5N Plus Inc
TSX:VNP

Watchlist Manager
5N Plus Inc Logo
5N Plus Inc
TSX:VNP
Watchlist
Price: 7.25 CAD 0.69%
Market Cap: 645.6m CAD
Have any thoughts about
5N Plus Inc?
Write Note

Earnings Call Transcript

Earnings Call Transcript
2022-Q1

from 0
Operator

Good morning, ladies and gentlemen, and thank you for standing by, and welcome to the 5N Plus Inc. First Quarter 2022 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to your speaker today, Richard Perron, Chief Financial Officer. Please go ahead.

R
Richard Perron
executive

Good morning, everyone, and thank you for joining our first quarter ended March 31, 2022 financial results conference call. We will begin with an overview of our business performance, strategies and the review of our financial results, after which we'll begin the question period. Joining me this morning is Gervais Jacques, our President and Chief Executive Officer. We issued yesterday our financial statements, and we have posted a short presentation on the Investors section of our website.

I would like to draw your attention to Slide 2 of the presentation. Information in this presentation and remarks made by the speakers today will contain statements about expected future events and financial results that are forward-looking and, therefore, subject to risks and uncertainties. A detailed description of the risk factors that may affect future results is contained in our management discussion and analysis of 2021 dated February 22, 2022, available on our website and our public filings.

In the analysis of our quarterly results, you will note that we use and discuss certain non-IFRS measures, which definitions may differ from those used by other companies. For future information, please refer to our management discussion and analysis.

I would like to turn the conference to Gervais for the discussion on the business and quarterly results. Gervais?

G
Gervais Jacques
executive

[Foreign Language] Welcome, everyone. Let me begin by saying that I am extremely proud to have been appointed CEO this past March, after holding the interim position since late last year. It is with great pride and enthusiasm that I will continue working with the strong team in place as we aim to drive future growth while managing a complex global business environment.

5N Plus is on the right path to establish itself not only as a leader in its market but as a strategic and value-added partner to critical industries around the world. With that, let's now turn to our first quarter performance. We kicked off 2022 with strong demand for our advanced material across core businesses. This resulted in significant revenue growth over last year. The key sectors that outperformed were renewable energy and space for Specialty Semiconductors and pharma and health under Performance Materials. This confirms the underlying strength of our business and reflects our continued shift towards value-added products and markets.

The first quarter was not without its challenges for businesses operating globally with escalating geopolitical events, ongoing supply chain pressures and inflation. While the company successfully addressed mounting inflation in 2021, inflation in 2022 increased due to the unforeseen impacts of the Russia-Ukraine conflict. This will remain a challenge we will need to contend with going forward. Additionally, some of our activities were impacted by internal sanctions on Russia. For Q1, this resulted in unrealized sales for both AZUR and, to a lesser extent, our Extractive Materials business.

The impact of sanctions is also reflected in our Q1 backlog and bookings, adjusted as a result of the removal of any anticipated sales commitments to Russia-based clients for the foreseeable future. While the Russia impact on AZUR is not material for the overall business, we did take a noncash impairment charge on noncurrent assets to reflect the adjustment in our assumptions. Despite this unanticipated impact, we nonetheless maintained a solid backlog and booking levels overall.

We have also quickly shifted our production scheduling in shipments for certain European products and clients. Looking ahead, we are seeing significant demand for solar cells for space applications in Europe and North America, and AZUR is well positioned to capitalize on this. We anticipate that the strong demand will, in fact, more than offset the portion of AZUR's business impacted by sanctions.

Turning to Industrial and Extractive and Catalytic Performance Materials. These businesses remain vulnerable to sudden and rapid inflation and have also been impacted by the Russia-Ukraine conflict and related sanctions. As announced yesterday, we have reactivated our strategic review process now that the AZUR acquisition is behind us. Our objective is to ensure that we focus on businesses that will deliver improved margins and which are less affected by commoditization. Since we are picking up where we left off, we expect to move forward efficiently in our review of legacy businesses less compatible with our long-term strategy. We will keep you informed as we advance this process.

On the investment front, we are pleased to announce that we move forward with planned investments in AZUR as we seek to tap into new and growing markets in future. This is one of the reasons why this transaction is so transformational, opening up our TAM in future. The project is focused on developing and commercializing new wide band gap materials, specifically gallium nitride. This is an emerging multibillion-dollar market around high-power electronics and communications applications, and we are excited to move forward with this project.

