China Yuchai International Limited (CYD) Q2 2013 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the China Yuchai International Limited Q2 2013 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Kevin Theiss. Please go ahead, sir.

Thank you for joining us today and welcome to China Yuchai International Limited's second quarter and half-year ended June 30, 2013, conference call and webcast. My name is Kevin Theiss, and I'm with Grayling, China Yuchai's U.S. Investor Relations advisor. Joining us today are Mr. Weng Ming Hoh and Mr. Kok Ho Leong, President and Chief Financial Officer of CYI, respectively. In addition, Mr. Kelvin Lai, VP of Operations of CYI, is also joining us today. Before we begin, I will remind all listeners that throughout this call, we may make statements that may make -- may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words believe, expect, anticipate, project, targets, optimistic, intend, aim, will or similar expressions are intended to identify forward-looking statements. All statements other than statements of historical fact are statements that may be deemed forward-looking statements. These forward-looking statements are based on current expectations or beliefs, including, but not limited to, the statements concerning the company's operations, financial performance and condition. This company cautions that these statements, by their nature, involve risks and uncertainties and actual results may differ materially depending on a variety of important factors, including those discussed in the company's reports filed with the Securities and Exchange Commission from time to time. The company specifically disclaims any obligation to maintain or update the forward-looking information, whether on the nature contained in this conference call and release or otherwise in the future. Mr. Hoh will provide a brief overview and summary, then Mr. Leong will review the financial results for the second quarter and half-year ended June 30, 2013. Thereafter, we will conduct a question-and-answer session. For the purposes of today's call, the financial results are unaudited, and they will be presented in RMB and U.S. dollars. All the financial information presented is reported using International Financial Reporting Standards as issued by the International Accounting Standards Board. Mr. Hoh, please start your presentation.

