Gentex Corporation (GNTX) Q4 2011 Earnings Report, Transcript and Summary

Please standby. We're about to begin. Good morning, ladies and gentlemen. Welcome to the Gentex announces fourth quarter and year-end financial results conference call. Today's call is being recorded. I would now like to turn the meeting over to Ms. Connie Hamblin, Vice President of Investor Relations and Corporate Communications. Please go ahead, Ms. Hamblin.

Thank you. Good morning, everyone. Thanks for participating in our fourth quarter conference call and joining me and Steve Dykman, our Chief Financial Officer, for a review of Gentex's fourth quarter and calendar year 2011 results. As you know from the 8-K filed in January of 2010, Enoch Jen retired from full-time employment at the end of 2011, and will continue on a limited part-time basis for 15 months. I'm going to go through a few routine matters and then I will turn the call over to Steve. This call is being broadcast live on the Internet via an icon on the homepage of Gentex Corporation's website. The auto playback of the conference call is also available on the website. All contents of Gentex Corporation's conference calls are the property of Gentex and may not be copied, published, reproduced, rebroadcast, retransmitted or otherwise redistributed without the express or written consent of Gentex. Gentex Corporation alone holds such rights. While we understand that there may be companies that transcribe and redistribute our conference calls notwithstanding this warning, Gentex Corporation provides no authorization to do so and expressly disclaims any responsibility for any unauthorized use of the content. We advise that you should not rely on the content of any unauthorized transcript, as Gentex Corporation will not be held liable for the content of any such transcript. Gentex Corporation will hold responsible or liable any party for any damages incurred by Gentex Corporation with respect to any such unauthorized use. Your participation implies consent to our taping and to the foregoing terms. Please drop off the line if you do not agree to these terms. Before we begin, I'd like to remind you of our forward-looking statements. Gentex Corporation will make forward-looking statements in this presentation related to its financial results for…

Good morning and thank you for joining us on the call. We're pleased to report record fourth quarter in terms of revenues and earnings. The company reported record fourth quarter 2011 net sales of $260.3 million, a 17% increase compared with net sales of $222.1 million in the fourth quarter of 2010. Record net sales of $1 billion for calendar year 2011, a 25% increase compared with net sales of $816.3 million in calendar year 2010. We also reported record fourth quarter 2011 operating income of $55.8 million, a 10% increase compared with operating income of $50.6 million in the fourth quarter of 2010. Record operating income of $231.4 million for calendar year 2011, a 21% increase compared with operating income of $191 million in calendar year 2010. We reported record fourth quarter 2011 net income of $40.5 million, a 10% increase compared with net income of $36.9 million in the fourth quarter of 2010. Record net income of $164.7 million for calendar year 2011, a 20% increase compared with net income of $137.7 million in calendar year 2010. We reported record fourth quarter 2011 earnings per diluted share of $0.28, compared with $0.26 per share in the fourth quarter of 2010. Record calendar year 2011 earnings per diluted share were $1.14, compared to $0.98 per share in calendar year 2010. Next, we'll look at automotive net sales and auto-dimming mirror unit shipments. For the fourth quarter ended December 31, 2011, total auto-dimming mirror unit shipments increased by 16% in the fourth quarter of 2011 compared with the fourth quarter of last year. Automotive net sales increased by 17% from $217.7 million in the fourth quarter of 2010 to $254.7 million in the fourth quarter of 2011. The lower-than-expected automotive net sales versus our guidance at the beginning of the…

So, an update on SmartBeam. For the 2011 calendar year, we shipped approximately 1 million SmartBeam units, which was a 66% increase over the SmartBeam unit shipments of 630,000 in calendar year 2010. Based on the IHS January 2012 forecast, we currently expect that SmartBeam unit shipments will increase by approximately 40% to 45% in calendar year 2012. Now, an update on Rear Camera Display product. On the legislation, the Kids Transportation Safety Act and the pending requirement that all new vehicles in the United States will be required to be equipped with cameras and Rear Camera Displays by September of 2014. And this is based on the December 3rd, 2012 Notice of Proposed Rulemaking that was issued by the National Highway Traffic Safety Administration. That was moved from the Office of the Secretary of Transportation to the Office of Management and Budget on November 16th. At that time, the final rule was targeted to be completed by December 30th. On January 10th of 2012, Secretary of Transportation, Ray LaHood, sent a letter to Congressman Fred Upton and other congressional leaders, indicating that due to the many public comments and the complexity of the rule that he now believes that the rule can be finalized by February 29th of 2010. We continue to believe that RCD mirrors will likely be implemented in three overlapping phases. First phase was market-driven phase, and that was the time period prior to any legislation through the date of the National Highway Traffic Safety Administration's Notice of Proposed Rulemaking last December. Then secondly, there is a wait-and-see phase, which we currently are in. And that's the period of time for when the legislation was signed into law on February 28th of 2008 until a final rule was issued, which currently is indicated by February 29th…

