Ternium S.A. Q4 FY2022 Earnings Call

Good morning, my name is Rob, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Ternium Fourth Quarter 2022 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. Thank you. Sebastian Marti, you may begin your conference.

Good morning, thank you for joining us today. My name is Sebastian Marti, and I am Ternium's Global Investor Relations and Compliance Senior Director. Ternium released yesterday its financial results for the fourth quarter and full year 2022 and announced new investment projects. This call is complementary to that presentation. Joining me today are Ternium's Chief Executive Officer, Maximo Vedoya; and the Company's Chief Financial Officer, Pablo Brizzio, who will discuss Ternium's business environment and performance. After the conclusion of our remarks, there will be a Q&A session. Before we begin, I would like to remind you that this conference call contains forward-looking information and that actual results may vary from those expressed or implied. Factors that could affect results are contained in our filings with the Securities and Exchange Commission and in today's webcast presentation. You will also find any reference to non-IFRS financial measures reconciled to the most directly comparable IFRS measures in the press release issued yesterday. With that, I'll turn the call over to Mr. Vedoya.

Thank you, Sebastian, good morning to all, and thanks very much for your interest in this conference call. Ternium had a strong performance in 2022, EBITDA reached $3.4 billion. Net income was $2.1 billion, and earnings per ADS were $9. On top of these very positive results, the company had significant cash generation with free cash flow of $2.2 billion, which increased our net cash position to $2.6 billion. Considering these good results and Ternium's solid financial position, the company's Board of Directors proposed an annual dividend for 2022 of $2.70 per ADS, equivalent to $530 million. This represents an increase of $0.10 per ADS compared to 2021's annual dividend. Another thing I would like to share today is that yesterday we approved several projects that are very significant to our company. First, we launched a project to build a new slab facility in the USMCA region. We talked about this plan several times in previous calls, and we are excited to be able to give you the details about this project today. I believe this initiative will be very positive for our company. It will include the construction of an electric arc furnace-based steel shop with annual capacity of 2.6 million tons, as well as a DRI module with annual capacity of 2.1 million tons. Together with this, we will also build a port facility for raw material handling. We currently expect to commission these facilities in the first half of 2026 with a total CapEx of $2.2 billion. The exact location of the facilities will be disclosed in due course. After careful consideration, we chose to install a technology that we believe has several advantages against other alternatives in the steel shop. We have only one large EAF instead of two smaller units. This lowers the CapEx of the project as well as its operating expenses. The facility will also have a vacuum degassing facility and a slab caster with two lines. All of this will enable us to produce the highest specifications steel necessary for the most demanding applications, like those of customers from the auto industry. In addition, this increased slab production capacity will complement and support our new state-of-the-art hot rolling mill, which began operations in 2021 and the downstream project in Mexico that we announced in February 2022. The implementation of the USMCA trade agreement and the recent trends of nearshoring manufacturing capacity in the steel value chain has made the USMCA region an attractive destination for continued investment. These new projects will advance the integration of our industrial system and reform Ternium's position as a leading steel supplier in the region. This initiative will also support our ongoing compliance with the USMCA's melt and pour requirements for the auto industry. Another significant aspect of this new project is related to the decarbonization of our operations. The technology we decided to use for the steel shop is the most modern and greenest currently available. Also, the new direct reduction module will include carbon capture capabilities, as all of our DRI modules do, and it will be ready to switch from natural gas to green hydrogen whenever this is feasible in the future. Wrapping up this announcement of this new project, we expect it to be very beneficial for Ternium, not only from a business aspect but also from a