael Egholm, President and CEO of Standard BioTools. Michael?

Michael Egholm, CEO

Thank you, David, and good afternoon, everyone. We appreciate you joining us today. Before we discuss our quarterly results, I want first to touch on the leadership news we announced this afternoon. As you saw from our announcement today, Jeff Black has accepted an opportunity in another public company located closer to home and family. Jeff helped us build a strong finance function with talented and capable leaders that position us well for a seamless transition. We appreciate Jeff's contributions, his decision, and wish him all the best. He will remain with SBI through August 31st to ensure a smooth transition of his responsibilities. We have started a search for a permanent successor and we're fortunate to already have a deep bench of talent across our leadership team and throughout our finance and IT organizations. Starting on September 1, Alex Kim, our long-time Chief Operating Officer and a Co-Founder of Standard BioTools will take on the interim CFO role, and will continue to lead strategic planning and integration of acquisitions. We also recently appointed Sean MacKay as our new Chief Business Officer, who now assumes responsibility for strategic business development, product management, marketing, and Investor Relations functions. With that, let's discuss our results. Our team's focus on cost structure and early integration of SomaLogic has accelerated synergy realization in the quarter, and we are now pulling forward the $80 million cost reduction target to the end of 2024, a year ahead of plan, keeping us on the track to achieve breakeven adjusted EBITDA for the full year 2026. A strong operational execution was offset by a weaker-than-anticipated second quarter revenue and SomaScan services experienced contract delays and instrument revenue was down year-over-year. While the latter is largely attributed to headwinds from the ongoing industry-wide restricted capital purchasing environment, as peers have reported, combined with the service business variability discussed, we are revising our revenue guidance to $170 million to $175 million for the full year 2024. We're confident that industry issues are transitory and some encouraging signs emerge in particular markets. Further, our operating system, SBS, has become deeply embedded in the new businesses focused on delivering improved forecasting, shortened sales cycles and in time, expanded product offerings to enable a more diversified customer base. SomaScan and its proprietary aptamer technology is a leading proteomics platform with tremendous upside. We're excited to be partnering with Illumina and their full commercial release in the first half of 2025, enabling the SomaScan assay on Illumina's NovaSeq platform, which has an installed base of around 2,200 instruments. Most importantly, we remain committed to hit breakeven adjusted EBITDA for the full year 2026. We're well capitalized with nearly $400 million in cash to execute on our strategic vision of building a scaled, profitable multi-omic solutions life science business. At Standard BioTools, we're grounded in the reality that the life science technology and service industry is highly fragmented, filled with small enabling solutions and brilliant technologies, but in desperate need of operational scale and the commercial and manufacturing expertise to achieve that. This is a perfect setup for strategic M&A, which is central to our strategy and an area we continue to be active. In fact, we believe the current market dynamic is creating opportunities for us to accelerate our consolidation thesis to drive additional scale, diversification, and shareholder value. In summary, despite a challenging quarter, we remain confident in our long-term outlook and we will stay the course on our vision to become a leading diversified life science leader with the best-in-class technology platform and several differentiated growth vectors and a team of operators that understand what it takes to execute in any environment. Turning to our quarterly performance and highlights, revenue as on a reported basis grew 57% in the first half of 2024 and 34% in the second quarter. On a performed combined basis, revenue declined 11% in the first half and 23% in the second quarter. Our lower-than-expected revenue results were driven primarily by two factors. First, we experienced project delays for SomaScan assay services, largely by select customers in the EMEA region. We are encouraged, however, by an early third quarter uptick in key pharma account activity providing us an early optimism for potential improvement in this segment as we move through the second half of the year. Instrument revenue was down year-over-year, but we saw a 40% sequential improvement compared to the first quarter of 2024. While we experienced continued economic pressure in the CapEx instrument purchasing cycles in the second quarter, largely consistent with what we saw in the first quarter, we're encouraged by the sequential increase in placements in the second quarter. As stated above, we have seen sales cycle extend across the portfolio. The opportunities remain available just on an elongated timeline. Against this challenging backdrop, we continue to deliver on an operating cost reduction. On a pro forma combined basis in the first half of 2024, we reduced our non-GAAP operating expenses by more than $30 million, or 27% over the first half of 2023 and delivered another reduction in adjusted EBITDA loss for the quarter. And we have already operationalized $60 million of our $80 million target cost synergies, which we expect will be fully reflected in our full year run rate entering 2025. Turning to sales mix in the second quarter, Instruments accounted for 19% of revenue, consumables and kits were 40%, instrument support services 17%, and SomaScan services 21%. While our SomaScan service revenues remain concentrated and susceptible to quarterly variability, we are working hard to diversify our customer base, which will help to mitigate this. We are also expanding our near and medium term growth drivers of this business with more distributed solutions to complement our service business, chiefly through our partnership with Illumina. In addition, we are exploring new models to sell SomaScan both with a lower plex more cost-effective model and single SOMAmer reagents. But single SOMAmer reagents participation is underway with a goal to launch a minimal and viable product this fall. Furthermore, we continue to lean into our strategy to deploy our Multi-omics-as-a-service offering, which will leverage our SomaScan and CYTO combined technology platforms and future platforms developed and acquired offerings to expand our lab services business, providing customers premium data with clinical solution support. This might glove customer experience will further accentuate complementarity of lab technologies and where they can best be applied. It's a natural extension of our existing offerings and provides a quicker path to technology adoption, while avoiding some other capital budget constraints currently facing the broader biopharma market. As we look to the next several quarters and beyond, we are incredibly well-equipped to execute. First, we have assembled what we believe to be the most comprehensive proteomics platform in the industry with multiple revenue drivers and a platform to expand and complement those sources of revenue, both organically and inorganically. Second, we have an experienced leadership team committed to our continuous improvement initiative with a track record of driving growth, expanded gross margins and reducing operating costs. And finally, our healthy balance sheet provides both runway and firepower to execute our long-term growth and strategic initiatives. We ended the second quarter with over $396 million in cash, which we see as a significant competitive advantage in a highly constrained capital environment for our sector. And with that, I'll now turn the call over to Jeff.

