5N Plus Inc

TSX:VNP

Earnings Call Transcript 2018-Q3

[Operator]

[Foreign Language] Good morning. My name is Jessa, and I will be your conference operator today. At this time, I would like to welcome everyone to the 5N Plus third quarter results conference call. [Operator Instructions] Mr. Jean Mayer, Vice President, Legal Affairs, Corporate Secretary and in charge of Investor Relations, you may begin your conference.

[Jean Mayer, VP of Legal Affairs & Corporate Secretary]

Thank you. [Foreign Language] Good morning, everyone, and thank you for joining us for the presentation of the 5N Plus Financial Results for the Quarter ended September 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've also posted on our website a presentation on our quarter results, which 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, 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 over to AJ for the discussion of the quarter results.

[Arjang J. Roshan, CEO, President & Non Independent Director]

Thank you, Jean. Good morning, ladies and gentlemen. Thank you for joining us as we discuss Q3 2018 and year-to-date performance of 5N Plus. Last night, we posted our results for the third quarter of 2018. Adjusted EBITDA and EBITDA grew by 24% and 21%, as compared to the same period last year. Revenue in Q3 grew by 6% as compared to the same period last year. Annualized return on capital employed improved to 16.4% as of September 30, 2018, versus 15.6% at the end of 2017. Before analyzing these results, I would like to spend a bit of time addressing some of the key macro topics of importance. As you may know, over the past several months, the price of most metals utilized in our businesses have been sliding by as much as 25%. In addition, trade and tariff disputes between major economies along with anticipation of interest rate hikes have created uncertainty across the globe. The question is, how are these factors impacting 5N Plus? Well, first let's tackle the subject of metal prices. Prior to the implementation of 5N21, decline of 25% in key metals used in our products over a period of several months would almost invariably deliver a palpable negative impact to both revenue and earnings. In the advent of 5N21 and subsequent implementation, a number of parameters have changed. Today, the company's product portfolio contains materials that carry less revenue from metals, and more from value added activities. Furthermore, flow of various in-process materials across the globe have undergone optimization. Inventory has been rationalized, efficiency and yield have improved, and most recently, the newly-created upstream activity has begun to meaningfully contribute to the company's results. A company, which in the past relied on favorable movements in the metal markets for the lion's share of its revenue and earnings is undergoing significant transformation, which is making it much less exposed to the movements in the metal markets. To be clear, the impact from these movements have not been eliminated, and management has declared that the complete elimination of this exposure is not possible. In fact, had it not been for the adverse impact from the metal markets, 5N Plus would have posted higher revenue growth and even better earnings. This being said, the company's exposure to metal-related volatility has been significantly reduced as evident by results in Q3 2018. With respect to trade and tariff related issues, we see little to no impact to our businesses. We are a global company with operating entities across 3 continents. Most of our entities are dedicated to serving the needs of their local customers in their local market, and their inputs are supplied with little impact from disputed jurisdictions. Recognizing that the situation is fluid, continuing to monitor the developments to keep abreast of any changes and adapt appropriately. Given the current situation, our footprint and product flows, we believe we are uniquely positioned to operate in this environment and are ideally geared to serve the needs of our customers. As with concerns over interest rates, well, we believe the best posture for the foreseeable future for 5N Plus is to continue to retain a strong balance sheet, continuing to exercise discipline with respect to projects and their expected payback, optimize the mixture between debt and equity, manage cash diligently and remain selective and patient with respect to any M&A opportunities.Let's now turn our attention over to the business segments. During the quarter, Eco-Friendly Materials posted lower quarterly adjusted EBITDA as compared to same quarter last year while year-to-date adjusted EBITDA was slightly higher as compared to the same period last year. Decline in metal notations and to a lesser degree of additional operating costs contributed to the lower level of performance during the quarter. Revenue for industrial materials dropped year-on-year, while margins declined given the fact that within the company's portfolio, materials associated with this sector required a highest percentage of metals as consumables. It is logical to assume that the adverse impact from metal notations has affected this sector the most. Thanks to the company's new business model, risk exposure has been limited.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 has been completed and the facility is being commissioned. Project has so far been on time and on budget. Our commercial activities are gaining momentum. And we're expected to be engaged in this market in earnest by Q1 2019. Revenue for catalytic and extractive materials grew substantially year-on-year. This lower-than-expected performance from oil, gas and automotive markets were more than compensated by strong performance from the mining sector with a robust order book extending well into 2019. Let's now move on to electronic materials and its 3 sectors. Electronic materials posted a especially strong quarterly performance with revenue growth and notable adjusted EBITDA expansion well ahead of the same period last year. The movement in metal markets associated with this segment resulted in muted financial impact. Revenue for technical materials were down year-on-year. This sector is undergoing refurbishment as it moves away from commodity chemicals and precursors based on bulk use of gallium and indium, who engineered powders and high-purity materials, which require higher degree of value added transformation. Consistent with this approach, while the year-on-year revenue from this sector was lower, margins from the new product lines were higher both in percentage and gross value. Revenue for security, aerospace, sensing and imaging materials were notably higher year-on-year, driven by strong demand for the company's products related to imaging, sensing and security markets, for which the company is in the process of expanding its capacity and capabilities. Despite program delays within the aerospace market, 5N Plus performed better year-on-year. Revenue for renewable energy materials grew considerably as compared to the same period last year, driven by strong demand for the company's semiconductor compounds utilized in various layers of thin-film solar cells. Much of the business in this sector is governed by long-term contracts, which are layered and optioned as products and services. One more note with respect to metals management. During the course of this year, 5N Plus has been commercially hedging its metal exposure whenever sensible opportunities present themselves. This activity has a material impact on the company's working capital, given the fact that we have employed return on capital employed as a measure of our performance, we believe we have the appropriate compass in place to assess the benefit of this risk management tool and scale ourselves accordingly. As we move to the final quarter of 2018, based on how the company's earnings are developing, adjusted EBITDA is expected to close in the upper range of the company's guidance of $30 million to $33 million for 2018. With that, I will turn the call over to Richard.

