Salmones Camanchaca SA

SGO:SALMOCAM

Earnings Call Transcript 2024-Q1

[Unknown Executive]

Good morning everyone. Welcome to Salmones Camanchaca First Quarter Conference Call. On behalf of BTG Pactual, we would like to thank all the investors who connected to this call and the company. Representing the company, Ricardo Garcia, Company's Vice President and Manuel Arriagada, CEO will be presenting.

At the end of the presentation, we will have a Q&A section also linked with a survey regarding the call, will be copied to the chart. We would like to ask you, please, if you can complete it. Thanks.

[Ricardo Garcia Holtz, executive]

Thank you, Paolo Fernando and Alex from BTG in organizing this call to review the earnings report by Salmones Camanchaca submitted yesterday. Let's start then. This is the agenda. We'll probably take 40 to 45 minutes. [ Alberto ] go ahead.

On the highlights of the quarter, well, certainly, this was not a good quarter. Let's start by that. The condition for that is mainly related to some oceanographic condition in the Patagonia during the summer, actually spring and summer that generated a lot of radiation in the area and lack of appetite in the biomass and therefore, the growth of the biomass was lower than expected, meaning lower weights at Harvest point from several sites, particularly those that were on harvest during the quarter. That meant that whatever we harvest had a lower weight as well as the decision we took to delay harvest in one site for the second quarter of '24 and therefore, there was a double impact on volumes in general. That limited our ability to sell on the first quarter, particularly in fresh formats.

Yet the operating revenues in the first quarter were higher than in the first quarter of '23 by approximately 3%, which is a combination of higher volume sold and much lower prices. The harvest combining the last part of the '23, '24 Coho season plus the harvest of Atlantic was in the area of 11,000 metric tons WFE, in line with our expectation for the quarter, but 19% lower than in the first quarter of '23, but that's only because we had a lot of harvest from the '22 to '23 Coho season in January '23. And therefore, that hide that.

Prices is probably one of the main concern of the quarter declined 13% for Atlantic and 27% for Coho compared to the first quarter of '23. This is something that will be covered later in the presentation, but it's mainly due to very unique, I would say extraordinary decline in demand in several markets globally for the first time that I've seen. Our interpretation of that is because of inflation accumulated over the last 3 years. Approximately 50% of the lower EBITDA that we are reporting this quarter is attributable to the reduction in the price of the Atlantic.

The price impact on our inventory, which was $3.5 million to $4 million negative in the fourth quarter of '23, was now positive and will revert some of the provision in the inventory. It was a positive close to $3 million in the first quarter of '24 million. That compares with a negative in the fourth quarter of '23 and a negative in the first quarter of '23.

Ex-cage cost increased and peaked at higher levels during the quarter, mainly attributable to the lower weights, harvest weights that we had in the quarter, meaning that all the fixed cost of our farming site is distributed among a fewer number of kilos in the site, and therefore, that meant an increased cost. But also, we had about 1/4 of the harvest during the first quarter of '24, in one particular site that had a very high sea lice outbreak, and therefore, there was a lot of treatment as well as incidence of lower oxygen, meaning that there was a lot of support -- oxygen support to that particular farm meant that, that particular had a very high cost and Manuel will cover that.

The good thing of the quarter. I think that was something that pleased us a lot was that the mortality during the quarter was extremely low in the area of 0.5% per month, 1.5% in the quarter on the total biomass in our sites. That's very good, particularly in a quarter where we had an El Niño phenomenon in the Chilean coast and therefore, we were a bit afraid of the impact. That is precisely why we have invested and spent a lot in terms of the mitigating devices and technology in our sites.

So a good thing is that these technologies and devices that were implemented in our sites worked well, meaning that there was very low mortality. And yet the other side of the coin is that there was higher cost. No extraordinary mortality during the quarter. When we take a look of the sustainability indicators in general, there was favorable trend during the quarter in almost every indicator compared to the industry. I would mention particularly the decline in this -- in the length of the cycle that we shortened it by about 2 months. That's very good.

For the 2024 estimates, we keep our estimate of around 50,000, 51,000 metric tons combining Atlantic and Coho harvest 45%. Approximately 46%, maybe on Atlantic in about 4,000 in Coho. And that -- we will cover that during the presentation.

