Stolt-Nielsen Ltd

OSE:SNI

Earnings Call Analysis

Earnings Call Transcript 2024-Q2

[Alex Ng, executive]

Good afternoon, and welcome to Stolt-Nielsen's Second Quarter 2024 Results. As always, the earnings release and related materials are available on our website. We will also be recording this session and it will be available from tomorrow. Included in this presentation are various forward-looking statements. Such forward-looking statements are subject to risks and uncertainties, and we'll refer you to our latest annual report for further details.

I'm Alex Ng, Vice President of Corporate Development and Strategy. Joining me today are Udo Lange, CEO; and Jens Gruner-Hegge, CFO. At the end of the presentation, there will be a Q&A session where we will be taking questions online. [Operator Instructions] Thank you, and over to you, Udo.

[Udo Lange, executive]

Thanks, Alex, and good day to everyone joining us online. Today, I will begin with a review of the group's results for the second quarter. Jens will then cover the financial highlights before handing back to me for segment highlights, market outlook and a few closing remarks. Before I talk about our strong results, I would like to take a moment to thank our employees for their excellent work this quarter and the laser focus on putting safety first and delighting our customers.

At our recent Capital Markets Day, I had the great pleasure to highlight some of the amazing work being done by our people and share a closer look into what makes Stolt-Nielsen such a great business. None of this would be possible without our people. And so a big thank you to our 7,000 team members across the world. If you haven't seen them already, you can review our recordings of our Capital Markets Day on our website.

I would also like to thank our loyal customers who continue to place their trust in us each day to deliver and store the goods safely and provide them with delicious seafood. At Stolt-Nielsen, we aspire to be simply the best for our shareholders, customers and people. And this is reflected in the strong underlying performance of each of our businesses. For Tankers maintained its strong momentum from Q1 to deliver a record high average TCE rate growing an impressive 9.7% versus last quarter.

While the Red Sea transit restrictions continue, we are working with our customers to minimize any negative impact on their supply chains. Results across our other businesses are also strong, and I look forward to discussing these in our segment highlights. But first, some important milestones from this past quarter.

Firstly, I'm delighted that on July 1, Maren Schroeder added the title of President to a Chief Operating Officer role at Stolt Tankers, and Bjarke Nissen assumed the role of Chief Commercial Officer. It is a testament to the quality of our people that we have been able to promote from this and ensuring a smooth transition.

Thank you to Lucas Vos for his fantastic contribution during his time with Stolt. My best wishes to him for his next chapter, and I wish Maren and Bjarke all the best as they need Stolt Tankers into an exciting future. Secondly, we continue to invest in our businesses and announced a long-term agreement with SFL for 2 LNG dual-fuel 33,000 deadweight tonne chemical tankers expected to be delivered in the second half of this year.

Finally, I'm pleased to announce that we recently completed a new $450 million note issue in the U.S. Private Placement market, ensuring we have ample liquidity to execute our strategic initiatives. We achieved 7- and 10-year funding at fixed rates below 6%. Thank you to Jens and his team for their excellent work on this. With that, let's take a closer look at what happened during Q2.

We delivered a strong underlying performance in line with first quarter 2024 with impressive growth in our Tankers, Terminals and Sea Farm businesses. However, adjusted operating results were down compared to this time last year due to a return to pre-COVID margins at Stolt Tank Containers. Despite this, we have seen some encouraging signs that the ISO tank sector is normalizing and this is reflected in a more stable performance for STC from quarter-to-quarter.

EBITDA was strong at $209 million, marking our fourth consecutive quarter above $200 million and sixth consecutive quarter when accounting for the Flaminia provision. Operating profit and net profit both declined 12% year-on-year, mainly due to lower operating results in Stolt Tank Containers and higher time-charter expenses, bunker costs and ship management costs in Stolt Tankers. Compared to Q1, operating profit increased 3.5%. And when adjusting for one-off items, net profit is broadly flat versus last quarter.

On free cash flow, adjusted for the recent Flaminia payment that increased to a healthy $145 million this quarter. Our balance sheet remains strong, and our continued focus on cash flow generation ensures we have ample financial flexibility for the future. Before I talk about our key performance driver for this quarter, I first want to touch on how our diverse portfolio has continued to provide strong earnings momentum.

Over the recent quarters, we have seen strong operating profit and performance from Stolt Tankers, Terminals and Stolt Sea Farm, collectively growing 14% year-on-year from $126.2 million to $143.9 million.

