Tobii AB

STO:TOBII

Earnings Call Transcript 2024-Q1

[Carolina Stromlid, executive]

And welcome to the presentation of Tobii's Q1 Results 2024. My name is Carolina Stromlid, and I'm Head of Investor Relations here at Tobii. As usual, our CEO, Anand Srivatsa; and our CFO, Magdalena Rodell Andersson will guide you through the highlights and the financial development of the quarter.After the presentation, there will be a Q&A session. So, please feel free to start posting your questions in the chat already. And for those of you who have registered to ask questions live, you simply have to raise your hand to participant.Now, I will hand over to you, Anand.

[Anand Srivatsa, executive]

Thank you very much, Carolina. So, let me start by giving a quick summary of how Q1 2024 was for Tobii as a company. This quarter was a very important quarter for Tobii as we completed the transformative acquisition of FotoNation and established ourselves as a top 3 player in the automotive interior sensing market.The acquisition itself was completed on January 31, and we also successfully completed an oversubscribed rights issue on April 3. I'm really pleased that automotive customers and Tier 1s are leaning in and happy with the new capabilities that Tobii is bringing into the space. We are definitely establishing ourselves as a much more credible player.And I'm also really pleased that in this quarter, we were able to show some tangible results of that momentum, announcing a new DMS design win that we shared after the quarter. This was for our commercial vehicles. We also shared that our existing OMS design win had expanded to a new OEM. This brings the total number of OEMs that we count as customers up to 9 and continues to demonstrate that we are building momentum in this space.I will share some additional details on the AutoSense business at the end of this presentation. As most of you may imagine, this quarter has also been very much focused on successfully integrating the acquisition we have made, and I'm happy that so far, our progress is on track.Our expectation and our ambition is to combine the leading capabilities of Tobii and FotoNation to deliver the most competitive interior sensing offering on the market. We also expect that as we go through this integration process, we will be able to leverage technology and cost synergies and realize the impact of those synergies in the second half of 2024.Now, if we move on to the financial development, which Magdalena will talk about in more detail, for this quarter, we saw a decline in overall revenue, and that was led primarily by our Products & Solutions business. The integration business, on the other hand, had a solid quarter.When we look forward for the rest of the year, our ambition continues to be that we are very much focused on profitability, and I expect that we will improve our EBIT substantially for the year 2024 versus 2023.Now, before we jump in and share our financial development on a segment basis, I wanted to start out by laying some context for who Tobii is after this acquisition. Tobii is now organized into 3 different segments versus the 2 segments we operated under before. The Products & Solutions business engages thousands of customers from university labs that are pushing the boundaries of science with our technologies to enterprises where understanding insights about their employees and their customers with the power of attention computing, all the way to gamers who are enjoying much more immersive game play with the technologies that we built.This segment represented 70% of Tobii's 2023 revenue. The integration business is engaging customers who take our technologies and make them part of their own solutions. Today, this segment is primarily focused on enabling customers that make virtual reality and augmented reality headsets. It also engages companies that are building medical devices that use our technologies in them as well as personal computing OEMs.This business in 2023 represented 29% of our overall revenue. Finally, we have the AutoSense business, and this is a new segment for us. And in this segment, we are engaging automotive OEMs and Tier 1s by providing them with driver monitoring and occupant monitoring software solutions that they can embed into their vehicles. This segment is relatively new and early in its maturity phase. And in 2023, it would have represented 1% of Tobii's overall revenue.Our expectation is that going forward, on a quarterly basis, we are going to share both top line revenue for each of these segments as well as the gross margin for each of the segments and finally, the EBIT level for each of these segments as well. This will allow investors to better understand how these segments are performing and get a better gauge of their maturity as we make progress towards profitability for the overall company.With that, I'd like to hand it over to Magdalena, who will share more details on our financial development.

