Earnings Labs

Element Solutions Inc (ESI)

Q3 2016 Earnings Call· Fri, Nov 4, 2016

$38.87

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Transcript

Operator

Operator

Good day, ladies and gentlemen, and welcome to the Platform Specialty Products Third Quarter Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would like to introduce your host for today's conference, Carey Dorman. You may begin.

Carey Dorman

Analyst

Good morning, everyone, and thank you for participating on our third quarter 2016 earnings call. Joining me this morning are our Chairman, Martin Franklin; our CEO, Rakesh Sachdev; CFO, Sanjiv Khattri; Ben Gliklich, our EVP of Operations and Strategy; Scot Benson, President of Performance Solutions; and Diego Lopez Casanello, President of Agricultural Solutions. Please note that in accordance with Regulation FD or Fair Disclosure, we are webcasting this conference call. Any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of Platform is strictly prohibited. Before we begin, please take note of Platform's cautionary statement regarding forward-looking statements in the press release and supplemental slides issued and posted today in connection with this conference call. Some of the statements made today will be considered forward-looking. All forward-looking statements are based on currently available information, and Platform's reported results could differ materially from those predicted. Platform undertakes no obligation to update such statements as a result of new information, future events or otherwise. Please refer to Platform's SEC filings for a more detailed description of the risk factors that may affect Platform's results. Please note that in the press release and supplemental slides, Platform has provided financial information that has not been prepared in accordance with U.S. GAAP. In accordance with Regulation G, Platform is providing reconciliation to these non-GAAP measures to comparable GAAP measures in both the press release and the supplemental slides, which can be found on Platform's website at www.platformspecialtyproducts.com in the Investor Relations section under Events and Presentations. As a reminder, for the purposes of this call, Platform will be comparing the same period of 2016 and 2015 on a comparable and comparable constant currency basis as management believes that these figures provide a better comparison and understanding of the underlying business results for its operations. Comparable information assumes full period contribution of all Platform's acquired businesses to date. Please review the press release and the supplemental slides for further information. It is now my pleasure to introduce Rakesh Sachdev, Platform's CEO, for opening remarks. Rakesh?

Rakesh Sachdev

Analyst

Thank you, Carey, and good morning, everyone. I'm happy to report a very strong third quarter for Platform. Both of our business segments saw solid organic sales growth and constant currency EBITDA growth, which led to a meaningful cash flow generation for the company. Margins also improved, driven by the ongoing success of our integration efforts and synergy realization. We achieved these results despite a continued difficult macro environment for many of our end markets, which only reinforces the quality of our businesses and the teams we have managing them. Platform had a productive quarter on multiple fronts. In September, we announced a settlement agreement with Permira with respect to our Series B convertible preferred stock obligations. We had felt the Series B was an overhang on the balance sheet and our resolution of this issue and the savings it implies was a meaningful step forward. If exercised, which we expect to do before year-end, our negotiated settlement option would reduce the number of underlying shares issuable to Permira from 22 million to only 5.5 million shares and reduce the total value payable to Permira by over $100 million. Next, in order to delever the balance sheet, we raised approximately $400 million in an equity offering in September. The dilution from this offering is meaningfully offset by the reduced number of shares that would be issued to Permira, as I just mentioned. On the back of this balance sheet improvement and healthy debt capital markets, we extended and favorably repriced about $2 billion of our term loans, which will generate savings of approximately $11 million in interest expense annually. Given our current tax footprint, this should translate nearly dollar for dollar into free cash flow. Subject to certain conditions, we also successfully extended the maturities of that debt by 3…

