Oi SA em Recuperacao Judicial

OTC:OIBZQ

Earnings Call Transcript 2023-Q2

[Operator]

Good morning, ladies and gentlemen, and thank you for joining Oi S.A.'s Conference Call for the Second Quarter of 2023. The event will be held in English with simultaneous translation into Portuguese. Please be informed that this video conference is being recorded and it will be available later on the company's Investor Relations website.

During the company's presentation, all participants will have their microphones disabled. To get in line in order to ask questions, please click on the Q&A icon at the bottom of your screen and write your name and company. After the presentation, we will begin the Q&A session.

Now, I'll hand it over to Mr. Rodrigo Abreu, Oi's CEO. Please, Rodrigo, you can proceed.

[Rodrigo Abreu, Chief Executive Officer]

Thank you, and good morning everybody. Welcome to our Q2 2023 call. And as usual, I have here with me our CFO, Cristiane Barretto, who will present details on our financial results. And together we'll cover the results for the quarter and some other status updates about our judicial recovery process. After the delays in the last two calls, we are now resuming the regular schedule of earnings calls as most of the impacts, which required us to delay, some of our past calls are now behind us and the reporting should now be straightforward again.

Q2 is one of the first quarters where we start getting close to a clean annual comparison after the closing of the mobile operations sale last year. And now we continue to present our numbers and core metrics in a very standardized way to allow for the appropriate comparisons for the assessment of our operating performance. In parallel with the natural adjustments to our operation, as we ramp up the new way model, following all the restructuring from last year.

We are also dedicating a significant amount of time to negotiating and discussing our new judicial recovery plan with creditors as you all know. As we said many times, this financial debt restructuring along with solving the multiple concession issues are two key pillars, which are absolutely required for the company to have a long-term perspective. We'll talk more about this at the end of the call.

So, without further ado, let's start looking at the key figures and results for the quarter, which had some positive results in maintaining growth on the core, but also pointed out a faster deterioration of our legacy business.

With that, let's look at the highlights of Q2 by jumping to Slide 3. So, let's start looking at the progress on the key core metrics, and as I mentioned in the opening the New Oi revenue growth decelerates a little bit in Q2, given the sharper declining legacy revenues, but the Ex-Legacy revenues grew at double-digits. Cost efficiency continues to improve year-over-year, as are we focus on having a leaner and more efficient company.

When we look at the 2Q '23 growth for over 10 quarters now, the New Oi core revenues continue to grow. And this time at roughly a 10% clip this quarter. Fiber still growing in the mid-teens with plus 15.3% year-over-year. And B2B has also grown albeit slightly slower than the last quarter, but in line for a business this size. In terms of homes connected, we also have growth and it continues to be a key responsible for the fiber revenue growth, and on the B2B side, the ICT revenues continually improving at a very fast pace.

On the efficiency side, we remain firm on all of our focus and even in a clean comparison without all of the impacts of the mobile cost reductions that we had in the previous quarters. We continue to reduce OpEx year-over-year and this is paramount for the company to continue pursuing its goal of being self-sustained and generating positive operational results.

And finally, a key cash metric, which is how much we're spending in OpEx plus CapEx. Here we dropped again by a very large amount in Q2 minus 32% compared to last year. So, maintaining a better cash profile in terms of cash generation for the company. So now let's look at the more detailed view of revenues on Slide 4.

In Q2, our core revenues reached close to 80% of the New Oi total and continue to grow year-over-year. The Oi's fiber, as I mentioned, maintained mid-teams’ growth, but the negative aspect here is the legacy drop of minus 50%, which impacted the overall growth of the company. The core results, as I mentioned, are now over 80% of New Oi revenues and legacy now represent only 10% of the total. The remaining 10%, and 11% are represented by the DTH revenues, which remain relatively stable compared to Q1, but also contributed to an overall revenue decline when you include the discontinued operations.

In terms of the legacy revenue, here the drop surpassed the minus 50%, which impacted the new way overall growth which was then negative to the clip of a minus 3%, slightly negative compared to what we had last quarter when we were able to maintain a total positive growth. This indicates a run rate for copper-based revenues, which is now pointing to less than R$1 billion this year.