Thank you. (Operator Instructions) And we'll take our first question from David Leiker with Robert W. Baird. David Leiker – Robert W. Baird & Co, Inc.: Good morning, everyone.

Good morning.

Good morning, David. David Leiker – Robert W. Baird & Co, Inc.: The production number here in the fourth quarter, it sounds like from what you're talking about that you saw a decline in production rate relative to what you expected. Am I understanding that correctly?

Yeah, so certain customers and within the customers, with certain vehicle models that we're on. And that is primarily with some of the Asian customers. David Leiker – Robert W. Baird & Co, Inc.: So the Asian customers in Europe?

Yeah. And then, the second item that really affected the fourth quarter compared to the beginning of the quarter forecast was, as you're aware, we're a Tier 2 for our exterior mirrors, and some of the Tier 1 customers had some inventory adjustments as they approached year-end and evaluated their inventory levels. So that affected us in the fourth quarter as well. David Leiker – Robert W. Baird & Co, Inc.: Yeah, on that second item, if you look at your foreign exterior mirror shipments, it's really the source of most of the shortfall, at least from what we are looking for. A couple hundred thousand units in the quarter, do you think all of that would be attributed to inventory correction or most of it?

No, no, because the 200,000 is both interior and exterior. And so, the exterior mirror units is what's been affected by the inventory adjustments. David Leiker – Robert W. Baird & Co, Inc.: And how much of your -- I don't recall right now how much of your business in Europe is Tier 2 driven.

Strictly exterior mirrors only. David Leiker – Robert W. Baird & Co, Inc.: All of your exterior mirrors are Tier 2?

Yes. David Leiker – Robert W. Baird & Co, Inc.: Okay, I'll stop there with my one question. Thank you.

And we'll take the next question from Himanshu Patel from J.P. Morgan. Himanshu Patel – J.P. Morgan Securities, LLC: Hi, good morning, guys.

Good morning, Himanshu.

Good morning. Himanshu Patel – J.P. Morgan Securities, LLC: I think on the third quarter call you indicated that the Thailand flood was expected to be a 25 to 50 basis point margin hit. First of all, can you just kind of do a post-mortem on that? Is that where that impact shook out? Was it worse or better? And then, I'm just trying to bridge from sort of that magnitude versus the 90 basis point year-over-year gross margin decline that you saw. Was all of the difference between the two annual customer price-downs or was there something else going on there as well?

Okay. So the guidance and on a sequential basis, yeah, we estimated that the flooding impact to be 25 to 50 basis points, and it was about 25 basis points in the quarter effect related to that. So it's a little bit on the low-end of our guidance range. And on a year-over-year basis, the other impact was the effect of annual customer price reductions. Himanshu Patel – J.P. Morgan Securities, LLC: Okay, thank you.

Yep.

And we'll take the next question from Rich Kwas with Wells Fargo. Richard Kwas – Wells Fargo Securities, LLC: Hi, Steve and Connie, how are you?

Good, how are you?

Good, how are you? Richard Kwas – Wells Fargo Securities, LLC: Good. Steve, I know you talked about guidance for ER&D and SG&A over the first quarter. As we think about the year, should there be some better leverage on the ER&D side as we move through the year, given the amount of money you've spent the last couple of years?

If you look at the trend line, we're working off a larger base, a lot of percentage basis, naturally we think that would come down a little bit. But we continue to devote resources to the ER&D line item as we develop new products. So I think, here for the near-term, it will likely be running ahead of the long-term historical trend of that 10% to 15% range. Richard Kwas – Wells Fargo Securities, LLC: Okay, and is that for both --

Oh, no. On SG&A expenses, for -- and again, you do have the potential effect of any foreign currency fluctuation that could affect that line item. But in the first quarter, we've guided 15% to 20%. And we do think, here in the near-term, that the expense growth on a percentage basis on that line item will be a little higher than the historical trend of around 10%. Richard Kwas – Wells Fargo Securities, LLC: Okay, thank you.

