Earnings Call Transcript - MEG Q3 2024

Operator, Operator

Good day, and welcome to the Montrose Environmental Group Inc Third Quarter 2024 Earnings Call. All participants will be in the listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Adrianne Griffin, Senior Vice President, Investor Relations and Treasury. Please go ahead.

Adrianne Griffin, Senior Vice President, Investor Relations and Treasury

Thank you, and welcome to our third quarter 2024 earnings call. Joining me on the call are Vijay Manthripragada, our President and Chief Executive Officer; and Allan Dicks, our Chief Financial Officer. During our prepared remarks today, we will refer to our earnings presentation, which is available on the Investors section of our website. Our earnings release is also available on the website. Moving to Slide 2. I would like to remind everyone that today's call will include forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ in a material way due to known and unknown risks and uncertainties that should be considered in evaluating our operating performance and financial outlook. We refer you to our recent SEC filings, including our annual report on Form 10-K for the fiscal year ended December 31, 2023, which identify the principal risks and uncertainties that could affect any forward-looking statements as well as our future performance. We assume no obligation to update any forward-looking statements. On today's call, we will discuss or provide certain non-GAAP financial measures such as consolidated adjusted EBITDA, adjusted net income, and adjusted net income per share. We provide these non-GAAP results for informational purposes, and they should not be considered in isolation from the most directly comparable GAAP measures. Please see the appendix to the earnings presentation or our earnings release for a discussion of why we believe these non-GAAP measures are useful to investors, certain limitations of using these measures, and a reconciliation to their most directly comparable GAAP measure. With that, I would now like to turn the call over to Vijay, beginning on Slide 4.

