Marfrig Global Foods SA

BOVESPA:MRFG3

Earnings Call Transcript 2017-Q4

[Operator]

Good morning, and good afternoon, ladies and gentlemen. At this time, we would like to welcome everyone to Marfrig Global Foods S.A. conference call to present and discuss its results for the fourth quarter and full year 2017. The audio for this conference is being broadcast simultaneously through the Internet in the website www.marfrig.com.br/ir. In that address, you can also find the slideshow presentation available for download. [Operator Instructions] Before proceeding, let me mention that forward-looking statements are being made under the safe harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of Marfrig's management and on information currently available to the company. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions because they relate to future events and therefore, depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Marfrig and could cause results to differ materially from those expressed in such forward-looking statements. Now I'll turn the conference over to Mr. Marcos Molina, Marfrig Global Foods Chairman. Please, Mr. Molina, you may now begin the conference.

[Marcos dos Santos, executive]

[Foreign Language] Good morning, everyone. First of all, I'd like to thank the Marfrig team for the 2017 results and achievements. [Foreign Language] 2017 was a challenging year to the sector in Brazil, but we were able to demonstrate our flexibility, agility and quality while growing quickly with operational efficiency. [Foreign Language] Following the growth in supply as well as the early demand for our products by our customers, [ demonstrating ] our position and brands in the market. [Foreign Language] In the fourth quarter, we're able to prove the quality of our assets and teams and both are reflected in our results. [Foreign Language] Based on that, this demand and supply, we have invested in organic growth, adding capacity for our production globally. [Foreign Language] For 2018, we are committed to our leverage target of 2.5x net debt EBITDA, which is non-negotiable and crucial for our business. [Foreign Language] Our view is that 2018 will be again another challenging year but with significant opportunities. So we are pretty sure that we are all prepared for the year, which is in front of us. [Foreign Language] Thank you. Again, I'd like to pass the word to Mr. Martin.

[Martin Arias, executive]

[Foreign Language] Thank you, Marcos. Good morning. I want to start by thanking everyone for participating in another earnings conference call of Marfrig Global Foods. Today, we will be commenting on the results for the fourth quarter and fiscal year 2017. I would like to apologize that I am not actually present in the same locale than the rest of the team. I need to leave São Paulo yesterday for a personal reason, and I would like to apologize if you have some technical problems on the line. With me on the call to share with you the -- all the reports and the information will be Frank Ravndal, the CEO of Keystone division; Eduardo Miron, our Global IRO and CFO. Before commenting on the fourth quarter results, I want to give a brief retrospective of 2017. We began the year with an important mark in January. We carry out our mandatory conversion of the debentures, which is an important step in our liability management process. With the global economy still recovering, we faced a turbulent political and economic scenario in Brazil. And specifically in the beef industry, we were affected by the exogenous factors unrelated to the market fundamentals. In the first half of the year, however, this challenging scenario also highlights the opportunity arising from the already expected positive trade of the cattle cycle in Brazil, which -- one of the catalysts of our strategy to adjust our production footprint at the Beef Division, which states our recovering growth in the second half. At the Keystone division, it was the first year of the 2021 strategic plan, and we were delighted with another record results. In anticipation to a possible question about Keystone sale participation, as you know, we cannot give in too much detail, but it remains an alternative for us. The sale of Keystone stake is crucial to our deleveraging plan and reaching the 2.5x target until the end of 2018. Again, our commitment to the deleveraging is now -- is non-negotiable and we are focused on it. Let's go to Slide #3. The last quarter of the year was marked by the good performance of the global economy. In beef industry, we observed firm demand and better margin in relation to the same quarter of 2016. The Beef Division continued its plan to reopen plants, which gradually increased the Brazilian operation slaughtering capacity to around 300,000 heads per month volume reached in December. This supports growth in the division total sales volume of 28%, while fresh beef export grew by 34%. In regard to the Keystone division, despite the more rigorous winter in North America, which ended up weighing on store traffic, and demand in the quarter continued to deliver solid results. These results were also influenced by the startup of a new plant in Thailand, which is in the ramp-up phase. In other words, we have incurred all the associated [ freight ] costs but have yet to reach full cash generation capacity. Another highlight was the company decision to participate in the tax amnesty program known as PERT. This finally allowed us to resolve all pending federal tax claims. Please, let's go to Page #4. The last quarter of the year was marked by the volume increase due to the continued ramp-up of the plants we opened on the same quarter. With nominal capacity returning to the level of 2014, which is before the capacity closure due to the negative trades of [ carbon cycle ]. The average of the capacity utilization rate of the Brazil operation reached 96%, demonstrating the improvement in operating efficiency between periods. Net revenue accompanying the expansion in capacity to BRL 3 billion, growing 18% on the fourth quarter of 2016. The highlights were the higher volume due to our plants reopened; higher prices in U.S. dollar, which offset the lower domestic prices and the -- by the stronger Brazilian real. In the fourth quarter, fresh beef sales volume in the domestic market grew 27% year-over-year, with this performance explained by the higher production and strong demand, even if below the initial expectation for the quarter. The highlight was the higher share of the Montana brand in total domestic sales, 53% compared to 49% on the fourth quarter. Just to remember that in the local market, we have a lot of product that is unbranded, like leather and subproducts. For that, this increase is a very good performance for the sales team. Meanwhile, fresh beef export grow 34% with Asia remaining the main destination, accounting 51% of the total export. Note that even during the ramp-up process, export registered a strong growth, reflecting the company capacity to optimize the production footprint, directing sale from its plants already in operation to the export market, while the recently opened plants, which lack the necessary certification, direct the production to the Brazilian market. The export revenue were 47% of the total division sales versus 43% in the previous year. The Beef Division ended the quarter with adjusted EBITDA of BRL 262 million, increasing 67% on the fourth quarter of 2016. The result is explained by the better spreads in both local and export market and by the higher volume with consequent operational efficiency gains due to the increasing the capacity utilization. I will pass now the call to Frank, who will comment on the result of Keystone division.