And the ER&D is also vehicle-specific implementation in the engineering area on programs that we already have. Because our product mix has become more complex, it requires more engineering resources to implement these products on the vehicles.

And we'll take the next question from John Murphy with Bank of America Merrill Lynch. John Murphy – Bank of America Merrill Lynch: Good morning, guys.

Good morning. John Murphy – Bank of America Merrill Lynch: I have one real question and then one housekeeping question, and I apologize for sort of the addition there. But the first question is on the average selling price for the mirror for the full-year of 2011. It looks like it's about flat, but you're talking about the RCD's and SmartBeam sales or unit sales increasing quite dramatically. I'm just curious why the average selling price, if we load those in, is not increasing. It just seems like you're actually not getting paid too much for the RCD's and the SmartBeam sort of incrementally. And then, sort of just a housekeeping issue. Is the sales -- your sales are up 25% but your inventory is up 90%. So it looks like to me that your inventory turns are about 3.5 times versus kind of the long-term average of 10 times. And I just fear I'm actually something with my math there, but it just seems like inventory has gone up a lot faster than sales. Just trying to understand what I'm missing there.

So first, on the ASPs on a year-over-year basis, as you mentioned, it's just up slightly and so, part of that on the positive side, we have the higher mix of featured mirrors. And then, the other impact is the effect of annual customer price reductions on the overall book of business that would have partially offset that. And then on the housekeeping question on inventories, you are correct, inventory has increased from a little over 100 million to a little over 180 million year-over-year. And so, that's a combination of increased production levels, and then the other factor really relates to the longer lead times, certain electronic components related to supply chain constraints. So we have carried additional inventory levels in the raw material area as a result of all the supply chain disruptions and constraints. And so at this point, as we work through those, we hope to bring those levels down a little bit. Most of the increase within the inventory is in the raw materials area. And as we talked about on the third quarter call, we are expected to have our finished goods inventory decreased a little bit sequentially as we head into year-end, and our finished goods inventory levels did decline during the fourth quarter a little bit. John Murphy – Bank of America Merrill Lynch: But you think that this is -- you can work that working capital or the inventory back down, and this may be just really a short-term issue or is this kind of the new level that we should expect inventory to run at? I'm just curious --

Yeah, I think part of it is we're working off a larger base. But the component that relates to the longer lead time and the supply chain disruptions and constraints, as that component of the increase improves through the first half of next year, that should come down a bit. John Murphy – Bank of America Merrill Lynch: Great. Thanks, Steve and Connie. I appreciate it.

And we'll take the next question from Adam Brooks with Sidoti & Company, LLC. Adam Brooks – Sidoti & Company, LLC: Good morning, guys. Maybe you should just give an update on your thoughts on the margin impact from the expansion plans this year, and maybe anything beyond. It seems like at the rate you're growing, probably in another year or so, like you said, maybe a completely new facility, maybe what you're thinking initially the margin impact could be.

Okay. So as we've said previously, the four expansion plans that we have ongoing here, their expansions to existing facilities. And that is a little different than our historical trend where if we add a new facility. And with the expansions to existing facilities, we're not anticipating as significant of an impact on margins due to the fact that it's not like we have to duplicate and add the support functions like you do with a new facility. So there will have -- I think when we opened our 2006 facility, we had talked about half a percentage point decline or impact on margins in the first year as a result of that new facility. And we're not expecting that these expansion plans will be to that degree. Adam Brooks – Sidoti & Company, LLC: Okay. And maybe if I could sneak in one quick more, do you have a rough number as far as percentage of sales to China at this point?

It's very immaterial, low, low single-digit. Adam Brooks – Sidoti & Company, LLC: Thank you.

And we'll take the next question from Steve Dyer with Craig-Hallum. Steve Dyer – Craig-Hallum Capital Group, LLC: Thank you. Good morning, Connie and Steve.

Good morning.

Good morning. Steve Dyer – Craig-Hallum Capital Group, LLC: Was there any currency impact, either to revenue or margins, in any material way in the quarter?

