Genomma Lab Internacional SAB de CV

BMV:LABB

Earnings Call Transcript 2018-Q1

[Operator]

Good day, ladies and gentlemen. Welcome to the Genomma Lab First Quarter 2018 Earnings Conference Call. [Operator Instructions]

And please note that this call is being recorded. I would now like to introduce your host for today's call, Mr. Enrique Gonzalez, Head of Investor Relations. Mr. Gonzalez, you may begin.

[Enrique Gonzalez, executive]

Thank you, operator. Good morning, everyone. Joining me on the call today is Mr. Máx Juda, our Chief Executive Officer; and Mr. Antonio Zamora, our Chief Financial Officer. Mr. Juda will begin with an update on the business. Mr. Zamora will then provide an update on our first quarter results. We'll then turn the call over to your questions. And as we normally do, we will be making certain forward-looking statements during the call. Such statements are based on assumptions of future events that may not provide to be accurate. And such they involve risks and uncertainties. It's therefore possible the actual results may materially differ from any forward-looking statements that we may make today. We direct you to our cautionary statements in the press release we filed on April 25, 2018. With that, I would like now to turn the call over to Mr. Juda. Mr. Juda, please go ahead.

[Máximo Juda, executive]

Thanks, Enrique. Good morning, everyone, and thank you for joining us today. As you saw in yesterday's press release, we delivered a strong start to 2018. Our company posted a robust EBITDA margin for the quarter, closing at 22.6%, one of the highest EBITDA margins on the company's history, with a 90 basis point expansion as compared to the same period last year. Overcoming exchange rate headwinds on our consolidated figures, which impacted the company's top line in Mexican pesos. We continue to benefit from the successful execution of important cost-containment strategies throughout our organization, which we began implementing in 2016, with ongoing improvement and fulfillment capabilities. We achieved just over MXN 3 billion in consolidated sales for the first quarter, a 5.5% decrease compared to the same period of 2017, reflecting the negative currency impacts that I described. However, excluding the exchange rate impact, on a like-for-like basis, net sales for the quarter grew 4.1%. Our Latin-American operations posted a 7.5% top line increase year-on-year in local currencies. When expressed in Mexican pesos, consolidated figures declined by 9.1%. The EBITDA margin therefore closed at 25.8% for the first quarter of the year, a 130 basis points expansion on a sequential basis. We saw particularly strong performance in Argentina, Colombia, Uruguay, Panama and Costa Rica, underpinned by strengthened consumption trends as well as a significant improvement in our go-to-market capabilities. We focused on maximizing revenue and fine tuning our local programs while consistently improving sales force effectiveness, product mix and consumer -- and customer selection. Genomma has never been better positioned for the recovery we are seeing in this market than it is today. Three years ago, Genomma products could be found only at local pharmacies throughout the region, where today, we have a presence at every major retail chain. This quarter, many of our OTC brands outperformed across-the-board in every market. We also sharpened our competitive edge in the region by dramatically accelerating the speed of fundamental business process with the successful implementation of SAP S/4 HANA in our Argentina, Uruguayan, Panama and Costa Rican operations. The U.S. also delivered improved profitability this quarter. While we saw a decrease in first quarter 2018 net sales for this region, EBITDA for the period reached just over MXN 79 million, a 30% year-on-year increase with an EBITDA margin of 20.3%. This is a 650 basis point year-on-year margin expansion. Our strengthened U.S. performance is an indication that we are successfully executing on our planned turnaround.

With favorable consumption trends and growth drivers, we expect to remain with our year-end expectations. We've made progress on key initiatives, which will contribute to our U.S. growth strategy, with the top brands growing more quickly than we had initially expected while we discontinued certain SKUs for which we believe there was limited future potential. Genomma remains focused on driving sales by enhancing our connections with consumers and retailers, where we have seen strong success in the U.S. Hispanic markets. We also benefit from our continued emphasis on streamlining expenses at Genomma U.S. operations over the past 12 months. In summary, both the underlying market and our successful efforts to-date in streamlining operation, coupled with a robust demand for our brand, continues to give us confidence in the strong potential of the U.S. market for our products. We therefore remain cautiously optimistic about our prospects and expect growth to return as we move through 2018.