sustainability perspective in the years to come. With sustainability in mind, I'm also very excited to announce that Ternium will build a wind farm in Argentina from which it will source electricity. We expect to invest $160 million in this project, which will have a power capacity of 72 megawatts and will begin operations in the second half of 2024. This will allow us to replace 65% of the electricity that our Argentine subsidiary currently purchases from external providers. We have already secured access to the national grid to transport this power to our facilities in the country. This wind farm will be our first company-owned renewable energy project, and we plan to expand its capacity if we see opportunities for doing so in the future. We are thrilled with the announcements we are sharing with you today as I believe these projects are proof of the commitment Ternium has to make its operation more sustainable over time. As you know, another top priority for Ternium is safety in our operations. In this aspect, as we close 2022, I'm glad to report that we had a lost-time injury frequency rate of 0.6 accidents per million hours worked in the year. This is the lowest rate in the history of the company. The safety of our people has always been a priority in our agenda, and we keep incorporating the best safety practices and raising awareness of its importance at all levels. Let's turn now to the state of our main markets. We have positive expectations regarding Ternium's performance in 2023. During the first half of the year, we expect margins to normalize as costs per ton should decrease and steel prices in the USMCA region are recovering. The second half of 2023 is a bit more difficult to forecast considering the ongoing interest rate tightening cycle which introduces some uncertainty regarding its impact on the economy down the road. In Mexico, we anticipate a continued increase in steel volumes during the first half of the year. Since the end of 2022, when steel prices in the region began recovering, we are seeing a restock in the commercial market. On the other hand, industrial market demand is slightly improving, and Ternium's most recent investment program is yielding new steel products that are allowing us to gain market share against imports. In this positive situation, we are increasing the utilization of our downstream facilities in the country and capitalizing on opportunities to serve new customers. Ternium is perfectly positioned to take advantage of this market environment as we are very advanced in the ramp-up of our new constraint mill, and we are bringing back capacity utilization in other lines, which we had reduced last year to adjust to lower market demand. Another interesting dynamic under development in the Mexican market is an increase in the investment activity of the value chain linked to the nearshoring of manufacturing capacity. Since our last conference call, a remarkable number of companies in the steel value chain have announced expansion of capacity or greenfield investments in the country. The new manufacturing facilities where our main facilities are located, is the number one destination for these investments. We are ready to serve these growing needs in the market. In addition, the different projects we are currently developing, such as the new steel shop and the project we launched last year to expand our downstream facility, will put us in an even better position to take advantage of the opportunity to grow our business. Turning now to Argentina, our customers in the industrial and construction sectors are performing well and are maintaining a good level of purchasing activity. The most active ones during 2022 were construction, the automotive industry, and the energy sector. The agribusiness also did very well in 2022, although the extended drought in the country should affect the activity in this sector in the year to come. We are expecting good levels of demand in Argentina during the first half of 2023, with the usual seasonality in the first quarter, but macroeconomic uncertainty is always present in this market. So this could adversely affect economic activity and steel demand in the future. To finish my prepared remarks, I would like to emphasize our positive view regarding Ternium's performance in 2023. In addition, we are very excited about the growth projects under development. We believe these projects will enable Ternium to drive the growth of the USMCA region, support the nearshoring of manufacturing capacity, and contribute to the company's decarbonization and import substitution strategy. With this, Pablo, please go ahead with the review of Ternium's results for the fourth quarter and full 2022. Thank you.