Next, as I mentioned, the higher volumes sold in the 24% level for the first quarter is attributable to the fact that we had a lot of inventories during the last quarter of the last month in '24, and therefore, we have a lot to sell and that explains why we increase operating revenues. However, the decline in prices limited the growth in revenue, as I mentioned, 13% and 27% decline in Atlantic price and Coho price, limited the growth on revenue.

Negligible EBIT, as I mentioned, I would say, slightly positive on Atlantic in the $0.20 area and substantially lower in Coho, we will cover them. And because of the price evolution in the first quarter, we reversed some of the provision made on the inventory, as I mentioned.

And the remaining inventories at the end of March '24 is about 7,000 metric tons of both Coho and Atlantic, which is a manageable volume to be sold in the coming months. Despite the fact that we are going to harvest a lot less Coho this year than the previous one, we entered 2024 with a lot of inventory of Coho that we are selling throughout the year at better conditions than those observed at the end of '24.

Next, on harvest and stocking, harvests are in line with the projections that we mentioned. And as you can see here, we are projecting a much lower volume stock by Coho including '24 in the 4,000 to 5,000, I am sorry -- yes, 4,000 to 5,000 fish -- sorry, 4,000 to 5,000 Coho harvest. Basically, one site will be -- one farming site will be stock in '24 or wash stock actually. It's going to be harvested completely during 2024.

On Atlantic, we are increasing the stocking during '23 and '24 and therefore, there will be further increase in '24. That's why the projection for '25 is to reach about 50,000 metric tons of Atlantic harvest.

In terms of the industry, we are still where we are yet to get the information on stocking for Coho for this season, but we envision that there will be a reduction over for Chile. Next, Manuel.

[Manuel Arriagada Ossa, executive]

Okay. Thank you, Ricardo. Good morning, everyone. Now we will review the results of the company's main operation for the first quarter. First one is the Atlantic biology. As Ricardo said, in the first months of this year, we have had a very positive biological results for the sea-farms. In the left graph, you can see the evolution of monthly mortality of Atlantic salmon, which was under control in the first quarter with values far below the industry average.

In the right table, you can also see that all indicators were better than the industry average for close groups such as mortality, feed conversion, growth, cycle length and antibiotic consumption. The only exception was the harvest weight, as Ricardo mentioned, due to the fish lack of appetite during the spring and the summer. These important effect was due to oceanographic conditions of high radiation and also the presence of harmless algae in the farming side, which caused a decrease in the fish appetite, in the farming sites in general, from October last year until the end of February of this year. This situation also happened for the entire industry.

As a result, this led to a lower harvest weight of 4.3 kilograms and also a delay of the harvest to the second quarter to gain weight. However, the good news is that starting in March of this year, conditions improved and appetite and feeding are normal, which is helping us improve harvest weights in the second quarter.

Atlantic farming cost. This Q1 came with an ex-cage cost of $4.91 per kilogram. That was higher than Q1 2023 in $0.64 and also higher than the comparable biological year, which is Q1 2022. The breakdown of the extra $0.64 compared with last year is the following, $0.26 due to the lower average weight, $0.09 due to mitigation measures for Bloom and mainly for oxygen, $0.14 due to fish health, mainly sea lice treatment in one particular site.

And finally, $0.15 in general operations due to inflation and extra services to the sites, also because of sea lice. This Q1 has been pressed mainly by incidence of sea lice and low oxygen in one particular site that represents 24% of the total Atlantic harvest in the quarter. This particular site had an ex-cage cost very high at $6.2 per kilogram. The remaining sites of the quarter had an average cost of $4.5 per kilogram. All of this in a context has resulted low harvest weights in all of the sites harvested.

Going forward, in the coming months, we expect a decrease in the ex-cage cost due to better harvest weight and also harvest from sites with more positive sanitary and biological conditions.

Total cost. Total costs for Q1, including ex-cage processing was $6.46 per kilogram. It was 11% above compared with the same quarter last year. Processing costs was $1.18 per kilogram, below the same quarter of the previous year mainly due to no outsourced processing exchange rate effects and processing efficiencies. The devaluation of the Chilean currency in the period was 17%. It's important to mention that in the processing area during 2023, we implemented a productivity and efficiency project through which we anticipate reducing cost for this year by 5% to 10% on an annual basis.

