Earnings Call Transcript - SXT Q3 2020

Operator, Operator

Good morning, and welcome to the Sensient Technologies Corporation 2020 Third Quarter Earnings Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Steve Rolfs. Please go ahead.

Steve Rolfs, Senior Vice President and CFO

Good morning. I'm Steve Rolfs, Senior Vice President and Chief Financial Officer of Sensient Technologies Corporation. I would like to welcome all of you to Sensient's third quarter earnings call. I'm joined this morning by Paul Manning, Sensient's Chairman, President and Chief Executive Officer. This morning, we released our 2020 third quarter financial results. A copy of the release and our investor presentation is now available on our website at sensient.com. During our call today, we will reference certain non-GAAP financial measures, which we believe provide investors with additional information to evaluate the company's performance and improve the comparability of results between reporting periods. These non-GAAP financial results should not be considered in isolation from or as a substitute for financial information calculated in accordance with GAAP. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measure is available on the Investor Information section of our website at sensient.com and in our press release. We encourage investors to review these reconciliations in connection with the comments we make this morning. I would also like to remind everyone that comments made this morning, including in responses to your questions, may include forward-looking statements. Our actual results may differ materially, particularly in view of the uncertainties created by the COVID-19 pandemic, governmental attempts at remedial action, and the timing of a return to more normal economic activity. We urge you to read Sensient's filings, including our 10-K, our second quarter 10-Q and our forthcoming third quarter 10-Q for a description of additional factors that could potentially impact our financial results. Please bear these factors in mind when you analyze our comments today. Due to changes we’ve made to our portfolio and the divestitures we announced last year, we are updating our group and product lines. The most notable change is that our Flavors and Fragrances segment will now be named the Flavors and Extracts segment. You will also notice some small changes to the names we use for some of our product lines. Sensient's focused portfolio strengthens our ability to service the food, pharmaceutical, and personal care markets. We will continue to report the three divested product lines of fragrances, yogurt fruit preparations, and inks as long as these product lines impact our comparisons. Now we will hear from Paul.

