MPC Container Ships ASA

OSE:MPCC

Earnings Call Transcript 2019-Q3

[Operator]

Thank you, all, for standing by. Ladies and gentlemen, welcome to today's Q3 2019 earnings call of MPC Container Ships. [Operator Instructions] I would now like to turn the conference over to your speaker, Mr. Constantin Baack. Thank you. Please go ahead.

[Constantin Baack, MD & CEO]

Thank you, operator. Good afternoon and good morning, everyone. This is Constantin Baack. I am CEO of MPC Container Ships. And I'm here joined by our CFO, Mr. Harald Wilke.Thanks for joining us to discuss the third quarter earnings call of MPC Container Ships. End of last week, we issued a press release announcing the third quarter results for the period ended September 30, 2019, and the release as well as the presentation is also available at the Investors Relations section of our website.During this call, I would like to provide, first of all, an update on MPCC with a specific focus on the third quarter and year-to-date 2019. And of course, I will also look ahead to 2020.Let me remind everyone that the material provided, and our discussion today will contain forward-looking statements and indicative figures. Actual results may differ materially from those stated or implied by all forward-looking statements due to the various risks and uncertainties associated with our business.Now let me start off with a presentation, and I would like to run you through some of the highlights on Slide #3. At USD 46 million, Q3 revenues came in slightly lower than in Q2 of this year. The time charter equivalent was at $8,718 per day. And with 85%, the utilization was notably lower than in the previous quarters, which is mainly attributed to our scrubber installation works, class renewal and upgrades of a number of ships that underwent these works during the third quarter. On a normalized basis, i.e., taking out the scrubber retrofit, utilization would have been more in the vicinity of 90%, as we have stated on Slide #3.Affected by these one-off effects, i.e., lower utilization, the EBITDA for Q3 came in at $4.5 million during the second -- third quarter. Adjusted for the effects regarding the utilization in light of the IMO 2020 preparation, the EBITDA figure would have been more in the vicinity of $7.9 million, as illustrated on this slide. Similarly, Q3 operating cash flows came in at $1.3 million, which was also affected by the low utilization. Adjusting for these effects, the operating cash flow for Q3 would have been in the vicinity of USD 7.4 million. At the end of Q3, the company had a cash balance of $43.5 million, maintaining a solid equity ratio of 59% roughly and in line with our strategy, we maintained a low financial leverage of 38%, which will stay a key criteria for us going forward. More details on the Q3 financials can be found in the appendix of this presentation or in the quarterly report issued on our website.Please turn to Page #4, where we provide an update on key developments for Q3 and also year-to-date 2019. Three main headlines, one, operational excellence. It is worth noting that 2019 is the first year with all vessels on the water. We have continued to place, hence, a strong emphasis on the vessels' operations, and we're happy to announce that we have been able to deliver solid operational KPIs as well as competitive and reliable operating expenses across the fleet during the first 9 months of 2019. On the chartering side, we have seen a fairly active third quarter. We concluded 38 new fixtures during that quarter. And overall, 2019 has been extremely busy in terms of chartering activities, with year-to-date more than 150 fixtures with more than 35 charterers for our fleet during the first 9 months of 2019. This reflects both, first of all, our [ in-depth ] market relationships to the charterers and industrial network; and secondly, a high degree of logistical complexity due to the high number of charter renewals in a volatile market, in particular, during the first half of 2019. Furthermore, we have a strong focus on sustainable and safe operations and stringent governance, both of which are key values in the MPCC DNA. One example is an industry-leading LTIF of 0.6 for year-to-date 2019. IMO 2020, obviously, a key theme going into next year, but a theme that has kept us busy throughout 2019. For quite some time, we have been preparing for the IMO 2020 to ensure a smooth transition. We have continued to execute our balanced approach in terms of compliance options, and the installation phase of our scrubber retrofitting program has commenced in Q3 with a lot of effect on utilization. As explained, this had a notable impact on our earnings in Q3 and will also have so in Q4, but I will elaborate on that in more detail when we run through the presentation. We have a separate topic on IMO 2020.Strong balance sheet as a third element, during Q3, we have drawn under certain facilities to fund our scrubber CapEx and scrubber program, amongst others, our revolving credit facility. Nevertheless, we have maintained a very moderate balance sheet leverage of 38%. And at the same time, we have kept the sustainable cash breakeven levels low, obviously, in Q3 and Q4, also affected by additional CapEx in relation to the scrubber program, but a low cash breakeven is a key ingredient in our strategy.In terms of capital allocation, a clear focus is on maintaining a solid liquidity reserve to be flexible in the present market environment and to balance risk and opportunities going forward.I would now like to run you through the market section of the presentation. So please turn to Slide #5. Looking at the chart at the top left, you see the development of