Asustek Computer Inc

TWSE:2357

Earnings Call Transcript 2019-Q1

[Operator]

Good afternoon, and welcome to the First Quarter 2019 Earnings Conference Call for ASUSTeK. The conference call is divided into 2 parts. First, Mr. Nick Wu, our CFO, will brief us on the financial results; then our co-CEOs, Mr. S.Y. Hsu and Samson Hu, will brief us on operations. The second part will be the Q&A session. If you are watching this online, you can go to the questions tab and enter your questions there and we will address them later.

Now we would like to ask Mr. Nick Wu, our CFO, to brief us first.

[Nick Wu, executive]

Thank you for attending our online earnings call. Please refer to Slide 5 of our presentation. This is our first quarter 2019 brand P&L. Net revenue was TWD 83.5 billion, down 5% quarter-over-quarter or down 7% year-over-year. Operating profit was TWD 886 million. Net profit was TWD 2.187 million. EPS was TWD 2.9 per share.

The revenue in the first quarter of 2019 was down slightly year-over-year because in the first quarter of 2018, we benefited from cryptocurrency. That was the height for demand for graphics related to cryptocurrency and that is why we saw this decline in the first quarter of 2019. Another factor is with our notebook and PC business. The core business declined a little bit in the first quarter due to 2 reasons. First, the shortage of major components such as the processor, another factor was industry competition. In response to the shortage of processors, we will optimize our product mix. We also improved our ASP. The ASP in the first quarter of 2019 was slightly higher than that in the first quarter of 2018. In terms of management, we continued to improve our management quality.

In the major markets that we are in, for example in Europe and Asia Pacific, excluding China, we saw a pickup in momentum as well as in our shipment. And now we see our shipments restabilizing.

Now Europe and Asia accounted for about 60% of our notebook shipments and revenue.

Now please refer to the next page, Page 6 of the presentation. This is our brand P&L with separate numbers from our old and new phone models, respectively. By old models, we refer to models and business units that we stopped last year. We announced the plans last year, whereas new phone models refer to gaming and high-end phones for power users.

In the first quarter, old models had a revenue of TWD 7.44 billion, operating loss of TWD 460 million. New models, TWD 391 million in net revenue, TWD 250 million (sic) [ TWD 247 million ] in operating profit -- rather in operating loss. If excluded losses from the old and new phone models, the core business had an operating profit of TWD 1.59 billion with a net revenue of TWD 75.6 billion, translating into an operating margin of 2.1%, in line with our target and expectations.

Slide 7 is about our non-OP items. In the first quarter, net interest income was TWD 271 million. Investment income was TWD 142 million. Askey significantly improved its operations and we expect Askey to continue this improvement. In the first quarter, exchange gain was TWD 1.38 billion. Total non-OP items were around TWD 2.14 billion.

Slide 8 is our brand balance sheet. In the first quarter, cash and equivalents were around TWD 52.8 billion. Accounts receivable, TWD 71.7 billion; inventories, TWD 80.8 billion. Accounts payable went down from TWD 58.9 billion to TWD 45.3 billion. This was mainly due to more conservative procurement in the first quarter for better inventory control. As accounts payable matured, the cash level in the first quarter was down slightly. So that was the highlight of our balance sheet.

Now please turn to Slide 10 of our revenue mix. This is our revenue mix, excluding the smartphone business. PC accounted for 70% of the revenue. Components and others, including motherboards and graphics cards, accounted for 30%. Revenue breakdown by region: Europe, 36%; Asia, 45%; Americas, 19%.

Next slide is our business outlook for the second quarter of 2019. For our 2 major business groups, PC will be down by 5% or remain flat, whereas for components, it will be between 0 or negative 5% quarter-over-quarter. This is actually comparatively better than past performances. In the second quarter, our PC revenue may actually be flat year-over-year. This is going to reflect our efforts in improving management and our management efforts are seeing results.

During the second quarter, in a lot of our major products, including mobile phones and PC, you are going to see us launching new products with innovative features. Driven by these new products, we expect in the second half of the year, the company's operations will improve.

Next, our co-CEOs will brief you on our strategy and outlook. I will now turn it over to S.Y. Hsu and Samson Hu.

