Ci&T Inc

NYSE:CINT

Earnings Call Transcript 2023-Q1

[Eduardo Galvao, Investor Relations Director]

Good morning, and welcome to CI&T Earnings Call for the First Quarter of 2023.

I am Eduardo Galvao, Investor Relations Director at CI&T, and I'm happy to be here again to talk about our results. With me on today's call are Cesar Gon, Founder and CEO; Bruno Guicardi, Founder and President for North America and Europe; and Stanley Rodrigues, our CFO.

This event is being recorded and all participants will be in a listen-only mode during the company's presentation. After that, there will be a question-and-answer session for analysts and investors. If you'd like to submit a question, please send it via e-mail to [e-mail]. The presentation is available on the company's Investor Relations website and the replay will be available shortly after the event is concluded.

Some of the matters we'll discuss on this call, including our expected business outlook, are forward-looking statements and as such, are subject to known and unknown risks and uncertainties, including, but not limited to, those factors described in our earnings release and discussed in the Risk Factors section of our annual report on Form 20-F and other reports we may file from time to time with the SEC. These risks and uncertainties could cause actual results to differ materially from those expressed on this call. We caution you not to place undue reliance on those forward-looking statements because they're valid only as of the date when made.

During this presentation, we'll comment on certain non-IFRS financial measures to evaluate our business. Please refer to the reconciliation tables of non-IFRS measures in the appendix for more details.

Our agenda for today includes an update on our financial highlights, followed by some of our successful business cases. We'll then talk about our people and deep dive on our quarterly financial results. After the presentation, there will be a Q&A session.

Now, I invite Cesar Gon to begin our presentation. Cesar?

[Cesar Gon, Founder and Chief Executive Officer]

Thanks, Eduardo. Good day, everyone. Thank you for joining us. It's a great pleasure to be with to you today and discuss our results and achievements.

It's unescapable to start by sharing a few reflections on artificial intelligence. 77 years after the introduction of ENIAC in 1946, the first general purpose digital computer, I believe we are on the verge of probably the most disruptive moment in the history of computers on Earth. However, I must start by saying, we are still decades behind achieving sci-fi-like artificial general intelligence.

But no, AI is not just a hype. It's a transformative technology with real-world applications and rapid advancements. However, there is hype surrounding artificial intelligence leading to inflated expectations and misconceptions. A few weeks ago, I published an article in the MIT's Sloan Management Review titled "Software is Eating the World, and AI is Changing the Menu," organizing my reflections on opportunities and risks associated with this unprecedented productivity disruption in science and engineering. You can download my article on my LinkedIn account.

Turning our attention to the corporate world and what is actionable. Right now, I see two major opportunities. The first one is what I call hyper productivity in the entire flow of producing digital platforms and solutions. This is a very welcome and needed solution for the efficiency dilemma that large companies are facing after so many years of investing in digital. And the second opportunity is starting to explore an entirely new set of possibilities to engage and generate value for customers, starting by moving away from smartphone and app-based interface toward human natural language interactions and going further for things we will have to invent. At CI&T, we are already partnering with our clients, co-creating the future in this new chapter of innovation and endless possibilities. And for me personally, I feel blessed to be living in such exciting times.

Now moving on to our quarterly financial highlights. I'm happy to kick off this cloudy 2023 with solid results from top to bottom. Our net revenue was BRL610 million in the first quarter of 2023, an increase of 24.3% at constant currency year-over-year. We've reached 180 clients with annual revenue above BRL1 million, adding 70 new clients in multi-million accounts in the last 12 months. The adjusted EBITDA margin in the quarter was 19.1%, an increase 1.9 percentage points compared to first quarter 2022. Adjusted net profit was BRL67 million, 70% higher than first quarter 2022, with an adjusted net profit margin of 11%. In addition, we generated BRL116 million in cash from operating activities in the quarter.

These figures indicate our strong performances, showcasing our agility in maintaining a lean organizational structure and successfully adapting to changes in the external market environment. I'm grateful to all CI&Ters worldwide who have been dedicated to creating value for all our stakeholders.

Now, let's see some examples of our client's engagements and some of our business highlights for the quarter.

[Commercials]

I hope you liked our client stories, news and highlight selection. From here, I invite Bruno to talk about our talent management.

[Bruno Guicardi]

Thank you, Cesar, and good morning, everyone. It's great to be here again.

