Macquarie Mexico Real Estate Management SA de CV

OTC:DBMBF

Earnings Call Transcript 2018-Q2

[Operator]

Good morning, and welcome to FIBRA Macquarie's Second Quarter 2018 Earnings Conference Call and Webcast. My name is Carmen, and I will be your operator for this call. [Operating Instructions]

I would now like to turn the conference call over to Nikki Sacks. Please go ahead.

[Nikki Sacks, executive]

Thank you, Carmen, and good morning, everyone. Thank you for joining FIBRA Macquarie's Second Quarter 2018 Earnings Conference Call and Webcast. Today's call will be led by Juan Monroy, our Chief Executive Officer. And to answer any questions you may have at the conclusion of today's prepared remarks, we also have Simon Hanna, CFO; and Peter Gaul, MPA's Head of Real Estate Operations.

Before I turn the call over to Juan, I would like to remind everyone that this presentation is proprietary and all rights are reserved. The presentation has been prepared solely for information purposes and is not a solicitation of an offer to buy or sell any securities.

Forward-looking statements in this presentation are subject to a number of risks and uncertainties. Actual results, performance, prospects or opportunities could differ materially from those expressed or implied by the forward-looking statements. These forward-looking statements are made as of the date of this presentation. We undertake no obligation to publicly update or revise any forward-looking statements after the completion of this presentation, whether as a result of new information, future events or otherwise, except as required by law.

Additionally, on this conference call, we may refer to certain non-IFRS measures as well as to U.S. dollars, which are U.S. dollar equivalent amounts, unless otherwise specified. As usual, we have prepared supplementary materials that we may reference during the call as well. If you have not already done so, I would encourage you to visit our website at www.fibramacquarie.com and download these materials.

A link to the materials can be found under the Investor Relations' Events and Presentations tab.

And with that, it's my pleasure to hand the call over to FIBRA Macquarie's Chief Executive Officer, Juan Monroy. Juan?

[Juan Monroy, executive]

Thank you, Nikki. Good morning, and welcome to FIBRA Macquarie's Second Quarter 2018 Earnings Conference Call. On our call today, we will review our operational and financial performance and discuss our ongoing progress for driving long-term growth. We had another solid quarter as we delivered record operational results, made meaningful progress on our portfolio strategy, and continued to return capital to our certificate holders, including to our certificate buyback for cancellation program. I'm also pleased to announce that we are increasing our guidance for the remaining of the year. Despite some ongoing uncertainty on the macroeconomic and political front, we remain encouraged about our prospects and our ability to deliver ongoing shareholder value.

Mexican economic conditions remained generally favorable through the quarter with consumer growth assisted by stable inflation and record remittances. The outlook remains positive, now that Mexican elections have been decided and the U.S. economy continues to do well. However, resolution of NAFTA will provide more clarity, particularly for new leasing and firms seeking to make investments into Mexico. In the meantime, we continue to see its trend in the automotive industry. In the month of June and for the first half of the year, Mexico vehicle production was up almost 1% on a year-over-year basis, representing record levels. Reported exports for all of this positive momentum up an impressive 10.5% on a year-over-year basis. This is providing positive tailwinds for many of our tenants in the industrial portfolio, reflected by strong leasing activity throughout the quarter.

In the second quarter, we delivered solid operational performance with AFFO per certificate up 6.2% year-over-year to MXN 0.6042. Another quarterly record for FIBRA Macquarie.

These results reflect higher average rental rates and higher average occupancy in both our industrial and repo portfolios, enhanced by a focus on cost controls, resulting in an improvement in expenses. Along with the continued accretive benefits realized from our certificate buybacks program.

In our industrial portfolio, we had a productive quarter across all relevant metrics with a 3.2% year-over-year increase in revenues and lower expenses, reflecting a 5% NOI increase. Our strong results were driven by an acceleration in leasing volume, positive contractual increases, leasing renewal spreads and tight cost control. All contributed -- contributing to NOI margin expending to 91.6%. Leasing activity was slightly above versus historical quarterly average with 6 new leases representing 350,000 square feet and 22 renewals with 1.7 million square feet. Retention continued to be strong with a trailing-12 month retention rate of 83%. Our closing weighted average rate of $4.69 per leased square meter per month, it was 2.1% higher over the prior year. We are pleased with the composition of our leasing activity, which is diversified across geographies and customer types. The combination of volume and diversity reinforces our confidence in the quality of our assets and our platform. Notable new leases in the quarter include a plastics manufacturer in Ciudad Juarez, a logistics firm in Monterrey and an automotive parts suppliers in Hermosillo.

