Unifi, Inc. (UFI) Q1 2016 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Unifi First Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the call over to James Otterberg. You may begin.

Thank you, Michelle, and good morning, everyone. Joining me for the call today is Bill Jasper, our Chairman and Chief Executive Officer; and Roger Berrier, our President and Chief Operating Officer. During this call, we will be referencing a webcast presentation that can be found at unifi.com. The presentation can be accessed by clicking the first quarter conference call link found on our homepage. Before we begin, I need to first advice you that certain statements included on today's call will be forward-looking statements within the meaning of federal securities laws. Management cautions that these statements are based on current expectations, estimates and/or projections about the markets in which the company operates. These statements are not guarantees of future performance and involve certain risks that are difficult to predict. Actual outcomes and results may differ materially from what is expressed, forecasted or implied by these statements. I direct you to the disclosures filed with the SEC and our Form 10-Qs and Form 10-Ks regarding various factors that may impact these results. Also, please be advised that certain non-GAAP financial measures such as adjusted EBITDA, adjusted net income, and adjusted EPS will be discussed on this call and non-GAAP reconciliations can be found in the schedules to the webcast presentation. In the current presentation and for all periods presented, adjusted EBITDA now includes the company’s portion of income or loss before income taxes for REPREVE Renewables, LLC and the Company's nylon joint ventures. Before we get to the financial details for the quarter, I'd like to turn the call over to Roger, who will provide you with an overview of the Company's markets, raw material trends and other business updates.