At this stage, we have completed the layout design and started subcontracting the building improvement and infrastructure works. Earlier this year, we also produced samples with the support of our equipment suppliers, so we are already in project execution mode.

Here in Montreal, our St-Laurent project aimed at expanding the development and manufacturing of tellurium for advanced II-VI-based semiconductor is also progressing well with project commissioning slated for mid-2022 as planned. Once complete, we will be able to better serve the important renewable energy market and with our Western World advantage.

Finally, we are also making good progress implementing our commercial excellence program, which we discussed on our last call. We are focused on developing value-creating partnerships with our customers in the current context. This is -- this strategy is definitely key. We continue to make good progress with the deployment of the first wave of our go-to-market strategy now well underway.

In conclusion, mindful of ongoing geopolitical events and inflation impacts on our business, we will continue to be disciplined and focused in addressing these ongoing challenges, while also supporting our continued growth. We are focusing on value-added and growing end markets, and we are investing where we see opportunity for future growth.

I will now hand over to Richard to discuss our financial results in more detail before taking questions from analysts.

R
Richard Perron
executive

So good morning, everyone. We're very happy to be with you this morning. Reporting a very challenging quarter for the company, impacted by our foreseen geopolitical events in Europe, further accentuating the sudden and rapid inflation and forcing a sudden shift of production scheduling and shipments for certain European products and clients. But despite that, as mentioned by Gervais, on a very positive note, we entered 2022 with strong demand delivering revenue growth over last year before any incremental revenue associated with AZUR recently acquired. .

For management expectations, the key sectors outperformed the same period last year with renewable energy and space under Specialty Semiconductors while imaging performed at similar level. And Pharma and Health -- performing better than last year's first quarter was Pharma and Health under Performance Materials.

However, Industrial and Extractive and Catalytic materials were [ narrowed ] by the impact of inflation and ongoing supply chain challenges, further accentuated in Europe by recent conflict in Russia and Ukraine. During the quarter, while AZUR had sales commitment to Russian clients, the amount of such sales not material as a whole to the company, production and shipments planned a long time ago were not realized. Similar also took place for a Canadian client with operations in Russia purchasing extractive materials annually at the specific time of the year.

In the specific case of AZUR, while capacity usage is lost for the quarter, the demand for solar cells under space applications within Europe and North America has increased greatly to a point demand will likely cross worldwide capacity in the very near term, creating business opportunities for the company that exceeds by far the current Russian business impacted by the recent economic sanctions.

Our near-term priority continues to ensure the successful integration of AZUR, while also continuing to accelerate the company's growth trajectory in 2022 both organically and through acquisition. The recently launched investments, just referred by Gervais to develop the commercialized new wide band gap materials more precisely Gallium Nitride, is one strategic initiative. As part of this next phase of its strategic transformation to our advanced materials with improved margins away from products affected by commoditization, the company has relaunched its strategic review of certain legacy businesses to assess the long-term compatibility with the strategy.

Based on current challenges, adjusted EBITDA of 2022 is expected to land between $25 million to $30 million. The range of variance of the adjusted EBITDA is largely dictated by the speed at which 5N Plus addresses the challenges associated with inflation and geopolitics. Mindful of current geopolitical uneasiness and inflation impact on our businesses, we believe these can be transforming into unique midterm opportunities and strategic partnerships.

So now starting with the coverage of revenue and gross margin followed by the adjusted EBITDA and net earnings. Revenue in Q1 increased by 37%, reaching $64.4 million compared to $46.9 million in the same period last year, supported by our demand for Specialty Semiconductors over and above contributions from AZUR as well as pharma and health materials under Performance Materials.

Adjusted gross margin in Q1 was fairly impacted by volume, reaching $14.1 million or 21.9% compared to $11.7 million or 24.9% in Q1 of last year. The adjusted gross margin percentage was impacted by an unfavorable mix under Specialty Semiconductors as well as inflation and ongoing supply challenges under Performance Materials. In Q1, the EBITDA was impacted by a noncash impairment charge on noncurrent assets of $5.4 million recorded this quarter that I will cover next, creating a net loss for the quarter.