Renewal activity included a global manufacturer of health products, a glass manufacturer and a fiber optics cable manufacturer. With expensive leasing executed in the first 6 months of the year to 7.4% of total leases by base rent are expiring the second half of the year, which is very manageable, particularly given the favorable market dynamics laying the foundation for a positive occupancy outlook.

Now turning to our retail assets. Our retail portfolio delivered NOI of MXN 148.2 million, an increase of 6.6% over the prior year period. Year-over-year growth was driven by a 5.1% increase in average monthly rents and a focus on cost controls resulting in a reduction in expenses. Occupancy was flat compared to the first quarter at 94.5%. I am particularly encouraged with leasing activity in the second quarter. We signed 66 leases representing 11,800 square meters. This activity included 19 new leases and 47 renewals. Renewal volume was meaningfully greater than historical average and was the most active quarter over the past 4 years.

Similar to our industrial portfolio, NOI margin expansion was also a highlight, reaching 76.5%, a quarterly record since the third quarter of 2014. One of our recent highlights was the completion of the sale of 35 nonstrategic industrial assets for an amount of $80.2 million with 2 more assets under contract for sale for an additional amount of $7.2 million. The disclosed properties are located in Mexico's northern markets of Matamoros, Reynosa, Ciudad Juárez, Chihuahua, Mexicali and Tijuana. Following the expected completion of the pending sales of the 2 assets under contract, we will have sold 44 nonstrategic assets and exited 4 per share in single property markets, generating $117.5 million in proceeds to reinvest in value-creating opportunities, representing an aggregate premium to book value of 2.2%. This premium is in contrast to the substantial discount of FIBRA Macquarie's certificate price to -- price's intrinsic net asset value, which currently exceeds 40%. These sales have increased FIBRA Macquarie's focus on core assets and core markets and enhanced the overall portfolio composition in key operating and financial metrics. In particular, pro forma for a transaction, or end of period occupancy, would be 150 basis points higher, and our average monthly rent per square foot would increase by 1.6%.

Please note that in our supplemental package, on Page 14, we have included key portfolio pro forma metrics for the sales transaction. Proceeds from this recent sale have been used to fully repay the $40 million outstanding balance in our revolver with $21 million held as unrestricted cash and the remaining $19.2 million to be received in 2 installments over the next 24 months. We anticipate redeploying the capital in accretive investments, including property expansion and development and certificate repurchases for cancellation. We have substantially accomplished our near-term asset recycling goals. We now have a more efficient portfolio with enhanced operating metrics, fewer single-asset markets and a more flexible financial position to allow us to invest into attractive opportunities.

Turning now to our balance sheet and capital activity. Our balance sheet is set in a very strong position, being further enhanced with the post-quarter impact of asset sales. Today, we have significant liquidity equivalent to approximately $300 million, no significant debt maturities until 2021, strong visibility into our cost of funding with 100% fixed rate debt until mid-2020 with a real estate net LTV of 36.9%. We have a capability and flexibility to pursue our growth objectives.

Executing on our capital deployment strategy has been one of the highlights of the FIBRA Macquarie story. Since announcing this strategy in the first quarter of last year, we have deployed more than $100 million into value-created initiatives, including expansions and developments, debt repayment and certificate repurchases for cancellation. Our expansion and development projects have a combined average NOI yield of almost 12%. In terms of buybacks, since April 1, 2018, we repurchased 7.9 million certificates for cancellation, bringing the total to 27 million certificates, and we expect to continue to execute on the program as our certificates continue to trade at a significant discount to NAV. All in all, this has contributed to a solid 6.2% increase in AFFO per certificate year-over-year.

Finally, in a positive move that reflects our strong performance and confident outlook, yesterday we announced an increase to our guidance for the year. We now estimate our full year AFFO per certificate to be in a range of MXN 2.28 to MXN 2.33. We're also adjusting our distribution outlook from an expectation of MXN 1.56 per certificate to MXN 1.60 per certificate. Despite prevailing macro volatility, we remain confident in our operating performance and our ability to execute on our value-creating objectives. As always, I'd like to recognize the value contributions from all the members of the FIBRA Macquarie team. Without your hard work and dedication, our continued success would not be possible, and I look forward to working with you over the coming periods.