[Frank Ravndal, executive]

Thank you, Martin. Good morning, everyone. Keystone had a solid finish to what ended up being a record year in 2017. Adjusted EBITDA for the fourth quarter was $66 million and the adjusted EBITDA margin was 9.4%.

On a year-over-year basis, adjusted EBITDA was down 4%, and the adjusted EBITDA margin decreased 27 basis points. It's important to note that the fourth quarter of 2016, as a basis for comparison, was an exceptional quarter for several reasons. One factor was an extra week of results in the U.S. segment due to U.S. accounting procedures, and another factor was strong results as the poultry markets recovered from the avian influenza outbreaks earlier in 2016. During the past quarter, we continued to experience strong customer demand and to operate at high levels of capacity utilization. In fact, we leveraged manufacturing partners to meet demand that exceeded our capacity for certain products. In parallel, we began to ramp new capabilities and expanded capacity, which will allow us to better meet the dynamic needs of our customers. The foodservice channel was particularly strong during the quarter, as some of the leading QSR brands, which are Keystone's biggest customers, are significantly outperforming their peer group. These QSRs are increasing both store traffic and average check size through value promotions and by adopting new technologies and approaches like home delivery. Let's turn to the slides and take a look at the numbers. Please remember that all financial information that is presented by Keystone Foods is presented in U.S. dollars. First, in the lower left corner of the slide, let's take a look at sales volume. Volume reached 289,000 metric tons in the fourth quarter, a 5% decrease on a consolidated basis when compared to the same period last year. However, if we look at the historical quarterly volume, the fourth quarter of 2017 was the second highest quarterly volume in Keystone's history. In the U.S., we saw strong volume growth of 4% in the foodservice channel, which is more than offset by decreases in the retailing, convenience and industrial channels. The increase in foodservice was driven by the value, technology and innovation initiatives launched by several of the leading QSR brands. The decreases in retail and convenience and industrial were, for the most part, strategic decisions made by Keystone to focus limited available capacity on higher-value products and prioritize a more favorable product mix. In the case of the industrial channel, the decrease was the result of the final period of transition from one large industrial customer to newer customers. During the quarter, one of these newer customers experienced operational disruptions, which dampened demand in the quarter. The shift in newer customers in this channel represents a higher overall value opportunity for us with less seasonality. In APMEA, volume increased 3%, driven by strong foodservice growth, partially offset by a modest volume decrease in retail and convenience. The increase in foodservice was driven by the ongoing success of the large QSR brand and expanding their business in the high-growth global markets where Keystone operates. With respect to revenue, now in the upper-left corner of the slide, consolidated net revenue for the quarter was $705 million, a decrease of 1% over the same period in 2016. Revenue decreased 4% in the U.S., driven by the volume decrease, but partly offset by higher pricing associated with higher-value products as well as the pass-through of higher raw material input costs. In APMEA, revenue grew by over 6%, driven by volume increases, price improvements and foreign exchange gains. Now moving to the right side of the page. Adjusted EBITDA was $66 million and the adjusted EBITDA margin was 9.4%, down 4% and 27 basis points, respectively, from the fourth quarter of 2016. Beyond the basis for comparison issue, which I've already mentioned, there were some operational disruptions that impacted profitability during the quarter. In the