This offsets the impact of STC, we have seen a more challenging tank container market with margins near pre-COVID levels. We will talk more about our outlook later in the presentation, but we expect continued strong earnings into the second half of this year. Moving on to our main performance drivers.

Our performance remains strong. Stolt Tankers had another exceptional quarter achieving a record high average TCE in Q2. We are immensely proud of these results and the supply and demand fundamentals for chemical tankers remain positive. Turning to Stolthaven Terminals, utilization fell compared to Q2 2023 as we free up tanks for higher-margin business. However, the fall in utilization was more than offset by recent rate increases due to strong demand for safe, high-quality storage.

Stolt Tank Containers completed almost 42,000 shipments, achieving an all-time record number of shipments this quarter. This is an amazing accomplishment and demonstrates the trust placed in us by our customers across the world as well as the scalability of our platform. And finally, Stolt Sea Farm delivered an outstanding quarter with strong prices and stable production volumes more than offsetting a slight dip in sales volumes. That's all for me for now. Jens, over to you to talk us through the strong financial highlights.

[Jens Grüner-Hegge, executive]

Thank you very much, Udo. and good afternoon to everyone in Europe, and good morning to those of you calling in from the United States. Just as a reminder, our second quarter runs from March 1st through May 31st. And I will compare the second quarter of 2024 with the second quarter of 2023.

Now to reiterate what Udo has talked about, place us in a strong position our businesses enjoy within their segments and the strong performance they had delivered given their market situations, the company is in a very good position. In addition, we recently secured liquidity through new financing, and we have a strong balance sheet and a very good liquidity position.

So one thing I want to explain to you before I dive into the numbers is I want to highlight that the MSC Flaminia legal claim impacted both the second quarter of this year as well as the second quarter of 2023. Last year, we announced a claim provision of $155 million, which ended up impacting net profit for the year by $115 million and EBITDA by $155 million.

The provision was reflected in the expected settlement amount of approximately $290 million which exceeded our insurance coverage and the payment therefore -- payment too from our co-defendant. This excess is what was covered by the $155 million provision taken. So I want you to have that in your mind.

Then moving fast forward to the second quarter of 2024, we saw the cash effect of that provision as we settle the claim and all outstanding amounts with a $290 million cash payment made on April 15 and with this settled the Flaminia case in Fall. So let's move on to the numbers. As mentioned by Udo, revenue was up about 2.7% compared to the second quarter last year. And I want to highlight something based is what I saw from analyst reports coming in earlier this morning to clarify the impact of our newly founded SNAPS/ENEOS pool on both operating revenue and operating expense.

So the SNAPS/ENEOS pool is a regional pool established in Asia Pacific and for trading within the region. And as this is now a pool rather than previously, we had a joint venture there. We have to consolidate the full revenue of that pool into our income statement. But likewise, we also consolidate the operating expenses. And the operating expenses here include all voyage-related costs as well as the pull-out revenue.

So in a way, you can say what we are showing is a $33 million increase in revenue and almost a $33 million increase in expenses. The only difference between revenue and OpEx for that pool being the commission that we receive for managing the pool. So when you see the increase in our operating expenses, this is driven by that transaction that we did during the fourth quarter and is not necessarily a reflection of a significant increase in the run rate of our expenses. And Stolt Sea Farm also saw an increase in revenue through higher prices and higher source volume. And offsetting this was a bit of a reduction in STC's revenue. The decrease was caused by a reduction in demurrage revenue, additional revenue and depo revenue, and that was partly offset by a significant increase of 17% in shipments, albeit at lower average rates.

Tanker's Deep-Sea revenue fell due to fewer operating days and longer voyage routing following the transit restrictions through the Red Sea. Moving down, depreciation was up by $2.6 million, and that was driven by capitalization of Tank Container Purchases. And equity income from joint ventures was up, and that was driven by the improvement that we saw in Tanker JV results on the back of the strong tanker markets that we have enjoyed over the last 12 months.

This was offset by losses at Avenir LNG due to a $7 million impairment taken during the quarter. Another comment I got from analyst reports was the administrative and general expenses, which you can see are significantly up from the same quarter last year. And this also warrants a bit of an explanation. As we took the provision for Flaminia last year, we also recorded a negative profit-sharing provision of $10 million which pushed down the administrative and general expenses by the same amount, so from $68 million to $58 million. Whereas in the second quarter of 2024, we have actually taken an additional accrual for profit-sharing and long-term incentive plan expenses because we have seen that the company has performed better than what we initially had anticipated when we did made a provision in the first quarter.