And with that, I'll ask that our operator open the phone lines for questions. Carmen?

[Operator]

[Operator Instructions] And I have our first question from Eugenio Saldaña from GBM.

[Luis Saldana Flores, analyst]

First, I've seen that you are almost reaching the 5% regulatory, in terms of buybacks. Are you planning to perhaps liberate more room for that by canceling out some of the shares you've already purchased? That's the first question. The second one is in terms of your retail portfolio. Or I think that you -- that the average age maturity of the portfolio have been declining sequentially, while the retention has been, lately, below 70%. And I wanted your comments on what's happening on that portfolio and specifically how the JV doing in that context?

[Juan Monroy, executive]

[Foreign Language] In your first question, yes, we are open to continue with the program. Obviously, we're, at the moment, focused on completing our existing program of 5%, and as a reminder, our program is a buyback or cancellation program. So that's the first question. With regards to your second question, it's -- weighted average remaining term on the retail portfolio has been coming down and that's just as expected and is, obviously, the natural trend as we have long-dated, anchored leases that were 10 or 15 years that obviously have not expired. So by definition that will continue in a downward trend as the leases that are rolling tend to be for small shop space or junior boxes that the, as you know, the average term of those leases tends to be shorter between 3 to 5 years. So we'll continue to see that trend, but it's that as expected. In terms of retention and leasing activity for our retail portfolio, we feel pretty comfortable with our retail portfolio. It's a very high quality defensive portfolio, very well located, properly anchored with our very balanced and appropriate tenant mix. And in fact, this quarter we had a record level of leasing activity. We have a high occupancy level at around 94.5%. And we are encouraged by what we're seeing in the market and in terms of our tenants' performance, where they are reporting sales growth on a year-over-year basis in the double-digit scenario -- in the double-digit sort of range. So we're happy with our retail activity in the portfolio -- in the retail portfolio as well, and that's been driving also pretty positive retail leasing spreads.

[Simon Hanna, executive]

And just to follow up on that and that's confirmed in the numbers, Eugenio. You'd see all across the key metrics, NOI to retail up to a record level and up almost 7% year-over-year. Furthermore, record level margin just more or less at 76.5%, again, very healthy increases on a margin basis with the focus on cost control. But we are definitely seeing that top line continue to grow, and I guess the best reflection is rental rates increasing over 5% year-over-year. So everything is pointing to a positive indication with regards to the retail portfolio, and we do expect, as I mentioned, to continue in the second half of the year.

[Operator]

Our next question comes from Enrico Trotta with Itaú.

And the next question is from Marimar Torreblanca from UBS.

[Marimar Torreblanca, analyst]

My question is, given where your loan to value stands at pro forma and your view on the future and the strength of the industrial markets in particular, what's your view right now on growth? Are you starting to consider more actively M&A? Do you plan to continue just doing expansions and very selective M&A? Or what's the outlook for this going forward?

[Juan Monroy, executive]

Marimar [Foreign Language]. Yes, we have a pro forma LTV post transaction at slightly below 37%, which is very healthy. As you know, we feel pretty comfortable with the current level. Our long-term target is somewhere between 35% to 40%, I guess, ideally over the long term closer to 35%. And as always, we are constantly monitoring M&A opportunities in the markets. So we're pretty well aware of what's happening as we do have an important competitive advantage as we have boots on the ground in all the markets where we operate. So we have pretty good sourcing capability. Also, as you know, we're pretty disciplined in terms of capital deployment, and what we've seen historically over the last couple of years has not been of either the quality or the price or the geographic location that we are prepared to acquire. And obviously that's -- that becomes even now to do acquisition -- stabilized product becomes even harder with our current share prices in the listed space. So we are, as always, monitoring M&A opportunities, however, our capital deployment strategy for this year has been pretty simple, very straightforward and that has been more, as opposed to acquiring asset, has been more selling assets, noncore assets at a premium than buying back our own shares at a significant discount and obviously investing proceeds as well in expansions and development at a double-digit yield. We believe that's a very powerful value-creation formula and we intend to continue executing on that strategy. And obviously, we'll continue to monitor also for acquisition opportunities of stabilized product. However, what we've seen as of yet, we will continue to prefer our current strategy.