[Richard Perron, Chief Financial Officer]

Good morning, everyone. Our most recent results confirms the company has achieved notable progress on [ modable ] strategic fronts and is increasingly well positioned to deliver 5N21's targets. The financial results continued to evolve positively showing material improvements over the same period of 2017. Performance reflects strong demand, structurally higher utilization rates and the benefits of our own business improvements. 5N21 continues to differentiate 5N Plus from its best. We have already made significant progress on a number of key initiatives, and there is more to come as referred by AJ. With the business remaining focused on structurally improving costs, realizing its internal growth initiatives plans and increasing the share by added value products. In recent years, the company has transformed its balance sheet. The company is investing with focus and discipline to improve future returns. We continue to invest in projects that support our ongoing transition towards higher added value products.So now starting with the coverage of revenues and gross margins. In Q3 of this year, revenue increased by 6% compared to Q3 of last year, impacted by volume. The gross margins supported by a favorable sales mix and strong product demand reached 27.6% this quarter compared to 26.5% in Q3 of last year. Tracking to date, an average gross margin of $44.8 million compared to $43.5 million for the same period of 2017. Now for the adjusted EBITDA, EBITDA, operating earnings and net earnings. In Q3 of this year, adjusted EBITDA reached $8.6 million compared to $6.9 million for the same period last year. For year-to-date of this year, adjusted EBITDA reached -- increased by $2.6 million, reaching $25.4 million supported by a favorable sales mix, strong product demand and overall performance of operating activities. In Q3 of this year, the EBITDA reached $7.8 million compared to $6.4 million in Q3 of last year. While for year-to-date of this year, the EBITDA reached $23.4 million compared to $22.4 million. Regarding operating earnings, it reached $6.1 million compared to $4.4 million in Q3 of last year and $17.5 million compared to $17 million in year-to-date '17. For backlog presented in days, based on annualized revenue to normalize the impact of commodity prices, as of September 30 of this year, the backlog reached a level of 181 days of sales outstanding, representing an increase of 3 days compared to September of last year and 11 days compared to June of this year. Quickly going through some of the expenses. Depreciation, amortization were slightly higher than the same periods of last year due to the completion of specific capital expenditures in late '17 and early 2018. SG&A expenses in Q3 and year-to-date amounted to $5.7 million and $19.2 million, respectively, lower than the same period of 2017. Share-based compensation expense in Q3 of this year and year-to-date of this year amounted to $0.8 million and $2.6 million respectively compared to $0.8 million and $2.8 million for the same period of 2017. The decrease is mainly due to the important rise in the company's share price during the second and third quarter of last year. Litigation and restructuring income in Q3 of this year, the company sold its participation in a small joint venture at a loss and received the liquidation proceeds from the liquidation of another venture closed back in 2016. In Q1 of this year, the company recorded an income from litigation and restructuring of $0.6 million, representing a nonrecurring income relating to an amount receivable from an active legal entity for which no receivable had been recorded giving the uncertainty back then. Financial expenses in Q3 2018 amounted to $1.1 million, compared to $1.2 million in Q3 of last year. Financial expenses and year-to-date of this year amounted to $5.8 million compared to $5.1 million for year-to-date '17. Increase in financial