[Magdalena Andersson, executive]

Thanks, Anand. So, Q1 delivered an overall growth of minus 4% and organic growth of minus 9% and an EBIT of minus SEK 75 million. The integration segment had a solid development, while the Products & Solutions segment development was weaker.The total net sales development of minus 4% for the quarter comprised of this organic growth of minus 9%, a currency effect of minus 2% and then an effect from the acquisition of plus 7%.The net sales from the acquisition in this quarter is pretty much equally divided between the integration and the AutoZone segment. We closed the acquisition on January 31. And when identifying the revenue already booked in January before getting the company consolidated into our books, we now conclude that the full year's estimate of net sales from the acquisition previously communicated as being in between SEK 180 million to SEK 220 million is now closer to the lower range of this estimate.For the 11 months, we now will consolidate in 2024. And the majority of these net sales is expected to come in the second half of the year. The gross margin was 74% compared to 73% last year where the product mix effect drove the margin upwards.The weakness in Products & Solutions is visible in a worse EBIT performance than we expected for the quarter. The EBIT was minus SEK 75 million compared to minus SEK 53 million last year. And to rectify this, we are now taking further steps in reducing our cost base throughout the year. This will be done through streamlining our product portfolio, prioritizing investments and, of course, by leveraging synergies when integrating the AutoSense business.And so, going over to the segments. Products & Solutions today, the largest segment within Tobii with 69% of net sales, had a weak quarter with an organic growth of minus 15%. We saw a sustained weaker demand in Asia. Since some costs within cost of goods sold are fixed, the lower sales also drove the gross margin to 64% compared to 69% last year.And, as Anand pointed out earlier, we will, from this quarter and onwards, present our segments down to the EBIT level. And the EBIT for Products & Solutions was minus SEK 23 million in this quarter, which is a disappointment in this mature segment. And as commented earlier, we are already now taking further steps to reduce costs on top of the actions already taken in Q4.The integration segment, which stood for 27% of Tobii's net sales in the quarter had a total growth of 41%. The organic growth was 23%. Currency effects was plus 1% and the acquisition contributed with 18%. The gross margin was 96% compared to 91% last year, which was a result of a higher share of software and services. The EBIT was minus SEK 13 million.And then the AutoSense segment, which is still in an investment phase, had a net sales in the quarter of SEK 7 million, mainly stemming from the acquisition. The gross margin was 99%, reflecting the high level of software and services and the EBIT was minus SEK 38 million.And then going over to the balance sheet and cash flow. The free cash flow of the continuous investments was minus SEK 126 million in the quarter compared to last year's SEK 46 million. Besides the lower result, we had a difference in the change in working capital between the years. This year's SEK 2 million of change in working capital was negatively affected by one-off costs and cash outflow in relation to the acquisition, where last year's SEK 123 million was positively affected by SEK 63 million of temporary COVID-related tax release.With that, we ended the quarter with a cash position of SEK 107 million and the net debt position, excluding IFRS 16 of minus SEK 202 million. After closing of the quarter, a rights issue of net SEK 267 million was completed. And in addition, we also have an unutilized revolving credit facility of SEK 50 million.And so, despite this first quarter, we are very much committed to our new long-term financial goals, which we presented earlier this year. We are thus working to secure positive free cash flow for the full year of 2026, an EBIT margin of around 10% for the full year of 2026 and an EBIT margin of around 20% for the full year of 2028.And with that, over to you, Anand.

[Anand Srivatsa, executive]