Our attrition rate in the first quarter of 2023 was 12% compared to 16% in the first quarter of 2022, and it continues in a downward trend. We are glad to be back at our historic attrition levels and to see that our investments in our people are bearing fruits. Most importantly, our leadership attrition rate is below 4%, ensuring consistency in our delivery and high-quality service for our clients.

We ended March 2023 with 6,500 CI&Ters, a slight reduction compared to the previous quarter. This decrease reflects our active headcount management to adapt to the current demand environment. Part of this reduction, comes from back office functions as we are capturing synergies from the recently acquired companies.

On the delivery side, we are reducing the number of people on the bench in order to maintain a lean and nimble organization and adapt to a slower pace of growth. These actions will allow us to direct investments to research and development in our artificial intelligence initiatives, as Cesar mentioned earlier. In other words, we are committed to balancing healthy profitability margins in the short term, while keeping investments that will sustain long-term growth.

Last year, we made a strategic move to diversify our geographic footprint. Our decision to expand globally was driven by a vision of creating more value for our global clients and pursuing new opportunities in dynamic markets.

First, our expansion to the U.S. market with the acquisition of NTERSOL has proven a strategic. We have established a relevant footprint in U.S. and expanded our expertise in the financial services vertical. The U.S. continues to show great potential for sustaining growth, and we are committed to maximizing its opportunities organically.

In parallel, our foray into the European market has yielded promising results. We have gained traction in this highly-competitive landscape by leveraging our established brand with Somo's reputation. We aim to strengthen our position in Europe even further and develop our strategic partnerships to drive growth in this region.

In Asia Pacific, the acquisition of Transpire has allowed us to incorporate key Australian clients successfully, and the growth trajectory in this region is very encouraging. We remain dedicated to capitalize on this momentum.

Last, but not least, Brazil continues to be an excellent opportunity for us. Besides offering significant market potential, being one of the top 10 tech markets globally, it also has a very progressive visual consumer base that is quick to adapt to tech trends in segments like financial services, retail and consumer goods. This characteristic, combined with our commanding position of that market, provides us with fertile ground to create innovative digital solution that are impactful to our clients and trendsetting globally.

As we continue to faster our operating model by combining teams close to clients and remote teams working from anywhere, our strategy is to attract and nurture top tech talent across the globe. We understand that a diverse and high-skilled workforce is paramount to staying competitive in today's digital age. So, our commitment to fostering a culture of continuous learning and personal development ensures that our tech talent remains at the forefront of industry trends in emerging technologies.

Now, I will pass it over to Stanley to comment on our financial results.

[Stanley Rodrigues, Chief Financial Officer]

Thank you, Bruno, and good morning, everyone. I'm happy to be here again to discuss our financial performance with all of you.

We are proud to deliver another set of solid results during the first quarter of 2023. Our net revenue in the first quarter of 2023 was BRL610 million, 24% higher than the first quarter of 2022, both on a reported and on a constant currency basis. Our strong revenue growth derives from our expansion within existing clients, the addition of new clients every quarter and our programmatic M&A strategy.

North America is our largest market, accounting for 46% of our revenue in the first quarter '23. And if we combine it with Europe with 9% of revenue and Asia Pacific with 5% revenue contribution, we have more than 60% of our revenue coming from mature economies. LATAM represents 39% of revenue and a great exposure to an emerging market, as Bruno mentioned.

As of this quarter, we present you with a new classification our revenue by industry vertical. We have done small adjustments to it, mainly changing the Food and Beverage to a more broader category of Consumer Goods, and a similar move from Pharmaceutical and Cosmetics to Life Sciences. We believe this new classification better represents our business trends and go-to-market strategy. You can find more details of the new revenue breakdown from the previous years in the fact sheet available on our Investor Relations website.

Finally, we continue to grow our revenue base from our top 10 clients, while the addition of new logos and M&A contributed to diversify our revenue base even further.

Now, let me detail the components of our growth profile. In first quarter '23, we continue to consistently diversify our client base by adding 70 new clients with revenue exceeding BRL1 million to our portfolio volume as compared to the same period in 2022. In addition, we increased the number of clients with revenue above BRL20 million from 22 clients in the previous quarter to 26 in first quarter '23.