Jeff Black, CFO

Thank you, Michael and thank you all for joining us today. I first want to say a few words about my decision to leave Standard BioTools. Since I started the company almost 15 months ago, we've set an incredibly strong foundation for transformation. We're only just getting started. It's been a tremendous opportunity to be the CFO here working alongside Michael and the rest of our talented ELP team. I remain a steadfast believer in Michael, the team and the SBI vision. I didn't take the decision lightly, but ultimately decided this new opportunity is the right move for me at this point in my career. It's an industry I know well, located closer to my home, and my family. There's never a great time for a move like this, but I'm firmly committed to making the transition a success. Alex and I have been aligned in lockstep since my first day here at our finance and IT organization is second to none. The leaders are hand selected and the most capable team I know to continue the great work we started together. Now, turning to our results. And as a reminder, our second quarter and first half 2024 results on an as-reported basis include the combined operations of Standard BioTools and SomaLogic since the close of our merger January 5th of this year, while the same periods in 2023 include the financial results of Standard BioTools' legacy business only. And so for comparative purposes, we think it's more meaningful to look at the combined operations for both businesses. So, my commentary today will focus on the pro forma combined results of operations for Standard BioTools and SomaLogic for both 2023 and 2024. Please refer to today's press release and the appendix to our investor deck for more information, including a reconciliation of GAAP to non-GAAP measures I'll be discussing here. So, starting with revenue in the second quarter, pro forma combined revenue was just over $37 million, down 23% and just over $83 million, down 11% for the first half of the year. This is as we continue to navigate lingering headwinds from a challenging macroeconomic environment and timing of orders from large pharma accounts. As Michael mentioned, second quarter revenue was predominantly impacted by our SomaScan assay services, where we saw a number of customer projects extend past the second quarter. Approximately $9 million of the $11 million decrease in our second quarter revenue was attributed to our assay services business. Product revenue was just over $22 million in the second quarter, down 10% compared to 2023 and just under $46 million in the first half, up 6% compared to 2023. This is driven by the traction we're seeing in our SomaScan assay kits and related businesses or business with continued expansion in our authorized sites and related pull-through as well as our Illumina Early Access Program. Instruments and consumables was $16 million in the second quarter, down 27% and $31 million in the first half of 2024, down 20%. We continue to navigate a macro environment that has constrained customer funding cycles and extended sales cycles. We're seeing this impact on our instrument orders with a correlated impact on consumables, but we're encouraged by the sequential uptick we saw in instrument places and revenue growth compared to the first quarter. Service revenue was down $14 million in the second quarter, 37% down versus 2023 and $36 million in the first half, down about 25%. And as mentioned, the biggest driver of this decline was the SomaScan-related business, which contributed about $8 million in revenue for the second quarter, down 50% and just over $23 million in the first half of the year, down about 35%. But as Michael mentioned, we are encouraged by the early Q3 uptick in sample delivery from key pharma accounts. We expect that to continue to improve as we move through the back half of the year. Instrument Support Services contributed over $6 million in revenue in the second quarter, a 9% decrease over 2023 and $13 million in the first half of 2024, roughly flat with 2023. And like our consumables, this revenue source is highly correlated with instrument placement and we expect this will continue to expand as we grow the installed base over time. Turning quickly to our segment revenue, our proteomics business as a whole today represents 75% to 80% of our revenue. This segment includes our flow cytometry, imaging instruments, consumables and instrument support services, as well as our SomaScan assay services and kits business, which is more prone to variability from customer purchasing cycles in our genomics segment. It was down 27% for the quarter and 12% for the first half of 2024, but we expect proteomics to be our highest growth segment over the long-term. Genomics was down 6% in the second quarter and in the first half of 2024, that's in line with expectations as we continue to manage the business through its planned transition, focusing on OEM and key strategic customer accounts. We've rightsized the OpEx over the past two years