Natuzzi S P A Q2 FY2022 Earnings Call

Good day ladies and gentlemen. Thank you for standing by. Welcome to the Natuzzi Second Quarter 2022 Financial Results Conference Call. As a reminder, interested persons can join this conference call live via telephone by dialing in the following number: (+1) 412-717-9633, then passcode 39252103#. Once again, to dial-in, please dial (+1) 412-717-9633, then passcode 39252103# in addition to the link already provided for the video to join. At this time, all participants are in a listen-only mode. Following the introduction, we’ll conduct a question-and-answer session, instructions will be provided at that time for you to queue for questions. Joining us on today’s call are Mr. Antonio Achille, Natuzzi’s Chief Executive Officer; Mr. Jason Camp, President of Natuzzi Americas; Piero Direnzo, Investor Relations; and Mr. Pasquale Natuzzi would join us in a few minutes. As a reminder, today's call is being recorded. I would now like to turn the conference over to Piero. Please go ahead.

Thank you, Kevin. Good day to everyone and thank you for joining the Natuzzi's conference call for the second quarter 2022 financial results. After a brief introduction, we will give room for a Q&A session. Before proceeding, we would like to advise our listeners that our discussion today could contain certain statements that constitute forward-looking statements under the United States Securities Laws. Obviously, actual results may differ materially from those in the forward-looking statements because of risks and uncertainties that can affect our results of operations and financial condition. Please refer to our most recent annual report on Form 20-F filed with the SEC for a complete review of those risks. The company assumes no obligation to update or revise any forward-looking matters discussed during this call. Now, I would like to turn the call over to the company's Chief Executive Officer. Please, Antonio.

Thank you, Piero for the introduction and good morning, good afternoon to all the respected investors and analysts. So as usual, let me start sharing a bit about what has been the quarter results. As you've seen from our press release, we closed the quarter on a positive note, both in terms of sales, which were high single digits above 2021, that as you know, has been a very strong year for the industry as well as for Natuzzi. We closed 2021, 30% above 2020. So, having a quarter and half that closed at 7.8, I believe has been a good result. And of course, we are very much higher than 2019, which has been the last year of our normal conditions for the market before COVID. We closed roughly 27% above 2019. The driving force of the growth has been the branded business. We will be commenting more in detail, but our branded business now represents 90%. As you know, this is the future of the company. We are on a journey to become a brand retailer and the branded business now is more than 90% of our overall turnover. It's also the sixth sequential quarter with positive results after quite a significant track record of investment by the company that resulted in negative operating profit. We closed with 1 million operating profit in the second quarter. We spell out that in comparing this figure to 2021, you need to take into account the one-off measures that were still in place because of COVID that accounted for 1.5 million in 2021. So, in other words, the operating profit of 1.1 million for the second quarter compared to 0.1 million operating profit in 2021, once the official number is netted by the one-off measures. We continue paying significant attention to cash, also given the uncertain times every business is running through. Our cash position is close to 60 million, roughly double that we need to manage our daily operations. This is a bit the picture in essence of the business. We will be discussing the specific actions we're taking as a leadership team to face a market context. They remain not only for us but I would say for the whole furniture industry and for the whole economy quite challenging because of multiple factors. Those factors have affected our business in terms of orders. In fact, in the last weeks, we have seen a trend less positive than what was observed at the start of the year, and we are taking—I will discuss later both the top-line measures and cost measures to ensure that these difficult conditions do not impact our financial status and our long-term plans. Let me stop here. I'd rather continue the discussion in more Q&A fashion rather than this opening.

Thank you. Our first question is from Stephen Regan from Regan Analytics. Your line is now live.

Yes, good morning.

Good morning.

Good we have connection here or should I say good afternoon rather?

British morning, afternoon. It is 4 p.m.

Okay. Well enjoy your evening after this call. Can you please just explain your FX strategies? Obviously, we're in unprecedented times with – in the FX markets globally. Can you please explain how Natuzzi is taking steps to mitigate that? And where – is most of our money, is it in the Euro? And I thank you for taking my call – or my question.