Thanks, Max, and good morning to everyone. Let me start by describing Ternium's achievements, and to do that, let's begin on Page 3 of the webcast presentation. Ternium's previous achievements reached in 2022 the highest level on record, supported by our investment in the new hot strip mill in Mexico. In addition, Ternium has advanced its integration strategy, as evidenced by the reduction of the volume of slab shipped to third parties, which moved from 2.9 million tons in 2018 to 800,000 tons in 2022. Adjusted EBITDA and net income were very strong in 2021, and in 2022 was the beginning of a transition to a more normal level of profitability. The decrease in the year during the last year mainly reflects higher cost of sales due to increased prices of purchased slabs and raw materials linked to the disruption in the global steel and raw material market caused by Russia's invasion of Ukraine. This negative effect was partially offset by higher realized steel prices, mostly reflecting a higher-value sales mix due to the integration of Ternium's slab production in Brazil. The annual dividend increased significantly in the last five years from $1.20 in 2018 to $2.70 proposed for 2022, equivalent to $530 million. We have started to pay interim dividends in 2021, with $0.80 per ADS in November of 2021 and $0.90 in November last year. Once the Board's proposal is approved, the company will pay the remainder of the 2022 dividends in May, equivalent to $1.80 per ADS, or $353 million. This is the annual dividend payment, net of November interim dividends. On the next page, you can see Ternium's cash generation in the past five years. Cash from operations was particularly strong in 2021 and also in 2022, with the significant shift in working capital in those years reflecting tariff fluctuations in steel prices and raw material costs and an inventory buildup in 2021 in connection with the ramp-up of the new mill in Mexico. CapEx over the last three years has been relatively stable at $500 million to $600 million per year. This is about to change as a result of investment projects under development, mainly the upstream project we announced yesterday and the downstream project we announced last year which has been broken into two of the four initiatives: the cold rolling mill and the galvanizing line, which are now expected to start-up at the end of 2025. Some of these projects will take total CapEx for the company in 2023 to approximately $1.1 billion and will add a total of $2.9 billion to the company CapEx over the next four years, with high CapEx intensity in 2025. Turning now to free cash flows, as can be seen in the chart, it has been exceptionally strong in the last two years, at around $2.2 billion each. This is equivalent to $11 per ADS. The significant cash generation strengthens Ternium's balance sheet, enables us to continue with a high level of dividend payments, and will also help us when we announce new capital expenditure projects. Let's now review Ternium's results for the fourth quarter on the next page. As we anticipated in the previous quarter's call, the adjusted EBITDA margin in the fourth quarter declined to a level below the company's usual range. This happened because there was a mismatch in the pace at which revenue per ton and cost per ton deflated, with lower-priced raw materials lagging the decline in revenue per ton and raw material prices gradually slowing through the company's inventory before impacting the cost of sales. We expect Ternium's cost per ton to continue decreasing over the next couple of quarters, reflecting lower-priced raw materials purchased in the second half of last year. We believe this development should help Ternium's margin to gradually normalize over the coming quarters. Net income was $59 million in the fourth quarter, reflecting the decreased level of adjusted EBITDA and also the negative impact of a $99 million write-down of Ternium's investment in Ternium Brazil. Turning now to Page 6, we can see a 9% increase in steel shipments in Mexico; we reached an all-time high of 1.9 million tons in the fourth quarter. Shipments in Mexico increased, mostly driven by the factors described in Maximo's initial remarks, and should continue growing in the next few quarters. On the other hand, shipments in the other market divisions decreased 16% in the fourth quarter compared to the third, and sales volume in the Southern region remained unchanged. We expect shipment in the Southern region to seasonally decrease in the first quarter of this year. Let's turn now to Page 7. As anticipated, consolidated revenue per ton declined sequentially in the fourth quarter as steel prices decreased in Ternium’s steel market and contract steel prices in Mexico reset at lower levels. Although spot steel prices are improving in the USMCA region, we expect this positive trend to be offset in the first quarter by the reset of contract prices at lower levels. So we anticipate revenue per ton to stabilize after the decreases noted during the second half of last year. On Page 8, let's review the main drivers behind the decrease in net income in the fourth quarter. The sequential decrease in net income reflected the mentioned decrease in adjusted EBITDA and the $99 million write-down of the company's investment in Ternium Brazil. These negative results were partially offset by the performance in the fourth quarter of two items that we already analyzed in the third quarter earnings call: a $120 million impairment of Ternium in Usiminas, and a $95 million decrease in the fair value of the securities received as a dividend from Ternium Argentina. To finalize the presentation, let's now review Ternium's cash generation on Page 9. Cash flow from operations in the fourth quarter was $1.1 billion, including a working capital release of $955 million. The change in working capital resulted from the impact of declining prices of steel, purchased slabs, and raw material. Free cash flow in the fourth quarter of last year was $873 million after CapEx of $159 million. This drove our net cash position to $2.5 billion at the end of December. With this, I am finalizing my presentation. Thank you very much for your time and attention, and now we are ready for your questions.

