Emami Ltd

NSE:EMAMILTD

Earnings Call Analysis

Emami Posts Strong Q2 Earnings and Growth

Emami Limited reported a solid second quarter with consolidated revenues rising to INR 865 crores, a 6% increase. The company saw a 4% rise in domestic net sales and nearly 2% volume growth. Particularly successful were the Navratna and Dermicool brands growing at 12%, while healthcare products increased by 4%, and pain management by 1%. Subsidiary investments in Helios and Brillare Science impressed with a 63% advancement. Internationally, Emami enjoyed a robust 16% upswing in constant currency terms. The gross margins expanded significantly by 350 basis points to reach 70.1%, with EBITDA growing by 20% and margins by 300 basis points to 27%. Emami's first half-year witnessed a revenue increase of about 7%, gross margin increase of 290 basis points, and a notable 23% jump in profit after tax. The firm maintains strong liquidity even after a shares buyback and confidently anticipates future growth, declaring a 400% interim dividend for FY'24.

Consolidated Financial Performance and Channels Outlook

In the latest quarter, the company reported consolidated revenues ascending to INR 865 crores, marking a 6% rise. Domestic business showcased resilience with 4% growth in net sales and an approximate 2% rise in volumes. Growth was prominently seen in urban-centric channels such as modern trade and e-commerce, which expanded by about 17-18% and approximately 50% in the quarter, respectively.

Brand Performance and International Market Resilience

Navratna and Dermicool brands experienced a notable 12% increase in Q2, while healthcare and pain management categories observed growth rates of 4% and 1% respectively. However, BoroPlus, Male Grooming, and Kesh King saw single-digit declines due to reduced demand among price-sensitive consumers. Despite currency headwinds, international business persevered with a 16% growth in constant currency and 12% in INR terms, thanks to robust performance in key regions like MENAP and SAARC.

Operational Efficiency and Margins Expansion

With the aid of reduced input costs and strategic price increases, the company succeeded in expanding gross margins by 350 basis points to 70.1%. Earnings before interest, taxes, depreciation, and amortization (EBITDA) saw a 20% increase, with margins reaching 27%. Looking forward, the company expects stable raw material prices and predicts margin improvements in modern trade and e-commerce sectors, which collectively contribute to almost 24-25% of sales.

Anticipating Growth Post Diwali and Winter Season

The company has cautiously managed inventory ahead of the winter season and anticipates secondary sales to pick up post Diwali, especially in northern markets where winter has set in. With these seasonal factors in mind, the company expects to gain a clearer picture of winter product performance in the coming weeks.

Subsidiary Performance and Margin Contributions

Strategic investments in subsidiaries Helios and Brillare Science exceeded projections with a staggering 63% growth, bolstering the overall financial picture. Despite the growth investments, margin erosion remained minimal, with the brands together accounting for approximately 5% of sales.

Revitalization and Diversification of Key Brands

The Male Grooming and Fair and Handsome brands are earmarked for a relaunch in response to stagnant growth, with plans for major changes underway. In contrast, the BoroPlus brand has successfully diversified beyond antiseptic cream, with lotions, soap, soft, and aloe vera gel variants now accounting for over 20% of the brand's contributions.

International and Zandu Business Prospects

Despite a rough quarter for CIS Russia due to external issues, long-term growth remains positive, with an anticipated recovery in Q3 and Q4. Similarly, after a stagnant Q2, the healthcare segment is on an upswing with high single-digit growth expected, signaling a positive trend for the Zandu business in future quarters.

Strategic Initiatives and Market Recovery Plans

Project Khoj has set a strong foundation for market reach, especially in middle Indian and pharmacy channels. With the groundwork laid, the company is poised to respond swiftly to a rebound in market demand. However, future steps for expanding reach and sales will be considered after optimizing current channel performance.

Guidance and Confidence in Future Performance

While not officially providing guidance, the executive team expressed confidence in achieving an approximate 200 basis points expansion in margin by year-end, supported by the first half’s 7% top line growth. They anticipate ending the year with a similar trend.

Earnings Call Transcript 2024-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to Q2 FY '24 Earnings Conference Call of Emami Limited hosted by IIFL Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Percy Panthaki from IIFL Securities Limited. Thank you, and over to you.

