Good morning, and welcome to the Watsco Third Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask question. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Albert Nahmad, CEO. Please go ahead.

Well, good morning, everyone. Welcome to our third quarter earnings call. First, I hope everyone is safe and healthy given the virus is going on. But this is Al Nahmad, Chairman and CEO. And with me is A.J. Nahmad, President; our two Executive Vice President, Paul Johnston and Barry Logan; and Rick Gomez, Vice President. Before we start our normal 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 I am pleased to share that Watsco delivered another record quarter. New records were achieved in virtually every performance metric. Earnings per share jumped 31% to a record $3.62 per share and a 32% increase in net income. Sales grew 16% or nearly $250 million during the quarter, to a record $1.78 billion. Gross profit increased 29% with gross margins expanding 280 basis points. Operating income increased $50 million, or 32%, to a record $207 million. Operating margins expanded 100 basis points to a record 11.6%. And cash flow for the quarter was a record $238 million. Today's results are all the more positive when considered against last year's record results and in light of the industry-wide supply challenges that are still going on. Our teams throughout all of Watsco are doing an extraordinary job taking care of customers, and that has made a big difference. I want to say thanks to all of you. We also ended the quarter with a strong balance sheet with virtually no debt and cash of $137 million. This financial strength provides us the flexibility to invest in most any size opportunity. Our press release summarizes important fundamentals that are critical to understand as we continue…

[Operator Instructions] Our first question comes from Nigel Coe with Wolfe Research. Okay, moving on. Our next first question is coming from Tommy Moll with Stephens. Please go ahead.

You referenced increasing engagement with some of your OEM partners and an increased ability to help you meet the robust underlying demand. At this point in the year, I wonder if you've started to talk to some of the initiatives for 2022 planning? And if so, what, if any, insight, can you give us on those

I like that question because all of us in the industry are finding just to get enough product to continue to meet the demand. But 2022, but best one for that, I think, is Paul Johnston.

Yes. First of all, I'd like to say that we're not increasing our conversation with the OEMs. We're under -- we have been continually communicating with our OEMs and them with us. So the relationship there, all barring the pandemic and even before the pandemic, we are working with them on product planning and delivery planning and all that. Right now, what we're looking at in 2022 is we're trying to straighten the inventories out a bit. What we ended up with was some of our inventories ended up to be a little bit lopsided on indoor versus outdoor-type units. So we're working with them trying to balance that out so we can sell complete systems. We've been working with them on what the transition plans obviously, are going to be given that next year is a big year when we're going to be transitioning to 2023 to the -- or 2022 and 2023 to the new SEER levels. So it's been a -- it's a full agenda that we have with our OEM partners as far as communicating and planning with most of them, as you recognize, we're one of the largest customers, if not their largest customer. And so we're important to each other.

If I could, I wanted to pivot to the customer side of the business for you. How receptive have they been of late to price increases? And I ask that because clearly, there's input inflation on the OEM side, presumably in this environment, your customers are going to be pretty receptive to your passing that through. It would occur to me that if you've got product available, there's less concern around pricing, which is going to be pretty well passed through to the end user anyway. But any context you can give us on that dynamic?

Well, I think your thought process is a good one, but let's see if Paul can fill in to hole there.

Yes. It's -- we always talk about the equipment. Yes, those are the most recognized price increases that we have. And the dealer contractors have been accepting of them, especially those who are in the replacement business. Perhaps, a little more resistance from people who are on the new construction side. But we've also -- they are also experiencing upticks in commodity pricing, with copper going up above $4.70 here recently a pound. We're seeing flex stock go up double digit pretty much every 3 to 6 months. So a lot of the other products that go into actually installing a units are going up at the same time. So I think we're all a little bit numb to it, including our contractors and accepting it, and trying to pass it on as best we can, given the timing of how many price increases we've had here in the last call it, 18 months.

But it doesn't seem to be slowing demand. Our demand is strong.

Yes.

Your next question is from Steve Volkmann with Jefferies. Please go ahead.

Just following up on that last one, Al. Are you guys seeing any change in your mix relative to the type of equipment customers are willing to pay for at this point?

Well, that's a very enlightened question because there is a chip shortage. So we see high efficiency demand there, but we're unable to fulfill it given the supply of that product. Paul, do you want to fill in?