No. On revenues, it was maybe like a tenth of 1%. It was very insignificant. And within the SG&A line, it was pretty much flat with no effect. For calendar year SG&A expenses, foreign currency accounted for about 4 percentage points of the overall increase in the expenses. Steve Dyer – Craig-Hallum Capital Group, LLC: Okay. I'm wondering if you can help me kind of reconcile your gross margin guidance for Q1 of essentially flat quarter-over-quarter. I think the midpoint of your revenue guidance would imply $30 million, $35 million of additional revenue sequentially. You've kind of said that you think the majority of the supply chain flooding impact is behind you, so why would we not see a little bit of a bump there on the gross margin line?

That's a good question. As you mentioned, sequentially, revenues are going to be up about 13% and really the offset is going to be the impact of annual customer price reductions in the first quarter. And that impact will be offset by our ability to leverage fixed overhead costs. I think one thing to keep in mind, 10 years ago when we talked about the effect of annual customer price reductions, the majority of those reductions occurred in the third quarter, and that has shifted overtime throughout the year. But as we look at the customer base and the mix, the first quarter is the largest quarter in which we have customers that have their annual customer price reductions effective. Steve Dyer – Craig-Hallum Capital Group, LLC: Okay, and then one more. How should we think about gross margin trending throughout the balance of 2012 directionally, and maybe any help with magnitude would be great?

Okay. Well, I think first, we have to demonstrate that we can stabilize margins as we work through the supply chain issues that we are hopeful and expect to improve in the first and second quarter. And then, improve on those from the current levels. So we do continue to work and we have an aggressive purchasing cost reduction program, and engineering VAVE program that continue to generate cost savings. So as we progress through the year, we continue to work to improve on the margin. It will likely be smaller, incremental improvements as we move forward. Steve Dyer – Craig-Hallum Capital Group, LLC: Okay, thanks.

And we'll take the next question from Brett Hoselton with KeyBanc. Brett D. Hoselton – KeyBanc Capital Markets, Inc.: Good morning, Steve. Good morning, Connie.

Good morning, Brett.

Good morning, Brett. Brett D. Hoselton – KeyBanc Capital Markets, Inc.: The Kids and Cars Safety Act, first question I had was, have you heard anything that suggest that the final rule will be materially different than the current proposed rule, whether in terms of implementation standard themselves, like what cars are covered? And/or the timing which is currently 2014, is that possible that that could on to 2015? Have you heard anything along those lines or not at all?

We have not heard anything in terms of what the final bill is going to be. In terms of having a slip, we've said for a while that because of the delays in the final rule, that we would expect that the September 2014 date probably will be pushed out a year for full implementation just because of the way that the rule -- the actual law is written. This isn't based on any information we're getting from the market or anything, but the way the law is written. So they're supposed to be given four years from the date of the final rule. Brett D. Hoselton – KeyBanc Capital Markets, Inc.: And then, the slowdown in shipments near-term, you've attributed that to just customers waiting and seeing. Even if we assume that we get pushed back to 2015, you're looking at a very or potentially a very substantial ramp-up in RCD shipments, which sound really good. But at the same time, I'm not sure you've really experienced anything that has ramped up at a 40% or 50% rate in the 2 million to 3 million, to 4 million to 5 million units range in terms of shipments range. So my question here is as you look out the next two to three years, do you think that you're going to be able to ramp-up at a very, very significant rate, high-volume, and be able to absorb that and leverage off of that, get the operating leverage that you might expect off of that?

Well, and that's why we're looking at longer-term facility expansion needs for our overall product base. I think when you look at the ramp of RCD, it's going to be somewhat dependent on customers' final decisions, as well as they look at their vehicle platforms and when they have a mid-cycle refresh or a model change. That might be spread out a little bit through the implementation phase. Brett D. Hoselton – KeyBanc Capital Markets, Inc.: Okay. Thank you very much, Steve, Connie.

And we'll take the next question from Greg Halter with Great Lakes Review. Gregory W. Halter – LJR Great Lakes Review: Yes. Looking at the price reductions that you have been discussing, I know in the past you had talked about, I think, a 3% to 5% and then that had dropped to about 2% to 4% area. And I'm just wondering what kind of range you're looking at these days.

Still in the 2% to 4% range. Gregory W. Halter – LJR Great Lakes Review: Okay. And one other quick one on the contract that you have with PPG, I think it was signed December of '05. Given all the delays, it was the Boeing 787. Has that been extended or renewed or are there any number of planes that were under that contract? How does that work?

