Ladies and gentlemen, thank you for standing by, and welcome to the Garmin Ltd. First Quarter of 2020 Earnings Conference Call. [Operator Instructions]. As a reminder, today's program may be recorded. I would now like to introduce your host for today's program, Teri Seck, Manager of Investor Relations. Please go ahead.

Good morning. We would like to welcome you to Garmin Ltd. First Quarter 2020 Earnings Call. Please note that the earnings press release and related slides are available at Garmin's Investor Relations site on the Internet at www.garmin.com/stock. An archive of the webcast and related transcripts will also be available on our website. This earnings call includes projections and other forward-looking statements regarding Garmin Ltd. and its business. Any statements regarding our future financial position, revenues, earnings, gross margins, operating margins, future dividends, market shares, product introductions, future demand for our products and plans and objectives are forward-looking statements. The forward-looking events and circumstances discussed in this earnings call may not occur, and actual results could differ materially as a result of risk factors affecting Garmin. Information concerning these risk factors is contained in our Form 10-K and first quarter 2020 Form 10-Q filed with the Securities and Exchange Commission. In particular, there is significant uncertainty about the duration and impact of the COVID-19 pandemic. This means that results could change at any time, and any statement about the impact of COVID-19 on the company's business results and outlook is the best estimate based on the information available as of today's date. Presenting on behalf of Garmin Ltd. this morning are Cliff Pemble, President and Chief Executive Officer; and Doug Boessen, Chief Financial Officer and Treasurer. At this time, I would like to turn the call over to Cliff Pemble.

Thank you, Teri, and good morning, everyone. First quarter of 2020 continued the strong momentum we experienced in the back half of last year. Revenue increased 12%, resulting in a new record for the first quarter. Gross margin was stable to last year, and operating margin expanded, resulting in operating income growth of 17%. Late in the quarter, the landscape changed as the COVID-19 outbreak became a global pandemic and governments responded with drastic measures to slow the spread of the virus. This resulted in unprecedented economic changes affecting every company, and Garmin is no exception. Accordingly, we are withdrawing our fiscal 2020 guidance. However, we are optimistic for the long-term as the markets we serve and the products we offer are well positioned to succeed in a post pandemic world. I'll explain why we are optimistic in just a moment. But first, I want to share a few insights on how Garmin is approaching the most significant health and economic crisis of our time. First, I'll highlight our business priorities. The global awareness of the coronavirus is recent, but its impact was felt much earlier when parts of Asia were dramatically affected by its emergence and rapid spread. Since the beginning, employee safety has been our top priority, starting in Asia and expanding as the virus spread to other regions of the world. Most of our employees can work from home. And we've taken steps to protect those who continue to work within our facilities. Our employees adapted to these new circumstances with speed and resilience, and I'm super proud of their response to this challenge. Our second priority has been to strengthen our supply chain. In the early days of the virus outbreak, our supply chain teams were working hard to ensure we would not be affected by…

Thanks, Cliff. Good morning, everyone. I'd like to begin by reviewing our first quarter financial results, move to comments on the balance sheet, cash flow statement and taxes. We posted revenue of $856 million for the first quarter, representing a 12% increase year-over-year. Gross margin was 59.2%, a 20 basis point increase from the prior year. Operating expense as a percentage of sales was 38.5%, a 70 basis point decrease from the prior year. Operating income was $177 million, a 17% increase year-over-year. Operating margin was 20.7%, a 90 basis point increase from the prior year. Our GAAP EPS was $0.84 and pro forma EPS was $0.91. Next, to look at our first quarter revenue by segment, we achieved record first quarter revenue of $856 million, with 4 of our 5 segments posting double-digit growth. As seen in the charts, we have a diversified business model from both a segment and geography perspective. Looking next, operating expenses. First quarter operating expenses increased by $29 million or 10%. Research and development increased $19 million year-over-year, investments in engineering resources, incremental costs associated with recent acquisitions. Advertising expense decreased approximately $1 million from the prior year quarter. SG&A increased $10 million compared to prior year quarter, but decreased as a percentage of sales to 16%, 60 basis point decrease compared to the prior year. Increase was primarily due to personnel-related expenses, incremental costs associated with recent acquisitions. As Cliff mentioned, we're implementing expense control measures to defer discretionary spending and sharpening our focus in R&D. A few highlights on the balance sheet, cash flow statement and taxes. We ended the quarter with cash and marketable securities of approximately $2.6 billion and no debt. Accounts receivable decreased sequentially to $500 million on a seasonally strong fourth quarter, increased year-over-year in line with first quarter sales. Inventory balance increased on both a sequential year-over-year basis as we have been preparing for the seasonally strong second quarter. We are aligning production levels and inventory with anticipated demand. However, we expect incremental increases in inventory in the near term as it takes time to scale supply chain around near-term demand. During the first quarter of 2020, we generated free cash flow of $185 million, $50 million increase for the prior year quarter. We took another look at our capital expenditures and now expect 2020 annual cap expenditures to be approximately $140 million. 2 key capital expenditure projects for 2020 were the Tacx manufacturing facility and the auto OEM manufacturing facility in Europe. Also during the quarter, we paid dividends of $109 million. Turning an attractive dividend to our shareholders is one of current priorities for cash. In the first quarter of 2020, we reported an effective tax rate of 9.3% compared to 15.7% in the prior year quarter. The decrease is primarily due to the migration of intellectual property ownership from Switzerland to United States. This concludes our formal remarks. Jonathan, can you please open the line for Q&A.