Yes, that's very true. It's -- it takes more hours for an OEM to make a high efficiency to make an 18 or 20 SEER product. And so the focus has been pretty much on the 16 SEER, 15 SEER, 14 SEER, 13 SEER product. So a little bit of a shift there where we're seeing a bump in 16 SEER sales and obviously, 14, 13 SEER sales and a small decline in 18, 20 SEER. Having said that, the 18, 20 SEER has never been a major portion of the market. And obviously, it's something we would like to have as a major portion of the market. And hopefully, with the new energy standards, we'll be able to expand the very high efficiency products as a greater percentage of our sales.

Yes, just to add a thought to that. Just so it's clear on the data, what the data says, the high-efficiency mix increased again this quarter. It's almost 11 straight years of quarters where it increased. But that ultra-high efficiency is where the missing link is and did not contribute, but overall, high efficiency grew at a faster rate than base efficiency.

So it almost sounds like as -- or if maybe, I should say, if the supply chain issues ultimately normalize, and we have these kind of SEER changes happening in '23, we may actually see a better mix shift going forward?

I would agree with that. Absolutely.

But we're definitely going to see a better mix change because the efficiency going up to 14 SEER in the north and 15 in the south. So

Which is mandated by the federal government.

Yes. So we're going to see that regardless. Our focus is we really want to make sure that, that ultra-high efficiency that Barry refers to grows at a faster rate and becomes a more material piece of the market.

Understood. Okay. And then a quick follow-up. I think you mentioned in your prepared release that SG&A spending was a little bit elevated, and you expected that to normalize as we go forward. Obviously, gross margin was also very good. Do you also expect gross margin to normalize going forward? Or do you think you can kind of hold the rate that we have?

Well, that's a very perceptive question. Looking into the future. Who wants to take that? Barry or Paul.

Barry, that sounds like your question.

Alright. Here we go. So let's get to SG&A first because that's easier to think about. Obviously, everything we've said -- and I just want to say this also, so it's on the table for the rest of the call. Sales volume in the second quarter was up 29% on a same-store basis, I think, something like that. So this has been an extraordinary summer if you look at things as a combined last 6 months. Let's not just talk in quarters, let's look at our seasonal realities of what we dealt with. Extraordinary demand, SG&A that needed to deal with, a lot of stuff going on in terms of supply chain to make it work. A lot of austerity that came off last year's comparison that is now in this year's numbers. And just, again, as I said, drinking through a firehose over the last 6 months. So SG&A, we wanted to highlight some things very specific to SG&A that are big buckets. And the word normalized usually means it goes down or declines. Let's put it this way, there's a lot of variable costs that increased those costs remain variable and will adjust themselves to whatever the sales volume is over the next 12 months. As Al suggested in the remarks, we're not necessarily seeing a slack in demand as we get out of season right now. In fact, we're seeing increased demand as we're going out of season from, let's say, recent days. And so SG&A will normalize. But again, time will tell and the variable cost should adjust over time. Gross profit is a more interesting question. Obviously, I've said this for a career, and we've said this in our comments over many years, inflation is something that we pass through and pass on. It adds to a gross profit equation and makes more money for us. There's no question of that. We're also doing immense work with technology to improve pricing and margin. And to optimize pricing, that doesn't necessarily mean just getting higher margins. That means improving our pricing profile across customers, competitors, products and so on. There's a benefit this year in that equation, which is only just the beginning of a pricing discussion. And I think mix also obviously has a benefit. And you heard Paul's comments earlier about mix maybe looking forward. But that's a big crystal ball to look into, to be honest. And for some of the undercurrent of inflation and mix and technology and incentives and the way we pay salespeople and commission our sales force, all those things are pulling in that direction. So in next year, I'll tell you more when we know more, but that's what I would tell you today.

The next question is from Jeff Hammond with KeyBanc Capital Markets. Please go ahead.

So just follow-on on the gross margin. It looks like if I do the math right, the gross margins on the acquisitions are higher than your blended average and the SG&A seems higher on a blended basis. Is there anything -- I know like TEC, I think, is the biggest acquisition contributor, but maybe just speak to those dynamics, those impacts?

