Earnings Call Transcript
Watsco Inc (WSO)
Earnings Call Transcript - WSO Q4 2020
Operator, Operator
Good day, and welcome to the Watsco Fourth Quarter 2020 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 Albert Nahmad, CEO. Please go ahead.
Albert Nahmad, CEO
Good morning everyone. Hope everyone is healthy and safe. And welcome to Watsco's fourth quarter earnings call. This is Al Nahmad, Chairman and CEO and with me is A.J. Nahmad, President; Paul Johnston, Executive Vice President; and Barry Logan, also Executive Vice President. Now as we normally do, before we start here's our cautionary statement. This conference call has forward-looking statements as defined by SEC laws and regulations that are made pursuant to the Safe Harbor provisions of these various laws. Ultimate results may differ materially from the forward-looking statements. Now onto our financial report. Watsco produced another record year, with sales, net income and earnings per share reaching record levels. We generated record cash flow of $534 million during the year, well in excess of our goal of generating cash flow greater than net income. This further strengthened our balance sheet, which is now debt-free and provides us the capacity to make almost any size investment to grow our business. We also announced this morning a 10% increase in our annual dividend to $7.80 per share. That reflects our confidence in our business. 2020 results were driven by steady growth with market share gains in our U.S. residential HVAC equipment business, which grew 10% for the year and 17% during the fourth quarter. Homeowners continue to invest in their homes as replacement sales at higher efficiencies remain strong from early summer through today. Looking long term, we see opportunity to be a significant participant and contributor in efforts to address climate change. Sales of high-efficiency products have long been a component of our business and have grown steadily in our sales mix over the past decade. This is an interesting data point. There are over 110 million installed HVAC systems in the United States, many of which are operating under old efficiency standards that resulted in higher energy use and costs. It's important to note, we will explore and evaluate impactful opportunities to make progress in our marketplace. We believe the combination of Watsco's technology platforms, industry leading scale, access to capital, customer relationships and unrivaled OEM relationships provide a strong foundation and long-term benefit for all stakeholders involved. We also continue to invest in our industry-leading technology platforms, leading to greater adoption, new customer acquisition and market share gains. User growth on Watsco's e-commerce platform, a good indicator of overall tech adoption, was up 20% during 2020. This is important as sales growth rates for customers that are active users outpace growth rates of non-users. Also, customer attrition among active users is a fraction of non-users, another good indicator of effectiveness. Now some more detailed examples of our progress. Weekly users of our mobile apps increased 27% in 2020, with over 120,000 downloads. The number of e-commerce transactions grew 20% this year to 1.2 million online orders. Our annualized e-commerce sales run rate is 33% versus 31% at the end of last year. In certain markets, it's over 50%. Our curbside or dockside pickup services expanded to more locations and now includes no-contact payment functionality. The technology has only been available since this summer, and already over 22,000 orders were fulfilled by more than 3,000 unique users. Two of our newer innovative platforms gained momentum in 2020. We call them OnCall Air and Credit-For-Comfort. These platforms help digitize the relationship between contractors and homeowners when buying and financing replacement HVAC systems. OnCall Air is growing exponentially. Contractors have provided digital proposals to over 109,000 homeowners using the tool during last year and generated nearly $350 million in gross merchandise value for our customers, an 89% increase over last year. And Credit-For-Comfort processed 40% more digital financing applications in 2020 versus 2019, resulting in more than 180% increase in third-party funded loans. This tool helps homeowners afford much needed HVAC systems. Investments in inventory management software have also benefited the company by yielding lower inventory, improved returns, and contributing to our record cash flow and operating efficiency. These examples are exciting, and we believe it's still early in terms of reaching the full potential of our technology investments. As always, feel free to schedule a Zoom call with us, and we can further explain our technology and its progress. Now one very important thought as we end these prepared remarks. Our 2020 results are a testament to the efforts of our valued employees across the Watsco network. We deeply appreciate their commitment. With that, A.J., Paul, Barry and I are happy to answer your questions. Elizabeth?
Operator, Operator
Good morning, Stephen.