Turning to our Mexico operations. This quarter, we made important headway in anticipation of launching our new manufacturing facility located in the state of Mexico. We continue to rationalize our product portfolio with a focus on our most profitable SKUs to reduce or eliminate the production of those SKUs with low sales volume, ensuring optimal planned future efficiency. Those brands on which we have focused are doing very well, often ahead of our [ exhibited ] patients. Further, we ramped up our innovation progress at our Mexico City pilot plant, as we build inventory in anticipation of launches in the second half of the year. Innovation is one of the many tools we plan to apply to grow our top line when the timing is right. And we are enthusiastic as our pipeline of innovation remains strong. We intend to leverage our new facility to fill unmet consumer needs in a variety of ways. The goal is to enhance brand building efforts by rationalizing our product portfolio while transitioning towards higher performing brands. Although these lines during the quarter, Genomma has invested 1 -- sorry, along these lines during the quarter, Genomma has invested MXN 194 million in our new manufacturing sites. And you note that our net debt for the quarter has increased in line with this investment. I'm also pleased to let you know that progress towards signing a long-term facility with the IFC and the Inter-American Development Bank is well underway. IDB is expected to provide MXN 1.2 billion and the IFC MXN 1 billion for a total of MXN 2 billion project financing structure with a maturity yield of up to 8 years.

These long-term loans will ensure that we are in strong financial position to make the investments necessary to meet our manufacturing goals on time. Finally, as Antonio will discuss in more detail, we were very pleased to have successfully placed a 3-year bond in Mexico's debt market for MXN 2.45 billion. We were able to use these proceeds to prepay the total amortization of our outstanding LAB 13 local bond. Both Fitch ratings and HR ratings ranks the transaction a AA on a local scale with a stable outlook. In summary, I'm enthusiastic about the company's outlook for the remainder of the year. Our strategy is executable. It's working well, and our brands resonate with Genomma's customers. Our solid overall execution in the first quarter reflects performance in line with our stated expectations to achieve full year guidance. We are gearing up to accelerate in the second half of the year. Our performance speaks to the effectiveness of our visibility at the point-of-sale, excellence in cost-containment and portfolio evolution. Thank you for your time. Now we'll turn it over to Antonio for more information on our financial results. Antonio?

[Antonio Zamora Galland, executive]

Thank you, Max, and good morning, everyone. As Max mentioned, we are pleased with our progress in the first quarter of 2018. Consolidated net sales reached MXN 3 billion, which is a 5.5% year-on-year decrease as Max have described earlier. As you know, a strengthening of the Mexican peso exchange rate dampened the contribution from the company's international operations, as well as sales from the U.S. operations as compared to the same period a year ago. EBITDA for the first quarter of 2018 amounted to MXN 683 million, representing a 22.6% EBITDA margin, and a 90 basis point increase as compared to the first quarter of 2017.

This strong performance at the middle of the P&L is a result of the company's continued execution of important cost-containment strategies and initiatives to enhance efficiencies across the organization, which have been implemented since late 2015. Net sales in Mexico amounted to just over MXN 1.1 billion in the first quarter of 2018, which is a 2% year-on-year increase. As you know, the implementation of the CFDI 3.3 electronic invoicing required by the Mexican tax authorities at the beginning of this year partially impacted our collections while we are also focused on fulfillment across the sales channels. Sales from the Latin American region decreased 9.1% year-on-year to MXN 1.5 billion. The MXN 115.4 million decrease in sales is primarily due to translation effects of converting local currency to the Mexican pesos. In local currencies, sales increased by 7.5% as compared to the same period of last year, reflecting our continued success in strengthening Genomma's market share in the region.

Moving Q1 the EBITDA margin for Latin America reached 25.8%, a 20 basis points margin contraction as compared to 26% EBITDA margin from this first quarter of 2017. We expect the EBITDA margin improvement in the quarters ahead, resulting from important initiatives that Max have previously described. Gross profit decreased 8.1% to MXN 2.05 billion in the first quarter of 2018 compared to MXN 2.23 billion during the first quarter of 2017.

First quarter 2018 gross margin declined 190 basis points to 67.8%. Gross margin contraction for the quarter was primarily driven by the product mix effect, as certain higher SKUs made a more significant contribution to the company's top line results in the quarter. Selling, general, marketing and administrative expenses, SGM&A, declined by 2.4 percentage points as a percentage of net sales, closing at 46.5% compared to SGM&A of 48.9% for the same quarter of 2017. The decrease is again due to the company's continued successful execution of company-wide expense reduction initiatives.