[Percy Panthaki, analyst]

Good evening, everyone. Thanks for joining us on the Emami results con call. I have with me Mr. Mohan Goenka, Whole Time Director and Vice Chairman; Mr. Vivek Dhir, CEO International business; Mr. Gul Raj Bhatia, President, Healthcare Division; Mr. Manish Gupta, President, Sales; and Mr. Rajesh Sharma, President, Finance and IR.

I will hand over the call to Mr. Mohan Goenka, who will take us through the results presentation, and then we will open up for Q&A. Over to you, sir.

[Mohan Goenka, executive]

Thank you, Percy. Very good evening, ladies and gentlemen. Thank you for joining us today. I am pleased to share some good set of numbers amidst the challenging economic backdrop. Despite the subdued consumption demand, especially in rural markets, Emami has showcased resilience and profit-led growth in the second quarter and first half ending 30th September 2023.

In Q2, our consolidated revenues soared to INR 865 crores, demonstrating 6% growth. Our domestic business exhibited fairly impressive resilience with a 4% growth in net sales and a nearly 2% increase in volumes. Notably, urban-centric channels like modern trade and e-commerce witnessed robust performance, underscoring our adaptability to changing market dynamics. On a brand level, Navratna and Dermicool range performed well and recorded growth of 12% in Q2, while healthcare range grew by 4% and pain management by 1%.

BoroPlus, Male Grooming and Kesh King range declined in single digits on account of lower consumer demand from the price-sensitive sections of mass consumers. Additionally, our strategic investments in subsidiaries, Helios and Brillare Science outperformed expectations, witnessing a stellar 63% growth. Internationally, we continued our upward trajectory, growing by an impressive 16% in constant currency and 12% in INR terms.

Despite challenges in certain markets due to currency fluctuations and import restrictions, our international business remained buoyant, driven by key regions such as MENAP and SAARC. With lower input costs and judicious price hikes, we achieved a significant expansion of gross margins by 350 basis points, reaching 70.1%. Our EBITDA registered robust growth, climbing by 20% to INR 234 crores with margin expanding to 27%, a rise of 300 basis points. For the first half of the financial year, our revenues grew by around 7%, accompanied by an expansion of gross margin by 290 basis points.

EBITDA experienced a robust 15% growth, with margins expanding to 25.1%, an increase of 180 basis points. Notably, our profit after tax for the first half saw an impressive surge of 23% at INR 316 crores. Further, the company made its foray into the juice category with AloFrut through strategic investment in Axiom Ayurveda Private Limited by acquiring 26% equity stake.

I'm happy to announce that despite absorbing around INR 230 crores related to buyback of shares, the company maintains a robust cash balance. Consequently, our Board has declared an interim dividend of 400%, amounting to INR 4 per share for FY '24. I'm also pleased to inform you that following the disinvestment of promoter's majority stake in AMRI Hospitals, the promoter's pledge levels are now reduced to around 15% of the promoter's holding in line with our commitment. What's even more promising is our outlook for the future.

Despite the headwinds, we are optimistic about the coming quarters. Anticipated improvements in agricultural yields, the onset of festive season, rising rural wages and increased government spendings on infrastructure projects are positive indicators that bolsters our confidence in the recovery of rural markets. Our unwavering focus remains on driving our long-term strategic goals and enhancing our capabilities.

We are determined to continue investing in our brands, ensuring superior value for our consumers. With these efforts and the resilience that is the hallmark of Emami's journey, we are confident in our ability to deliver consistent, responsible and profitable growth in the medium to long term.

With this overview, I invite Q&A. Thank you.

[Operator]

[Operator Instructions] We have a first question from the line of Abneesh Roy from Nuvama Institutional Equities.

[Abneesh Roy, analyst]

Congrats on the margins. My first question is on the B2C Zanducare business. So essentially, I see a lot of new products being launched. So my question is out of the Zandu portfolio, what percentage of the products which are sold on Zandu B2C website are also available on third-parties, say, Amazon, Flipkart, BigBasket, et cetera? And second is, what is the thought process behind launching a very non-FMCG kind of product for jug, tumbler, et cetera. We don't see FMCG company normally do this, but I understand ayurvedic thesis behind this, but why does an FMCG company need to do this?

[Mohan Goenka, executive]

Gul Raj is there. Gul Raj, you can take this question?