U.S., there were industry-wide disruptions throughout the supply chain caused by hurricanes and unseasonably cold weather. Additionally, Keystone had some downtime associated with certain production modifications, which will improve operational flexibility and drive greater efficiency in the future. In APMEA, there was downtime associated with the ramp-up of a new production line in Malaysia as well as the new production facility in Thailand. Commodity pricing also added impact during the quarter. In both the U.S. and APMEA, an increase in raw meat pricing impacted profitability, though, in many cases, we were able to pass through these higher input costs. Feed pricing continues to be favorable -- continued to be favorable in the quarter. Turning to SG&A, it has historically been trending around 2.2% of sales. During the fourth quarter of 2017, SG&A was approximately 1.6% of sales as a result of certain corporate adjustments. SG&A for the full year 2017 was in line with historical levels, and we would anticipate that being the case in 2018 as well. Reflecting on a record full year in 2017, adjusted EBITDA increased $21 million or 8% to $282 million, and the adjusted EBITDA margin increased 44 basis points to 10.1%. We continue to deliver on the core objectives of our Strategy 2021 plan, including growing volume with existing core customers, establishing Keystone as the partner of choice with new customers across multiple channels and driving towards a higher-value product mix. 2017 was the first year of our longer-term Strategy 2021 initiative, and we executed well during the year and continued to build a solid foundation for future performance. We have invested a considerable amount of CapEx into the growth of the business, including new capacity in Malaysia, a new plant in Thailand and the new capabilities, including fresh beef, in the U.S. And we will continue to invest in additional capacity and capabilities over the next few years to capitalize on the significant commercial opportunities we have in front of us. Now I'll pass the call to Eduardo.

[Eduardo Miron, executive]

Thank you, Frank. Going to Slide #6, I will comment on Marfrig's consolidated results.

For 2018, we -- in the fourth quarter of 2018, Marfrig's consolidated net result -- net revenue was BRL 5.3 billion, growing 8% on the prior year quarter.

This division supported by higher production volume was the main responsible for the results. At the Keystone division, the highlight was the 6% growth in revenue from the APMEA region, namely Malaysia, Australia and China.

Sales volume came to 641,000 tons, 11% higher than in the fourth quarter of 2016. Once again, driven by the Beef Division, which accounted for 55% of this total, up from 47% in the previous year.

Consolidated adjusted EBITDA grew by 24% to BRL 493 million, while EBITDA margin stood at 9.3%, expanding 120 basis points on the fourth quarter of 2016, basically reflecting the margin gains at the Beef division, which exceeded 120 basis points as well.

Let's turn to the Slide #7. This slide shows Marfrig's key financial indicators. As you can see, at the top of the chart, Marfrig, excluding the nonrecurring effect from the tax plan called PERT ended the year with a leverage ratio of 4.55x.

If we take annualized adjusted EBITDA, which we believe is the indicator that best reflects the current footprint of the Beef division, the leverage ratio was 3.94x.

On semi basis, the leverage ratio increased from the first quarter when it stood at 3.69x. As I mentioned last quarter, our projection for the fourth quarter was for the leverage ratio to remain stable.

Despite the fact that the results delivered in the last quarter of the year were good, they fell short of our initial expectation. As I already mentioned, the results of Keystone -- the Keystone division were affected by the weather in North America and by the ramp up in capacity.

At the Beef division, despite the improvement the expectation was for a better Brazilian economy growth and a better year-end.