Benjamin Gliklich

Analyst

Thank you, Rakesh. Good morning, everyone. As you just heard, our integration efforts are evidenced in the results this quarter from both the sales and margin perspective. On Slide 10, you can see that we reported $13 million of new cost synergies into our P&L year-over-year. This is composed of $5 million from our Ag business, primarily from the supply chain and G&A actions we took in previous quarters, and another $8 million of new cost synergies in our Performance business from a variety of actions, including organizational design, procurement and supply chain. We've already achieved $39 million of the $40 million of cost synergies we guided to for 2016. We're happy with this result, and we are confident to exceed the initial estimate for the year, pulling forward some savings from 2017 and 2018. On a run rate basis, we have achieved $74 million of cost synergies from the Ag integration, very close to the $80 million total estimate we provided when we closed the Arysta acquisition. As we have said before, we do not intend to raise this estimate further, but instead to move from talking about synergies to continuous improvement in the Ag business. We do believe there's room for more costs to be taken out here. In the Performance segment, we have achieved $39 million of run rate savings, more than half of our initial estimate, and we are less than 10 months into the integration. You've also heard that the combined businesses have been taking market share in some of our key markets. We're successfully executing on both goals of our integration plans here. We've begun implementing the first phase of our facility rationalizations, which we expect will be an important contributor to the realized cost savings next year. The legacy Performance business historically demonstrated an ability to manage cost well in both strong and weak markets and the synergy achievement to date is another testament to that skill. Slide 11 provides integration highlights from both businesses. As has been the case for several quarters now, we are heavily focused on both cost and revenue synergy opportunities in both segments. The combination of businesses we have created is allowing our teams to execute against the exciting growth plans we highlighted at our Investor Day. Importantly, everything we have done to date has kept the customer as priority #1, and we believe the top line story is proof that we've not disrupted our commercial operations. Rather, we believe we have enhanced them through our integration efforts. With that, I'll turn the call over to Sanjiv to take you through financial results in more detail.

Sanjiv Khattri

Analyst

Thank you, Ben, and good morning, everybody. Thank you again for joining our Q3 call today. As I'm sure you would have read, we had a solid quarter of performance. I'm going to review our financial performance in the quarter and provide some more detail on the balance sheet initiative we took recently. Like the last quarter, we are providing numbers on an actual but also on a comparable basis. Comparable is the same calculation we did when we used the term pro forma but we have renamed the metric to avoid any confusion with other SEC-defined terms. We had no acquisition activity in the current quarter but comparable Q3 of 2015 assumes that we own the Alent and the OMG businesses for the whole third quarter. We also compare certain results on a comparable constant currency basis in order to illustrate the impact that translational currency movements had on our financial performance. Finally, as we indicated in the footnote on Slide 6 of the web deck, we use certain non-GAAP measures to provide what we believe is useful industry information for you as you analyze our results. We believe these non-GAAP metrics provide better insight into the business. We discussed the adjustments in significant detail and provide all appropriate reconciliations in the appendix of this presentation and in our earnings release that we filed this morning. Now onto the numbers on Slide 13. As Rakesh highlighted, both of our business segments performed well this quarter, despite a challenging macro backdrop. Organic sales, a key focus of Platform, showed strong 3% growth year-over-year. Year-to-date, organic growth is approximately 1%, below our mid-single-digit long-term expectations but the trends have been positive. A quick comment on our EPS and share count this quarter. These metrics are impacted by 2 discrete items. One…

Rakesh Sachdev

Analyst

Thanks, Sanjiv. I just want to correct something that Sanjiv may have -- just misheard accidentally. I think Sanjiv said that we expect in Q4 our working capital to increase significantly. Actually, we expect working capital in Q4 to decrease significantly. So anyway, thanks. So in conclusion, I'd like to revisit our 2016 priorities on Slide 17. This is the third quarter where we have shown this slide and we are pleased with our progress against each of these year-to-date. Integration is going well. Our businesses are growing. And perhaps more importantly, they have formulated strategies that should enable them to continue to grow. We have settled into a more steady operating rhythm, and we are demonstrating positive earnings momentum. Finally, we are generating free cash flow and expect a strong fourth quarter in that regard. Before I turn the call over to questions, I'd like to recognize the hard work of our teams who have been doing double duty as both operators and integrators. This has been a transformational year so far and no one knows that more than our people. With regard to 2017, while we are still in the midst of our budgeting process, the outlook remains the same as outlined in our last call: high single-digit adjusted EBITDA growth in 2017. In this context, barring any alternative uses of cash flow, we expect to have reduced our leverage ratio of net debt to adjusted EBITDA in the high 5s by the end of next year. And we're really excited about our progress and we look forward to continuing to build it in 2017. So now operator, we'll open up the call for questions. Thank you.

Operator

Operator

[Operator Instructions] And our first question comes from the line of Daniel Jester from Citi.