[Operator Instructions]. Our first question comes from the line of Ben Bollin from Cleveland Research.

Cliff, I wanted to start, I think, back in 2008, 2009, you were, I believe, President and COO of the organization. Interested in any thoughts you have on how - what you're seeing now is similar or different versus then? And if you kind of take out your crystal ball and look into the future, how are you thinking about things developing? Or what are you looking for in the business before you start thinking about providing guidance on the year or even on a forward-looking basis? And then I have a follow-up.

Yes. Thanks, Ben. I think 2008, 2009 was a totally different set of circumstances. I think Garmin was a much different company back then. About 70-plus percent of our revenue came from literally one product line. And we were not as well diversified then as we are now in terms of facing a crisis. So we had a lot to worry about at that time, and we were facing also not only an economic crisis, but a declining market. I feel like things are totally different now. Our company is very well diversified. And our product lines target all of the areas where we believe people are going to have a lot of interest in, especially as these restrictions are removed. So one thing we learned in the past is that, certainly, you have to have great new products. You have to be able to continue to invest. We're doing all of those things today, but we're a much different company than we were back then. In terms of how things develop for guidance, as I mentioned, we're going to be looking for changes around these restrictions. I think there's still a lot of uncertainty that's happening as every locale seems to have a different approach to removing restrictions. And every locale has a different approach when it comes to how much things they allow so all of these things probably impact consumer behavior. That's a big wildcard. And then just trying to see how the economic volatility shakes out once we get a feel for that, we believe we'll be in a good position to be able to predict the business going forward.

The follow-up, if you look at your retail footprint, my understanding is you have a little more exposure to smaller specialty stores versus perhaps some other OEMs. What is your approximate exposure to maybe smaller mom-and-pops, smaller specialty retailers that don't have perhaps the same type of balance sheet as the larger big box stores? And any concerns on receivables from those partners?

Yes. I don't have a number I can share in terms of mix. But what I would tell you is that the execution of retail partners has been varied. The smaller shops are looking for ways to be successful and to try to keep their businesses open. Some of the larger retailers have taken a more conservative approach, and that's impacted, obviously, the retail sell-out and the availability of products for consumers. But we've seen a great improvement in terms of online sales. So we're really excited about that, and we're working with our business partners to be able to enhance their online sales as well as our own garmin.com.

Yes. And regarding receivables, Ben, so those - yes, we are getting some requests from some of our customers regarding extended payment terms, and we're granting some of those. But I do want to - so our DSO probably will increase in Q2. But we want to remind everybody that we do have trade credit insurance to limit some of our exposure with our receivables.

Our next question comes from the line of Nick Todorov from Longbow Research.

I hope everyone is safe and well. Doug, can you comment on - or Cliff, on the current state of the channel inventories in each of the segments, maybe relative to historical norms? And what do you think is going to be the retailer strategy for channel inventory for the remainder of the year? I understand how in second quarter, there's going to be a lot of destocking. But do you have any visibility how these - your partners are thinking about the second half?