Paul Manning, Chairman, President and CEO

Thanks, Steve. Good morning. Sensient reported third quarter earnings this morning, and I’m pleased to report that results were in line with our expectations and our overall guidance for the year. I'm very pleased with the continued revenue and profit growth in our flavors and extracts group, as well as our food and pharmaceutical business in the color group. Our Asia Pacific group also posted solid profit growth in the quarter. Overall, each of our groups performed well, despite the adverse impact of COVID-19. COVID-19 continues to be a net negative to the company. The market decline in the makeup industry continues to impact the color group's personal care business. And on a geographic basis, we continue to see headwinds in Asia Pacific, Europe, and Latin America. In the midst of this pandemic, we have ensured our employees are safe and healthy, our facilities remain open, our supply chain remains strong, and we have delivered our products on time to our customers. Based on current trends, I expect that we will deliver on our EPS outlook for the year as the foundation of our business remains strong. Our focus over the years on customer service, on-time delivery, and sales execution has led to a high level of revenue from new product wins during the second half of 2019 and the first half of this year. Furthermore, as the pandemic continues, new product development at certain companies has slowed. We have focused on regaining lost business and gaining share at our customers. This focus coupled with lower overall sales attrition is paying off in our results and should continue to benefit future periods. Last year, at this time we announced three divestitures. In the second quarter, we completed the sale of inks, and I'm pleased to say that we completed the sale of the yogurt fruit prep business during the third quarter. This is our second completed divestiture in 2020. And I'm optimistic that we will complete the divestiture of fragrances in the near future. As I mentioned last year, the divestiture of these three businesses allows us to focus on our key customer markets: food, pharmaceutical, and personal care. I'm very pleased with the progress of our flavors and extracts group this year. The group had an impressive quarter with adjusted local currency revenue growth of 13% and profit growth of 24%. This is the third straight quarter of revenue growth, which has resulted in continued profit and margin improvement. This growth is based on the group's focus on sales execution, which has resulted in a high win rate, a focus on retaining existing business, and an overall decline in the group's attrition rate. Additionally, the groups focus on transitioning the product portfolio to more value-added solutions and the reduction of its production cost structure from restructuring and ongoing initiatives is complementing the revenue growth and the overall improvement in the group's profit and margin. Within the flavors and extracts group, the natural ingredients business had another strong quarter with local currency sales growth of 14.5% as a result of strong demand for seasoning snacks and packaged foods. This business has a solid foundation to deliver a consistent and reliable supply of high-quality natural ingredients to its customers. Flavors, extracts, and flavor ingredients also had a nice quarter, up 12% in local currency. The business's strong technology platform in flavor modulation and enhancement, its clean label solutions, and its applications expertise are leading factors in the growth of this business. Overall, the flavors and extracts group's operating profit margin was up 110 basis points in the quarter. Long-term, I expect mid single-digit revenue growth with continued margin improvement for the group. Now turning to colors. Revenue for food and pharmaceutical colors was up low single digits for the quarter. The group continues to see solid demand for natural colors in the market. There's also strong consumer interest in functional natural extracts and nutraceuticals, and the group's product portfolio and innovation are well positioned to support this demand. Despite the continued growth in food and pharmaceutical colors, revenue in personal care continues to be down due to the negative impacts of COVID-19 on the color makeup market. The demand for makeup in Europe, North America, and Asia continues to be down substantially for the year. Given the uncertainty with COVID-19 and ongoing restrictions, I anticipate challenges for this cosmetics product line to continue. The color group's adjusted operating profit increased 3% in the quarter. Food and pharmaceutical colors had a great quarter generating profit growth of more than 20% and about 15% for the first nine months of 2020. However, the lower demand for makeup and other personal care products continues to be a drag on the group's profit performance. Overall, the color group's operating profit margin increased 110 basis points in this quarter. Long-term, I continue to expect mid single-digit revenue growth from food and pharmaceutical colors, as well as personal care once demand normalizes from the impacts of COVID-19. We've made good product progress in our Asia Pacific group this year. Similar to flavors and extracts and colors, the group has focused on sales execution and building a stronger customer service and technology-driven organization. The group has created a solid infrastructure and has been focused on localizing production. During the quarter, the group had solid sales growth in certain regions. However, this growth was offset by declines in other regions as government COVID-19 restrictions continue to significantly impact many sales channels. The group had another strong quarter of profit growth, up approximately 15% in the quarter and 17% for the first nine months of 2020. The group's operating profit margin increased 200 basis points in the quarter. This was the third straight quarter of strong profit improvement. The Asia Pacific group is well positioned for long-term growth, and I anticipate that as certain COVID-19-related restrictions ease, the group will resume mid to high single-digit revenue growth. Overall, I'm very pleased with the results of our groups this year. Our flavors and extracts group is having a great year, and the food and pharmaceutical business within the color group continues to have solid revenue and very strong profit growth. Our Asia Pacific group is well-positioned for future revenue growth. Overall, COVID-19 continues to be a headwind for the company. Despite this headwind, I'm excited about the future growth opportunities for Sensient due to the strength of our portfolio technologies and our exceptional customer service. Steve will now provide you with additional details on the third quarter results.