[Operator]

Mr. Bhatia, we are unable to hear you.

[Gul Bhatia, executive]

Hello?

[Operator]

Yes. Please go ahead.

[Gul Bhatia, executive]

Can you hear me?

[Operator]

Yes, sir, we can.

[Gul Bhatia, executive]

Yes. So thank you for the question, sir. Basically, the whole purpose of launching our D2C portfolio Zanducare was to look at leveraging the opportunities, which are coming up rapidly in the ayurvedic health care space. And we launched a number of new products, basically, which are targeted towards improving the health care need gaps which consumers have. And we are not only selling them on the D2C platform, but we are also selling them on other e-comm marketplaces and also in the modern trade channel.

In that context, we don't just want to limit ourselves to only products or medications, which are the traditional health care segments. We want to cover a whole gamut of products, which probably come in the range of ayurvedic products. In that context, the benefits of using copper vessels for storage of water, for water bottles or even glasses becomes an important component. And that's why we're looking at getting into this segment, which is a fairly large segment, which traditional ayurvedic companies are not catering to as of now. And we received a fairly good response on the launch of these products.

[Abneesh Roy, analyst]

And on the overall company for the India business, if you could tell us, e-commerce and modern trade, what is the growth? And do you expect acceleration given festival demand will be in Q3. Would you expect that?

[Mohan Goenka, executive]

This is for the company, no, Abneesh?

[Abneesh Roy, analyst]

Yes, company.

[Mohan Goenka, executive]

So modern trade and e-commerce -- yes, yes. So the growth has been in the range of about 17% to 18% in modern trade. And for e-commerce, it is about 50% growth in this quarter.

[Abneesh Roy, analyst]

Do you expect acceleration?

[Mohan Goenka, executive]

So we expect, yes, similar kinds of growth coming from both the channels, both from modern trade and e-comm. In fact, our e-comm is now reached to almost 13% of our total business and modern trade is at 11%. So put together, we have almost reached to 24% MT and e-comm.

[Abneesh Roy, analyst]

And one last follow-up. I remember at the end of FY '23, you had said now e-commerce is already -- plus modern trade is 20% of business. So this year, you want to do more focus on profitability rather than sales growth. I see sales growth being strong. Could you address on profitability? Is it meeting your initial expectations?

[Mohan Goenka, executive]

Yes, Abneesh. So that is part of our overall margin expansion plan because now both the channels put together is 25% of our total business. And margins are slightly lower compared to our GT business. Definitely, we have improved our margins in both the channels. There is further scope of improving margins in e-comm and modern trade. It will come gradual, but yes, there are levers of margin expansion in these 2 channels.

[Operator]

We have our next question from the line of Prakash Kapadia from Anived Portfolio Managers.

[Prakash Kapadia, analyst]

Yes. Could you talk about rural markets? We were targeting 60,000 villages. So what is happening? Are bridge packs increasing? What geographies are we concentrating on? And in the opening remarks, you mentioned about you being positive about rural recovery coming back. That is the first question.

Secondly, chemist channel was very important during COVID time. So as Zandu Healthcare sales are now bouncing back on the low basis and a normalized base so how much is that important for Zandu Healthcare doing well from here on? And Kesh King, what seems to be hurting us because growth remains muted there despite we retrying organic shampoo, new variants. So what is happening in some of these things? So are small packs working in Kesh King? What is happening? Those were my 3 questions.

[Mohan Goenka, executive]

So Prakash, rural, as I said, is still muted. I would not say that it has bounced back, but of course, the election season is going to come in now soon and government -- we are all hearing good amount of spends coming in from infrastructure rural side. So we all are hopeful that the market should bounce back. At the same time, with our Project Khoj reaching out to almost 60,000 villages, those projects are almost complete. And due to our investments in these channels, we have somehow managed to sail through. And we have not declined with the kind of weakness that has been in the market.

Same lies in chemist also. We have expanded our chemist reach to 125,000 outlets now through the new initiative. There also if you see very specific expansion in chemist channels, our growth in chemist is almost 20%. So these are initiatives. Unfortunately, as I said, the markets are slightly weak. Once the consumer demand at rural and any of these channel bounce back, we would significantly benefit. Let us -- as I said, we are well prepared. We are well geared, but very difficult to say when the market would bounce back.