No. It basically talks about $50 million of the first five years of production, and given that there were production delays. So basically, it's just kind of moved out as the production has been delayed. Gregory W. Halter – LJR Great Lakes Review: Okay, thank you.

Yep.

(Operator Instructions) We'll take the next question from Peter Nesvold with Jefferies. H. Peter Nesvold – Jefferies & Company, Inc.: Good morning.

Good morning.

Good morning. H. Peter Nesvold – Jefferies & Company, Inc.: I had a question on the growth rate of ER&D versus the growth rate in revenue. So if I take -- ER&D grew faster than revenue in fourth quarter, and if I take the midpoint of the range to the guidance in 1Q, it happens again in 1Q. When do we see that inflection point to the positive? When do we start to see revenue growing faster than ER&D again?

Okay. We've talked about that for probably the last 12 to 18 months as ER&D expenses have grown at a higher pace than historical trends, and in some quarters, greater than the revenue growth. And within the ER&D line, they are working on projects and programs that really are currently generating revenues. And with the historical trend of the 10% to 16% growth rate in ER&D, that was primarily driven by new program awards and work surrounding actual new programs that were coming online, but then two years. And the last 12 to 18 months, the higher growth rate was really driven by increased activity regarding product development projects. And those necessarily aren't generating revenues here in the near-term because that really will be two to three years out. So we feel that here in the near-term the growth rate will continue above the historical 10% to 15% trend line but should moderate overtime on a percentage growth basis. And hopefully, then you'll start to see revenues growing at similar or greater pace than the ER&D growth rate. But that will likely be beyond the 2012 calendar year. H. Peter Nesvold – Jefferies & Company, Inc.: I just sort of had the sense from the past two earnings calls or so, because the CapEx guidance was going higher. But it sounded like there were some near-term programs that were approaching, and that we would -- I think the investment -- the markets would start anticipating an acceleration in the top line growth. But I don't really get that sense from the communication this morning. Has anything changed or is this sort of the growth rate in terms of top line that maybe we could anticipate for 2012

Well, the expansions that we talked about, the near-term expansions that we're doing, and the dollars that we're investing there are basically to get us through the next year or so. They were -- we looked at our business as a whole and there were bottlenecks in capacity in certain areas where we needed to expand. And when where the law of large numbers if impacting us, where we can't just, if we need to add capacity, we can't just add a shift anymore. When we have to flex, we have to literally like build a new plant or expand a plant considerably. So that's kind of where the expansion is coming from, and that's just based on our basically current book of business. H. Peter Nesvold – Jefferies & Company, Inc.: Okay.

And I think, one thing we've talked about for several quarters is when you look at the vehicle production trend versus our unit growth, it has been very strong for the past 12 months. And what you really saw, starting in the fourth quarter and continuing into the first quarter, is a slowing or a narrowing of the delta between vehicle production and our unit growth. And that really is driven by some of the slowing growth that you read about in China, as well as Europe, and specifically some of the German automakers. And so, we've had that tailwind from really the fourth quarter of 2010 through the first three quarters of 2011, and that is part of the contributing factor as well. H. Peter Nesvold – Jefferies & Company, Inc.: Okay, thank you.

Nothing really has changed with respect to new program awards or anything like that. It's just that that tailwind with the vehicle production mix isn't as significant as what it has been previously.

And we'll take the next question as a follow-up from David Leiker with Robert W. Baird. David Leiker – Robert W. Baird & Co, Inc.: Hello?

Hello. David Leiker – Robert W. Baird & Co, Inc.: The first, a follow-up on the question earlier about Europe. And Steve, your comment on that was primarily Asian OEMs in Europe. But my thought was that the majority of your European business is with essentially BMW, Volkswagen, Mercedes and Opel. How large are the Asian OEMs for you in Europe?

It's not as significant. But when you look at the vehicle production forecast from the beginning of the fourth quarter to the end of the fourth quarter, many of those variations and weakness in vehicle production were with some of the Asian automakers. David Leiker – Robert W. Baird & Co, Inc.: Okay. And then on a different note, as we look at the capacity of plants that you laid out here, essentially getting interior, exterior mirrors combined to something in the low 30 million range. It seems to me, by my math, that that's probably sufficient to get you through demand levels through 2014. Is that reasonable?