Vijay Manthripragada, President and CEO

Thank you, Adrian, and welcome to all of you who are joining us today. I will start with an update on our business and our outlook, and I will then speak generally to the third quarter earnings presentation shared on our website. Allan will provide the financial highlights, and following our prepared remarks, we will host a question-and-answer session. While today's call will highlight third quarter performance, it is important to reiterate that our business is best assessed on an annual basis. Demand for Environmental Solutions does not consistently follow quarterly patterns, and we manage our operations using an annual perspective. Before we dive into the quarter's performance, I would like to welcome our new colleagues from Origin's Laboratory, an environmental lab serving Colorado and the US Mountain States, who joined us in September. I would also like to take a moment to express my gratitude for the approximately 3,500 Montrose colleagues around the world. Through their continued dedication and service to our customers, in many instances, despite the personal and community challenges caused by two major hurricanes, we were able to produce another quarter of record results and further our position as a leader in the environmental industry. As for Q3 2024, we are very pleased to report another period of record results. Our quarterly revenue reached $178.7 million, and our consolidated adjusted EBITDA reached $28.3 million. Our consolidated EBITDA margin was 15.8%, which was a 190 basis point improvement over the prior year quarter. This exceptional performance was driven by robust organic growth across most of our business lines as well as positive impacts from recent acquisitions. During the third quarter, we were particularly encouraged by the progress of Matrix in Canada, which is set to achieve our targeted mid-teen EBITDA margin, an impressive improvement from their 4.6% EBITDA margin prior to joining Montrose in June of 2023. As is evident from our strong performance in Q3, we continue to benefit from healthy end market demand as clients prepare for and respond to environmental regulations on a host of topics, ranging from PFOS, methane leak detection, and new air emissions standards. These tailwinds are further bolstered by growing public and private sector focus on environmental stewardship. Growing demand and industry tailwinds have supported the continued execution of our strategy and our cross-selling initiatives, which continue to drive our organic growth opportunities. With this backdrop, we remain committed to our long-term strategy, which has been in place since our inception and has facilitated significant shareholder and stakeholder value creation. However, in the near term, our priority over the coming quarters will be the redemption of our Series A-2 preferred stock and subsequent deleveraging. We expect to fund this redemption via cash flow generation and incremental borrowing under our current credit facility. We do not intend to issue equity as a source of funds for the preferred redemption. Given this near-term prioritization, our team will focus on organic growth opportunities and will temporarily deemphasize acquisitions. Though the pipeline and medium to long-term acquisition opportunities remain very robust. We also confirm our annual target of converting 50-plus percent of consolidated adjusted EBIT into operating cash flow, which, coupled with our low maintenance CapEx needs of approximately 1% of annual revenue, generates attractive cash flow opportunities. As a result, it enables us to invest in our business, our strategy, and our people. Regarding cash flow, we were pleased to report significant improvement in our operating cash flow conversion to 40% of consolidated adjusted EBITDA in our third quarter. We expect operating cash flow to increase materially in the fourth quarter of this year through continued working capital improvement. And finally, we are reiterating our full year 2024 guidance ranges for revenue of $690 million to $740 million and consolidated EBITDA of $95 million to $100 million. We continue to see strong organic growth across most business lines and positive contributions from acquisitions. Despite the delay earlier this year in the promulgation of the US EPA's PFAS rules, these regulatory delays temporarily shift the project start dates beyond the second half of 2024 within our treatment technologies business line. It is important to note that since the US EPA announced its drinking water PFAS rules in April 2024, our quarterly treatment technology revenue has increased each quarter. That positive trend continued with third quarter revenue growth over the second quarter. As we have discussed on prior calls, Montrose benefits from PFAS opportunities across all of our segments, not just within treatment technology. PFAS-related revenue in our laboratories is expected to increase approximately 30% in 2024 versus 2023, and PFAS-related consulting services are expected to increase approximately 75% in 2024 compared to 2023. This growth has been driven by market expansion and our successful cross-selling initiatives, and we remain confident in solid growth in total PFAS-related revenue in 2025. It is important to note that our segments are benefiting from multiple newly regulated and emerging contaminants, not just PFAS, though PFAS remains a significant near-term opportunity for us. Shifting now, I would like to discuss a few recent key regulatory developments and some of the trends we are seeing in our business. As we discussed last quarter, we have seen very little impact to Montrose from the US Supreme Court's decision in Loper Bright, which overruled the longstanding Chevron doctrine, allowing federal agencies to interpret ambiguous federal statutory provisions. However, this complexity and resulting short-term uncertainty from the Chevron decision drove increased demand for our advisory and consulting services. Our short- and long-term business outlook remains unchanged. Regarding the political landscape and the outcome of the US presidential election, we remain confident in our ability to perform as planned. As we've demonstrated historically, we grew rapidly during the Obama, Trump, and Biden administrations, as our business model is designed to be resilient and largely insulated from the political swings at the federal level. We expect this trend to hold true going forward, given our limited exposure to any one end market and the higher relative influence of state and local environmental regulations on our customer activity. In addition, the approximately 20% of our business in Canada, Australia, and Europe continues to perform in aggregate and in each geography very well. Overall, the fundamental drivers of demand for our environmental solutions remain strong, and the relative strategic advantages offered by our business model and our technology portfolio continue to prove out. As one example, our recent selection by the US Army Corps of Engineers for our participation in a major environmental contract validated our approach and positions us well within the growing US federal sector. In summary, I'm extremely proud of our team's exceptional performance this quarter, delivering record revenue and profitability while advancing our strategic priorities. In the near term, we look forward to delivering on our core organic growth opportunities and allowing our cash flow generation capabilities to shine as we focus on the redemption of the Series A-2 preferred instrument and we deemphasize acquisitions. As we look to 2025 and beyond, we remain very optimistic about our ability to drive shareholder value with our proven and consistent long-term strategic thesis, which remains unchanged. With that, I will hand it over to Allan. Thank you.