Next slide. Sustainability indicators. The sustainability metrics presented in the table are related to 2 sites that were closed in this first quarter. For those sites, the fish in-fish out ratio people was maintained below 0.5. That was a good level and also consistent with our sustainability linked loan target. The farming length of the cycle was in average level, low in risk and extending the follow-up periods.

In relation to the ASC certified harvested biomass, it was in a very good level, reaching at 95% in the quarter. Antibiotic usage were higher than previous year, used for fish wellness in one sea-farm. That side, as we explained, also experienced an important sea-lice pressure, so it was used a higher amount of antiparasitic treatments.

Finally and unfortunately, we reported in the quarter fish escapes 1,700 due to a fish net cutting sabotage that we had in January of this year, at our waiting cages at the primary processing plant. Because of this situation, we filed a criminal claim to the Chilean prosecutor authority, which is now in process.

So Atlantic salmon price. The table shows the evolution of the unvaried reference market price in the U.S. market during the year. As you can see, after a peak in the beginning of the year, the price decline and remained stable and below previous year in Q1 on a context of a weaker U.S. demand. Currently, prices are in line with 2023.

In Q1, the total global harvest for Atlantic were below previous year in 5% and for Chile, the supply drops 16%. For the full year, Kontali expects a 6% drop in the Chilean supply. For global supply, Kontali expects a 1% increase for this year. So limited supply for Chile and for the industry.

Atlantic price achievement. We said market prices had a sharp increase in January, then prices remained stable. At the same time, Salmones Camanchaca price remained stable since more or less by last year. Our raw material return was $0.32 under the Urner Barry reference during the last quarter.

In general, whenever price rise, we tend to lag behind in the short term. Our company's ability to react to market changes by changing formats and markets to capture the best opportunities in the market help us in the long term to achieve above market prices. The company's strategy also involves increasing the value added of our products and sales with medium to large term commercial agreement that mitigate volatility. In other words, we have more stable prices, less volatility and higher prices than the market but in the long term.

Atlantic sales value-added strategy and mix. In relation to the Atlantic sales distribution, the American market continues to be the largest one and most important market with 51% of market share, followed by Mexico sales with 15%. American market increased the share versus Q1 of last year. The value added was 85% and above previous quarters. HOG sales were at low levels due to harvest weight because they were below 4.5 kilos. In general, HOG is a market with a premium price to higher sizes.

Let's go to Coho -- Coho price development. So the graph presents the key metrics pertinent to the sales performance of Coho. It features a blue line that illustrates a 7% depreciation of the Japanese yen against the U.S. dollar throughout 2024 with a cumulative devaluation of 14% in the last 12 months, and 24% over the past 2 years. This currency shift has influenced the U.S. price of Coho in its principal market, which is Japan. The repo effect of devaluation and price reduction has extended to all Coho markets. Currently, the yen is over the 150 level against the dollar.

The graph also presents the volume sold for Salmones Camanchaca in columns and Coho price, the orange line. A decrease of price can be observed starting from August 2023.

Salmones Camanchaca price in the first quarter increased $1.10, but it was still $1.60 below Q1 2023. The Chilean industry increased the Coho production since 2020 with an increase in the production of 20% during last year. It's important to mention that Japanese market still represents 2/3 of the total sales for the Chilean industry.

In relation to the formats and markets, sales distribution for Coho, Japan and Korea were the largest market in Q1 with a 37% market share, followed by LatAm, which is mostly Mexico with 28% and then the American market with 18%. Latin America and North America reduced their share in the first quarter due to the higher production volume in the last season that requires new markets.

Value added was 74% in the quarter, which is below previous quarters due to the higher production of the last season, which increased the production and sales in the HG and fillets.

[Ricardo Garcia Holtz, executive]

Thank you, Manuel. Let's review whatever is out of the EBITDA. I guess the conclusion on the EBITDA, which was as you mentioned, Manuel, more than 20 million below 2023 was a consequence of mainly Atlantic price and Atlantic -- and Coho price and also the higher cost ex-cage of Atlantic.

The conclusion of Manuel's comments on the operation is mainly that the higher cost is a consequence of this higher radiation during the spring and the summer, which caused the biomass to grew slower than expected, and therefore, the lower harvest weights for the higher cost of the good sold. That's one of the main reason. The second is one particular site and Manuel mentioned it, 25% of the harvest of the quarter that was impacted by an outbreak of sea lice and lack of oxygen that was very expensive.

