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Hello, everyone. And welcome to Husqvarna Groups’ Presentation for the Second Quarter of 2022. My name is Johan Andersson. I am responsible for Investor Relations. Here in Stockholm, we have Henric Andersson, our CEO; and Terry Burke, our CFO. Henric and Terry will present the report first and afterwards we will have a Q&A session. And in the Q&A session, you can either ask your questions over the phone in the telephone conference or you can use the web interface to post questions there and I will read them here in Stockholm.
So warm welcome, and with that, I leave the word over to you, Henric.
Thank you, Johan, and also a warm welcome from my side. When summarizing the second quarter, a positive was that the strong demand of our products continued and we managed to meet that recently well when it came to our professional products and when it came to our ride-on mowers. So we experienced strong sales in those segments.
At the same time, we were affected by component supply restrictions in most of the other segments, particularly when it comes to robotic mowers and battery products to a large degree depending on electronic components coming out of China and the lockdown -- COVID lockdown that we had there that really affected us.
For Gardena, after seven years of consecutive growth and improved performance, we are struggling a little bit in the second quarter to match the sales of last year, largely because of weather. It was a cold weather in the second quarter in the beginning and that led to a delayed start of the season. And then this specific -- in these specific markets we also had higher than normal retail inventory coming out of last year, where those markets were affected by extreme weather like flooding, et cetera.
So combining these two things, basically then came down to lower volumes overall and an unfavorable product mix that, of course, had a significant impact on our operating income. At the same time, it’s important to remember that we are continuing to execute our strategy, we have launched a lot of interesting products this season and I will give a bit of an update on that later on.
Before we dive into the details of the second quarter it’s always important to zoom out a little bit and as we have talked about in a few calls before, we are building a stronger Husqvarna Group. We are on one hand repositioning to make sure that we are more of a premium pro, have that kind of positioning and we are pivoting our product offering to become more sustainable, to be more autonomous and to become smarter overall. And what that does, it creates a different sales mix, which basically allows for higher growth opportunity in the future and high profitability.
Looking at the graph, it’s apparent that there are very few times you have a straight line and this year we have had a setback, yes, like we had in 2018, driven by external factors, mainly the component shortages that we are experiencing.
However, the market fundamentals have not changed, the trends in the industry has not changed, the needs of the customers have not changed, and therefore, our strategy has not changed and the attractiveness of our products have not changed. We are about to change the world and how the world is mowing with our robotic mowers and we are now just starting to opening up in the U.S., we are starting to opening up the professional segment.
But we are also about to change how the world water and to become much smarter around that and Gardena Orbit are clearly the leader in smart watering. And our quest is to make sure that we make it as easy for the consumer as possible while minimizing the amount of clean water that is needed for watering. So, all in all, the mid-, long-term value creation opportunity has not changed in any way.
Then digging into the details of the second quarter, sales amounted to SEK15.8 billion, compared to SEK14.6 billion last year, which was 8% up, but in reality, when cleansed for acquisitions and currency ended up being negative 7% and this is mainly driven by component supply, it’s not driven by demand.
One example of that is the robotic mowers, that if we would have met the demand of robotic mowers, that would have moved a whole Group from minus 7 to minus 1, just to give one example here.
We did experience good growth in the professional segment, no matter whether that was Pro robotics, Pro handheld or construction which is something that we are very happy about. And but we also saw very strong growth in terms of ride-on mowers, where we managed to catch up and grow after have been gated also there in the first quarter in terms of component supply.
The operating income ended up at SEK2 -- about SEK2.1 billion, compared to SEK2.6 billion last year, mainly affected by the lower volumes and unfavorable product mix. However, a couple of good guys in there as well, one that we are very satisfied with is that we continue to show that we can offset any cost increases in raw materials, in logistics, transportation with price increases to the market and also we had favorable currency in the quarter.
From a direct operating cash flow perspective, we ended up at SEK1.8 billion versus SEK2.9 billion last year, obviously driven by a lower EBITDA on one hand, but also higher inventories and this is something that we will start to address working down those inventories in the second half of the year. Net debt to EBITDA increased to 1.1 times versus 0.7 times last year.