Our client base remains predominantly from brick-and-mortar clients representing around 90% of our revenue, while digital-native represents approximately 10%, providing resilience to our business during uncertain times.

Our net revenue retention rate over the past five years has been around 123%, demonstrating that new clients have the potential to expand and thrive over time, which is critical for our sustainable growth through 2023 and beyond.

Moving on to our profitability metrics. Our adjusted EBITDA increased by 37.9% from BRL84.5 million in the first quarter '22 to BRL116.5 million in first quarter '23. Adjusted EBITDA margin was 19.1% in the first quarter '23, 1.9 percentage points higher than first quarter '22. The substantial improvement in the EBITDA margin reflects our discipline in managing costs combined with the dilution of sales, general and administrative expenses, as we indicated in our previous calls.

We are taking a proactive and disciplined approach to identify areas where we can optimize our operations. By diligently analyzing our cost structure and streamlining processes, we are promoting innovative cost saving initiatives and continuously seeking opportunities to enhance productivity. Part of these savings will be dedicated to invest in research and development of artificial intelligence initiatives as we understand the significance of investing strategically in areas that generate long-term value and drive future growth.

The adjusted net profit was BRL67.2 BRL in the first quarter '23, an impressive 70% growth when compared to the same period of last year. The adjusted net profit margin increased from 8% in the first quarter '22 to 11% in the first quarter '23 due to our focus on maintaining a lean cost and expenses structure combined with lower income tax expenses.

In addition, we generated BRL116 million in cash from operating activities, which represents 100% of cash conversion to adjusted EBITDA. And free cash flow was BRL89 million excluding the CapEx from our net operating cash flow.

Finally, our Board of Directors recently approved a share buyback program, authorizing the company to purchase up to BRL1.5 million of the company's Class A shares over the next 12 months. The amount of shares approved in the program was based on the company's commitment to deliver shares for its stock-based compensation plan and M&A purposes. Therefore, this program will allow the company to substantially offset dilution expected in 2023 and 2024. We project to continue generating solid free cash flow in 2023, providing us flexibility on our capital allocation strategy.

With that, I invite Cesar back to comment on our business outlook.

[Cesar Gon, Founder and Chief Executive Officer]

Thank you, Stanley.

As we set our sights on the future, it's essential to acknowledge the prevailing uncertainty in the global economy. While our core client base, primarily comprising large enterprise, is, in general, maintaining their digital budgets for the year, we continue to observe a cautious approach when embark on new initiatives. In this scenario, we will persist carefully in navigating 2023, prioritizing bottom-line and cash generation, while preparing our teams and capabilities, especially in artificial intelligence, to resume more aggressive growth in 2024 and beyond.

For the second quarter of 2023, we expect our revenue to be at least BRL570 million, 90% growth year-over-year. For the full year of 2023, we are maintaining our FX-neutral net revenue growth guidance in the range of 13% to 17% year-over-year, and our adjusted EBITDA margin expectation of at least 19%.

In conclusion, I would like to express my gratitude to our stakeholders, clients, investors, partners, and CI&Ters for your support and dedication toward our long-term shared vision and objectives.

Thank you all for attending our call today. We now conclude our presentation and may begin the Q&A session. Thank you.

[Eduardo Galvao, Investor Relations Director]

All right. We'll now begin the question-and-answer session. I'll announce each participant's name. Once you hear your name, please unmute your line and ask your question. Then when you're done, please mute your line.

First question comes from Tyler DuPont from Bank of America. Tyler, your line is open.

[Tyler DuPont, Bank of America]

Great. Thank you, Eduardo, and good morning, everyone. I just wanted to start by asking if you can speak to some of the demand assumptions that you have baked into the 2023 guidance outlook? I know it looks like both revenue and margins were reiterated, but how should we be thinking about the cadence of demand? Are you assuming that the current macro will remain relatively stable through the year, or you anticipating a ramp up in the back half of '23? It looks like based on the 2Q revs guidance, you're expecting some back-half reacceleration on revenue. So just any clarity there would be helpful.