Thank you, Steve. So, let me start from the last part of your question. So, we're working on the markets. When we look at the buying, it is predominantly in dollars, because some of our key ingredients like the wet blue leather are negotiated in dollars and we buy from China where we source typically motion and other lesser metallic parts in dollars. When it comes to selling, our business has a significant portion in the U.S., which more than offsets the purchasing in dollars. So, at the moment, we would rather benefit than suffer from a stronger dollar. More generally, we're working with similar currencies. The way we do to our Financial and Treasury Department, we don't do covering because the covering would be too costly; you can develop the position in the short-term to offset the FX fluctuation. So, we basically do short-term coverage to offset the FX fluctuation. And I think for what I've seen so far, our treasury department has been quite successful in navigating quite nicely through these FX volatility periods.

Excellent. That's really good news. A follow-up question. The stock trading on the New York is trading at cash, basically U.S. dollar, trading at cash. What does the company think about that number one; and what steps can we take to improve shareholder value? And thank you for taking my questions.

So, what I think about it, I will use the polite version of what I think. I definitely see a bit of asymmetry here, maybe given the past history of the company of not being systematic in providing returns to investors. Last year, we closed with a 25 million EBITDA. As you said, we traded at cash, not even considering the cash that we don't have on our balance sheet, but we have in our JV with a £60 million or $60 million stake where we have a minority, and that answer is not considered in our balance sheet, but also that, in a sense, is part of the broader value creation story at Natuzzi. Let me take the positive angle. I believe as a CEO and as a leadership team, we need to do two things and it is actually in this order. The first is to systematically deliver value to shareholders and hence ensuring marginality and profit and cash return on capital employed. This is entirely on our end. Of course, these years are a bit more challenging than we wish. The second element is that we're trying to also bring some spotlight or clarity on the story of Natuzzi, which, as you know, is a microcap in the U.S., so we run the risk of being neglected by investors and also not benefiting from analyst coverage. In essence, we do our duty not to do too much momentum about what we're doing, but at least provide clarity. As part of that, we are doing quite regular calls with potential investors. We're also planning to join some events in late October like LD Micro. Maybe it's not the ideal time, but again, it's not a roadshow, it’s simply sharing our story and what we are doing in a transparent manner.

Thank you.

Thank you. Next question is coming from David Kanen from Kanen Wealth Management. Your line is now live.

Good morning, guys. Actually, congratulations on turning a profit with all of the challenges that you were facing in the quarter, China inflation, etcetera. So, just to scratch beneath the surface in terms of some of the operating lines, it looks like the operating expenses were down from like 37.7 million, down to 35.6 million, despite revenues being up about 6.5 and it looks like that was mostly transportation. Can you just confirm that for me or were there other items that contributed to that reduction in OpEx? And as we get into the second half of the year, I mean when we look at spot rates and container costs, it looks like it's going in the right direction, but can you give us a little bit of update there?

I may start, but definitely will have you Jason jump in, and I’ll tell you why. So, your reading is spot on. Typically, transportation helped us. Eighty percent of our transportation costs, which are significant in the range of 60 million towards the U.S. given that the U.S. does not have production sources from different regions. So, Natuzzi Italia from Italy, and then branded business from Vietnam in addition from China, so quite longer routes. What we are seeing is definitely a significant decrease in freight surcharges, not at yet the level of pre-COVID, but significantly lower than what we've experienced at the most dramatic part of the industry last year, especially last year, also this year when, you know during Chinese New Year, the tariffs were reporting at all-time records. So, we see long-term trends. Transportation, which again for the U.S. is a bit of an issue. The fuel and other things are contributing not to a sharp decrease. So, we are passing some of these, let’s say, decreases across to our clients, but always in a very cautious manner not to jeopardize our marginality. Having said that, given the fact that the U.S. is really central for this, maybe I will ask Jason. And if you allow me, Jason, maybe you can also share a bit about how we deal with freight to Natuzzi Italia as opposed to Natuzzi Editions and take it from there.

Happy to. So, during the last year, we probably adjusted our landed pricing to our customers three to four times, depending on the brand as freight was rising. We're definitely seeing a strong downward trajectory and together with our global freight team watching things carefully and adjusting our surcharges downward as it seems prudent and keeping a careful eye on our competition as well as they make moves with their surcharges and landed pricing. So, it’s a big focus of ours to make sure that we're protecting our marginality by staying competitive as well.