Then the very important KPI in terms of the share of robotics and battery sales out of total Group sales on a rolling 12-month basis. Unfortunately, here we can see the impact of the component shortage falling from 17% last time we reported to now 14%. It’s a big impact in one quarter on a rolling 12-month basis and this is supply related, it’s not demand related in any way and here we have full focus on mitigation activities.
Just to mention a few, we have redesigned our products to make sure that we can use the components that are the easiest and preferred ones to manufacture from our suppliers. We have also made sure that we, in some cases, can use the same -- we can use different kinds of suppliers or components into our products and the products still can work.
We have also changed how we work with our suppliers to now also shaping very strong relationships with our supplier’s suppliers or even our supplier’s suppliers’ suppliers, which is very important for transparency, but also to make sure that our priorities come through the whole supply chain.
So, with that introduction, Terry, over to you.
Thank you, Henric, and good morning to everybody. Let’s go into the detail of the divisions a little bit more, just to put a little bit of context on the division level, how the quarter two has been.
We start with our largest division, the Forest & Garden Division. Organic sales in the quarter was a negative 8% and a lower operating margin of 12.6%, really the lower margin driven by the lower volumes and the mix with less robotic sales.
However, there was some good parts to the Forest & Garden. We performed very well in our Pro segments within the Forest & Garden Division, Pro handheld had good strong growth and our robotic lawn mowers in the professional part had good strong growth.
And also let’s not forget we launched our CEORA robot at the end of March, mainly coming into the Q2 quarter and that has been a successful launch, and I would say, in general, we are on track with our ambitions for CEORA during this year.
Henric already mentioned the fact that ride-on improved during the quarter as well. We had a difficult supply situation during the first quarter. However, we managed to get through that and we have managed to catch up and have good strong growth and development for ride-on during the second quarter.
Of course, I think, we all know the robotic supply challenges have materially impacted our results for the quarter. And one important factor is, of course, price increases and during the second quarter, price increases almost offset all of the pressures that we had from raw materials and logistics. From a half year perspective, it’s also an 8% organic negative development in sales and a margin of 13.7%.
Switching to Gardena Division, and I think, Henric, also highlighted that. Gardena has had a fantastic seven years of growth and development and here we have some challenges coming through.
Organic growth for the quarter was a negative 10%, with an operating margin of 16.3%. We now have the Orbit business included within Gardena and that contributed to some 29% of sales. However, Orbit does have a dilutive effect of some 200 basis points on the operating income.
Gardena was also impacted by the robotic supply situation no different to the Forest & Garden, but again, we have covered that quite some. Price increases did offset all of the raw material and logistics pressure. So from a half year perspective, we have an organic minus 3% and an operating margin of 15.7%.
Construction, record quarter for Construction, they have had a very strong second quarter and also a strong first half of the year and that’s great to see. They have had good performance in all of their main markets and also really driven by a very robust power cutters market and sales growth in power cutters, which of course, is great to see and a favorable mix from our perspective within the Construction division.
Price increases have offset raw material and logistics pressure, and also let’s not forget, we did talk about it in the last quarter, but it actually happened in quarter two, we had the acquisition of Heger, which is a diamond tool business based out of Central Europe. Half year results 6% organic growth and earned an operating income of 13.2%.
So if we try to visualize how do we see the development of the operating income during the quarter two. I think the story really lies within the three big bars you can see on the chart, and of course, most importantly, our price of SEK950 million in the quarter has managed to offset those raw material and logistics pressures. However, as we talked about earlier, we have a negative volume development during the quarter and we have an unfavorable mix particularly driven by the robotic.
We continue to invest with some of our transformational strategic initiatives and that’s a good investment for us for the long-term and we did have a favorable currency in the quarter of some SEK260 million. All in all, bringing the margin to 13.1% for the Group.
If you look at the half year, it’s actually pretty much a mirror image of the quarter two. Yes, the numbers are different, but the visual is actually pretty much a very similar story. So I don’t think I need to repeat too much, but the story again, price did offset our raw material and reaching SEK1.7 billion of price during the first half year, I think, is a good number and we will continue to drive price in the second half year to continue to offset those increased raw material and logistic pressures.
We have covered the mix and the volume impact, which of course, has had a negative impact on our operating margin, but we continue with our transformational initiatives and investments. Currency for the first half year, SEK390 million and that brings our operating margin to 13.5% for the first half year.