And last, but not least, is the regulation. The regulation over the last 1.5 years or maybe 2 years has been putting obstacles and requirements for farming in the Patagonia of Chile, not necessarily on the benefit of the environment, not necessarily on the benefit of the sustainability. But definitely, putting obstacles and limitation for growth and development, and there are several of those. That is probably impacting something between $0.25 and maybe $0.40 the cost of today's performance.

Next on the P&L, other than the things that we have already covered in the EBITDA, the prices, the costs, the volumes and the like. I'd like to mention the performance of the trout operation where Salmones Camanchaca is a minority partner. We contributed with 4 farming sites in the northern part of the Patagonia, someone else is in charge of the operation. And this venture, which is association [Foreign Language] or share account, in English. It's something that has generated losses in the last year as a consequence of the major devaluation of Japan, which is the main market for trout and some higher cost in the venture.

The performance of these and our intention to focus completely from our Coho development in the near future has led us to an early termination of that association. And we have stopped our participation in the stocking beginning of 2024, meaning that the last stocking where we are going to participate is the stocking of the fourth quarter of 2023. That means that by -- we estimate by the first half of 2025, there will be no more financial impact of the result of this trout. It will be gradually declining during 2024 to be completely extinguished by 2025. That's a 2-year earlier termination than what we expected.

And the other thing that is in the P&L that is not on the EBITDA is interest on our debt. The impact of the higher rate of about 40 basis points compared to the first quarter of 2023 was about USD 1.3 million additional expense than '23.

And next, on the cash flow. Cash flow was negative in the area of $6.2 million. Investments were lower. We have contained limited investment in Salmones Camanchaca only necessary investment to keep the assets in place. The vast majority of the investments of new sites in the southern part of the Patagonia is already made. There was no borrowings nor debt payments during the quarter. And the net interest-bearing debt reached $136 million, which is about $49 million higher than 2023 -- March '23 as a consequence of the negative cash flow of the previous year and the second, third and fourth quarter of 2023 that, as you recall, had a negative cash flow.

On the equity asset level, we are above our covenants in the sustainability linked loan about 40%. And on net financial debt in relation to the EBIT, we are obviously very [ high ] in the quarter because of the low EBITDA, but that's not mean anything for the debt yet because it's measured twice a year in June and in December, December was fine. We would probably be reporting a much lower number than that in the second quarter of '24.

And for the Chilean -- for our growth plan, I think that we have already covered that. For 2024, we expect a slight increase in the harvest of Atlantic in a much lower harvest of Coho for 2024. The reason for that and I will recall what we mentioned in the report of the fourth quarter of '23 is that because of the much weaker condition of demand for Coho in Japan because of the devaluation.

And the weaker demand in general for seafood in the markets at the end of '23 and still now, we believe that with the inventories that we built up at the end of '23 of Coho, there was no need for a high harvest in '24. And therefore, we limited the stocking of Coho to one site. That means that we would be harvesting something between 4,000 to 5,000 metric tons of Coho during '24, including 1,000 already harvest in January '24.

The stocking plant that we showed in the previous slides for Atlantic, means that we have secured at this point, approximately 40,000 metric tons of harvest in '25 under normal productive condition, obviously. And therefore, we expect in '25 to surpass 50,000 metric tons of Atlantic and a similar amount of Coho. So we will be in the high 50,000 metric tons in '25.

And concluding, well, I think that it's unfortunately, not nice number, that's the case. But I think that the good thing is that we have a much better oceanographic condition in the summer than we expected and that is expressed in our mortality levels, very low level of mortality in a year that we have some threats because of the El Niño. The Atlantic harvest unsold volumes were impacted by the radiation and the lack of growth in the biomass, much lower harvest weights in the fish than expected.

The Atlantic ex-cage cost, the farming cost of Atlantic was impacted by these lower wage as well as one farming site performance affected by sea lice and oxygen incidents. And that particular site was about 25% of the total harvest for the quarter. One important thing that we have not mentioned is that this lack of growth of the biomass and about 500 grams to maybe 700 grams lower average weight on the fish, limited our ability to sell the large fish in the markets that showed the best performance in terms of price, such as Brazil, China and a few others.