[Simon Hanna, executive]

Yes, and I'll just follow-up with that just to point you, Marimar, to the Page 8 of our supplementary information where have quite a detailed capital allocation summary. That's how we've deployed the $100 million over the last 18 months, and we also indicate a pipeline over the next 6 months plus of close to $74 million, as Juan says, between expansions of 11% pipeline buyback obviously to get to the 5% implied NOI yield over 10%. And we also have a little bit debt repayment to get to that pro forma LTV of close to 37%, which gives us that flexibility going forward. So that also is a good point of information to understand how we've deployed a clear view to date and what's in store in the pipeline.

[Operator]

[Operator Instructions] And our next question is from Jorel Guilloty with Morgan Stanley.

[Jorel Guilloty, analyst]

It's Jorel. So I have two questions. First, I wanted to tackle a little bit more on the -- questions on the margins. It was a meaningful expansion and I just wanted to understand. So this was mostly driven by retail, and if so, what component particularly in the cost cutting side helped drive this? And then on the M&A side, of course, you guys announced 3 weeks ago -- 2 weeks ago that you sold $80 million or so in assets. I just wanted to know post elections, are you seeing more of a pickup at least on chatter, dialogue in terms of M&A activity? And what sort of cap rates are people discussing around this time?

[Simon Hanna, executive]

Thanks, Jorel. I'll take the first part of the question with regards to margin expansion. And pretty positive story. Again, I'll point to the supplementary information where we do provide a pretty detailed bridge on Page 38 of the margin bridge for the second quarter. And I think the general story is that it's a combination of factors where we're seeing top line growth. So higher average occupancy leading to higher revenues and also combining that with a focus on cost control means that overall same-store improvement has contributed to the overall margin expansion. That's obviously being complemented by buyback. When we look at that on a, I guess, a year-over-year basis that's getting close to 3% increase in overall -- in AFFO per certificate but that obviously then provides the margin expansion. I think the other impressive thing to note is on a quarter-over-quarter basis sequentially, we actually had an adverse impact on FX through the accounting, whereby revenue was actually adversely impacted as was expenses, where we basically had a higher FX or peso rates if you like, for expenses, but a lower peso appreciation for revenue when compared to Q1. So the net effect of that was actually a 4.5% negative impact to AFFO per certificate quarter-over-quarter. So that makes the overall improvement even better once you take into account the FX impact. So on a same currency basis to sequentially improve in AFFO per certificate would have been 4.5% better and that obviously would have been a -- flowed through to margin as well. So that's definitely a point worth noting. With regards to the second part of the question, I'll hand it over to Juan.

[Juan Monroy, executive]

Thanks, Simon. Jorel, thank you for your questions. After elections over the -- past 25 days or so, wouldn't say that we've seen significant increase in M&A activity. We've seen a couple of deals come back to the market. I think we saw 1 closing, but someone buying from their private equity to their listed in the 7s, so that's the pricing from industrial assets, so obviously continue to prove fairly tight pricing in the private equity market for industrial assets in the 7s. And other than that, I guess it's business as usual. We have seen, however, a bit of a pickup on property visits in industrial portfolio in markets like Monterrey, for example. So we are encouraged that at least the momentum will pick up and continue during the second half of the year.

[Jorel Guilloty, analyst]

One more question if I may. I'm just trying to understand more on the decrease in same-store expense, what is the -- what efficiencies are you guys achieving and how much more efficiencies could you get, going forward?

[Simon Hanna, executive]

Yes, I think -- good question. I think we've obviously always had a good focus on cost control and I think that's no more evident than in the current quarter. When we do look on a -- at a quarter-over-quarter or year-over-year basis, it's a -- it's pretty disciplined. I think one highlight to note is definitely with regards to doubtful debts. We have had a -- we have a very conservative and prudent provisioning policy. And this quarter we actually had a very strong collections. So we did see below average doubtful debt expense through the quarter, somewhere closer to around MXN 1.5 million comparing that to historic run rate, but that's a good MXN 5 million lower than year-over-year. And actually closer to MXN 14 million quarter-over-quarter, so that was a meaningful improvement. And that's been reflected in the downward trend in accounts receivable, which has really come off. So that's one highlight that I'll also just -- just also focus on the fact that the general cost management has been pretty disciplined and you can see that in the contribution, as I say, whether it's quarter-over-quarter or year-over-year.