Thanks, James, and good morning, everyone. The retail indicators impacting our core business showed year-over-year improvement with retail sales increases of 3.3% in apparel, 5% in furnishings and 6% in automotive. And looking at the Apparel segment, demand for the Company’s products continues to be driven by the fact that category growth has been coming from the increased consumption of synthetic apparel versus cotton apparel. Looking at the company’s domestic operations for the September quarter, we continue to see growth in our textured polyester volume, particularly in our premier value-added products as brands and retailers continue to look to our PVA products to help them deliver the comfort, performance and sustainability benefits that consumers are seeking. This increase in demand for our textured polyester and PVA products is also being driven by the ongoing growth in the NAFTA and CAFTA regions, which continue to have an estimated average annual growth rate of around 5%. In fact, the eight drawn texturing machines that we recently added to our locations in the Yadkinville, Madison and El Salvador to support the growing demand for synthetic yarns in the CAFTA region are already running that capacity. Based on the anticipated growth for synthetic apparel on the NAFTA and CAFTA regions, the company is exploring adding additional polyester texturing capacity of approximately 10% over the next 18 months to support customers that choose to source their products in the region. These investments in increased capacity will also allow us to support the company’s mixed enrichment strategies in the region. We are also improving our ability to better service customers and handle increasingly complex product mix. The increases in domestic polyester volume associated with our mix enrichment strategies and PVA products in the September quarter, were offset by declines in volume at the lower end of our commodity business. Textile utilization rates in Asia remained very low and the gap in polymer pricing between the US and Asia remained at the high end of the range over the past several years. And Asian yarn producers have further lowering the price of imported yarn at the low end of the market. The resulting lower price of yarn imported into our markets puts a lot of pressure on our products that are at the low end of the market. Prices for our raw materials declined slightly by approximately 2% during the September quarter as compared to the June 2015 quarter and they were lower than the fiscal year 2015 September quarter, a time of which all averaged around $97 per barrel. The year-over-year decrease from raw materials led to pricing-related declines in our revenues in the current September quarter compared to the year ago quarter. Turning to our international businesses. We are pleased with the September quarter results from our operations in China. Our results from UTSC benefited from an increase in volume stemming from a substantial REPREVE program that we have been transitioning to China from the US. Our customers are very encouraged by our ability to successfully transfer the program to China and we expect the program to grow over the next two to three years. Based on our growth in China and the positive comments we have received from our customers, the company recently announced that through our Unifi China subsidiary we will expand the global availability of REPREVE recycled fiber with the assistance of Cortex which is now a liaison manufacturer of REPREVE in Turkey and Sun Chemical which is now a distributor of REPREVE in Taiwan. These collaborations will greatly expand global distribution channels for REPREVE and will help to shorten lead times and broaden options anywhere in the world our customers choose to do business. As the development cycle of new programs can be 12 months or longer, we do not expect significant results from Cortex or Sun Chemical arrangements until future fiscal years. We have been developing our business in China over the last three to four years and we expect to take similar amount of time to build our business in these new markets as well. Based on entrants we have heard from several of our customers the company will also begin to explore opportunities for further growth in the global supply chain for REPREVE in Vietnam and Sri Lanka. We do not have any specifics to discuss at this time, but we will provide appropriate updates as we proceed. Our operations in Brazil performed near expectations for the September quarter on a local currency basis. Our volume at the low end of the market declined as we continue to face pressure from imported yarn coming in from Asia and softer market conditions. The devaluation of the Brazilian real versus the US dollar continued in the September quarter, while this does allow our operations to better compete with imported yarn, the translation of sales and earnings into US dollars is negatively impacted. We are very fortunate to have an extremely strong management team in place in Brazil to help navigate through these challenging conditions. They remain focused on managing prices, controlling costs, improving manufacturing efficiencies; they are also developing innovative value-added products to support our mix enrichment strategy. Turning to our CapEx projects, the startup for our plastic bottle processing operations remain on schedule for May 2016. After an initial startup phase of approximately six to nine months, our plastic bottle processing operations will be capable of producing 75 million pounds per year of clear polyester bottle flake to supply our REPREVE Recycling Center and also provide us the ability to supply REPREVE flake to some third-party customers. The expansion of our REPREVE Recycling Center in Yadkinville also remains on schedule. We continue to expect our fourth production line to be operational in the fall of calendar year 2016 and this will expand our REPREVE capacity from 72 million pounds to 100 million pounds. We believe that these investments we are making in plastic bottle processing and the expansion of our REPREVE production capacity clearly establishes Unifi as a leader in producing first quality recycled polyester fiber and yarn. To help drive awareness and demand for REPREVE, we are continuing our partnership with the Detroit Lions with our Make The Smart Throw switch tapes, which will take place at this Sunday’s games at Ford Field against the Minnesota Vikings. To further educate consumers on the cool products that can be made from recycled plastic bottles, REPREVE is also launching the #TurnItGreen National Mobile Tour which will help bring to life the way that REPREVE helps transform recycled plastic bottles into products that we wear and use everyday. Each tour stop will feature products from several of our co-branded programs and will also tie into one of our customers. Ford has recently requested a tour stop at the 2016 Automotive Show in Detroit, while the North Face, Hager and Polartec are also planning to utilize the tour for a variety of promotions in the upcoming year. We are very excited by the potential that the tour will have on increasing consumer awareness and understanding of the REPREVE brand, as well as strengthening the relationship that we have with our customers. In addition to the tour, we are working with several customers on new development programs using REPREVE and our other PVA products that will be launched over the next six to 12 months. These include, Victorinox Swiss Army will be using REPREVE in a new denim garment set to launch in the spring of 2016, Target, which operates nearly 1800 retail stores as well as online sales will be introducing new jeans, T-shirts and back packs that will be branded with REPREVE, Chik-Fil-A, which has more than 1900 US based locations is producing new uniforms for their in-store personnel that will use REPREVE, and American Eagle Outfitters, which operates more than 1000 stores in the US and internationally will incorporate REPREVE into a new denim program. With that as a backdrop, I will now turn the call back over to James.

