5N Plus Inc
TSX:VNP
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5N Plus Inc
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Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the 5N Plus second quarter results conference call. [Operator Instructions][Foreign Language] I must inform you this conference is being recorded today, Wednesday, the 8th of August, 2018.I would now like to hand the conference over to your speaker today, Jean Mayer. Please go ahead.
Thank you very much. [Foreign Language] Good morning, everyone, and thank you for joining us for the presentation of the 5N Plus financial results for the quarter ended June 30, 2018. I'm Jean Mayer, Vice President, Legal Affairs and Corporate Secretary of the company and also in charge of Investor Relations.Before reviewing in more detail our quarter results, I would like to mention that we issued yesterday our financial statements for this period, together with our management discussion and analysis. If you have not been able to get a copy of these documents, I invite you to do so by accessing our website at 5nplus.com, or the SEDAR website at sedar.com, where these documents are posted. Earlier, we have also posted on our website a presentation on our quarter results that you may find helpful during this call.Joining me this morning is Arjang Roshan, our President and Chief Executive Officer; and Richard Perron, our Chief Financial Officer. Mr. Roshan, Mr. Perron and I will now be reviewing our financial statements, and we will be available afterwards to answer questions during the Q&A period.During this call, Mr. Roshan, Mr. Perron and I may be making forward-looking statements, which are subject to the usual cautionary remarks. More specifically, these statements are based on the best estimates available to the company at this time and involve known and unknown risks, uncertainties or other factors that may cause the company's actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. For a list of the factors that could cause our actual results to differ materially from those discussed or implied in our forward-looking statements, please refer to the risk factors described in our management discussion and analysis.In the analysis of our last quarter results, you will note that we use and discuss certain non-GAAP measures, which definitions may differ from those used by other companies. For further information on the use of these non-GAAP measures, please refer to our management discussion and analysis.I would now like to turn the conference to Arjang for a discussion of the quarter results.
Thank you, Jean. Good morning, ladies and gentlemen. It is a pleasure to be with you as we discuss Q2 2018 and year-to-date performance for 5N Plus.Last night, we posted our results for the second quarter of the year. While adjusted EBITDA for the quarter remained somewhat flat, EBITDA grew by 24% as compared to the same period last year. Revenue in Q2 2018 grew by 4% as compared to the same period last year. Return on capital employed increased to 16.8% by the end of the quarter versus 15.6% at the end of fiscal year 2017. These results reflect continued improvement in the company's performance.Let's have a look behind these numbers, and in doing so, allow me to start with revenue. The growth in revenue during second quarter came from newly-formed upstream activity and Electronic Materials, which more than compensated for revenue reduction in Eco-Friendly Materials. During Q2, 5N Plus processed more complex secondary streams, which incur higher treatment charges. As one of the growth initiatives, the company is investing in this activity with the aim of markedly improving valorization costs, while expanding the range of secondary feed material to gain competitive access to the essential metals.Now turning to Electronic Materials and its 3 sectors as of year-to-date. Revenue for technical materials were down significantly year-on-year. Historically, this sector was dominated by sale of upgraded electronic metals such as gallium and indium, along with commodity precursors associated with these metals. Over the past few years, this space has faced significant downward price pressure driven by oversupply in the market. In response to this, 5N Plus has begun to comprehensively transform its products in this sector by moving away from aforementioned activities and toward engineered powders and high purity materials, which require higher degree of value-added transformation. These products target a number of growing things ranging from increased functionality of electronic devices to additive manufacturing, which would materially enhance the company's pricing position. As this transformation is taking shape, old revenue units are shedding at a faster pace and acquisition of new revenue units. This trajectory remains consistent with the company's strategic plan, where the contribution from the growth initiatives are to be expected later in the planning period.Revenue for security, aerospace, sensing and imaging materials were notably higher year-on-year, driven by strong demand for the company's product related to imaging, sensing and security markets. Over the recent past, demand for these products have continued to surge. To address this, 5N Plus recently announced investment in its Montreal campus. Investment has been structured to address near term acute supply shortage in an expeditious manner, while