[Shi Chang Hsu, executive]

Hello, everyone. My name is S.Y. Hsu. I will now brief you about our focuses for the first quarter of 2019. Since the second half of 2018, the biggest challenge for the PC industry was the shortage of Intel CPU. Starting from the third and fourth quarters, we started to adapt to this situation, including optimizing our product mix of high-end versus low-end products. And we're seeing preliminary results of our efforts. As CFO mentioned earlier, our ASP is now slightly higher than that of last year.

Also last year, cryptocurrency was very popular and boosted the demand of graphic cards. We now have some inventory of graphic cards, and we started to adjust to the situation starting from the second half of 2018. And we are on track to finish these adjustments in the first half of 2019.

With respect to smartphones, last December, Chairman Shih announced our new strategy. We will focus on high-end phones for power users as well as gaming phones, the ROG series. ZenFone 6, the sixth generation of ZenFone, will be launched in Valencia, Spain on May 16. In Taiwan, the event will be held on May 22. I'm sure we will surprise you with our unique design. We put our unique ideas into the product design. We hope to bring very good user experience to our users.

Regarding ROG, we've been making efforts quietly in the background. We also expect to launch the second generation of ROG phone in the second half of this year. In addition to building a good product, we are also thinking about how to better collaborate with the ecosystem. Since a lot of work is in talks, so stay tuned.

Also in last December, Chairman Shih talked about that we needed to change our internal culture. Since then, we've been changing our business strategy. In terms of decision-making, we've been focusing on leveraging team wisdom to get the best ideas.

In terms of our process, in terms of organization, we are continuing to adapt. ASUS, we are a very product-focused company. Product innovation in our current position. You can say this is part and parcel of who we are as a company. We believe only through product innovation can we win customers. In the past few months, we've been conducting efforts to better understand PC users. Through design thinking, we identify the innovations that are going to be welcomed by users. In a few weeks at COMPUTEX, we're going to launch some new products. Stay tuned. We are going to bring you some new experiences.

Now I'd like to turn it over to Samson. He will give you more color around products.

[Samson Hu, executive]

Dear investors and analysts, this is Samson. Good afternoon. Now I'm going to give you a briefing on our operations and our strategies. First, components, motherboards and graphic cards. We will continue with our Giant Lion strategy. We will maintain our market share and our #1 position so as to maintain our good profitability. We will also try to expand that leadership position to other products.

In terms of regular notebooks, we will continue to optimize our product mix and generate profit through innovation. Our target for 2019 is to have thin and light notebooks accounting for 50% of our revenue.

As S.Y. mentioned earlier, we are going to launch new generations of products. This is to capitalize on the back-to-school opportunity in the third quarter and the holiday sales season in the fourth quarter.

With respect to gaming, in the first quarter, the industry had a flat situation year-over-year; however, at ASUS, we outperformed the industry. Our growth was close to 20% year-over-year. We will continue to innovate, to offer best user experience and best performance as well as working with the gaming ecosystem to maintain our ROG market share and our leadership position with ASP.

In Google markets, excluding China or if you look at products with an ASP of over USD 100, our ROG remains #1 in the market. We're confident that in 2019, we will be able to maintain this market leadership. The PC industry in 2019 is more segmented than before. As you may know, in the early days of the PC industry, there were only 2 categories: commercial versus home use. Now in the commercial segment, you have enterprise, SME, government and education. For home use, we now have the gaming segment. This is the industry trend. It's all about more sophisticated segmentation. For example, Chromebook for students and notebooks for creators, such as engineers and designers. These are all opportunities for us.

For creators, back in 2014, about 5 years ago, we launched a sub-brand called ProArt. At the beginning, we started with the monitor product series. After years of effort, our ProArt monitor in the creator community has created a very good word-of-mouth and visibility. On the foundation of that, we have been expanding into even more product categories, for example, desktop and notebook.

For example, at CES this year, we also launched a ProArt series StudioBook for creators. Early April in Las Vegas, at the NAB show, we launched a new series that supports Dolby Vision. This is a series of professional level monitor display. There are also desktop workstations and notebook offerings.

As the PC industry develops, we -- at ASUS we capitalize on all opportunities, including all market segments for growth. This is something I would like to share with all of you at this earnings call.

Thank you very much.

[Operator]

[Operator Instructions] Our first question comes from [ Nikkei ].