and we're now driving the genomics segment where positive contribution margin targeting mid-single-digits, but profitable revenue growth over the long-term. Moving to our operating performance, starting with gross margin. Our non-GAAP gross margin on a pro forma combined basis was 45% in the second quarter versus 53% in 2023 and 51% for the first half of 2024 compared to 53% in the same period last year. In the second quarter, we did see headwinds of around 250 basis points from lower capacity utilization related to our lower SomaScan assay services volumes and over 300 basis points impact from strategic decisions to replace or upgrade instruments in the field. Excluding the impact of these items, our non-GAAP gross margin would have been 51% and we expect to continue to see improvements as our SomaScan revenue volumes recover, replacement upgrade costs decline with some expected headwinds to continue in the second half of 2024. But encouragingly, we're beginning to see our run rate warranty costs decrease. This is an early indicator that our corrective actions are beginning to have an impact on longer-term gross margin expansion. So, with all that said, we still remain confident in our ability to drive non-GAAP gross margins into the mid-60s over time, especially as we move past these transitory headwinds, we grow sales, and drive costs and efficiency improvements across our combined operations. Moving to operating expenses. As Michael mentioned, we're pleased to report that we're ahead of plan on our operating expense reduction initiatives. On a combined pro forma basis, our non-GAAP OpEx of just under $48 million, decreased by about $11 million or 19% in the second quarter, reflecting continued traction on expense reduction that began in the second half of 2023. For the first half of 2024, our non-GAAP OpEx decreased by about $33 million or 27% and as seen by the slight uptick in R&D spend for the second quarter, where we continue to take a thoughtful, strategic approach to our cost reduction actions, preserving core R&D investments as necessary. And these reductions are all before we see the full impact from restructuring initiatives that we implemented earlier this year and before the impact of any future cost reductions we plan to operationalize in the second half. Today, we've operationalized $60 million in annualized operating expense reductions versus our 2023 jumping-off point of $250 million. We've now committed to accelerate the remaining $20 million target by the end of the year. So, in total, we expect that over $25 million of these savings will actually show up in the P&L in 2024 with the full P&L impact reflected in 2025. Based on these efforts, we're more enthusiastic than ever about the value we expect to generate under our now combined cost structure, leveraging the scale and reach of our diversified portfolio, where we remain committed to adjusted EBITDA breakeven for the full year 2026. We're prepared to manage costs even more aggressively if needed to get there. At the same time, as I said, we continue to maintain focused investments in commercial and R&D pipeline to support long-term growth. And finally, cash flow and the balance sheet. We ended the quarter, as Michael said, at about $396 million in cash, cash equivalents, restricted cash, and short-term investments. As we expected, our cash burn, while it sequentially improved over the first quarter, was still typically high in the second quarter due to several merger-related and other non-operating uses of cash. In the aggregate, during the second quarter, we made about $38 million in cash payments for transaction and merger-related expenses and share repurchases. But excluding the impact of these items, our adjusted operating cash burn was about $28 million, representing about a 7% reduction over our pro forma combined burn a year ago, even at a reduced revenue level. So, while not at the levels we saw in the first and second quarters, we do expect continued cash outlays for merger, integration, and restructuring activities. But we're well-positioned to fund both these non-operating cash needs and to support the combined business to cash flow breakeven. And as we think about any future M&A, we remain very thoughtful and disciplined about additional strategic M&A when such opportunities arise, including the related use of cash. And then one final update on capital structure initiatives. As we previously announced in February, the Board approved a new share repurchase program of up to $50 million. Through the first half of 2024, we purchased approximately 15.4 million shares, about 4% of our common outstanding shares were about $41 million in cash at an average repurchase price of $2.66 per share. As we shared in our first quarter call, we still have room available under the $50 million authorization, but we suspended the buyback plan on May 2nd. And in summary, we remain responsible towards our assets. We committed to create long-term value for our shareholders.