Well, I got to say, Barry will answer that, but this is a $6 billion a year business. And what you're talking about is small relative to the overall in revenue. I can't imagine that's driving the overall numbers that you perceive. But Barry, go ahead.

Yes, Jeff, I mean again, as related to what we've acquired lately. And yes, the margin and yes, the cost of doing businesses is higher. That's unique and eccentric to TEC, and it's part of their legacy and profile of how they go to market. So they've had an exceptional last 6 months as part of Watsco. They've had an exceptional year coming into this year. And very proud and happy that they're part of Watsco.

Okay. Great. Thanks for all the color on the '21 performance. That was really helpful. Just sticking to the price dynamic, I think you called out 6% increase in average selling price for the year-to-date. I'm just wondering if that number overall, is higher within the context of 3Q? And then if there's any noticeable difference in that 6% between equipment versus the nonequipment?

I'll take a first stab, but Barry, do you want to take the second half? But is there a difference between equipment and nonequipment? Yes. Anything that's commodity-based has an external profile where the pricing fluctuates on a daily, weekly basis. And as I mentioned earlier, things like copper, refrigerant, steel have definitely been on the incline and have gone up faster than for the last 18 months have gone up faster than equipment. Equipment has a more slower cadence to it because there has to be an announced period of time before we have a recognized price increase. So normally, we get anywhere from 60- to 90-day lead time on the announcement before it's implemented. So it gives us an opportunity to adjust ourselves. So timing is not unique to the third quarter or to 2021 so far.

The next question is from David Manthey with Baird. Please go ahead.

So just definitionally, when you're talking about the 6% year-to-date price increase on residential HVAC, is that the typical price mix definition that you've given us historically ?

Yes, it is, Joe -- yes, it is, Dave.

Okay. And then as far as the increased investment that you outlined, and thanks for doing that out of that clarity, is some of that incumbent on the gross margin being elevated here? And Barry, you noted that some of the variable expenses will obviously naturally flex down if things moderate a bit next year. But if gross margin moderates and sales moderate, is this a fluid plan? Do you kind of modifying that investment plan if things moderate a bit next year?

Yes. The answer is, of course. I mean, this is 673 location managers managing P&Ls. It's 30, 35 super power presidents running markets. It's a data platform suggesting, and telling, and reminding, and monitoring margins and cost and profitability every single minute of the day. It's incentive systems that geared toward EBIT growth and cash flow production. So, yes. I mean, culturally, the intent and the obvious culture is profitability growth responsible ways is what the mission is. So it may be different in Texas than in Massachusetts next year. It may be different in California than it is in Chicago. So this decentralization and data flow that goes on in markets is how we operate. And when I say, of course, it's because all those dynamics get measured and carried out in different ways in different markets. So clearly, all these moving pieces that are going on are different everywhere. And so culturally, every Friday morning, we spend a few hours together, go through it all together and act and react accordingly. So the answer is, of course, there'll be actions and reactions going on as things change.

Yes. Got it. Okay. And just quickly as it relates to technology investments or other sort of corporate level decisions, I know there's not that many of those, but what about those? I mean, those are obviously not controlled by the markets individually. Are those subject to? Or those set in stone at this point?

Yes, let me deal with that. I agree that that's not controlled the way you stated. But let's have A.J. respond to that.

Yes. Well, as you saw in our release, our investments in technology continue to grow. And that's because we are maturing things that are already in flight, and we're taking on new projects and programs, all with the intent of continually improving and modernizing everything we do, all focused around helping our customers do business loss and helping them grow their businesses. So as we see more and more opportunity, we're going to continue to invest.

In other words, we are dedicated to the long-term, and A.J. said it, but we don't see any reason not to continue to invest regardless of what's going on in fluctuations from season to season.

The next question is from Jeff Sprague with Vertical Research. Please go ahead.

I was wondering if you could give us your early thoughts on behavior around the potential for prebuy next year. And I asked the question kind of in the spirit that folks are programmed for prices to move up. And so is there actually much logic or much to be gained from distributors wanting to prebuy into that efficiency change?

Well, right now, the reality is that prebuy doesn't help anything. We can't get what we want now, and we don't seem to be -- we don't see an end of that yet. So we don't even face those prebuy decisions. What we need now is enough product to meet the demand that we seem to be having at record levels into the -- going into the fourth quarter. It will be adjust and prebuys, of course, we would. We have a lot of data that -- and a lot of software that tells us how to manage our investment in inventory. Right now, it's a scramble.