the idle fleet year-to-date. The gross numbers of the idle fleets are up year-to-date. However, when looking at the inactive fleet that is out due to scrubber retrofitting, the market has actually tightened across sectors. If you look at November 2019, you will see a dotted line that illustrates the levels of volume that is actually inactive due to scrubber retrofitting. And that, for November, marks more than 550,000 TEU.Compared to last year, the actually active and available fleet is down by around 22% compared to November 2018 figures. And in particular, in the feeder sector, idle fleet in that sector in November 2019 is roughly 30% lower than 2018.Furthermore, longer installation times and congestions in terms of shipyards will likely lead to a further increase in the inactive fleet, not only until year-end 2019, but also well into 2020, but we will also comment on that in a bit more detail when looking at IMO 2020 in particular.As you can see in the top right chart, at the same time, charter rates have improved and stabilized across sectors, the smaller vessels have benefited, to a lesser extent, from this stabilization and increase. However, also in the feeder segment, in our core segment, we have seen rate increases from early 2019 until today of more than 20% for feeders between 1,000 and 3,000 TEU. And at the same time, we have seen a stabilization of the idle capacity, as I've said, just before. So overall, we have seen a slightly more balanced and stabilized charter market. The stabilization of the market can also be observed when looking at the Howe Robinson Index. See at the bottom left, please. This graph illustrates that the overall charter market is more stabilized and improved compared to the previous 3 years and even 25% above the levels at the same time of the year in 2018.S&P, so sale and purchase activity, continues to be extremely thin throughout the year and has actually been very limited and with hardly any transactions. So selling ships is extremely difficult at the moment, also in light of IMO 2020, but more specifically, the number of transactions has been very, very limited. The improved charter market development is, as such, not reflected in the secondhand values, which have been fairly flat throughout 2019 on the basis of only very few transactions.Please turn to Page #6, which shows the latest demand and supply forecast from Clarksons. Overall, the shipping industry continued to endure macroeconomic uncertainty in Q3 2019. One prominent contributor, obviously, was the unpredictability around the U.S.-China trade tensions combined with recession fears. As a consequence, demand forecasts during 2019, for 2019 have been revised downwards throughout the year. And currently, for full year 2019, growth is now expected to come in somewhere between 2% and 2.5%. The demand side definitely remains the big uncertainty and thus presently constitutes a key risk for the shipping industry as such.At the same time, whilst Mainlane trade growth has been slower in 2019 and expected to see only limited growth in 2020, the key trades for MPCC have seen fairly good growth in 2019, and prospects are also positive. More on this on the next slide, when we will focus on the different trading profiles and drill down in the different trades.Yet, on the -- even in a scenario of modest growth on the demand side of around 2% to 3% for 2019 and 2020, as you can see on this chart, we still expect rebalancing due to favorable supply and capacity developments.A few items I've mentioned, meaning specifically IMO 2020 scrubber installation effects, and similar to the last quarter, we have, therefore, included a line, which is a dotted line, which is based on the expected supply growth for 2019 and '20, also factoring in the implications of scrubber retrofitting on the active capacity as such. This is based on research data from Clarksons, and it shows that the combination of the 2 effects point towards the market rebalancing even in a market with modest growth. Since scrubber installations and the whole logistics around it, specifically phasing in and phasing out of vessels into and out of charters, takes and we expect will take longer than initially scheduled, we expect this will affect active capacity both in Q4 2019, but also well into 2020. Furthermore, we have observed slower steaming on various container trades, which I strongly believe will continue going forward, especially as a reaction of -- on IMO 2020 with increasing fuel prices.Let's have a closer look at the demand side and on the outlook on Slide #7. As I mentioned before, Mainlane trade growth is expected to be rather limited for 2019 and 2020 at 1% to 2%. However, at the same time, a robust trade growth is expected for the key trades in which we operate our fleet.Slide #7 illustrates the expected growth figures for the main Intra-Regional trades. A large share of our fleet, around 85%, in fact, operates in Intra-Regional markets, and the chart shows the expected growth in the various trades over the next couple of years. The importance of Intra-Regional trades has increased from 2000 to today growing on relative terms from 33% of global trade to 42%. As such, we have seen continuous growth and importance when it comes to Intra-Regional trades. At the same time, Intra-Regional trades can be expected and have been observed as being less affected by the implications of trade tensions between the U.S. and China, and they have actually the potential of benefiting from certain shifting in trading patterns, especially countries like Indonesia, Vietnam and others have shown so already during the course of 2019, with significantly increasing