Coca Cola HBC AG

LSE:CCH

Earnings Call Transcript 2019-Q1

[Operator]

Thank you for standing by, ladies and gentlemen, and welcome to the Coca-Cola HBC's Conference Call for the 2019 First Quarter Trading Update.We have with us Mr. Zoran Bogdanovic, Chief Executive Officer; Mr. Michalis Imellos, Chief Financial Officer; and Ms. Joanna Kennedy, Investor Relations Director. [Operator Instructions] I must also advise that this conference is being recorded today, Thursday, May 2, 2019.I will now pass the floor to one of your speakers, Ms. Joanna Kennedy. Please go ahead.

[Joanna Kennedy]

Good morning. Thank you for joining our call today to discuss Coca-Cola Hellenic Bottling Company's first quarter trading update. Today, I am joined by our Chief Executive Officer, Zoran Bogdanovic; and our Chief Financial Officer, Michalis Imellos. Before we get started, let me remind you that this conference call contains various forward-looking statements. These should be considered in conjunction with the cautionary statements in our trading update press release, which we published this morning.Although we've added a webcast facility to our call for ease of access, there will be no slide presentation today as per our usual practice for trading updates. We will start with some brief opening remarks from Zoran, and then open the floor to your questions.In order to facilitate a good Q&A session, we suggest that you ask your questions one at a time, waiting for us to answer one question before you ask another. The operator will keep your line open until we have exhausted all of your questions.Now let me turn the call over to Zoran.

[Zoran Bogdanovic, CEO & Executive Director]

Thanks, Joanna. Good morning, everyone, and thank you for joining our call. We are happy to report strong performance during the quarter with several notable positives, which give us confidence that we can achieve our plans for the year. Let me share the highlights. Our revenue growth was up 4.7% on a currency neutral basis, driven by strong volume growth of 3.5% and 1.1% expansion in currency neutral revenue per case. This puts us on track to deliver on our expectations for the year, given that in 2019 the sell-in for the Easter period shifts from the first into the second quarter and that we still have the impact of the discontinuation of our distribution of the Brown-Forman brands in Russia in our numbers in the first quarter. The negative impact of these 2 factors in the first quarter was 150 basis points, 90 basis points on volumes and 60 basis points on price mix.Volume growth was broad-based across our markets, and we saw growth from all our segments. Let me give you some detail.Established market volumes grew by 0.2% in the quarter. We are pleased with these results for the segment, given the timing of Easter. As well as ongoing good results from Ireland and Greece, we are particularly happy to have delivered another quarter of volume growth in Italy. We are seeing a positive impact from the changes we made to our pack/price architecture in Sparkling in the country, while improvements to our route to market, particularly in out-of-home are driving strong performance from new categories and occasions in that channel.FUZE Tea continues to perform very well in Italy, more than doubling volumes compared to the prior year quarter.In the developing markets, volumes grew by 2.6%. As in the Established segment, the timing of Easter impacted volumes and we estimate that adjusting for this, volume growth would have been in excess of 4%. Growth was broad-based across the segment and particularly strong in Energy and Water.Emerging markets volumes grew by 5.7% with ongoing good growth in Russia, Romania and Ukraine, and the notable improvement in Nigeria in the quarter. We are seeing good results from our route-to-market changes in Nigeria. At the same time, our competitive response, which includes a new widened pack/price architecture is protecting our performance in Sparkling. Sales volumes in Nigeria grew double digits, with juices continuing to benefit from the additional PET packs we launched in the market in 2018.Turning now to price and mix. Price/mix in the Established market expanded by 1.2% with positive impact from package mix as well as selective price increases, including pricing taken to offset the Irish sugar tax. This was partially offset by negative country mix due to volume declines in Switzerland.In the developing markets, we are seeing positive results from our plans to drive more revenue growth in this segment from price and mix with a 3.8% expansion being a notable improvement compared to the prior year period. This was driven by broad-based improvement across the markets in this segment and came from packaged and category mix as well as price increases.Price/mix in the emerging markets was up 1.1% and was impacted by the discontinuation of our distribution of the Brown-Forman brands in Russia. Excluding this impact, Emerging segment price/mix would have been up 2.5%. We benefited from pricing in Russia, Ukraine and Serbia, while in Nigeria our widened price architecture across our Sparkling brands impacted price/mix in the quarter.Let me move on to some highlights by category. We continue to see encouraging growth from Sparkling with volumes up 2.8% in the quarter. Growth was led by strong trends in low and no sugar variants, which grew by 43% while full sugar variants declined by 2.5%. Coke Zero growth continues to have excellent momentum with volumes expanding in all our markets, leading to group level volumes up 40%. This is the eighth consecutive quarter of growth above 20% for the brand.Schweppes, Kinley and Royal Bliss, which together comprise our Adult Sparkling portfolio, saw very good performance with combined volumes for Adult Sparkling up 8.8%. These brands form an important part of our mixability programs across our markets, and they are complemented by the creation of dedicated teams in relevant markets to serve premium hotels, restaurants, cafés and bars, which is helping to deliver these positive results.The Energy category continues to see strong growth with volumes up 31.8%. This is the 13th quarter of double-digit volume growth in the category.Moving to Stills. Volume growth of 4.3% is an acceleration from the pace of expansion in the prior year, which was up 0.4%. We are seeing strong volume growth in Water, which was up 7.3% with volume growth in all of our segments. However, juice volumes declined by 0.8%. Ready-to-Drink Tea declined in the quarter, down 5.1% as we cycle the first few months of the pipeline, which was built to allow for a successful launch of the FUZE brand last year. The exit rate from the quarter is positive with volumes up 6.4% in March, and we have an exciting year of new flavors and package launches in the category.So in short, we have had a good start to 2019 in line with our expectations. And we are energized by the plans we have in place. This, combined with the fact that for the rest of the year we will leave behind the negative impacts of Easter phasing and the cycling of the Brown-Forman distribution, give us confidence that we will see faster revenue growth for the rest of 2019.Having discussed our results, let me turn to another topic. You will have seen that today we have announced that the Board will be proposing a special dividend of EUR 2 per share. We have been on an exciting journey over the last few years at Coca-Cola Hellenic. We restructured the company during the challenging years after the financial crisis, creating the right base for growth. Since then, with our increasingly consumer-centric portfolio, our customer-focused execution and the economic recovery in our market, we have made significant progress toward our 2020 objectives.Since we set out our 2020 objectives in 2016, we have grown currency neutral revenues at an average of 5% per annum and have expanded comparable EBIT margins by 270 basis points. The special dividend announced today reflects the value created by this excellent progress, our strong cash position and our financing plans.I would like to take this opportunity to thank our shareholders for their trust and support of our company.With that, I will now hand over to the operator to take any questions you may have. Thank you.