So you would be interested in prebuying along maybe historical patterns if the product was available to do so?

No. No, I don't think that would be the case. We just want what we have on order. We want to bring it in exactly -- Al spot on. I don't see a prebuy. We don't see a prebuy coming at us. We want to make sure we get the inventory that we need to meet current demand and as well as early part demand. I don't think anybody is looking at carrying a huge amount of inventory into 2022 because there's going to be different government regulations, which are going to have different requirements for where and how you can sell it. So I don't think it's going to be an issue this year.

Yes. I was sort of meaning prebuying in '22, not right now. But it sounds like the answer is probably the same, regardless?

Yes.

Yes. And sort of related to that, what percent of your sales now is above the minimum efficiency standards across the platform?

They all have to be -- or above.

Minimum. I'm saying -- so you got 80% or 90%, I would think, at, right? I guess the question is, what's the percent above.

Above the minimum. That's a good question. Do we have that data available?

Yes. It's quite a bit higher than you think. It's higher than 50% is actually above the minimum.

Interesting. That is higher than I would have guessed.

You've got a lot of other rules that apply to it, such as EPA, new home construction in order to get your sticker from the EPA, you have to have a higher efficiency product. And there's an awful lot of the 14 SEER product that actually goes to 15.

The next question is from Chris Dankert with Loop Capital. Please go ahead.

I guess maybe just one a little more target A.J.. You did highlight some new projects. I guess, anything specifically you're right to discuss over at the skunkworks Watsco yet? Or we -- anything new to talk about there? You got about a week.

Yes, exactly. Now you know that these are all long-term things that we're a long-term company. So I wouldn't -- we don't need to highlight things that are just in early stage development. I will tell you some of the earlier things that are getting a little bit more mature, which we -- I don't know if we include in this quarter's release, but our OnCall Air, which is our tool to help the contractors sell to their customers and CreditForComfort, which is a companion tool to help them sell the financing, they're both continuing to grow and very exciting. And customers that are using those tools and really our technology in general continue to be better customers for us, meaning they're stickier, their attrition rates are much lower and their growth rates with us are much higher. So all the data shows that these technology investments are paying off and having a nice return.

Got it. And you've given us some of the numbers in the past. I guess, are you guys willing to comment on kind of what e-commerce growth was in the third quarter here?

Yes, we can give me that. Sure. Who's got that number? Barry or Rick, anybody?

15%, 16% was the growth in e-commerce for the quarter.

Rick, I was trying to get you in, but Barry cut you off.

The next question is from Ryan Merkel with William Blair. Please go ahead.

So I think it was Al maybe you mentioned that the supply chain is going to get better in the fourth quarter. Is that all of your equipment OEs? Or are certain OEMs doing better than others?

Let me say that it's not gotten better just yet. And when I say that, I'm talking about all of them. We're hoping it will get better in the fourth quarter. But as I said earlier, the demand is so high now that it's not easy for them to catch up. And it's all of them, and it's not one that's better than the other. I mean, there -- as you know, we're probably the biggest customer for all of them that represent our brands. Now, I would still say it's still catch up. I don't see any solutions to supply chain yet that we're optimistic.

Okay. And I don't know if you mentioned this, but did you leave revenue on the table you think this quarter because you just didn't have -- okay. Probably hard to quantify, but is it material? Or

Yes. Did we take a shot at that, Paul? I don't remember? Let's not speculate. I'd rather not speculate.

It's pure speculation. If you listen to the salesman, it's a lot higher than it is when you listen to the data. It's a way.

The OEMs are running flat out, and they're doing the best they can. And I'm talking about all of them that we buy from and I think we have, besides the three major equipment OEMs, we have numerous other OEMs, and they're doing the best they can. Have they caught up, not even close. Will we see some improvement as the quarter proceeds? I think so.

Okay. That's helpful. And then I'm noticing there's more private equity interest in HVAC distribution lately. And I'm just curious, are you seeing multiples rise in space? And is there more competition for deals?