expenses of $0.7 million is mainly due to the accelerated imputed interest of $1.5 million, recognized as a noncash expense following the early redemption of the $40 million convertible debentures in June of this year, mitigated by lower cost from the draw down on its senior credit facility as well as lower imputed interest on the outstanding debenture during Q3. Income taxes. The company reported earnings before income taxes of $5 million in Q3 and $11.7 million for year-to-date. Income tax expense in Q3 of this year was $1.5 million and $1.8 million for year-to-date. These amounts were favorably impacted by deferred tax assets, applicable in certain jurisdictions.Covering liquidity and capital resources. In year-to-date cash use in operations amounted to $1.1 million compared to cash generated from operation of $15.2 million in year-to-date '17. The decrease in working capital compared to December 2017 was mainly attributable to the reclassification of the convertible debentures as current liability resulting from its maturing date of June of '19. Net of lower payable, mainly due to payments of short-term obligations since the beginning of the year as well as likely higher accounts receivable and inventory aim at hedging commercial positions. In year-to-date '18, cash used in investing activities totaled $6.7 million compared to $4.9 million in year-to-date '17. This increase is explained by higher investment in property plant and equipment, mitigated by proceeds from the disposal of investments in joint venture. In year-to-date of this year, cash provided by financing activities amounted to $0.7 million compared to $0.1 million. In year-to-date '17, the increase of $0.6 million is mainly explained by a contribution from a product development partnership program combined with the impact of the drawdown on our senior credit facility to partially redeem the debentures in Q2 of this year, while in year-to-date, the company had repurchased a certain number of shares under the common share repurchase program, which ended in October of '17.Ending with net debt. Net debt, after considering cash and cash equivalents increased by $10.5 million from $11.4 million at the end of December '17 to $21.9 million as at September of this year, mostly impacted by noncash working capital requirements. This completes the financial coverage. We are ready for questions.

[Jean Mayer, VP of Legal Affairs & Corporate Secretary]

Operator?

[Operator]

[Foreign Language] [Operator Instructions] Your first question comes from the line of Rupert Merer from National Bank.

[Rupert M. Merer, Managing Director and Research Analyst]

Looking at the results, the electronic materials division posted the highest adjusted EBITDA we've seen in probably 8 years. Can you talk about where you saw strength? Were there any big lumps in the quarter? Or is this more representative of a higher run rate in the business today?

[Arjang J. Roshan, CEO, President & Non Independent Director]

Well, Rupert, as we mentioned within the segment there are 3 sectors. And what we're seeing is certainly 2 sectors, renewable -- sorry, yes, renewable energy and the -- what we call, SASI, sensing, imagining -- security, aerospace, sensing and imaging. These 2 sectors had a very strong performance. We also -- the third segment, which is the really technical material, we have actually had better margins, the revenues weren't as good, but we had better margins because we're beginning to change the mix. A few years back, actually, the activities associated to this sector had caused some difficulties because of the change in the metal notations especially linked with gallium and indium, in that we have taken a lot of that out of the play. We still provide materials that are gallium containing and indium containing, but they are at a much, much less content, a lot more value added. To that extent, we have impacted the bottom line of that sector positively.