As far as Kesh King is concerned, it has a cycle so I'm not very worried about it. This quarter, we have declined. But I'm again confident that in the third quarter, we will see a growth because it has to do with consumer promotion at times. When there is a consumer promotion, the sales really goes up and when we withdraw, the sales comes down a bit. So hopefully, we will end up the year with a growth positive note.

[Operator]

[Operator Instructions] We have a next question from the line of Shirish Pardeshi from Centrum Broking.

[Shirish Pardeshi, analyst]

What I understand, you, in the beginning, said that you are happy with the growth which has happened over. So if you can break because to our understanding, June, July and August was bad. So is the recovery is back-ended or it is front-ended because the now season is panning out and we have been able to get some benefit because of loading of the products, which is more relevant to the winter care.

[Mohan Goenka, executive]

No. Shirish, honestly, we haven't loaded so much stock what actually we had done last year. So that is not a big concern. I would say, yes, the markets are still weak, but -- and most of the growth in this quarter has come from the e-comm and some of our strategic investments that we had done. So we are still waiting for winter to set in, honestly. Post Diwali, we will get a fair picture how the winter products are panning out to be. Whatever loading had to done is done in the month of October and September, but we will have to still wait for the secondaries to happen.

[Shirish Pardeshi, analyst]

Yes. The reason why I'm asking because if you have not done the loading of winter products, say, end of September, but the initial report says that the winter has started setting in, in the north. So I assume that last year we had a bad winter or the winter was not so severe. So given that benign base, are you confident, or is the science on ground seeing that the rural and urban markets are faring well in last 30, 40 days?

[Mohan Goenka, executive]

You can say so, Shirish, that markets have definitely slightly bounced back. It is not the same weakness what was in the month of July, August. So the festive season has gone down well. Last year, if you would see the puja festivals or the Diwali was all in the month of October. This year, the Diwali is mid-November. So markets typically bounce back post the Diwali festival. I'm talking of the more GT.

[Shirish Pardeshi, analyst]

Okay.

[Mohan Goenka, executive]

The secondary will happen, particularly for our brands, post Diwali. [Foreign Language] We will have to wait for another 10, 15 days to see how the secondaries actually pick up. Yes, but you are right that now the winter has set in, in some of the markets in the north.

[Shirish Pardeshi, analyst]

Okay. My second question is on the strategic investment what we have made in the Man Company and Brillare. Will you be able to quantify what is the revenue we have got this year and last year same quarter? So 63% growth is very humungous. And more qualitatively, what this growth is driven and what other things? Is their product portfolio is expanding? Is the reach is expanding? Or is the genuine e-commerce trend is moving and picking up these brands?

[Mohan Goenka, executive]

So, there are multiple reasons, Shirish. Of course, the focus has increased tremendously on both the companies. There is premiumization, which is happening. The -- we have also launched a lot of new products in Helios and Brillare. And at the same time, we have gone beyond e-comm. A lot is now coming to modern trade and also to some of the large GT stores. So that is also helping in expanding the Man Company portfolio. And as far as the revenues are concerned, we will not be able to give very specific numbers, but the base is not very low now.

[Shirish Pardeshi, analyst]

So I mean in terms of revenue contribution or what is the absolute number put together both of the brands. I'm not saying individual and more from the -- now we are consolidating. So from the margin perspective, what is it that are they broken even at the EBITDA level or there is some loss which you are still booking in this year?

[Mohan Goenka, executive]

So TMC is now breakeven, but Brillare, still, but it's a very miniscule kind of margin erosion, honestly. And as far as the percentage contribution is concerned, it, both the brands put together, should be in the range of about 5% -- around 5%.

[Shirish Pardeshi, analyst]

Total 5% or 5% each?

[Mohan Goenka, executive]

Total 5%.

[Shirish Pardeshi, analyst]

Okay. Okay. My last question is on the margin front. Though we have seen an impressive recovery, and you have said in quarter 4 that there is no problem of getting the margin back. From here onwards, what are the margin levers which we have? Because directionally, most of the raw material is looking downward, except LLP at this time, which is little firm. So any reading, any thought through how we should look at the second half margin?

