ZIM Integrated Shipping Services Ltd. Q2 FY2022 Earnings Call

Good afternoon, ladies and gentlemen. Thank you for standing by. I am Frenzy, your conference call operator. Welcome and thank you for joining the ZIM Integrated Shipping Services Q2 2022 Earnings Conference Call. Throughout today’s recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. It’s my pleasure, and I would now like to turn the conference over to Ms. Elana Holzman, Head of Investor Relations. Please go ahead, ma’am.

Thank you, Frenzy. And welcome to ZIM’s second quarter 2022 financial results conference call. Joining me on the call today are Eli Glickman, ZIM’s President and CEO; and Xavier Destriau, ZIM’s CFO. Before we begin, I would like to remind you that during the course of this call, we will make forward-looking statements regarding expectations, predictions, projections, or future events or results. We believe that our expectations and assumptions are reasonable. We wish to caution you that such statements reflect only the company’s current expectations and that actual events or results may differ, including materially. You are kindly referred to consider the risk factors and cautionary language described in the documents the company files with the Securities and Exchange Commission, including our 2021 annual report filed on Form 20-F on March 9, 2022. We undertake no obligation to update these forward-looking statements. At this time, I would like to turn the call over to ZIM’s CEO, Eli Glickman. Eli?

Thank you, Elana, and welcome everyone to today’s call. I am very proud of our execution and continued strong financial performance during the second quarter and first half of 2022, as you can see on slide number three. Over the past several quarters, ZIM has established itself as a leader in terms of EBITDA and EBIT margin in container shipping. Our first half results are record results for ZIM, and we are pleased to continue delivering strong EBITDA and EBIT margins. Based on our solid performance in the first half, we are reaffirming our full-year guidance for 2022 and are on track to deliver another year of record earnings and profitability. We are also announcing today an increase in our quarterly dividend payout from 20% to 30% of quarterly net income. This quarterly increase is based on our confidence in our ability to deliver long-term and consistent profitability while enabling our shareholders to benefit sooner from these strong results on a quarterly basis. As you can see in slide number two, in the first half of 2022, revenue grew by 73% compared to the same period in 2021; adjusted EBITDA grew 115% and net income grew 106%, as we further capitalize on elevated freight rates and resilient demand. We remain committed to profitable growth. In the first half of 2022, adjusted EBITDA margin improved from 52% to 65% and adjusted EBIT margin improved from 45% to 56%. Our balance sheet continues to be very strong, with total equity of $5.25 billion at the end of the quarter, after the distribution of $2.4 billion in dividends during the first half of 2022. In slide number four, you can see that the return of capital to shareholders has been and remains a top priority for us. Given our confidence in our long-term profitability and goal to reward long-term shareholders, we are increasing our quarterly dividend payout from 20% of quarterly net income to 30% of quarterly net income, with a total dividend payout of 30% to 50% of annual net income. As such, starting this quarter, we intend to distribute approximately 30% of quarterly net income for each of the first three quarters of the year, with a possible step up to 50% of our annual net income with the release of the Q4 and full-year results subject to Board approval. Accordingly, our Board declared a Q2 dividend of $4.75 per share or a total of approximately $571 million. The Q2 dividend includes the 10% one-time catch-up from Q1 net income. In slide number four, you can see that the past several weeks have demonstrated the dynamic nature of our industry and the importance of staying focused on our growth strategy in key strengths: innovation, agility, and excellence, which are the foundation of ZIM’s successful turnaround, and they will continue to guide our commercial and operational strategy further to position ZIM as the top performer in our industry. We have established a track record of successfully identifying attractive growth opportunities and adjusting our fleet size based on changing market conditions. This is a direct result of our operational and commercial agility, which has enabled ZIM to optimize vessel deployment, support high utilization levels of vessels, and explore specific trade advantages, driving our strong results and strong profitability. We expect this approach to continue to be beneficial as the market is expected to