Operator, Operator

We will now begin the question-and-answer session. The first question comes from Matt Stanton with Jefferies. Please go ahead.

Matt Stanton, Analyst

Thanks. Maybe first one for Jeff, on the guidance cut. So, lower by $30 million at the midpoint, 2Q was about $10 million or so below expectations. Can you just talk about the remainder of the bridge on the cut in terms of products for service, proteomics versus genomics? What are you assuming for each of those for the year now? And then talk about visibility or clarity around the step-up in the second half, I think even on the new guide, it implies kind of a 10% step-up in the back half versus first half. It sounds like maybe early signs on SomaScan to encouraging, but anything else to help bridge the back half relative to the first half of the year? Thanks.

Michael Egholm, CEO

Hey Matt, I'll let Jeff provide a bit more detail, but I'll start off. First of all, joining us are Jeff and Alex Kim, who will serve as interim CFO next month when Jeff departs. I'm very excited about the SomaScan business. When we assumed control, we recognized its high concentration. Over the past year, we've faced a challenging comparison with major customers and a forecasting miss due to not implementing our SBS principles effectively in the SomaScan business. We've addressed this issue now and have a solid handle on the business. I'm optimistic about its direction, especially with new papers emerging that demonstrate the platform's superiority, the growth we're experiencing with a wider customer base, and over time, the major customers will stabilize and become a healthy part of the business rather than dominating it. Jeff, do you want to add anything regarding the bridge?

Jeff Black, CFO

Yes, Matt, we've not broken out the components, either by segment or by product line in terms of what the back half looks like. But I think you hit on it as we are seeing encouraging signs of an uptick in some of the large pharma accounts. We're encouraged by the existing pipeline on the instrument side of the business. And so what you'll see is really just a mix of components that will drive that 10% sequential second half versus first half.