And before I continue the presentation, I want to take a little time to go a little bit further or deeper on the leverage ratio. 2017 was a typical year and we had to make some top choices about cash and leverage. We believe that these decisions would have one-off impact in our indicators, but that, in the long term, it would help to support and ensure our future profitability.

In the Beef Division, scale is fundamental for a more commodity-oriented business. Meanwhile, at Keystone, the ongoing investments made more crucial to maintaining and growing our business as per the strategic plan 2021.

For 2018, we should continue to see the rewards from this investment, which will help to support the company's deleveraging process. And to accelerate this process and reach our target leverage ratio of 2.5x, I and everyone else on the Marfrig executive team are 100% committed to executing our strategic plan to achieve this goal. And among the many alternatives, the Keystone participation sale was the path that we decided to pursue during 2017, and we remain focused on concluding this process in 2018.

It is important to note that even with these processes that are ongoing from the listing, the company continues to assess all its strategic options and its careful monitoring opportunity in the market that could help us to achieve this deleveraging commitment.

Going back to the presentation. Now on the chart at the bottom of this slide, I will comment on the company -- company's debt.

Since 98% of our debt is in U.S. dollar as well as most of our cash, the following analysis in same currency. As you can see, gross debt ended the year at $3.8 billion, while our cash position stood at $1.3 billion, down 70% from the previous quarter.

As a result, net debt ended the year at $2.4 billion. In line with what we already anticipated. Our expectation was for our net debt to increase due to the investments made to implement the capacity adjustment and the expansion plan carried out during the second half of 2017.

A highlight, however, is the long-term profile of our debt, where only 15% coming due in the short term, and our debt cost had a small, but important for us, decline to 6.38% per annum in this quarter. Let's go to the next slide. So in this slide, we are going to be talking about the cash flow. The -- Marfrig's registered a positive operating cash flow of BRL 88 million, influenced was by the results delivered by the divisions and by the lower use of working capital.

As expected, the continued production ramp-up at the Beef Division and the preparation of promotional activities for the foodservice service channel at Keystone division led to higher inventories.

On the other hand, most of this negative effect was offset by seasonal increase in payment terms to suppliers. As a result, working capital consumption in the quarter was BRL 200 million lower than in the third quarter.

In CapEx, despite the reductions, we maintained our robust level of investment of BRL 247 million in the quarter of the year. The main investments continue to be related to the reopening -- continue to be related to the reopening of the plants at the Beef Division and the growth projects at the Keystone division, which are aligned to its 2021 strategic plan.

Meanwhile, the interest expenses came to BRL 192 million, in line with the third quarter. The combination of these factors lead to a negative cash flow of BRL 350 million in the -- in this quarter.

Considering the nonrecurring expenditures related to the company's decision to participate in this tax program together with the discontinued operation, in this case, it's our Argentina plant, cash flow was negative BRL 599 million.

Important to highlight, the company has been delivering positive free cash flow since 2014. And in 2017, as I previously explained to all of you, we end up with this negative cash flow. Our commitment did not change, and for 2018, we shall deliver positive cash flow again.

Let's move to Slide #9, please. This slide -- as you can see, Marfrig posted this quarter its lower, I would say, lowest net loss since 2015 of BRL 8 million, which represents important improvement over BRL 200 million from same period -- the quarter before.

The result reflect all the company's efforts towards the main drivers, meaning better gross margin, very well controlled and discipline on fixed cost, and finally, cost reductions on the interest line.

Moving to Slide #10. Here, I will briefly go over our key indicators in the year. Net revenue was BRL 19 billion, down slightly from 2016. The highlight was the stronger local currency and the lower price in Brazil domestic market, which accompanied the downward trend in the cattle price.

The positive highlight was the growth in sales volume, especially beef products. The recovery in the growth of the Brazil operation at the Beef Division during the second half of the year offset the negative impact that the industry suffered in the first half of the year.

Consolidated adjusted EBITDA in the year was BRL 1.7 billion, up 6% on 2016 with margin expanding 60 basis points to 9.2%. This performance was due to the recovery in the results of the Beef Division and by the delivery of another record-breaking result at the Keystone division.

With that, I conclude my part in this presentation, I'd like to move this back to Martin for his closing remarks.

[Martin Arias, executive]

Thank you, Miron. On the Slide 11, I go over to outlook the first quarter and goal of 2018. I should remind you that the first quarter is seasonably the weakest of the year, especially in the Beef Division.