If we turn to the balance sheet, first of all, let me just remind everybody and be clear, we have a solid financial position here. This is still a solid financial balance sheet. Of course, we have our challenges with inventory and we can’t shy away from that and there’s various reasons why we are at SEK16.5 billion versus a SEK9.5 billion last year.
Put it into context, first of all, we have a SEK1.1 billion currency effect. In addition to that, we have SEK1.3 billion of Orbit, which we did not have last year. So there’s SEK2.4 billion bridging already from the two.
Then on top of that, we are carrying higher components, really driven by the logistics disturbances and supply chain disturbances, and we have higher finished goods and a lot of that is the longer lead times of goods in transit.
So that’s what’s really driving our inventory, and Henric also made the point and I’d like to reiterate that, we will drive inventory down during the second half of the year. That is one of our focus areas for the second half to drive that inventory down. Other than that, I would say, quite a normal development on the balance sheet and no other major things to call out.
Cash flow and it leads me nicely onto the cash flow, having just talked about the high inventory levels, which of course, is naturally having an impact on the cash flow, as well as the lower EBITDA. Those are the two main drivers why our cash flow is behind previous years. But, again, we will work hard on inventory reduction and look to improve that cash flow situation.
Capital ratio, I think, it’s also a similar story. We have higher inventory, which of course, is impacting this ratio, and of course, it’s a negative trend, which we expect to turn around.
EBITDA, our net debt position has slightly increased due to lower operating cash flow, and of course, a lower EBITDA. So the ratio, I would still say, 1.1 is a healthy ratio, but of course, we want to turn that negative trend that we see at the moment and we will continue to work on that.
So, with that, Henric, I pass back to you.
Cool. Thank you. So switching gears a little bit, I will not go through the strategy per se, but show a few important launches we have made recently or before the quarter started or during the quarter as a testament to how we are executing our strategy. These are all important parts of that.
Starting with CEORA, which is the first dedicated professional robotic mower that we just recently launched, and as Terry alluded to, very strong demand of this product. I would say there’s a sentiment of customers chasing us at this point in time rather than the opposite and we feel confident that we will reach the target. So a very well received from the market, which is so important to us, of course, because there’s such an opportunity in the commercial turf space.
Another important aspect of the strategy is that the Husqvarna Forest & Garden Division now is joining the Power for All Alliance that we founded together with Bosch and it is for products more targeting the urban, suburban customers, where we believe that having one battery system that you can use across a lot of different applications in the house is a very appreciated concept, whereas we will continue in the land owner segments and the professional segments to develop and produce our own 36 and 94 wall systems.
Gardena launched the Ecoline here earlier on and this has been very well received. The Ecoline is a range of products that contains a very high share of recycled materials, plastics, metal and packaging, et cetera, and it has been very well received in the marketplace, which is of course, very good to see.
In terms of Construction, we normally talk about the so important K-1 PACE power cutter, the first battery power cutter that truly has petro like performance, which is really a game changer in our industry.
But today, I rather would like to draw everyone’s attention to another launch, which is a whole new range of dust extractors. We are a market leader in this segment and we had a fairly dated range and now we have put a lot of innovation into a new range of products. These products are so important because they provide a clean, but also safe work environment.
Just to show, first of all, two battery models and the three quarter models, and just to show, we have something we call eFlow, that’s an innovation we have that does three things at the same time.
On one hand, it makes sure that you have the same efficiency during the saturation of the filter, you get lower sound level and you reduce the energy consumption with up to 30%, which is incredibly important from a sustainability perspective.
So these are just a few examples of how product launches are actually a consequence of our strategy and an integral part of the strategy. Over and above that, as Terry has said, we completed a deal acquiring Heger. But we also, through our corporate venture arm, took a stake in Moleaer that is really an innovator in nanobubbles, which is a technology we are very, very interested in and that we are following closely.
In terms of sustainability, we are delivering on our sustainable targets for 2025. We are in a good position to reach the target by 2025. In terms of absolute carbon emissions, we are at 30% -- minus 30% versus the target of 35%. However, there’s still some heavy lifting left to actually get to the minus 35% as we continue to grow.
In terms of circular innovations, we have set a target of 50. We have five that we call approved and we have 16 or so in the pipeline that we will assess. And when I say assess, that there is a clear benefit from a circular perspective that we can validate and also that it’s well received in the marketplace. That’s how we define it.