Daniel Jester

Analyst

So just starting in Performance. I think you mentioned this very briefly in your prepared remarks, but can you just give us an insight on what your customers are thinking about in terms of the North American and Western European audit cycle? It seems like we've seen some reports of slowing production rates. So just wanted to hear what your -- the latest is there.

Rakesh Sachdev

Analyst

Yes, I'm going to just ask Scot to make a couple of remarks here. But it seems the automotive production is still very strong in North America. It may have flattened out, but we continue to see growth in Asia, which is where we are gaining share. And as I said, the electronic content for the cars, and it's not just the electronic content, we sell our chemicals for nonelectronic components as well for plastic components where we provide the finish, and we have seen growth there. Scot, can you add some color?

Scot Benson

Analyst

Sure, sure. Daniel, the -- a lot of this is happening -- has happened fairly recently, but we have seen a build of inventories in both North America and in Europe. And of course, it's been reported that incentives are high, et cetera, et cetera, and there have been some manufacturing slowdowns, primarily in North America. So we still continue to see some very aggressive capital spending for expansion plans, particularly in Mexico, in North America, which we think is going to continue to help us mitigate any of these -- what we view as temporary slowdowns. So -- and on the back of Rakesh's comments, we're confident in continued increase in content that we supply within the supply chain. And although big growth rates have slowed, we don't see it as a sign of any real trouble in the near future.

Daniel Jester

Analyst

Okay, that's helpful. And then moving to Ag. Could you just give us a little bit more color about what specific end market, potentially in Brazil, that you're seeing the most price pressure? And if you have any updated comments on either your inventory levels or maybe the industry inventory levels for chemicals in Brazil, that would be helpful as well.

Diego Casanello

Analyst

Yes, it's Diego here. With respect to pricing in Brazil, overall, since we have combined our former legacies, what we see is that our pricing power has increased. And what you see in this quarter is a reflection of that. We have seen a very strong pricing performance in Brazil for Arysta. Overall, the market remains a challenge in Brazil because, of course, what you have is an appreciation of the real. And in such a situation, farmers are asking you for reductions in prices in U.S. dollars. The game here is to really resist that -- the pressure. I think we're doing a good job in Q3. We will see in Q4, of course, increased pressure, but we're confident in the job we're making in Brazil right now.

Rakesh Sachdev

Analyst

And just to add to that, I think we have been also very successful in getting the benefits from suppliers, especially in Latin America, to get reduction in prices quite significantly. So while we have had to get some pricing in Q3 and we think we'll have to get some pricing in Q4, but net-net, from the benefits we're getting from our supply base as well as the transactional benefits we get, I think we're doing pretty well.

Operator

Operator

And our next question comes from the line of Ian Bennett from Bank of America Merrill Lynch.

Ian Bennett

Analyst

So it seems the outlook and results for revenue and adjusted EBITDA has been improving and that's evident in the results reported and the outlook for fourth quarter, but cash flow from operations has not been improving. Can you comment on why that is and what are the priorities for the next 12 months?

Sanjiv Khattri

Analyst

Consistent with the correction that Rakesh made in my script, our cash flow is very seasonal. It was driven by -- primarily by the Ag sector because working capital is a big use. And consistent with the outlook that we've been discussing with you, we expect Q4 to be very positive cash flow quarter. Even in Q3, our cash flow from operations was in excess of $90 million. And in Q4, with the way the seasonality works, both in North America and LatAm, consistent with our plan, we would expect to generate -- we could then end up in full year being up a solid positive number for the full year in terms of cash flow from operations.

Rakesh Sachdev

Analyst

And this is no different than what we saw last year in 2015 as well.

Sanjiv Khattri

Analyst

That's correct.

Ian Bennett

Analyst

Okay. And then for 2017, just directionally, and -- any notable items that you'd call out in kind of the bridge from adjusted EBITDA down to cash flow from operations that you expect to recur or improve?

Sanjiv Khattri

Analyst

So again, if you step back, we have a fairly unique tax position. We've talked to you about this in previous quarters. So if I step back, the first of -- Rakesh has been talking consistently about organic sales growth, increase in organic sales growth, better cost management will lead to a higher EBITDA. So that's sort of the starting number. We will expect to have a decent cash tax bond. Our CapEx, we've been giving you guidance throughout the year, so you know what's happening in CapEx. Working capital management is a key priority for us. And then as we continue to reduce our debt burden and improve our debt structure, you will see some savings in interest expense. In addition, we have some nonoperating expenses, but net-net, that is a good walk of what you should expect. And consistent with our goals to reduce our leverage over time, you would expect this cash to be allocated to reducing the debt levels in the balance sheet.