[Mohan Goenka, executive]

Second half margins, again, Shirish, I'm saying that's not a concern, honestly, because raw material prices are still benign. And as I said, both these channels, modern trade and e-comm, which now contributes to almost 24%, 25%, there our margins are relatively lower compared to the GT channels. And we see significant improvement in margins in some of these channels. So margin is not a concern. We are only awaiting a good set of winter and some rural recovery. That's it.

[Operator]

[Operator Instructions] We'll take a question from the line of Percy Panthaki from IIFL Securities.

[Percy Panthaki, analyst]

On the portfolio of the Male Grooming, the Fair and Handsome, what really we need to do to make this brand sort of back on the growth path? Because I understand the overall demand scenario is weak, and as that improves, of course, that's one part of the equation. But apart from that, is there anything else to be done?

[Mohan Goenka, executive]

Yes, Percy, I think as marketers, we are definitely looking at what major changes brand needs to go through because you are right that the brand has come to almost a kind of stagnancy. And we definitely have plans as far as marketing is concerned. So it needs a complete relaunch, and we are working towards it.

[Percy Panthaki, analyst]

Sir, on the other part of the portfolio, which is sort of the BoroPlus portfolio, it was originally in a cream then you launched lotions, et cetera. Can you give some idea on what is the contribution of lotions and like -- because lotions is more of a mainstream format, which is catching on. So are we seeing that over the years, the salience of lotions has like definitely increased and that is sort of becoming more of a mainstream rather than just antiseptic cream now.

[Mohan Goenka, executive]

Definitely, Percy. I think BoroPlus brand is no more just an antiseptic cream. So we have significant contributions coming in from lotion, BoroPlus Soap, BoroPlus Soft, BoroPlus Aloe Vera Gel. So these are the 4 brands under BoroPlus and the contribution of these brands should be around more than 20%, 22% in the total BoroPlus scheme of things.

[Operator]

[Operator Instructions] We have a question from the line of Shirish Pardeshi from Centrum Broking.

[Shirish Pardeshi, analyst]

Two questions. In the international business, though this quarter, we have seen a very strong growth. But what we also have learned from you that there is a currency devaluation, which has happened in certain parts. CIS is 1 of the important piece to our strategy, and that has seen some weakness. I mean, I understand there is a Russian geopolitical disturbance. But I think if I look back last 4, 5 years, we have taken a lot of actions. So when do we see a double-digit growth? And the part 2 to this question is that do you think the second half also, we will be seeing a very strong double-digit growth in the international business?

[Mohan Goenka, executive]

Vivek?

[Vivek Dhir, executive]

Yes. yes, Mr. Shirish. CIS Russia, this is one bad quarter, which happened for us due to some uncontrollable issues, but when you look at the CAGR over the quarters and quarters, it is performing very well for us, that market. And we expect it to bounce back in quarter 3 and quarter 4 again to a decent growth rate, due to the efforts, which we had made in the marketplace over the years. So that is not a concern. The concern that happened was more internal in nature and we couldn't handle that particular thing and that is behind us now, that particular issue.

Most markets are showing growth and even the NPDs, which we have done in Russia and CIS, they have got a very decent acceptance with the trade channels. Although most of our revenues come out of pharmaceutical channel over there, where the purchase pattern is in the units of 3 units or 2 units at a time by a pharmacy. Even then, our acceptance for NPDs is becoming very decent over there. So we see a very bright future in this market going forward as well.

[Shirish Pardeshi, analyst]

Okay. Okay. My second question is on Zandu. I think Gul Raj ji, I was more keen to look at double-digit growth in health care, given the base is benign. The growth in quarter 2 is just 4%. Though we have seen a very strong momentum on the e-commerce, but could you talk something on the GT channel, how it is faring well? Or what is it that the product interventions which are doing? And when do we see -- I mean, the base is now going to be normalized in second half also. So can we expect a double-digit growth in the second half?

[Gul Bhatia, executive]

Thanks, Mr. Pardeshi for your question. So actually, on the back of relatively better quarter 1, we did see a decline in terms of the growth numbers in quarter 2, specifically in the medico business. So -- and if you see overall also, it has not been just limited to Zandu. If you see the overall market for various reasons in quarter 2 has, for the entire OTC and medico business, been a bit of a challenge, more stagnant in quarter 2. So in fact, one of our major other players in the market have declared the results a day or 2 back.