Stephen Volkmann, Analyst
Good morning, guys. Thanks for taking my question. I guess maybe just to kick off, obviously, 2020 was an extraordinary year in lots of ways, in terms of the stay-at-home spending and your market share gains and improvements in e-commerce, etc. But of course, that sets us up for what is potentially a difficult comparison in 2021, especially, as the year progresses. So I'm wondering, Al, maybe you can give us your thoughts about how you think the market will be unveiled in 2021 relative to the opportunities for continued growth?
Albert Nahmad, CEO
Well, I'll start with an answer, and then I'll turn to Paul Johnston to talk about the industry. I'll talk about ourselves. I think that we are set up to continue to grow over a number of years. We've talked about technology adoption. We've talked about our financial strength, which allows us to continue our active M&A program. We have a lot of things we can do to continue our growth, regardless of what happens to the industry, and we feel very confident in that statement. Paul, you want to talk about the market next?
Paul Johnston, Executive Vice President
Yes, the market in 2021, it's tough to make a comparison, obviously, to 2020 because we had so many ups and downs and ebbs and flows and inventory issues and such. However, I think it's fair to say that the industry will remain strong during the year. New construction remains strong. Replacement demand, we're still seeing that following through with where we ended last year or beginning this year on the right footing. I think there's another phenomenon out there that's helping and changing the replacement dynamics. And that is, we're seeing homeowners stay in their homes for longer periods, and I don't mean because of the pandemic. I mean, they're not flipping houses as they were in the early 2000s. We're seeing them stay in their homes 13, 14 years, which is a good indicator that when something does happen to your air conditioning system, you're probably going to replace it as opposed to repair it. You'd have more of a tendency to repair if you are planning to sell your home. So I'm bullish on that. Secondly, I'm also bullish on the idea that we have markets where we have very good market share, and we have markets where our market share isn't as high as we think it should be. So we still have market share gains that we're striving for and going for. And we have great partners working with us on the OEM side to help make that happen.
Albert Nahmad, CEO
Good, Paul.
Stephen Volkmann, Analyst
Okay. And my house is going on year 20, actually. So I get your point. Quick follow-up, if I could. I was really surprised by the inventory levels. You guys just did a really good job of keeping that under wraps as we ended the year. And I'm curious whether that's just more the strong demand in the industry, and you might have even preferred to have them a little higher? Or is that actually kind of the new normal with all the information technology kind of benefits that you've added to your inventory management?
Albert Nahmad, CEO
That's a great question. Let me turn to A.J. for the answer.
A.J. Nahmad, President
Sure. It's a combination of all of the above. There were supply chain constraints in the industry. There was strong demand. And our technology enabled us to fill customer orders and take market share and show sales growth in that environment as well as it gave us new insight and tools to attack what we call non-performing inventory. Inventory that's probably been on our shelves for too long. So with more detail and more talent focused on it, we were able to move some of that old product out of the network as well. So it's a mix and a confluence of all three factors. And certainly, those efforts are going to continue going into 2021 and beyond.
Paul Johnston, Executive Vice President
I have one more thing to add. A.J. did a great job not only in acquiring the necessary technology for the system side, which allowed us to have visibility into our inventory, but we were also fortunate to hire individuals from diverse backgrounds in purchasing and inventory management before the pandemic. This included people from retail and other commodities who collaborated with our team that was already well-versed in the HVAC industry. This diversity in expertise proved beneficial during the pandemic, as our team was equipped to work closely with our OEMs and suppliers to maintain a steady flow of inventory.
A.J. Nahmad, President
You're so right, Paul.
Barry Logan, Executive Vice President
And I just want to add a layer of numbers to it. The reduction year-over-year was around $120 million, which is a pretty astounding number. And I think part of the question is, how much of that is temporary versus permanent, right?
Albert Nahmad, CEO
Yes.
Barry Logan, Executive Vice President
We had to navigate through the discussions, and I would estimate that more than half of it represents a permanent reduction in our technology and how our stores manage operations, inventory, and product orders. So, I would consider more than half to be a permanent reduction.
Stephen Volkmann, Analyst
That's perfect. Thank you, guys.
Albert Nahmad, CEO
Sure.
Operator, Operator
The next question is from David Manthey of Baird. Please go ahead.
Albert Nahmad, CEO
Hi, David.
David Manthey, Analyst
Hey, good morning. Hi, guys.
Albert Nahmad, CEO
I hope it's not too cold where you are.