Therefore, in comparison with the last quarter of 2017, we should expect some margin contraction following the market trend. The perspective for the year remain positive.

The growth in both global and Brazilian economies are expected, so the demand is expected to follow. Also, the opening of the new markets, such as Japan that is expected to open worldwide in the near term and the USDA -- U.S. for the Brazilian Beef should positively contribute for the global pricing dynamics.

Once the scenario is confirmed, the margin for the year should remain in healthy level and within the expected range for the beef business with EBITDA margin between 8% to 10%.

At the Keystone division, the first quarter of the year should continue to show some impact from the store traffic due to the bad weather in the United States, while the new plant in Thailand should continue to advance and ramp-up.

For 2018, we expect the market to normalize and the prospects are -- for the result to remain robust. In other context, we improved in the company operation flows as well as in the free cash flow, which should benefit from the greater stability in working capital and from CapEx returning to a historical level of 2015 and '16 in the range of BRL 550 million to BRL 600 million.

In terms of leverage, as Eduardo mentioned, we remain committed to the financial discipline and to our deleveraging target. As I mentioned, the sale of Keystone stake is crucial to our deleveraging plan and reaching their 2.5 target till the end of the year.

We conclude, with this, our presentation and now, I would like to open the space for question for you.

[Operator]

[Operator Instructions] Our first question comes from Teo Lasarte, Insight Investment.

[Teo Lasarte, analyst]

I was wondering if, first of all, can you comment on the adjustment you made to EBITDA, specifically referring to the leverage slide, I think it's Slide 7, where, I think, a part -- in terms of the 4.55 leverage target you -- the leverage number you gave, there's an adjustment to EBITDA, but I think you also accounted for this impact of the tax settlement with the Brazilian authorities. Exactly how much are you adjusting for this tax settlement in your EBITDA calculation?

[Eduardo Miron, executive]

The adjustment was not in the EBITDA. The adjustment was in the net debt, it's around BRL 230 million.

[Teo Lasarte, analyst]

Okay. So for the exact amount, the cash outflow, that's what you're adjusting for in the net debt.

[Eduardo Miron, executive]

Yes, and just remember. The number that you -- you can see this number in the free cash flow, so then you can see in the next page.

[Teo Lasarte, analyst]

Okay, understood. And in terms of going forward after this settlement, how much should we expect in terms of a tax -- cash payments for tax in '19?

[Eduardo Miron, executive]

Yes. The remaining payment is a small amount of the 3 -- around BRL 3 million, and it's going to be done for the next 150 -- 4 to 5 months.

[Teo Lasarte, analyst]

Okay. And after that, should we expect any further cash outflows due to tax?

[Eduardo Miron, executive]

I'm sorry?

[Teo Lasarte, analyst]

Will there be any more cash outflows due to tax payments in 2018 apart from this BRL 3 million that you mentioned?

[Eduardo Miron, executive]

In fact we are expecting a better positive flow coming in our direction from the cash that we have. I think that's one of the most important things, and that's the reason why we made those -- that decision because it's kind of, I would say, it normalized our relationship and with the tax authorities. So then we should expect you have some inflow.

[Teo Lasarte, analyst]

Okay. And for 2019, should we expect any cash outflow due to taxes?

[Eduardo Miron, executive]

2019?

[Teo Lasarte, analyst]

Yes.

[Eduardo Miron, executive]

I don't know exactly if I understand your question. So you are talking about the program?

[Teo Lasarte, analyst]

No, no, just your general tax payments for 2019. I mean, should we have seen that [indiscernible]

[Eduardo Miron, executive]

Yes, I mean, we normally pay taxes.

[Teo Lasarte, analyst]

Normalized or...

[Eduardo Miron, executive]

Yes. We pay taxes, and in Keystone pay taxes. And in Brazil, we have a robust tax credit, so then we normally have a reduced tax payment because of the negative -- the losses that we carry.

[Teo Lasarte, analyst]

Okay. And my other question was regarding Keystone. Can you give us any sense of what your volume targets are for 2018?

[Frank Ravndal, executive]

Yes, we don't really talk about sort of guidance and what we're looking for. But I would say that we don't see any kind of structural headwinds from a market. We see continued strong demand, really almost everywhere in the world around our main customer basis. So I feel pretty good about the year, but we don't give volume guidance or any other type.