[Cesar Gon, Founder and Chief Executive Officer]

I think I got this one. Thank you. Great to see you, Tyler. Well, I think as you saw, we are probably delivering the best Q1 in our industry, strong top- and bottom-line. So -- and our Q2 guidance is in line with our budget and forecast. I think there is two effects when we compare it with Q1. Firstly, in our reported revenue for Q2, we are anticipating an FX effect due to the recent appreciation of the real against the dollar. And we are also delivering Q1 above our expectations due to -- mainly due to additional revenue from short-term strategy engagements with new clients. And now we believe that this can turn into long-term end-to-end engagements in the second half of the year on. So, we are considering this will be a very, I would say, non-trivial year. We are keeping our guidance. We are optimistic -- cautiously optimistic about the year, but we still are playing conservatively due to the macro uncertainties.

[Tyler DuPont, Bank of America]

Okay. Great. Thank you. I appreciate that. And I guess sticking with the 1Q performance, during the quarter, the results seemed fairly strong, growth 400 basis points above guidance. So I was just wondering if you can speak to what surprised you during the quarter. Were there any particular vertical or geographies that experienced an outside surprise that you weren't anticipating, or any new client signings that leads to this growth?

[Cesar Gon, Founder and Chief Executive Officer]

I think, Tyler, the main good news is this onboarding of new global clients in Q1, still playing strategy engagements, but we believe there is a good chance on term -- this in long-term initiatives with us. I think this demand on a strategy is a reflection on the discussion on how to deal with the new set of possibilities around artificial intelligence? How this will reshape your digital strategy? How should we really adjust our hypothesis based on such a disruptive moment? So, I think I would credit this good new set of digital possibilities around not only AI, but mainly AI advancements.

[Tyler DuPont, Bank of America]

Okay. Great. Thanks.

[Bruno Guicardi]

Tyler, if I can chime in real quick on this matter, like, I think the most of our clients understood that the possibilities of this new set of AI tools, mainly generative AI in saving in all operational costs and kind of automating a lot of activities, and that's the perfect moment for that type of exploration, right, this economic downturn that everybody is going through. So it's been creating a lot of traction in a lot of discussions that we think some of them will materialize in great engagements in the second half of the year. That will be beneficial for us, but also beneficial for clients kind of freeing up resources and maybe creating a bandwidth to invest in more innovation in the digital initiatives.

[Tyler DuPont, Bank of America]

Okay. Appreciate all the color. Thanks.

[Eduardo Galvao, Investor Relations Director]

Thank you, Tyler. Next question comes from [Brandon] (ph) from J.P. Morgan. Brandon, please go ahead.

[Unidentified Analyst]

Hey, guys. Thanks so much. Yes, and first of all, congratulations, super strong performance [indiscernible] congratulations as well. So, I'll kick it off kind of on another question on the 2Q guide. So you guys guided for like a BRL20 million sequential deceleration when you issued the one quarter guidance. And you crushed it by roughly BRL20 million, just about a -- less than -- just under a BRL2 million sequential decline. And then now, we've got a BRL40 million sequential decline in the 2Q guidance. So, is there -- what's kind of going on in the business that makes you lean towards a steeper sequential decline in 2Q? And should we not expect you guys to crush it again?

[Cesar Gon, Founder and Chief Executive Officer]

Thank you, Brandon. I think I mentioned first is FX we are really anticipating the recent appreciation of Brazilian real versus dollar. And the second is, I think, this -- when we compare it with the Q2 in line with our original forecast, but Q1 was surprisingly better based on good news on onboarding new clients and so on. But this onboarding we believe that will take at least one or two quarters to converting sustainable long-term revenue source. So, we -- again, we are cautiously optimistic, but playing conservatively due to the volatility of the year. But I could say we are really optimistic about what we are doing and discussing with our clients.

As Bruno mentioned, when we -- probably you'd remember, since the beginning of last year, we were playing the digital efficiency value prop [in messaging] (ph), and now we are boosting this value prop with artificial intelligence. And the early results are extraordinary. So, we are really optimistic about how we can help our clients to really gain efficiency, exploring this new set of possibilities. So, I think we see the year again cautiously optimistic right now.

[Unidentified Analyst]

Great. Thanks. Yes, that's -- we're excited to see it unfold. If I could ask one more, a little bit of a longer term one maybe on really strong growth out of Europe and Asia, obviously off a little bit of a smaller base. How do you guys think about that unfolding over more like the mid to longer term? And what do you guys do in operationally to propel that strong growth?

[Cesar Gon, Founder and Chief Executive Officer]

I can take that one. Yes, please go.