Now looking at annualized backlog when comparing Q1 of this year to Q4 of last year. The backlog on March 31 represented 196 days of unrealized revenue, a decrease of 25 days or 11% over the backlog of December. The net difference is largely attributed both to the quarterly realization of long-term contracts under negotiation for renewal in the coming quarters as well as an adjustment made due to the impact of recent international sanctions on Russia on sales to certain customers. In both cases, the impact is on the backlog for some Specialty Semiconductors.

Quickly going through the expenses. Depreciation and amortization expenses in Q1 amounted to $4.8 million compared to $2.6 million for the same period of last year, explained by an increase in property, plant and equipment, intangible assets, right-of-use assets following the acquisition of AZUR.

SG&A expenses in Q1 were $7.5 million compared to $5 million for the same quarter of 2021. The increase mainly explained by the acquisition of AZUR as well as general inflation impacting various expenses and progressing easing of restrictions related to COVID-19, allowing, for example, travel.

Share-based compensation expenses in Q1 amounted to $0.1 million compared to $1.4 million for the same period of last year. In Q1, the company recorded a noncash impairment charge on noncurrent assets of $5.4 million, $5.1 million on the customer relationships and $0.3 million on other intangibles included in the Specialty Semiconductor segment to reflect the assessment of the carrying value of intangible assets impacted by the Russia-Ukraine conflict, more precisely in reference to Russia-based customers. The impairment charge results from the fact that the company's initial assumptions regarding the timing of future cash flows from these customers can no longer be supported given the uncertainty associated with recent international sanctions against Russia and the unknown duration of the conflict.

Financial expense in Q1 2022 amounted to $1.6 million compared to financial income of $0.1 million last year. The negative impact is mainly due to the interest on long-term debt, imputed interests, which is -- are following the position of AZUR.

In terms of income tax, we recorded income tax recovery in Q1 of this year of $0.5 million compared to income tax expenses of $1.6 million for the same period last year, both periods impacted by deferred taxes applicable only in certain jurisdictions.

Quickly covering liquidity. In Q1, cash used in operating activities amounted to $4.9 million compared to cash from activities of $5.8 million in Q1 of last year. The decrease in Q1 of this year is mainly due to the negative change in nonworking capital. In Q1 of this year, cash used for investing activities totaled $4.1 million compared to $2.7 million in the same quarter last year. In Q1 this year, the cash used in financing activities amounted to $2.8 million compared to $6.4 million in Q1 of last year. The decrease of $5.7 million has been explained by the reimbursement of $5 million to the credit facility in Q1 of last year.

Now looking at gross and net debt. Total debt as of March, similar to December 2021, pulling the drawdown from the credit facility to finance a portion of the acquisition of AZUR in Q4 of last year. And on a net debt basis, after considering cash and cash equivalents, increased by $10 million to $90 million from $80 million, reflecting additional working capital requirements normally required at this time of the year.

So this will conclude the financial review. We will now be taking questions from analysts.

Operator

[Operator Instructions] We will begin with Rupert Merer with National Bank.

R
Rupert Merer
analyst

Gervais, congratulations on [indiscernible] CEO position. If I could start with Russia. Can you give us a sense of the scale of the headwind there. How much revenue have you historically seen in Russia? And maybe how much have you seen in the backlog?

G
Gervais Jacques
executive

Okay. Historically, AZUR has somewhere between $3 million to $10 million worth of sales. But in the backlog, as we started the year, they had about $10 million of sales, most of which was planned to be shipped at the end of Q1, okay? So that explains my comment that -- I mean production capacity was lost for Q1, but the growth that we expect in the space sector will more than compensate what we've lost from the Russians. And ultimately, we don't know -- I mean, we don't know what will come next in terms of sanctions and how long it will last, but it may not be...

R
Rupert Merer
analyst

Okay. Now then the historically, say, 5N Plus business, how much revenue would you have had from Russia?

G
Gervais Jacques
executive

Very small. Some years, it could be a couple of million, $3 million.

R
Rupert Merer
analyst

All right. Excellent. And then secondly, on supply chain and inflationary pressure. Now you're investing in some performance initiatives like your standalone initiative. Is that going to help to alleviate some of the supply chain issues? Can you talk us through that? And can you pass on some cost increases to customers? Basically, how can you manage with these pressures? What can we expect?