David Manthey, Analyst
No. In Tampa, Al, we're absolutely fine. Actually, a little warm yesterday in the 80. But as always, hoping you can disaggregate the organic equipment growth, units versus price/mix there? And then your outlook for 2021 as it relates to pricing?
Albert Nahmad, CEO
Barry, do you want to take a shot?
Barry Logan, Executive Vice President
Sure. Well, Dave, first, if you look at the full year, which I think is a responsible way to look at it, the potential business up 10%, almost all unit growth, very little price, if any, a slight benefit on mix, mostly unit growth this year. And for the quarter again, I would say, very similar circumstance, almost all unit growth, almost no price and a slight amount of mix benefit.
David Manthey, Analyst
Okay. And with copper and steel and everything being up, should we expect that 2021, we could actually see a positive impact there?
Albert Nahmad, CEO
Barry?
Barry Logan, Executive Vice President
Well, there are two groups in that discussion. There's what the OEMs make products and what their cost inputs are, right? So almost all the OEMs already announced pricing actions, price increases for 2021. And that will flow through the inventory cycle and into the season this year. So I don't think we're ready to call it. It's a crystal ball, but there has been pricing announced, and we'll see how that fits through the market this year. We do sell non-equipment products that consist of metals, right? And there is inflation going on in that, and those prices have been increasing and accounts for some of the fourth quarter's benefit that you see in the non-equipment growth, while you're more encyclopedic than me about that, but I think it's some helpful price increases heading into 2021.
Albert Nahmad, CEO
Correct.
David Manthey, Analyst
Got it. Okay. And just to stay on that theme of the other HVAC products, assuming there was some volume there, I know you had a major initiative that you're working on and I'm assuming that some of that growth was early returns from that program. Could you just talk about the trends that you're seeing and the early returns from the initiative relative to other HVAC products?
Albert Nahmad, CEO
I guess we can take a shot at it, Paul, with that picture.
Paul Johnston, Executive Vice President
Yes. I don't think a lot of it was from the early parts of our initiative. I just think a lot of it was a little bit of pent-up demand with some of the equipment spotting that we had, that equipment wasn't available. So people had to repair their product. Had to repair a furnace. That's been probably the tightest market for everybody right now. As far as price increases, a lot of the steel and copper prices that Barry mentioned, did occur in the fourth quarter. They had a benefit, but really not material in the overall scheme of Watsco's revenues for the quarter. I think more of that is going to bleed into perhaps in the first and second quarter of this year. We'll have a better idea for what's going to happen price-wise with those commodities.
David Manthey, Analyst
Thank you, alright. Thanks for the update, guys.
Albert Nahmad, CEO
Sure.
Operator, Operator
The next question is from Jeff Hammond of KeyBanc Capital Markets. Please go ahead.
Albert Nahmad, CEO
Good morning, Jeff.
Jeffrey Hammond, Analyst
Can you provide an update on the performance of the businesses outside the U.S. for the quarter or full year, considering they appear to be a challenge? Additionally, what are the commercial trends for the fourth quarter and into 2021?
Albert Nahmad, CEO
Barry?
Barry Logan, Executive Vice President
The U.S. market is directly addressed in the press release. Our international businesses are primarily divided into two markets: Canada, which resembled the U.S. market significantly by the end of the year, showing a strong commercial market with residential being weaker. Overall, Canada increased its sales and profits in 2020. In Latin America, where we provide data in our 10-K, the business mainly consists of commercial operations and experienced a decline in sales and profits this year, likely impacting earnings by about $0.20 per share over the full year. When discussing our results, we should anticipate a recovery in Latin America this year, as it has cost us about $0.20 this year. This area is also largely commercial. As reflected in industry discussions, the commercial market is improving, though it still lags behind. We are hopeful that 2021 could be a recovery year with some positive effects. We'll monitor the situation and update as it unfolds, but this provides insight into 2020.
Jeffrey Hammond, Analyst
Okay. That's helpful. And then just on the SG&A line, can you just talk about maybe puts and takes as you think about that into 2021? Certainly good incrementals, very good incrementals in the back half. But it seems like a lot of companies tamped down costs in 2Q and then demand kind of came back quickly. So just how are you thinking some of those tamped down costs or temp costs start to come back and impact SG&A?
Albert Nahmad, CEO
Go ahead, Barry.