So that’s why this is a little bit back-end heavy but the pipeline is growing very fast and we feel confident in this as well and we have also started to really trying to encourage customers to make more sustainable choices in terms of actually selecting sustainable products, and to-date, we have 545,000 customers there versus our target of 5 million.
So we are coming towards the end of the presentation here. Yes, I would like to summarize the quarter again. Super positive is, of course, the good demand of -- for our products is still there. We could grow substantially in the professional segments and in ride-on mowers during the quarter.
However, most other segments, not all, but most other segments were actually impacted by supply constraints, most severe, of course, when it comes to the residential robotic mowers, and I would say, battery products.
Gardena, after the seven years of consecutive growth and improved performance, struggled to keep up watering sales in some of the core markets in Europe due to weather conditions. All this combined led to lower volumes and an unfavorable product mix, putting pressure on our operating income.
And I think one important thing here is also to separate between short-term and mid long-term. Yes, clearly a setback in the first half versus what we expected, truly driven by external events that we can’t really control.
But the fundamentals in the market are still there, the consumer needs are there, the trends affecting our industry is still there, the attractiveness of robotic mowing, smart watering, for example, is still there.
So from that perspective, we are very optimistic in terms of our strategy and our future value creation, and we will continue to lean forward and make sure that we change how the world mows and how the world waters.
With that, I hand it back to you, Johan, for some Q&A, I guess.
Thank you very much, Henric and Terry. And now we will go into the Q&A session. And we will -- we can both take questions over the telephone conference and I have a few questions also already e-mailed to me, we had a web interface as well. So don’t forget that as well. So, please, operator, let’s start with the telephone conference.
Thank you. The first question is from Hageus Gustav with SEB. Please go ahead.
Yes. Thank you. Very good half year definitely. I guess a lot of uncertainty in the market relates to sort of demand in the second half and what retail is doing and you have seen that, demand is good and the backlog is record high. But are there any examples not for retail -- retailers in U.S. otherwise sort of like orders or discussing double order with other your competitors or any of that sort of thing that nature?
I mean, there could, of course, be a sentiment or a part of that, but to-date, we can’t really see any slowdown in demand. We don’t see it. We don’t feel it at this point in time. At the same time, we -- of course, all are wondering what would next year look like from a demand perspective.
And is there a reason to believe that sort of the typical seasonal pattern will be more back-end loaded into Q3 than normally due to the supply constraints that you have had. Is that a reasonable assumption of demand/supply there [ph]?
I think it’s very difficult to give you a good answer on that question since the supply situation is so fluid. There’s so much uncertainty in it. But we are cautiously optimistic when it comes to component supply for robotics.
And the reason is really that we have, during the spring redesigned our products to use the components that the suppliers really want to manufacture, and we, in some cases, can take alternative components into our products. So that helps us a little bit.
And we also know that they are installing -- suppliers are installing more capacity, but that will be a little bit in the second half, a little bit in the spring, but the big things will likely happen in the second half of next year.
So when you take all that together, we are cautiously optimistic, because we also know that there are so many unexpected things. I mean when we went into Q2, we were optimistic and then we got the whole lockdown that affected us and the Q2 turned out entirely different and that’s why it’s very difficult to be sharp on this, Gustav.
And in terms of channel inventories, inventories with your retailers, especially in U.S., what’s the situation there or , is there any destocking happening at the moment or...
I would say, generally speaking, we don’t see that as a big factor at this point in time. However, there are certain exceptions, one of those we talked about, which is watering products in certain markets in Europe, as an example, where clearly inventory is higher than normal, but I wouldn’t say that is a general thing.
And two more questions, if I may. First, the sort of on campaign expectations, on campaign and price into second half, maybe key raw materials coming down substantially and we haven’t really had some of a Black Friday as we used to during the pandemic. Are there any indications of what you expect in terms of campaign pressure into H2?
Nothing that we are seeing at this point in time and it will, of course, be very dependent on component supply. There’s no reason to run campaigns if we are still gated in terms of manufacturing.
Yeah. And lastly you referenced price versus raw material costs, and again, raw materials have come down especially steel and -- substantially. When does that hit your P&L and when do you start to see a positive tailwind from raw mat?
So if I can step in and take that one. We still believe there will be a continuation of the raw material and logistics pressures for the rest of the year. We still think there is another SEK1 billion of additional cost to come through of those increased costs that we have faced.