Well, that question answers itself. Sure, with private equity gets involved, there is more competition. Is it affecting how we think about our strategy? We won't. We will not chase pricing because we're in for the long term. I don't know how long they're going to be in terms of valuations for businesses. So -- but there are a large number of distributors. What's our latest count, Barry, more or less?

In terms of acquisition, 65.

No, no, no. Available -- independent distributors. How many

1,300.

1,300. So there's room for lots of stuff for us.

The next question is from Steve Tusa with JPMorgan. Please go ahead.

So on price, you guys booked 12% ASP in the second quarter, 2% in the first quarter. I think you're saying it's up 6% year-to-date. Can you just give us what the -- I mean, given the seasonality, I guess we could kind of do the math, but what was the third quarter ASP for U.S. resi year-over-year?

Very consistent, Steve, with the overall 6%.

So why did that decel? Am I missing something on kind of like the comps. Most guys are thinking things continue to accelerate with all these price increases coming through. Any particular reason why that decelerated quarter-to-quarter?

I'm not -- season, things change very much in terms of price in the course of the season. There are some late quarter price increases that flow in, I think, September that will flow into the fourth quarter. But in-season, Steve, there's not much variation. And with the kind of volatility that went on, I'm not going to surmise much over the last 90 days, just given what was going on.

But I would -- we sense that there will be more price increases in the near future.

Right. So that would suggest that your U.S. resi volume was down a little bit in the quarter, right?

No, it was up slightly.

Did you mean unit -- it was not down, no. It was up slightly, yes.

Most of our major resi suppliers, the price increases that they had in the third quarter was in September. So it didn't get impacted.

Do you think you guys took market share in the quarter? Like is the industry -- I mean, if you guys took market share, that means the industry was down in the quarter, right?

You really don't know for the quarter until all the data comes out. And like we said this on the last call, the shipment data versus movement data has been so out of sorts here for about the last 12 months. I think it's thrown all of our models off. Would I like to say, we gained market share? Well, August shipments, as you know, were down, what, 2.2%. July was down, what, 5.6%. So we weren't down. So we must have gained market share, but I don't think that's a hollow statement.

Yes. And then so for these price increases that are coming through, should we expect price to accelerate here in the fourth quarter? I mean, can you get to kind of back to that kind of high single double-digit level for the fourth quarter?

No idea. No. I really can't predict that. So we see -- essential demand is in the fourth quarter. We don't know what that's going to be.

And then one last one just on inventories. They were flat quarter-to-quarter. Hard to tell what would be kind of volume and what would be some sort of inflation there. Usually, it's down a bit seasonally. Is there -- I'm trying to reconcile that with kind of the supply constraints that are out there because you guys look like you're pretty good on inventory. How do you feel your own inventory situation is?

Barry gave you a clue on that in terms of having inventory, particularly in equipment, where we only have part of this system, not all of the systems. So we are carrying unusually high numbers of this item that doesn't -- we don't have the matching part yet of the unit. Barry, do you want to elaborate on that?

Yes, just do some math. The -- our version of inventory turns, which we can calculate usual monthly averages, it's hard for you all to do that. But the monthly average inventory turn as of September 30 was identical to the prior 12 months. So all the investment level, if you will, is the same. The mix of that investment is what we're talking about that needs to improve and so on. And Steve, there's not a great story there. There's some inflation, yes. There's some shortages, yes. There's a lot of product being moved around, as we mentioned in the press release in terms of our logistics to handle customer needs and all that balances out and should help the inventory position as we go into next year. Still dependent on normalcy, which means normal lead times are normal. Normal feeling in terms of order flow, and we're not there yet.

Right. Right. Well, congrats on executing continually here in a challenging environment.

The next question is from Josh Pokrzywinski from Morgan Stanley. Please go ahead.

I guess, maybe first question on some of the availability stuff. I know we've kind of broadened this path already. But even though it's not a critical market to Watsco, we are transitioning into furnace season, you guys do have some exposure there in a few regions. Does that availability look any different than the AC market? I mean, obviously, the lines aren't the same. The components aren't fungible. Like any improvement just by virtue of turning on furnaces this year?