Barry Logan, Executive Vice President
Yes. Again, three factors, I think, in the answer, Jeff to kind of unbundle it. So 2020, you're right, an early spring reaction to all the knives that were falling helping with cost reduction and provoking cost reduction for good reasons. Second was interesting, the need to deal with double-digit demand thereafter for the next eight months. So certainly, some costs needed to conduct a clear equation as 2020 played out. And then third, technology. What did we do, can we do, can we continue to do relative to technology, which is kind of the whole, outcomes of technology is to improve cost. Especially we should see gain of all the technology that's intended in that. So that's nice in abstract answer. If I look at 2021, I would say this, half of our SG&A are people. And commission growth, growth in incentive pay, we want that to happen. We would expect that to happen next year. And so with the SG&A increases, for example, in that category. Rent, which is about 15% of SG&A is, I think, flat this year. That's an accomplishment. Our teams went to landlords and dealt with the realities of what was going on in the market and this year's rent is flat. Well, that was otherwise intended to are likely to increase. I think some of those savings will be kept and sustained into next year. So if I try to summarize it without another 10 minutes of explanation, we would see some SG&A growth next year, just in the realities of what happened in 2020. We are making investments in our distribution network in 2021 with people and locations. And we see the opportunity. We have a really strong partnership with many of those efforts, and we're going to go out and expand our network some next year, and there will be some SG&A growth for that. Otherwise, technology will help pinch those increases. And again, I would expect not the same performance but a moderate increase next year.
Jeffrey Hammond, Analyst
Okay. Thanks for the call, guys.
Operator, Operator
The next question is from Chris Dankert of Longbow Research. Please go ahead.
Albert Nahmad, CEO
Good morning, Chris.
Christopher Dankert, Analyst
Hey, good morning, guys. Thanks for taking the question. I guess just kind of looking into 2021, I mean, great performance on the gross margin in the back half of 2020. Definitely got things stabilized. I guess, Latin America is a moving piece. I know there's some mix dynamics going on, but how do we think about gross margin into the new year? Just any puts and takes you'd call out anything to kind of bear in mind besides just the typical price/volume mix?
Albert Nahmad, CEO
Well, it's something that we're focused on. And whatever improvements you saw this year or last year, I should say, we continue to believe this year will show improvement as well because of our focus and because of the ability to do something about it through our own internal systems and approach to the marketplace.
Christopher Dankert, Analyst
I do assume Latin America was a piece of kind of what the headwind was kind of late 2019, early 2020, though?
Albert Nahmad, CEO
2019, 2020? Barry, if you understand that, go ahead and answer.
Barry Logan, Executive Vice President
Yes. Please repeat your question. What are you trying to get at?
Christopher Dankert, Analyst
Yes. Sorry. So I think gross margin is kind of on a year-over-year basis in the latter half of 2019, early half of 2020. We're facing some year-over-year headwinds. I'm just curious how much Latin America was playing a role in that gross margin decline earlier in 2020?
Barry Logan, Executive Vice President
Oh no, not at all. The margins internationally resemble the U.S. gross margin. So there are no calculations affecting the mix in some way. It's really about the fundamental work needed to set prices in the market. There's a significant pricing initiative underway to enhance how we price our products as we go to market. We also mentioned inflation earlier, and there was a lack of inflation in 2020. The potential for inflation may help, but we won’t know until we get into the season. Those are the significant factors at play.
Christopher Dankert, Analyst
Got it. Got it. All right. And then I guess, something we haven't touched on lately. Just any update on Russell Sigler, either in terms of investments being made there, what's required in terms of investments? The likelihood of further consolidation of ownership? Just anything you can share there would be great.
Albert Nahmad, CEO
We can't share much. We're in a minority position and are very supportive of anything they want from us. That's all I can say. We have no idea what their intentions are regarding divesting more ownership.
Christopher Dankert, Analyst
Yes. How are they utilizing some of the technology tools? Are they fully integrated in terms of using OnCall Air and similar tools?
Albert Nahmad, CEO
What we can tell you is that we're very pleased with their performance. All across...
Christopher Dankert, Analyst
Understood. Thanks so much, guys.
Operator, Operator
The next question is from Jeff Sprague of Vertical Research. Please go ahead.
Albert Nahmad, CEO
Good morning, Jeff.