on a longer term addressing the shortage -- the growing demand associated with these markets. When the full investment comes to fruition by mid-2019, 5N Plus will have doubled its capacity. The aerospace market continues to present growth opportunities for specialty semiconductor materials, and 5N Plus is engaged in several qualification campaigns secure future business.Revenue for renewable energy materials grew considerably as compared to the same period last year. As you may recall, earlier this year, 5N Plus was awarded a series of multi-year contracts, covering products and services linked to this sector. As of year-to-date, the service contracts have played an important role in growing revenue within renewable energy materials. Some of the service contracts generated moderately lower margins while assuming lower risk. To that end, it is worthwhile to note that while the interplay between service versus product and product mix can influence revenue and margin generation, in all cases, return on capital employed is expected to remain in line with 5N21 target.Moving to segment Eco-Friendly Materials. Year-to-date, adjusted EBITDA closed significantly higher as compared to the same period last year, despite lower year-to-date revenue for this segment. Let's have a closer look at the 3 sectors within this segment.Revenue for industrial materials dropped year-on-year, while margins continued to increase in percentage of revenue and in absolute dollar value. Historically, this sector generated a significant portion of the company's revenue, sale of bulk metals and commodity chemicals dominating the sector. As these products require little transformation and contain high percentage of metals, we are exposed to price pressure and can carry notable risk with respect to earnings volatility. Considering the company's new business model, management has moved away from these products, and instead, have focused on growing products requiring more value-added transformation from which competitive margins can be extracted. This shift has not only improved margins as of year-to-date but has also reduced earnings volatility associated with bulk use of metal.Revenue for health and pharmaceutical materials were up year-on-year, with strong demand across the board. Construction of the state-of-the-art manufacturing facility for the feed additive materials in Germany is progressing well, and commissioning is expected by the end of the year. As you may recall, late last year, 5N Plus announced its entry into the feed additive market.Revenue for catalytic and extractive materials grew substantially year-on-year. This is a relatively new sector for 5N Plus, and the products associated with this sector are used in mining, oil and gas industries. These materials enable process and yield improvements, and in certain cases, reduce environmental impact. We are encouraged by how the order book is developing as our capacity has been completely sold out until Q1 2019.Considering the wave of trade and tariff headlines associated with various metals and country jurisdictions, management continues to monitor the situation closely. Based on available information, at this point, we see little to no impact from the current trade and tariff related disputes. In the past few years, we have diversified the origin of many critical metals. Our global presence enables flexibility, and flow of goods and services of 5N Plus across disputed jurisdictions remain limited. With respect to this issue, we believe we are uniquely positioned in our industry.As we move to the second half of 2018, we would like to reiterate our guidance for adjusted EBITDA in the range of $30 million to $33 million for 2018. Also, we believe we are well on track to deliver adjusted EBITDA of $45 million and return on capital employed of 17% by 2021.I now turn the call over to Richard.
So good morning, everyone. So well covered by AJ. We continue to prepare the company for the future, taking calculated risks actively and optimistically pursuing new opportunities. During the quarter, we continued to evaluate opportunities for organic growth. We're investing to improve product mix and quality of earnings. As for previous quarters, the diversity of the markets we deserve continued to yield benefits. So, I believe, we believe that we are making strong progress with still more to do.Starting with the financial coverage, I'd like to mention or remind, as reflected in our financial statements of June 30, 2018, company partially redeemed its convertible unsecured subordinated debentures maturing on June 30, 2019, on aggregate principal amount of CAD 40 million pursuant to the terms of the convertible debenture and venture agreements between the company and the debenture trustee. The company completed a drawdown on its senior credit facility of USD 30 million to partially redeem the debentures on favorable terms reducing the current cost of gross debt. At the end of the quarter, the aggregate principal amount of debentures currently outstanding is CAD 26 million. Following the early redemption of the $40 million convertible debentures, an accelerated imputed interest of $1.5 million was recognized as an expense in the interim consolidated statement of earnings. This is a non-cash charge that won't need to be charged [ recorded to ] the financial results of the subsequent 4 quarters.So now starting with the coverage of revenues and