[Teo Lasarte, analyst]

Okay. And is that because of the -- you're intention to IPO part of the group that you don't give any guidance?

[Frank Ravndal, executive]

No, I think that's just not our general practice.

[Teo Lasarte, analyst]

Okay. And you -- and can you at least comment on a sort of a normalized margin for this business for Keystone going forward?

[Frank Ravndal, executive]

I would say that longer-range targets that we had issued a number of years ago in the Marfrig day continue to be valid. I mean, we're currently performing well above those, but I don't think we've set new longer-range targets, and I think the ones out there, we don't...

[Teo Lasarte, analyst]

If you can you just remind us what it was?

[Frank Ravndal, executive]

Those were 8% to 9% longer term.

[Teo Lasarte, analyst]

8% to 9%. Okay, got it. And just one last one. In terms of the BRF investigation of the headlines, I realize it's a different protein, different company, but have you seen any impact at all from the BRF investigation?

[Frank Ravndal, executive]

Are you talking about beef or are you talking about other global protein?

[Teo Lasarte, analyst]

Beef, beef.

[Martin Arias, executive]

Just to remind you that Marfrig doesn't have any participation on the episode of the last year of the week push. And also, we don't have any participation or any movement regarding this last episode of BRF. Of course, it's a very bad situation for the chicken sector, and we are so attentive to the movement of -- on the market. I hope to understand what is your question because the line was not good.

[Operator]

The next question comes from Christina Ronac, HSBC.

[Christina Ronac, analyst]

Just a follow-up on that last call. You know, BRF is pressuring chicken places. I know Marfrig just got to chicken, but we are understanding that it's pressured the beef prices. And so want to know how the first quarter is looking. Is it stable or are you feeling pressure from beef prices? Or are you able to export more?

[Martin Arias, executive]

No. Thanks to you for your question. Of course, they have some relation internally in Brazil regarding the movement between different proteins. The chicken protein is very cheap this day on the market. Of course, the situation of BRF, it doesn't help too much for the situation because I imagine that most of the volume that they attend for Europe, for example, stay in Brazil, some part and other parts go to other markets. And of course, it doesn't help for the price in general for the chicken. But as you know, the -- even the consumer are making a more reasonable consumption. We have a very good alternative to go to the export. As we mentioned on the call, we grow very, very much on the expert for that we are trying to be out of this situation. And internally, we are continue working in our quality. As you know, Marfrig is the most well-known brand regarding quality in Brazil. And we have the alternative to go to local market or to export where the situation are on the better price. For that, we are looking with a -- carefully, the situation these days also. And the Easter period is not a very good to make any conclusion because it's not a typical time to eat beef. But we are not seeing too much problem regarding the situation on chicken.

[Christina Ronac, analyst]

You mean on beef?

[Martin Arias, executive]

Sorry?

[Christina Ronac, analyst]

Your last point, you meant, you don't expect -- you're not seeing much pressure in your beef business in the first quarter. I know first quarter is normally weaker than the other quarters, so we should not be surprised by additional, beyond reasonable softness in first quarter '18. Is that okay?

[Martin Arias, executive]

But when we say that this is the weak quarter, we are always referring to the amount of animals ready to slaughter. This is the most important part of our business when we talk about seasonable on our business. Regarding the sales, we have different episode during the year that we must manage between export, local brands and other things. But our -- always our attention regarding the margins are more focused on the volume of the animal, the very level and the price that we need to practice regarding this.

[Christina Ronac, analyst]

Okay. So sorry, one more time, just to summarize, you shouldn't see any more than usual -- so first quarter '18 is stable. BRF is not impacting you too much because you're able to export more?

[Martin Arias, executive]

Yes.

[Operator]

This concludes today's question-and-answer session. I'd like to invite Mr. Martin, so he can proceed with his closing statement. Please go ahead, sir.

[Martin Arias, executive]

Thank you. I would like to thank all of you to follow our presentation and to participating in our Q&A session. And Eduardo, Roberta, of course, me will be waiting if you have more questions in the next days or today. We keep in touch. Thank you all.

[Operator]

Thank you. That does conclude our Marfrig's conference call. Thank you much for your participation, and have a nice day.