So there's a bit of a catch up in the profit sharing expenses in the second quarter of 2024. And that's why you will see, if you dissect it, that cost increase is more aligned with inflation than what the numbers here would indicate. During the quarter, we sold a Stolt Facto for a gain of $2 million, and you will see this being mentioned when we look at the cash impact of that on the next slide.

But before that, operating profit came in at $136.8 million for the quarter, and that was up from $10 million due to the Flaminia provision. Net interest expense was down. It's mostly due to interest income on cash held and account during most in the second quarter this year. That was money that we had held from insurance companies to pay the Flaminia legal claim as well as income tax expense was $9.3 million, up $38 million (sic) [ $28 million ] from the same quarter last year when we recognized a $40 million tax credit related to Flaminia. And therefore, net profit ended up at $100.2 million, so another quarter with over $100 million in net profit, and that is on EBITDA of $208.9 million.

Now let's take a look at the cash flow. So on this slide, on the top line, cash generated from or used in operations, you can clearly see the cash effect of the Flaminia provision as we ended the quarter with negative cash from operations due to the $290 million claims settlement. If you exclude this amount, the $290 million, our operations generated a very strong $225.9 million operating cash flow for the quarter.

So an increase from both the second quarter of '23 as well as the first quarter this year, which ties to our -- the better performance than we had initially anticipated. Interest paid was higher at $33.8 million due to higher interest rates on our floating rate debt. And also, we have certain loan agreements that run with interest payment every 6 months, and the second and fourth quarter gets impacted by that.

Capital expenditures were down. As last year, we took delivery and paid for 2 ships, both in the secondhand market, the Stolt Condor and the Stolt Tucan. Contributions to joint ventures was up as we injected equity into our joint venture NYK Stolt Tankers for the 6 new buildings ordered for that joint venture as well as equity injected into Avenir LNG to cover the initial progress payments on orders for 2 new ships that they have placed.

Sale of assets mainly reflects the sale of the Stolt Facto. So $2 million profit on the previous slide, $24 million in cash proceeds on this slide. We had $100 million in proceeds from issuance of long-term debt as we drew down on one of our revolving credit lines to pay for the Flaminia claim. And during the quarter, we also repaid debt of $57.4 million. And as you see, we made dividend payments of $1.50 per share, ending up in $80.3 million distributed to our shareholders in May.

So all in, this resulted in a negative cash flow during the quarter of $245 million. Due to the Flaminia payment. However, a testament to the strong position of the company, we still ended the quarter with $115 million in cash and cash equivalents. And as you will see at the graph at the bottom right, in the orange section, we had $331 million available under our committed long-term revolving credit lines for a liquidity position of almost $450 million. And mind you, this is before we have drawn on the new $450 million U.S. Private Placement facility that Udo mentioned.

Moving on to the next slide. There you see our capital expenditures. For the second quarter, capital expenditures were $35 million. The number I mentioned on the cash flow slide included also dry docking, whereas this $35 million excludes dry dockings. And you can also see that for the remaining of 2024, we are projecting $172 million to be spent.

Considering that between the first and second quarter of this year, we spent $108 million, $172 million might be a stretch, and I would expect some of this to roll into the first quarter, first half of 2025. We also spent $64 million in advances to affiliates, reflecting new building deposits, as I mentioned earlier, that is not reflected here in this capital expenditure overview.

Let's move over to our debt maturities. Now I mentioned that we drew $100 million on our revolving credit lines to fund the Flaminia payment, and you see that in the third quarter of '24, the orange $100 million there. This draw plus the $236 million maturity in the second quarter of '25 will be replaced -- sorry, we paid once we draw down on the new U.S. Private Placement facility, which was closed on July 9, but is expected to be drawn by the end of next week.

Just to reiterate what Udo said, this is a new facility that we have signed up to, the $450 million U.S. Private Placement notes. It's a triple rated facility to investment grade. That rating is an improvement from the previous rating, which was a BBB minus. And I think again, that reflects the stronger position that the company is in compared to prior periods.

The notes are secured by assets in the United States, but more importantly, by a corporate guarantee issued by Stolt-Nielsen. We have selected 7-year and 10-year tenors for this facility, which we have then fixed at 5.88% and 5.98%, respectively. If you look at the bottom left graph, you can see that our debt profile is quite stable.