Yes. I think we don't have a lot of direct feedback. I would tell you this, that we believe that the channel inventory is actually low. Where we see less restrictions in some of the locales, we actually see sell-through, as indicated by our Garmin Connect indications as being very strong. And with the sell-in situation being much lower, we believe the channel inventory is being depleted.

Okay. And the second question now. Can you help us how should we think about decremental margins? It's very unusual to see revenue declines on a sequential or on a year-over-year basis for you. I think historically, it had been in the mid-30% range, but any color on how should we think about decrementals, that would be helpful here.

Yes. I think it's not surprising that we see revenue declines in this environment. Today, GDP for the quarter was down 5%. And most of the economic activity impact was in the last couple of weeks of the quarter. And so there's a severe economic impact taking place out there, and we certainly cannot defy that gravity. But in terms of our margin impact, it all depends on product mix. We think some of the online sales will be accretive. And of course, our key product lines are still a strong part of the overall mix. And so we're not anticipating any gross margin impact to any significant degree.

Okay. And then the last question before I jump back in the queue. Can you help us think about OpEx? I mean a lot of companies have seen increased expenses related to COVID-19. Are you seeing any? What is the impact of that? I know you originally planned to scale up R&D and SG&A, but at the same time, I think I'm assuming that some discretionary spend is going to go down. Any color on how should we think about operating expenses in the near future?

Sure. Regarding - this is primarily, as we look at what's happening with our demand, so we've taken a close look at our expenses across the board and put in place various expense control measures. Some of those of which were slowing our hiring. The second of which is taking a look at all of our discretionary spend just to make sure that, that's appropriate. And also as it relates to advertising, with the lower demand there, we're flexing our advertising down in response to some of that lower demand that's out there. And as it relates to CapEx, it was previously mentioned that we took a look at all of our CapEx also and making sure that's all the critical CapEx we have. So relates to Q2, looking at each one of those, probably R&D and SG&A, I probably expect that to probably be up dollar amount year-over-year just due to our analyzing - or annualizing some of the 2019 headcount additions. As it relates to advertising, that's one that we would expect that to be down year-over-year just due to the flexing that down on our demand. But we're constantly looking at our expense structure and seeing how we want to make that fit with the current environment we're at.

Our next question comes from the line of Charlie Anderson from Dougherty & Company.

I wanted to start on the comments around the April sales. I just wanted to double check that, that was indeed a sell-in versus a sell-through comment. And then within that, I wondered if it's one versus the other, if you could sort of speak to the other. So if it's a sell-in, what are you seeing in terms of sell-through trends? And then you have all kinds of different businesses here. I wonder if you could sort of speak to how uniform those declines are? What's better off versus what's worse off within the business unit, then I have a follow-up.

Okay. Yes. So April, the April trends that we're seeing, everything that we're doing is, of course, sell-in. To the extent that those sales came from our online mix, of course, that's going more direct-to-consumer. But in general, it's more influenced by sell-in. Sell-out, again, as I mentioned earlier, our indications from our product registrations on Garmin Connect are strong in those regions where restrictions allow the kinds of activities our products are known for. So we're encouraged by that. And because of that, we believe that the channel inventory is being depleted in some of those places as customers are looking for products and trying to find whatever they can. In terms of segment by segment, we're seeing right now in terms of the sell-in stronger results in outdoor and fitness compared to the trends that I mentioned. Marine is about where we expect. And then aviation and auto are trending behind.

Okay, great. And then as it relates to the auto OEM business, I wonder if you could sort of speak to what you're seeing there? And then we have a few large projects on the horizon with BMW and Geely. If you could just update us on if those schedules are remaining on track?

Yes. So our current sell-in situation in the OEM is affected by those programs that are more mature, like I mentioned in the remarks. So we're seeing some weakness there as - and especially probably compounded by the fact that automakers are shut down right now, and their inventories are high. As we look towards the back half of the year, we do have those newer programs launching, and those should be a boost to the overall auto OEM category. And the projects, the major ones, especially the BMW project, it's a very complicated and involved project, but it's going well. And we're meeting all of the milestones there, including standing up our factories that we need to be able to support the program.

Our next question comes from the line of Will Power from Baird.

I guess a couple of questions. Yes, I guess either Cliff or Doug, I guess I'd be curious as to trends you've seen in Asia Pac. I mean, it looked like lower growth in Q1. And obviously, they would have had an earlier COVID impact, but what have you seen trend there from March into April? And how does that inform how you're thinking about some of the other geographies?