Jeffrey Sprague, Analyst
Hey good morning everyone. Thanks for the questions. I guess maybe somewhat following up on that last point. I just wonder if you could speak a little bit to what you are seeing in potential M&A landscape. And I imagine there's a little bit of tug of war. Business is good. So perhaps people aren't eager to sell, but by the same token, it does seem like the technology changes maybe are kind of increasing the pressure on some of the smaller guys. So just the state of play there? Should we expect other M&A to happen in 2021? Maybe some color on the activity in your pipeline?
Albert Nahmad, CEO
I will start with a general statement and then Barry, who oversees our M&A efforts, can share more details. Watsco is an acquirer and part of our strategy involves operating in a $40 billion industry where we have a $5 billion revenue, indicating significant growth potential for our market share. We leverage our balance sheet to facilitate M&A activities and are actively pursuing opportunities. While there are no guarantees, we anticipate engaging in M&A this year. Our reputation reflects a unique approach; we are not disruptive but rather supportive. We enhance our acquisitions with capital, equity for key personnel, and our 401k program, which involves donations in Watsco shares. These aspects are appealing from a cultural standpoint. As mentioned, there are many opportunities since we currently represent only a small fraction of the overall market. Some targets may be small, but our focus is on bringing in partners who want to continue their growth with our support. Barry?
Barry Logan, Executive Vice President
Yes, Jeff. Just first, Jeff, welcome back. Yes, two things I take to remind everyone of is, the focus of M&A is kind of the regional superpower businesses that are in this industry. We're not attempting to roll up a fragmented industry. We're focused on the largest of targets that will drive growth and share and then platforms to build on and invest in. The second, big picture fundamental is, we would rather invest in businesses when they're growing and reaching greater strength, we're not turnaround experts; we're not looking for a dip in the market to buy. We're looking to invest in strengthening businesses. So I think this environment after everyone has been through a lot this year, net-net is stronger now than it was a year ago. So I would say that presents us opportunity and certainly gives us confidence in where the good businesses are. But having said that, for 2021 I'll never be able to predict a thing, other than to say some of the targets that were technology discussions were the reason for the discussion. Along with performance, I think that rekindling of that effort can happen now that we're through some of the weirdness and again, the foundations are stronger today than they were a year ago. So I would expect some great conversations. Whether there are great transactions or not, is still to be seen, but...
Albert Nahmad, CEO
There's got to be a great transaction, Barry. Good answer. We're very optimistic about that. No guarantees, but we're very optimistic.
Jeffrey Sprague, Analyst
Very well. Thanks for that color and good to be back on the beep, Barry. Thanks.
Operator, Operator
The next question is from Steve Tusa of JPMorgan. Please go ahead.
Albert Nahmad, CEO
Go on, Steve.
Charles Tusa, Analyst
Hi, guys. How is it going?
Albert Nahmad, CEO
Doing good. Come visit.
Charles Tusa, Analyst
I'd love to. It's a little snowy up here. Question for you on Carrier said their backlog in residential was up three times year-over-year. Backlog is not typically the type of thing we talk about in residential, especially not in December. Did you guys get out in front of some of these price increases or availability concerns and order a bunch, that they'll deliver to you guys in the first half here?
Albert Nahmad, CEO
What a question. Who wants to volunteer for that answer?
Paul Johnston, Executive Vice President
I will. We did not make large pre-buys. We executed several selective purchases to replenish the inventory we lost, even though we still faced a deficit. Throughout the pandemic, while many other companies were canceling orders, we consistently placed orders and kept our order board active. Therefore, while we experienced shortages, we avoided the erratic inventory fluctuations that others encountered. We believe we ended the year with a solid inventory situation. However, we are concerned about maintaining that status as we head into 2021. We are actively collaborating with our OEMs on a daily and weekly basis to ensure we receive the necessary fulfillment for our orders.
Charles Tusa, Analyst
Yes. I suppose that wouldn’t qualify as inventory, right? If they had a backlog, that’s something they would transfer to you in the first half or so? It seems unusual that you would be permitted to simply place a paper order and receive terms while they essentially hold whatever finished goods they possess. So none of that activity?
Paul Johnston, Executive Vice President
We have placed our orders as we always do and conducted a pre-buy, just like in the past. We're not trying to do anything out of the ordinary. Most manufacturers continued production during the offseason, even when they typically would have shut down, which I believe was a common approach among the OEMs.