volumes.Obviously, the trading pattern has changed over the last few years, and then also in terms of type and size of vessels deployed in various trades. And yes, there have been quite some cascading effects on a number of trades. However, looking at data provided by institutions like, for example, MSI, it becomes obvious that both in absolute terms as well as in relative importance and market share, feeders between 1,000 and 3,000 TEU have grown in importance in certain key trades. One example, in absolute terms, the number of feeders deployed between 1,000 to 3,000 TEU operating in Intra-Asian markets has increased between 2014 and Q4 this year by around 240 vessels in terms of growth. And the relative market share has increased by around 10%. During the same time, around 100 vessels between 3,000 and 5,000 TEU have been added to those trades. This reflects, overall, the importance of feeders, in particular in those trades, where we do foresee and expect further growth and this, in our view, will positively affect and make MPCC benefit from these developments.I would now like to run you through the expected supply developments on Slide #8. Please turn to this slide. At the top left, you see the historic development of order book to fleet ratio. We're presently at an all-time low order book to fleet ratio. Actually, as per today, it's more on the vicinity of 9%. This is still saying 10%, which is early November data. So the order book has been shrinking over the last couple of years and months, both in relative as well as in absolute terms. This development has to be seen also in context of recent ordering activities, which are illustrated at the top right, where you see a decline in ordering activity over the last 24 months. My strong expectation is that the uncertainty about the right future propulsion, combined with uncertainty about the global economic outlook, will keep ordering low. This applies even more for the smaller vessels, where [ LNG ] or dual-fuel concepts are not yet a viable option, nor available at price levels that can be justified.The order book to fleet composition by size, you can see that bottom left as well as the age profile of that fleet on the water, basically, on the right-hand side. The vast -- as you can see, the vast majority of the order book is still in the segment above 10,000 TEU. There's hardly any order book in the segment between 3,000 and 10,000 TEU. And whilst the feeder segment has quite a number of orders, these are mainly replacement orders matching the age profile in that segment, where you have more than 18% of the fleet above 20 years of age. And in fact, more than 35% of that fleet on the water, more than 15 years of age. We believe that matching of age profile and order book is a very important feature when looking at the supply development in the smaller sizes.Please turn to the next slide, Slide #9, which shows the demolitions since 2017 on the top left. Due to the age profile of the segment, 65% of the vessels scrapped in 2019 were in fact in the feeder market between 1,000 and 3,000 TEU. And for 2020, we expect this to increase further in light of the IMO 2020 ballast water treatment and other regulations, which will, in our view, accelerate scrapping in -- across sectors, but specifically also due to the age profile in the feeder market.Furthermore, and I mentioned slow steaming as one important feature going forward already, the Clarksons average speed index for container ships, which you can see at the top right, shows 3.5% reduction since 2018, part of which can certainly be attributed to speed reductions as a -- in reply to bunker price increases or in order to reduce the bunker costs. This is -- we think this is highly relevant in light of specifically IMO 2020 regulations as reducing speeds is the most efficient way to save bunker and reduce emissions and save costs on the side of the liner operators. According to MSI, and that's, again, on the top right, a reduction of 1 knot for the container fleet is expected to lead to somewhere, depending on the trading profile, 3% to 6.5% reduction in capacity. And with IMO 2020, we expect that this will certainly be [ applied ] even more in 2020.Please turn to Slide #10, which provides now a general update on IMO 2020 implications. Retrofitting takes longer than expected. As you can see at the top left, Clarksons' data from October suggest that the [ fuel ] installation duration is somewhere between 60 and 65 days, and that does not include voyage times and phasing in and phasing out of charters and certainly does not include waiting times at shipyards, which is extremely important as well. If you look at the chart in the top center, this illustrates how the capacity out of service has piled up during the second half of 2019 and capacity out of service has increased drastically, and this is even more relevant in light of the longer durations in terms of installations as well as logistical challenges and yard congestions, especially in China, and we expect this to pile up even further going forward. If you look at the spreads on the top right, the spreads have widened recently between low sulfur fuel oil and HFO (sic) [ HSFO ] for Q1, Rotterdam and Singapore as the main hubs. We are currently looking at spreads of around $270. This has, as I said, recently increased. We do see, for the next year, a spread in that vicinity, and you see how that develops over the various quarters.Now let me turn the attention on Slide 11, where we have illustrated our compliance approach for IMO 2020. As previously communicated, we have taken a balanced approach in terms of compliance options. First of all, we have the vast majority of our ships will go -- will switch to compliant fuel in -- as a compliance option. We have implemented individual ship implementation plans, where we have rolled out tank cleaning activities throughout the year, which we have closely monitored. We believe we will be very well-prepared for those 58 ships going into 2020. As another option, and we have adopted a scrubber program, which includes in total 10 ships. 