But of course, at some point, it will level out. But at the moment, we still expect to see that further SEK1 billion roughly. But, again, let me be clear, we will offset that with price. And price is tracking in a good way. We will continue to drive price to make sure we offset any of those pressures.
Okay. I appreciate that. Thanks for taking my questions.
Thank you. Operator, do we have another question?
The next question is from the line of Eliason Johan with Kepler Cheuvreux. Please go ahead.
Yes. Hi. This is Johan. Thank you for taking my questions. On the consumer side, I mean, I noted that you mentioned sort of robotics U.S. as a growth opportunity for in your initial comments here. We have been looking at the U.S. robotics market for some time and it hasn’t really taken off big time. Are there any specific developments going on right now in the U.S. robotic market?
I mean two ways of answering the question. One is, I talk about that more from a medium-, long-term value creation opportunity. That’s one way of answering it. But on the other hand, we are making progress. So in terms of robotic sales in the U.S., we are significantly up year-to-date. So when we -- and the same thing when it comes to pro robotics, I mean, where we are doubling sales basically so far this year.
So I think the important thing is when we talk about the robotics situation, it’s really a European residential issue that we have, because we have decided to prioritize Pro in the U.S. market that are in the buildup phase.
Okay. Understood. And talking about the European consumer market, the supply issues, have they hurt you more than some of your competitors, do you think this season?
I will say that generally speaking it has affected the whole market, but there are a few exceptions, where some players does not seem to have any major impact whatsoever.
Are those Asian players or Europeans?
I mean, I think, if you generalize a little bit, you can say that. It seems like the Asian manufacturers have more access to components than the European ones.
And then on the robotics, I think, you targeted selling more than 1,000 of CEORA units this first season. Are you confident with that number and how many have you sold so far?
We still believe that is a good number and we have already produced more than half of that number. So this is a segment where we are trying to push hard.
Okay. Thank you very much.
Excellent. Thank you, Johan. Do we have any further questions from the telephone conference, Operator?
Yes. We do. The next question is from the line of Rinta Karri with SHB.
Yes. Thank you. Karri from Handelsbanken. Two questions or three questions from me. Firstly, the EBIT bridges the second quarter versus the first half. The main difference that you see there is that the first bar that being volume mix and other is significantly more negative in the -- showing that there’s significantly more negative in the second quarter compared to what it was in the first quarter. So can you discuss a bit about the moving parts that between the second quarter and the first quarter. What was the main reason that the impact on second quarter was so much more negative from this?
Okay. So, yeah, let me take this one, Henric. This is really -- there’s two main drivers in this, and of course, we talk about the volume, first of all. We were 7% down organic sales, but of course, then you have to adjust for the price as well. So volume has been significantly down during the second quarter.
And in addition to that, we have the two mix elements of the robotic, which was a material drop from a sales perspective and watering. And watering is a high margin area for us, which, of course, has been impacted during Q2 and we did not see that watering decreasing in Q1. So I think that’s really the main themes of why we see that big bar in Q2.
All right. Very helpful. And then, secondly, you have alluded to some innovative new products that you plan to launch in 2023, but now given the uncertainties about the macro and consumer demand, coupled with continued issues with component availability. The question is that are you still planning for those launches and then the follow-up would be that what would make you delay those launches to 2024, I am sorry, we are talking about residential robotic lawnmowers?
I mean the whole plan is to continue -- I mean to launch those products in 2023. That’s still the plan and something that we are driving hard towards. But to your point, of course, there’s an element of uncertainty given the situation, but we have not given up by any means when it comes to launching products next year.
All right. Thank you very much both for answers.
Thank you very much, Karri. And let us take a question from -- that has come in from the web interface. And it’s from Eric Agiland from Alcune [ph]. And he wonders if the price -- raw materials and logistics prices starts to come down, let’s say next year, how is your view on pricing? Do you expect also your prices to start to come down, though? What’s your general view on that one?
I think we need to be agile and see what happens in the marketplace, because key is, of course, that we remain competitive. So if the rest of the market starts to move back, we need to follow to some extent. But, of course, the whole plan will be to make sure that we get a little bit of an improvement that sticks over time.
Okay. Great. Okay. Operator, any further questions from the telephone conference?