Yes. Asia continues to struggle right now. China, I think, was the first country that really was impacted from a virus outbreak perspective, and the retail channels there completely shut down due to the virus spread. And we've seen it kind of roll around from country to country. So some of the stronger countries as they get impacted and implement their own measures, then of course, we see the situation change. So in general, as a whole, APAC has struggled to regain their footing, even though they're theoretically a little more advanced in the overall development of the pandemic. But we see encouraging signs in those countries where the virus has either been well controlled and restrictions are lifting or they haven't yet had the kind of spread that other countries have had.

Okay. And then, Cliff, I guess, separately, you had talked about one of the areas of focus going forward is looking at opportunities longer term. And I think you referenced the strong balance sheet and cash. So how should we think about potential M&A? What are - are you starting to see more opportunities? How aggressive might you be there? And are there particular verticals that could look interesting here given some of the challenges of some of your competitors potentially in the markets?

Yes. We're still looking for opportunities. Of course, we're very discriminating, but I would anticipate there would be some opportunities that would come our way in the near term. And I think generally, our experience in the past has been that this tends to shake out more opportunities. So again, we're looking to leverage our cash for things that can help Garmin be stronger and grow in the future, and that's what we'll continue to do during this time.

Okay. Great. Yes. I hope you all stay as safe and healthy as possible. Thanks.

Thanks, Will.

Our next question comes from the line of Paul Chung from JPMorgan.

So just first up, retail shops are seeing some 0 traffic essentially. So how big of a shift to online channels are you seeing as a result? Is there kind of a percentage of sales on your website and e-commerce site you can share pre-COVID? And then as we move forward post, are you thinking about kind of like a shift in strategy to kind of place more emphasis on direct-to-consumer e-commerce channels which would benefit margins, I assume? And then I have a follow-up.

Yes. So online and web has been very strong during this time. I think it's a combination of the fact that many retailers, especially the bigger ones, have restricted access to their stores and customers are looking for ways to get products safely, so they're turning to online. For us, our website growth has been phenomenal during this period, and we've been adding to our capabilities on the website to be able to support sales strategies there. With all of that said, our retailers remain very important to us. And as soon as they can come back online, we'll certainly be supporting them. But we do see a significant shift at this time, and I would anticipate that generally speaking, the shift to online that has been occurring broadly across all of the geographies is going to continue in the future.

And then a follow up on the marine side, nice kind of growth to start the year. It sounds like some marine retailers are kind of seeing some positive trends in April, though sales are probably going to be down for the year. But now you have like the New York Tri-state area kind of reopening marinas and boating arguably kind of suit social distancing. So usage, I assume, would be fine, possibly benefiting some accessory upgrades. Just want to get a sense for what you're seeing from your customers? And how much - how the month of April is evolving? And anything you want to call out on the marine side?

Yes, I would say that it's a mixed situation for marine. Depending on the locale and the retailer, some retailers are doing very well and some have had to operate under more restrictive circumstances even closing their stores. So this has hindered the access to marine products. And generally, we've seen very strong end-user demand for the products. Some of our top products, even on our own website, are our marine products, which is somewhat counterintuitive because they're more complex and require installation, but people are buying those. So again, it's kind of a mixed bag. We would expect things to get better, as you say, as states open up for boating. Michigan has been a big one. You mentioned New York. That's also been a big one. We hope that boats can come out of storage soon. And we are hearing from the field that customers are excited about equipping their boats and getting them on the water. In terms of the opportunity going forward, we're very optimistic about marine. It's a great market. I think a crisis like this when people are evaluating priorities, they tend to turn to things that inspire them, and I think boating and fishing is one of those things that we'll see a benefit in the future from people's evaluation of their priorities.

Our next question comes from the line of Ivan Feinseth from Tigress Financial Partners.

Again, congratulations on another great quarter and really nicely managing the company during this difficult and crazy time.

Thanks, Ivan.

My first question is Doug had spoken about CapEx, but something cut out on my phone. You said that investing in expanding the Tacx manufacturing. And then you said one other thing, it sounded like auto something. So what are the two big CapEx projects?