Thank you, Kevin. We're pleased to report that we continued to grow in the second quarter of 2013 as our net revenue, operating profit and net profit exceeded the results of the second quarter in 2012. Net revenue rose 24.1% in the second quarter to RMB 4.25 billion or USD 688 million. Our total engine sales increased 29.1% year-over-year to 141,000 units, outpacing diesel-powered commercial vehicle industry sales as reported by the China Association of Automobile Manufacturers, CAAM. We continued to expand our market share in the second quarter of 2013 as we maintained a leading position in the world's largest commercial vehicle market. During the second quarter, truck unit sales in China increased 15.1%, with growth mainly due to pre-buying of new truck before the implementation of the National IV emission standards on July 1, 2013. An important part of our growth strategy is to supply multiple engine solutions for diversified markets. To accomplish this, we continue to increase our investment in research and development, R&D. R&D expenses grew 21.6% to RMB 115 million in the second quarter of 2013. We remain committed to the development of advanced new engines to meet the evolving needs of our customers and capture new market share, as well as improve the performance and quality of our existing engines. Through our R&D program, our customers now have the option of diesel, hybrid and natural gas engines for their vehicle. We expanded our natural gas models so that most of our diesel engines have a natural gas alternative to help our customers conserve fuel and reduce emissions where applicable. To capture further market share in the off-road construction, mining, marine and power generation markets, we introduced new high horsepower diesel and natural gas engines. The growing range and advanced performance of our engines provides us with sales opportunities that we can quickly respond to as market requirements change. Although the National IV emission standards were implemented on July 1, 2013, we had, in 2007, already started producing engines compliant -- producing standard engines compliant with National IV and V emission standards, far ahead of the requirement. Our range of advanced engines is one of the reasons why we have captured a leading-market position in the important Chinese market, which requires low emissions as most buses operate in the urban areas. Rapid expansion of our portfolio of natural gas engines, with their lower emission and fuel conservation, solidify our dominance over the bus markets. Two recent examples of the effectiveness of our R&D efforts are, Guangxi Yuchai Machinery Company Limited, GYMCL, engines has been awarded a CE certification. In the European Union, such certification is required before any products are allowed to install in the EU market. This offers a potential new sales channel for us. At a recent session of the National Work Conference on Machinery Brand Strategy Advancement, a list of 101 advanced machinery brands in China was released and GYMCL's independently developed YC6CL engines -- diesel engines series for heavy-duty commercial vehicles was included on the list. The YC6L engine series had been -- has been awarded 5 patents for invention and 37 utility patents. Our new research and development institute located in the high-tech development zone of Nanning, the capital of Guangxi province, is expected to be operational by the end of 2013. The R&D institute will enhance our capabilities to develop new engines, designs and technologies to improve and diversify our range of engines. The development of new production capacities for natural gas engines and high horsepower engines are on schedule. The natural gas facility is expected to be operational in the second half of 2013 to support the great demand for our suite of compressed natural gas and liquid natural gas engines. In the first half of 2013, our sales of our natural gas engines continued its upward trend, as it sold approximately 13,000 natural gas engines, representing a significant increase in the first 6 months of 2013 compared with the same period a year ago. Let me now provide an update of our joint ventures. The market for heavy-duty engines remains attractive long term, and sales of heavy-duty trucks in the second quarter of 2013 in China were up more than 30%. The YC6K engines provide strong performance with low emissions and we're using this next-generation design to build larger and more powerful engines. The YC6K design engines supplement our existing 6L, 6M, 6G and 6MK heavy-duty engines, as we build our capabilities to become one of the largest heavy-duty engine manufacturers in China. Our green joint venture with Caterpillar is now fully operational, remanufacturing engines and parts. Engine remanufacturing conserves raw materials and reduces pollution, compared with manufacturing new engines and saves money for the customer. As with many new technologies, it will take time to build customer's acceptance in China. China Yuchai is in the forefront of introducing this cost-effective emerging service to the marketplace. We continue to believe that long-term outlook remains favorable. Light-duty vehicles represent the largest segment of the commercial market in China. Our joint venture with Geely continues to tap the second-generation of the 4D20 engine for use in passenger cars and light-duty commercial vehicles. Testing is expected to be completed by the end of 2013. On June 4, 2013, we are now entering into the -- into a framework agreement for the establishment of a new joint venture with -- between GYMCL and its subsidiary, Y&C Engine Co. and Baotou Bei Ben Heavy Duty Truck Co., Ltd. and Inner Mongolia First Machinery Group Co., Ltd. New advanced diesel and gas engines will be designed and produced for Bei Ben's heavy-duty and medium-duty trucks and buses. Bei Ben is a leading truck manufacturer in China. He continues to be the leader in the commercial engine market, as he's sold 271,000 engines in the first half of 2013, a 12.8% increase over the first half -- of, sorry, over last year's first half. With 12 new engines to be introduced during 2013 and new production capabilities coming onstream, we are prepared to capture market share in both on-road and off-road markets. For the same quarter of 2013, we generated positive cash flows from operating activities and invested in property, plant and equipment. We believe in continually investing our cash flow to build our operation and provide a return to our shareholders. To reward our shareholders, we declared on 13 June 2013, a cash dividend of USD 0.40 per ordinary share and a special dividend of USD 0.40 per ordinary share for the year-ended December 31, 2012. The cash dividend was paid on July 10. Additionally, we have, today, also announced that the Board of Directors has approved a payment of an interim dividend of USD 0.10 per ordinary share to be paid on August 26 to shareholders of record as of the close of business on August 16, 2013. We believe the payment of cash dividends is the best way to share our operational success with all our shareholders. Entering into the second half of 2013, we remain cautious due to the uncertainty of the Chinese economy. However, we stay focused on building stronger relationship with our OEM customers, expanding our margin share and generating a free cash flow. With that, let me turn the call over to Kok Ho Leong, our CFO, to provide more details on the financial results.