Your first question comes from the line of Caio Greiner from BTG Pactual. Your line is open.

Hello, good morning, everyone. Thank you. So, my first question regarding the project: I guess the EAF mill was slightly smaller scale than you guys had indicated in the past. I think it's slightly lower CapEx per ton too. So I just wanted to understand what were the main drivers for that. And also if you can provide any details on the estimated cost per ton for this planned project, that would be helpful too, or just any color on whether it will be in the first quartile or the second quartile of the cost curve. I think that would be helpful too. And secondly, on the direction of margins, I mean, you guys mentioned that you expect the normalization of margins in the first half of 2023, but I just wanted to understand your views on the first quarter specifically. So firstly on prices, even though spot prices are on the rise, I mean we might still see some damage from the resetting of quarterly contracts in the fourth quarter, so I just wanted to understand the direction of revenue per ton here for the first quarter. And then on costs, I understand that trend is downwards but maybe if you guys could provide any color on the magnitude for the first quarter, that would be helpful too. Thank you very much.

Okay, thank you, and good morning to you, Caio. I'll take the first part of your question regarding the investment. It's not that it's a smaller EAF. The EAF we are putting is probably the biggest EAF that is available in the market today. What we have said in the past is that the alternative would probably be putting two EAFs, for a total capacity of roughly 3 million tons. What we are doing today is installing only one of those EAFs, but much bigger of the two with a capacity of 4 million tons. So we are changing a little bit the configuration, putting only one EAF to give you the 2.6 million tons. This helps us with the other part of that question, that is the CapEx is lower or slightly smaller than what we thought it would be if we put the other configuration. That's number one. Number two, the operating cost is smaller. If you have only one EAF, that is also the case. And number three, but this is in the long-run, so don't expect this revenue, but it could allow us to grow the capacity fairly easily in the future by putting a second one. So, I think it's very convenient for our operation to go with this technology instead of the different alternatives that required putting a little bit more capacity but with two EAFs. So that's—I think—is the answer to the first question. The second question about margins, Pablo, why don't you answer that.

Okay, perfect. Hi Caio, how are you? So, as we have been expecting in the fourth quarter, we have been seeing a squeeze on margins because everything that we have already addressed, which is the decreasing prices in an environment of also decreasing costs but taking longer to be reflected in our numbers. Clearly, what we have done in the fourth quarter, the EBITDA margin at around 9% is below the range that Ternium usually expects. So we are expecting to get back to this range in the coming quarters, specifically in the coming quarters. Clearly prices that are— we increased in the last quarter, I guess at some point Maximo will comment extensively on that. Will not yet be fully reflected in our numbers in the coming quarter because of the reset of the prices of our contracts, especially in Mexico. On the other hand, costs, we continue to see some reduction and we are expecting to see that coming into the first quarter results. So all in all, to give you a more precise answer and summarizing the whole thing, as I've been saying, we will start recovering and return to more normal levels in the first quarter of the year not yet in the range that we are expecting to have, but we should be approaching that level at the end of the second quarter or the beginning of the third quarter.

I hope, Caio, with that we answered the two questions.

Yes, just one point on the project still. Can you guys provide any color on what you're expecting in terms of cost for the EAF plus DRI facilities. In terms of cost per ton for your slab production operations in the announced projects, not the total CapEx, but your expected cost per ton.

So, I mean it's very difficult to provide a number because, as you might expect, some parts of that depend on the cost of our raw materials. To put some numbers, and I put the numbers that are today. Slab market prices are around $700, and the operating cost of this project, if we take today's numbers, will be around $550. That's what I can tell you about the cost.

That's helpful. Thank you, Maximo. Thank you, Pablo.

Your next question comes from the line of Timna Tanners from Wolfe Research. Your line is open.

Hi, good morning guys, and thanks for the great detail. I wanted to follow up on the last question and get a little more color on how you're thinking about volumes. So on the last question, the answer you gave was about margins returning to more normal. When you talk about normal, I just want to reiterate—is that the historical guide of 15% to 20% target that you're talking about when you refer to normal EBITDA in the steel-making segment? That's the first question if you could just clarify that would— it sounds like definitely in that range second half. And then kind of approaching that in the first half. Does that mean the first quarter would be more like the fourth quarter or improving from the fourth quarter? And then my second question, like I said on volumes, obviously with AMSA not operating fully, there seems to be kind of a gap in availability in the Mexican market. So, is it possible to see a meaningful uptick in your volumes to fill that gap, given the good demand you described? Just any more color on where volumes could go to given your availability would be great. Thanks a lot.

Thank you, Timna, good morning. Yes, the first question, the answer is yes. When we refer to normalized margin, it is between 15% and 20%. In the first quarter, what we are expecting is not to be like the fourth quarter, but a little bit closer to the lower range of this margin. We are not getting to the normalized range, but will be a little bit closer to those numbers than the fourth quarter. Volumes in Mexico? Yes, volumes in Mexico are going to increase in the next two following quarters. Clearly, one aspect of that is AMSA. The second aspect is that we are gaining market share against imports. And so we are starting to work our facilities at much higher depreciation rates, especially the Churubusco facility, which was working at a very low capacity. And so forth, at least for the next few quarters, we see that facility working at much higher capacities. The exact number of the increase we don't have it clarified yet, but we are very hopeful working with our customers to see the final demand. I think that— one thing that is also clear, Timna, is that demand for the consumption of steel in Mexico is expected to increase in the future, and we are seeing all the investments that our customers, our new customers are making. Remember that our capabilities also before the hot strip mill, some of the products we couldn't produce. So now, industrial customers, we are going through the painful certification process necessary to meet the requirements, but this year and next year, most of the certification processes will be completed. So, we are starting to gain all that volume against imports.