So they've also had fairly challenging quarter 2. And the current couple of months have been much stronger for the OTC business. So we do see quarter 3 to be much better, may not be strong double-digit growth, but definitely high single-digit growth is what we are seeing. And we do see the market being on an upward trend and the Zandu business will be on an upward trend in the coming quarters.

[Shirish Pardeshi, analyst]

Okay. My last question on the sales front. I think Mohan ji you alluded saying that Project Khoj, the project is now done. There are a lot of benefits, I'm sure you would have got it because of the distribution in the rural. But therefore, my question to Mr. Gupta is that what is the next strategy which we are trying to look at? Is the distribution efforts has already done and now we are looking for throughput? Or there is still further room for growth in terms of sales efforts to get into maybe Tier 3, Tier 4 towns? And maybe some color -- the alternate channels are firing well, but the core problem is still lying in the GT. So what are the efforts, initiatives which we are expecting for next 2 to 3 quarters?

[Unknown Executive]

So I think Project Khoj has prepared the foundation and laid the very solid foundation for reach to these markets. As Mohan ji mentioned earlier in the call, as the markets recover back, I think we are sitting and waiting for these demands to perk up so that we can service very quickly. Now to your query about what other initiatives are happening, as we mentioned earlier on, whether it's the middle Indian markets or whether it's the pharmacy channel opportunities, we have done a lot of good work over the last few years. So it's all there. I mean the basic foundations are there and as the demand perks up, our GTM is there to fare it up in terms of the fulfillment story.

[Shirish Pardeshi, analyst]

Okay. But is there any special initiatives which we are planning to take once the market recovery happens? I mean this question is more pertaining to rural because I do understand the weakness is there. The food inflation has now started subsiding. But in terms of structural changes, in terms of distribution or what we can do the justice to lift the sales?

[Unknown Executive]

See, a lot has happened over the last 2, 3 years. I think we first need to chew what we have bitten. We first need to put the performance through these channels, make the foundation stronger and continue to do that. The current reach that we have is quite a lot. And if you have to maintain the current cost to serve and maintain the profitability out of these channels, I think the prudent thing is to stay and first get the sales out of it. Then, we will take the next step in terms of what next bite has to be taken.

[Operator]

We have our next question from the line of Nitin from Emkay.

[Nitin Gupta, analyst]

My first question is with respect to the guidance we have provided, 8% to 10% top line growth, 15% international growth, double-digit growth in health care, Male Grooming and 200 to 250 bps margin expansion. So like how post-Q2 numbers and how do you see the guidance holding on?

[Mohan Goenka, executive]

So we don't give guidance, Nitin, let's say, but surely, you have seen that our margins have expanded by 200 basis points. And I'm very confident that we will end up the year by at least 200 basis points expansion in margin. That is what we -- it looks like. And top line number also you have seen for the first half, we have done almost 7%. And we will hope to end the year also in the similar range. Of course, a lot will depend on the season and -- winter season and rural recovery.

But we are confident that we will be able to do high single-digit growth. So markets are very, very stable, I would say. And I'm more confident on the margin front. We can recover very significantly if the winter sets in well and there is a good amount of rural recovery. But in these difficult times, I would say 7% is also a good top line number.

[Nitin Gupta, analyst]

Certainly. And in terms of like the competitive intensity, does any of your categories see any sort of surge in competition?

[Mohan Goenka, executive]

Not so much, Nitin. Only in the cool oil, we had seen Dabur launching cool oil. So that's the only competition with new competition that we have seen. So let us see.

[Nitin Gupta, analyst]

And lastly, in terms of this festive period. So any part of the portfolio, which is more skewed towards festival like -- would you like to highlight?

[Mohan Goenka, executive]

Towards festival?

[Nitin Gupta, analyst]

Yes.

[Mohan Goenka, executive]

No, we don't have any specific SKU, we are more winter skewed.

[Operator]

Ladies and gentlemen, that was the last question for today. I now hand the conference over to management for closing comments. Over to you, sir.

[Rajesh Sharma, executive]

We thank all the participants for joining us at our results -- quarter 2 results con call. Thank you, IIFL, for arranging it. Thank you, Percy. Have a good day.

[Operator]

Thank you, sir. On behalf of IIFL Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.