normalize from peak levels. Our global new strategy dictates that we operate in trade names where we have a competitive advantage and can command meaningful market share. In Q2, we extended our operating fleet capacity. We now operate 149 vessels to meet customer demand. We opened new lines and adjusted our services to these changes in the business environment, so vessels continue to sail full. I remind you that we have extended our fleet over the past few quarters, partly in anticipation of the changing nature of our collaboration agreement with the 2M. We transitioned to a full slot swap agreement on the Asia to U.S. East Coast and Gulf Coast and terminated the slot purchase agreement we had on the PNW and Asia to Med trades. As a result of these changes, which went into effect in April 2022, we increased our operating capacity in order to best serve our customers. I would also like to highlight our car carrier business as an example of ZIM's ability to identify profitable commercial opportunities. Since the beginning of the year, we grew the number of car carriers we operate to 10 as we take important steps to further capture growth in car cargo being exported out of Asia. On the operational side, we remain committed to our strategy of relying primarily on chartered capacity while maintaining a high level of flexibility. This flexibility allows us to adapt our fleet size to the changing market environment. Yet we adopted some chartering strategies to reduce our exposure to the spot charter market due to shortages in capacity and rising daily rates. Instead, we hope to charter newbuild vessels for our cooperative capacity to improve our cost structure in the mid- and long-term. As you know, during 2023 and 2024, we expect the delivery of 46 newbuild vessels, of which 28 are LNG-powered vessels. This newbuild capacity strengthens our commercial proposition and improves our cost structure by securing fuel-efficient newbuild capacity. The LNG vessels also serve our own ESG goals. We estimate that approximately a third of our capacity could be LNG-powered when we take delivery of these LNG vessels, and we will be the first ones to operate an LNG fleet on the Asia to the U.S. East Coast trades. We are excited that ZIM will be more carbon and cost-efficient than it is today, while improving our competitive position and supporting our customers in meeting their ESG commitments. We are pleased to continue to position ZIM at the forefront of carbon intensity reduction among global liners. In slide six, we can see that as part of our strategy, we continue to leverage the Israeli high-tech startup ecosystem to identify attractive new innovative companies as growth engines. Our focus is on digital initiatives and technologies relevant to our core shipping activities in the broader logistics sector. Our objective is to identify opportunities at an early stage, which require modest investment to establish our position and serve as a strategic partner in implementing the technologies internally and assisting these companies in their growth. We have been very active on this front and have recently completed four investments. We made two follow-on investments in WAVE BL and Sodyo, and a first-time investment in Data Science Group and Hoopo Systems. Highlighting our most recent investment in Hoopo, they are a provider of cutting-edge tracking solutions for unpowered assets. The solution is extremely durable, cost-efficient, and power-efficient, creating a tracking device that can last up to 10 years without changing the power source. Our investment in Hoopo will be used in part to develop solutions suitable for containers. While all these companies are young, we believe they have significant potential in the future. Before turning the call over to Xavier, our CFO, I would like to briefly address the current market environment and outlook moving forward. As I mentioned, the shipping industry is dynamic. Over the past several weeks, we have seen a decline in freight rates, particularly in the transpacific, despite persistent port congestion and overall positive demand trends driven by macroeconomic and geopolitical uncertainty. We therefore recognize that current rates may fluctuate. However, we know that current freight rates, which are at historic highs, remain elevated and therefore quite profitable. While we anticipate some decline in rates for the remainder of the year, we expect the normalization to be gradual and support ZIM's guidance for 2022, which as I mentioned, will enable us to post another year of record earnings. Furthermore, we expect the new regulations in 2023 around carbon shipping to partially offset growth in supply and support freight in the mid- to long-term. I will now turn the call over to Xavier for his remarks on our financial results and additional comments on the market.