And this goes to what we have been saying all along that the legacy business was already unsustainable, we'll continue to be so, so our focus is to reduce as max of possible the costs on the legacy side while ramping up fiber and also looking to solve all of the issues with the concession, so we can diminish this impact for the legacy revenue drop with the comparable drops on the cost side, which today are still not possible due to the obligations of the concession.

On fiber, fiber growth will still be significant, but not enough to completely offset the declining copper this quarter. Let's move then to Slide 5 and take a little bit of a look at the key fiber results. Fiber revenues continue benefiting from the customer base and ARPU expansion and presented again healthy year-over-year growth. The sequential growth was a little bit smaller given a different environment, but all-in-all, we are heading now with the fiber revenues to our run rate of at least $4.5 billion annually. And this is in line with what we expected or as fiber is going to pretty much substitute the entire legacy revenues as we move along the plan.

On the homes connected, our homes connected continue to increase, now we got to a customer base of homes connected of 4.1 million homes. And this came with both ARPU and the growth ads average speed, maintaining a healthy pace. We remain stable sequentially on the ARPU, but present a significant growth compared to last year. And now we believe we are close to the industry benchmark in terms of ARPU with around R$91 per customer.

This has been driven, as I mentioned, by the continuously growing average speed of our new ads, which is now at over 430 megabits per second. Contributing to all of that, the V.tal homes passed based also grew significantly in Q2. In particular, in comparison with last year with almost 1 million new homes passed the reaching 21.5 million homes passed across the country.

To further understand the evolution of our customer base. Let's now then turn to Slide 6. In Q2, it's important to mention that, we still felt the impact of the slightly tougher macro and competitive scenarios on the demand and in order to continue pursuing growth with the profitable growth, we are adjusting and continue to adjust both our commercial strategy and our acquisition models. And the trends point out to a better second half '23 from what we see on leading indicators.

In Q2, our net ads was in the range of 60K new users, and we could see that there was an overall market declining in net ads across the board, but our churn keeps also dropping both annually and sequentially, minus 0.4 percentage points in this last quarter. And when we look at the whole competitive scenario, even though we recognize that there is a tougher market, competitively speaking, we still maintain the fiber leadership in the largest number of cities in Brazil compared to all other players in the case of Oi.

When we look at the, the second half of 2023, we are seeing better trends based on some leading indicators of our new acquisition models. For instance, the second quarter '23 showed improvements and indicators such as the collection of new cohorts, which tends to be an indication of churn and how the customer base is going to behave going forward. And in order to capture all of the opportunities in the different segments of the market, we have also been evolving our portfolio to address these growth opportunities.

On the high-value segments and customers looking to extend their coverage inside the homes. We are now emphasizing our Oi Fibra X -- Oi Fiber X portfolio, which is a high-end product enabling strong connectivity in the entire household, while also providing differentiated customer support. And this comes into flavors one based entirely on Wi-Fi and one based on FTTR, which is the fiber to the room model, which we pretty much exclusively develop and deploy in Brazil.

On the other end of the scale, on the entry-level customers, we have also launched our Oi Fibra start portfolio, which is an offer with a hundred megabits per second speed designed for customers with demand for just the basic internet consumption with fully digital support and this portfolio has been having inroads in terms of market results and we expect it to continue to grow, especially in the areas, where we did see more competitive pressure.

And finally, on the small and medium enterprise segment, we continue to emphasize our Oi Fibra plus Negocio. So Negocio, which is a plan tailored for small companies combining both the fiber broadband with fixed voice, special customer care options, and with the partnerships developed exclusively for the segments such as the one with PagSeguro.

Now let me turn over to our CFO, Cristiane Barretto, who will cover the topics of OpEx, EBITDA, CapEx, and our liquidity position. Chris?

[Cristiane Barretto, Chief Financial Officer]

Thank you very much, Rodrigo, and good morning to all of you. On Slide 7, we showed that our initiatives to generate a linear cost structure for the new way resulted in a significant 22% year-over-year decrease in routine OpEx when excluding rent and insurance costs, mostly related to the rent of neutral fiber network capacity from V.tal due to the change of the operating model. It's important to emphasize that this is the first quarter comparing cost evolution after the mobile UPI sale, which occurred that in early April, 2022.