No, that’s really helpful. So, it sounds like even if AMSA were to reopen. And I'm not sure I'm quite up to date on this, if we do see it return to operations, do you think that at least some of the volume improvement is sticky due to market share gains against imports. It sounds like as well, yes?

Yes, yes, you see both trends. Remember in Mexico you have AMSA, you now have ArcelorMittal, of course, with the new hot strip mill, and you have us. And what we are seeing is that we are increasing market share against mainly imports, and of course, AMSA is producing fewer tons, that's also true. What we expect in the future, probably not next year, but you are seeing that demand is going to increase for several years to come. With this nearshoring, all the industrial manufacturers that are coming remember that our capabilities also before the hot strip mill some of the products we couldn't produce. So now, industrial customers, we are going through the painful certification process necessary to meet the requirements, but all this year and next year, most of the certification processes will be completed. So, we are starting to gain all that volume against imports.

Your next question comes from James Spies from Morgan Stanley. Your line is open.

Yes, hello, thank you for taking my question. I just wanted to ask, where do you plan to divert the volumes of Ternium Brazil and to which markets? And also, I want to ask of the volumes you currently have integrated from Ternium Brazil to your Mexican operations. What percentage goes to the auto industry approximately, yes just to have some more color there?

Thank you for your question, James. Let me provide a broad response. In Mexico, along with some capacity in Argentina, we have about 7.5 million tons that require slabs. Excluding the Guerrero facility and the mini mill, if we operate the hot strip mill in Pesquería and the Churubusco mill at full capacity, alongside the mill in Argentina, we will likely need between 7.5 and 8 million tons of slabs. Currently, Brazil is producing around 4.7 million tons, which results in a deficit aligned with the new capacity we are introducing. Therefore, we don't plan to sell off any of Ternium Brazil's operations; we expect to continue using most of the slabs in our own processes. However, there are customers and partners in Brazil who require slabs for the long term. As a result, we anticipate increasing sales to the USMCA while continuing to acquire some slabs for Ternium. Our perspective is that this will support our operations as the new capacities come online. Additionally, volume specific to the automotive sector from Brazil is on the rise, and we expect to reach around 1.2 million tons in 2023. In Mexico, we currently sell about 2 million tons to the automotive industry.

Okay, perfect, very clear. Thank you so much.

Your next question comes from the line of Isabella Vasconcelos from Bradesco BBI. Your line is open.

Thank you. Good morning, thanks for the opportunity. I have one question here on my end. In terms of Mexican demand, you mentioned that there is destocking happening in the commercial market. So I just wanted to understand where do you think that stock is currently at in the supply chain—is it already above average, or if we just continue to see more restocking happening in Mexico in the coming months?

Okay, thank you. Good morning, Isabella, and thank you very much. I think the restocking is just starting to be honest; when you see the apparent consumption in Mexico it decreased by 2% last year. Although the GDP in Mexico increases, you see that throughout the year, especially in the second half, there was a destocking, or a profound destocking in Mexico. So I'm expecting that this restocking will continue for a couple of months or at least a couple of quarters. And then, as I said, industrial demand will come on; there are some industries that are increasing, and the automotive industry is one of them. We had huge problems in the automotive industry in the consumption of the automotive industry in Mexico because of the lack of components, but we are seeing in January that most of the OEMs in Mexico are producing again without any stoppage because of lack of components, and it seems that the supply chain in the automotive industry is already working. So we are expecting more demand from them, and I think that in the second half of the year or in the second quarter, demand for other industries is going to come back. So that's our view that we have from the Mexican market. I hope it helps, Isabella.

Yes, that's very helpful; one quick follow-up on nearshoring: have you already been seeing actual demand for nearshoring products or projects, or do you think that’s something to expect in later 2023/2024?