Thank you, Eli. And again, welcome everyone. On slide seven, we present key financial and operational highlights. Our second quarter records first half 2022 financial performance reflect the historically high freight rates, which were significantly higher this quarter compared to the prior year period, resilience in our demand as well, and the value of our differentiated approach. Specifically, our average freight rate per TEU of $3,590 in the second quarter was 64% higher compared to the second quarter of 2021. During the first six months of the year, our average freight rate was 72% higher than in the first half of 2021. Our commercial strategy and competitive positioning enable us to identify better freight cargo opportunities and more TEU than on average. Our current quantities in Q2 were down 7% compared to the same period last year. Lower volume this quarter resulted primarily from continued congestion, exacerbated by increased congestion in the U.S. East Coast ports, which we call on our transpacific trade. Over the six-month period, our carried volume was down 1%, compared to the 2% decline in market volumes in the first half of 2022. When we look at the full year, we still expect to grow our volume by 2% to 3% based on higher operating capacity and assumed easing of import congestion going forward. Our free cash flow in the second quarter totaled $1.6 billion, compared to $861 million in the comparable second quarter of 2021, an increase of 93%. Turning now to our balance sheet, total debt increased by $1.2 billion since the prior year-end. The increase in debt is driven mainly by the increased number of vessel fixtures, long-term charter duration, as well as higher daily charter rates. In the first half of 2022, our cash position remained essentially flat, even after having paid approximately $2.4 million in dividends. Maintaining flexibility in our fleet management strategy, so we can match our capacity with customer demand, remained a core focus for us. The average remaining duration of our current chartered capacity is 27.7 months, slightly down from the 28.6 months in May 2022, and reaching our current operating capacity is dependent on the scheduled delivery of our chartered newbuild vessels. Also, only nine of our chartered vessels are scheduled for renewal between now and the end of 2022. When we look into 2023 and 2024, 28 and 34 vessels are up for renewal, respectively. In other words, we have a total of 62 vessels up for renewal compared to the expected delivery of 46 chartered newbuild vessels during this time period. Next, moving on to slide eight, we can see that our earnings continue to grow, our net leverage has trended downward and is at 0.1 times as of June 30th this year. Moving on to the next slide, slide nine, our differentiated and proactive approach continues to generate strong results. Revenue for the second quarter was $3.4 billion, up 44% compared to $2.4 billion in Q2 2021. Most importantly, we grew profitably in Q2, with net profit of $1.3 billion, representing a 50% year-over-year increase. Adjusted EBITDA was $2.1 billion for the quarter, an improvement of 57%. Consistent with our focus on profitable growth, margins were 61% for adjusted EBITDA and 61% for adjusted EBIT, compared to 66% and 49%, respectively, in Q2 last year. Our six-month 2022 adjusted EBITDA margin was 65%, and the adjusted EBIT margin was 66%. These margins are amongst the highest in the liner industry and reflect our outperformance during the first half of 2022. Margin contraction in Q2 versus Q1 was driven mainly by higher freight costs resulting from the transition of the slot swap agreement we had with 2M, which was terminated on April 1st, to our own operating capacity, as well as higher LSFO bulk carrying rates, and lower volume in Q2 versus Q1. Moving on to slide 10, we carried 856,000 TEUs in the second quarter, compared to 921,000 TEUs during the same period last year. The lower volume in the transpacific was caused by congestion on the East Coast, while partially offset by growth in Intra-Asia volume, which we see as a key focus area. The growth in Intra-Asia was driven primarily by the new e-commerce lines we opened from China to Australia and New Zealand in the second half of 2021. Moving to slide 11, regarding our cash flow, we ended Q2 2022 with a total cash position of $3.9 billion, which includes cash and cash equivalents, as well as investments in bank deposits and other investments that we assume. During the first half of 2022, our adjusted EBITDA of $4.6 billion converted into $3.4 billion cash flow from operations. Other cash flow items in the P&L included $248 million of net CapEx and $627 million of debt service. I will also remind you that during the second quarter, we distributed dividends totaling approximately 2.4%. Moving to our guidance, we are reaffirming our full-year guidance and are on track to deliver another year of record earnings. We expect to generate adjusted EBITDA between $7.8 billion and $8.2 billion and adjusted EBIT between $6.3 billion and $6.7 billion for the year. Our assumptions with respect to our guidance remain largely unchanged, except for lowering our expectations on volume growth from 5% to now 2% to 3% for the full year. Our guidance also includes the assumption that spot rates have normalized and that the gradual normalization in rates will continue through the second half of the year. In other words, average spot rates in Q3 are expected to be lower compared to the average of Q2, and the same for Q4 versus Q3. Turning to our view of the business environment, slide 13. The combination of very strong demand, tight supply, and port congestion were the main underlying drivers of freight rates, which we expect to stabilize. We have very few liners. First, port congestion and supply chain bottlenecks remain significant challenges, especially in the United States. Vessels avoiding heavily congested West Coast ports are diverting cargo to East Coast and Gulf Coast ports which is outside our control. While there have been some corrections in port operations, evidenced by major improvements, it is clear that execution regarding port congestion will materially improve in the near future. Despite this correction at the port, we continue to estimate that 7% of effective capacity will be scaled down in 2023 due to port congestion. Also, given the port congestion and its effect on landside bottlenecks, the efficiency of moving containers in and out of the port, some level of port congestion may become less of an issue in our industry. This would result in the reduction of effective capacity on the water. In the United States and elsewhere, there are signs that certain headwinds such as increasing inflation and higher energy prices have resulted in a softening of demand. Yet, overall demand trends globally, and possibly in the United States, remain healthy. Additionally, 2022 has shown levels higher than pre-pandemic, i.e., 2019 levels. In fact, for the first six months of 2022, volume was up 5.4% when compared with the same period in 2019. Going forward, the current inventory to sales ratio also supports this uptick. While it is up from lows of approximately 1.1 to 1.2, our retail inventory to sales ratio is still below historic peak levels of around 1.5. In light of persistent congestion and landside bottlenecks, we believe that the sailors cannot and will not maintain a lower inventory to sales ratio compared to pre-COVID times. Moving to slide 15, the capacity outlook for 2023 will also change, with additional supply expected to be delivered, and supply growth anticipated to outpace growth in demand after a long period of limited supply. Yet, we believe that both short- and long-term net effective supply growth may be smaller than implied by the current order book. In 2023, port congestion will partially offset the expected supply growth, while possible slow steaming resulting from the IMO's 2023 regulations, which are expected to go into effect in January 2023, will also be a factor. The growth in supply will also prompt scrapping, which has been essentially zero in the past couple of years. Longer-term, we have indicated that the increase in order book is at least partially a response to anticipated pressure to decarbonize shipping and reduce the aging fleet. Thus, the motivation to scrap older, less efficient vessels in the industry results in lower growth in actual capacity than is currently implied by the order book. To summarize, these factors support our positive outlook for our business environment. Furthermore, recent consolidations in the industry also support improved efficiencies. With that, I will turn the call back to Eli for his concluding remarks.