[Unknown Analyst]

Regarding the U.S. China trade war, if this Friday the tariff is raised to 25%, what is the impact on motherboard and PC products exported to the U.S? Which products will be impacted the most? Will ASUS handle the issue with suppliers?

[Unknown Executive]

The U.S. China trade war is ever-changing indeed. According to the latest information, for USD 200 billion worth of products, the tariff will be raised from 10% to 25%. This will mainly affect our motherboards and graphic cards and some impact on desktops as well. Actually, when the tariff was around 10%, we already discussed contingency plans with our suppliers. We already have some solutions. For example, in moving manufacturing bases to Taiwan and Vietnam. Now we hear that the tariff will be increased this Friday. The impact on us will be minimal because we adjusted before. That's my answer to the question at this moment.

[Operator]

Second question is also from [ Nikkei ].

[Unknown Analyst]

What's your view on the CPU shortage issue? When will this shortage be solved? Are you going to use CPU products from other brands? If so, at what percentage?

[Unknown Executive]

I will take this one. Right now, overall, the shortage of CPU was most severe in the fourth quarter of 2018. Starting from this year, Intel has been recovering. But their output may not match our demand 100%. We're talking about the difference between big cores and small cores. For Intel, of course, they'd like to optimize their capacity utilization. They would, of course, start with their big core, their high-end products.

Starting from the second quarter, the gap for the big core products has been minimal, whereas the shortage for small core products are still there. And only in the third quarter of this year, these shortage problems can be solved.

In the second half of last year, once we realized the shortage, we already adjusted internally. The CPU that Intel was able to provide us were not entirely the same with the products we needed. So we first did a mapping of the products they could provide and the products that we needed. And if what they deliver could not meet our demands, of course, we need to adopt A and B solutions. Right now, the shortage of Intel processor had a single digit impact on our shipments and AMD's growth at ASUS is in the low to mid-single-digit. And this is not just happening at ASUS. This is happening across all industry peers. That is why we are seeing that AMD is enjoying a very good momentum. And of course, Intel is fast recovering as well. So that was about the systems side.

With motherboards and graphics cards, the Intel shortage also has impacted motherboards and graphics cards. In the chipset market, its priority compared to the CPU is lower. So a bigger impact on the chipset. The motherboard business unit has already responded very well to this issue. As I mentioned, we have just adjusted our product mix. We have also introduced AMD solutions. Right now, the situation looks pretty good. In terms of our motherboard and graphics card shipments, our share in this is quite strong.

[Operator]

Next question is from [ Arthur ] of Fubon.

[Unknown Analyst]

The operating expense ratio was 10.4% in the first quarter. Was that a bit too high? In the second half of 2019, will the gross profit margin come back to over 13%?

[Unknown Executive]

If we include the phone business, the expense ratio was about 10.4%, however, we need to remember that our phone business is in transition. If we exclude the phone business, the operating expense ratio was actually less than 10%.

In the first quarter, our revenue was quite contained. As mentioned earlier, with our effort, with our new product cycles, we expect revenue to pick up starting from the second quarter of this year. At the same time, we will manage our expenses to achieve a more balanced book.

In terms of profit margin, based on the rules of TAIEX, we cannot come up with a target on this. What I can say is our direction remains the same. In the first half this year, our goal is to stabilize our operations through better management and better operations, better management of our inventory and quality. On top of that, we expect to see better operations and profitability in the second half of the year.

[Operator]

Next question is from Howard of Morgan Stanley.

[Howard Kao, analyst]

Can you give us the scale of your new smartphone business after transformation? The scale in terms of units.

[Unknown Executive]

After transformation, we focus on phones for power users as well as ROG phones. If you look at ROG only, we believe the market should be, at least, tens of thousand -- hundreds of thousands of units. If you look at the development of gaming notebooks, we believe the market can grow to millions of units. Internally, we've set very aggressive goals. We'd like to grow the addressable market and to account for 30% to 50% of the market share. Now before the market grows, we'll, of course, need to make investments first. With our second-generation ROG phone, this year we expect to invest in this area, focusing on how to enable is from market, to grow this market and work better with the ecosystem. Therefore, we expect higher investment on ROG this year.

[Operator]

Next question is from Capital.

[Unknown Analyst]

There are actually several questions. Some are related to financials. First, the consolidated profit of the first quarter of 2019. Will we include the phones' P&L?