And because of this limited amount of large fish, the ability of Salmones Camanchaca to exploit these market opportunities was a lot less than what we have envisioned. Processing cost was below 23% first quarter of '23, but yet above $1 because of the lack of volume that I mentioned. The prices are still below our expectation. Our expectation were that because of the lower supply that Manuel mentioned in the first quarter and first half of '24, the prices were going to be higher than what we have observed and observing at the moment. And the reason for that is the weaker demand.

My interpretation is that, that weaker demand is a consequence of 3 to 4 years of high inflation. Food inflation is about 25%. In light of about 12% to 13% increase in salaries in markets, in the developed markets, such as the U.S. and therefore, there is a 10% -- 12% erosion of the real salaries and therefore, people are cutting expenses, and this is observed in many, many products and growth rates and switching to some lower cost product.

We don't believe that, that is a structural change, but it may affect -- it is affecting demand now and was affecting demand in the second half of '23.

Good biological condition for the fish in general in terms of the conversion factor, length of the cycle, mortality and so on. And as mentioned by Manuel limited supply growth or negative supply growth for this first half of '24. I think that these are the main issues of the quarter. As again, we were concerned on the results. We certainly were not happy. Meaning not aspiration, but a lot of work to make the operation more efficient, contain cost, but without taking good care of the fish, which is the main business of Salmones Camanchaca.

With that, I'd like to see if we have some questions.

[Ricardo Garcia Holtz, executive]

The net investment-bearing debt over EBITDA ratio of 11x. The covenants of the debt says that, that indicator has to be higher than -- that indicator is measured twice a year in June and in December. And that indicator should not be higher than 4 times. That is if EBITDA is -- in this case, the net investment -- net interest-bearing debt is $136 million, I think was the number for March, meaning that the EBITDA needs to be more than the EBITDA of the last 12 months need to be more than $45,000 million.

Obviously, in this particular quarter because of the low EBITDA that we had, that number went up, but that should lower because you may recall that the first quarter of '23 was an excellent record year for -- record quarter for Salmones Camanchaca. This last quarter was very low and the contrary will happen in the next quarter of the second quarter.

The second quarter of '23 was very bad for Salmones Camanchaca for reasons that were explained a year ago, and we estimate that the EBITDA in this second quarter of '24 will be better than that. So the last 12 months EBITDA will improve.

Daniel, the CFO, would you like to add something to that?

[Daniel Ventura, executive]

No Ricardo, very precise your comments on definitions, how it's measured.

[Ricardo Garcia Holtz, executive]

Thank you.

[Daniel Ventura, executive]

Hope [indiscernible], he's clear also with the answer.

[Ricardo Garcia Holtz, executive]

Next question is, can you please provide more details on your efficiency plan Manuel mentioned? What to expect, when?

[Manuel Arriagada Ossa, executive]

Okay. Yes, of course. Last year, we started that efficiency plan in processing. It's important to say that also we are starting now the same project for farming. But in terms of processing, that plan had several initiatives. One of them is related to productivity.

Other is related to some investment to obtain quick wins also in terms of productivity, to better use the equipment, to reduce -- to improve the time in the line, some initiatives related to energy consumption efficiencies to reduce the maintenance cost and also that had some initiatives related to optimize and improve the planning of the lines. We expect a reduction in processing costs of about 5% to 10% in this project. And the idea is to achieve most of them during 2024. We are talking about around $6 million in savings and productivity this year.

[Ricardo Garcia Holtz, executive]

I think that, that was the last question, I see.

[Manuel Arriagada Ossa, executive]

There is one question from Alfredo [indiscernible] also. Could you please provide insights on the current regulations in Chile and technological advancements, state-of-the-art utilized for managing organic residues under Salmon sea-cages?

That's an another question. Alfredo, just to say in general, in some sites, depending on the oceanographic condition and in the depth of the site, you can may have some temporary organic situation at the sea bed, which is always temporary. Never, it's a permanent situation. And in those cases, there is a regulation in place in Chile that allows you to implement some preventive system or you can also do some mitigation system to accelerate the recovery of this event.

Those kind of systems are mainly a system that injects mix between ocean water rich in oxygen to accelerate the recovery of this event that is the most difficult way to do that under the current regulation.

[Ricardo Garcia Holtz, executive]

There is another question. What are you estimating -- what are you estimating for Atlantic price this year considering this weak demand scenario contrasted by the negative supply from Chile?