[Rupert M. Merer, Managing Director and Research Analyst]

So you would say that this is indicative of a higher sustainable run rate in the business? Although you, I understand, can have some lumpiness from time to time.

[Arjang J. Roshan, CEO, President & Non Independent Director]

I wouldn't be ready to declare that just yet. I think in the past I've said that this is a business that is hard to make declarations on based on quarterly results. You have to really look at it, actually, probably more from a yearly. I think it is a good quarter, but I wouldn't say it's a sustained -- would I right now sign up to this sustained level? I think it's too early to say.

[Rupert M. Merer, Managing Director and Research Analyst]

Okay. And then if we can turn to working capital. You commented that the change in working capital so far this year has been driven by your commercial hedging activities. Looking at the specific balance sheet items, it seems the change is primarily from a drop in trade liabilities. Just wondering if you could walk us through the dynamic here. How the commercial hedging impacts the various balance sheet items?

[Arjang J. Roshan, CEO, President & Non Independent Director]

I'll start and then Richard can take over. But it's actually quite -- I would say, it's quite simple. When you identify a position that you want to close, if you then go in the market and close it, you end up increasing your inventory and then in terms of payables and receivables. But the whole...

[Richard Perron, Chief Financial Officer]

What's behind all of it is that the real exercise of commercial hedging started earlier this year. So you end up in a situation where it's been paid for -- hedged and paid for.

[Rupert M. Merer, Managing Director and Research Analyst]

Okay. So you're moving from trade liabilities into inventory?

[Arjang J. Roshan, CEO, President & Non Independent Director]

Exactly.

[Richard Perron, Chief Financial Officer]

Exactly.

[Rupert M. Merer, Managing Director and Research Analyst]

Your inventory, however, has been flat. So I suppose what we're seeing there is that your overall inventory level would otherwise have been in decline.

[Arjang J. Roshan, CEO, President & Non Independent Director]

Much lower.

[Richard Perron, Chief Financial Officer]

Much, much lower. Significantly lower.

[Arjang J. Roshan, CEO, President & Non Independent Director]

That's a good observation.

[Operator]

[Foreign Language] [Operator Instructions] Your next question comes from the line of Nick Agostino from Laurentian Bank.

[Nick Agostino]

Yes. Just a quick question. I think you guys highlighted on the catalytic/extractive operations another strong quarter and I think last quarter you indicated that you were sold out in this whole group through Q1 of next year. But you also indicated that you were assessing whether to maybe expand capacity or expand margins for that particular piece of business. Can you maybe just update us as to where that stands as far as the decision one way or the other?

[Arjang J. Roshan, CEO, President & Non Independent Director]

Nick, yes, indeed. So if we look at catalytic and extractive, we have indeed sold out our capacity, and it's probably not even more than Q1 2019. This is a -- or parts of this portfolio, the -- let's say, the art to making it value added is making sure that there is a certain flow into the production environment, and that some of what you're bringing in is as a byproduct. And so it actually nicely ties into our upstream activity. And so the reason why we're not yet keen to expand capacity there are twofolds: one, that we want to make sure that the current scheme remains because that's where value gets generated; and then the second thing is, this thing really took off much, much faster than we had anticipated. And when those types of things happen, you have to challenge your commercial folks and wonder if they have left money on the table. So that effort is ongoing. I don't have anything to report on that. We'll be monitoring this over the next quarter or so, as the contracts gets negotiated and whatnot.

[Nick Agostino]

Okay. And then just by way of color, obviously, on the eco-friendly, you talked about going upstream, and that's benefiting the margins on both sides of the business. In the case of eco-friendly, obviously, the pricing impact had a impact on the margins, and I'm going to assume offset by your efforts going upstream. Can you -- you mentioned earlier that you don't want to call on a quarter-by-quarter basis, any sort of margin trends that you'd rather keep it more on a year-by-year basis. Can you maybe give us a better sense, looking at last 12 months, where and how we should be maybe modeling eco-friendly margins and how we should be modeling electronic material margins on an annual basis?