[Unknown Executive]

Yes, we will. We will also give you separate numbers for old and new phone models.

[Unknown Analyst]

And how will we recognize the P&L of the phone business?

[Unknown Executive]

We will actually follow the format we used in the previous quarter. We will give you the revenue and profitability for the mobile business for your reference.

[Unknown Analyst]

Next question related to operations. If an additional USD 325 billion worth of products will be subject to higher tariff, how will ASUS respond?

[Unknown Executive]

Samson will take this question.

[Samson Hu, executive]

First, allow me to clarify. U.S. sales account for about 10% to 15% of our revenue, mostly PC-related products. With the smartphone, since we're focusing on ROG and power user phones, we won't be very aggressive in the U.S. market. Regarding the latest developments in the U.S.-China war, PC will bear the brunt of the impact. Actually, when trade tension was very high last year or we talked with our suppliers, we talked about plans of moving manufacturing sites elsewhere. So back then, we already had plans. We've been paying attention to the latest developments in the U.S.-China trade war. We talked about contingency plans with our OEM partners and very quickly, we can implement the plans.

[Operator]

Next question is from Wei Asset Management.

[Unknown Analyst]

How will the price decrease in components impact on the gross profit margin in the second quarter?

[Unknown Executive]

Yes, indeed, the drop in component prices can help our profitability. Having said that, the second quarter is traditionally the trough season for the PC industry. It usually is a time when we transition to a new product cycle. In other words, transitioning from old models to new models and products in the second half of the year. If we consider all these factors, the drop in component prices will perfectly be offset by the other 2 factors that I talked about. Therefore, we expect to see more stable cost structure. Our goal is to achieve product differentiation so that we can improve our revenue and profitability. This is how we can bring substantial benefit to the company in the second half of the year.

[Operator]

Next question is from Albert of JPMorgan.

[Albert Hung, analyst]

Earlier, our CEO talked about higher investments on ROG. Do we have KPIs to measure the performance of our phone business? And whether there would be synergy created when we combine marketing for ROG phones with ROG systems.

[Unknown Executive]

We are increasing our investment this year with a focus on growing the gaming phone market. Take our first generation ROG phone for example. That kind of sales, that kind of size didn't represent that the market was really opened up. So with the second generation, we're focusing on not just our product but also the content, the ecosystem. We want to work with the ecosystem to really grow the ROG phone market. And that is why we are putting more investment on ROG this year.

As for the KPIs, at ASUS each BU sets its set of KPIs at the beginning of the year. The phone business is no exception. Of course, when we set the KPIs, we will take into consideration the status of this business unit to set reasonable KPIs.

As for synergy that might be created across product lines, this is something we've been pursuing. For example, with our ROG series, we have Aura Sync, a software that can control the lighting. This could be used on ROG PC, notebook as well as ROG phone. So this is something that goes beyond product lines. With the ROG sub-brand, of course, we want to maximize the brand equity.

In terms of marketing, we are already putting together ROG PC and notebook marketing campaigns. The phone business or phone as a product is not entirely the same as a PC or a notebook. Going forward, we will think about how to better create synergy across product lines. A trend we're seeing is that there are more cross-platform support. For example, in earlier days, software could not work across different platforms. The PC software was different from device or the phone platform. But now we see cross-platform support being more common. You can play the same game across different devices, notebook or the phone. So we are going to integrate with our ROG offerings.

[Operator]

We'll now compile questions coming in from online.

Next question is from DIGITIMES.

[Unknown Attendee]

Among the top 6 PC makers, ASUS suffered the biggest decline in notebook shipment. And earlier, it was mentioned that the shortage problem is being improved. So what is driving this decline? Will we see notebook shipment rebound this year?

[Unknown Executive]

If you look at 2018 and compare that to 2017, the decline was over 10%. But if you compare the first quarter of 2019 with the first quarter of 2018, the Y-o-Y decline was smaller, around 7%. So compared to the previous year, we have stabilized the situation.

As for the second half or let's talk about the second quarter first, based on the current market situation and our current operations, it's very likely that the second quarter will be flat year-over-year. Of course, in the second half of the year, our goal is to have growth year-over-year. That's our aggressive goal. As mentioned earlier, at COMPUTEX, we will launch a new generation of products, very innovative products. And this means that we can be more confident that in the second half of the year, we are going to achieve our targets.