[Operator]

[Operator Instructions] The first question comes from the line of Edward Mundy calling from Jefferies.

[Edward Brampton Mundy, Equity Analyst]

First question is around the special dividend. Should we interpret the special dividend as potentially less appetite for M&A or transformational deals? And how far could you stretch the balance sheet from a net debt-to-EBITDA perspective without losing investment grade?

[Zoran Bogdanovic, CEO & Executive Director]

Ed, thank you for the question. In short, the special dividend does not reduce our appetite and our eagerness for the right opportunities and possibilities that we could have in the M&A area, whether those are bolt-on or if along the way there would be any appropriate transformational deal as you referred to it. So in short, from my side, just to clarify that this does not eliminate our focus and work that we are having in this area. I'll hand over to Michalis to clarify the other parts of your question.

[Michalis Imellos, Chief Financial Officer]

Ed, just to build on Zoran's response from a technical perspective. As we said also in our February's call, by the end of the year, after all the anticipated uses of cash, including bolt-on acquisitions and the special dividend, we will be around 2x net debt to comparable EBITDA. And this leaves us with enough flexibility to temporarily go beyond this range, while at the same time maintaining comfortably investment-grade rating.And indeed, we would consider doing this for the right exceptional transformational M&A opportunity that obviously would create value for the company and its shareholders with the intention to get our leverage back towards the 2x levels after such a potential transaction. And I would really like to emphasize that such stretch way beyond the 2x would only be considered for such an exceptional opportunity was to come, not in the ordinary course of business.

[Edward Brampton Mundy, Equity Analyst]

Very clear. And my second question is around confidence of seeing faster growth for the remainder of 2019. I think you flagged the 150 bps owing to Easter timing and also the Brown-Forman discontinuation. I appreciate the summer was very, very hot last year and you also had the World Cup. I was wondering if you could share some of your thoughts as to why you're confident on faster revenue growth for the remainder of the year?