Thank you, Roger. I will begin the review of our preliminary financial results for the September quarter on Page 3 of the presentation with income statement highlights. For the three months ended September 27, 2015, the company is reporting preliminary basic EPS of $0.45 on pre-tax income of $11.7 million, an increase of $0.06 in basic EPS compared to the prior period. Pre-tax income is $900,000 higher than the $10.8 million of pre-tax income generated during the prior year first quarter. This increase in our quarterly pre-tax income is primarily attributable to improved gross profit of $500,000 driven primarily by increased volumes and margin gains for PVA products across all segments and lower SG&A expenses of $800,000, all achieved despite lower earnings from Parkdale America of $1.4 million. For the current quarter, we are reporting preliminary basic EPS of $0.45 per share against $0.39 per share for the prior year quarter, higher due to our improved operating income and a decline in our effective tax rate of almost 5% from 38.4% to 33.6%, partially offset by the lower earnings from Parkdale America. The decline in average basic shares outstanding to 17.9 million shares from the prior year quarter’s 18.3 million shares is due to purchases made under the company’s previously announced stock repurchase program. Turning to Slide number 4, we will review our net sales, and gross profit highlights by for the first quarter. Although net sales decreased $13.4 million from the prior year quarter, the company continues to see strong sales volumes for textured polyester in the region and continued growth for PVA products in both the US and China. The decrease in sales dollars is primarily attributable to $11 million for the devaluation of the Brazilian real, $5 million to $6 million for lower average pricing driven by a reduction in our raw material cost and approximately $2 million lower sales volumes at our subsidiary in Brazil. PVA products continue to grow as a portion of consolidated net sales, reaching approximately 33% for the current quarter, up from approximately 30% at June. Consolidated sales volume is 1.8% lower than the prior year quarter driven primarily by the decreases in the nylon and international segments which were partially offset by an increase for our polyester segment. Absent the volume declines for our Brazilian subsidiary mentioned earlier, our sales volumes for the current year quarter were slightly higher than the volumes for the comparative period. During the current quarter, the polyester segment experienced higher sales of its PVA products while lower priced imports applied competitive pressure to the low end of our product offering. Nylon segment sales volumes decreased over the prior year primarily due to timing of shipments to larger customers in that portfolio based in large part on the timing of the seasonal shutdown periods and changes in inventory levels for these customers and the international segment sales volume decreased from the prior year quarter due to 9% lower volumes in Brazil due to a soft local market partially offset by 10% higher volumes for our Chinese operation due to the success of several PVA programs. The decrease in price quarter-over-quarter for the polyester segment is due to a reduction in raw material cost which was approximately $0.10 per pound. The nylon segment pricing is lower due to changes in sales mix as well as lower raw material costs and the quarter-over-quarter price decrease in the international segment is a result of unfavorable currency translation in Brazil of approximately $11 million due to the devaluation of the real against the US dollar which more than offset their local currency price increases. The average exchange rate for the period was 3.53 Brazilian reals per US dollar versus 2.28 for the prior year period. For our gross profit results against the prior year quarter, the company is reporting higher consolidated gross profit as improved gross profit for the nylon and international segments were partially offset by lower gross profit in the polyester segment. For Q1 of the current fiscal year, consolidated gross profit improved to $21 million from $20.5 million for the prior year quarter and gross margin improved to 12.9% from 11.6% for the prior year quarter. The decline in polyester segment gross profit is primarily due to the impact on volumes from low priced imports manufacturing variances with respect to the timing of shutdown periods and an increase in depreciation expense due to recent capital expenditures which was partially offset by mix enrichment achieved through increased PVA sales. The increase in nylon segment gross profit is primarily driven by improved margins for textured nylon and air-covered products and the increase in international segment gross profit versus the prior year quarter is due to higher sales volumes and margins in China, attributable to increased PVA sales. For our subsidiary in Brazil, higher unit conversion margins and increased pricing in the local currency have helped to partially offset the impacts of currency translation and weak market conditions that Roger spoke of previously. Turning to Slide number 5, we can review of equity affiliates