We saw a slight increase in debt levels this quarter that was due to the Flaminia payment, but interest rates -- average interest rates came down slightly from 5.72% to 5.58%. And that is driven by the repayment at the end of the first quarter of the maturing bond, the remaining portion there, which was about $81 million. And that helped us reduce the average interest expense.

So if you look at our maturity profile, you can see, once we have dealt with the $100 million third quarter -- draw and the $236 million, we have very little of -- in form of balloon payments until we get out to actually 2027. So a very benign picture for us going forward from a cash flow perspective. And with that, I'd like to just move on to our financial KPIs. And you can see here, we have a significant headroom.

The strong performance of the company has translated into good performance on all the KPIs. The top 2 are bank covenants, where the top left is showing our debt to tangible net worth, which has been on a steadily improving trend and ended the second quarter at 0.95, slightly higher than the previous quarter, but again, due to the Flaminia settlement, and we expect the positive trend to resume going forward.

Key to this strong development is the EBITDA and how that has improved over the last number of quarters. You will note that the second quarter '23 EBITDA now drops off on the 4-quarter running average and that means a significant improvement in our 12-month EBITDA run rate. We're now jumping up to $837 million with the second quarter dropping off.

And you see the impact of that on the top right graph with the EBITDA to interest expense improving as well as the net debt to EBITDA improving now to down to 2.36% to -- from 2.54%. So the company overall in a very strong financial position. And with that, I would like to hand it over to Udo for results.

[Udo Lange, executive]

Thank you, Jens, for this excellent update. As always, I will begin with Stolt Tankers. We saw operating revenue increased 8% versus the second quarter of 2023, mainly due to the consolidation of the SNAPS regional Asia Pacific pool. Deep-sea revenue was down 1.6%, reflecting fewer operating days and longer voyages due to ongoing transit restrictions in the Red Sea. This was partly offset by an increase in average freight rate of 6.6% compared to the same period last year. Our contract ratio reached 56%, up from 50% for the second quarter last year. Operating profit came in above $100 million, with the increase in deep-sea revenue more than offset by a reduction in port charges.

Overall operating profit increased 10% year-on-year. This is even more remarkable when you take into account the operating days are down 3.5% year-on-year. EBITDA also increased compared to previous quarters, coming in 6.5% higher versus the second quarter of 2023. During the quarter, the average rate of renewed COA contracts increased by 18.1%, the effect of which will be seen over the next 12 months. Stolt Tankers also sold 1 ship, the Stolt Facto for a gain of $2 million positively impacting this quarter's results.

Turning now to rate development. Following a similar trend to Q1, we have continued to see firming in the market, but ongoing transit restrictions continue to support strong freight rate levels. As a reminder, we typically fix cargo bookings 30 days in advance of a voyage, which results in an approximate 90 to 120-day lag between rates, change in rates and the impact on our earnings. Therefore, we are now seeing the full impact of the tight freight market we saw in Q1 with TCE rates for Stolt Tankers increasing 9.7% to $32,860 per operating day, a new record for the company.

And looking at this graph, I would like to remind you that a $1,000 per day increase in the TCE rate equated to a change in EBITDA for the year of approximately $23 million. Based on current Q3 performance, the rate environment and market outlook, we expect to see an increase in the TCE rates for the third quarter of around 2% to 4%.

We remain confident that firm rates will continue for the foreseeable future. Moving on to Stolthaven Terminals. Average utilization in the second year (sic) [ second quarter ] was 90%, down from 97% in the second quarter of 2023. As discussed during our previous earnings presentation, utilization continues to be impacted by our focus to drive long-term margin improvement at various locations.

We expect utilization to continue to normalize in H2 with full impact expected into 2025. We reported operating profit of $28.2 million, up 1.5% versus Q2 last year, reflecting the positive impact of our strategy on contract rates. While operating expenses of wholly-owned terminals were flat, A&G increased slightly due to annual cost increases. EBITDA came in at $44.3 million, a slight increase over Q1 and the second quarter of 2023.

Going forward, we expect earnings to be impacted positively by a combination of higher contract rates and improved utilization. Thank you to Guy and his team for another strong quarter. Now to Stolt Tank Containers. Shipment volumes continued to increase to a record of almost 42,000 during the second quarter an increase of 70% from the same quarter last year.