[Operator]

Next question also comes from DIGITIMES.

[Unknown Attendee]

What are the primary regions for ROG phone? Market rumors say that you're going to work with a major software developer in China. Could you elaborate on that?

[Unknown Executive]

With the ROG phone, when we developed it, of course, we conducted market research. Undeniably, China is a very important market with numerous players and a lot of people who are willing to spend big bucks on high-end devices. So that's going to be one of our focused markets.

Regarding Tencent, we actually treat players in the ecosystem equally. We welcome players in the ecosystem to work with us. However, right now, it's not the right time for me to offer an official comment on that. What I can say is, we believe this year is not just about investing on our own phone, it is also about working with content players and ecosystem players to support one another to really grow the ROG market. This is a big focus for us for the second-generation ROG phone. So we will not let slip any real opportunity and we are quite confident in our new product. We will have good news to share with you. Stay tuned.

[Operator]

Next question comes from Business Next.

[Unknown Attendee]

Gaming notebooks grew 20% in the first quarter year-over-year. What can we expect in the second quarter?

Second question, if thin and light notebooks account for 50% of shipment, what about the contribution from gaming notebooks and creator notebooks?

[Unknown Executive]

First, allow me to comment on the gaming notebooks. Around end of April, we worked with NVIDIA. They had 1660 Ti and 1650 Ti. We worked with them. We were among the leaders. So that was part of the effort.

In terms of the momentum, we're seeing in the second quarter, in terms of orders -- and as you know, we have unveiled our new generation of gaming notebooks also in end of April. Considering all of these, we are continuing the momentum in the second quarter. We are quite optimistic about the second quarter. We believe it will grow by 15% to 20% year-over-year.

About thin and light notebook. What is the contribution of gaming and creator notebooks, respectively? I already talked about gaming notebooks. In 2019, we believe at ASUS, we will outgrow the industry. Our gaming notebooks will have a year-over-year growth of between 15% and 20%. That is our target. As for the creator notebook, this is a new product line for us. As mentioned earlier, we launched it at CES. But we've set a very aggressive goal for this new product line. We expect to achieve at least a 2-digit growth. Those are our targets.

[Operator]

Next question comes from Morgan Stanley.

[Unknown Analyst]

Could you talk to us about what ROG phone users care about the most? Is it display pixel or refresh rate or thermal performance? Second question, ROG phone users, are they replacing their old phone with the ROG phone, or are they buying an additional phone for their gaming use?

[Unknown Executive]

Let me take on this question. I will address the second part first. When we developed the ROG phone, we conducted some user research. The finding was even for the most zealous, enthusiastic mobile game users, they still treat their gaming phone as their standard phone -- standard smartphone for daily use. The smartphone is a very important and personal device for everyone. While we are making the ROG phone a gaming phone, the phone still has to be up to the task for daily use. It has to be an excellent and powerful smartphone for the user. So that's the first part.

As for the ROG phone users, what do they care about the most? For a gaming phone, you can think about our ROG notebook or ROG desktop. The digital specs are, of course, important for our customers. For example, take refresh rate, for example, it directly bears on the smoothness of display. And that will, of course, affect players' performance. So these digital specs are important. You must meet their expectations. That is a must.

To be frank, when we developed the ROG phone, we spent a lot of effort trying to understand what consumers really needed in addition to the specs. Of course, you can have the higher specs, but it was more important to identify customer pain points.

Let me use the air trigger function on our first generation of ROG phone to illustrate. If you played mobile games, you know that the control buttons are on the screen. You touch those control buttons to control the character. But when you do that, your hand will block part of the screen and not only that, the touching operations are not very ergonomic. Our air trigger function is very similar to the joystick in a PlayStation controller. There is a sensor for your index finger. Even though there is no physical button, but when you try to make a pressing or touching gesture, that is picked up by the sensor and you can control the game character accordingly. Some of the users have told us, "We've tried this air trigger function on our ROG phone." Well before having this, they were stuck on a certain level. But with our ROG air trigger function, they could complete a difficult task and level up. So this is how a ROG phone is different from a regular smartphone. In terms of product development, it's about using design thinking to provide the best user experience for our users. We will continue to work on that.

[Operator]

Next question comes from KGI.

[Unknown Analyst]

What can we expect from the contribution of the commercial notebook? What are the primary markets?