Charles Tusa, Analyst
Did you see any changes among the OEMs? It seems clear that Goodman lost some market share, regardless of the reasons behind it. Are you noticing any potential shifts? Since you serve all of them, it doesn't really impact you negatively or positively. Do you anticipate any recovery this year among those who gained or lost market share in 2020?
Paul Johnston, Executive Vice President
That's a tough question that everyone is wondering about. Will the dealers return to the brands they initially preferred but couldn't get enough availability from, or that they lost and switched to other brands? This is a central focus of many marketing strategies. It has been able to sustain the share gains it achieved last year.
Charles Tusa, Analyst
I've noticed that Goodman is acquiring a few distributors recently, which seems to be selective and mostly around their Daikin brand. Additionally, it appears that Ferguson is aiming to be more aggressive, as they've set some quite ambitious public targets. Have you noticed any increase in competition in the market?
Albert Nahmad, CEO
Competition is always strong. And the one you mentioned and others, it's a very fragmented industry that we think we have advantages that others don't have. And we've had that for a number of years as evidenced by the growth that we've had. I don't see any reason why that's not going to continue. I think we're actually getting stronger. I'm more optimistic about the future than anything we've done in the past. We're on a roll.
Charles Tusa, Analyst
Right. Clearly, the digital stuff has worked out for you guys. So congrats on that.
Albert Nahmad, CEO
Yes. It has. And it's just beginning.
A.J. Nahmad, President
This is A.J. Going back a question to the market share, which ties right into what the conversation was now is that, we saw huge new growth and new customers buying from the Watsco Company, which is exciting. And at the same time, we're seeing an all-time low attrition rate of customers. So I think what that tells you is that customers are finding it's very good to buy product in the Watsco companies. We're good partners to these contractors as we try to make it easy for them to do business with us, we try to help them grow their businesses, and that's getting more and more valued and appreciated.
Charles Tusa, Analyst
Right. It sounds like A.J. is up for a raise, Al.
Albert Nahmad, CEO
Well, I agree with that.
Operator, Operator
The next question comes as a follow-up from Chris Dankert of Longbow Research. Please go ahead.
Christopher Dankert, Analyst
Hi, Chris. Just one more from me. I guess we talked about your inventory, OEM inventory, let's go down one level. I mean, what are you seeing at the customer level? I mean are they still stocking a bit more than normal, still kind of skittish about being able to get product on time? Just what are you hearing back from customers and what their inventory position looks like?
Albert Nahmad, CEO
Paul, why don't you take that?
Paul Johnston, Executive Vice President
Most of the dealers and contractors we work with typically do not keep much inventory, just basic parts and supplies. This isn't much of a concern. Some larger contractors may hold some inventory, but generally, the industry depends on the distributor's supply. We do think some contractors might be worried about last year's shortages and are trying to stock up a bit. However, I'm not sure how significant that is at this moment.
Albert Nahmad, CEO
And it also remains true. The vast majority of our customers rely on us for their inventory.
Paul Johnston, Executive Vice President
Yes. That's right.
Albert Nahmad, CEO
Yes. I mean an example, we have 100 business units that we call Baker is probably pushing $1 billion in terms of revenue as part of Watsco. I would say 99.9% of what they sell today was ordered within the last six hours. None of their customers are out, talking, drawing from inventory and replenishing with us. If I said de minimis, that's overstating it. Some of them...
Paul Johnston, Executive Vice President
That's 95% of the market. I mean dealers carry motors and ambassadors and some line set, some copper tubing, refrigerant, but generally not equipment.
Christopher Dankert, Analyst
Got it. Thanks so much.
Operator, Operator
This concludes our question-and-answer session. I would like to turn the conference back over to Albert Nahmad for any closing remarks.
Albert Nahmad, CEO
Well, thanks for listening, and I'll talk to A.J. about his raise. We appreciate your interest. I just want to give you the confidence level that I have that we're really on a roll here. I think we're very strong and going to get stronger. I think business is solid at the start of the year. And I hope that continues. And take us up on our offer; call us about learning more about the technology initiative. It's a game changer. And other than that, I wish you all to stay safe and stay healthy, and we'll talk at the next quarter. Bye-bye now.
Operator, Operator
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.