Steve Rolfs, Senior Vice President and CFO

Thank you, Paul. In my comments this morning, I will be explaining the differences between our GAAP results and our adjusted results. The adjusted results for 2020 and 2019 remove the impact of the divestiture-related costs, the operations divested or to be divested, and our recently implemented operational improvement plan. We believe that the removal of these items provides a clearer picture to investors of the company's performance. This also reflects how management reviews the company's operations and performance. During the third quarter, the company initiated a plan primarily to consolidate some of our global cosmetic manufacturing operations. The company expects to complete this operational improvement plan during the first half of 2021. The costs of this plan are estimated to be approximately $5 million to $7 million. Our third quarter GAAP diluted earnings per share was $0.78. Included in these results are $1.4 million or approximately $0.03 per share of costs related to the divestitures and other related costs and the cost of the operational improvement plan. In addition, our GAAP earnings per share this quarter include approximately $0.04 of earnings related to the results of the operations targeted for divestiture, which represents approximately $23.6 million of revenue in the quarter. Last year's third quarter GAAP results included approximately $0.02 of earnings per share from the operations to be divested and approximately $34.1 million of revenue. Excluding these items, consolidated adjusted revenue was $300 million, an increase of approximately 6.1% in local currency compared to the third quarter of 2019. This revenue growth was primarily a result of the flavors and extracts group, which was up approximately 13% in local currency. Consolidated adjusted operating income increased 10.1% in local currency to $41.5 million in the third quarter of 2020. This growth was led by the flavors and extracts group, which increased operating income by 24.1% in local currency. The Asia Pacific group also had nice growth in operating income in the quarter, up 15.5% in local currency. Operating income in the food and pharmaceutical business in the color group was up over 20% in local currency. The increase in operating income in these businesses is a result of the volume growth Paul explained earlier combined with the overall lower cost structure across the company. Our adjusted diluted earnings per share was $0.77 in this year's third quarter compared to $0.74 in last year's third quarter. As Paul mentioned, the overall impact of COVID on the company's results has been a headwind. The impact on our food and pharmaceutical businesses is mixed, but as we have discussed, the negative impact on our personal care business is significant. We’ve reduced debt by approximately $60 million since the beginning of the year. We have adequate liquidity to meet operating and financial needs through our cash flow and available credit lines. Our debt to EBITDA is 2.6, down from 2.9 at the start of the year. Cash flow from operations was $143 million for the first nine months of 2020, an increase of 12% compared to the prior year. Capital expenditures were $34 million in the first nine months of 2020 compared to $26.1 million in the first nine months of 2019. Our free cash flow increased 7% to $109 million for the first nine months of this year. Consistent with what we communicated during our last call, we expect our adjusted consolidated operating income and earnings may be flat to lower in 2020, because of the level of non-cash performance-based equity expense in 2020. We also expect a higher tax rate in 2020 compared to our 2019 rate, which was lower as a result of a number of planning opportunities. Based on current trends, we are reconfirming our previously issued full-year GAAP earnings per share guidance of $2.10 to $2.35 per share. The full-year guidance also now includes approximately $0.05 of currency headwinds based on current exchange rates. We are also reconfirming our previously issued full-year adjusted earnings per share guidance of $2.60 to $2.80, which excludes divestiture-related costs, operational improvement plan costs, the impact of the divested or to be divested businesses, and foreign currency impacts. The company expects foreign currency impacts to be minimal in the fourth quarter. We are also maintaining our adjusted EBITDA guidance for low to mid single-digit growth. In conclusion, we continue to expect long-term revenue growth rates of mid-single digits in each of our groups. Our stock-based compensation and other incentive costs have reset this year. Going forward, this should be less of a headwind for us. We do expect our tax rate to trend up slightly in future years under current law. As a result, we believe adjusted EBITDA is a better measure of the company's operating performance and expect this metric to grow at a mid-single-digit rate or better. In terms of our capital allocation priorities, we will continue to pay down debt in the near-term. We also continue to evaluate acquisition opportunities. Absent an acquisition, we have the ability to buy back shares. We expect our capital expenditures to be in a range of $50 million to $60 million annually. Our divestiture activity and our operational improvement plan allows us to focus on our key customer markets of food, pharmaceutical excipients, and personal care, while providing the foundation for future revenue and margin growth. Thank you for your time this morning. We'll now open the call for questions.

Operator, Operator

And the first question will be from Mark Connelly with Stephens. Please go ahead.

Mark Connelly, Analyst

Thank you. So you've talked in the past about the benefits of B2C clients in terms of food innovation. But one of the most common questions we get is what are supermarkets doing in terms of prioritization? There's a view that supermarkets are deemphasizing new and smaller companies that they see as less reliable, although I have to say in my own area, we're not seeing that. So I was hoping you could just give us a sense of how that’s impacting your customer base, just the access to the market right now.

Paul Manning, Chairman, President and CEO

Hey, Mark, good morning. So I would say this, there are many different channels that our customers deal in supermarkets is certainly one of them. Supermarkets in the U.S. is certainly a subset of that. Your comment about certain B and C brands perhaps being deemphasized in supermarkets in the U.S., that's I think that's probably directionally correct. But I think B and C companies, many of the ones that we deal with, I'm sure supermarkets is one channel, but they have many other channels: specialty stores, online, a lot of these other areas that continue to grow. Certainly online is yet a small fraction of what you could do in a supermarket channel. But I think directionally your comment is correct. I would tell you that we see some of that in the European market, perhaps a little bit less pronounced than in the U.S. market. And I see that as being even less of a factor in, say, places like Latin America and Asia Pacific.