Thank you, Weng Ming. Let me first walk you through our unaudited second quarter and first half ended June 30, 2013, financial results, and then we can begin the Q&A session. Net revenue for the second quarter of 2013 was RMB 4.25 billion, USD 688.1 million, compared with RMB 3.43 billion in the second quarter of 2012. The increase in net sales was RMB 825.5 million, or 24.1%, as compared with the same period in 2012. The total number of engines sold during the second quarter of 2013 was 141,147 units compared with 109,329 units in the same quarter a year ago, representing an increase of 31,818 units or 29.1%. This was mainly attributable to an increase in the sales of engine for agriculture and truck applications. The increase in the sales of commercial vehicle was mainly due to the pre-buying of trucks prior to the implementation of the National IV emission standards nationwide on July 1, 2013. Gross profit was RMB 855.2 million, USD 138.4 million, compared with RMB 674.1 million in the second quarter of 2012. Gross margin was 20.1% in the second quarter of 2013 compared with 19.7% in the second quarter of 2012. A higher volume of engines was sold in the second quarter of 2013 compared with the same period a year ago, which enabled us to improve our gross margin. Other operating income was RMB 36.6 million, USD 5.9 million, an increase of RMB 25.0 million from RMB 11.6 million in the second quarter of 2012. The increase in income was mainly due to lower foreign exchange losses in the second quarter of 2013 compared with the same quarter last year. Research and development, R&D, expenses were RMB 115.9 million, USD 18.8 million, compared with RMB 95.3 million in the second quarter of 2012, an increase of 21.6%. As a percentage of net revenue, R&D spending declined to 2.7% compared with 2.8% in the second quarter of 2012. The lower percentage was due to higher net revenue in the second quarter of 2013 compared with the same quarter in 2012. Selling, general and administrative, SG&A, expenses were RMB 442.1 million, USD 71.6 million, up from RMB 380.4 million in the second quarter of 2012, an increase of RMB 61.7 million or 16.2%. SG&A expenses represented 10.4% of net revenue in the second quarter of 2013 compared with 11.1% in the same quarter a year ago. The decrease was mainly due to higher sales volume in the second quarter of 2013 compared with the same quarter in 2012. Operating profit increased by 58.9% to RMB 333.8 million, USD 54.0 million, from RMB 210.1 million in the second quarter of 2012, mainly due to higher gross profit and other income, partially offset by higher R&D and SG&A expenses. The operating margin was 7.8% compared with 6.1% in the second quarter of 2012. Finance costs declined to RMB 39.6 million, USD 6.4 million, from RMB 62.2 million in the second quarter of 2012, a decrease of RMB 22.6 million or 36.3%. The decrease was due to tax [ph] bill discounting, as well as lower interest costs relating to GYMCL's outstanding short-term financing bonds, STFB, and medium-term notes, MTN, compared with higher interest rates applicable to the outstanding STF in the second quarter of 2012. The share of joint ventures was a loss of RMB 10.0 million, USD 1.6 million, compared with loss of RMB 6.2 million in the second quarter of 2012. In the second quarter of 2013, total net profit attributable to China Yuchai's shareholders was RMB 166.3 million, USD 26.9 million, or earnings per share of RMB 4.46, USD 0.72, compared with RMB 67.1 million or earning per shares of RMB 1.80 in the same quarter in 2012. May I now move on to the financial highlights for the 6 months ended June 30, 2013. For the 6 months ended June 30, 2013, net revenue was RMB 8.10 billion, USD 1.31 billion, compared with RMB 7.11 billion in the same period last year. The increase in net sales was RMB 987.2 million or 13.9% as compared with the same 6-month period in 2012. The total number of diesel engines sold by GYMCL during the first 6 months of 2013 was 271,891 units compared with 241,026 units in the same period last year, representing an increase of 30,865 units or 12.8%. This increase was mainly attributable to an increase in the sales of engine for agricultural and truck applications second quarter of 2013. The increase in sales of commercial vehicles was mainly due to the pre-buying of trucks prior to the implementation of the National IV emission standards nationwide on July 1, 2013. Gross profit was RMB 1.63 billion, USD 264.2 million, compared with RMB 1.45 billion in the same period last year. Gross profit margin decreased to 20.2% in the first 6 months of 2013 as compared with 20.4% a year ago. This was mainly attributable to a shift in the sales mix to more light-duty engines, as well as engine for agriculture applications with lower gross margins. Other operating income was RMB 57.5 million, USD 9.3 million, an increase of RMB 19.8 million from RMB 37.7 million in the same period last year. This increase was mainly due to a smaller loss relating to the disposal of plant and equipment as compared with the same 6-month period in 2012. Research and development, R&D, expenses were RMB 210.7 million, USD 34.1 million, compared with RMB 177.2 million in the same period in 2012, an increase of 19.0%. As a percentage of net revenue, R&D spending rose to 2.6% compared with 2.5% in the same period last year. The R&D expenses mainly related to the ongoing development of new and existing engine products, as well as continued initiatives to improve engine quality. Selling, general and administrative, SG&A, expenses were RMB 806.6 million, USD 130.5 million, up from RMB 756.7 million in the same period last year, an increase of RMB 49.9 million or 6.6%. SG&A expenses represented 10.0% of net revenue for the 6 -- for the first 6 months of 2013 compared with 10.6% in the same period last year. The decrease in the SG&A percentage was mainly due to higher sales in the first 6 months of 2013 as compared with the same period in 2012. Operating profit increased to RMB 672.7 million, USD 108.9 million, from RMB 557.3 million in the same period last year mainly due to an increase in the gross profit and other income, partially offset by higher R&D and SG&A expenses. The operating margin was 8.3% compared with 7.8% in the same period last year. Finance costs declined to RMB 73.8 million, USD 11.9 million, from RMB 137.5 million in the same period last year, a decrease of RMB 63.7 million or 46.3%. The decrease was due to less bill discounting and lower interest costs relating to the outstanding STFBs and MTNs. The share of joint ventures was a loss of RMB 25.7 billion, USD 4.2 million, compared with a loss of RMB 22.9 million in the same period last year. For the 6 month ended June 30, 2013, total net profit attributable to China Yuchai's shareholders was RMB 339.8 million, USD 55.0 million, or earning per shares of RMB 9.12, USD 1.48, compared with RMB 235.0 million or earning per share of RMB 6.31 in the same period of 2012. Now I would like to highlight a few key items in the balance sheets as at June 30, 2013. Cash and bank balances were RMB 3.98 billion, USD 644.3 million, compared with RMB 3.16 billion at December 31, 2012. Short and long-term borrowing were RMB 2.56 billion, USD 414.7 million, compared with RMB 2.45 billion at the end of 2012. Net inventory was RMB 1.98 billion, USD 320.8 million, compared with RMB 2.01 billion at the end of 2012. With that, operator, we are ready to begin the Q&A session.