This excellent result demonstrates the strength of our scalable platform as we continue to gain market share. Thank you to Hans and his team for the brilliant effort. As mentioned in Q1, we expect to see a slowdown in this strong volume driven -- drive during the second half of the year. Operating revenue was up 7% compared to the previous quarter. However, revenue was down 11.7% when you look at it year-on-year.

The decrease was caused by a reduction in revenue from the demurrage, depos and additional revenue. The lower revenue was only partially offset by a decrease in ocean freight and trucking costs resulting in a reduction in gross profit margins. As a result, EBITDA came in at $25.9 million, down versus previous quarters when accounting for the MSC Flaminia provision. Our fleet of tank containers also grew 6% compared to the second quarter last year, resulting in a higher depreciation charge.

Together, these factors have led to a 68.5% decline in operating profit year-on-year and a decline of 5.8% versus the previous quarter. Although margins on average declined slightly, we saw signs of the trend reversing towards the end of this quarter. Looking to the future, we continue to see firming demand out of the Americas and Southeast Asia, with China exports also picking up. With the strong volumes and recent improvement in terms per tank and utilization, the focus is now on improving margins.

Finally, Stolt Sea Farm delivered an outstanding quarter. Thank you, Jordi and team for these immense results. Operating revenue came in at $30.16 million (sic) [ $ 31.6 million ], a significant increase from $27.6 million in the same period last year. This growth was driven by firming prices for turbot and sole, both of which have improved materially since the second quarter of 2023 as well as steadily rising sales volumes throughout the quarter. Total sales volume increased by 7.1% in line with higher production, whilst turbot sales volumes decreased 4.5% due to the impact of higher prices on demand.

As a result of these factors, EBITDA excluding the fair value adjustment reached $10.6 million, up 56.5% versus same period last year. Operating profit also increased an impressive 85.1%. Going forward, we expect prices to work steady as we enter the seasonally stronger summer. As the supply situation remains favorable as we saw the sole wide catch season and during the quarter.

However, continued high prices, particularly for turbot, are expected to have a negative effect on demand. Our short-term focus is to find the optimal balance between strong market prices and demand within the typical peak volume summer months. That completes our deep dive into each of the businesses.

Turning now to the outlook. Our review remains the same. The long-term market fundamentals are favorable across all our businesses. On the supply side, markets for both chemical and product tankers look for. Although we have seen an increase in new ordering during the quarter, this will only be delivered from 2027 onwards. And we hope to see discipline from fellow operators in the new building market.

In addition, as Bjarke discussed during the Capital Markets presentation, around 14% of the global chemical tanker fleet can easily be retired based on the existing asset age. This provides a clear buffer and the lever for ship owners to significantly reduce supply in the end of the markets turning. As a result, we expect muted net supply growth for at least the next few years.

We have seen a recent softening in the spot rates, and we actively monitor whether this is the impact of a typical summer slowdown in activity or something more meaningful. That said, on the demand side, leading research funds are forecasting demand growth of between 3% to 6% in our sector. And over the next 3 to 4 years, we expect demand to outpace supply growth.

Let's now turn to our closing remarks. As you've heard today, our second quarter results reflect the strong spending of our company and the strength of our diverse portfolio. We expect an ongoing strong market for the foreseeable future and remain focused on delivering value to support our aspiration to be simply the best for our shareholders, customers and people.

Hence, we expect continued strong earnings during the second half of 2024. As for Tankers, we expect to see TCE increasing 2% to 4% next quarter and see attractive supply-demand fundamentals for the foreseeable future. For Stolthaven Terminals, the positive impact of our rate optimization program is beginning to show in our results with future earnings to be supported by a combination of higher rates and improved utilization.

In STC, we expect more normalized operating results going forward as we have now concluded on MSC Flaminia and to be second quarter '23 quarter drops off from our 12 months run rate. With the strong volumes in place, our focus now is on leveraging our scalable platform to drive margin growth.

At Stolt Sea Farm, we expect prices towards steady as we enter the seasonally stronger summer season. Our short-term focus is to find the optimal balance between strong market prices and demand within the typical peak volume summer months. Finally, on a group level, our recent U.S. Private Placement debt issue -- issuance ensures we have significant liquidity to execute our strategy and ambitious growth plans with targeted investments across both liquid logistics and aquaculture. Thank you for your attention, and I will now pass you back to Alex as we open up for our Q&A session.