No, I mean in all our numbers for 2022 and 2023, we are not seeing immediate demand. Except the demand you have in the construction of the facilities that takes a lot of steel, of course, but we are not seeing that demand now because that production is coming onboard; late '23, the first one we saw last year, and it's going to come into effect in '24 and '25. That's why I said in the beginning that nearshoring is something that is happening and that we are seeing all the buildings and factories being built. But this is coming in a couple of years when all the production facilities are running.

Your next question comes from the line of Alfonso Salazar from Scotiabank. Your line is open.

Thank you, and good morning, everyone. My first question is about the location of the new plant you are building. What considerations are you taking into account for this location? Does it involve factors like water availability, clean energy sources, and your carbon goals? Pesquería seems like a suitable option, but could you elaborate on your considerations for the location?

Thank you, Alfonso. You’re correct about the second part. We are going to be nearly hedged. Yes, primarily, and as I mentioned, we will likely sell to a reliable source. This approach makes a lot of sense logistically, and we intend to continue purchasing slabs in the market as Ternium while maintaining a strong hedge. Regarding the location, Pesquería is certainly one option, but we are still in discussions, and we will reveal the exact location soon as there are still some factors we are evaluating. I hope that addresses your question, Alfonso.

Yes, to clarify, we are aware of the water scarcity issues in the Nuevo León region. Currently, energy is not a major issue, but it could become one in the future, and the availability of clean energy is a concern for potential investors in Mexico. I want to make sure you understand these are the types of factors you should consider.

Well yes, and no. I mean, to be honest, water for our Pesquería plant is not a problem. As you know, all of the— I mean, from a water standpoint of view, Pesquería plant is the—Pesquería plant with the increase in the downstream facilities and the electrical plant we had, all of that consumes water from the disposal facility that is close to Pesquería. So we are not consuming clean water, and so it's very, very efficient from a water point of view, and the plant is prepared to grow. So although it's a concern in the north of the country, the water part is not a concern for Pesquería at all because of sustainability; we felt the plant and we are consuming all, I don't know how you said it in English, the black waters. Yes, I think sewage waters. And so we don't have any problem with water. Energy, which is a big concern in Mexico, I think it's not a concern in the north of the country. The north of the country has more energy supply than energy consumption. So it shouldn't be another problem. I think that our decision is based on discussing the alternatives we have and to disclose the location pretty soon.

Your next question comes from Alex Hacking from Citi. Your line is open.

Good morning, and thanks for the call. I just have a few follow-ups. I guess mostly on the projects. So with the DRI, would Ternium be consuming all of that DRI at the new EAF facility, or would you be selling some of that to third parties?

Yes.

What technology will that be based on? Will it be the technology that you're very familiar with?

Most likely. I mean, there are two technologies. Clearly, we have HYL in all our plants; probably it's not decided. But of course, it is what we intend to do.

Okay. And then finally, are there any steel quality implications from shifting from very high-quality Brazilian slabs to slabs made in an EAF? In particular, for your automotive supply chain, exposed auto body sheet, are you fully comfortable that you can replicate your current tolerances and quality?

Yes, the answer is, yes, of course, it's a different technology. But we have to go that road for several reasons. First, we have to be USMCA melted and pour compliant. We are not going to make a blast furnace in Mexico or anywhere, to be honest. So we worked hard all last year to understand the technology and to see exactly how this steel shop will be to produce the same quality that the Brazilian slabs operation produces. And the secondary steel shop will probably be the same as that we have in Brazil. So we are comfortable although we are working very hard that the quality will be the same.

Okay, thanks. And then just back on the raw material side. I assume that outside of the DRI, you would also be using some prime scrap in the mix, is that a correct assumption?

Yes, probably the mix depends. Of course, the steel quality and the facilities are prepared to produce with more DRI or with less DRI depending again on the steel quality, but roughly on a general mix, it's going to be 65% DRI and 35% scrap.

Okay, perfect. Thank you for the clarifications.

And there are no further questions at this time. I will turn the call back over to Ternium's CEO, Maximo Vedoya for some closing remarks.

Okay, thank you all very much for your interest in our call today and for your very good questions. As usual, please contact us if you have any comments or additional questions. If not, we'll talk next conference call. Thank you very much, and goodbye.

This concludes today's conference call. Thank you for your participation. You may now disconnect.