Mark Connelly, Analyst

Okay. That's helpful. Thank you. And just one more question, and then I'll jump in the queue. In Asia, you talked a little more extensively last quarter about the impact of local restrictions. I was hoping you could give us a little bit of a sense of how that's evolving. You've obviously got a lot of local manufacturing and supply. Can you talk about how much of what you produce in those countries in Asia stays within the country?

Paul Manning, Chairman, President and CEO

In this country, we produce where our customers are. Our operations in China primarily serve the local market, although we do import some products from other parts of our manufacturing footprint because we don't produce everything there. Generally, our supply chains for raw material production are localized. Despite this, we've managed to achieve strong on-time delivery and service levels to our customers, which have even exceeded our usual performance. Since the onset of the situation seven months ago, we proactively began to stockpile certain raw materials in key markets and product lines. With effective supply chain operations, we've maintained consistent output for our customers. When comparing lockdowns in Asia to those in Europe or the U.S., Asia's restrictions seem to be broader in nature. For instance, in the United States, including Wisconsin where we are located, lockdowns are targeted but restrictive due to COVID infections. In Asia, lockdowns are less about specific regions and more sweeping. Despite these challenges, Asia experienced top line growth and impressive profit growth, indicating our resilience. We remain confident in our supply chain; although we produce locally, we also source many raw materials from Asia for our operations in the Americas and Europe. We've effectively managed this situation through stockpiling certain raw materials and maintaining a diverse supply base.

Mark Connelly, Analyst

Thank you, I'll jump back in the queue. Thank you.

Operator, Operator

And the next question will come from Heidi Vesterinen with Exane. Please go ahead.

Heidi Vesterinen, Analyst

Good morning. I have a few questions. The first one, why have you not upgraded full-year guidance after such a strong quarter?

Paul Manning, Chairman, President and CEO

It was a really strong quarter with great results from each of the three groups. I might be a bit conservative, but I feel confident we are at the top end of that range, possibly even above it. However, I don’t want to be overly specific about any 90-day period. I believe the businesses will continue to perform well. We've seen positive numbers in flavors, food colors, and profits from Asia, all with good EBIT margin growth. I am optimistic about the rest of the year and into next year. That said, there are factors related to taxes and COVID that are difficult to predict right now, including possible additional lockdowns. We've maintained our guidance all year, unlike some companies that have withdrawn theirs, and we remain committed to it. So, while there are some uncertainties, perhaps I am being a little cautious.

Heidi Vesterinen, Analyst

Thanks for that. That's great to hear, and congratulations on the flavors number by the way, spectacular. So just to focus on that segment, can you confirm that there was nothing really one-off or exceptional in nature in terms of growth? There's no, like, I don't know, pull forward of demand or any one-off. And also, what was the contribution of volume and price in that flavor growth number?

Paul Manning, Chairman, President and CEO

Flavors experienced significant growth, well into the double digits, which positively impacted our operating profit. We're starting to see the operating leverage I mentioned at the beginning of the year, indicating an increasing profit outlook. I wouldn’t single out any one-time events; the demand has been strong and consistent across all our product categories. Each segment, whether it’s S&I, flavor ingredients, or others, showed robust and broad-based growth. While certain areas, like quick service restaurants, have faced challenges, other categories such as seasonings and snacks are performing well. Attrition has decreased significantly, and last year's high win rates in the flavor group were overshadowed by attrition in some legacy product lines, which we have now mostly resolved. With the sale of two businesses and plans to sell a third, we have effectively removed that headwind. If there is any one-time factor to mention, it might be the divestment of those businesses, which differentiates our GAAP from non-GAAP results. Overall, I am optimistic about the ongoing sustainability of flavor performance, and I believe mid-single-digit revenue growth is highly attainable, with a promising future ahead for our flavors segment.

Heidi Vesterinen, Analyst

Thank you very much. I'll get back in the queue.

Paul Manning, Chairman, President and CEO

Okay. Thanks, Heidi.

Operator, Operator

Thank you. And our next question is from Mitra Ramgopal with Sidoti. Please go ahead.

Mitra Ramgopal, Analyst

Yes. Hi, good morning. Thanks for taking the questions. I believe in the first half, the net impact of COVID on EPS was about $0.10. Just want to get a sense as to that impact in 3Q and how you see it playing out over the rest of the year?