Thank you, Magdalena. So now, I'm going to spend a few minutes talking a little bit more about the AutoSense business to share some insights about why we believe that we are the top 3 player in the automotive interior sensing market today and that we are well positioned for us to build a leadership position in this space going forward.Now, if we look at the overall market for automotive interior sensing, it's important to recognize that this market is undergoing a significant evolution. The first technologies that have been deployed inside of automotive interior sensing are driver monitoring systems. And DMS systems have actually been deployed as early as 2006. Driver monitoring systems are very much focused on improving the safety of cars and ensuring that drivers are alert and focused on the road in front of them.The driver monitoring systems are driven from an adoption perspective, primarily now by regulation, and we've seen increasing interest in mandating the use of DMS across multiple regions.In the European Union, for example, starting in 2026, all new cars will need to ship with camera-based driver monitoring systems. This creates an environment of very steady expected growth as the safety-related technology will draw broad adoption, we believe, across all regions in the world.The next major evolution that we've seen as interior sensing started to get deployed is the addition of occupant monitoring systems. Now, occupant monitoring systems have been focused very much on driving comfort and convenience features. It's an opportunity for OEMs to monetize their in-cabin experience more effectively and also to differentiate the experience that they deliver versus their competitors.Tobii is a leader in occupant monitoring systems, and our systems have been shipping in vehicles on the road since 2021. As DMS and OMS systems start to proliferate, we see the next stage of this evolution, which is the initiation of single-camera DMS and OMS systems.The big driver for single camera solutions is the opportunity for OEMs to both meet the regulatory requirements that are mandated for inclusion of DMS systems but also to enable occupancy monitoring systems that offer them better opportunities for monetization while lowering the overall system cost.A single camera solution can use a single camera, as mentioned in the name of this category, but also a single compute to lower the overall system cost and complexity to deliver the full feature sets that OEMs are looking to deliver.We expect that Tobii will be the first player to deliver a single camera solution into production in 2025. Now, let's talk about each of these areas and how Tobii is doing inside them. Now, when we consider driver monitoring systems, we've talked about the fact that these technologies are very much focused on safety. They enable cars to understand the state of the driver, whether it is around their distraction level, whether they can measure the driver fatigue or drowsiness.It can also be used to understand what a driver is doing, for example, using a phone while they're driving. All of these kinds of signals help the car understand if the drivers actually alert and focus on the action of driving. Typically, driver monitoring systems have been deployed with cameras that are focused very much on the driver. And you could see sort of the typical locations of where these driver monitoring system cameras are placed.They tend to focus on the driver and are located in several potential areas inside of the car. Tobii today has 7 OEMs that are shipping Tobii's driver monitoring systems solutions from us, 7 OEMs with design wins with our solutions, with over 50 models across those 7 OEMs.One of the big changes since the acquisition is that we can demonstrate the credibility of not only having design wins but having our technology deployed into cars on the road. And as of Q1 2024, we have more than 200,000 vehicles on the road that are shipping with Tobii DMS.This demonstrates the momentum we're starting to build in the space, both in terms of having numerous OEMs that have chosen our technologies for deploying DMS, but also the credibility of taking these technologies and going through the automotive design and process to get the technologies on to cars on the road. We expect that we will continue to build momentum in the space over the next few years.Now, let's look at occupancy monitoring systems. In this area, we believe that we are the clear leader. And again, occupant monitoring systems are used to typically deliver comfort and convenience features FotoOEM. They can be used to understand whether there are passengers in various locations of the car, understand what their identities are, but there are scenarios where this technology can also improve the safety of the car to detect if seatbelts are being worn in the correct way to detect if children are accidentally left behind in a car.For occupancy monitoring systems, Tobii counts 2 OEMs as customers and more than 20 models that we have won with our solutions. We have been shipping OMS systems since 2021 and as of Q1 2024, we are at approximately 200,000 vehicles on the road with these solutions. These metrics, we believe, demonstrate that we are the clear leader in the OMS space. But what about the future?When we look at single camera DMS and OMS solutions, again, the location for where these types of solutions are built in are typically going to be in the rearview mirror. This is a location where both the camera can look at the driver to enable the safety features required from DMS systems but can also get a view of the full cabin of the car to understand what the other occupants inside the vehicle are doing in order to deliver those comfort and convenience feature sets.Single camera DMS and OMS is driven primarily by the benefits to the OEM of lower overall system cost while delivering all of the features that they would like to enable maximum monetization and maximum differentiation. Here, we believe that Tobii is a pioneer in this upcoming space with design wins already with 2 OEMs that represent more than 50 automotive models.We believe that we will be the first player in the space to be shipping solutions on vehicles in the road starting in 2025. So, if we sum up where we are from an AutoSense perspective, we think that the combination of a number of OEMs, which count as 9 at this point in time as customers of Tobii, plus the credibility of having our solutions on the road more than 400,000 vehicles that are on the road today using Tobii technologies and the number of models that we have won as part of these design wins, 120 models, demonstrates our capability that we are a top 3 player in automotive interior sensing today.Our strength in OMS as well as in single camera DMS and OMS puts us in a great position to be a leader in this field in the future as the evolution in automotive interior sensing continues.With that, I'd like to go back and give you a quick summary of where we are for the quarter as a whole. As I mentioned earlier in this presentation, Q1 2024 was an important quarter for Tobii, where we completed the transformative acquisition of FotoNation. This puts us in a top 3 position in the automotive interior sensing market and poised for leadership in the future as we bring the technology capabilities of Tobii and FotoNation together.We are well underway in the process of integrating this acquisition, and I'm happy to share that, that is very much on track. In Q1, we also shared new long-term financial targets that are aligned to profitability. This is the expectation that we will be free cash flow positive for the full year 2026 at an EBIT level of 10% for that year and with the ambition to reach 20% EBIT in 2028.Based on where we've been so far in Q1, we will continue our focus on cost measures. This will be implemented both by streamlining our overall product portfolio, but also realizing synergies from the acquisition we have made. For the full year 2024, we continue to expect substantial EBIT improvement for this year as we take the road towards overall profitability for the company.With that, I'd like to open it up for questions.