[Zoran Bogdanovic, CEO & Executive Director]

Yes. Ed, that's true. While we do cycle World Cup, which was primarily Russia, last year we did say that we were -- we benefited from very good weather in parts of our territory, which was the whole kind of a north and more west part of our territories. However, south and east actually did not have a good weather, especially July last year. So that's why kind of on one side we are cycling, on the other side it's -- it actually is an opportunity.On top of that, we do have -- I'm very confident with the plans, initiatives that we have for the period ahead of us. We are embedding and increasing distribution rate of sale of the -- a number of innovations that we have launched last year. And that was happening in the course of Q2, Q3 and that is materializing and has a rollover effect.On top of that, also this year is not going to be shy of new innovations that are happening across the world market. You probably know as well as in some other territories that we've been launching also, for example, Coca-Cola and coffee, we are also one of the first markets that started with Coke Energy and there are a number of other flavor and PET innovations that we are doing in many of our markets.On top of that, I'm really encouraged with the strong marketing plans that we have for this -- especially 2 critical quarters ahead of us. And on top of that, our continuous work that we do on route-to-market enhancements in many of our markets that increases our capability and capacity to deal with increased portfolio across of our territories. That gives me confidence that we are going to see accelerated revenue growth versus Q1 so far.

[Operator]

The next question comes from the line of Fernando Ferreira calling from Bank of America Merrill Lynch.

[Fernando Ferreira, Director]

I have a few as well. First one on M&A. Can you talk a bit about what Bambi will add to your capabilities in Serbia? And also if you're looking at other adjacent businesses like that in other countries as well?

[Zoran Bogdanovic, CEO & Executive Director]

Fernando, related to Bambi, I'd like to emphasize that this case is -- we need to look at Bambi acquisition as a unique case, which blends strong, excellent, unique portfolio in Serbia and why we are doing that in Serbia itself where our market position is quite strong with 70% plus share in Sparkling and 40% plus share in the whole nonalcoholic ready-to-drink.So this is where we have recognized that through combining those 2 complementary portfolios, we see an opportunity to drive further healthy growth, leveraging and exploiting complementarity across several occasions, where our portfolio and Bambi portfolio actually play so well from the breakfast and then snacking on the go, snacking at home. This is where we see the opportunity.What Bambi also gives us in Serbia is stronger leverage and opportunity to serve better fragmented trade and HoReCa part of the market because Bambi has a very strong distribution network, coverage of more than 16,000 direct customers. On top of that, this gives us also the opportunity to have chilled distribution, which we didn't have so far in the country because Bambi does have chilled distribution network as their product also need to be delivered during summer in preserved condition. And that gives us, as you may appreciate, the possibility to think now also of the beverage solutions in the country that we couldn't do so far.And last point, if I remember well, I said this is a unique case and we should look at it in such way. All our M&A exploration and work is related to beverage opportunities and this does not reflect the shift in our strategy of where we do see bolt-ons going forward, but rather as a unique case for this particular market.

[Fernando Ferreira, Director]

Very clear. And the second question maybe for Michalis on the balance sheet. If you were to eventually reach a net leverage above the 2x for that exceptional deal you mentioned, are there any potential divestments that you can have within CCH's current business?

[Michalis Imellos, Chief Financial Officer]

Fernando, yes. Look, I guess you are implying now how a potential transformational M&A deal might be structured. And of course, there are many, many different options that we might have. By definition, we are not -- as we said many times in the past, we are not in the business of potentially selling different territories and so on. But clearly, when it comes to context of a big deal, potentially things can be discussed in the way that such a deal can be structured.

[Fernando Ferreira, Director]

Great. And if I may -- just last one on the Trademark Coke brand. Can you talk about the rollout of the new flavors and Coke Energy across your territories? And if you can share some early results there, please?