Therefore, the total routine OpEx reduction of 2.1% year-over-year reflects savings that additional to remote cost and out in occurred despite additional fiber-to-the-room expense in the periods compare to it. Recurrent personal expenses fell 4.2% year-over-year despite inflation given our continuous reduction of personal, despite higher expense regarding collective agreement adjusted in the period, 30-part services dropped at an expensive and expressive 18% year-over-year because of our efficient measures driven driver reductions of 64% in energy expenses, 35% in specialized services and 16% in content acquisition. The last two lines made into the contract were negotiations.

Rent and insurance expenses grew by 51.8% year-over-year, driven by cost related to the rent of fiber op network from V.tal as of June 2022, with a consequent reduction in CapEx and a positive net effect in operating cash flow as we detail further on Slide 9.

Turning to Slide 8, we emphasize the consistent cost reduction activity in the past year due to all use of operational transformation and cost save initiatives. You can see on the left-hand side of this slide that third-party services and network maintenance declining notably each quarter reflecting ongoing efforts to drive cost-out result from M&A in addition to contract renegotiations simplification initiatives, we still see key opportunities to create even a linear cost structure as we've shown on the right-hand side of V.tal. The first, which has been mostly concluded is the cost out of the mobile and infra call UPI that led us to those important expense related to footprint, call center, inventory, personal among others.

Moving forward, Oi has cost-saving potential and improvements of its organizational structure to be achieved through ongoing simplification, downsizing, marketing, and customer experience by streamlining our portfolio and embracing digital channels in IT network usage, focusing on network maintenance efficiencies, simplifying the IT stack, and reducing energy consumption.

Another key component of our efficient plan is the adjustment of the concession operations where network, the commissioning efficiency initiatives in line with regulatory obligations are crucial to the sustainability of the business. We have implemented strong cost-efficient initiatives driving solid reduction trends so far. Even so, we still see many drivers to continue this trajectory as we implement those key efficient opportunities as I just mentioned, gain scale on the new fiber model which is still in transitional phase, and reduce impact from concession.

Now turning to in Slide 9, we present Oi's EBITDA and CapEx evolution highlighting our operating cash flow which continues to improve after the change of the operating model. This quarter routine EBITDA closed at R$129 million and sustained the mid-single-digit margin of 50% in line with the expectations for 2023.

On the right side of this slide, we present Oi's CapEx, which close to R$263 million in the second quarter higher than the previous quarter may include the seasonality of volume of ET acquisitions in the beginning of the year is typically lower. When compared to the previous year, Oi enhance it is operating cash flow increasing R$550 million year-over-year. In this quarter, we're going to highlight the positive effects of the reduced reorganization, the working capital, high CapEx disbursements, and payment of non-care obligations, particularly the transaction of agreement with [indiscernible] for the period, which was already scheduled for this month. The total cash position reached R$2.5 realized in June, 41% higher than our position in March.

Now I give back to Rodrigo again the word. Thank you.

[Rodrigo Abreu, Chief Executive Officer]

Thank you, Chris. Well, before we head to conclusion, we have as usually our quick update on ESG, which remains for us an important part of everything we do, and highlighting the three pillars here on the E front. Our key highlights go to the increase of equipment usage. And in this case, this is not also, not only good for the environment, but also good for the company's efficiency.

We are emphasizing the recovery of ONT equipment’s coming from churn customers. And with this avoiding the disposal of electronics and generating significant savings in this quarter of circa R$16 million and we do see space to continue increasing this recovery and then reducing both the environmental impacts and the cost of acquiring new ONT's and thus reducing CapEx.

On the social front, we remain focused on education initiatives and launched some key initiatives such as our ESG learning for all of the employees that are Oi Educa platform, and also introduced the 2023 tech apprentice program and opportunity for young talents part of the Oi Futuro initiative that we have for social impacts.

And also launched the fifth edition of our Oi Futuro social entrepreneurship initiative, which has the aim of accelerating more than 70 businesses and impacting over 400 social entrepreneurs. And finally, another key pillar, we have just released our 2022 sustainability report highlighting all of our actions from last year and giving full transparency to all of the initiatives and results achieved in 2022.

So, let's close our presentation by giving you an updated status on the three key transformation pillars and what to expect next for each of them in slide 12. In closing here, I wanted to recall that as we have highlighted already, the three key pillars that we are focusing or our execution our depth reduction, the solution of the legacy and concession issues, and obviously the buildup of the new Oi.