Allan Dicks, CFO

We were pleased to deliver another quarter of strong financial performance as we continue to execute our growth strategy. Our solid results during the third quarter were driven by organic momentum from cross-selling activity and expanding customer relationships and the positive contributions of acquisitions. Our focus on higher-margin services and operational efficiency continues to benefit our business, reflected in a notable improvement in our overall profitability to record levels. Moving to our revenue performance. Our third quarter revenue increased to a record $178.7 million or a 6.4% increase compared to the prior year quarter. Revenue for the first nine months of $507.4 million was a 10.7% increase versus the prior year period. The primary drivers of growth in the third quarter were strong organic growth in our Assessment, Permitting and Response and Measurement and Analysis segments, as well as positive contributions from acquisitions, partially offset by lower environmental emergency response revenue. The drivers of revenue growth in the first nine months were solid organic growth of 7% compared to the prior year-to-date period and the positive contributions from acquisitions, partially offset by lower environmental emergency response and treatment technology revenues. Our consolidated adjusted EBITDA performance in the third quarter reached a record $28.3 million or 15.8% of revenue. This compares favorably to consolidated adjusted EBITDA of $23.3 million or 13.9% of revenue in the prior year quarter. The significant increase in quarterly profitability despite a substantial reduction in high-margin emergency response activity was driven by organic growth, the impact of acquisitions, and lower corporate expenses, which is partially timing-related. First nine months 2024 consolidated adjusted EBITDA was $68.5 million or 13.5% of revenue compared to consolidated adjusted EBITDA of $61.1 million or 13.3% of revenue. Diluted adjusted net income per share of $0.41 in the third quarter of 2024 increased from $0.31 in the prior year quarter. Year-to-date diluted adjusted net income per share of $0.80 increased compared to $0.78 in the prior year period. The improvement in both periods was mainly driven by improved loss from operations and lower dividends, following the partial redemption of our Series A-2 preferred stock earlier this year, partially offset by higher interest expense and higher average checkout. Please note our adjusted net income per diluted share attributable to common stockholders is calculated using adjusted net income attributable to stockholders divided by fully diluted shares. We believe this net income methodology is the most helpful net income metric to Montrose and to common equity investors. I will now discuss our third quarter performance by segment. In our Assessment, Permitting and Response segment, third quarter revenue was $52 million, compared to $57 million in the prior year quarter. The AP&R segment adjusted EBITA was $11.2 million or 21.5% of revenue, compared to 26.1% in the prior year. Results during the third quarter reflect a $12.8 million reduction in high-margin environmental emergency response revenue, partially offset by strong organic growth in the rest of the segment and the positive impact of the Spirit acquisition. Given this segment includes our environmental emergency response business, associated revenue does not follow a regular quarterly or seasonal pattern. In our Measurement and Analysis segment, revenues for the quarter increased 16.1% to $58.6 million. We continue to experience strong organic revenue growth, particularly in our lab and field services businesses, as well as the positive contribution from our acquisition of Origins. The M&A segment adjusted EBITDA increased 29.2% to $13.4 million or 22.8% of revenue, a 230 basis point improvement over the prior year quarter due to revenue growth and operating leverage. In our Remediation and Reuse segment, third quarter revenue increased 12.6% to $68.1 million, benefiting from acquisitions and solid organic growth in our remediation services, which more than offset the decline in our treatment technology revenue due to the temporary customer project delays that Vijay discussed earlier. This segment's adjusted EBITA and margin benefited from the impact of acquisitions and higher organic revenues in our remediation services, resulting in a 480 basis point margin improvement to 17.1% in the quarter. Moving to our cash flow and capital structure. The other day cash flow used in operating activities was $9.7 million compared to cash generated of $41.5 million in the prior year. Lower cash flow from operations was driven primarily by the previously discussed invoicing delays associated with the integration of Matrix and delays in payment on a single large US government-funded project. The invoicing delay of Matrix was substantially addressed, and collections are returning to a normal cadence. We have received payment confirmations from key clients, which includes the US government. Excluding these two temporary and isolated issues, day sales outstanding as of September 30, 2024 were unchanged versus September 30, 2023, and DSOs at the end of 2024 are expected to be in line with DSOs at the end of 2023. Cash flow from operating activities is expected to improve significantly in the fourth quarter mainly attributable to this working capital improvement. At the end of the quarter, we had $139.8 million of liquidity, including $13 million of cash on hand and $126.7 million of availability on our credit facility. Our leverage ratio as of September 30, 2024 was 2.6 times, which includes the impact of the acquisitions of Spirit and Origins, and is well within our preferred level of below three times. Our balance sheet simplification will continue to be a near-term priority of our capital allocation strategy. Historically, our capital deployment has been focused on accretive acquisitions and investments to drive organic growth. While acquisitions remain a key part of our long-term capital allocation, we are evolving our near-term capital allocation priorities to focus on balance sheet simplification, particularly as it relates to the redemption of our Series A-2 preferred stock while maintaining a focus on organic growth. As of September 30, 2024, we had $122 million of Series A-2 outstanding with repayments in cash at our election. Moving to our reiterated full year outlook. Based on our performance through the first nine months and our visibility into the fourth quarter, we are reaffirming our full-year 2024 guidance ranges. For the full year, we expect revenues of $690 million to $740 million and consolidated adjusted EBITDA of $95 million to $100 million. We continue to expect environmental emergency response revenue to be in the range of $50 million to $70 million this fiscal year. As we evaluate the final quarter of 2024 and compare it with the prior Q4 period, revenue is expected to increase 10% to 15%, and consolidated adjusted EBITDA margin is expected to increase 350 to 400 basis points. Our expectation of ongoing margin improvement reflects meaningfully enhanced profitability and demonstrates alignment of our strategic and financial goals. Overall, our reiterated outlook reflects the service offering and geographic diversification of our revenue, strength of our business year-to-date, and the continued benefits from our margin expansion initiatives despite the temporary timing shifts in certain project work. We remain confident in our ability to execute through the remainder of the year and continue building momentum into 2025, given the increasing demand for our services. Thank you all for joining us today and for your continued interest in Montrose. We look forward to the opportunities we see ahead and updating you on our progress next quarter.