[Zoran Bogdanovic, CEO & Executive Director]

Yes, Actually, first of all, let me just remind that last year, one of the reasons why we have very strong performance of the overall Coca-Cola trademark is because there are many avenues of innovation that are happening for the trademark from Light and Zero expansion and reformulations that are happening as well as many new flavors that we have launched last year and that we will also be doing this year, which creates continuous relevance of the brand with consumers, with customers and we see that working very well.In that context also, we are very excited and inspired with the pipeline that also brought us Coca-Cola plus coffee as well as Coke Energy that we started in Romania, Hungary and also in May, we started in Ireland. It's too early to sell -- sorry, you see I'm thinking about selling. It's too early to tell because it's early days. However, first feedback from the markets, from customers is actually very promising. And I personally feel quite optimistic and confident about potentiality of such innovations because in a perfect way, they combine the strength of the brand with additional functionality that is given to consumers across various occasions. Does that answer your question?

[Fernando Ferreira, Director]

Yes. Very clear.

[Operator]

The next question comes from the line of Sanjeet Aujla calling from Crédit Suisse.

[Sanjeet Aujla, European Beverages Analyst]

Just on the timing of the special dividend. I guess why now? And is the right interpretation that any potential transformational deal might just take longer?

[Michalis Imellos, Chief Financial Officer]

Sanjeet, look, the timing is purely driven by the fact that the Board has just made the decision to propose the special dividend to the Annual General Meeting in June. It's not linked in any way with any other uses of cash. We said back in February that we will be utilizing our own spare cash and debt that we will be raising this year from the market in 5 groups, I would say, accelerate our general CapEx investment in the business. We have an accelerating trend starting in the last couple of years and -- with particular focus on revenue generating investments; that's coolers, new technology for innovation, production lines, logistics and so on.Secondly, selective bolt-on acquisitions with strong local equity. We started with Bambi. And as we said, there are other considerations also in the pipeline with good possibility to materialize.The progressive ordinary dividend policy continues. We also have some buybacks that we are doing to prevent dilution and that is quite significant for 2018 and '19. We are nearly completing the program and that's just under EUR 200 million worth of buybacks. We have just announced a special dividend today.And clearly, as we said and reiterated both Zoran and myself, we are open and we have a flexibility also to look at transformational M&A if and when this comes forward by The Coca-Cola Company, and of course, makes strategic and financial sense to our business.

[Zoran Bogdanovic, CEO & Executive Director]

And Sanjeet, if I may add, you can appreciate the fact that in a number of opportunities that we are exploring in the M&A area, this is not something that we necessarily rush just for the sake of speed because the critical element is that there has to be a proper strategic fit and there has to be a proper and fair value. And that's why also we have the responsibility for our shareholders to balance the both. But in no way, in no way, this special dividend, I want to reinforce, does not reduce our firepower to do the right things for Coca-Cola Hellenic in the respect of any possible M&A.

[Sanjeet Aujla, European Beverages Analyst]

Got it. Just a follow-up. Michalis, are you able to just share an update on currencies and input costs at this stage of the year?

[Michalis Imellos, Chief Financial Officer]

Yes. So back in February, we said that based on the spot rates at that time and assuming further depreciation of the naira to the dollar, to the levels of NGN 380 from the current NGN 360, we would -- we were seeing negative impact of around EUR 50 million for the year. Things have progressed pretty much in line with what we were seeing back in February, maybe only slightly better on the Ruble front.And clearly, the depreciation that we were expecting for the naira has not yet happened. The elections are behind us. There is ongoing stability to the currency. So that is clearly good news. However, due to the seasonality of the results in Nigeria, what is now important for the FX impact to our results from Nigeria is quarter 4 because that's the next seasonally material quarter.So what is important is to see what the naira will be in quarter 4 this year to be able to, let's say, bank this improvement to the EUR 50 million that obviously will happen if the naira stays at NGN 360. So so far so good. We stay at around EUR 50 million based on where the rates are and the levels of hedging we have. And potentially, we can have some good news from naira if things remain as they are today until the end of the year.

[Sanjeet Aujla, European Beverages Analyst]

Got it. And just a follow-up, Zoran, on Nigeria. Can you just elaborate a little bit on the route-to-market changes you're making there? You talk about increasing direct outlet coverage. So just like to learn a bit more about that.