gross margins. In Q2 of '18, revenue increased by 4% compared to Q2 of '17. Although revenues were supported by a favorable sales mix and strong product demand, gross margin decreased slightly in Q2 due to higher cost of goods sold. The gross margin as a percentage reached 26.5% in Q2 of '18.Now for the adjusted EBITDA, EBITDA, operating earnings and net earnings. In Q2 of '18, adjusted EBITDA reached $9 million compared to $9.2 million Q2 of '17. And year-to-date, the adjusted EBITDA increased by $1 million from $15.9 million last year to $16.9 million, supported by favorable sales mix, strong product demand and overall performance of our operating activities. In Q2 of '18, EBITDA reached $7.9 million compared to $6.3 million in Q2 of last year, while for year-to-date, EBITDA reached $15.7 million compared to $16 million last year. Last year impacted by positive nonrecurring item recorded in Q1, as income from restructuring of $3.4 million compared to only $0.6 million in Q1 of this year. Operating earnings reached $5.6 million compared to $4.9 million in Q2 of last year, and $11.4 million compared to $12.7 million on a year-to-date basis. Net earnings were $3.4 million or $0.04 per share in both quarters, Q2 of this year and Q2 of last year. On a year-to-date basis, net earnings reached $6.5 million.For backlog presented in days, based on annualized revenues to normalize the impact of commodity prices, backlog at the end of June reached a level of 170 days of annualized revenue compared to 172 days in the previous quarter, so similar levels.Quickly going through some of the expenses. First, I would like to mention, like for last quarter, that our euro-based expenses increased following the appreciation of the euro versus the U.S. dollar, reaching approximately [ EUR 1.17 compared to EUR 1.06 ] against the U.S. dollar last year. However, it is important to note that the impact on gross margin is minimal as we're close to a natural hedge for this currency and make opportunistic foreign exchange contracts as appropriate. Depreciation and amortization is slightly higher than last year, following the completion of specific capital expenditures in the second half of '17. SG&A expenses are very close to last year due to FX impact conversion. Share-based compensation expense in Q2 of this year and year-to-date amounted to $1.1 million and $1.8 million, respectively, compared to $2.4 million and $3 million for the same period of '17. The decrease mainly due to the important rise in the company's share price during the second quarter of '17. No expenses or income from litigation or restructuring activity recognized in Q2 of this year and last year. In Q1 of this year, the company recorded an income from litigation of $0.6 million, while same quarter last year the company recognized an income resulting from contract amendments for securing higher margins, mitigated by costs relating to the termination of noncore commercial activities in the upstream business activities, for a net income of $3.4 million.Financial expenses in Q2 of this year amounted to $3 million compared to $1.9 in Q2. The increase in financial expenses of $1.1 million is mainly due to the accelerated imputed interest of $1.5 million recognized as a noncash expense, as mentioned earlier, following the early redemption of convertible debentures. Financial expenses in year-to-date [ 2018 ] amounted to $4.7 million compared to [ $2.9 million ] last year, for the reasons just mentioned.Income taxes. The company reported earnings before income taxes of $2.6 million in Q2 and $6.7 million in year-to-date '18. Income tax recovery in Q2 was $0.8 million while income tax expense was $0.2 million in year-to-date '18. These amounts were favorably impacted by deferred tax assets applicable in certain jurisdictions.Covering liquidity and capital resources. Cash generated by operating activities amounted to $6.1 million in Q2 of '18 compared to $9.6 million in Q2 of '17. In year-to-date 2018, cash used in operations amounted to $0.5 million compared to cash generated by operations of $9.4 million in year-to-date '17. The negative change in noncash working capital in year-to-date '18 resulted mainly from an increase of about $1.8 million in receivable, $0.9 million in inventory aimed at hedging commercial positions combined with a decrease in trade and accrued liabilities of $11.9 million.In Q2 2018, cash used in investing activities totaled $2 million compared to $2.5 million. In year-to-date, cash used in investing activities totaled $4.6 million compared to $3.1 million last year. This increase is explained by higher investment combined with slightly less proceeds from the disposal of redundant property, plant and equipment.Cash provided by financing activities amounted to $0.2 million compared to $0.1 million in Q2 of last year. In year-to-date 2018, cash provided by financing activities amounted to $0.4 million compared to cash used by financing activities of about $0.4 million last year.Ending with net debt. Net debt, after considering cash and cash equivalents, increased by $8 million from $11.4 million at the end of December '17 to $19.4 million as at June 30, 2018, mostly impacted by noncash working capital requirements. The company ended the quarter with USD 29 million [Audio Gap].This completes the financial coverage. We are ready for questions.
Operator, we may now proceed with the Q&A period, please.