Okay. So, in other words, the reduction in transportation cost is persisting into the second half of the year. Now, when I look at, for example, commodity prices, many of the raw materials that go into your products, we're seeing them decrease now. I know that there is a lag between the price increases and the invoice sale. And when we through the P&L start to realize the improved gross margins, but I see every indication that that's going to happen between Factory 4.0 reduction and raw material costs, you guys taking price increases, transportation being down, all of that points to better gross margins in the future. So, my question is, will we see that in the back half of the year start to see it and then will it be better in 2023?

So let me start answering for what I have visibility on. As you know, Dave, we don't provide guidance, but let me try to be explicit to your question. In quarter three, we still benefit also because our price increases typically are embedded in the system. In March and April, we’ll start being visible in terms of the top line. So, the second-half results don't yet include the impact of 2022 price increases for the business cycle of our order to revenue business that you mentioned. So that will happen. Transportation, I share the direction of the trend. In materials, I keep reviewing that with our team. It’s a bit of a mixed picture. There are some materials that are starting to decrease, notably leather; others, like fabrics, are not decreasing, and motion products are also not decreasing because yes, there is less demand, but also those industries are quite energy-intensive, and we all know the dynamics about energy these days. So, raw materials, the picture is more complex. There are materials where there is less demand and costs are starting to normalize with decreasing trends, like leather, which is a byproduct of meat production. Fabrics, which again is quite relevant to our business. As for other metallic parts, they're not decreasing because of the cost of production for those materials as they, too, are affected by higher energy costs.

Okay.

But David, sorry to maybe it’s a long story. Let me tell you the short story. Clearly, the idea is to keep managing the company for margin. I thought that’s obvious. So, that's obvious.

Understood. And then a quick question for Jason, then I'll go back in queue. Can you give us an update on the North American branded product expansion, in particular, Italia, how we're doing? Any stores that have been opened subsequent to our last update and what the next 6 to 12 months looks like?

Happy to, Dave. So, by the time 2022 ends, we will have opened 7 stores, 6 of those additions and 1 Italia. And then in the first half of 2023 with signed leases, we'll open another 5 stores, all of which will be Italia. And so, that's maybe a quick summary of the openings ahead and happy to, kind of answer any more questions that come. Those 6 openings that will open in Italia will include locations like La Jolla in the suburbs of San Diego, Manhasset, Houston, and the west side of Atlanta, so we're really excited to get this going.

I'm sorry, Jason, you partially broke up. So, tell me how many have you opened so far this year? And then the 6 new openings, when will they be complete?

So, in total for 2022, we will open 7 stores, 6 of those which are Natuzzi Editions, and 1 which will be Italia, our first Italian company will be right around December of this year in La Jolla UTC. And then in the first half of next year, all the signed leases and design will be complete, and we'll open 5 Italia stores in key markets around the country.

Understood. Thanks, guys. Our next question is coming from George Melas-Kyriazi from MKH Management. Your line is now live.

Good morning, guys.

Hi, George.

Good morning. Can you guys give us an update on the China JV? I don't recall whether you actually give information on the revenue of the JV, but maybe you can tell us, I think you have 25 DOS stores there, the rest are franchises, help us remember how the JV is constituted and maybe also what cash the JV has?

Okay. I will start, maybe I ask Piero. I know them by heart, but I want to be sure I quoted rightly, to pull out the information on the DOS and FOS on China. And also, if we disclose it before us on revenue in 2021. So, the JV, Georgia, has been constituted at 49.51, so, we don't consolidate line by line. We just get benefits from it historically in two ways, and now I mentioned a third way, which we are implementing this year. The first way is the selling margin. So, the JV sourced products from us, and as any third party pays our industrial cost to pass the margin. And that's the first way we gain benefits from it. The second way is dividend. So, every year, the JV distributes dividends and 49% of that goes to Natuzzi. Those are the historical avenues that we use to distribute returns to Natuzzi. We discussed and agreed with the Board a third way, which is distributing some cash that is sitting in the JV, which is not needed for sustaining this business in the form of capital reduction. That has been approved and is on its way in terms of execution. We all work to make it happen within this year. I will disclose the amount that gets finalized, but that is something which has been agreed by the Board of Directors of the JV based on my proposal to do some capital reduction. Those are the more short-term ways. Mid-term, as discussed, I believe the JV is quite interesting in terms of growth and we would be clear now to comment because it's been almost double business every year. So, there might be some long-term options to get full benefit of our participation. I'm looking forward to being able to travel there because I believe that those are easy to be discussed with our KUKA in person, but we already mentioned potential options, including separating IP or the entity, but there are no plans for that yet. So, I think you should not take that into account as something already happening, but I just wanted to share my view. Piero, if you can share the stores. And remind me if we disclosed the revenues well in the past, if so, please do it again now in this call, 2021 revenue?