[Bruno Guicardi]

I think like long term, Brandon, I think our revenue distribution pie should look like more the size of those markets, right? So, if you look at markets like Australia and in Japan and China, they are top like, though, China and Japan are, like, number two and number three in the world, so long term, they should represent a bigger part of CI&T revenue. So that's long term plan. In Australia as well. Australia is actually bigger than Brazil, so which is our number two market. And so it's for long term they should -- CI&T revenue pie should look like the rankings of the biggest markets in the world.

[Unidentified Analyst]

Great. Thanks so much, guys. Congrats.

[Eduardo Galvao, Investor Relations Director]

Thank you, Brandon. Next question comes from [Carlos] (ph) from Itau BBA. Carlos, please go ahead.

[Unidentified Analyst]

Ye, thank you, and good morning, and congrats on the results. Just a couple of ones here. First of all, in terms of profitability, I had understood that you have commented on that you were expecting pressure in Brazil, particularly with the labor increase -- the annual labor increase. So, obviously, the result is quite favorable. I'm wondering how we are able to offset that.

And secondly, perhaps a more housekeeping thing for the model. I saw that your effective tax rate was much lower year-over-year. So I wonder how should we think about that going forward. Thank you.

[Stanley Rodrigues, Chief Financial Officer]

I can take those. Thank you, Carlos, for the questions. Well, first question, EBITDA margin improvement in first quarter is mainly explained by the dilution of SG&A expenses as we expected as the company grow. We are closely monitoring the cost and expenses structure to maintain a linear organization, healthy margins, especially during this growth environment that we are on. Part of those savings though, we are redirecting to investments on AI and R&D. And so thus, Carlos, we expect to -- for the full year, we're maintaining that 19% EBITDA horizon, let's say.

And for the second question, with regard to tax, last year, we acquired NTERSOL, the previous year we acquired Dextra, those acquisition provided some tax benefit that they are maturing right now. So we are getting the full benefit right now. We expect although the first quarter we have extra effects that add to the lower FX rate, let's say -- tax rate, sorry, but for the full year, we expect to be in the range of 21%-22%. That's the full year expectation. So due to seasonality, we have a lower -- even lower the first quarter, but the full year, that's the expectation we should have there.

[Unidentified Analyst]

Thank you for that. Very clear.

[Eduardo Galvao, Investor Relations Director]

Thank you, Carlos. Next question comes from Ashwin from Citi. Ashwin, please go ahead.

[Ashwin Shirvaikar, Citi]

Thank you, Eduardo. Good morning, everyone. Good to see you all. Yes, my first question is with regard to the impact to the sales cycle because of macro concerns among clients, and if you could comment on that, say, by geography, that that would be would be helpful. And, I guess, when I say sales cycle, the initial sales, but also the sales -- the revenue conversion, if you don't mind.

[Cesar Gon, Founder and Chief Executive Officer]

Sure. Thank you, Ash, and great to see you. I think we continue to see consistence in -- on keeping the investment on the current initiatives, so very, very good visibility on what we are already doing. But there's still a lot of, I would say, low visibility on ramping up of new initiatives. I think what we are seeing now is really companies, I think, considered to ramp up, especially things related to the digital efficiency powered by AI initiatives in the second half of the year. We -- as I said earlier, we are optimistic, but still seeing this to be concrete to update our expectations for the second half of the year.

But what I see is -- I think this is an equation of the fact that 90% of our clients are traditional large brick-and-mortar companies where we have a [indiscernible] in terms of budget and investments. Of course, more volatility on the 10% of revenue we have from digital-native companies, tech companies, fintech where the environment is playing against their ambitions of leveraging a new capital and investments.

So, still I think a better moment now than the beginning of the year, but we are still cautious on our ability to convert this new set of pipeline and discussions in real engagements in the second half. But this is -- I would say is a much better moment than in the beginning of this year.

[Ashwin Shirvaikar, Citi]

Okay. No, that makes sense.

[Cesar Gon, Founder and Chief Executive Officer]

And then, regarding regions, we don't see relevant difference among Latin America, North America, Europe, or APJ.

[Ashwin Shirvaikar, Citi]

Okay. No, that makes sense. I guess, what should we then expect for margin cadence through the course of the year? Should it follow what you have said about revenues? And then, the related question is, since you brought up AI -- applying AI to your own processes and improving your own productivity, what impact can that have on your margins? I guess, do you keep it? Do you keep the benefit? Do you give it to clients? How does that work?