highlights. As of September 27, 2015, the company has approximately $114 million recorded for investments in unconsolidated affiliates. These investments consist of our 34% ownership in Parkdale America, a domestic cotton spinner and our 50% interest in two joint ventures that supply raw materials to our domestic nylon operations. For the current quarter, these equity affiliates accounted for $2.9 million of the company's pre-tax earnings, which is a decline of $800,000 versus the prior year's quarter. For Parkdale, earnings are down $1.4 million as the prior period included a bargain purchase gain of $1.1 million while the current period includes higher sales volumes, but comparatively lower operating margins due to lower EAP income, and higher start-up costs and depreciation expenses from recent expansions. We received $1.9 million in distributions from our equity affiliates in the current quarter, of which, $947,000 was received from Parkdale. Turning to Slide number 6, the company’s adjusted EBITDA results are presented. For the first quarter of the current fiscal year, the company is reporting preliminary adjusted EBITDA of $15.4 million with an EBITDA margin of 9.5%, up $1.4 million and 150 basis points when compared to the $14 million at an average margin of 8% for the prior year quarter. Improved cash gross profits and lower SG&A expenses discussed earlier are the primary drivers for the higher adjusted EBITDA versus the year ago quarter. On Slide number 7, we can review the company’s reconciliations of GAAP results to adjusted results. Adjustments presented here are intended to exclude certain items, which management believes are not indicative of the company's underlying and ongoing operations. Such amounts are excluded from adjusted net income and adjusted EPS, in order to better reflect the company's underlying basic earnings per share. The columns presented here provide the before and after tax impacts of certain GAAP transactions or amounts as well as the approximate impact on basic earnings per share. For all periods presented, each of the individual items that were identified as separately listed within the reconciliation, the largest impact to the comparative period is the prior year’s adjustment for Parkdale America’s bargain purchase gain recognized during that quarter. The company is reporting adjusted EPS of $0.45 for the first quarter of fiscal year 2016, up $0.08 from the prior year driven by increases in GAAP net income and the benefit of a lower average share count. The trailing 12 months adjusted EPS is $1.95 per share. On Slide number 8, we can review the company’s working capital highlights. The balance of $141.2 million in adjusted working capital, defined as AR plus inventory less accounts payable and accrued expenses, at September 2015, is approximately 21.8% of annualized net sales. The increase in the company's adjusted working capital dollars versus the beginning of the fiscal year is primarily due to lower amounts for accounts payable and accrued expenses as expected for reductions in amounts due to vendors related to capital expenditures, and amounts due under variable compensation programs in addition to increases in inventory and accounts receivable. These items were partially offset by the devaluation of the Brazilian Real and lower polyester raw material costs. Total working capital was $142 million and the comparative increase is primarily driven by the previously discussed increase in adjusted working capital, offset by an increase in other current liabilities due to current maturities for additional capital leases, and a decrease in other current assets from reductions of income tax receivables and lower deposits. Turning to Slide number 9, details for the company's capital structure are presented. The company ended the first quarter of fiscal year 2016 with $128.2 million of total debt and net debt of $118.3 million and net debt has increased approximately $24 million from the beginning of the fiscal year due to capital expenditures, an increase in working capital and share repurchases. As of September, 27, 2015, the company's weighted average interest rate for its outstanding indebtedness was approximately 2.3% and our total revolver availability and liquidity were $57.1 million and $67 million, respectively. In addition, during the first quarter of 2016 fiscal year, the company repurchased 179,000 shares of its common stock at a total cost of $5.4 million. As of September 2015, there were approximately 17.8 million shares outstanding. The various capital spending opportunities we have discussed before are primarily related to our core regional polyester and recycling businesses. The company's total commitment for these capital projects over the three year period through fiscal year 2017 is expected to be approximately $120 million, with the expectation that a portion of these projects will be funded with the borrowings available under our ABL facility. And to conclude with Slide number 10, we have provided details for the company’s upcoming 10-Q filing and our Annual Investor Meeting to be held on Monday, December 14, at the New York Stock Exchange. With that, I would like to now turn the call over to Bill.