Rakesh Sachdev

Analyst

But if I can just add, I think when you look at 2017, we clearly expect what's going to drive even more enhanced cash is our earnings growth. As I said, we expect our earnings to grow in the high single digits. That's going to be a significant provider. We are going to be very focused on working capital, not that we have not been, but I think we are beginning to really drive all our teams to be far more efficient in managing our working capital. And as I said, I think we expect our net debt to EBITDA by next year-end to be in the high 5s, which is a fairly significant move that we would have made into our net debt ratios.

Operator

Operator

And our next question comes from the line of John Roberts from UBS.

John Roberts

Analyst

Do you think some of the share gains at MacDermid may be coming from distractions at the #1 and #2 players? I mean, Dow's in the middle of an antitrust review and Total's recent deal for Saft has generated speculation that they could exit your market. So do you think some of that's behind it?

Scot Benson

Analyst

John, this is Scot. Actually, I think that, that potentially provides us some additional growth in the future. I don't think that the activity that we've had to date could be directly tied to that. I think what we've experienced to date has more been a result of the combination and the integration of our teams and the broader product portfolio that we offer. Our customer base has responded positively to the fact that we have such a broad product range. So as far as it relates to distractions, I think that we might see some more benefit from that in the future than we've seen year-to-date.

John Roberts

Analyst

Okay. And then secondly, when do you lap the weakness in hydraulic fluids for subsea well controls?

Scot Benson

Analyst

That's a terrific question. That is going to depend on the CapEx investments, of course, from the major oil companies going forward. We've definitely seen a positive or a stabilization of oil pricing, which is helpful. I think we still need to see some appreciation in oil before we see significant increased capital investment in either exploration or additional production capacity.

Operator

Operator

Our next question comes from the line of Duffy Fischer from Barclays.

Duffy Fischer

Analyst

First question is just around Ag. Brazil gets a lot of commentary, but Argentina seems to be the market that might be moving the most with the new government down there. Can you talk about your business in Argentina and what that market looks like from a growth perspective for you guys over the next couple of years?

Diego Casanello

Analyst

Sure. Yes, that's a good question. I think we are in a good timing in Argentina because we are changing our go-to-market in Argentina to have a more direct access to the market. We are registering products from the different legacies that were not in that market before. We're building a team. We have a great strategy in that country and just in time for what we expect will be a rebound in that market. I mean, we see this already happening. We see much more corn in Argentina already due to the different policy of the government to reduce the export taxes for those crops. So obviously, weather is going to play a role. Political stability moving forward is going to play a role. But we are confident that we will see growth for our business in the coming years.

Duffy Fischer

Analyst

Okay. And then just on the commentary around high single-digit EBITDA growth next year, when you look at the segment, should both basically equally contribute to that? Or would one or another pull greater weight in getting you there?

Rakesh Sachdev

Analyst

Yes, we're still finalizing our numbers there. I would say directionally, we would expect the growth in both the businesses in the high single digits. I think performance -- just to be clear, Performance Solutions has a bigger synergy story in 2017 because the Alent acquisition happened more recently. Ag has already produced a lot of the synergies. So you probably will see a little more growth on the performance side, but I think, hopefully, we will bring to you pretty impressive numbers on both businesses.

Operator

Operator

And our next question comes from the line of Jon Tanwanteng from CJS Securities.

Jonathan Tanwanteng

Analyst

Can you touch on the North American Ag market, where you're seeing the improvements specifically? And can you give an update on the inventory over there, what's burning off? And is it doing better than planned?

Rakesh Sachdev

Analyst

Sure, I'll turn it to Diego, but we had a good quarter in North America. As you know, we had a tough second quarter in North America. And even though Q3 is a low quarter for North America, we actually saw growth and so we were pleased. I think Diego can talk about some of the steps we have taken in stabilizing our business in the region, but we are very -- we are cautiously hopeful. We're going into a quarter in Q4 where we expect North America to be fairly strong for us and so that's important. Diego?