[Cesar Gon, Founder and Chief Executive Officer]

I can start, and Stanley you can complement if you want regarding the -- our plan for margins sequentially. Ashwin, I think you are right. We are really boosting our digital efficiency, value prop, in offering with AI. This has an amazing potential to generate efficiency gains. That means opportunities for increase our pace of replacing our performance competitors and increase our client share, and also opportunities to tackle a new set of problems that were hard to solve without this new set of technology possibilities. So I'm talking about new ways to create hyper-personalized solutions for clients or migrate from app-based smartphone interfaces to more human natural language and interactions and things that we will have to invent.

And internally, there's a lot of opportunities. We are fully committed to apply this efficiency in our internal process. But as Stanley mentioned, we are also dedicating part of these savings to increase our creation of capabilities around AI and digital efficiency, because we believe this will be our main vector of regaining high growth from 2024 on.

[Ashwin Shirvaikar, Citi]

Okay. Understood. So it's very interesting you mentioned the TAM increases also, it's not just the productivity. So that's a very interesting point. Thank you.

[Eduardo Galvao, Investor Relations Director]

Stanley, do you want to comment on EBITDA?

[Stanley Rodrigues, Chief Financial Officer]

Adding to EBITDA, as I mentioned before -- hi, Ashwin, thank you for the question. Well, EBITDA, again, we are in this focus, let's say, to bring and continue to maintain efficiency throughout all the -- from cost to expenses. And of course, taking the opportunity of the synergies from the M&As. So integrations are going on. We are focused this year on integrating those acquisitions, as we've mentioned previously. So -- and again, as Cesar reinforced here, we are investing in those AI capabilities. So -- and the whole, the sum of everything, that's why we keep focusing on having a -- delivering 19% EBITDA as -- in line with the guidance we provided. We see lots of opportunities ahead of us, and we really have to be in line with those opportunities. So that's why margins are projected the way we mentioned.

[Ashwin Shirvaikar, Citi]

Okay. So, flattish through the course of the year?

[Stanley Rodrigues, Chief Financial Officer]

That's it.

[Ashwin Shirvaikar, Citi]

Okay. Thank you.

[Stanley Rodrigues, Chief Financial Officer]

Some seasonality in between, but the full year is 19%, because as you remember, we have some seasonality and -- but it's all factored in.

[Ashwin Shirvaikar, Citi]

Okay. Thank you.

[Eduardo Galvao, Investor Relations Director]

Thank you, Ashwin. We have one question here from the email associated with Ashwin's question. Given the seasonality in your business, how do you expect the EBITDA margin to evolve in coming quarters? And a related question. Cash generation was impressive in the first quarter. How do you project the cash generation for the remainder of the year?

[Stanley Rodrigues, Chief Financial Officer]

Well, I can take that one. Cash generation in the first quarter, we have this BRL116 million in operating cash flow, which represents 100% cash conversion to adjusted EBITDA. Free cash flow was BRL89 million in the quarter, that's with -- after CapEx.

Cash generation benefited from improvement -- mainly from improvement in working capital in the first quarter and mainly in the accounts receivable zone, let's say. For the second quarter, we have this profit sharing cash disbursement. So usually seasonality plays here. First half, we generate less cash in comparison to second half. So, as a whole, for the full year, we expect to be around 50% to 70% cash conversion from EBITDA, I mean, EBITDA to cash, which is our historical. So this 100% that we see now in first quarter, we should consider that seasonality plays here. So for the full year, we aim for this 50% to 70% cash conversion from EBITDA.

Does that answer the question, Eduardo, just...

[Eduardo Galvao, Investor Relations Director]

Yes. I think it's pretty complete. So that concludes our Q&A session. Thank you all for attending our event today. I'll now invite Cesar Gon to proceed with disclosing remarks. Cesar, please.

[Cesar Gon, Founder and Chief Executive Officer]

Thank you, Galvao, Bruno and Stanley. Thank you all for participating in our call. Once again, I want to thank you all CI&Ters for the amazing achievements in this quarter. And a special thank you for our clients that are selecting CI&T to corporate this exciting new chapter of innovation powered by artificial intelligence. Stay well. I will see you soon. Bye.