G
Gervais Jacques
executive

Well, I think the fact creating this sale -- the project sale of a platform will definitely help us in terms of being more efficient because instead of having to -- to operate in different sites, we will be optimizing one in Montreal with the economy of scale. Then that is definitely one advantage. And we are not exposed to the energy price in Quebec, as you can imagine. And I think that's also a key competitive advantage that we're going to be -- that will play in our favor, that we will benefit. I think that is one thing.

The other thing, we -- our customers, they are in the same business environment than we are. Then they understand the type of challenges we're facing and they are -- it's not -- for them, it's not a big surprise when we were talking about a normal inflation. And the 2 things that are impacting us the most are the energy price in Europe and also the acid price, which you need a lot of energy to produce acid.

Then these 2 are impacted by the current situation. And this is what we're doing with our customer. But again, it was such a rapid and sudden in Q1 that we always have a lag when it's time to entertain this type of discussion with customers.

R
Rupert Merer
analyst

Okay. How long do you think that lag -- elastically, how long before you can put through price increases?

G
Gervais Jacques
executive

Well, anything between -- some are spot contracts. And I think that's also -- when we're looking at your portfolio of customers, as you may imagine, we have some on spot sales. And these are automatically adjusted with the current pricing environment. And then you have the one with short-term contract, could be a quarter, it could be a year. And you have -- the other one that -- even if you have a contract that you will reopen because you've been facing, I would say, event like this one, which are sudden and unpredictable, then I think it will take some of the -- some are immediate. Some other will take a quarter and some other will be done for the second half of the year. Then that's what we're doing and, as you can imagine, we're doing it also. We are prioritizing, then we're starting with the one that are most impactful for our business.

R
Richard Perron
executive

Just maybe on the on the topic of inflation. The inflation that everyone lived and went through at the end of last year, this, as we mentioned in previous calls, we have implemented price increases. The challenge with Q1 is that sudden rapid inflation, especially on energy and chemicals that occurred because of the conflict. This one was definitely impossible to handle the -- to end the Q1.

Operator

Now moving to our next caller, which will be Miguel Ladeira with Cormark.

M
Miguel Ladeira
analyst

I just want to follow up on Rupert's question regarding lag. When we talk about spot sales versus contract sales, can you point to a percentage split here?

R
Richard Perron
executive

Historically, on average, used to be half and half. Now with the AZUR part of the group, the ratio is likely to change. AZUR is a project-based business, okay? So there's a little bit more contract. But the way contracts are written, there are often a bit of openness to change prices along the way. But the old rule of thumb would have been half and half. But under the current context, and we've done that in the past, we may increase the proportion of spot business versus contract business, as you can imagine.

M
Miguel Ladeira
analyst

That's helpful. One more for me. You mentioned in your opening remarks that you're conducting a strategic review around divesting assets. I know it's early days, but are there specific assets you can point to?

R
Richard Perron
executive

Well, we've -- it's a topic that we referred to in the past, okay. By default we're often and then always pointing towards our Industrial sectors and very close Extractive and Catalytic material sectors, which by default has a very -- much higher if not a very high metal content as part of the product we sell.

Operator

[Operator Instructions]

We'll move to Michael Glen with Raymond James.

M
Michael Glen
analyst

Just to come back on some of the challenges. Are you seeing any challenges with moving material at ports or getting your hands on materials that you need in your manufacturing process over in Europe?

R
Richard Perron
executive

It's definitely a lot more challenging to get stuff across oceans, either from Europe to North America or Asia to Europe. And the team definitely has to plan way ahead of time. It takes much longer at sea than before availability of containers is ordered. But ultimately, everything moves but it definitely needs more work from our team.

G
Gervais Jacques
executive

If I may add one thing that we have observed is our customers, they are increasing their trade working capital. That means that they're holding an inventory more material than they used to be. And most of them have been through these optimization cycle with the external firm to improve the trade working capital. These days, with the current geopolitical environment, I think they're revisiting their position and they are increasing their inventory.

R
Richard Perron
executive

And obviously, our...

M
Michael Glen
analyst

Go ahead.

R
Richard Perron
executive

And everything we do around shipments needs to be properly planned.

M
Michael Glen
analyst

And any of the sourcing of the materials that you would use in any of your processes to produce product, was any of that sourcing coming out of Russia?

R
Richard Perron
executive

If any, it's certainly not material. Nothing comes to my mind.