[Zoran Bogdanovic, CEO & Executive Director]

Yes. Sure, Sanjeet. So in Nigeria, what we've been doing now almost more than 1.5 years is that we've been structurally changing and enhancing and strengthening our route to market in a way that gives us better capacity and capability to directly cover outlets, which, of course, we have segmented based on the outlet performance and potential. So that means that we have people in the market, who are directly visiting outlets, doing customer development, relationship building, introduction of new products, activating promotions, et cetera.And then on the other side, we have also -- we are working with a selected number of distributors, who have also the capacity and capability to serve the business in a faster and more capable way, where also we we are having our own customer development programs, where our teams are working with those distributors, helping them building their own capability when it comes to warehousing, logistics, and other aspects of the business.So that brings us closer to the market, increases our ability to respond, react or to penetrate new initiatives much faster in a much broader and scalable way based on our segmented approach what in each of the outlet segments needs to happen.Also in that context, we have also evolved our sales organization structure because I have mentioned few times that in Nigeria, while it's one country, actually because of its demographics, socioeconomic differences, there are actually several markets in the country itself. That's why we have reorganized that there is a broader Lagos, and so the whole team which is focused on Lagos and surrounding area because this is the most competitive and most dynamic market in Nigeria. And then there is a whole rest of Nigeria, where there are many other differences that this second part to the team. And we do see that in such more focused organizational setup, this gives us also more focused, faster and responsive way to deal with challenges that we have and opportunities that we have in each part of Nigeria.

[Operator]

The next question comes from the line of Nik Oliver calling from UBS.

[Nik Oliver]

Firstly, can I ask on margins? You've talked about another step-up in margins this year. I think at the full year stage, you guided to at least 40 basis points of an expansion. Does that still hold? And how should we think about that in terms of phasing H1 versus H2?

[Michalis Imellos, Chief Financial Officer]

Nik, so -- yes, the -- we said in the previous call that we see another year of margin expansion in 2019, not as fast as the 70 basis points that we saw last year. Indeed, 40 basis points is a good minimum that we would expect to hit this year in terms of margin growth and we stand by this.Now in terms of the phasing, we expect that half 1 growth will be a lot slower, if any, to -- compared to half 2 and that's because we have a number of one-offs that we cycle in the first half. And some good news that are happening in the second half. So in the first half this year, first of all, we are cycling the good news from the -- that Croatian bad debt provision elimination last year and also the partial recovery of the debt, which was a positive last year, so a negative for half 1 this year.We also have the sugar tax in Ireland, which started in April, May of last year. And that means that if you look at this year's first half, we have a significant boost in the revenue from the pricing that was taken to cover the sugar tax, but obviously no impact on the gross profit. So that's bad news for 6 months of our margin this year, whereas last year we only had it from April, May.We also cycled the Brown-Forman discontinuation of the distribution contract in Russia. And that has also a negative impact this year in the first half, which normalizes after April in -- April this year.And in the second half, we have some good news, which are going to boost the margin growth. On one side, you recall that we are cycling a relatively slow quarter 3 last year in terms of revenue per case. And also, we are going to have a small positive impact from the consolidation of Bambi in the second half. So these are some reasons, structural reasons why we expect to see a much, much slower progress in terms of margin in the first half compared to the second half. But on a full year basis, we reiterate that we can see a minimum of 40 basis points expansion in 2019.

[Operator]

[Operator Instructions] The next question comes from the line of Ewan Mitchell calling from Barclays.

[Ewan Mitchell, Research Analyst]

First one is on Nigeria and the good volumes you saw there this quarter. Can we expect that to continue? And building on that, the price architecture and these volumes, how should we be thinking about that in terms of the profitability within Nigeria?

[Zoran Bogdanovic, CEO & Executive Director]

Ewan, yes, we should expect to see volume progression in Nigeria. I personally believe that this Q1 was a very good start and I expect given today's visibility and adjustments that we have done, programs that we have, team strength that we have, I really expect nothing less than along the lines what we have seen in Q1.Also, the price/pack architecture that we had done serves a balanced purpose to be able to competitively respond with the most affordable proposition as well as the most premium proposition that we have in the category of Sparkling beverages.So in glass, we have excellent affordable propositions that actually such pack types should have as a purpose. But at the same time, in our PET packages, we do maintain and preserve premiumness that we want to have, leveraging one of a kind and strong marketing programs that we are doing in the country.So it's a balanced approach, which we are doing in a segmented way. I would just add one more comment, which helps us in the profitability sense is the hard and strong work that has happened over the last few years in terms of also doing the cost optimization and reduction in Nigeria because the circumstances of the country economy, the whole market dynamic are such that simply pushed us even more and the team has done an excellent job in doing significant improvement in our cost base, which is helping us to be more competitive and also to affect positively our profitability levels in Nigeria.