We expect the price to remain stable that is not showing any major increase due to the lack of supply as we would have expected it and demand would have been strong. So there will be a weak demand in the context of a weak supply and therefore, we expect rather [Audio Gap].

Could you give some guidance on the ex-cage cost for the rest of the year? And what would be the net new ex-cage cost target of the company considering inflation over the last 2 years?

Thank you very much. Well, I think, Manuel, you can also cover that. But in our view, if you compare to prepandemic levels, the structural cost in Chile has gone up by approximately $1 or maybe slightly more. And as a consequence of the inflation that you mentioned on several elements within the cost, but mostly related to some structural things such as the technologies and the mitigating devices that we put in place for algae blooms incidents and/or oxygen incidents. That's one source of structural change, which I think will continue in the future.

And the second thing is the regulation that have put obstacles as I mentioned and requirements that many times does not add anything to the environment, but rather it's more cost for the site.

The other component of the cost, which is related to feed that is entirely related to the ingredients of the feed and the situation of the market of those ingredients. In the case we know better, which is the fish meal and fish oil levels.

As you may know, we include about 15% of marine ingredients within the diet of the fish approximately. And on those ingredients -- marine ingredients because of the El Niño and the lack of fishing in Peru, the price of fish oil particularly, was more than double during 2023. So that's an impact of about 7% of the ingredients of the diet. And there was about 10% to maybe 15% increase on the fish meal. That is another 7% or 8% in the diet.

On the other ingredients, such as the vegetable oils or the protein, soy protein and the like, I think that the peak of 2022, early 2023 is already over. And therefore, we should see some relief in the cost of the feed in the coming harvest, which is a fish that has been fed with feed in 2023. Manuel?

[Manuel Arriagada Ossa, executive]

Yes, exactly. In relation to the feed costs, there is a question on that. And of course, we are seeing a relief, fortunately. As you mentioned, Ricardo, the peak was at the end of 2022. At that time, more or less the average cost of feed was around $1,900 per feed. Now we are having a relief since more of the -- the majority of the vegetable components are reducing the price. So now we are in the range of 1,600 tons. So we are going to see a reduction in the feed price impact in the coming months for the harvested sites.

[Ricardo Garcia Holtz, executive]

Yes. And last but not least, Valeria Gonzales is asking, we whether the profitability of the Chilean industry will come back? And I will answer that more with general comment rather than specifics.

When? Only God knows. But I think that the trends are the following. On the cost side, we have seen an escalation of the structural cost, as I mentioned, something that was in the $3.5 maybe 4 or 5 years ago as a target. Today is probably $1 more and that is because of the feed ingredients inflation. And on the devices, technologies and prevention taken to confront more frequent incidents of oxygen and/or algae, any company and any industry when confronted to some change on the production function, takes a few years to adjust and optimize and Manuel has just mentioned how we are optimizing the processing and how we are assessing optimization of the farming.

So the first impact of a change such as the algae blooms and oxygen incidents, is that you take prevention measures to limit the risk. And typically these are not the most efficient one. They are effective, but not necessarily efficient. In the second round, you start to make these changes more efficient. So I think that in the coming quarters, we will show efficiencies in the farming and therefore, we ex-cage cost because of this new shift that we generate to make farming more efficient. That's one thing.

On the regulation, it's -- that's hard to answer. I don't think that we will have any rational order or rationalization of the regulation within the next 1.5 years. I think that, yes, in the future, because reality will prove very strong the salmon farming is structurally critical for the southern part of Chile. And I think that in the long-term regulation will find a rational way of regulating the industry.

And on the demand side, another subject of the profitability. On the demand side, I'm very optimistic. I think that the consumers, generally speaking, in the world has been absorbing this additional inflation. Salaries are lagging behind this inflation and therefore, people are struggling for their expenses in groceries, in general, but that will find its equilibrium. In the medium term, people will recover in the main markets their purchasing capabilities and therefore, seafood will regain its position as a very healthy protein. So I'm not concerned about demand in the medium term.

Well, I think that with that, we covered the questions. I would appreciate if you can answer the questionnaire that is going to be given to you so that we improve our presentations in the coming quarters. And thank you very much, BTG for organizing this call.

[Unknown Executive]

Okay. So thank you. Bye-bye.