Yes. Furnaces are an important part of Watsco. Let's put it that way, especially with the acquisitions that we've made over the last several years with pure stuffs and TEC and N&S supply and ASCO, et cetera. Furnaces, right now, what we're seeing there is kind of an inversion a little bit to the air-conditioning. What we need more of the -- what we call a standard furnace right now. And there seems to be some shortage on standard furnaces where we're getting some of the high-end furnaces. Just got off a call with one of our groups on furnaces and a manufacturer, and we're trying to supplement that and make sure we get them in. They may be a little bit later than normal. Normally, we're able to do a preseason with the contractors to presell furnaces into the marketplace. And this year, it looks like that may be a little bit of a delay coming up with a preseason program.

And then just on the refrigerated transition, I guess, the phaseout on R-22. I think some of the other OEMs have described is this sort of de facto $1,000 off the system because it's cost avoidance on having to recharge a system that had work done or had a leak. I guess maybe a couple of questions off that. What is sort of the pricing on R-22 today? And how does that work in the homeowners demand? And I feel like if we would have this conversation, I don't know, 7, 8 years ago, recycling of refrigerant was something that was a little bit more of a topical moment in time, like isn't that helping at all? So just maybe speak to like how much of these upgrades or replacement is driven by the refrigerant piece and maybe some of the numbers behind that, if you wouldn't mind?

Well, the number of R-22 units is decreasing, obviously, every year. And my best estimate is it's probably 20%, 25% of what it was when we did the transition. So there's fewer units out there that we have to service. But the other side of R-22 is that there were drop-in replacements from both DuPont as well as from Arkema or Chemours and Arkoma that we're able to work around any sort of higher prices or shortages in R-22. We continue to see 22 sales as just a raw gas on the residential side of these continue to move down.

Okay. So the actual like homeowner economics haven't changed that much because of these drop-ins?

No, it really hasn't. And if you think back to how many years it's been since we went with 410 across the board, a lot of those units have become replacement vehicles. And as we move forward into -- obviously, into the phase down of the refrigerants that we currently are using, the 410s and such, I think there'll be a slight acceleration on the remaining balance of those 22 units coming forward to be replaced, and that's just a guess.

[Operator Instructions] The next question is from Nigel Coe with Wolfe Research. Please go ahead.

Of course, all my questions have been answered at this point. So -- remaining. Just like to clarify the point on pricing. You mentioned you got 69 days notice from the OEM on price increases. Does that allow you a chance to maybe get ahead of that and therefore, there's a mismatch between price utilized from your customers versus what you pay out?

It's interesting.

It's 60 to 90 days. It's not 69 days.

Answer the question, though, Paul.

Yes. And yes, of course, we can move ahead of that.

Okay, okay. It's -- I just want to clear that up. And then on the air-conditioning and refrigeration, I mean, focus on your sales that spend much time here, but it was up 27%. So I'd be curious what drove that extraordinary strength?

Paul. Here's Paul.

Okay. Generally, what drove that is a lot of it has to do with restaurants supply, ice machines, reach-in coolers, that type of thing was really driving that progress. Rebound in opened

Okay. That makes total sense. And then just a quick one, if I may, on the other HVAC products outgrew HVAC equipment. Was that because of the availability issues, was there a slight shift towards repair versus replace in the quarter because you just couldn't get product out?

Has anybody study that mix?

No, I have not.

Barry?

I can take a quick look. I mean, first, it is about -- and I said this for a long time, too, there's over 100 product lines and 600 vendors in that bucket. Anything from duck tape to sunglasses to refrigerant to copper tubing and so on. So -- and replacement parts is a component of that. Replacement parts does not account for the increase because it's a single-digit increase in parts during the quarter. So it's everything else and it across, again, 100 different product lines. So a measure of inflation going on, as Paul suggested, in some of the, what I'll call the building materials in there, which would be flex duck, copper tubing and other products. It's also been a mission of our business units to grow that part of our business. It is much higher margin. That's part of the consequence of the higher margin across Watsco as well in the quarter. So there's not one story there, Nigel, and the story is not repair versus replace.

Okay. I didn't know you sold sunglasses. So that's something -- I've done today.

This concludes our question-and-answer session. I would like to turn the conference back over to Albert Nahmad for any closing remarks. .

Well, thanks again for your interest in our company. We hope that you'll join us for more of these calls and follow us as we progress scaling the company. Thanks again.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.