6 out of 10 ships have already been fitted with scrubbers, and the installation has been completed by November 2019. The remaining 4 ships are at the shipyard as we speak, and we expect all of these ships to be completed by the end of this year. And hence, we will have all 10 scrubber vessels available for 1st of January 2020. In that context, we have concluded -- for 9 out of these 10 ships, we have concluded charters, 8 longer-term charter charters for 2 to 3 years, and one shorter charter of 6 to 8 months. The last ship charter discussions are ongoing, and we expect to have charter for this vessel concluded prior to January 2020.At the top right, you can see an indicative scrubber sensitivity. Specifically, we have seen at the, let's say, x axis, we have shown the different spreads between $150 and $350 in spread. The red line is basically the repayment of the scrubber investment over time, and the columns reflect the U.S. dollars in additional earnings as a result of the savings sharing mechanisms we have concluded. So at a spread of $250, we would look at a payback of the CapEx in association -- or associated with the scrubber program of 1.6 years, and we look at additional benefits in terms of scrubber savings of around $20 million, which will come in as revenue and basically translate in a respective EBITDA figure.At the bottom of this, we have shown the sensitivity to every $50 in additional or lower spread translates into plus/minus $4.5 million per annum in additional EBITDA.If we now turn to Page #12. We have illustrated the upside to newbuilding parity based on the book value and the stock market value of the company. As you can see, there is a significant upside potential in these valuations. And furthermore, as you can see from the chart on the right-hand side, we continue to follow a strategy of low cash breakeven to benefit from a significant operational leverage in a rebalancing market. This is the basis also for the sensitivity which we have shown on the next slide, Slide #13. This slide basically shows the sensitivity of EBITDA as well as free cash flow yield based on different rate assumptions as well as other assumptions that we have illustrated in the footnotes. So the input is basically the cash breakeven from the previous slide. And the earnings starting point is at the bottom, the x axis, basically, the time charter rate. So from the left, we looked at year-to-date time charter rate, which is around $9,000, $9,013, that would translate on an annualized basis. So we look at this on an annualized basis here, would translate basis the same scrubber savings that we have illustrated in one of the previous slides into an EBITDA figure of roughly $67 million and free cash flow of around $28 million. This would translate, and you see that in the basically circles at the top of the page, the different free cash flow yields. And we have basically run a sensitivity on the basis of different time charter rates across this slide from left to right. And at the very right, you see the -- basically, a reflection of the newbuilding parity rate, which -- and what EBITDA would that mean if you applied this rate.So to wrap this up, and then I'm more than happy to open the floor for questions, and I would like to wrap up with Slide #14. A quick summary and a quick recap of some of the topics we've discussed. The demand side, as I said, remains affected by uncertainty and, obviously, recession fears and others. But we believe that even in a modest growth scenario, the supply side entails quite a few features that will be a positive going into 2020 and beyond.First of all, there are still effects related to the scrubber installations. We do expect an increased number of scrappings. Obviously, a focus on newbuilding deliveries is key as well. However, in the smaller segment, we see those mainly being replacement tonnage in light of the age profile. And we do expect fewer orders, as we have also seen already in 2019 compared to previous years, as a result of the uncertainties also about the right propulsion and outlook. And as such, market fundamentals are intact, and we believe charter rate recovery and stabilization that we have already seen during the last 6 months will continue to benefit our company and the market in general going forward. Short-term basis, key priorities for us is finalizing our kind of getting ready exercise for 2020, ensure a smooth transition; complete the scrubber program, which is ongoing and will be concluded during Q4 this year; and basically complete the changeover process for the remaining fleet. Obviously, a strong focus will remain on our operations. We have spent a lot of time this year on this. We have had a very active year so far in terms of chartering fixtures, and we are fairly happy with the operational performance of the fleet so far.And finally, obviously, and one of the key pillars in our strategy has always been keeping a low leverage and be very stringent in capital allocation. So the focus is in a still volatile market environment to retain a solid cash position and a low leverage and be prepared for risks and opportunities going into 2020.So with that, I would like to hand over to the operator, and I'm more than happy to take questions. Thanks a lot.