[Operator Instructions] Our first question comes from the line of Alex Potter from Piper Jaffray.

Was wondering if you could chat, first of all, on the National IV emission standard. There's been now, I guess, a little over one month since the standard went into effect. Have you seen an impact on sales of National IV-compliant engines? Has there been an uptick in the last month?

Okay, I like -- this is Weng Ming here. Okay, as you know, the National IV standard has been implemented in China, but implementation has been a little bit patchy. So far this year, a lot of pre-buying for National III engines, but haven't seen National IV engines being sold in a big way yet.

Okay. So does that basically mean that if there hasn't been any new sales of National IV engines in the month since the standard was implemented, does that mean that the standard basically isn't being enforced at all if you're not selling any?

Well, we can't say that, right? But I'm sure the government is doing something about it but just, I think, because of the pre-buying in June, I'm sure that will have an impact on the sale of National IV going into the second half.

Okay. All right. So I guess then, another way to look at this is you expect -- because clearly, if you're not selling any National IV engines and you're no longer selling any National III engines after the standard, then your volume must be going down very, very substantially right now. Is that true?

We have a healthy July. July sales is pretty healthy. But the second half of the year, we expect it to be quite challenging, because of India -- I think, as you all know, the Chinese economy is quite challenging for the second half.

Right. Okay, so if there was a healthy July, what was it you were selling? If you weren't selling National IV engines, then you must have been selling National III engines that don't comply with the standard?

We are selling -- we also have other engines that we sell, things like the bus engines, that we sell quite large quantity most months. We have off-roads engines, the agriculture engines since we began these first 6 months and also now. But the extension [ph] of IV engines, we do sell some smaller in quantities, particularly there's demands in the big cities like the Tier 1 cities.

Okay. Okay. So you are getting National IV engine sales, just only...

Yes, we do have some.

Okay. Okay. And then I was wondering also, when it comes to meeting those National IV standards, whose SCR system are you using?

I will let our VP Operations answer this.

Alex, the SCR we have at the moment, and then we still using the -- some of the imports and the -- we also and then buying some components and then we're building by ourselves as well. So depends on the OEM's option.

Okay. All right. Okay. And then can you remind me again -- I know that, I think, I heard you say this, but I didn't hear quite clearly, how many natural gas engines did you sell in the quarter? I think, I heard 13,000. I didn't know if that was in the quarter.

That's correct. Yes. For half year, sorry, for half year. That's for the half, sorry.