[Juan Monroy, executive]

And this is -- adding to what Simon is saying. It's an ongoing effort and it's part of our day-to-day asset management business, Jorel. And we are pretty proactive and trying to constantly think through ways to further improve our business. So stuff that we've done over the last few months, for example, that's noted in the retail portfolio. And we've had 2 properties that we had not -- the parking collection system was not automated. So we invested in automating the parking obviously, we reduced that expense and actually increased collections there. Also, we are constantly evaluating all of our major contracts, and we're operating in the right time putting them up for bidding, so -- to ensure that we have proper pricing and when we find a better quality, better price, better value overall vendor then we make the switch, so we've made a couple of those also in the last quarter. The issue in terms of utilities, we are pretty proactive in looking at ways to further reduce our utilities expenses, for example, in our -- in the process of doing rooftop solar panel investments and evaluating -- doing that for a couple of our retail properties that will have over the long term a positive impact with further reductions in utilities expense as well.

[Simon Hanna, executive]

Yes. And just to close that out, I guess obviously one of the key line items on -- dropping down through FFO is interest expense. You would have noted there was a slight tick up on a peso equivalent basis, but we do have our debt 95% fixed and in fact 100% fixed rate post the repayment that we made on July 5 with regards to asset sales. So underlying that $12 million in U.S. dollar equivalent. That's been pretty steady quarter-on-quarter. And we obviously, have no exposure to rising interest rates going forward for debt profile.

[Operator]

And our next question comes from Alan Macias with Bank of America.

[Alan Macias, analyst]

Just a follow-up question on the M&A activity. In the retail space, are you still -- if -- are you still looking at opportunities in Mexico City? Or are you also looking at other markets? And in the industrial space, are you focusing in manufacturing or open also to logistics? Any preference there?

[Juan Monroy, executive]

Alan [Foreign Language]. Yes, you know our retail portfolio as you noted is preliminary focused in the #1 country per country. #1 markets of the country that's Mexico City, also have properties in the top 2 and 3 of Monterrey and Guadalajara and Cancún. Our focus is clearly on the top markets of the country, and we remain focused on those markets and opportunistically looking at investment opportunities that will be accretive to the portfolio primarily in those markets, Alan. With regards to industrial, we are encouraged by what we're seeing in terms of a very strong long-term fundamental. So the industrial, specifically the manufacturing space in Mexico, so we remain pretty bullish on that. However, obviously our platform is also very well positioned to capitalize on the emerging trend of logistics that could potentially be driven in the future by e-commerce and the growth of the middle class in Mexico. So we're very well positioned to capitalize on that long-term growth trend and we are acting on that. Our focus in terms of core markets continue growing in industrial portfolio, in terms of sort of the primary markets are the markets of Mexico City, Monterrey, Guadalajara, Tijuana, Juárez and [ Selectinde Rahil ] markets and obviously, of the markets that I mentioned the top 3 are importantly logistics markets. So we'll be focused on investing in both product types, Alan.

[Operator]

Our next question is from Alejandro Lavin with Citigroup.

[Alejandro Lavin, analyst]

I noticed that you disclosed the average age of your portfolio, so thank you for that. It's about 14 years right after the recent asset sales. So my first question is, what was the average age before this transaction? And the second one, if you have a -- if you expect over the longer term or the midterm to continue averaging down this -- the age of your portfolio.

[Juan Monroy, executive]

Alejandro [Foreign Language] Yes, we've reported the average age, I think, that was one piece of information that was missing from our -- what we considered to be a leading reporting package that we have fairly transparent. So yes, we have put that out there this quarter at 14 years of age. Average age of our portfolio that we saw was certainly older, but it was just a portion of the total age. So pre-transaction it was around 16-or-so years of age. And in terms of age going forward, it will be balanced between portfolio activity that will include acquisitions, development and debt divestures. So I guess, it should continue to be around between the 14 to 15, 16 years of age in the future.

[Operator]

And our next question is from Gabriel Simoes with Itaú BBA.