[Operator]

[Operator Instructions] We have a question over the phone. It's from the line of Mats Bye.

[Mats Bye, Junior Analyst]

This is Mats Bye from DNB Markets. I just wondered if you could share some insights on the volume of the secondhand market. And if there's any [ debt ] in there, where do you see the rates -- the values are moving?

[Constantin Baack, MD & CEO]

Of course, if -- I mean, we have a small illustration on Slide 6. We might be able to jump over to Slide 6. There, we have illustrated the different volumes in the S&P market at the bottom right. So the gray columns, which you can hopefully see, shows that there are very few transactions, not even a handful per month. Basically, if you look -- and specifically, if you look at our segment, so if you see transactions, these are for [ sellers ]. I mean there's no willing buyer, willing seller market at the moment. So very few buyers only on very specific designs. If you look at what type of ships have changed hands, some of the buyers have been industrial players who have looked for specific assets and specific designs. And if you had such a design, a transaction was possible. Other than that, very thin markets, very low expectations in terms of pricing, and that is also reflected if you look at kind of the development of the S&P kind of index valuation compared to charter rates. So charter rates have actually seen an uprising trend, whilst at the same time the secondhand prices have rather moved sideways and/or actually come down in terms of value. However, that is based on very few [ sems ] and very limited trading activity. And we expect also for the end of this year, people are also uncertain about the IMO 2020 transition and the fuel changeovers. So people will not -- basically, a few people have stepped back basically from the market by saying, let's look at 2020, and that the fuel changeover has been successful from the previous owner prior to committing into any deals end of this year. So we do expect that there will be very limited transactions also for the remainder of this year and going into 2020.

[Mats Bye, Junior Analyst]

Okay. And then you see that this could change going into 2020 once you sort out the uncertainties and you get to make a clear -- clearer picture of where the macro picture is moving and then also supported by improving rates? Or what's the catalyst to see increased transactions?

[Constantin Baack, MD & CEO]

Obviously, the catalysts will also be sustainably -- sustainable rates, right? I mean we have already seen a stabilization of rates also in the smaller sizes and, actually, an increase to some extent. To the extent we will see a more stable rate environment, we will, for sure, see more transactions. And I mean everyone has been waiting, and this is across sectors. I mean it's not just in container shipping. Obviously, you've seen more transactions in other sectors where the cash flow situation was different. But in my view, in particular, on the container sector, you have seen people holding back. First of all, sellers holding on their assets because they wanted to run into 2020. And secondly, buyers being a bit more reluctant to enter into any commitments in light of uncertainties around 2020. And I do expect more transactions to take place in 2020. However, it will always be a function also of the charter rate environment, which, however, we believe will continue to firm in 2020.

[Operator]

The next question is from the line of [ Alec Roman ].

[Unknown Attendee]

I had a question on Slide 13. Can you explain just a little more how the -- on the leftmost column, the -- are you saying that you would have pro forma $67 million in EBITDA based on the rate today? Or -- because this says Q3 '19 year-to-date. So I'm just curious how that's calculated? Because your -- obviously, your LTM EBITDA is much lower than that.