In terms of the debt reduction on the restructuring and JR processes, we remain in negotiations with creditors to get to a final version of the plan agreement. And this has been taking longer than expected, given all of the details and certain discussions and guarantees for securing access to the new money, and obviously the discussion of other detail terms that are always present when discussing definitive documents.

In the same front, we have also maintained our ongoing negotiations with the mobile sale arbitration with the three operators that acquired our mobile operation last year. And we remain committed to finance solutions to that. And we also maintain our ongoing negotiations with non-financial creditors in order to alleviate the long-term feature take or pay obligations for the company as part of the entire restructuring plan.

In terms of main challenges, next steps, we have originally mentioned that we expected the RSA conclusion for July, but as negotiations are taking longer than expected, given the amount of details, we now expect them to take yet a couple more months. Only after this, a final version of the plan can be presented, and this is now estimated for Q4. This is running in parallel and in line with the overall judicial recovery schedule, which given its complexity in terms of number of creditors and just the analysis of the whole creditor list has now been postponed a little bit given the demands of the judicial administrator.

In terms of the legacy solution, on the concession updates, the key advancement we had was the opening, the formal opening by Anatel of the consensual process at TCU. So Anatel's board voted in favor of presenting to TCU, the possibility of a potential consensus agreement. And this is now in under discussion at TCU for the admissibility analysis.

As part of this, we have been interacting with TCU to move the process forward and still maintain a positive stance on the possibility of an agreement, but obviously, this is going to still require all of the formal processes to take place and to be concluded. And as we mentioned in the past, even the mandate of the TCU consensus group, we expect that we could have and should have a news until the end of the year.

Finally, on the operating fronts, we are focusing on the same challenges and execution focus since we started this whole journey. And pretty much this has been the focus of our communication with you, both in terms of the growth of homes connected, the implementation of our cost reduction initiatives, the reduced CapEx intensity of the company, and looking for profitable growth and the next wave of growth for the new way.

What it's worth highlighting as well is that we will continue with the deep dives on cost reduction initiatives, and in this case, we are now entering a next wave of structural cost reduction to address some key legacy infrastructure costs, such as energy, buildings and property, poles and the whole infrastructure for transmission of the legacy contracts as well.

To summarize, then, we have another quarter which are highlights the evolution of the operation with many indicators that point out that we are in the right direction. While at the same time we acknowledge and don't minimize the multiple challenges we have to face on all fronts. From a tougher market scenario to getting to a viable plan agreement with creditors and advancing an agreement with TCU and Anatel.

But as said before, the teams remain committed on making it happen and really focused on both executing on a daily basis, the buildup of the new way, as well as addressing the two more strategic pillars for debt reduction and a solution for the legacy and concession issues. And that's the update as we mentioned in a standardized way, so to allow for comparison with the previous periods.

And we can now start the Q&A session. Thank you, everybody.

[Operator]

So, we'll now begin a Q&A session. Please remember the live questions should be asked in English. Our first question comes from Eduardo Ruby [ph], sell-side analyst from UBS.

[Unidentified Analyst]

It was released on the news that BTG funds increased their position on V.tal. I'd like to know if you could give us some color on the long-term view of Oi's participation of the company. Thank you.

[Rodrigo Abreu, Chief Executive Officer]

Thank you, Eduardo. Yes, this was already expected and counted for, when we highlighted the closing details of the transaction last year, the Eduardo. So, this is nothing more than just executing on what was committed, when we closed the deal. And this puts our participation at roughly around 30%, 30% plus.

And this is obviously, our participation as we have it right now, and we see it's a fair participation. And in the future, obviously, this participation can vary depending on numerous factors including what happens with the performance of the company, including the possibility of other aspects and operations related to M&A, related to IPOs, related to what happens with eventual changes in the capital structure.

But for now, obviously, this is the visibility we have, and obviously, as many of those things depend on the evolution of the company itself. We cannot do any forecasting on what will be the ultimate participation for the company in the long run.

[Unidentified Analyst]

That’s great. Thank you very much.

[Operator]

[Operator Instructions] So now I'll hand it over to Luis Plaster, IR Director for questions from the audience.

[Luis Plaster, Investor Relations Director]

Thank you. Now we'll switch to Portuguese. As we have done throughout this year, we now receive questions in Portuguese through the Q&A, written Q&A. [Operator Instructions]. We have one from [indiscernible]. His question is, does Oi have the cash flow to support how many months’ worth of a judicial reorganization?