[Ewan Mitchell, Research Analyst]

Very clear. My second question is on Russia and the strong volumes that you saw particularly in Energy. Where are you in terms of capacity? How is that developing? And is that something that Coke Energy might be looking at next? And how will that rollout proceed?

[Zoran Bogdanovic, CEO & Executive Director]

Yes. Russia continues with a strong growth. And specifically, your question on Energy, Energy is a very important part of that development, where there's another quarter where Energy in Q1 in Russia has been growing almost 45%, where we are leveraging and utilizing 2-brand strategy with both Monster and Burn. The team is doing excellent job in increasing distribution, in activating this vibrant category, which has a strong potential.Also, Coke Energy, yes, I would say simply that Coke Energy is opportunity across-the-board. It's just a matter of the timing and phasing when is the right time to start with that. So I would really see that also happening in Russia. I just couldn't say specifically when is the timing, sometime this year or next year. That depends on all other plans that we have in the market and that we will be reviewing and discussing together with the team.

[Operator]

We have no further questions on the phone line. Apologies, we do have one question coming through.The next question comes from the line of Andrea Pistacchi calling from Deutsche Bank.

[Andrea Pistacchi, Research Analyst]

I have 2, please. First one is on Bambi. Do you still expect Bambi to close in Q2? And whether the -- I think the numbers that you put in the -- in the press release of sales of around EUR 80 million and a margin around close to 3x your margin, so close to 30%. Are these sort of numbers, EUR 80 million sales on 30% margin, what we should be sort of incorporating for the first 12 months? Or are there any distorting factors, which may affect this?The second question is about the shape of your growth this year. You said you're reasonably confident that you can accelerate growth for the rest of the year and probably grow ahead of your medium-term target? When you think about the shape by division, is there -- in the light of Q1, is there anything different compared to what you had indicated at the full year in terms of regional expectations?

[Zoran Bogdanovic, CEO & Executive Director]

Andrea, on Bambi, we do expect that all the regulatory approvals across the countries should be obtained during Q2. So we are pretty confident that, that will close in that time frame as we initially highlighted. So we don't see anything that would be a barrier to that. Obviously, we are still working on that. And that's in process, but with this estimate.Second thing is on the numbers that we highlighted on Bambi. Those are the numbers and we don't see anything that would impact those numbers. We do see that particularity in the territory with Kosovo, the team has done, we see, excellent job in mitigating that particularity that happens in the trading conditions between Kosovo and Serbia. The team has done an excellent job. And as we see, they are progressing in line with expectations. On the other one, listen, as we said across all segments, we -- there's nothing major that will -- that we would say is going to be dramatically different. Definitely, we do expect that emerging markets will have this kind of volume performance around mid-single digits or even stronger driven by Russia and Nigeria, but as well as other countries. In the Developing segment, we did say that we do see this year more of a balanced revenue generation between the volume and price mix. And also in the Established, we do expect the growth here because also expectation is that Italy performance not only in Q1 but also the previous quarter is going to continue and that is going to be an important contributor to the overall segment performance in this year.

[Michalis Imellos, Chief Financial Officer]

And Andrea, sorry, just 2 small technical points. Clearly, we will be consolidating Bambi this year as of the completion date. So we are going to -- we expect to have 6 months' worth of the results in our 2019 full year results. And the margin is more around the 25% mark rather than the 30%, which probably you were pointing towards.

[Andrea Pistacchi, Research Analyst]

So you should be this year approximately consolidating maybe around EUR 10 million of EBIT from Bambi? Is that fair?

[Michalis Imellos, Chief Financial Officer]

Roughly, that might be the right ballpark, yes.

[Operator]

We have no further questions coming through on the phone lines, so I'd like to hand back to your host for any concluding remarks.

[Zoran Bogdanovic, CEO & Executive Director]

Thank you. Thank you all for joining our call today and for your questions and discussion of our first quarter performance. We have a clear road map for top line growth and continued margin expansion, which is underpinned by the strategic initiatives to drive that. We continue to partner with our customers and strengthen our route to market to capture the growth opportunities in every channel. I look forward to sharing more progress with you in the coming periods. Thank you very much.

[Operator]

Thank you for joining today's call. You may now disconnect your lines.