Moving to the balance sheet. Genomma's cash position was MXN 2.4 billion as of March 31, 2018, representing a 28.3% year-on-year increase and a 124.2% increase on a sequential basis. As you know, the increase was a result of cash generated by operations while also reflecting the proceeds of the company's LAB 18 local bond issuance, of which Max have already commented earlier today. Later on, on April 9 of this year, the company repaid its MXN 2 billion LAB 13 local bond in full. As Max discussed, certain proceeds were directed to investments in Genomma's new manufacturing facility as well as to partially repay short-term back debt. We placed our new bond in the market of highly competitive terms and prepaid the total amortization of our outstanding local bond. Therefore, with a new -- with a net debt-to-EBITDA ratio of 1.46x, we have a healthy balance sheet, again, a net debt-to-EBITDA ratio of 1.46x, this is -- and I want to stress, a healthy balance sheet that will allow us to continue to execute our plans. Net debt amounted to MXN 3.8 billion, which is a MXN 158 million decrease as compared to March 2017 and a MXN 162 million increase as compared to the fourth quarter 2017. The company's long-term debt represented 66% of total debt at the end of this quarter, reflecting the issuance of Genomma's LAB 18 CEBUR local bond in the amount of MXN 2,450,000,000.

Genomma's cash conversion cycle reached 85 days at the end of the first quarter of 2018 compared to 90 days in March 2017 and 97 days as of the end of 2017. These 5 year -- sorry, this 5 day year-on-year improvement to the cash conversion cycle confirms our commitment to improve profitability and cash flow generation. And with this, we conclude our prepared remarks for the morning. Thank you again for joining our call today. And we will now open up the phone lines for all your questions. Hector, please go ahead.

[Operator]

[Operator Instructions] Our first question comes from the line of Antonio Gonzalez with Crédit Suisse.

[Antonio Gonzalez, analyst]

I want to talk about the U.S. market. I just wanted to see if you can help us understand qualitatively what's going on with the sales of that market? If I understand properly, in the first quarter of '17, you were phasing out of certain product categories, nutritional supplements and so on, but you have not yet broken the exclusive agreement that you have with one of your clients. If -- again, if I understood correctly. So I just wanted to see if you can help us understand a little bit better if that is the case? And in light of this mild decline in dollar terms during the quarter, how can we expect revenues to progress throughout the rest of the year? And I don't know if you can give us any update on how many SKUs or how many stores will you be entering with your new partners as previous exclusive agreements have expired?

[Máximo Juda, executive]

Yes, thank you, Antonio, for the question. As I think you've been hearing in the last 3 or 4 quarters when we had some issues with our sales in the U.S. entity, we announced that we planned to [ satellite ] the entity for 2018. And to get the EBITDA to previous levels and we executed exactly what we said. In the U.S., we expect the entity in 2018 to be flat in terms of sales in U.S. dollars, first of all. And we expect to maintain approximately the same level of EBITDA of the first quarter. So we are executing as we said. The phasing out of certain categories, specifically food supplements, that we think that are less sustainable than our PC and OTC lines are well underway. It's now a small part of the business and we plan to continue to phasing that out. The new customers are doing well but are progressing slowly. As we have said, when we open new customers and we have referred to this also in previous calls during the last 2 or 3 years, is not to expect hockey stick type of sales when we open new customers. It's very progressive because consumers are used to seeing the products in one customer. So one of the largest pharmacy chains in the U.S. already has our products in their main 1,800 locations. The products are doing well and they plan to expand it into the other locations as sales progress and they have been progressing well. And those are the updates we can give for our U.S. subsidiary. We are also looking in our brands to add the general market for some of our main brands. We don't expect any results for 2018. We plan to have some results in 2018, and we are taking a look at heritage brands for the general market at very, very low costs in terms of our cash for the next quarter or next couple of quarters in terms of acquisitions that will be nonmaterial, but are relevant in terms of brand names and brand heritage. I don't know if that answers your question.

[Antonio Gonzalez, analyst]

It does, it does.

[Operator]

Our next question comes from the line of Álvaro García with BTG Pactual.