[Unidentified Company Representative]

Thank you for your question. As we said this a while ago, when the judicial reorganization was first announced, our plan includes a number of steps to ensure that there will be cash flow available to enable the company's operations until the end of the process and until new money can come in. This plan was decided upon in the early year, in early 2023, there are a few topics that still need to be discussed about our negotiations with the creditors.

Some of the steps are currently being taken. There's currently a strong focus on cost reduction, as Cristiane mentioned earlier in the call. There's also an initial agreement with the creditors that would enable a TIP type funding for which an initial installment has already been received in the amount of about $200 million, R$1 billion rays. So, from that point on, we'll be discussing the conditions for new money to come into the company.

As we had said, we expected this to happen by the first quarter of next year. So, until then, the cash consumption profile has gone up slightly in the beginning of the year, because of the seasonality of the first quarter as we mentioned in our first call and consumption has gone down in the second quarter, as cost reductions have continued and even stabilized.

And we expect that our cash, as it stands, will be enough to take the company all the way to such a point where new money starts coming in. Hopefully by the end of the first half of next year. We expect that to happen by late Q1, early Q2 2024. So that's when we were expecting to have a new money come into the company under this new company profile.

It makes sense to us to continue to significantly insist on cost reduction. Of course, the plan allows for new money coming in, in a way that can actually provide us to operate until such point as when we are generating our own free cash flow. But the less new money the company requires, the better. So, we're strongly focusing on reducing consumption costs more so than anything else at this point in time.

[Luis Plaster, Investor Relations Director]

Okay, thank you. Next question. In the fiber slide, you mentioned the increase in net ads and also expected improvements for the second half. How do you see competition in the fiber market and how will that impact your revenue?

[Unidentified Company Representative]

Well, let me say this again in Portuguese. The market has heated up significantly initially, and growth levels were very, very high. Oi was probably the company that benefited the most from this increase. We got a lot of space, we grew significantly, we also acquired a lot of fiber market share with a second-leading fiber player in the country. And over time this growth tapered down in the market because there was greater competition, more players coming in, meaning the penetration increases.

And also because of macro issues, the macro environment is taking a bit longer than expected to react. So, there is an impact on our consumption capacity for new acquisitions as well as default rates and it's impact on churn.

Now, the market is stabilizing a bit more, but the overall trend is that we'll be seeing greater maturity going forward with continued growth, yes, but in a healthier fashion, in a more profitable fashion for the companies. We've seen many movements in the market in that direction, and we know that scale will be an important element in making sure that all players traditional and fiber continue to remain in the market. This is why we've seen a reduction in the number of players. There's fewer players in the market. We're seeing consolidation acquisitions resulting in a smaller number of players in the market.

The market is nearing adequate competition rates in a way that incumbent companies can achieve better results and achieve more stable growth going forward. In our case, specifically, like I said, we're turning our commercial strategy towards value increasing, value increasing, just the base is not enough. We continue to grow, but we're very prudent when it comes to acquisitions. We want to continue to accelerate our acquisitions in a more focused fashion, focusing on bringing in valuable results.

Now we're also looking for ways to reduce churn, and doing so, we expect to be growing at a higher pace than we are today. That way we'll increase our net ads and also the profitability on our base.

[Unidentified Company Representative]

There is a question from Chris [indiscernible]. He's asking about the homes best and homes connected figures and the evolution of the market, and also the recent base to continue into the future. He is also asking if we expect it to pick up again or slow further.

[Unidentified Company Representative]

Okay. I'll answer in Portuguese first and then I'll answer in English. Well, overall, the volume of homes passed, as we saw in the presentation, grew significantly. Homes passed growing by 1 million homes is very significant, and that growth was provided for in our V.tal's plan, and V.tal is the one planning for that growth. It's not Oi, Oi is not determining the numbers of homes passed and homes connected. And obviously, we should consider, and I am not speaking on behalf of V.tal, but this is just a market observation.

It is important for us to take a look at the market so that we understand where we are going to continue to build and also considering consolidation so that we have a better use rate. So, these are natural movements in the market.