[Carolina Stromlid, executive]

Yes. We will now open up for questions and start with questions posted in the deck. [Operator instructions] So, let's start with the first question. Can you comment on Apple's announcement yesterday about them launching eye-tracking features into iPad and iPhones? How will that affect Tobii?

[Anand Srivatsa, executive]

Yes. I think that's a great question. For many of you who may be listening and may not have seen this news, Apple yesterday announced that they were bringing in eye-tracking features into the iPad and iPhone and that these capabilities would use the built-in camera from these devices.This, I believe, is extremely positive for Tobii, and we can reflect on sort of the impact that we have seen with the Apple Vision Pro announcement last June. Apple is an industry titan. They take technologies that are novelty and make them a necessity. And we've already seen the early examples of that in Q2 last year, where after their announcement, we saw a lot of inbound interest from headset manufacturers to go and deploy eye-tracking in their solutions and most importantly, to deploy high-quality eye-tracking in their solutions.Our expectation at that point was that Apple's announcement in this VR space would have an impact that was broader than just VR alone. Of course, with this announcement that they've made yesterday, it's even more direct that Apple themselves are taking what we believe is the most natural way to interact with devices and bringing them to many parts of their portfolio.We think that this validates Tobii's belief that attention computing and eye tracking or a natural and immersive way for us to engage with machines and something that has very, very broad application. And I hope that it will address one of the big shortcomings for us as an industry, which is that, eye tracking technologies are still very low in the awareness of being available, whether it is towards customers who want to integrate them or with users who could choose to use them as an efficient way to communicate with their devices.I think this will broaden the market, and I think that for us is a very good outcome.

[Carolina Stromlid, executive]

Thank you, Anand. Moving on to the next question. How do you look on the possibility of needing new financing?

[Magdalena Andersson, executive]

We are happy that we've just made this share issue that we successfully concluded in the beginning of April, and that is cash that we need to do this journey that we are on now to come into profitability. So, we have all the cash that we need.

[Carolina Stromlid, executive]

I will now go over to questions from the analysts. And our first question comes from Daniel Thorsson at ABG.

[Daniel Thorsson, analyst]

So first, a question on AutoSense here in Q1. Why was it such a weak development? If I calculate correctly, it looks like $12 million in sales, and you still guide for EUR 180 million for the full year, if we look at both integration sales and the AutoSense segment stand-alone? And was Q1 as you expected? And if it was, why didn't you guide on that when you gave the full year guidance?

[Magdalena Andersson, executive]

So, when we gave the full year guidance, we said that we expect EUR 180 million to EUR 220 million now in the lower range for the total acquisition, of which AutoSense is between 30% to 50%. The remaining part is within integrations.

[Daniel Thorsson, analyst]

Yes, exactly. But I calculate SEK 12 million in Q1. And if you still stand at EUR 180 million for the full year, and you expected SEK 12 million in Q1. Couldn't you be clear on that, that 2024 is going to be such back-end heavy?

[Magdalena Andersson, executive]

Then we come to the little tweak there that we concluded the acquisition on the 31st of January. And in January, if we would have taken the whole quarter, we would have gotten NOK 44 million in revenue. So, there are SEK 32 million that our partner that we did this sort of sold this to us got in their books in January that we then didn't get. So, that's the difference for the first quarter. So, that's why it's so low in the first quarter.We only got February and March, and the big part was taken in January.

[Daniel Thorsson, analyst]

That was the reason but we didn't know that. Okay. And then secondly, a question on the DMS and OMS, which you very nicely elaborated on here. I mean, you show that you have 200,000 cars on the road in both of these categories and already have a leading position in these categories, although they are growing, but revenues are still extremely tiny.So, what is really needed to happen in terms of volumes and number of cars on the road in 2026 and 2028 to reach the quite ambitious plans for growth and AutoSense revenues? I guess it requires millions of cars, given the unit economics we have today? Or is the ASP going to be materially different for the upcoming products?