Thank you, Xavier. Thank you. I am incredibly proud of our team and ZIM's ability to execute at the highest level and deliver on our commitment to profitable growth reflected in our second quarter and first half of 2022 performance. We generated our best-ever first half year results and expect to deliver another record year based on the guidance we reaffirmed today. We believe these core strategies and key strengths will continue to serve us well as freight rates are expected to gradually normalize from peak levels. We have taken proactive steps to improve ZIM’s commercial proposition and competitive position, both commercially and operationally. We anticipate changes in the charter market and have adapted our fleet strategy to secure growth while reducing our dependence on the spot charter market. We entered into multiple mid- and long-term chartering agreements to secure growth and fuel-efficient newbuild capacity. To remind you, our first chartering agreement for 10 15,000 TEU vessels, which will be the largest vessels in our fleet, was signed over 18 months ago. Going forward, we remain highly confident that our global strategy and cost structure will strengthen our commercial position. Our investments in innovation and disruptive technologies position ZIM to be a top performer in our industry and deliver long-term shareholder value.

Frenzy, we will take questions now. Thank you.

Your first question is from Sathish Sivakumar from Citigroup. Please go ahead.

Thank you, again, to Eli, Xavier, and Elana. I got three questions here. Firstly, on the dividend payout ratio, the change from 20% to 30%, what is actually like you got this quarterly dividend payout should change given that going into H2 and then the next year, there is uncertainty around demand and also as rates start to normalize. Could you actually explain your thought process on why you decided to increase your dividend share? Secondly, on vessel utilization on the ships, can you give context on the vessel utilization today and what it used to be at the start of the year, especially out of Asia to transpacific? The third one is around the spot premiums surcharges. Obviously, last year there was a big cushion or at least there was a significant increase in volumes that included spot premiums surcharges. Have you actually added any spot premium volumes in Q2, and do you think the outlook going into Q3 regarding that part of the premium market? Those are my three questions. Thank you.