Okay. Antonio, we generally disclose once a year within the 20F. I mean, I’m talking about the revenue of the JV because they are listed as well. And as for the number of stores, as of June, we have – in China, we have 378 stores, of which 25 are directly operated by the JV itself, and 353 are franchises. The bulk of the stores are not too traditional stores versus Natuzzi Italia.

Can you remind, the ones you can put out, but can you remind that we closed 2021 in the number?

Yes. In terms of revenue, we read the revenue from the JV was £96.3 million in 2021, and during the prior year, revenue was £62 million.

So, 50% more. This year, as you know, China is the last big continent still affected by COVID, so, we had till May, 18 stores that were closed. Now stores are open, but the COVID-related procedures are not really encouraging for shopping in the sense that, according to my latest information available, if a case of COVID was reported in a specific department store, all people entering this department store that day will have to quarantine. That, of course, does not create a strong incentive to be in the department store. So, that is something which is still affecting our traffic in the store. This year, though we opened, I believe 38 stores in China, Piero?

Correct. 38 stores.

During the 6 months in the 6 months, we opened 38 new stores. So, even in these, let's say, circumstances which are not really favorable, still our active progression in China is continuing.

Antonio, I'm here.

Hi, Pasquale. Welcome. We mentioned you were in a client call.

I'm sorry, I mean, for being late, but I had a call with the Chairman of the company where we are trying to do business with.

Fantastic. We were just commenting – we just shared a bit of status of the art, and now we're getting questions from our investors.

And also, maybe, Antonio, remind us how much cash there is in JV? And of course, 49% of that really is yours?

Yes. Isn't there in the range of 60 million, but again, Piero, if you can help me to be honest under the figure.

Again, we cannot disclose...

No, no, but the one in 2021?

Oh, sorry, sorry. Yes, I can. It was – okay, we had – the JV had £62 million roughly in 2021 versus £43 million at the end of 2020.

So, going back to my initial point, Georgia, and thank you for pointing that out, that's clearly, I believe one of the early investors pointed out that we are trading almost at parity with our cash. That without calculating what is the share, which is 49% of those 60 million. As I mentioned eventually, which I believe is a significant progression – progress, we agreed in the Board of Directors of the JV for this year, first capital reduction, because the nature of the business in China, which is based on retail, most in the form of franchising, does not require significant direct investment. So, the cash sitting in the JV even considering the volatile environment in China is something received by the business lead there. We mutually agreed with the Board to do a capital reduction that we are targeting to achieve by this year.

Very good. Thank you.

Thank you, George.

Thank you. Our next question is a follow-up from David Kanen from Kanen Wealth Management. Your line is now live.

Yes. Can you give us an update on your High Point property? I believe it was up on the market for sale. Have you been able to consummate a sale leaseback?

So, thank you for the question, Dave. You are absolutely right. We are working to complete the potential transaction. We are entering the final round of discussion with potential investors based, as you rightly mentioned, on the assets back frame. I'm not able at this time to disclose much more than that because discussion is ongoing as we speak. We are working and we hope that in the follow-up quarter calls, we can announce a positive outcome. That is part of our strategy to focus on the investments that make a difference long-term, which are our restructuring plans, accelerating the Factory 4.0 in our retail development. So, the plan of dismissing some of the strategic assets, the largest being a point continues. There are other tactical assets that we might look at selling, including some production units that we have in Italy, which are not strategic. But of course, we are very careful to put those assets in the market in a moment where the market is clearly not in a buying mood.

Okay. Thank you. I've got another follow-up. I'm sorry. Just again to me, the sort of the bright spot or silver lining here is the reduction in operating expenses as a percent of revenue because if I model going forward, if you would have had a 35% gross margin, we would have made like $5 million for the quarter. Okay. So, my question is, aside from the transportation cost, which we know continues to come down, was there anything anomalous in the OpEx that benefited the quarter that we would not expect going forward?