[Alex Ng, executive]

Thank you, Udo. That completes our presentation. and we will now begin the Q&A. [Operator Instructions] We have our first question, and it comes and it relates to the current tanker markets and the spot rates. We've seen some softening. But where do you see that? Can you comment more on the outlook for the second half of the year? Udo.

[Udo Lange, executive]

So yes, thank you so much for this question. So if you -- what we're seeing right now, the MR market continues to be strong. And as you saw in our next quarter outlook, we predict a 2% to 4% increase in TCE rates, achieving a new record quarter for our tanker business. And we are very confident on this 2% to 4% increase because, as you know, we see that a big part of that already in our numbers. So now if you think about this business, the summer months are seasonally weaker in general.

So what will be interesting on the point that you are making, this is a seasonally driven situation or is this a structurally driven situation. And that, of course, is very difficult to predict. I think we just need to get through the summer months and then see how this further comes out. Overall, we continue to believe that our second half will be strong for Stolt-Nielsen overall. And if you look at the supply-demand side, again, as mentioned, the demand continues to be solid, and the supply side is very favorable for us.

And I pointed also out again that in this segment of the tanker business, the scrapping ratio can be quite significant. So even in a downturn market, there is a significant buffer to really offset that. So we continue to be very positive for the second half of the year on this business.

[Alex Ng, executive]

Thank you, Udo. The next question is for you Jens. And it relates to OpEx. What do you expect for the OpEx level to be going forward given that quarter-on-quarter, and there's been an increase in both Tanker Containers and Terminals, which is not only explained by the pool as the pool was already established in the first quarter.

[Jens Grüner-Hegge, executive]

Thank you, Alex, and thank you for the question. So controlling our OpEx expense is a continuous exercise at -- all the divisions. For how we see the development going forward, we are impacted by inflationary pressures as everyone else is. That seems to be weaning off a little bit now with the latest inflation numbers that we have seen from the United States. We will continue to drive efficiencies throughout our organizations.

And if you look at the growth that we have targeted and really all our businesses with capacity growth that we have implemented in tankers with the growth of our Tank Container fleet with the growth that we're seeing in our Terminals division as well as the long-term growth that we are building on in our fish farming operations. Our aim is to do this on a scalable platform so that we don't grow our OpEx at the same rate as we aim to grow our top revenue numbers.

And that is important to keep in mind because it's -- growth growing cost is not really efficient, particularly when we get into a more competitive environment. My expectation is that you will see a continued focus on cost control and keeping a lid on our operating expenses, you will see a continued focus on our A&G expenses because we have seen an underlying increase driven by inflation but by the use of -- with the use of further digitalization and systems improvements, our aim is to flatten out that increase and potentially even turn it into a reduction in A&G.

But being cautious as I am on the financing side, I think you should expect really just mild not inflationary adjustments, but that we will aim to keep a lid on the expenses going forward.

[Bjarke Nissen, executive]

Thank you, Jens. We now have a question relating to Terminals CapEx, which maybe can go to you as well, second time Jens. When were the ongoing expansion projects in Houston and New Orleans be completed?

[Jens Grüner-Hegge, executive]

Thank you again for the question. These are organic growth projects, which we're actually very excited about because these growth projects, they utilize existing infrastructure at our existing facilities, existing infrastructure being the Jetty, being the pipeline, the wastewater treatment systems, everything that is necessary for a terminal to operate, but does not in itself necessarily generate revenue. But therefore, adding tanks organically, utilizing the land that we have and that infrastructure is a much better way in terms of expansion for us because it gives us better returns. So we announced those not too long ago.

These will be ongoing constructions throughout this year and most of 2025 before these become operational. So it will take some time before you start seeing the impact on the EBITDA. But then as this come in become operational gradually towards the end of the 2025, you will start seeing the improvement in the results related to that. Alex, you're on mute.

[Alex Ng, executive]

Thank you very much, Jens. [Operator Instructions] Okay. I think that then concludes our questions for today. So thank you very much. We will also be posting a recording of this call on the website tomorrow. Udo, back to you for closing remarks.

[Udo Lange, executive]

Thank you all for joining us today. And again, big thanks to our team for delivering such a strong quarter and we continue to be excited about our business for the rest of the year. And I look forward to talking to you again in October to present our results for the third quarter of 2024. Again, thank you, and I wish you all a good day.