Thank you, Sathish. If I may, I will address your questions. The first one regarding the dividend, the quarterly payout increased from 20% to 30%. You may remember that we intended to return significant capital to shareholders from the outset. We have already made a couple of changes to clarify our dividend policy. Initially, we started with a payout range between 0% to 50% once a year, then we acknowledged that this may have been too large, and we wanted to clarify our view on our market and our ability to continue distributing dividends. Therefore, we switched from a yearly to a quarterly approach and took the conservative view initially, distributing only 20% on a quarterly basis. Now we feel confident in our ability to continue generating ongoing profits quarter after quarter, so we see no reason to hold back and instead, we have committed to at least a 30% payout on a quarterly basis. This is why we have made that change today. Second, regarding vessel utilization, up until now, most of our vessels, if not all, focused on the transpacific trade name are sailing full. This does not necessarily translate to volume given the overall volume in terms of TEU that we initially expected due to congestion. Therefore, the congestion effect on schedules is what we're facing, not a utilization effect. Our vessels have been sailing full, and we assume that utilization will continue to be extremely strong for the rest of the year. We think we will catch up on our volume assumptions on a full-year basis because utilization will remain robust, and we also assume some sort of easing in the congestion. Regarding spot premiums and surcharges, there has been a noticeable decline over the quarter and we do not anticipate generating significant additional surcharges going forward. We have adopted a more conservative view in terms of rate normalization, which will occur gradually.

Okay. I got a couple of follow-ups, if I may. On the dividend, especially the payout, why not consider share buybacks? It gives you flexibility as we go into a potential downturn. Have you considered share buyback in the future? The second one on volume normalization for the full year; if you look at your H1 just this year versus last year, you have essentially reduced proportional volumes towards Intra-Asia, so do you expect that trend to continue, and will we see your volume recovery in H2? Thank you.

Let me start with the second question that you raised. Yes, we continue to be very active on the Intra-Asia trade. We talked about lines that we have recently opened between Southeast Asia, also to Australia and New Zealand. Therefore, we see ample growth opportunities on the Intra-Asia trade lines, and we are well-positioned to capture that volume growth in this region. Regarding your first question concerning share buybacks versus dividends, we have promoted returning significant dividends to shareholders up to now. If you look at our performance, we have returned $21.5 per share to our shareholders and $2.2 billion in dividends. When we guide for 2022, the numbers suggest there will still be more dividends to come in the future. So we've continued to promote capital returns through dividends while recognizing the possibility of share buybacks as an avenue. However, to date, we have not pursued such initiatives but will continue to evaluate options to maximize shareholder value.

The next question is from Omar Nokta from Jefferies. Please go ahead.

Hi, good afternoon. Hi, Eli and Xavier. Thanks for the update. Obviously very nice and solid quarter, and good to see the guidance reaffirmed especially given spot freight rates have been declining in the past several weeks. That said, some of your peers have actually been raising guidance this past earnings season, which sets up expectations that we could see the same from ZIM. Is there anything you could highlight that separates you from the others in this respect? Is it higher relative spot exposure on the transpacific, or is it maybe a function of being too conservative?

I would like to begin, and then Xavier can follow. First is a question about managing expectations. We began the year with very high expectations for 2022 and shared these with our analysts and investors. Looking at our EBITDA and EBIT margins, ZIM is performing very well compared to other companies who published their results. For sure, there are companies in the west impacted by uncertainties. Therefore, in Q1, we felt it was necessary to increase our expectations for the year, setting a target that 2022 will be a better year than 2021, which was the best year ever for ZIM. We believe it's our responsibility to be conservative, especially since we foresee a gradual normalization of rates in the transpacific. We have reaffirmed our guidance for the year based on our cautious approach.

Omar, we need to look at this in absolute terms. When considering the absolute terms, we are smaller than some of the larger European players you referred to. Our operating capacity is less than 500,000 TEU compared to theirs. If you compare our EBIT per TEU operated, you may reach a very different conclusion regarding our relative performance versus other liners.

Thank you, that’s helpful. I appreciate the comments. Regarding volumes, you've mentioned that you've taken the fleet up to 149 vessels. Volumes have been flattish over the past three or four quarters. How should we think about volumes going forward? You were estimating 5% growth before, now it's perhaps 2% to 3%. Are you seeing higher volumes in the third quarter that give you some confidence that we will see a bounce in volumes, or is it still more an expectation as we proceed through the rest of the year?

No, this year we expect to see increased payloads in Q3 for multiple reasons. Our vessels have been sailing full over the past quarter; it’s mainly that congestion has affected volumes. We’re optimistic about a recovery in volumes in the second half of the year. If we assume that rates will continue to normalize, we believe the current congestion should improve effectively, enabling us to move more cargo and increase carried volume. Additionally, we anticipate taking delivery of larger capacity vessels in Q3 and Q4, which can support this growth.