[Alvaro Garcia, analyst]

Two questions, one for Max, one for Antonio. The first one for Max. I was wondering if you can just provide as much color as you can on the manufacturing plan and how it's going? Any sort of details with regard to, let's say, pilot programs you might have in place at this stage? Or let's say, any color on what sort of progression you're seeing, maybe on a product basis or on a logistics basis would be great. And then on -- for Antonio, we saw a tax rate of 24% in the quarter, relatively low. I was wondering if you could just remind us why that was low and sort of the guidance for the rest of the year.

[Máximo Juda, executive]

Okay. Thank you, Álvaro, very much for the questions. So in terms of the plans, just to remind you we are doing our Genomma day in November in the plants. So you will be able to see actually the plants and the machines working at the plants. The plant's progress is going on very well according to our plans in terms of budget and timing. The OTC side of the plant is almost finished working in air conditioning, closing already the area. We are working now, we're making a lot of progress right now, in the warehouse that's in the middle the 2 plants, as you saw in our master plan at the last Genomma day. We plan to start receiving our OTC machines in June this year for the new plants. And we plan to finish the personal care plant in November and start receiving the first machines for the personal care plant also in November, when we plan to have our warehouses completely finished. So the plants progress is according to our schedule. We plan to start producing our OTCs in August or September in the new plants. We have sent -- we have put some updates of -- some photographs in the press release for you to be able to see it. There has been, from end of March, significant improvements or significant -- we have moved ahead significantly there. And it's going, it's moving fast week by week. So we will continue updating you on this in the quarterly updates and in our press releases.

[Alvaro Garcia, analyst]

Great. And I'll see you at Genomma Lab day in November.

[Máximo Juda, executive]

You are welcome. Thanks for coming, Álvaro.

[Operator]

[Operator Instructions]

[Máximo Juda, executive]

Yes, wait a minute, that we are answering Álvaro's second question for LATAM.

[Antonio Zamora Galland, executive]

Yes, your question was regarding local -- growth in local currency. Álvaro? I think we missed...

[Máximo Juda, executive]

Álvaro, we missed the second part of your question. If you can get again in line and we will answer that question. We see you in line now. We will answer that question as soon as we finish the second one.

[Operator]

Álvaro is now live.

[Alvaro Garcia, analyst]

Just a question on taxes. On the tax rate in the quarter, so a low tax rate in the quarter, what to expect for the rest of 2018 in terms of tax?

[Antonio Zamora Galland, executive]

Okay. You -- I think that there's some deferred taxes, deferred FX taxes that we will -- that you have seen over the last couple of quarters. When we repatriate dividends from certain subsidiaries, you would see a higher tax rate basically because we are paying taxes of income generated over a longer period of time, not exactly of a specific quarter. So there is going to be some movement there. I would advise you to use a little bit over 30% for your models. Obviously, there could be some movements within the quarters. But the long-term rate is closer to 32%, 33%. That's what you should be using in the models.

[Operator]

Our next question comes from the line of Richard Dolhun with Westwood International Advisors.

[Richard Dolhun, analyst]

I have 2 questions for you. The first one is regarding personal care sales in Mexico. They were down 8% year-over-year. But this is after a strong 2017, I believe they were up about 12% over the whole year. Could you tell us what percent was due to this electronic invoicing that slowed down the booking of sales for -- at the beginning of January? And how much of this you feel was due to underlying weakness in the Mexican economy? And the second question is, I'd like to return to what Antonio at Credit Suisse was asking about U.S. customers. Can you clarify for me, take a step back, the exclusive contract or agreement that you had with one retailer earlier. By how much was that scaled back? And what percentage of that relationship still remains? And the new relationships that you are working on right now, how far advanced are they? Or what -- I know that you have a -- your expectation is for flat EBITDA for the full year in the United States. But give us a sense of how many discussions with how many retailers and the relative size of those relationships, so we can get a sense of what the potential is for the U.S. going forward, please?

[Máximo Juda, executive]

Richard, thank you very much for the questions. So the issue -- the 8% decline in personal care in Mexico is not related to see CFDI or any supply issues or anything related to the consumer. It's related to the comparables that it was higher the first quarter and, as you know as we have been pointed out, as we separate segments so much, and they're small segment, there is volatility in the business. And there will continue to be volatility, sometimes it's OTC, sometimes it's Personal Care. As we said, as a general rule, our objective this year will be to slow down sales growth compared to last year, waiting for the plant and to be able to give a better value to a consumer. And focusing on EBITDA growth to try to take care of our EBITDA, make it grow and free cash flow and try to start operations in the new plant, being very careful not to increase or increasing as least as we can our net debt. So that will be our priority this year as we move through into the production of the new facility.