Steve Rolfs, Senior Vice President and CFO

The negative impact is somewhat subjective since we aren't precisely aware of where each product goes with our customers. However, we've analyzed both direct costs and sales impacts. Year-to-date, the direct costs are likely around $5 million. We're seeing some relief from lower travel and other SG&A expenses, which reduces most of the direct cost impact. The primary negative effect we see is on our top line, particularly pronounced in the color group, where our cosmetic business has declined by about 12% this quarter. We estimate that COVID has resulted in more than $20 million in lost revenue year-to-date, translating to an impact of approximately $0.20 on EPS.

Mitra Ramgopal, Analyst

Okay. That's great. Thanks for the color there. And obviously, you've talked about the operational improvement plan. Was that something that was sort of as a result of what you're seeing with the COVID-19 pandemic? Or was that something you were probably going to do in any event as you look to improve efficiencies?

Paul Manning, Chairman, President and CEO

Yes, it's likely a matter of interpretation. The profit improvement plan, as we consider it, may be new to some people following Sensient. We've had a series of restructuring events over the years aimed at consolidating our facilities and reducing capacity to eliminate some legacy products that had been significant challenges. We faced very high fixed costs in many areas of the company, which led to these restructuring initiatives. We were able to reduce a lot of those costs, and the impact on our operating leverage is closely tied to these efforts. We're continuously assessing the business, and when a plant manager discusses volume and the need for it to cover fixed costs, it's clear that there's a fixed cost issue in that facility. With this mindset applied throughout the company, we're always on the lookout for opportunities globally and across different business lines. We’ve done considerable work in flavors and colors and are currently focusing on additional work in colors. I would emphasize that seeking efficient operations is part of our normal business approach. The areas we’ve focused on closely relate to fixed costs, but we are also aware of opportunities within SG&A, such as automating and standardizing certain processes. We're committed to improving our operating margin, and there is potential for greater margin production. Many of you who've been with us will note that flavors are beginning to see an increase in operating margins, which I expect to continue into 2021, possibly up by an additional 50 to 100 basis points. In Asia, the color segment is performing well, with margins around or exceeding 20%. Overall, I feel optimistic about these sectors, especially flavors, where much of our activity is concentrated. In summary, this approach is part of our standard operations.

Mitra Ramgopal, Analyst

Okay. No, that's definitely great. And then just curious on the personal care side, obviously you're experiencing some softness due to COVID. But I believe at one point this is an area you felt there were some really nice opportunities you'd be looking to expand into it, it was oral care, et cetera. I was wondering if anything has changed on that front?

Paul Manning, Chairman, President and CEO

Cosmetics, often referred to as personal care, is an exceptional business for us, generating significant profit over the years. It is highly profitable and technically driven, requiring numerous applications. We possess a vast portfolio and operate in a substantial market with esteemed customers. Our business encompasses makeup, skin care, hair care, and personal care items like oral care and body wash, which are performing well. Although oral care has recently seen a decline in usage, particularly in brushing and chewing gum, there are temporary market factors at play. The majority of our revenue, over 50%, comes from makeup, followed by hair care, hair color, and skin care products. We continue to diversify our offerings. Makeup remains a strong category, with expectations of a recovery as restrictions ease and vaccination opportunities arise. Starting in March, we will begin overcoming some of the negative challenges we've faced in cosmetics. Overall, this business is outstanding and will be a vital part of our future, underpinned by strong dynamics and our leadership position.

Mitra Ramgopal, Analyst

Okay. No, that’s great. And then finally, just as again, with readouts of COVID, obviously, there have been some positive developments, I believe you've talked in the past about a favorable product mix shift in terms of customers transitioning from synthetic to more natural, et cetera. Just wondering if there are any other trends you're seeing that you think would really be positive for you longer term?