Michael Egholm, CEO

I want to reiterate that we have been excessively reliant on a few major pharmaceutical companies. Because of this, any single project in a quarter can significantly influence our performance positively or negatively, which has led us to our current situation. This was a recognized risk. My mistake was not implementing a rigorous SBS forecasting approach sooner, which we now have in place. As a result, we have strong visibility for the second half of the year, which informs our updated guidance.

Matt Stanton, Analyst

Okay. And maybe sticking with that lumpiness on the Soma side, I think you expect a kind of high single-digit million impact in 2Q from that. Just to be clear, that's kind of timing-related revenue and it didn't really go out or do you still expect to kind of recoup that over the coming quarters as those handful of projects start to resume or spend in a more earnest way?

Michael Egholm, CEO

Yes, I'll ensure I address the question. The forecasting miss is primarily due to timing, as we are too dependent on a few major customers. We are facing year-over-year challenges, which is typical for this business. We are actively working to diversify our mix through our authorized sites, where we experienced healthy growth. Illumina is set to come online in the first half of 2025, and we are optimistic about this transition. Additionally, we are launching a minimum viable product version of individual SOMAmers, which will help diversify our revenue. For this quarter, the issue is mainly timing, compounded by tough year-over-year comparisons related to our significant service contracts.

Matt Stanton, Analyst

Okay. And then just maybe one more, if I can. Taking a step back, you reiterated the commitment to adjusted breakeven in 2026 pulled forward the rest of the cost synergies by a year, how should we be thinking about the top line from here? And any additional color you can provide in terms of the revenue base or growth between now and 2026? I think it's probably unlikely the $300 million from prior, but just given you reiterate the adjusted breakeven? Any more color you can talk about on the revenue or growth side as we think about that in 2026? Thanks.

Michael Egholm, CEO

The $300 million target seems like a bigger challenge based on our recent discussion. However, I want to be very clear that we are experiencing strong growth in our proteomics portfolio, which makes up about 80% of our revenue. In our genomics portfolio, as our largest OEM vendor has reduced their inventory and is now out of Thermo, we are starting to see an improvement in the second half of the year and expect this to continue into next year. We believe that we will achieve adjusted EBITDA positivity regardless of our top line revenue. Therefore, we are confident that we will reach EBITDA breakeven by 2026. If we reach the higher end of our revenue expectations, no further actions will be needed, and we will pursue that possibility. However, if we end up at the lower end, I will need to manage additional costs, but I am fully committed to that.

Operator, Operator

The next question comes from Dan Brennan with TD Cowen. Please go ahead.

Dan Brennan, Analyst

Hey guys, thanks for the questions. Maybe Jeff, obviously, it's hard to see you leave, excuse me, good luck with the next endeavor. Anything else you can share just about the decision to leave now? I mean, you've been at the helm for 15 months, particularly after kind of a mixed quarter. Just anything else you can kind of share about the decision to part?

Jeff Black, CFO

Yes, Dan, this is definitely a personal decision for me. I'm returning to an industry I know well and working with people I've collaborated with before, and it brings me closer to my family and home. There’s never a perfect time for these choices, but this feels like the right decision for me at this stage in my career. I have no disagreements with the management team and I remain a loyal shareholder who believes in the vision. I'm proud of my role in rebuilding the finance organization, which will now thrive under Alex's leadership. We share aligned strategic and operational perspectives, supported by a strong team that will continue to drive our initiatives. So, I want to emphasize that this is simply a personal decision made at an appropriate time for the company.

Dan Brennan, Analyst

Thank you for that. Regarding the previous question, Michael, you touched on the new rigorous forecasting process that's been implemented. However, with the stock expected to decline significantly following Jeff's departure, there's an opportunity to reset the guidance. It’s important to reassure investors that the outlook is now less risky. Could you provide more details on how you arrived at the new projections and what assumptions you’ve made about the spending environment that might help instill confidence?