[Arjang J. Roshan, CEO, President & Non Independent Director]

Okay. So if -- I will do that. Before I do that, it's worth to note that Q4 typically has a bit of a seasonality with it. So what I'm about to say is, let's say an annualized depiction. So on an annualized depiction, we think that electronic material, at least at this point, as I said, I'm not ready to yet say that, that's the run rate. We think it's higher than what the annual depiction would have been. And for -- the opposite is true for eco-friendly. Eco-friendly is lower than what the annual depiction would look like. So one is higher, one is lower.

[Operator]

Your next question comes from the line of Frederic Tremblay from Desjardins Capital Market.

[Frederic Tremblay, Analyst]

Staying with the margins subject here. In terms of your gross margin expectations, wondering what your view was for 2019 and beyond? As you continue to make progress on your upstream activities, we saw some benefits from that in the Q3. I guess, broadly speaking, do you have an achievable range in mind for gross margin as you continue to progress on the upstream initiatives?

[Arjang J. Roshan, CEO, President & Non Independent Director]

Frederic, so yes, I think we'll remain consistent on that topic. We are looking at our business and we like to see our gross margins to be at least, let's say, around 25%, 26%, that's sort of the baseline. This quarter, it has been, obviously, better. In terms of where it's going to be in 2019, we're going through that budgeting process. So I -- you have to give me a little bit more time, and I'll be able to answer that. But again, I think the guiding principle is, let's say, a 26%, 25%, being the baseload of that activity or that parameter, I should say.

[Frederic Tremblay, Analyst]

Okay. And just coming back on tariffs and trade disputes. You mentioned little to no impact on your business. Wondering if that was the case for your competitors? Do you view your network as a competitive advantage. So if you can maybe talk a bit on that?

[Arjang J. Roshan, CEO, President & Non Independent Director]

Well, so I got to be very careful here. What I say, it's -- from my sense, it would be purely speculative, but I'll lay out the pieces on the table. As we said, we have entities in the various regions around the world. Much of the dispute is between U.S. and China. Well, when you look at our activities in those markets, they're fairly focused on those respective countries. In other words, we have not gone and build the plant in China to use it as a manufacturing or tooling base for the rest of the world. No, we have -- our primary purpose has been to serve the Chinese market. Similar thing also in this side of the pond, a lot of what we do serves the activities of this market. And so then, on top of that you add the whole supply chain, internal supply chain that we've created and we have diversified our sources now around the world where we can receive material from different places. And so if again, we go back to that example, our activities in China has its own access to supply that is primarily local. And then other activities have the same thing. So from that point of view, that's how we stand. Now if you take that to your question regarding the competition, as you know, we have especially in the field of eco-friendly, competition from China. Much of the activities or the people that we compete with have their asset base concentrated in China. And at least from what they publicly say, their -- one of their, let's say, go to weapons is low cost production in China, and they export from there outward. And so if you now relate that to what these tariffs are all about, that's exactly what these tariffs are supposed to be targeting is platforms which are being leveraged in China to export to the rest of the world. So again, I'm just taking public information, drawing a linear conclusion that there is more stress on that level of setup versus our level of setup, which we have gone and sort of segregated our asset base to make sure it is serving that individual market. I hope that answers your question.

[Operator]

Your next question comes from the line of Mac Whale from Cormark Securities.

[MacMurray Davidson Whale, Analyst of Institutional Equity Research]

We touched a little bit on we're entering this period for contract negotiations. Can you characterize -- give us a view of the situation this year versus where you were sitting last year? And maybe, give us an idea of what issues may be more or less favorable this year than last year? And maybe, given the improved margins in electronics, does that actually hurt your position when you go into doing those looking out the next year, or are you in a stronger position?