That's the first part. The second part is, we haven't scaled back our business with the current customer that we have. We are just diversifying our efforts. It was an exclusiveness. I think we said it, but it's important to say it was an exclusiveness only in the chain drug segment. It was not an exclusiveness in all of the other segments. So the second and third customers in the U.S. are the ones that we are working with. We have been -- we have made significant progress because those 2 customers were asking for our products for a long time now. And they have been pushing for us to sell them. So it has been seamless in that sense. There has been some issues in third and fourth quarter last year related to the fact that most of their operations were hit last year in Puerto Rico, Miami and Houston that -- for the fact that hurricanes were specifically in those 3 cities. And that generated, in their Hispanic efforts, some operations disruption even to their headquarters, to their Hispanic headquarters and that delayed our expansion more than what we expected.

[Operator]

Our next question comes from the line of Nicolas Larrain with JPMorgan.

[Nicolas Larrain, analyst]

I [indiscernible] if you could help me understand the difference between sales growth in PC and OTC in LATAM? The difference was pretty relevant over there. And also in Mexico, if you could comment a bit on the competitive environment with generics, if you have already started being more aggressive on competition over there? And that would be my main [indiscernible].

[Máximo Juda, executive]

Yes. Thank you, Nicolas. The answer to your first question is exactly the same as Richard's answer in the last question regarding Mexico. And it has to do to the segmentation, to the different segments we are dealing and the size of the segments. There is volatility across the segments. There is no indication of any special issues in any of our lines. In fact, we expect to hit more headwinds in OTC for the next quarter or next couple of quarters than in Personal Care for reasons of generics expansion until we have the plant. But that might not be the case but that's what we expect. And the difference between one and the other has nothing to do with any underlying factor in the business but it is related to the comparison level of the segments of last year.

[Antonio Zamora Galland, executive]

Just to build on Max's comment, when you look at the table regarding the evolution of Personal Care or OTC, et cetera, especially in LATAM, what you're looking there is Mexican pesos. You are not looking at local currency. So that's why, again, there's a translation effect this quarter that it's impacting those numbers. As we mentioned before, total growth in local currency in LATAM was 7.5%. So obviously, when you look at the performance of PC and OTC, what you are looking there is pesos. That's why it looks a little bit different. Maybe we should -- I don’t know, perhaps we should for next time, issue that table in local currency. But again, LATAM grew 7.5% in local currency and what you are looking there is Mexican pesos.

[Máximo Juda, executive]

And Nicolas what's your second question, sorry, if you could repeat it?

[Nicolas Larrain, analyst]

Sure. So in Mexico, if you could comment a bit on the competitive environment and against generics and if it started to be a bit more aggressive in that competition? And also just to add a bit, if you could comment on fill rates?

[Máximo Juda, executive]

Yes, thank you. Well, answering the last part of your question first, we said last quarter that the fill rates, the fourth quarter would be the last one. So there were no significant problems in terms of fill rates in Mexico. Answering your generics question for OTC, we still see competition, as I said, some headwinds in terms of OTC competition. We plan to roll out our strategy in the third and fourth quarter. So that is when we plan to start working on that and we expect to have measurable results within the fourth or the first -- fourth quarter this year, first quarter next year. As with the old plant that is currently operating or with the new -- and with the new plant that will be adding its production towards September, October.

[Operator]

Our next question comes from the line of Jeronimo de Guzman with INCA Investments.

[Jeronimo de Guzman, analyst]

I had a couple questions. Number one was, I wanted to go back to the U.S. because I was looking at the numbers in U.S. dollars and I saw this big jump, 40% quarter-on-quarter in U.S. dollars in sales. And I just wanted to understand what is driving that? Because first of all I guess, I wanted to see, if there's like a seasonality element that I should be thinking about? Because we don't have a lot of history to understand. But if that's not it, I just wanted to understand where are the incremental sales? And then as a follow-up, also if I look at that quarterly sales around $21 million, if I annualize that, I do get a much higher sales growth than what you're guiding to. So just kind of want to understand those elements.