[Unknown Executive]

Speaking of the commercial market, we need to confront the reality. The addressable markets for us are in SMB, government and education. Those are the primary segments. In terms of education, it's Chromebook primarily. In China, Windows PC stands a pretty good opportunity for education as well.

In terms of geographics, at ASUS, we will focus on China, Taiwan, our hometown as well as Southeast Asia where we enjoy a pretty good opportunity. Once again, in terms of segments, we're looking at government, education and SMB. In terms of geographic markets, China, Taiwan and Southeast Asia.

[Operator]

Next question is from Business Next.

[Unknown Attendee]

Will ASUS invest in content for mobile gaming?

[Unknown Executive]

With our ROG strategy, it's not product-only. As you see, in China, we not only have the ROG desktop, the ROG notebook, we have also sponsored the ASUS team. This is how we can better engage with the ecosystem.

In terms of the smartphone, the strategy will be very similar to our desktop and notebook strategy. As I mentioned before, we have an Aura Sync software that can control the lighting effect during gameplay. This has been incorporated in many PC-based games. We work with PC game providers, asking them to incorporate the lighting effect of Aura Sync into their titles. When players play supported games, their devices will have synced lighting effects with the game. Now with the smartphone, we will play a similar strategy. But the smartphone is at the -- or ROG phone is in initial stage. So we don't have names to reveal at this stage as for which titles of mobile games support this. We will continue to work with the ecosystem and content providers. It's all about better integrating the software and hardware for better user experience.

[Operator]

Next question comes from KGI.

[Unknown Analyst]

The revenue in the second quarter might be flattish. Is that excluding the phone business? If so, what was the number of revenue in the second quarter of 2018?

[Unknown Executive]

Now in the second quarter of 2018, our revenue was TWD 80.5 billion, including the phone business or TWD 71.4 billion without the business -- the phone business. Relevant information was provided in our previous quarters' earnings call. The information is also on our company website. We have consolidated revenues with and without the mobile phone business. Please go to our website for more information.

[Operator]

Next question is also from KGI.

[Unknown Analyst]

Now that you're focusing on the gaming phone and the high-end phone for power users, what's the retail scale required for your phone business to break even?

[Unknown Executive]

Regarding this, the most important thing for us is to grow the market for the ROG phone as well as phones for power users. Now we are experiencing a quarterly loss of TWD 250 million. But internally, we expect as long as we can cross the million unit mark, we stand a chance to break even and turn a profit. Please stay tuned.

[Operator]

Next question comes from Business Next.

[Unknown Attendee]

This year, the foldable phone created a lot of buzz at CES, but we are also seeing a lot of defects. Could you tell us about some challenges for the foldable phone? Will a sliding phone be better than a foldable phone?

[Unknown Executive]

At ASUS, we enjoy a unique position. We're one of the few players that manufactures both the smartphone and the notebook. We understand the user experience of a larger screen. We understand how a larger screen impacts the user experience. We have put a lot of effort into this as well.

Regarding the flexible display, we didn't think the technology was mature yet. This year, even though Huawei and Samsung both showcased foldable phones, we have also seen some negative reports of their foldable phones. We believe this year foldable phones are more about creating the brand position and it can be very high-end cost. We don't think foldable phones can generate a lot of sales volume. Based on our knowledge of the flexible display, we still have a long way to go before we can come up with a perfect product.

As you can see on YouTube, a lot of reviewers have posted videos detailing how after you unfold the screen, you still see a mark at the scene. And that is not a very good user experience.

We -- at ASUS, we, of course, are also paying attention to this technology. We also have a team that's doing R&D on the mechanism. For example, how to make sure the screen is entirely flat as you unfold it. We have also applied some patents in this area. Our main focus remains, however, to provide the best user experience. When the timing is right, when we believe the ecosystem is ready or when we believe the technology is mature to allow us to provide a mature product, then we will provide such a product to our customer.

With foldable screen, I think such a device can create a lot of new use scenarios. We are making efforts to look into this. And going forward, for us, it's not just about product innovation. We also have to consider a new business model or new user behavior. We need to look more extensive into these different areas before we can come up with a superior product.

That's about all the time we have, and I think we've addressed all your questions. This concludes our earnings call today. If you have any other questions, feel free to contact our IR staff. Thank you very much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]