[Operator Instructions] Your first question comes from the line of Rupert Merer of National Bank of Canada.
So I appreciate the added color you gave on the performance of some of your business segments in the quarter. And I believe you mentioned you're running at capacity on some of your semiconductor materials. Did that limit your revenue potential much in the quarter? And as you look to double capacity in that area, how quickly can that business ramp up?
So let me just give you additional color there. This part of our business has been -- in the recent past, has been experiencing, I would say, higher-than-usual demand. And there, I must admit, we, at first, were trying to find out exactly where it was coming from. And so in being prudent about it, we recognize that the demand looks sustainable. There is a -- seems to be the market is beginning to do a shift into from the current technology, for example, to a 2-6 type of material technology, which we are very strong at. And so in recognizing that we've begun to build capacity, we think this capacity -- we've tried to address some of the shortage issues in the short term [ through ] debottlenecking of what we have. And then on a longer-term investment, as mentioned second or half -- in the middle of 2019, that investment should be completed, and I think that's probably the point where we can bring on additional revenues. But in the short term, we have some debottlenecking that we're doing in order to be able to, if you will, remove this limitation for us.
Okay. So doubling capacity, how long you think it would take to bring yourself back to full capacity with that expanded capability?
Q2 -- by the end of Q2 2019. And so we -- when you look at our 5N21 plan, because we've also given you now long-term guidance, much of this is already put in there against the $45 million. So we think this is going to line up nicely with the plan even though it's going to take until Q2 2019 to bring it online. And because we are basically doing the debottlenecking in the short term, we think we can mitigate the plan.
And then secondly, you mentioned that your catalytic and extracted materials business was sold out. Is there an expansion opportunity there as well?
This is a point where we're going to probably take the same approach as we did with the previous case with the specialty semiconductor. In that, we want to look at the business to really assess whether we want to expand or increase margins. As you know, there is trade-offs there, because we have quickly -- this business actually has beat management's expectation of how fast it has risen. And if you're a normal healthy manager, your question to your people is, well, are we leaving money on the table? So I would tell you, Rupert, before we move to additional capacity, I would like to see -- I would like to have an answer to that question.
How big is that business for you today?
On revenue basis, I think -- Richard? Yes, it's about 10%. It's getting to be 10% of our business.
Little bit, I think, less than 10% actually.
Your next question comes from the line of Nick Agostino of Laurentian Bank.
I guess 2 questions on my part. First, when I look at the Eco-Friendly, it looks like the margins were just below 15%, and that's a similar margin profile to what, as far as I can see, you guys posted last year for the same quarter. Beyond that, every single quarter looked like you were in around that 10% range specifically on that unit. Can we assume that there is -- is there seasonality here that we should be modeling in as far as Q2 is concerned? Or was this -- not say it's an anomaly but rather it will be volatile and the timing of which really is not exactly known?
By default, there is a bit more seasonality under Eco-Friendly when you compared it to Electronic Materials. But there's really -- I don't see anything special in Q2.
As you know, mix...
Mix is really the main factor here for Eco-Friendly.
Great. The fact that the mix lined up again in Q2 same as last year, you're saying it's just coincidental not necessarily specifically seasonally related?
If it lines up next year, then we can say maybe it's seasonality. But right now, I think it's -- we wouldn't call that a trend.
Okay. Just trying to see if there was a trend, or as you said too early to say.
Too early to say.
Okay. And then the second question just on the guidance, obviously you guys reconfirmed the EBITDA for the full year. When I look at what you've posted so far at roughly $17 million, are you guys just suggesting that in the second half of the year you think the mix will come off? Or you're just taking the wait-and-see approach and see how Q3 plays out?
As you know, Nick, speaking of trends, if you look at Q4, usually it's not as strong. And so that's really a reflection of protecting for that because historically that's what it's been. It's not -- I wouldn't say it's mix, I'd say it's probably -- because if you look at certainly in the past 3 years, Q4 has not been -- has been the weakest.
So there's little of seasonality in our business, there's no doubt. Q4 is usually a bit softer than the other quarters. So maybe we'll get it wrong this time and do a better Q4 than usual, but look, this is our guidance at this point in time based on experience.
Your next question comes from the line of Mac Whale of Cormark.