M
Michael Glen
analyst

Okay. And then can you just comment on where you are with the balance sheet? Are you comfortable? Are you okay with where leverage is? What are your covenants? What do your covenants look like? How should we think about the balance sheet over the coming year?

R
Richard Perron
executive

The balance sheet. I mean the covenants are on the senior net debt that is treated on a net debt basis. It's just a net senior debt basis, so currently are in the low 2s. So very comfortable with our senior creditors.

M
Michael Glen
analyst

And do you have any guidance or targets for where you would like total debt or net debt to be at the end of the year or by the end of 2023.

R
Richard Perron
executive

We expect net senior debt to EBITDA to still be in the 2s, but a bit lower than the current low 2. So somewhere between 2 and, I guess, 2.4.

M
Michael Glen
analyst

Okay. And just coming back over...

R
Richard Perron
executive

We're currently tracking something around 2.35, I think.

M
Michael Glen
analyst

Okay. And is there -- like based on what you're seeing, are there any spots where you could -- like if we're thinking about this whole -- all the headwinds you saw in Q1 coming around and maybe at some point in the future, they start to provide a tailwind to your results, like is that a potential that we can think about?

G
Gervais Jacques
executive

Well, if I -- the example I gave about the spot and the contract, it works both ways. If the input costs are going down, it will take a quarter or 2 to revise our price down, to readjust the price with our customers. And yes, we will benefit from it if things are improving in terms of cost for like energy or acid.

And if I may add, I think it is really unfortunate what is happening with Russia and Ukraine. But on the other hand, I think the context we are in, in terms of the space industry, I think, the timing is really good in terms of all the consolidations that have been recently announced, and the demand for solar cells is increasing really fast. I think that it's really unfortunate, but the timing is not that bad.

R
Richard Perron
executive

And I'll add the following, we develop business to our Russian clients in Q1. We know that part of that business was aimed for the international space stations. So ultimately, some work will have to be done by someone at that stage. So like it may not be lost forever.

Operator

We'll now move to our next question, which will come from Nick Agostino with Laurentian Bank Securities.

N
Nick Agostino
analyst

I guess first question, I'm not sure if you guys highlighted in the prepared remarks, but just going back to the Samsung contract from late last year. Can you just give us an update as to where that contract sits vis-a-vis are you starting to recognize any revenues from that new contract? And where things sit as far as follow-on contract opportunities either with Samsung or with other potential clients on the back of that same announcement.

R
Richard Perron
executive

Just to be clear, your question, is it specific to medical imaging or you mentioned...

N
Nick Agostino
analyst

Well, specifically medical imaging, but I guess the whole PCB technology and any other business you might be doing with Samsung?

R
Richard Perron
executive

In our first quarter results, as I've mentioned, we are at similar level than Q1 last year. So nothing has been materialized out of that in Q1 of this year, okay, or is definitely not incremental, realizing it may not be the right term, but incremental to the same period last year.

We're still in exchange with our partner. And as we've mentioned in the past, the solar industry is evolving towards PCB. So we are in close contacts with the different players. And something will come up, but it's at this time, hard to tell at which point in time in the year that will materialize. But definitely a lot of action in the background in that industry that we're involved in.

N
Nick Agostino
analyst

And when do you anticipate maybe a ramping of revenues of that contract, specifically with Samsung?

R
Richard Perron
executive

I'll have to give you a conservative answer, and it's not going to be before 2024, okay? If anything -- in 2023, I mean. In 2022, it would be smaller than anything. That's what I can say today. And obviously, we'll adjust our message in the upcoming quarters as things gets confirmed. The good news, though, is Samsung came out and finally confirmed that they received FDA clearance.

From the point they get FDA clearance does not mean they go at a full-scale commercialization. What it means is that they're going to be placing more equipment in the field and collecting additional data to make sure that everything is going as per plan and at that point in time that they will officially commercialize the product, the equipment.

N
Nick Agostino
analyst

Okay. Great. And then if I understood your presentation correctly, it looks like you had an organic growth somewhere north of [ 15% ]. So assuming that, that number is about right, obviously, there's lots of moving parts for a term given what you've experienced in Q1. But can you maybe just give us a sense as to what you're targeting organic growth-wise bigger picture, maybe, say, 2023, 2024, just from a modeling perspective once things normalize?