[Enrico Trotta, analyst]

Enrico here. Two questions as well. The first one going back to leasing activity as you guys mentioned, leasing activity was quite strong in the quarter. Could you comment on the levels of leasing spreads that you had on these negotiations? And what should we expect in terms of prices on renewals, looking at the second semester, you have around 9% of the rent paids expiring in your retail segment, around 7.4% on the industrial one. So if you could give us some color here on prices, it would be great. And the second question, I think talking a little bit about e-commerce, how you guys have been seeing the e-commerce impacting the demand for industrial warehouses that you have? And in your view thinking about the strategy here for retail, how you guys should change tenant mix or prepare for any impact that e-commerce should have on the retail portfolio? It would be great to hear your thoughts here. Thank you very much.

[Juan Monroy, executive]

Sure. Thanks, Enrico, for your questions. With regards to leasing spreads and industrial and retail portfolio in general rental rate commentary, it continues to be pretty strong with industrial and retail growing at a 2.1% and 5.1%, respectively. That is a very different trend to what we saw in -- a couple of years ago, where we still saw negative spreads primarily on industrial. That's gone obviously, as a reflection of a very healthy supply demand dynamic in the market that has over the past few quarters been trending towards a higher occupancy and tighter market and has given us the ability to have an improved negotiation position. We have capitalized on that and delivered a higher rental rate growth in dollars. We continue to have obviously a very sticky U.S. dollar rental cash flow with more than 92% of our rental income in industrial portfolio. It seems to be U.S. dollar that's -- has been pretty consistent since IPO. And I guess going forward, we expect to continue seeing a healthy market in terms of rental rate growth. We are not necessarily modeling any significant increases ahead of inflation either U.S. or Mexican inflation. We still believe there's a good chance that we can have real growth in rental rates. But I think it's soon to assume modeling just inflation or a tad above inflation. So that's -- Simon, if you wanted to add something?

[Simon Hanna, executive]

Yes, just to complement that. I think also just reflecting the transparency in our reporting, it's good to also point to Slide 39, Slide 40 of our supplementary information where we do show the rental rate bridges both on a quarter-over-quarter and year-over-year basis for industrial and retail separately. So that provides a pretty good explanation of the movements. And I think also just to note, as Juan mentioned earlier with regards to the asset sales that we just completed on July 5, that will obviously have a step change in rental rates as well, moving industrial from $4.69 to $4.76 on a pro forma basis.

[Juan Monroy, executive]

So thanks, Simon. And in answering your second question, e-commerce risk and potential changes to our portfolio. I'm pretty happy with our portfolio. It's an offensive portfolio for number of reasons. Number one location, our properties are pretty well located in high-density markets, pretty urban, high barriers to entry, submarkets and importantly, very well anchored. I'll say that our properties have a very healthy tenant mix. One, that is where all the U.S. property owners are trying to get to, we are pretty much already there. That means a very good mix of entertainment, food-related tenants, health and then the necessity-based type tenants. So we are -- for example, for tenants, Superama, Cinépolis with a bunch of restaurants from Al Serra, Starbucks, et cetera, with gym operators could be spiritual then novel or others. That's a very healthy tenant mix that when you think about the long-term needs in terms of the retail space, that's what you need, right? You need an important component of entertainment, food, health and necessity-based type tenants. And with a little bit of services, and the majority of our properties are already there. Also our tenants tend to be fairly efficient in terms of usage of space. Their footprint tends to be smaller in the U.S. So their sales in a per square meter basis is fairly -- fairly efficient and the cost -- the rents as percentage of sales is healthy and sustainable. So we're happy with that. Obviously, we remain pretty proactive and what we continuously do is evaluating ways to further increase foot traffic at our properties by ensuring that we have the right programs from architectural components to marketing, to special events and services, ease of parking, et cetera. So we continue to ensure that we are top of the line, continue to innovate to ensure that our properties remain attractive for our end customer to be attracted to spend time at our property and ultimately buy from our tenants. So I think that we are -- we have a pretty healthy portfolio. So we're going to trend set, and we'll continue to innovate to ensure that we remain pretty relevant for the long term, Enrico.

[Operator]

And there are no further questions. I'd like to turn the conference back to management for any closing remarks.

[Juan Monroy, executive]

Great. Thank you, Carmen, and thank you, everyone, for participating in today's call. We look forward to speaking with many of you over the coming days and weeks as well as updating you again soon on our third quarter 2018 results. Thank you.

[Operator]

And ladies and gentlemen, the conference is now concluded. Thank you for joining our presentation today. You may now disconnect.