[Arjang J. Roshan, CEO, President & Non Independent Director]

It's a difficult question to answer, Mac, and I'll tell you why. There are certain contracts, if we compare this year to last year, which have crystalized. For example, contracts around renewable energy. And so there we have contracts that are in play. They're longer-term contracts. We have, again, for example, in our semiconductor segment, those -- there are contracts there that are on longer term. We've discussed those. In catalytic and extractive, we mentioned that we have those businesses booked. The rest of the business, I think there is -- especially, if you look at, for example, industrial material because the metal prices continue or they have come down, there is a bit of a hesitation right now, sign up to longer-term contracts. A lot of it is most likely on a spot basis. And that's fine with us, obviously, because we don't want to create any positions for us. As I said, it's not really anything negative, but those items are being developed right now. So I think we need to wait and see how some of these contracts are developed based on essentially what will -- where this metal price will stop. In the meanwhile, it shouldn't be really a huge impact on us as you can see based on results that we had this past quarter.

[MacMurray Davidson Whale, Analyst of Institutional Equity Research]

Okay. When you look at the animal feed, we haven't seen any impact there yet. We'll see that starting in beginning of the year. How big of an impact can that have in bringing -- in sort of giving the results you've seen in electronics segment. Can we start this -- will it be that animal feed over the course of the year be noticeably improve the -- that portion of the business?

[Arjang J. Roshan, CEO, President & Non Independent Director]

So this is a venture that has actually just started. We actually have -- we started investment early or late last year, early this year. We are commissioning it. Next year, I would say, we should pay more expectations because we're getting our beak wet. We're dipping our toe in the market. We're getting a lot of interest based on the nature of the production. There's a lot of know-how that the guys are building to production that makes -- that seems to have created some interest in the market, but I would not, for the sake of transparency, I would not expect it to contribute hugely next year. I would say, probably 2020 is a better target. And give us a couple of quarters, and we'll be able to add more color to that.

[MacMurray Davidson Whale, Analyst of Institutional Equity Research]

Okay. And then when you look at 5N21, that plan, that's a good progress on a number of fronts. Do you go back to that plan and say, okay, we've -- we thought we would do this, we've done these things. Do you go back to that plan and update it at all? Like when you're look at your budgeting, for instance, do you go and you say, like, we identified these areas, we haven't really done anything there. Or are there any areas like that, that you're unhappy with that you now really focus on? Or is it a situation where you've been not just looking at low hanging fruit, you've actually been looking at everything. Like, can you characterize like sort of where you are in that plan and how hard or easy the work is from here on out?

[Arjang J. Roshan, CEO, President & Non Independent Director]

So to -- I'll try to answer your question may be a little bit differently. We indeed have gone back, and that plan is essentially our compasses as we're moving forward. And we go back regularly and look at how we're developing there. I think what I have said is the first 2 pillars, a lot of it is up to us, a lot of the knobs that we're turning. The third pillar, which is growth, some of it is not in our hand. For example, how long is certification or I don't know, FDA certification, or adaptation to the market how long that will take. So where we are is actually, we think that when we look back, and we concluded this review just recently is that there is actually still room in the first 2 pillars. So we're trying to look at our future trajectory and say, all right, so because our goal is essentially, I mean, let's put it very simply, it's by 2021 have $45 million adjusted EBITDA at 17% return on capital employed. And what we've told the market is, we believe in that goal, we'll get there. How we get there, give us a bit of flexibility. And so now what we're trying to do in this equation, to say if our growth initiatives take a little bit longer, is there other things we can do to backfill. And we see some opportunities there as well from the first 2 pillars. So yes, indeed, we go back, we try to continue to build as best as we can. Contingency plans, we've been doing that actually since the beginning of this. Our upstream activities have come on, I would say, better than we expected, if you would've told me 2 years ago. And so -- but that is part of our calculus is to go back, review, and try to do a good job on contingency planning.

[Operator]

There are no further questions at this time. I turn the call back over to Mr. Roshan for closing remarks.

[Arjang J. Roshan, CEO, President & Non Independent Director]

Perfect. Thank you all for attending this morning's call. And we invite you to attend our conference call at the end of February 2019, for the presentation of our year-end results. So thank you again. And have a great day.

[Operator]

[Foreign Language] This concludes today's conference call. You may now disconnect.