Operator, Operator

Thank you very much. We will now begin the question-and-answer session. Our first question comes from Tim Mulrooney from William Blair. Please go ahead.

Tim Mulrooney, Analyst

Vijay, Allan, good morning.

Vijay Manthripragada, President and CEO

Good morning.

Allan Dicks, CFO

Hey, Tim, how are you?

Tim Mulrooney, Analyst

Doing well, thank you. You addressed many of my questions in your prepared remarks, so I will move to a couple of more targeted questions. The first is about the Trump election win. I was wondering which of your businesses performed well under his previous administration, and if you could highlight some of them. Additionally, which business lines do you expect to continue to thrive in this type of environment?

Vijay Manthripragada, President and CEO

Tim, why don't I start with that? And Allan, you can certainly jump in. Just as a quick reminder, we've been through our prior Trump administration before, as you alluded to, Tim, and we doubled in size, and we went public during the Trump administration. So our business is, by definition, designed to grow and go through these political cycles. And as it relates to our revenue mix, where we saw a significant uptick in demand was in our consulting and our treatment side of our business last time, Tim, and some modulation on the testing side. The reason for that is that the Trump EPA deemphasized new regulations and deemphasized certain forms of enforcement. And as a result, as we kind of look across our business mix, we are feeling quite optimistic about the opportunity to continue our organic growth cadence that we've kind of talked about with you in the past, and our outlook is largely unchanged. The other dynamic that I think is important and is different from where we were in the prior Trump administration is that approximately 20% of our revenue is now outside the US. As we think about Canada, Europe, and Australia, we're seeing exceptional performance across all of those geographies. And we certainly don't expect that to change all that much either. So we're feeling quite upbeat, Tim, and I don't know if that answers all of your questions.

Tim Mulrooney, Analyst

No, it did answer my question. Thank you, Vijay. Another one I wanted to ask about was in your 8K, I noticed in your 8K that the COO, Joshua LeMaire is leaving the organization. I was just curious if you could share any more details about that decision and how that kind of impacts your organization.

Vijay Manthripragada, President and CEO

Yeah. No, Josh is still part of the organization. He's a friend and an exceptional colleague. For personal reasons, he's going to be stepping down from the COO role, but he's going to stay with us, help us transition with the new leader both selecting and onboarding the new leader, Tim. And we're likely going to focus on someone with a deep bench of industry experience. But he's still part of Montrose. He was a core part of the founding team. And he's going to be working closely with me, Allan, and the rest of the team going forward. So we're actually really thankful for everything Josh has done. And we're excited to kind of see what his next chapter looks like for him.

Tim Mulrooney, Analyst

Got it. Okay. Thank you for the color on that. That's helpful. Just one more for me. I know you're pausing acquisitions but would just love to hear how some of these recent ones are going. Could you comment on Origins and Spirit in a little more detail? How are those going? Thank you, Vijay.