[Constantin Baack, MD & CEO]

Yes, absolutely. I mean this is year-to-date figures based on the -- and you can see that at the bottom in the footnote, you can see the various assumptions. So that's -- hopefully, that is good to understand. So we look at, obviously, a rate. We looked at the year-to-date rate just as an indicator, and we use annualized figures. Obviously, that does not factor in existing chartering commitments that we have in the book as we speak. So this is just a pure annualized view on the fleet. If you would charter out the fleet at that rate for a full year at a utilization of 93%, which we believe is a sustainable utilization, if we have the scrubber program behind us, basically, and those are the input factors, right?So looking at this -- and it also includes the additional EBITDA from the scrubber savings, which is basically, yes, the flow back from the investments that we have carried out and are carrying out in the second half of this year. So you have the 2 blue parts of the column. One is the scrubber and element, and the other one is just the EBITDA on that basis.

[Unknown Attendee]

And sorry, on the scrubbers, the $17 million of EBITDA from the scrubber upgrades, is that the EBITDA you expect to be earning on those 10 vessels once they're chartered out?

[Constantin Baack, MD & CEO]

This is based on the Slide 12 illustration basically where we said -- well, we have put the assumption $200 spread. Obviously, the consumption is still subject to kind of vessel trades, but we have looked at the trades where the vessels will be employed. And there we look on average at around 12,500 tonnes per annum in terms of consumption. And on that basis, at a spread of $200, this is what it would translate into. However, only 9 of the 10 ships are fully consolidated. One of the scrubber ships is part of the joint venture. So that will only come in indirectly through our return from this investment company as we do not fully consolidate that ship. But it's basis -- 9 fully consolidated scrubbers and on the basis of 12,500 tonnes per annum per vessel.

[Operator]

[Operator Instructions] We don't -- we do not have any questions now over the phone, sir.

[Constantin Baack, MD & CEO]

Are there questions through the Q&A?

[Operator]

Yes, you've got 1 question on the webcast.

[Constantin Baack, MD & CEO]

Okay. All right. This is a question from Espen Landmark. Espen at Fearnley. Can you read that out, operator? Or don't you see that?

[Operator]

Yes. A private equity and now a large owner of container vessels after taking large portfolios off of the banks, are you seeing any difference in terms of chartering discipline? And what about impact on the S&P market? Also, will be -- will there be a slow steaming effect next year if the fleet is already going well below design speed?

[Constantin Baack, MD & CEO]

Okay. Let's take one after the other. Espen, first of all, the question around private equity ownership and whether that has an impact on chartering discipline. I mean the market has seen a lot of charter fixtures this year. Year-to-date, we had around 2,800 fixtures in the container space. And of that, around 1,700 in the feeder space. So there has been a lot of activity this year, also way more activity than last year. So in terms of the discipline that has basically also followed the market dynamics. Of course, there are -- if you have lower entry prices, you can also commit your vessel probably at a lower rate for a longer period. But looking at kind of the behavior also of the liner companies and regional operators, there is still a very kind of rather short-lived chartering commitment. Some designs, and I think it boils down to the designs, are being committed for slightly longer term. We have been able to conclude a few ships for 2 to 3 years with scrubbers. We had some 2,800 TEUs for 18 months. So there is a bit momentum also when it comes to slightly larger feeders in terms of longer charter durations, but I do not see a significant shift in behavior, neither on the side of the owners, nor on the side of the liner companies. So that's to the first question.Impact on S&P market, as I said, very limited activity at the moment. Very few sellers, very few buyers. We have seen, rather on the larger vessels a few deals, that are basically on a charter-backed basis. In the smaller segment, we have seen that only to a very limited extent.And finally, in terms of slow steaming, will some vessels go well below design speed? Yes, that's the case, but not all of them. I do expect that we will continue to see more slow steaming. If you talk to the liners, I mean, some of them have already announced that they will do some slow steam on some of the Mainlane trades. However, we do also see, and I'd say the Clarksons Index is an indicator, that there are already implications on slower steaming and there is still a bit of room, certainly not on every single trade, but we do expect that there will be more slow steaming going forward. Not only on the very large ships, but also in some of the smaller ships and when you look at certain trades. So I do expect a slow steaming effect to be relevant for next year. Back to you, operator, to see whether there are more questions, please.

[Operator]

[Operator Instructions] No more questions coming in now, sir.

[Constantin Baack, MD & CEO]

All right. Then many thanks for everyone's attention, many thanks to you, operator, for moderating the earnings call. And I wish everyone a pleasant day. Many thanks. Bye-bye.

[Operator]

Thank you. That concludes our call for today. You may all disconnect. Thank you all for participating.