That is close, yes. And obviously, what we experienced coming out of the downturn is we experienced certain capacity constraints in specific areas. So as for some of the expansion, but generally overall, we feel that once the four expansion projects are complete, that we should be set for a couple of years. However, we also realize that if we're going to build a new facility, it takes a year and a half to two years to construct. David Leiker – Robert W. Baird & Co, Inc.: And what's the timing for those different expansion plans to be completed?

The current four that we talked about? David Leiker – Robert W. Baird & Co, Inc.: Right.

One of -- most of them in the first half of 2012, and then one of them in the second half of 2012. David Leiker – Robert W. Baird & Co, Inc.: We usually get some relief from the overtime and there's a bottleneck in the second half of '12 from these expansions.

We're hopeful for that, yes. David Leiker – Robert W. Baird & Co, Inc.: Okay, thank you.

Yep.

And we'll take the next question from as a follow-up from John Murphy with Bank of America Merrill Lynch. John Murphy – Bank of America Merrill Lynch: Thanks for squeezing me back in. Just two questions on RCD. Steve, you had given capacity numbers for mirrors. I don't know if you've given capacity numbers for RCD's. I'm just curious if you have that or is that sort of encompassed?

We have not provided that because RCD is just some additional equipment at existing lines, so it is difficult to segregate out. John Murphy – Bank of America Merrill Lynch: Okay. And then, sort of just as a second question on that, it looks like your penetration rate, if we were just to use your RCDs, it looks like your RCDs are already 13% of the U.S. market. I'm just curious if that sounds like that's about right. And what you think sort of the total RCD penetration rate is currently in the market for sort of all deliveries or all screens, including the mirrors and NAV systems?

Well, the 13% probably pretty close. What we've said is the NAV systems probably are 10% to 15%. And if we're at 10 plus percent, that kind of gives you an overall total. And Magna has a couple RCD mirror programs, but they're not that significant at this time. John Murphy – Bank of America Merrill Lynch: So you think RCDs have probably already penetrated 25% to 30% of just the U.S. market, roughly?

Between our products and the NAV --

In total, between the various -- John Murphy – Bank of America Merrill Lynch: Yes, not Gentex alone but sort of in the aggregate?

Yep. John Murphy – Bank of America Merrill Lynch: Okay, great. That's very helpful. Thank you.

We have time for one more question.

We'll take the last question from Rich Kwas with Wells Fargo. Richard Kwas – Wells Fargo Securities, LLC: Hi, just a couple of follow-ups here. The 15 million that, Steve, you talked about for the construction or getting set for constructing a new facility, is that -- that's year-over-year increase? And there was -- I guess there was nothing spent in 2011, is that right or --?

Yeah, the 15 million really relates to a parcel of property that we have. And the 15 million relates to master-planning an infrastructure that would need to be done to kind of get ready for when we construct and have a need for a new facility. Richard Kwas – Wells Fargo Securities, LLC: Okay, but this is first expenditures on those sort of thing.

Yeah. Richard Kwas – Wells Fargo Securities, LLC: Okay. And that hits SG&A, I assume?

No. Richard Kwas – Wells Fargo Securities, LLC: No?

Well, that would be for production. Richard Kwas – Wells Fargo Securities, LLC: Okay, so it's in the gross margin line.

Yeah. Richard Kwas – Wells Fargo Securities, LLC: Okay. And then, just a quick follow-up on the RCD. So the 10% to 15% for first quarter, if I recall, first half of last year, you were growing something like 50%, then it kind of came down in the second half closer to 30%, somewhere in that neighborhood. So is it reasonable to think that as you move through the year, the RCD comparisons on a quarterly basis, they get easier?

It's like one way to look at it, as you mentioned that a growth rate percentage slowed in the second half of the year to roughly 30%, but when you run the numbers of our first quarter guidance of the 10% to 15% growth rate, that really is the units are pretty much in line with the latter part of 2011 unit levels. Richard Kwas – Wells Fargo Securities, LLC: Okay.

And so, we are in the wait-and-see type phase. Richard Kwas – Wells Fargo Securities, LLC: Okay, okay, got it. Thank you.

And that was the last question for today.

Thank you. I'd like to take this opportunity to thank everybody for joining us. If you have additional follow-up questions, we'll be here. Thank you. Have a good day.