[Antonio Zamora Galland, executive]

I don’t know if I'm answering your question, but the first quarter of the year is higher than the second and significantly higher than the second and the third. And there's some seasonality there. But first quarter 2018 against first quarter 2017, the company decreased its sales in U.S. dollars in 3%, approximately 3%. And we -- and as I told you, through the year, we expect sales in U.S. dollars to be flat or slight -- be a slight increase in sales in U.S. dollars.

[Jeronimo de Guzman, analyst]

Okay, yes. I mean I guess, it seems a little conservative given the start, but I'll have to look at the seasonality more closely. And then just on the -- you mentioned, Max, a few times actually, this effort to rationalize the portfolio, cut some SKUs. And I was just wondering if you could talk a little more about this, just how much more room is there to reduce the portfolio and where do you see the biggest opportunities for this?

[Máximo Juda, executive]

Yes, thank you. Yes, we are rationalizing the portfolio in a way to try to keep our gross margin as healthy and as good as possible and our EBITDA levels. It is a phaseout. So we are doing it in some products in a phased way, as we do it in the U.S. We are also doing it in Mexico. In terms of portfolio, we do see with the plant that there's upside, but we will start working in the next 3 or 4 quarters in producing the products we have in the plant and deciding further portfolio changes in maybe the second half of 2018 or going into 2020. So we see some moderate upside in terms of portfolio rationalization in Mexico and in the U.S. for the next year. Where we do see upside is in SG&A reduction. We have been saying that we have done significant efforts last year that we didn't see last year that we will start seeing -- we will continue seeing through 2018. You see it now in the first quarter of 2018. And we plan to continue reducing expenses throughout the year and to see -- start seeing many of the expense reduction we did last year, we expect to see it throughout this year. And there is where we plan -- [ that is what ] you should see our EBITDA margin expansion that we committed in our year guidance in November last year. So we are still working hard. We are continuing to see savings, and we do see significant upside in that space as we continue taking -- putting the company in order respect of headcount, administrative processes and many things that we can rationalize, and we are still working on them.

[Operator]

Our next question comes from the line of Rodrigo Alcantara from UBS.

[Rodrigo Alcantara, analyst]

Just a follow-up in LATAM. Any additional color can you give on the performance by country in Latin -- and America both in terms of revenue growth and margins?

[Máximo Juda, executive]

Yes, thank you very much for your question, Rodrigo. We haven't been giving segments of the different countries in Latin America up to -- for the moment. And we don’t plan to give them in the future. There has been some -- again, without giving any color there have been some countries that have performed well above our expectations and there have been a couple of countries that have been performing a little bit below our expectations. Our EBITDA in Latin America was 20 basis points lower than last year. Our expectation is that, that will come up higher in the next 3 quarters, that we will be able to improve the EBITDA, the weighted average EBITDA of the region for the next quarters, and that will help to increase our EBITDA level. But that's as much as we can give you, as these countries as -- we think are temporary -- have been having some temporary problems that will get better for the next 2 or 3 quarters. So that's our expectation for the region. And we also commented on which are the countries that are doing best against last year in the -- in our initial comments. So that's as much color as we can give regarding that. I don’t know if that answers your question or if you would like to ask something else or something about that.

[Rodrigo Alcantara, analyst]

Okay. Yes, understood. Just maybe curious of any, I mean, trends you can tell us about, maybe Argentina perhaps. But I mean, if you cannot provide any color, that's okay.

[Máximo Juda, executive]

Yes, the Argentinian subsidiary, as we said, has been performing above the average. We have pretty strong brands there that are performing according to our expectations. OTC in Argentina is growing a little bit higher than our Personal Care subsidiary, but that was according to our plan and it's continuing to make an important contribution towards the EBITDA of the region and we [ plan ] that to continue throughout the year.

[Operator]

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Mr. Max Juda for closing remarks.

[Máximo Juda, executive]

Thanks, everyone, for joining us this morning. In closing, while there is still work to be done to realize our true earnings potential, we are encouraged by the results achieved this quarter and we believed the foundation has been laid for continuous success in 2018 and beyond through our strong cost management and operational excellence. I look forward to sharing with you our future quarterly results and speaking with you all again soon.

[Operator]

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.