[Anand Srivatsa, executive]

Yes. I think the first thing, Daniel, for us is to get into higher volumes, as you suggest now. If you look at the different parts of the business that we allude to, so far, our DMS wins and the stuff that's been on road has been on commercial vehicles. We've talked about the fact that the high-volume consumer cars or passenger car market, wins will be coming in, in '25 and '26.So, that's when we would think that there's going to be a substantial increase in the kind of volume that we have on DMS on road. And, of course, that will correspond to revenue also rising in a very material way at that point in time. This also corresponds to when we think we will have our single camera DMS and OMS solutions in market. And that, again, we've said is a win with a premium passenger car maker.And again, that also will substantially increase the revenue profile there. And so again, I think the big thing for us is to start to get some of these high-volume wins into market. There is, of course, the opportunity that as the interior sensing market moves from DMS to OMS that there's an opportunity for us as providers in the space to see higher ASPs.But I would say that the #1 variable for us is to get the volumes up with these high-volume passenger cars coming into production.

[Daniel Thorsson, analyst]

Yes. But we are talking tens of millions of cars on the road in '26 to '28 to reach the targets, I guess, implicitly.

[Anand Srivatsa, executive]

Yes. I would say that, yes, we've shared that we would like to be at SEK 500 million of revenue for the AutoSense business in 2028. And absolutely, we would expect to see substantial increases in the number of units that we're shipping by then to get to that kind of level. Yes.

[Daniel Thorsson, analyst]

Yes. And you have not told any numbers in terms of volume or ASPs that you expect?

[Anand Srivatsa, executive]

No, I think we've guided to the overall revenue expectation for 2028.

[Daniel Thorsson, analyst]

And then another question on Q1 OpEx here. Is the space relevant or a good picture for full year of 2024? Should we expect any OpEx increases or decreases during the year through the integration process here?

[Magdalena Andersson, executive]

First, you should expect an increase since in Q2, we will have 3 months of the acquisition, and with that comes an increase. Then we are working on taking down the cost base from sort of now integrating these 2 businesses and getting synergies out of that and also looking over the portfolio and investment in other places. That, of course, will take some time, so that you can expect in the later part of 2024, but with the expectation to go into 2025 with a lower cost base.

[Daniel Thorsson, analyst]

And then lastly, on Product & Solutions weakness here in the quarter. What type of products you said Asia in general, what type of products, what type of customer groups were weak in Q1 and why were they weak? And when should we expect them to recover?

[Anand Srivatsa, executive]

Yes. I think that when we look at Asia, we actually saw some of this effect already in the back half of last Q4. So, even in Q4 '23, when we had 5% growth on the Products & Solutions business, we started to see in December some broad-based weakness in markets like China.Historically, when we've looked at products and solutions, we've seen quite stable performance from university research type of labs and maybe a little bit more of a macroeconomic impact in enterprises who were thinking about where they wanted to make their investment. I would say that what we have started to see now is more broad-based weakness in China.Again, part of the question here is, where does the Chinese government drive their investment expectation and where is their growth ambition coming in? We have seen China on multiple fronts actually go very lumpy in this business, where we've seen strong localized effects of weakness. We saw that actually in Q3 last year, where most of Q3, China was extremely weak. And then we saw a very, very strong rebound in the early parts of Q4 with some tailing off effect in December.So, I would say that it's hard to call the specific geographic and regional dimensions of this business, but we believe that the underlying trends are pretty stable. We have seen continued strength on a worldwide basis from university research and we're hopeful that as the macroeconomic environment starts to ease up, that enterprise will once again get into making investments to understand their customers better or to invest into getting insights on their employees and to do upskilling, et cetera.

[Daniel Thorsson, analyst]

And then just finally, you are also saying that you are doing cost reductions in Products & Solutions. Is it because you do not expect a short-term strong recovery of sales? Or is it because you think that you can sell more or keep sales at this level but at a much lower cost? Or what's the reason for the cost reductions?