Vijay Manthripragada, President and CEO

Yeah, both are actually going very well. Origins is a lab that really focuses in on Colorado and the Mountain States, Tim, and the recent regulatory regime in those states has created a really nice set of tailwinds for that business. And it is performing exceptionally well. The team is excellent and integration is going well. And what's been really encouraging for us is that some of our cross-selling of our clients into their business is progressing really nicely. So we're really pleased with that. And then the same goes for Spirit. They've been very additive as an air permitting powerhouse with an exceptional team. They've really been additive to our broader consulting and testing footprint and have already really hit stride with working across our service lines and our clients. And so I couldn't be more pleased with both of those. And even with some of the earlier transactions, like Epic and Dot, they are going incredibly well as well. So, as we look across our portfolio of acquisitions from this year, notwithstanding some of the things we talked about earlier, which are normal as you integrate acquisitions, we're really happy. And all of those transactions, in aggregate, have been really accretive to our growth profile and margin profile. And we think they'll stay that way long-term.

Tim Mulrooney, Analyst

Helpful color. Thank you, Vijay.

Durgesh Chopra, Analyst

Hey team. Good morning. Thanks for giving me time.

Vijay Manthripragada, President and CEO

Hey, Durgesh, how are you?

Durgesh Chopra, Analyst

Hey Vijay, good morning. Just on this you know deemphasizing acquisitions and new equity. Can you just kind of help us with time? You know like is this for a what time period is that over? Is where I'm trying to go with? This is first half of 2025, no equity all of 2025. How should we think about that?

Vijay Manthripragada, President and CEO

Yeah, Durgesh, we're going to be deemphasizing acquisitions and really focusing on the redemption of the Oaktree preferred and on organic growth. We're excited to kind of demonstrate the engine that drives our organic growth profile and our cash flow profile. Our thesis is unchanged. So there is still a very robust pipeline of accretive transactions that we think will be very additive long-term. And so we're going to let the business over the next couple of quarters demonstrate the power of the organic engine and allow us to repay the preferred. And then we're going to target that three-ish times leverage. For select transactions, we may pop up above 3 to 3.5. And we're well in the twos right now. And so we're going to keep it to kind of those parameters. Durgesh, it's a little tough to predict exactly what deal flow looks like, but our intent over the next couple of quarters is to de-emphasize acquisitions and as it relates to the equity issuance and our specific focus on repaying the preferred. We do not intend to issue any equity to repay that.

Allan Dicks, CFO

No, that's exactly right. We've got certainly the leverage capacity and the financing capacity to take out the preferred. The next $60 million is due in April anyway. So you'll see us take that out before that, and then the final $62 million likely shortly after that again depending on how the year is progressing. But that would be our expectation.

Durgesh Chopra, Analyst

That's helpful, but I want to clarify that you're not ruling out acquisitions; you're simply indicating that you plan to operate within those leverage metrics. There may still be more acquisitions, but you won't be accessing the equity market. Is that accurate?

Vijay Manthripragada, President and CEO

That's the broad thesis, Durgesh. And just to be clear, for the immediate future, we will likely not transact, but it doesn't mean we never will. And going back to my earlier point, a core part of our strategy is to consolidate select parts of this market given our business model and use that consolidation to drive accelerated organic growth, and that thesis is unchanged. It's just where our focus is going to be through Q4, Q1, and Q2.

Jim Ricchiuti, Analyst

Hi, good morning.

Vijay Manthripragada, President and CEO

Hey, Jim.

Jim Ricchiuti, Analyst

Just a question on the decision regarding M&A. I'm just wondering, is there any risk that this decision could represent lost opportunities for you guys?

Vijay Manthripragada, President and CEO

No, Jim, we're staying very close to our core target opportunities. And at this time, there is absolutely no risk to us losing anything that we really want.

Jim Ricchiuti, Analyst

Okay. I understand that this decision was made before the election. I'm curious if this strengthens your position on M&A, waiting until there's more clarity on the regulatory environment, assuming any changes occur. It seems you don’t expect changes, but do you feel more confident about this decision now?

Vijay Manthripragada, President and CEO

We are definitely interested in observing how the new Trump administration and President Trump, along with his EPA, progress. We also want to assess what decisions are made at the state level. Honestly, we don't anticipate significant changes based on our current operations. We have connections with individuals from the previous Trump administration who are involved in many planning processes now. Therefore, we don't foresee major changes. However, we believe the focus on driving organic growth and leveraging our existing assets is important while we await the developments of the next few months. We made our decision independently of these factors, but we believe it will be beneficial given the current situation.