When you look at the last -- over the last year, 1.5 years, you've been watching revenue, seeing revenue decline and you've been working on getting the margins up. I think the expectation was when that reverses, we'll see some real torque to the business model. Now we've seen revenue increase a little bit, is there something going on here where the margins -- we've seen the margins compress that is that suggests the -- that torque is not as big as we should expect? Or it's just too early in this revenue expansion?
Mac, I think it is a bit too early to make conclusions on that, but allow me to just bring out -- highlight the fact that at 26.5%, it is -- for us, it is actually -- look at it at various quarters, it's one of the higher quarters in terms of gross margin percentage. Now the thing that I have said continually is, as long as we are increasing gross margins, don't penalize us for not necessarily growing revenue. So you're right about that. This quarter, revenue went up. Part of the explanation which was in my portion, in my text, was that some of the material that we were processing were much more complex, and so the costs associated with treatment of these materials were higher. Now, in all fairness, this is a new activity. There is quite a bit of learning that we're going through, and we think, with time, we're able to manage that. As you probably well know, sometimes as you embark on a new business, there are deficiencies or lack of, I would say, efficiencies initially; and as you gain those efficiencies, margins continue to improve as you learn about that business. So there's some of that being played here. And as management, you got to do judgment calls. Personally, I'm very happy to still deliver 26.5% and chase those revenue units. Now if it goes well below that, then we're back to favoring more in terms of playing with the margin and trying to bring it back up. But at this point, I think, the way we're trying to balance that scale is consistent with what we have said in the past.
Okay. Yes, that makes sense. I thought that it was pretty early days in doing some of these secondary streams. So I would expect some improvement down the road as you get -- as you work that into your main processes.
And with the investments that we have planned and that we'll plan, those will help us improve efficiency.
When you look at the new capacity in the semi space that you're putting into Montreal, is there better margin to be expected with some of this equipment? Is it effectively similar to what you already have in place? Or are there other advantages operationally that we might see in the results?
I think, at this stage, we should at least expect as good of a margin as what we have today, but there are opportunities. At least from what we see, the way the technology is developing, there are certainly opportunities for further improvement of those margins.
That's from the [ missed ] opportunity. From the operations perspective, those equipment will be newer. We'll have controls and other virtual equipments more standardized. So we may -- we're likely to reduce downtime term and timing, even better from that perspective.
Okay. And then when you look at the 5N21 plan, what are -- are there other verticals that you will do a similar capacity investment to -- investment in capacity to expand it like you've announced? Like, will we -- I'm just trying to understand whether we should be expecting a similar announcement like every 6 months or whatever time frame, where you'll see -- where we'll learn about some sort of capacity expansion to get towards that EBITDA goal in 2021. Is there -- I was wondering whether you could share with us what sort of milestones we should expect along that line? We had solar last quarter. We have the aerospace, semi space this quarter. Could you lay that out for the next, say, year or 18 months?
We are certainly working on that as we're going through the budgeting process. But just to maybe give you a little bit of a sneak preview on that, as I mentioned, for example, our upstream, as we're going into more complex feeds, as we are processing more complex material, I can see within 5N21 spectrum additional investments dependent on how we fill up our capacity on some of these semiconductor materials in terms of -- as you know, we go through the ebb and flow of increasing revenues and maybe working more on the margin side. So those play in terms of how well we use our capacity and how fast our capacity fills up, but I could potentially see additional investments there. We had a caller that asked about extractive and catalytic. At this point, we made no commitment for expanding that capacity, because I think that's a margin play now, but who knows. So we're working on that, but that hopefully gives you a little bit more color.
Okay. But in that plan, is there a situation where you have multiple options and you make a decision down the road? Like, for instance, for 5N21, you've made this doubling of capacity. Would you make a tripling of it in 2020? Or is there a different -- do you have a different roadmap where that's unlikely and it's really these other verticals? I'm just trying to get an idea of what verticals are baked into your vision of 2021.
So this capacity that we are doubling plays 2 roles. It actually serves an existing or not existing, an emerging external market and it, also internally within the company, serves our internal production for more value-added semiconductor product. And so, I think, it would be reasonable to see that before the end of the plan, there would be investments. Assuming everything holds the way it's holding and demand continues, I think it is reasonable to think there will be additional investments not only in this area of the business but further downstream where this product is also used to create, let's say, more value-added materials. So, yes, it is foreseeable.
Okay.