Okay. Okay. That's okay. And do you think that now with National IV going into effect, do you think people are going to be buying natural gas engines instead of buying National IV diesel engines as a way to meet the standard?

Well, I guess that there is a good chance of that happening. The reason being, the running cost of the natural gas engine is a lot cheaper than National IV and the cost of the differential between National IV and the natural gas engine is getting smaller than between the National III and gas engine. So there is a good chance at the core sense [ph] .

Okay. Can you give me rough numbers in terms of the percent? So if you've got a natural gas engine, how much does that cost in relation to a National III engine and a National IV engine just in maybe percentage terms?

Well, I think there's not -- not a guideline as for what the price variation will be because and then you will be various between the different manufacturers. That said, from our experience and the -- our natural gas engine and then comparing with National IV engine and then will be in the range of 10% to 15% higher. But for the National III engines are even more expensive because of the difference of emission standards.

Right. So that 10% to 15%, that was natural gas versus National III?

IV.

Okay. That's what I thought. Okay. All right. Let's see, I guess the last one I had was, if you could give a contribution from heavy-duty engine units in the quarter? I know that you gave your full units sold at 141,000 or thereabouts. How much of that was heavy-duty?

Okay. I think it's about 36% -- over 30% of it is heavy duty.

Over 30%?

Over 20%, over 20%.

And our next question comes from the line of David Raso from ISI Group.

My 2 questions are, one, how many months at the current selling rate in the industry, how many months of National III engines do you think are already in the channel?

That's a difficult question. I find it hard to estimate that one.

Just to at least get some flavor around it. I mean, do you feel half of your growth in the second quarter was prebuilding to serve demand in the second half? I'm just trying to get a feel for how long will it take to work through the transition at your customers, if we assume a certain adoption rate of NS IV. Can you give us a little bit of color around it?

Well, I guess it depends on how strictly the government enforce the National IV engine standards, David. So in the big tier -- first tier cities, it will be enforced very strictly. However, if we go to Tier 3 and 4 cities, it's hard to say. Just I think a lot of it depends on the local government, right? So it's hard to even gauge as to how many months is in the inventory. I would hesitate to estimate.

Maybe asked another way, if I think of the industry geographically across the country, whatever you want to consider to be normal selling rates in each region, the areas that have now adopted NS IV, what percent of the Chinese truck market is now NS IV?

The NS IV is, I would say the bulk of the user for NS IV will be in urban area, in the big Tier 1 city, okay? Long-range travel, that would be -- again, it's difficult to estimate, David. I would hesitate to estimate.

Just to get a rough idea, because I'm not sure which cities are really enforcing it in a strong fashion.

Those Tier 1 cities like Beijing, Shanghai, Guangzhou, those are big cities, so definitely will be enforcing it, emission gen, yes?

Let me then try to explain this way. This is Kelvin. I think that in Beijing they're already in the National IV, so they are ahead of the other city. But in Guangzhou and then they just announced and then they will have a grace period for 3 months of time. So I think, it really depends on the city from city; it's difficult to put a guideline at this stage because during the announcement of the implementation of NS IV and then the government they didn't put a day on depending on the registration of lead-free engine, so that and then you give a lot of room and then to the local government and then to pay risk. So at this stage, really and then we don't know which city and then will demand tomorrow more or not.

Could you -- I know it's hard to predict what the government's going to do, so I know it's not a fair question. But January 1, 2014, for your business planning, what percent of the market do you expect to be NS IV, January 1?

Again, we cannot forecast on that way, David. But I can -- what we can say now is we actually and then we have had a discussion with all the OEM and then we have all our engine and then has been work with the -- those vehicle. And then using the Nat IV as a public announcement, the fun gao [ph] in the system. So we already here. And the -- but at this stage, and then -- what I can say is our engine delivery is still on basis of the OEM orders instead of the -- during the stocks for the Nat IV because and then we don't really and have seen the real implementation date.

I know these are hard questions because the government's left you in a difficult situation, and so I apologize. But the order book that you have right now, what percent is NS IV? And when are your OEM customers at least trying to give you some insight on when it might shift more toward NS IV? So again, the current order book for heavy, how much is NS IV as a percentage?