Diego Casanello

Analyst

Yes, the market, I mean, remains difficult, as you know. We see farmer income still low. Commodity prices are not helping. However, we have worked. We have done our homework over the last couple of months, specifically in the second half of last year and the first half of this year, destocking the channel. So this was the first step that we took. But secondly, I think most importantly, moving forward, is really the changes that we're making on our commercial policy and our commercial strategy. We have established a key account management organization in North America that is fully focused on our key accounts, aligning the objectives of the customer with our objectives, aligning the activities on the field. We are putting a focus on the right products. I think this is very important, really emphasizing those products that bring us a higher margin. And we're putting a great team together. We have made good changes over the last 2 years in the team and I'm confident that we have the right team in place to start seeing now the stabilization and growth in the coming quarters.

Jonathan Tanwanteng

Analyst

Got it, that's helpful. And then just following the refi of some of your term loans. Are there further opportunities for refinancing and lowering the interest expense on your outstanding debt in the near term?

Sanjiv Khattri

Analyst

As you know, we have built a fairly flexible capital structure. And in light of the market, our term loan debt has fairly modest call protection. So we are always opportunistically looking for opportunities to refinance the debt and to mix it. So this is something we are nimble about. I don't want to specifically talk about any plans, but I do think having a big term loan structure gives us flexibility. Even our high-yield debt, as we generate cash, as we go through the period -- callback periods, we will have some flexibility with that also in the next couple of years.

Jonathan Tanwanteng

Analyst

Great. And then just finally, on the currency move since the end of the quarter, how much of a tailwind or headwind should we be expecting just since you gave guidance based on September 30?

Rakesh Sachdev

Analyst

Yes, so I think currency was -- didn't have a big impact in Q3. In Q4, we will have some tailwind in -- from currency, mostly in the Ag business. But relative to the guidance we gave you at the last quarter, the currency picture really hasn't changed for us in the second half much. So it's really not a factor in our guidance.

Benjamin Gliklich

Analyst

And in the period since the end of Q3 from our -- that our guidance is based on, it really hasn't changed too materially.

Sanjiv Khattri

Analyst

And real has weakened a bit but not by much.

Operator

Operator

And our next question comes from the line of Jim Sheehan from SunTrust.

Matthew Stevenson

Analyst

This is Matthew Stevenson on for Jim. Question about the -- your credit situation in Latin America. Is that impacting volumes?

Rakesh Sachdev

Analyst

On the contrary, as we've reviewed how we are doing on collections in Latin America, our experience has actually improved. In fact, when we look at how we are collecting, how we did in Q3, our performance improved from even the prior quarters.

Sanjiv Khattri

Analyst

That's correct. Diego, anything to add?

Diego Casanello

Analyst

No. I think we -- obviously, we have been very selective when it comes to the customers we're serving. Our teams are very focused on this. Our sales organization is measured by collected sales. All this helps manage the risk there. So we know credit availability is an issue in Brazil but we are confident about how we are managing the business over there.

Matthew Stevenson

Analyst

And then a follow-up there is, as was mentioned several times, there's a lot of M&A going on in the Ag space and there's likely to be product divestitures going on over the course of, say, the next year. You also have a very full portfolio, given the 3 different businesses that have now been combined. Are you likely to participate either as a buyer or a seller in the product -- individual product acquisitions and divestitures?

Benjamin Gliklich

Analyst

So for starters, certainly not as a seller. This is Ben Gliklich speaking, by the way. Certainly not as a seller. And with regard to regulatory filed assets that have -- that look like they're going to come loose in the context of consolidation, we've certainly seen a few things. None of them have piqued our interest. We're going to be super disciplined in that regard, looking for things that could fit our strategy, which Diego has articulated. If something fits right, we'll consider it. But right now, we're on the sidelines.

Operator

Operator

And our next question comes from the line of Aleksey Yefremov from Nomura Securities.

Aleksey Yefremov

Analyst

I was going to ask about synergy expectation for next year. On Slide 20 of the presentation, you list $73 million add-back to EBITDA for prospective synergies. Is it a good proxy for the next 12 months, next year?

Benjamin Gliklich

Analyst

So some of the synergies will be 2018 synergies from the Performance business. Recall, we're in the first year of integration of the Performance Solutions acquisition. And as we noted, we pulled some synergy forward into 2016 as we're going to exceed our initial expectation for synergies for the year. But the balance, sort of the preponderance of that number, will come through next year.