So, you mean just in OpEx? In OpEx, we have three main items. One is the transportation, which we commented before where the picture seems to be taking a more positive trajectory. The second is materials where we discussed here that trend is not homogeneous. On some materials, like wet blue, we see decreasing costs, while on some other materials, like fabric and motion, which – whose production is high energy consumption, we don't see a homogeneous trend. The third, let's say, element is our transformation costs that I don't know if you mentioned or not, but that is an important element we're working on. We're working on in two major ways. One is to have an optimal industrial production location. As you know, we have multiple sites, which include directly operated sites in Italy, Romania, China, and Brazil, and outsourcing, the largest one being Vietnam and now starting in Mexico, plus Portugal EMEA. So, the first strategic decision is reconfirming the location among those industrial platforms. That is based on multiple factors, which include the transformation cost, the tariff, and the production cost. The second big lever, which is more controllable, is the production cost, the transformation cost in our own factory. You are aware of the Factory 4.0 project I discussed before in Italy, which is delivering interesting results and is becoming the standard for all factories. We're also looking for ways to accelerate the transformation, especially for Italy where we produce Natuzzi Italia and Divani&Divani, the sub-brand of Natuzzi Editions for Italy. Yes, we still employ 1,400 people and we're carefully looking at ways to accelerate restructuring, still being compliant with all the agreements made by the company with trade unions and public ministry, which are important stakeholders in the local work environment. So, in short, transformation is also an important part of that, and we're working to make better industrial strategic sourcing decisions and to continue lowering our transformation cost, especially in Italy.

Okay. Thank you, guys. I'm sorry.

No, it's just right to summarize Dave's question. I think cost came down – operating cost came down about 400 basis points year-over-year, and I think maybe in summary, his question is, is that the new baseline for our costs or was there, some one-time benefit that we can't count on, on an ongoing basis?

Jesus, since you rephrased it, you are very free to answer that question.

Well, honestly, at a global level, I'm not sure I have enough visibility to answer it, but that, obviously, it was great news for everyone to see those costs come down year-over-year like that.

So, as I said, Dave, there’s a complex equation because there are conflicting forces. Transportation we discussed seems to be taking a direction. It was clearly a speculative bubble, and as demand is decreasing, that is decreasing, especially for shipping. For inland transportation, where fuel has a higher relevance, the trend is less sharp. When we come to materials, the conflicting forces I believe I already answered to that. The sense is that in general, for the suppliers to serve durables like furniture or the car industry, the demand is less strong than in 2021. So, it’s providing, let's say, a benefit in terms of potential reduction in cost, but at the same time, some of these producers like fabric producers or motion producers, they intentionally use energy in their production process. As you know, energy is at record highs. So, the net effect—I've been reviewing the cost of trend with our purchasing team this morning. There are diverging trends. Wet blue, where the energy consumption is lower, is reporting a decrease. Wet blue alone represents 25% of our cost structure. On fabric, the trend is opposite, because fabric is a more industrial process, so there is a moderate increase. So, I've been also changing views with some of my peers, CEOs of industrial companies, and they are also witnessing the same reality. So, there's no single answer. The answer is, it depends, which means it depends on the specific material, and it depends on where you source it and it depends on the timing of your question, because out there is very much still a volatile market when it comes to energy costs and raw material costs.

Okay. Thank you, guys. Good luck in the back half of the year.

No, the things – so, we don't want to project any false reassurance on this because we are just taking what the market is delivering on the materials. What I can assure you is that we are working to have better control of the dynamics of those costs and how they impact our final unit cost. For instance, we just launched an internal project with our IT department as part of the broader digital transformation to immediately recalculate the unit cost of a specific product based on the latest information on the raw material dynamics. This way, the pricing or margin calculation, we don't use any more standard cost, which in a more stable world were somehow useful to take this kind of decision during the year, but we are trying to use punctual information or real costs for individual products to make any pricing or margin decisions.

Thank you. We have a follow-up from George Melas-Kyriazi from MKH Management. Your line is now live.

Great. Thanks. Antonio, I think that you unveiled a new store concept in Milan a few months ago. Can you tell us a little bit about it and maybe what's the reception that you've had, and also what would be the plan to propagate that store concept? Maybe, sort of, first of all, what you learned and how you think that's going to impact other stores? How are you going to roll-out the lessons that you've learned?