[Operator Instructions] We have a question from Magnergard Christer with DNB. Please go ahead, sir.
Yeah. Hi, there. To start with, can you maybe talk about the backlog for the Group excluding robots.
I mean, generally speaking, we have a very extensive backlog also in many of the other segments. We actually have it in the Pro segment. We have it in handheld in general. We have it in several of the segments in Construction, et cetera.
So the backlog is not just a robotics thing and the component supply issue is not just a robotic thing. It’s just that it’s most severe when it comes to robotics. So we have a strong order book, if you would like, across the line, and just one comment, because it sounds like you want to chime in.
I was just going to chime in there...
But I just want to say that it’s, of course, incredibly frustrating to have orders in hand and not being able to ship them and behind each order is a customer that has decided to invest in us. It’s incredibly frustrating. I just want to say that before you.
No. Absolutely. And just to add to your comments, Henric, really, it’s around, we have not seen that demand or that backorder situation reduce. I mean that is really held, which is interesting to see how that develops. So we still continue with those high back orders despite us being at the half year stage.
Yeah.
Okay. Because, I mean, let’s say the price was up 6% and organic growth was minus 1% excluding robots, and then, of course, there’s some mix as well, but that means that volumes were down a couple of percent in the quarter and you have very high inventories talking about reducing those. At the same time, you talked about the strong order book and strong demand and a strong pipeline, so I don’t really add that up. Is the only difference here you are not able to produce what you -- what clients or customers are demanding or is it something else?
It’s a combination of things. But I would say, it’s mostly because of -- if you say -- if you take out Orbit, you take out the currency, what is left is really half and half component inventory and finished goods inventory, roughly.
And in terms of component inventory, it’s very much this golden screw thing, which is that you pull the material to build a certain product and then you don’t get one of those parts and then you end up trying to reschedule to another product and the pull that material and then you might end up missing another part. So it’s a little bit of a snowball, and this, of course, we need to start to turn back to some kind of a normal.
The other piece on finished goods, there’s a little bit of a mix of things, but one big new element is that due to the congestion in logistics, transportation, et cetera, we have much more in the book that is in transit, which is a little bit aggravating, of course. I don’t know if you want to add something else.
No. I think you summarized it well, Henric. I mean, it is longer times in transit, which is also impacting us, but I think, we have nothing else to add to that.
With those comments, is it fair to assume that production levels will be cut in the second half then?
I think we will have a very diversified approach. When it comes to robotics, we will take every part we can get and we will build a robotic as soon as we can build it. In some other segments, we will be much, much more restrictive and we will clearly scale back manufacturing in the second half.
So it will be a diversified approach. But I would say, generally speaking, robotics, we will go all in, and for the rest, we will -- to different degrees or different extent scale back inventory during the second half.
And the final question for me. The currency effect is I might have missed that, but how big part of the SEK250 million was just revaluation of hedges?
Yeah. There was a significant part came through that. We had SEK390 million year-to-date and we have a weaker Swedish kroner as well. So, there’s a couple of elements that have played into that SEK390 million.
I think what we should be clear on is, for the rest of the year, we do not expect to see any continued improvement. If anything, we probably expect a slight deterioration in that second half of the year. So around flat or slightly down on flat is how we see the rest of the year playing out.
Okay. Thanks. Have a nice summer.
Thank you. You too, Christer.
Thank you very much. And we have another question from the web interface and it’s from Ken Huang from Corning [ph]. And he is wondering if the end users has reacted to any of the price increases, i.e., have you seen less demand in robotics or people trading down in some way?
No. It’s quite fascinating to-date that we haven’t seen a whole lot of that and we are also seeing customer waiting longer than normal, particularly when it comes to, for instance, robotics. So, no, we haven’t seen that. But, obviously, at some point, you reach a point where you will start to lose volumes or start to sell down. But I can’t say that we are seeing that at this point in time.
Okay. Thank you very much. And Operator, do we have any further questions from the telephone conference?
[Operator Instructions] There are no further questions at this time.
Okay. So I think, with that, we don’t have got any further questions on the web interface as well. So I think, with that, we will thank you everyone that joined today on our conference call for the second quarter. We will have a virtual Roadshow Day next week with SEB on Monday. We will have open presentation slot as well that you can listen in to. And with that, we thank you everyone for joining in and wish you a very good summer. Thank you very much.