Michael Egholm, CEO

Thanks, Dan. We have established a strict process on the SomaScan side, monitoring projects from the contract signing to sample receipt, which is quite complex. However, we have rigorous daily management in place. The updated guidance reflects what we can see at this time. In response to your questions, this is occurring within a limited pharmaceutical spending environment for both projects and instruments. If the market improves in the second half, I would be thrilled, but we are not counting on that for the instrument side. We are actively building our pipeline; my team remains busy whether or not instruments are being sold. Even without instrument sales, we are still developing the pipeline. Additionally, we are focusing on other growth opportunities, notably Omics as a service, which we believe will become a growth driver next year. SomaLogic has developed a comprehensive integrated service organization, and we are enhancing our offerings with CyTOF and other technologies. We aim to lead with service sales instead of just instrument sales, catering to different customers and solutions. We anticipate this will contribute to higher growth in the future, offering some tailwind for second half revenue, although not significantly enough to change the overall picture.

Dan Brennan, Analyst

Got it. And maybe one final one. Just like instruments and consumables, obviously, you're in a tough CapEx environment. Anything you could speak to about the relative trends in the quarter and how they came in and kind of how you're thinking about the back half of those?

Michael Egholm, CEO

The consumables spending is flat year-over-year when considering consumer revenue, including the authorized side. We expected it to increase, but one contract can significantly influence the numbers, so I wouldn't place too much emphasis on this flat figure. It's still early in the launch of the Hyperion XTi imaging platform, which is anticipated to boost future consumable revenue due to its higher throughput. Additionally, we've worked through various issues with our CyTOF XT flow business and believe we're moving past them. Eventually, we expect our customers to increase their consumable orders. However, a significant pharma contract can shift numbers between quarters, and we had a strong second quarter last year, making this a challenging year-over-year comparison. So, I wouldn't overemphasize the current figures.

Dan Brennan, Analyst

Got it. Okay. All right guys. Thank you very much.

Operator, Operator

The next question comes from Paul Knight with KeyBanc. Please go ahead.

Paul Knight, Analyst

Hey Michael, what was the genomics in the quarter in terms of revenue? And I think you're calling out a pickup sequentially in the second half. But is that a growing business in future years? First question.

Michael Egholm, CEO

Last year, when we took over what was Fluidigm, we made significant changes to our cost structure and radically altered our strategy, resulting in a decrease in costs compared to a 6% increase in the first half of the year. This is part of what we refer to as a managed decline, as we are seeing some personnel move towards NGS, a long-term trend I have discussed in previous earnings calls. We expect to navigate through this headwind over the next 12 to 18 months. On the brighter side, our OEM partners, including Olink and Next Gen Diagnostics, are forming new relationships and are gaining traction. We've identified a few lucrative niches that are experiencing healthy growth. Therefore, we anticipate that the second half of next year will stabilize, followed by a significant upturn. As Jeff noted, the business contributes positively on a contribution basis. We have maintained a strong technological foundation, particularly our core microfluidic technology, which we believe will be beneficial moving forward. We also have an advanced manufacturing facility in Singapore that we plan to utilize throughout the business. We are committed to growing our microfluidics sector, which we expect will become a key driver of profit in the coming years.

Paul Knight, Analyst

And on the SomaLogic decline year-over-year, is that business that can be recouped or no?

Michael Egholm, CEO

Yes, Paul, it's important to note that a small number of customers contribute significantly to the revenue from the SomaScan service each year, which causes fluctuations. We are focused on expanding this service to reach more customers. Additionally, we are in the process of distributing solutions through our authorized partners, including Illumina, to drive further revenue. Although some specific projects are delayed, they will eventually proceed, but all projects have been postponed, which is why we adjusted our guidance. Haven't lost any one project just to be clear.

Operator, Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Michael Egholm for any closing remarks.

Michael Egholm, CEO

Yes. Thanks Drew and thank you for the question and thank you for listening. And we thank you all for your continued support. We look forward to seeing many of you at the Canaccord Genuity 44th Annual Growth Conference on August 13th in Boston and then at the UBS Genomic Medicine Summit on August 14th in Laguna Beach. So, looking forward to seeing you all, and back to you, Drew.

Operator, Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.