Thanks, James, and good morning, everyone. Coming off of our most profitable year since fiscal year 2000 I am pleased that our earnings momentum continued into the 2016 fiscal year. While revenues were down year-over-year, driven primarily by the devaluation of the Brazilian real and lower polyester raw material pricing, our polyester volumes grew in our core North American region. In addition, the volume and revenue from PVA products also grew significantly. Despite the lower revenue and weakness in both Brazilian and Chinese markets, during the September quarter, the company’s gross margin grew by 130 basis points, net income improved by nearly $1 million and adjusted EBITDA improved by $1.4 million versus the prior fiscal year quarter. I am also pleased with the progress we are making on the capital projects that are being implemented to support the growth of both our PVA products and synthetic apparel in NAFTA CAFTA regions. As Roger mentioned, the new texturing machines that we recently added to support the growing demand for synthetic yarns in the CAFTA region, are already running at full capacity and helping us to serve our customers sourcing from the region as brands and retailers continue to look to increase or move programs to the region, we believe our decision to increase polyester texturing capacity in our US and Central American operations sends the message that Unifi is committed to the region and that we will make the necessary investments to service customers who choose to source their products in the western hemisphere. Because polyester texturing operations in North America are running at high capacity utilization, additional capacity expansion is planned as we expect NAFTA and CAFTA apparel production will continue to grow. Overall, however, we see fiscal 2016 as a transitional year for the company as the benefits from our capital investments in plastic bottle processing and the expansion of our REPREVE Recycling Center won’t begin to be fully realized until our 2017 fiscal year and beyond. However, we believe that the improvements that we saw in the September quarter, in our PVA volume in regional textured polyester sales help validate the focus of these capital projects in which we are investing. We are very encouraged by the debt financing arrangement that REPREVE Renewables has secured with CoBank and Carolina Farm Credit, two of the agricultural lenders in the US. The funding will enable REPREVE Renewables to accelerate the expansion of its operations in the US including the construction of a new 13,000 square foot processing center that is being built in Wayne County in North Carolina. The new processing center which will help increase the quantity of Giant Miscanthus Rhizomes available for planting should be operational by the end of November. The new funding will also help REPREVE Renewables to secure an additional 40 to 60 land leases which will help the company meet the growing demand for Giant Miscanthus biomass used in the poultry bedding and biopower markets. We expect to plant several thousand new acres in the coming fall and spring planting seasons, mostly near poultry operations and expect to sell all we can grow from these new fields. We see this new funding as a vote of confidence in REPREVE Renewables and believe it validates our decision to invest in the business as a way of diversifying the company while remaining committed to sustainability. Turning to trade legislation, after nearly six years of negotiations, the 12 member nations of the Trans-Pacific Partnership signed the TPP trade pact on October 5. Overall, we believe that it looks to be a balanced agreement and while retailers and importers have argued that the benefits under the agreement are too small for them. Initial briefings confirmed that it reflects the key objectives endorsed by the US textile industry. These include a yarn forward rule of origin with limited exceptions, no generic tariff preference levels and extended duty phase outs of 10 to 12 years for sensitive products made in the western hemisphere. The final text should be available over the next few weeks for a more thorough review of the complete agreement and how it will impact the industry but we are encouraged that it appears that TPP will not slow down growth in the CAFTA region and may provide some opportunities for us to invest in the TPP region. The timing of a vote in Congress is uncertain. However the earliest possible timeframe will be February of 2016, election year politics will likely push Congress to delay consideration until the lame-duck session in December or until the new Congress is in place in 2017. Implementation also depends on when other member countries can secure approval through their governing bodies and meet other obligations set out in the agreement. In summary, we believe that TPP pact as it stands today, once and if enacted, does not change our ongoing strategy of growing in the NAFTA and CAFTA regions, growing PVA and high value products and capitalizing on global opportunities. This we believe coupled with our focus on continued process improvement will help achieve increased shareholder value. Our adjusted EBITDA of $15.4 million in the September quarter was slightly higher than the guidance provided on our previous earnings call. The company expects that adjusted EBITDA for the second quarter of fiscal 2016 will be approximately $16 million and that adjusted EBITDA will be in the high 60s for the 2016 fiscal year as previously projected. This is an improvement over the fiscal year 2015 EBITDA of $64.3 million. And with that, I will turn the call over to the operator for any questions.