[Anand Srivatsa, executive]

Yes, I think there's 2 pieces. Again, as Magdalena said, there's 2 major work streams that we look at when we consider cost reduction. One of them is related very much to the integration of the AutoSense business where we think we can extract synergies.The second part is that when we consider the new Tobii organization that we've built across these 3 segments, it gives us the opportunity to reevaluate where our investments are being made. And so, I would say that you should expect we are going to go and evaluate our full portfolio now that we have a broader set of capabilities and a broader set of customers that we can go monetize on to go and pick the best options for us to enable our path to profitability.And so, that's the second reason why we're making that change.

[Carolina Stromlid, executive]

Moving on to the next question that comes from Erik Larsson at SEB.

[Erik Larsson, analyst]

I have a few follow-ups on Products & Solutions. Just like you mentioned, it feels like every other quarter has been strong in every other quarter a weak and now it's a weaker one. So, besides China, has anything really changed in the market in recent years? Or is it just that China is important and it's more sluggish?

[Anand Srivatsa, executive]

Yes. I would say that one of the things that has been difficult in the Products and Solutions business, as I mentioned, this is thousands of customers practically in all countries in the world is that, after the pandemic, this business has gone from something that has been more stable to predict into being more lumpy.Some of it has been related to sort of the pandemic effects or the post-pandemic normalization where we've seen variations and sometimes fits and starts on whether the pandemic was truly over in the region. We saw a macroeconomic and inflation effects coming in right at the tail end as the pandemic effects were truly receding.So, I think in some ways, the business, it's unclear exactly what the new normal is. And there's still a lot of macro environmental impacts that we see that get distributed on a regional basis. I absolutely agree with you that this business has sort of oscillated for the last couple of quarters. And frankly, that isn't the kind of business we expect we're in.In this space, we are the clear market leader in terms of the products that we deliver. And in some cases, the solutions we provide are critical to ARM researchers to drive questions and science, whether this is in psychology, whether this is in neuroscience, whether this is in understanding linguistics. There are a raft of areas where our technologies are very much needed.Now again, if you sort of move up the funnel, some of that then depends on what is government funding doing, which typically should stabilize over time. Now again, maybe there's still some impact on that from where different regional governments are. But again, I think it's a tough question to come back and say exactly what do we expect here because we know that there are regional differences that impact it.And, I think that there's still a question of what's the new post-pandemic normal for the business. Historically, it has been a much more stable business overall just because of the number of customers that are represented by the segment.

[Erik Larsson, analyst]

I understand it's uncertain going forward. But now that they were half into Q2, is there anything you can say? Do you expect another weak quarter? Could we might as well see the lumpiness going on the upside here? Do you have any insights into how April was also?

[Anand Srivatsa, executive]

Yes, I don't think we're going to give some specific direction on where we are in Q2. What I would say is back to Magdalena's point, we don't expect this business to be at minus 15% like it was in Q1. And so, if we think about sort of a full year basis where you can start to normalize some of these quarterly variations or more short-term variations, we expect the business to perform better than where we were in Q1.

[Carolina Stromlid, executive]

Seems like we have covered all questions for today. I will hand over to Anand for some concluding remarks.

[Anand Srivatsa, executive]

Yes. Again, thank you very much for joining us here. As I mentioned, Q1 '24 for Tobii has been a very important quarter with making this strategic acquisition real, putting ourselves in a top 3 position in what we think is a really exciting market for us going forward, automotive interior sensing. I'm really happy to see that the momentum that we've started to expect in the space is showing some tangible results.And again, the focus of the company very much is to make sure that this acquisition is successful. On the financial side, we aren't happy with the overall revenue performance. Again, this is very much driven by the Products and Solutions part of our business with the integration business being much more solid. However, sort of weakness in that revenue does impact us down to the EBIT level.And we would say that the EBIT level that we've achieved because of the weakness in Products and Solutions is below our expectation. The acquisition itself has had some timing-related effects, which Magdalena has spoken to. And given the fact that we closed the acquisition at the end of January, we are projecting that the impact of the acquisition on a top line basis is at the lower end of the previously communicated range and that the revenue here will be tilted towards the second half.And that's sort of the case from the 4. But, of course, the fact that we missed some of the revenue in Q1 makes that even more pronounced.With that, I would like to draw this presentation to a close, and thank you very much for your time.

[Carolina Stromlid, executive]

Yes. We are grateful for everyone listening in today, and we welcome you back on the 19th of July when we release our Q2 results. And we wish you all a great sunny day. Thank you.