Just before -- maybe I should add that, at this point, we've also committed in the 5N21 that our investments will be in line with our depreciation. So if you take that as $10 million a year, over 5 years, that's $50 million. So everything that we're doing, everything we're announcing so far is within that envelope. That has not changed.
Your next question comes from the line of Frederic Tremblay of Desjardins Capital Markets.
First question would be on the $50 million envelope that you just mentioned. How much of that has been committed or announced so far in terms of investments? Are you at -- out of the $50 million, are you about $30 million committed right now, $40 million, $10 million? Maybe give us an idea of where we're at.
I guess the definition of committed is...
It's not committed, it's -- but I'm going to say realized on the balance sheet. We're probably -- if you look back 2 years, probably 75% that.
75% that is?
No, we have not spent the full depreciation rate, that's what I mean.
So about -- Richard, would it be reasonable to say about 1/3 of it has been already committed, if...
Committed, yes. About 1/3, yes. Over the 5-year perspective, [Audio Gap] $50 million.
$50 million, yes.
Yes.
Okay, that's helpful. And I understand that you're not managing the business on -- based on short-term metal price fluctuations and there is a strong rationale for securing access to metals. I was just wondering, with some of the decreases in metal prices that we're seeing right now, is there may be a bit less urgency to push forward with some of the upstream initiatives that you're contemplating? I mean, if metal prices are lower, technically, I guess, the spread between the cost of internal valorization of complex feeds and direct purchases on the market is -- would be narrower. So I don't know if you have any thought on that in terms of your upstream outlook versus fluctuations in metal prices, some comments on that would be helpful too.
Well, quickly. It definitely brings additional challenges for the upstream side of our business, but we continue to be very proactive finding new files. And if at current low metal prices, we find files that are bringing benefits to the company, we will continue to explore those.
I think it's important to note that this is almost like steering a cruise ship. It's not a ski boat, right. So when you go to develop some of these, excuse me, flow sheets and make the investments that you make, you've got to plan a bit ahead. You can't just easily turn it on and off. So, as Richard rightfully said, when actually metal prices are low, this is a good time to challenge your organization to develop these flow sheets, because the legacy that you create is a lower cost of valorization. And so even if, in the short term, you are not really making money with it, what you're doing is enabling your company on a more sustainable basis to be able to procure material and be able to be competitive at it. So, yes, just bear in mind it's not a light switch where you can say, well, at this point, I won't do this, at that point -- because there is development that goes behind these things.
Takes time to develop as a [ start-up ].
Right. It's actually -- we're using technology and essentially technology is a key part of procuring these metals now as compared to, let's say, the past where there was more speculation involved.
So if it passes the test now, we can only be more optimistic for the future.
Okay, that's helpful. Lastly on -- just on M&A, just an update maybe on your M&A ambitions and pipeline and sectors of interest as well as valuations that you're seeing now.
Yes. We're very active. We continue to look at various options, various files. In terms of -- I think there is no secret. In terms of what we like, are -- there are 3, if you will, nodes in the company, where we are strong at: specialty semiconductor being one; the second being health and pharmaceutical material; and the third being industrial material. And I think there is no secret that the first 2 have better margins than the last one. So as we scour the market, our priority is on the first two. To your point on valuations, well, our personal opinion, it's pretty rich at this point, and we're going to be disciplined. I have said this before, I'll say it again. We will not pull the trigger for the sake of pulling the trigger. We will certainly -- if we do so, we need to be able to justify it. There needs to be accretion. And if it's not there, we think we have a very credible plan in 5N21. If you look at it from where we were compared to where we're going to go, let's say, over the 5 years, each year, it's a 15% growth which we think is very competitive in the market. So I think we're ideally positioned because, with our organic plan, we have a very convincing growth plan based on a number of growth initiatives. And so far, we've been able to deliver. And so, we do not really feel pressured to do an M&A. We want to do an M&A, but it has to make sense for us. And if it doesn't, we'll be patient.
We have no further questions at this time. [Operator Instructions] We have no further questions at this time, please continue.
Okay. So we thank you all for attending this morning's call, and we look forward to speaking with you in November for the presentation of our third quarter results. So thank you, again, and have a great day.
Thank you.
Bye-bye.
That does conclude the conference for today. Thank you for participating. You may all disconnect. [Foreign Language]