[Operator Instructions] We have a question from Chris McGinnis of Sidoti & Company. Your line is open.

Good morning. Thanks for taking my question. You may have said this in the preamble, but can you just maybe, what is the exact growth of PVA on a percentage basis year-over-year?

For the 12 months ended June, PVA sales as a percent of the consolidated total were approximately 30%. For the three months ended this quarter September 2015, that same percentage was 33%.

Gotcha. I guess, maybe this is probably for Roger, but can you just maybe talk about how much of the portfolio right now is around the lower cost material with that risk low cost yarn is at risk?

You are speaking primarily out of the commodity business, Chris?

Yes, how much of that is the portfolio?

We look at the portfolio in many different ways and certainly we look at, as we speak to the CAFTA/NAFTA regulations, trade regulations, that calls for many of our yarns to be compliant and the compliant yarns that we send into the CAFTA/NAFTA is roughly 60% to 65% of our business. So around 30% of the yarns that we sell domestically do not require sort of a trade compliant program if you will, and so that part of the business is certainly, we compete with imported yarns in that part of the business.

Sure, all right. I guess, just on the modeling going forward, with the improvement in the margin profile of the international ops, should we kind of think that with the improvement from China, should the results there on a profit profile be kind of modeled forward?

It’s certainly our expectation that the operation in China continues to improve year-over-year as we talk about the international segment which includes Brazil and China. You have the consideration of our prior 10-Qs and 10-Ks and the effect of the real on the Brazilian portion. Brazil is a bigger portion of the sales of that segment than China and where the real is today, the changes in the local currency with the teams doing in Brazil, I think you have to consider that as you look at into the future as well.

And Chris, when we discuss our international segment, that is the reason we break out Brazil, China in some of commentary goes, both markets have their own dynamics. We certainly spoke of the challenging conditions in Brazil currently with the softer market, but also the commodities and we do sell commodities and specialty and PVA in Brazil where in China, we really focus on our PVA products. In China, we are not so much competing with any of the commodity sector in China.

Sure, yes, now I am just surprised by the strength of the profit margin from the business obviously the strongest I’ve seen in a number of years, so just thinking I guess that should be a continuation for the year I guess is what I was thinking at.

Yes, that’s fair Chris.

I guess, just how quickly with the REPREVE additional capacity, how quickly do you think you can go through that, that ramp up on that capacity?

And to make sure we understand Chris, you said for the upcoming REPREVE expand?

REPREVE, yes, yes.

And the recycle center and the bottle washing that Roger talked about earlier?

No, no, no, just on the expansion from $72 million to $100 million, how quickly, it seems obviously that the PVA and REPREVER growing pretty significantly, how quickly do you see it takes a ramp or to utilize that additional manufacturing capacity?

Yes, so Chris when we expanded from $50 million roughly or $45 million roughly to $70 million to $72 million, when we buy these machineries we have to buy on that scale. So we are buying, they have additional capacity that we grow into so to speak as we’ve talked about on previous calls. So as we are bumping into that $72 million capacity utilization of current assets, the next piece of equipment will take us to $100. We believe that that gives us a runway of 18 months to two years to continue to grow into that full capacity before we would have to consider a fifth line so to speak.

Great, and how much additional cost was – you talked about the 10% of manufacturing capacity addition over the next 18 months, how much will that add to that CapEx plans that you already have in place?

We are currently studying that, what I wanted to do is introduce the fact that, we are – the machines that were recently put in, we were able to put those in to existing buildings that we had in Yadkinville, El Salvador and Madison and those eight machines are already being utilized. Our customers are expressing a lot of interest and continuing to grow and so we are looking today at building requirements, used machinery versus new machinery. So we are really studying all that at the moment. So it will add some CapEx, but we are not at a point where we can share that yet. But we did want to share the fact that it is very positive response that we are getting from our customers and we look to continue growing.

Sure, great. And then a just a couple more. Just on Parkdale, do you expect a bigger distribution this year, at least your fiscal year 2016, so maybe just comment on, I guess, maybe what you are thinking for cash distribution?

We don’t have a specific number that we’ve been told or mind and we do have the same considerations that you do that Parkdale is nearing the end of its very large capital expansions. They continue to perform well and generate cash which certainly leaves, open the opportunity for higher distributions year-over-year.

What’s the – can you just give me an update on the fully diluted share count? I know you gave me the 17.8, but fully diluted?

It’s 17.8 million issued in outstanding at the end of the year and the diluted count is approximately 600,000 shares higher.

Great. I will go back in the queue for now. Thank you very much. Appreciating this and a nice quarter.

Chris, just to clarify your earlier question, I want to go back to the, sort of the CAFTA/NAFTA. Our CAFTA compliant yarns are around 60%, 65%, but within sort of the commodity sector of that 30%, lot of that goes into the automotive industry and within that, there is a lot of PVA that gives you lives. So when we breakdown sort of what we are really competing on a day-in, day-out basis with imports, it would be more in that 10% to 15%.

Great, that’s much better. Thank you very much. I appreciate that.

[Operator Instructions] I am showing no further questions at this time. I’d like to turn the call back over to Bill Jasper for any closing remarks.

Yes, thank you, operator. Actually, just one closing remark, just quick note, Alf Webster who has been on the Unifi board for many, many years has chosen to retire. And I just wanted to acknowledge Alf’s many, many years of service and his help to both the leadership team and the Board, he has been a tremendous asset and we wish him well in his retirement. And with that, we want to thank you all for being on the call and have a good day.

Ladies and gentleman, thank you participating in today's conference. This does conclude the program. And you may all disconnect. Everyone have a great day.