Well, David, I don't -- we don't see a very high orders book yet for National IV right now, I mean as of today, right? But then, again, we don't have high orders that goes into next year. So it's not high at the moment.

So last question. To think about the revenue sequentially in the second half, I would think the third quarter you still have some inventory of NS III that you can continue to sell in markets that aren't really enforcing NS IV and they're still ordering NS III. And you can still make all the NS III you want for the geographies that haven't enforced NS IV, correct?

Yes.

So the sequential revenue, as long as the market is not really enforcing NS IV, thus they're not ordering NS IV, the sequential decline should really only be a function of just what end demand is naturally and how much pre-buying was taking place. So I'm just trying to get a better feel for the sequential inventory decline in a way by who's enforcing it, and it doesn't sound like a lot of cities are enforcing it that hard, and how much of your second quarter growth was a pull forward. So maybe at a minimum, how much of the second quarter do you think was a pull forward? Just to help a bit with the modeling for the rest of the year?

Well, I mean -- it's again, I mean -- I'm not trying to evade your question, David, but we're really finding a bit difficult yet at this point to really judge the market, simply because we have only had one month of it and there was quite a lot of pre-buying before that. And then the how the government is going to enforce this National IV engine is not very clear right now, okay. From what we understand, they are leaving some of this enforcement to the local government, depending on how ready those locality are. So there is quite a bit of uncertainties in this.

I'm sorry to belabor the point, but it's difficult for you to set your production schedule the same way it's difficult for us to figure out the real end demand for the second half. As long as the government is not yet enforcing the NS IV, but there's a concern by customers that it's coming, wouldn't there continue to be some pre-buying then in the third quarter and, really, up until the moment the government does truly enforce it? Like are orders already lower sequentially?

Sequentially, I would think that the National IV engines will go up a little bit more than before. We sell more than before simply because, I think, the big cities like Shanghai and Beijing, even Tianjin, and now Guangzhou, they'll be enforcing National IV, okay? So they will force up the sales of National IV somewhat over the next 2 to 3 months. But by how much, and how it's going to affect the industry, it's really hard to gauge.

But for base case, we should assume some sequential decline. Is that a fair assessment?

Yes, yes. So I said. That assumes a sequential decline, yes, in National III, yes.

And our next question comes from the line Emmet Wright from Milwaukee Private Principal (sic) [Milwaukee Private Wealth Management].

And I do need to belabor the point on the National IV. With respect to what the government chooses to do or not to, what are the expectations of your management team in terms of the enforcement of National IV? And what does your business plan call for with respect to production and output for National III versus IV engines?

We are still expecting to see sale -- see the demand for National IV increase as the enforcements of -- as we go into the remainder of the year or into next year, simply because as more and more local government enforced the National IV standard, I think the demand will go up. Now the timing, the timetable, we haven't seen any yet.

How are your competitors reacting to this environment?

Well, it's hard for us to comment on what a competitor's going to do. We have no visibility as to how they're going to compare to do it. It would not be fair for us to comment.

Our next question comes from the line of Mohed Kana [ph] from Ralu Invest Principal [ph].

I had a question on the trade receivables. I mean, what is an average age of the trade receivables we have on the book?

Yes, this is Leong here. Actually, our account receivable has always been very healthy for those people who follow us. You can see that our account receivable are mainly with the large OEM buyers. OEM makers, they are all very established and big company with cash in the bank like the Tong Fong Group [ph]. As for our aging, they are healthy. All of the aging are healthy. And either they're on the healthy opened account or they are giving us bank bills, bills receivable that are backed by bank. So as far as I'm concerned, I have not seen a change in the profile of our account receivable, except those bigger customer, we may give them longer credit period, but that's backed by either their creditworthiness or bill receivables that are backed by the bank.

So you think 95 -- almost 100% are good?

I would -- don't want to put the numbers to the point of 100%, but it is significantly a portion of our account receivable belong to such healthy category.

Okay. We have a question here from our live audience. They ask, "Can you please give an indication of the total July engine shipments?" Now, all I can say at this point is that we had a healthy July shipment. It's better than what we had last year, same month. Yes.

We have now reached the end of our Q&A session, and I will turn the call back over to Mr. Hoh.

Okay. Thank you, all, for participating in our second quarter and half-year ended June 30, 2013, conference call. We look forward to speaking with you again. Goodbye.

Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.