Yes, Ivan. What it relates to is the Tacx facility. So when we acquired Tacx facility, we basically, at that point in time, made a decision to expand its manufacturing facility because of the increased demand we saw there. So we're in the process of actually building a brand-new manufacturing facility at Tacx to handle the increased demand there. And the second one relates to auto OEM manufacturing. So with that, expanding with some of the additional programs we have, we're actually standing up a manufacturing facility in Europe.

Okay. Then I think one of the things that when things go back to normal from my interaction and talking with people, I think the in-home fitness trend is going to be powerful. While people are - seem to be willing to go to restaurants, theaters, all kinds of other venues that are crowded, the one thing is people seem to be reluctant to go back to the gym and are more interested in in-home fitness. So I think that's going to be a huge opportunity. How do you view addressing that opportunity further?

Well, that's what we're seeing, Ivan, and the back orders on our Tacx products are very strong. We've not been able to supply all of the demand that we're seeing there. So we're working hard, as Doug said, to increase our capacity and hopefully then be able to get ahead of the demand curve that's occurring. We expect that there will be - people talk about a second cycling season, if you will, or indoor cycling season as people are more interested in staying indoors for a while, and we expect strong sales to continue. And then, of course, as our factory comes online, we'll be able to deliver more volume.

Then one of the other things I noticed, which was really good that you added a lot of features and functionality to the Connect app that supported the watches with like downloadable exercise routines that you could do at home and use your watch for. And like can you give us some color on how you were able to coordinate that, especially like if people who normally were in the office and kind of collaborating together and working from home because they did a nice job to increase the features during the time.

Yes. We've had the capability in our devices to be able to put custom workouts and even provide instruction on the device as some of the newer devices that are out there. And our Connect IQ platform has been a solid investment for us to be able to expand the interest that people have in the product through third-party apps and our own apps that can expand utility. So our teams have been able to be very agile in rolling new things out, and it's helped create more engagement and interest in our products, which we're really thrilled about.

And I have one last question. I know it's a hard question to answer. But as this increased interest in home fitness grows, there's a lot of small companies that have interesting products that could benefit from, let's say, your expertise. Are you looking at growing through acquisition in that area further the way you did with acquiring Tacx?

Well, I think Tacx is a great example, and we did see the opportunity for that, and that's where we put a big bet in terms of expanding into a new category. I would say, generally, our MO for acquisitions is that we look for things that are either a complementary product or a technology, enabling technology that can help us expand into new product categories. And so that's what we'll continue to do, not speaking specifically about fitness, but really across the board.

Thanks, and congratulations again, and I look - everybody stays safe and well. And I look forward to, hopefully, a different environment on the next call.

Thanks, Ivan. Same.

Our next question comes from the line of Erik Woodring from Morgan Stanley.

So just curious if you could provide some color on just what you're seeing? Obviously, you spoke to sell-through in the outdoor and fitness segments. But obviously, your results kind of bucked the trend that we've seen or heard with other consumer names. So just any high-level color on how coronavirus has had an impact? And then perhaps asking that question a little bit of a different way. How far in advance do your channel partners typically purchase inventory? And is that changing in the current environment? And then I have a follow-up.

Yes. So we saw strength in our business through most of the first quarter, remarkably strong really through most of about mid-March, and then things started to come down as the panic over the crisis quickly spread into Western Europe and North America. So we were super strong. We believe that's encouraging because, again, our product lines are very strong, and our business in general had a lot of momentum. In terms of retailer behavior, even when times are good, they don't try to over index on inventory. I think they're very cautious. They have a certain amount of open-to-buy dollars. So it isn't as if they had stocked up with a significant amount of inventory. I would say it was fairly manageable inventory levels. And as their businesses have scaled back as they respond to the crisis, we believe that the inventories are depleting.

Okay. That's super helpful. And then can you just provide some commentary on what you're hearing from your OEM partners in the aviation market? If you look back to '08, '09, obviously, those markets were - that market was very weak. So just curious how they're viewing the current crisis relative to a little over a decade ago.

I think for aviation, probably the situation is very similar to '08, '09, a significant economic downturn and loss of confidence, particularly in the business sector. So generally, I think they're very concerned and some of the more public things that have been announced, you see some OEMs that have done some furloughs and different things like that, and they're trying to scale their production to demand. But again, that said, I feel like the longer term is that general aviation has a bright future. Even now, many communities are actually losing their commercial airline service as airliners scale back. And so the only options for getting certain kinds of transportation is through general aviation. And we think because of the security, the safety, the convenience and flexibility of general aviation that it can play a big role in the future in the kind of concern over viral spread.