R
Richard Perron
executive

I guess you'll have to wait a little bit. At this point in time, we're not going to be disclosing growth assumptions for '23 and '24, you have to be more patient, sorry for that. But in Q1, as you see from that high level bridge, we do have more sales for 5N Plus, having just over and above what AZUR is bringing on board. And this growth is coming, as we've mentioned last year, our renewable energy business and in our pharma business. It continues to do very well.

N
Nick Agostino
analyst

Okay. And then my last question is, I know when Gervais came on board, he wanted to put through some value-oriented pricing increases? And then certainly, all of a sudden, you started to get inflationary discussions were going much, much higher. That was the case in Q1. Now you've got all these Russian-Ukraine issues, supply chain, et cetera, which I imagine is only going to make the amount of increases you want to push through that much more as inflation becomes even greater impact on your business.

So I'm just wondering, if you look at how much you want to put through before any of this discussion came -- surfaced and how much you want to put through now, is the amount -- is the total amount of some increases you would like to implement, is that something that you're comfortable that your customers are willing to absorb at this time? Or do you think that the idea of putting through value-oriented price increases is something that the current market environment you might have to do more in a step-function manner, say, through 2022 and then maybe into 2023 as well?

G
Gervais Jacques
executive

Well, there is finically no dull moment currently, but there is no good and bad timing to do -- to implement such a strategy. I think it's all about the partnership with your customers and the fact that you also need to put -- as a #1 priority, it's all about security of supply now. With the current geopolitics, you need to reinforce the fact that buying from 5N, you're also buying a type of security of supply. And then you can talk about the key differentiator attributes that we're bringing on board as well, which could be the fact that where we're operating, the way we are operating, our ESG practices, our quality, all that, I think, we have a broad portfolio of key competitive advantages, and we're bringing this discussion on board. And we're also working in partnership with them to develop the next generation of product.

Then, it's like a pipeline of initiatives. And not all of them are at the same -- I would say progressing at the same pace. We have very good quality customers, big names. And they know -- they are, I would say, well educated in terms of understanding, capturing the full value of the products and also devaluing the partnership. That -- in a nutshell, I think we are progressing this initiative. I believe that this is the right time to do it. We will -- even though we are facing this type of inflation, it's all about connecting with them. It's all about working closely with them and developing -- strengthening the relationship and developing even a better relationship in the future looking ahead as a real partner instead of just supplier customer.

Operator

Now we'll take a question from Frederic Tremblay with Desjardins.

F
Frederic Tremblay
analyst

I wanted to ask about the competitive environment. I imagine that your competitors are facing the same challenges. What have you seen in terms of competitive behavior? And how is that impacting [ financials ]?

R
Richard Perron
executive

The -- what we know is that they're going through the same challenges as AZUR are going through because some of our products, they're also located in Europe. But I'd like to say that -- I mean, Q1 was difficult. It was extremely difficult for our industrial and similar products like extractive and catalytics. It's really that sector that was not able to react quick enough or was by default most impacted by that sudden and rapid inflation following the Russia-Ukraine attack.

If it was not of that sector, everywhere else, we've been able to easily adapt inflation, best work with our clients and so on. So some of that sector would have done better than the same quarter of last year. So for that sector, competitors are facing the same thing. For all sectors, they're facing the same thing. But for that particular sector, we are, I suspect, more exposed from -- in terms of current European crisis.

F
Frederic Tremblay
analyst

Okay. And since your MD&A mentioned some contract -- long-term contracts under negotiation for renewal in coming quarters in Specialty Semiconductors, can you talk a bit more about that, sort of what end market back in and your degree of confidence that we can successfully renew the contract?

R
Richard Perron
executive

Okay. That's one of the key contracts under that sector is, everyone knows it, it's our client under renewable energy for solar power. And things are going well. I mean we continue to have an extremely good relationship with them, an old partnership. So all of that is on a way to be renewed. We don't see any issue coming.

Operator

[Operator Instructions] With no additional questions in our queue, I'll turn the call back to your host for any additional or closing remarks.

R
Richard Perron
executive

Okay. Well, we would like to thank you all who participate to this call, and we wish you a good day.

G
Gervais Jacques
executive

Thank you all.

Operator

Ladies and gentlemen, this will conclude your call for today. We thank you for your participation, and you may now disconnect.