Jim Ricchiuti, Analyst

Got it. I have one final question. I'm curious about your selection by the Army Corps of Engineers. Are there any milestone awards that you expect to keep track of over the next year or two in relation to that announcement? I'm just trying to understand how we should interpret the announcement. Thank you.

Vijay Manthripragada, President and CEO

Yeah it was great because it kind of validated, Jim, as we've talked about with you in the public sector, our strategic thesis and it enabled us to leverage both our advisory testing capabilities and our engineering and remediation capabilities. And so yes, there will be milestones as that contract process progresses and we'll certainly keep all of you abreast of that. And obviously, that's not the only one. There are others that we're quite optimistic about. So we'll stay close to you, as that progresses. I think the only point of highlighting that is that the broader opportunity set is incredibly strong and our relative advantage to harvest that broader opportunity set, which is expanded, also seems to be manifesting really nicely. So we'll stay very close to you as those awards start to come to fruition and translate into revenue.

Aadit Shrestha, Analyst

Hi Aadit. Hi, good morning. Thank you for taking my questions. I want to discuss the outlook for the fourth quarter of 2024. You mentioned revenue growth being in the range of 10 to 15%. Can you clarify how much of that growth is attributed to acquisitions and emergency response? It seems your guidance suggests a likely increase of over 20% for a solid quarter, and acquisitions appeared to contribute about 9% in the third quarter of 2024. Is this expected to decrease slightly in the fourth quarter?

Vijay Manthripragada, President and CEO

Yeah, let me speak about kind of 4Q and the year a little bit more broadly a bit because I want to make sure we're kind of keeping in line with all of the publicly disclosed information. Most of our business lines are seeing double-digit organic growth, which we're really excited about, and the two variables that are swinging Q4 in the numbers you just referenced are one, the temporary delays in some of the treatment technology projects, and two, the relative magnitude of the response business. And so despite those two, the responses, we kind of think about year-on-year, as Allan alluded to in his comments, are down the core organic plus the impact of acquisitions is driving some of our optimism into Q4 and 2024. And so that's the reason we're maintaining our guidance. On the response side specifically, the team has done an exceptional job this year. We're still expecting that to be in the $50 million to $70 million range. It was a little lighter in Q3; we expect, given the hurricane and recent events, that it may be on the higher end of that $50 million to $70 million in Q4, but it's very tough to predict as you know. And so that's the one reason for that range that you saw in the public comments that Allan provided. Does that make sense of it?

Aadit Shrestha, Analyst

Yeah, thanks a lot. And maybe if you could just elaborate on matrix margins how did that perform in 3Q 2024? I know you discussed you know you remain on track of attaining mid-teens margin, do you actually see that in 4Q?

Vijay Manthripragada, President and CEO

Yes, Allan, do you want to take that?

Allan Dicks, CFO

Yeah, they ran at mid-teens margins. It's a really solid Q3 performance. Year-over-year, they are expected to have tripled their margins from the time of acquisition that team is performing exceptionally. And all of the initiatives to drive that margin which is pricing, operational excellence, if you will, and then the cost savings through the integration activities, are all going to plan and that is resulting in us being exactly where we would have hoped at this time.

Aadit Shrestha, Analyst

And then just as a follow-up, are you seeing strong organic growth within matrix too?

Allan Dicks, CFO

We are seeing really solid organic growth. We had expected that with the pricing that was taken that we would not see much growth and that there would be some volume attrition. We have not seen that and credit is going to the metric team. So, they're seeing really nice organic growth for them and not all of that counts in our organic growth, right? Because the first five months was still considered acquisition growth. But certainly in the back half of the year they're seeing really nice organic growth.

Aadit Shrestha, Analyst

All right. Thanks a lot.

Vijay Manthripragada, President and CEO

Thanks, Aadit.

Operator, Operator

Thank you. This concludes our question-and-answer session. I would now like to turn the conference back over to Vijay Manthripragada, CEO for any closing remarks.

Vijay Manthripragada, President and CEO

Thank you, and thank you all for taking the time this morning. We really appreciate your continued support. Allan and I and the Montrose team are really excited about the year, the quarter, and our outlook into 2025. And so we certainly look forward to sharing more with you in the very near future. Thank you and take care.

Operator, Operator

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