Aleksey Yefremov

Analyst

And if we think about the cost of achieving those synergies, should they flow sort of in a similar fashion? Or are you expecting to maybe prefund the achievement on those costs earlier or later?

Benjamin Gliklich

Analyst

So we've historically said that synergies cost about $0.75 per dollar realized in the P&L that year. That having been said, we're running a bit inside of that to date, but there shouldn't be too much of a lag in that regard as you think about cash flow modeling.

Aleksey Yefremov

Analyst

And turning to corporate cost. You've been flat this quarter. Is there an opportunity to reduce this excess corporate cost over the next 12 to 24 months? And then in the short term, would you expect corporate cost to remain similar over the next couple of quarters as well?

Rakesh Sachdev

Analyst

So as I said in our last call, we have -- we believe that corporate costs have peaked. So this quarter, we had, year-over-year, the corporate costs were flat. Clearly, we will see an opportunity to start reducing these corporate costs starting in 2017. As I said before, today, we have relied on third parties for a lot of services at corporate because we became large very quickly. I think we're getting our own people now to develop the expertise in-house. We are putting the infrastructure. We're investing in IT. And I think we will start seeing that in 2017 and going into 2018.

Sanjiv Khattri

Analyst

Exactly.

Operator

Operator

And our next question comes from the line of Roger Spitz from Bank of America Merrill Lynch.

Roger Spitz

Analyst

Regarding Q4 of '16 release of cash from working capital, I wonder if you might put some very broad brackets of guidance, what it could look like. For instance, would it be closer to $50 million release, $100 million, $150 million, compare it to say anything?

Sanjiv Khattri

Analyst

I'm sort of reluctant to give a specific number, but if you look 2 play at things [ph]. One is the seasonality of earnings. The second is the impact of FX. So if you look at nominal working capital in terms of specific numbers, we were over our $200 million negative in Q1. We had a solid positive in Q2, a solid positive in Q3, and we expect to have a much bigger number. I'm reluctant to give you exactly what.

Rakesh Sachdev

Analyst

I think it's fair to say, Sanjiv, we'll been in excess of $100 million.

Sanjiv Khattri

Analyst

Yes, that's fair, Rakesh, definitely.

Rakesh Sachdev

Analyst

We will be in excess of $100 million.

Roger Spitz

Analyst

That's what I'm looking for. And lastly, you show a benefit of $14 million for volume this quarter. How -- can you give any split of Ag versus Performance? It sounds like it was mostly Ag, but I just wondered if you have -- can split that out a little bit?

Rakesh Sachdev

Analyst

Sorry, can you just repeat the question again?

Roger Spitz

Analyst

Yes. In Q3, the volume mix on the EBITDA bridge, that was a $14 million for volume mix. It sounds like most of the volume was in Ag. But I was wondering if you can say whether most of it was Ag or almost all of it was Ag or 75% was Ag or some other number.

Sanjiv Khattri

Analyst

It was mostly Ag.

Benjamin Gliklich

Analyst

It was mostly Ag. So if you look through the presentation we've provided, you can see that the Ag business grew organically close to 4%. The Performance business grew close to 2%. So clearly, it's mostly Ag contributing to that growth but performance also was a contributor.

Roger Spitz

Analyst

Okay. And just lastly, the slides in the Ag talk about share gains, driven in part by price. I just want to make sure, does that mean you are reducing price to gain share? Or how should I read that sentence?

Diego Casanello

Analyst

No, no, definitely not. So the share gains that we are mentioning here is through geographic expansion, most of the time. So we are extending our reach in Eastern Europe. We are growing in some countries in Latin America, in Asia, specifically through cross-selling opportunities of bringing products from legacies into markets where other legacies were stronger. This is really what is driving our share gains in this case.

Operator

Operator

At this time, this does conclude the Q&A portion. I would like to turn the call over to Rakesh for closing remarks.

Rakesh Sachdev

Analyst

Thank you. Again, I appreciate everybody joining in this morning. Again, we are very pleased with the way the business is performing and how we did in Q3, and I'm pretty confident that we'll continue the story in Q4 and 2017. So we look forward to updating all of you the next time we meet. Thank you for joining the call.

Operator

Operator

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may now disconnect. Everyone, have a great day.