Paul Manning, Chairman, President and CEO

Well, I think you mentioned one. You mentioned natural colors, which is going to continue to be a very nice trend for our company. Natural flavors, which has been a longstanding trend, I think that continues. But extracts and functional ingredients in general, whether it's designed for a nutraceutical product, for a food product, or even for a pharmaceutical over-the-counter product, that continues to be a very, very strong part of the portfolio for us. You've probably noted some CPGs talking about returning to their core brands, many of which do not really contain a lot of natural ingredients. I think that's kind of more of a temporary statement because as I look at our pipelines around the company, I see a lot of activity continuing in this world of natural colors, extracts, and functional ingredients. So while there may be a small hiatus from new product launches in many of the markets from the large multinationals, the level of product launches and pipelines on B and C customers continues to be quite strong and we continue to generate wins, right? The revenue you're seeing in the company right now is no accident. And Steve kind of told you about the headwinds here, but we've been able to be successfully winning new projects at a lot of different customers and it's because we're very committed to continuing to operate this company. Our employees are very committed to the mission of this company, and that is to provide essential products throughout the world. But in some cases, we’ve won biggest customers call up and say, you guys are the only guys who are working. So we continue to take advantage where we can take advantage. And these products that we have are ideally suited for many of our customers right now who are trying to advance these more health-driven products. But long-term, it's a tremendous portfolio to do just that because I think those trends are trends. They're by no means fads in any way.

Mitra Ramgopal, Analyst

Okay. No, that’s great. Thanks for taking the questions.

Paul Manning, Chairman, President and CEO

Okay. Thanks, Mitra.

Operator, Operator

The next question will be a follow-up from Mark Connelly with Stephens. Please go ahead.

Mark Connelly, Analyst

Thank you. Just two more. I was hoping you could give us a little bit of a sense of what the impact of this restaurant recovery with restaurants opening at reduced capacities. If this ends up being a new normal for, say, the next year or so, would you have to scale back any of your operations during that market more than you already have?

Paul Manning, Chairman, President and CEO

I would say no. When we talk about restaurants, there's really kind of a very simple interpretation of things, you have the quick service, the brands you know and love, and oftentimes those are served through drive-throughs anyway. They are still being hurt. But I think we can ultimately mitigate the impacts from that standpoint. But in a traditional sit-down restaurant, that that's certainly part of our portfolio, but that doesn't constitute a vast part of our portfolio. So the short answer is no. Even if this were to continue, I would not anticipate the need to do any sort of production or supply chain reconfiguration on the food side of things to address that.

Mark Connelly, Analyst

Okay. That’s helpful. And just one financial question. I was a little bit high on my cash flow assumptions. Can you tell us if there's anything that might be swinging in the fourth quarter and how I should be thinking about working capital next year, assuming that we do have sort of a steady recovery?

Steve Rolfs, Senior Vice President and CFO

Yes. Year-to-date, our cash flow results are strong, with a roughly 12% increase in cash flow from operations. There was a slight decline in the third quarter due to several tax payment deferrals; many companies postponed their federal tax payments in the first half of the year and needed to catch up in the third quarter. This was also seen in other countries. However, our sales remained robust throughout the quarter in certain product lines, which may have caused some timing issues with receivables. Any dip we experienced in the quarter is attributed to these two factors, but we are still up significantly year-to-date. We have made impressive strides in reducing inventories, especially in our flavors and extracts division this year, with a normalized decrease of about 24 days year-over-year, excluding divestitures. I believe there is still room for further improvement in flavors and colors, but overall, we have made significant progress over the last year, and I expect to see more small incremental improvements next year.

Mark Connelly, Analyst

That's super helpful. Thank you.

Operator, Operator

And our next question is also a follow-up, and it's from Heidi Vesterinen with Exane. Please go ahead. Please proceed, Heidi. Perhaps your line is muted on your end.

Heidi Vesterinen, Analyst

Sorry about that. Thanks for that. So we saw recently that Chr. Hansen's colors business was sold for nearly 21x EBITDA. Can you explain how your food and beverage colors business compares with Chr. Hansen, please? Thank you.

Paul Manning, Chairman, President and CEO

Well, I think Chr. Hansen is a great competitor, and I think under their new ownership, I think they're going to continue to be a great competitor. So, yes, I guess that's what I'd say about that.

Operator, Operator

Thank you. At this time, I would like to turn the conference back over to the company for any closing remarks as there are no further questions.

Steve Rolfs, Senior Vice President and CFO

Okay. Thank you very much, everyone. That will conclude our call for this quarter. Thank you for your time this morning. Goodbye.

Operator, Operator

Thank you. That concludes today's presentation. Thank you very much for joining the call. You may now disconnect. Thank you.