Super. Thank you. And then just last question, just a clarification question. Did you say earlier that you still expect your auto OEM business to grow in 2020? Just want to clarify that point, and then I'm done.

Yes. I think it will be towards the back half as newer products launch from the OEMs. And of course, their schedules are more in doubt as well as they face supply chain issues and also demand issues. But in general, all of the indications we have is that these new products are launching as they planned.

Our next question is a follow-up from the line of Nick Todorov from Longbow Research.

You mentioned an inability to meet fully the current Tacx demand. Can you try to quantify that? And also remind us when the new capacity is expected to come online?

Well, it's hard to quantify because we haven't found where the demand is. It's been so strong. So we're chasing as much of that as we can and trying to serve our customers the best that we can. The new factory is scheduled to come online about midyear and should start to ramp up into the fall as we prepare for the next indoor cycling season that occurs next winter.

Okay. And then you mentioned that channel inventories are depleted. And I'm assuming that in fitness, the trends are strongest among all the segments. Yet how do we - can you provide any additional colors other than just April orders are down 40%? How much are orders for fitness segment trending year-over-year if you can share?

Fitness and outdoor have been above that trend. And again, these, to clarify, are sell-in trends. So the sell-out is - everything is a case-by-case basis. But in those regions and countries where restrictions allow, we see strong registration activity on our Garmin Connect platform. And in places where restrictions are very tight, of course, you see a very predictable downturn in what's going on. So we're optimistic that as restrictions ease that things should get better.

Are those restrictions kind of implying more of a flattish environment or year-over-year growth in sell-through? Or how should we think about this?

Well, every country, every region has a case-by-case situation to look at. If you look at the countries with the strongest restrictions, such as Italy, Spain and France, sell-out is very confined there. And some of the cases in those countries, you need permission to even go out of your house. In other places, such as the Nordics, which have been - taken a different approach to how they manage the crisis, the sell-out is very strong and actually in strong growth mode over the last year. So it's a mixed situation. And everything that we're seeing points to the fact that the restrictions on people is impacting the sales more than anything right now.

Okay. And last question for me. The Marine segment, can you compare and contrast? Obviously, it's a much different business and your overexposure to aftermarket helps you here. But compare and contrast that to the '09 period, where it kind of took 2 years for the segment to reach the '08 peak. It seems like this cycle is going to perform much better. But what specifically gives you confidence and allows you to be more positive on the marine segment here, given it's still a discretionary spending, and it's - they're rather high-priced products?

Yes. So there's a few things that are different this time. In '08 and '09, the production capacity was so high that when the pullback occurred, there was simply no way to sustain that kind of production capacity in marine products. And so the marine market, especially the OEMs, felt a significant impact from the reduction in demand. There was also a lot of crazy financing going on with boats. And so the overall financial situation of people buying boats and the financers that were financing the boats was very, very precarious. Rolling forward to where we are today, the boat market has slowly recovered from those lows. And so it hasn't overbuilt in the same way that it was back in '08 and '09. And the kinds of products that are being offered are in the bell curve of where demand still exists, tends to be in those mid-range center console type of boats that still remain popular. And many of our OEM partners that are shut down right now are very anxious to go back to work because they have customers that want their boats, that have ordered them and are anxious to get them. So we're optimistic about that. We don't think it's the same situation. But I would also say that anytime there's economic shocks, that will take a certain number of customers out of the market. So there's bound to be some impact, but we hope it's not as bad as what it was before.

Our next question is a follow-up from Erik Woodring from Morgan Stanley.

Just one last question here. I was just wondering if you could detail kind of on the - in the fitness and outdoor segments, what the contribution to growth was from units versus pricing?

Yes. We don't break out just in terms of ASP and units versus pricing. But we're seeing in the Q1 growth in boat as we've had newer product lines in fitness and also our new product lines in outdoor, especially in the Phoenix area.

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Teri Seck for any further remarks.

Thank you all for joining us today. Doug and I are available for callbacks, and we hope you all stay safe and healthy. Bye.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.