Got it, thank you. Regarding the newbuilds, the 46 that are coming on starting next year and will be much more fuel-efficient; how do you see these newbuilds joining the ZIM fleet? Will the 46 come out of the existing chartering fleet, and does that mean your overall fleet size stays the same? Additionally, have you done any analysis on what these newbuilds will look like on a ship-by-ship basis? If we were to replace ships on a one-to-one basis in terms of TEU cost, are you able to estimate how much they would reduce your unit cost?

The answer is not that simple. We have those 46 newbuilds coming our way, and we eagerly anticipate this capacity. If we look at the vessels currently in our fleet, we have a total of 62 vessels up for renewal over the same period. We will evaluate whether it makes sense to let go of some of our existing vessels based on market conditions and growth options. Given that we are committed to 46 newbuilds, we want to ensure that we have options for growth, not obligations. The first series of 15,000 TEU vessels will be deployed on our Asia to U.S. East Coast trade routes, replacing vessels with lower capacities. The decisions we make will be influenced by our market assessment and partnership discussions.

Thank you, Xavier. That’s very helpful. The optionality is key. I appreciate it. I will leave it there. Thanks so much.

Thank you, Omar.

The next question is from Sam Bland from JPMorgan. Please go ahead.

Thanks for taking the question. I have two, please. Firstly, could you talk about the change in the 2M relationship that started at the beginning of April? To what extent has this increased your unit costs quarter-on-quarter? Secondly, you mentioned that in the last few weeks, spot rates have been coming down sharply. It seems port congestion is possibly worsening on a global basis, and I don’t think demand is falling that quickly. Could you provide insight into why you believe spot rates are continuing to decline given these factors?

Thank you, Sam. Regarding the first question about the change in our collaboration with 2M, you are correct that we entered into this new agreement as of April 1. In the first quarter, we were a net slot buyer from our partners, which did not see operational capacity. After the change, we now fully exchange capacity on the vessels we operate in our designated trades, primarily the Asia to U.S. East Coast and Gulf Coast. As a result, we needed to bring in additional capacity to maintain similar operational levels as before. This increased the number of vessels we are currently operating compared to what we did in previous quarters. The impact of this change is not easy to quantify, but it is in the region of over $100 million. Regarding the normalization of rates, while there is significant uncertainty, we maintain that normalization in freight rates must coincide with easing congestion; otherwise, it creates a paradox where there wouldn’t be a justification for rate adjustments. While demand is still strong, we note that it isn’t as robust as last year, so we believe the normalization of rates is a reasonable assumption.

You are right, Sam, it’s a complex situation in terms of rates. Our view, therefore, is in line with the normalization process while managing our expectations based on the underlying demand trends and operational challenges ahead.

The next question is from Alexia Dodani from Barclays. Please go ahead.

Thank you for taking my questions. First, can you explain the flexibility you have to adjust the network should a recession occur? It would be helpful to reference the number of vessels expiring. Secondly, is it correct that Eli mentioned you are reducing your spot exposure and entering into more contract agreements? If so, could you give a rough indication of how spot versus contract is evolving? Lastly, in terms of alliances, have you considered joining one? What do you think about the pros and cons of such a move?

Regarding your first question about adjusting the network in a prolonged recession; we have 28 vessels that will come up for renewal in 2023. If we hit a recession, we would not reduce the charters for these vessels. Additionally, in 2024, another 34 vessels are due. The new vessels are environmentally friendly and are commercial investments for us. While they conform to our ESG commitments, they will also remain competitively priced compared to older vessels due to lower operating costs. Your second question focused on the mix between contract and spot — we have secured 50% of our volume on the transpacific trade lane through contracts, leaving us exposed to the spot market at 50%. As Eli mentioned, today, rates for both are aligning closely, making it less significant whether we operate under contract or spot. Regarding alliances, our partnership with Maersk and MSC has proven beneficial. Our collaboration has resulted in improved efficiencies and significant cost savings for both parties. We continuously evaluate our options in terms of partnerships as they can benefit our operations at a lower cost for final customers.

Ladies and gentlemen, this concludes our Q&A session and today’s conference call. You may disconnect the telephone. Thank you for joining, and have a pleasant day. Goodbye.