Thank you, George. So, about the new store concept, for those who were not able to see it during design week, Milan is accounted for Natuzzi Italia, our ambassador brand, which is intended to propagate the DNA of the brand. As you know, the brand speaks about Italy and especially speaks about our reality of Apulia, which is a magic region, and we try to convey that magic in the product and the retail experience. So, the concept is about light colors, about resilience with our territory. That, George, is becoming – is the standard for any new opening. In fact, in China, the figure we mentioned before, the stores for Natuzzi Italia that have been opened are using this new concept, which will also be open in the U.S. as new locations. This is the image and the feeling that the customer globally will get from Natuzzi Italia, which is a global brand. This question allows me also to make a very transparent way to highlight another element. As you know, Natuzzi has been investing to become both a brand and a retailer, the two things go hand-in-hand. We are still a work-in-progress and still have a lot of improvement to be made in both areas. We are realizing that retail experience is very important, paramount importance, and retail experience is, of course, made up of the infrastructure, which is the store that I mentioned before, but is made up of a lot of other details that we are learning across geographies and we are trying to standardize in a blueprint that can become the standard, not only for our U.S. but also for our franchising partners, which is still and will remain the predominant form of our distribution. Here I'm talking about the way in which the product is shown, the merchandising, the visual merchandising, and all the clienteling that’s happening in the store. I've been working with companies that take the case to learn their job. We aspire to go through our faster cycle, but we are very transparent that we still have a lot of hard work to do in that direction.

Great. Okay. Very helpful. Thank you. Again, just to be factual, and again, we will talk a bit, if you don't ask me, I will do about the business trajectory, but if I look, for instance, at U.S. Retail, where U.S. has been in this quarter, a market which suffered, especially in the side, if I look at the performance up to date, retail on Natuzzi Italia is up 60% versus 2019; I'm talking like-for-like. And it's also up, again, if you look at year to date, it's also up versus 2021. So, there is a lot of work to be done, especially in Europe, and also in the U.S., but those figures confirm to us that Natuzzi has the legitimacy to run a retail.

Thank you. If there are no further questions at this time, I'd like to turn the floor back over for any additional comments or closing remarks.

So, gentlemen, and ladies, thank you for your attention. In closing, I might remind you of what has been the theme of today. So, we are closing a quarter nicely in terms of growth. And also, we are satisfied by seeing that this is the sixth consecutive quarter that we closed with positive results, notwithstanding the issue we reported in China, which created some shortfall in production. We feel that our cash position of roughly 60 million in the SPA, plus the one we own in China, is a good platform to sustain diverse headwinds of these days. At the same time, we've been transparent that Natuzzi, like other players in the furniture industry, has been reporting since, I will say, late April, a softening in the demand. This is for the reasons that you know about—the economy cooling down because of multiple factors. We, of course, are taking this very seriously and reacting with at least four major interventions. The first step is about commercial focus. We are staying closer than ever to our client. And when I say we, it means the full organization, starting from the Chairman down to the last regional manager. We are reviewing the organization where it makes sense to do so. We are taking every single opportunity, like the upcoming High Point market, to show our latest innovations in our retail and product offerings. So, commercial focus is very important to us. We're also launching new growth opportunities, just to name one—trade, which is the business we do with, let’s say, in our store, that we do with our architects and designers—is an important component in some stores, not so important in others. We just hired a senior manager to support creating a common terminology in accelerated parts of the business, and I can mention other initiatives here to support the growth, like the JV in Vietnam. So traction and retraction on growth and top line. Equally important is direction on our cost structure. We keep a very keen eye on margin. As I believe you captured from the discussion on the cost of materials and transformation, margin is not something we can take for granted. It's a continuous fight against external elements like the cost of materials and against internal elements, which is our unit production costs. So, we need to stay very focused on margin and that is the third point. The fourth point is accelerating restructuring. We have several elements to optimize our internal costs, and those have always been there, but we're looking at those elements with a strong appetite to do more in the shorter term. The last point, as some have touched upon with FX and other dynamics, we keep monitoring very closely our financial and our cash position. We believe that this time is very assuring for us as managers and I believe as shareholders to know that we are using the lens of cash to prioritize any decision we make in running the business. So, that was my final comment. I don't know if Pasquale, Jason, or Piero have any further comments; otherwise, I can't thank the audience for their patience this morning.

Antonio, you did a good job. Thank you very much. Very clear.

Thank you so much, everyone.

Thank you so much, everyone. This concludes the conference call today. Please contact us for any request you might have. Thank you again for joining and have a nice day.

You may now disconnect.

Thank you so much, again, bye-bye.