[Unidentified Company Representative]

Obviously, I mentioned that our market conditions have to do with a little bit of the phase, the macro scenario of the country is facing. And we are seeing some signs of improvement in our case, and the key component for these improvements to reduce churn. Obviously, this is also associated with our own actions to reduce churn and so to keep improving the growth rate of the net adds of our own base.

But we do see in the case of V.tal and just highlighting again, as I men mentioned in Portuguese, that we don't respond for highlight V.tal is the only one responsible for planning and implementing, and determining a strategy for growth on the home space side. But we do see that the recent growth of V.tal was very significant at any rate over almost 1 million homes passed and over 4 million compared to last year.

Obviously, this is very significant. It's already by far, above and beyond any other player, the largest neutral network in Brazil. And what we see happening is that not only this growth will continue to be planned based on what they see in terms of market growth, but also on the possibility that this market not only on the customer side, on the customer-facing side or in our case the client goes, we'll see opportunities for consolidation, but eventually also on the infrastructure side.

We know that one of the key metrics for any infrastructure utilization and this considering all players in the country is the percentage of utilization. And we do see that there may be opportunities for consolidation in the future. And here I'm highlighting that I'm just talking about our market view and not responding on behalf of V.tal. Given that V.tal is a completely independent company that has to follow its own strategy and management.

[Unidentified Company Representative]

There's a question from Marcos [indiscernible]. He is asking us about the court-supervised reorganization. What are our long-term expectations in terms of when the reorganization process should end? Well, the reorganization process, we should remember that this is a process that is a process that is not determined by the company. We're not the ones to say how long it is going to last.

If we consider how the judiciary has been conducting processes like this, it usually takes 24 months. However, it can end before that if the judge understands and believes that the main phases of the process have been completed, but also that depends on the new money coming in and also the achievement of targets that are part of the plan. So once again, we believe that this should last two years, but it could also end earlier than that. But it all depends on the execution and how it is going to be conducted.

And once we fulfill the plan, the judge can make a decision to enter this process before that deadline.

[Unidentified Company Representative]

We have a question from Carlos Sequeira. He's asking if we have any concerns about any potential intervention by Anatel.

[Unidentified Company Representative]

Well I believe that we have talked about that in the past when we were asked about news articles that come out in the press and informal processes that might exist and that come out on the media. And what I have said repeatedly is that the agency is in charge of monitoring the concession and the concessionaire's actions as part of their obligation as a national agency.

As a national agency, it has to consider all possibilities. For example, what happens if there's any issue with the reorganization process or what happens if we enter into a settlement or if the plan is approved later than expected. So according to Anatel's obligations, the agency needs to have all instruments in place in case they need to use it. But so far we don't have any indication that it is going to happen because we believe that we are fulfilling our obligations under the reorganization plan, including in terms of viability when we discuss the plan and since we are bringing new money into the company, which has to be approved still, and we are going to discuss that for the second half of this year or early next year, that's when we are going to achieve the targets that we established earlier this year.

So, Anatel is fulfilling its obligation of monitoring closely the concession and the concessionaire's actions. It is absolutely natural for the agency to monitor us and discuss internally any actions that might be necessary. But that is not an indication that we might have any intervention. It is actually a duty that the agency has to perform.

[Unidentified Company Representative]

I believe that the other questions that we have here have been answered during the presentation or during the Q&A session itself. So, I would like to turn it over to Rodrigo again for the closing remarks. Thank you very much for your participation.

[Rodrigo Abreu, Chief Executive Officer]

As usual, we will continue to be as transparent as possible with this whole process. Not only acknowledging, everything that we have been doing, but everything that needs to be done. And as my final message in the presentation, once the team remains fully committed to making it happen and to communicating to the whole market, to investors, to stakeholders, across the way, as long as, as soon as we have anything that requires this communication. So, thank you for your participation and we'll talk next quarter. [Foreign Language].

[Unidentified Company Representative]

Once again, thank you very much. The company will continue with its policy of being as transparent, and as possible and keeping investors and other stakeholders informed as any new development happens. We will be as transparent as possible in terms of everything that we have been doing and everything that we still need to do. And as I said earlier, our team is 100% focused on making things happen and we are fully committed to overcome the challenges ahead of us. Thank you very much.

[Operator]

Thank you. This concludes Oi's 2Q 2023 call for today. Thank you very much. If you need more information, please feel free to access the company's investor relations website, www.oi.com.br/ri. Thank you.