Grupo Aeromexico SAB de CV (AERO) 2014 Q1 法說會逐字稿

Please stand by. Good morning and welcome to Grupo Aeromexico's First Quarter 2014 Earnings Results Conference Call. Before proceeding, I would like to mention that certain comments made during the conference call may constitute forward-looking statements regarding future events or the future financial performance of the Company.

These statements are based on the current beliefs and expectations of management and the Company regarding future events or future financial performance. Forward-looking statements are based on management's current assumptions and on information currently available, and do not guarantee the Company's future performance. The timing of certain events and actual results may differ materially from those projected by forward-looking statements due to a number of factors, including, but not limited to, those inherent to our industry, as well as commercial, economic and other risks and uncertainties.

At this time, all participants are in listen-only mode. I would now like to turn the conference over to your host for today, Luz Montemayor, Aeromexico Investor Relations Officer.

Good morning, and thank you for joining us. Today, Andres Conesa, Grupo Aeromexico CEO, and Ricardo Sanchez Baker, our CFO, will review key highlights of the first quarter 2014 results. Also joining us today is Carlos Doormann, Senior VP of Financial Analysis. Now, I would like to turn the call to Andres. Andres, please go ahead.

Thank you, and good morning to everyone. And thank you, Luz. Thanks for joining us on this our first quarter conference call. Let me provide you with some highlights of the quarter and of our strategy. This quarter was characterized by a challenging environment on multiple fronts including a sluggish Mexican economy, significant capacity expansion in the Mexican [aerodynamic] industry that has put downward pressure to yields and what is seasonally the most difficult quarter of the year. Nevertheless, our resilient business model and the strategies we have implemented help us report positive results.

We achieved a 6.6% topline growth in the first quarter of 2014 with a 3.6% decline in cost per ASK excluding fuel and we recorded operating profits for the 16th consecutive quarter. In this weak economic and market environment, we have continued to implement our revenue management strategy aimed at optimizing revenue per ASK, favoring load factor and maintaining competitive yields.

The current climate led to our decision to temporarily delay the incorporation of several aircraft into our fleet while continuing to retire aircraft as planned. Ricardo will later comment in more detail what we have done in this front. These steps we have taken will allow us to reduce capacity growth from our original base plan and we continue to benefit from our fleet flexibility to efficiently address changes and fluctuations in economic and market conditions.

On the revenue front, we reached 9.8 billion pesos. Again, this is 6.6% higher than the first quarter of last year driven mainly by strong international passenger revenues and other ancillary revenues including baggage fees as we continue to build momentum through these businesses. Aeromexico's load factor increased by 5.8 percentage points to 79.3% while our unit revenue per ASK decreased by 5% as we observe a 12.2% capacity growth through more competitive fares.

In addition to the economic and competitive environment mentioned before, the following variables affected our yields in the first quarter. First, tough comparisons with the prior year as we highlighted previously, our revenue management strategy in the first quarter of 2013 was the opposite of what we have now implemented as it was seen that maintaining higher yields over load factors. Second, the 2013 Easter holiday effect negatively impacted international leisure passenger traffic that usually has higher average fares resulting in a change in the average fare mix during the quarter.

As you know, during 2013, Easter happened at the end of the first quarter. Finally, first quarter international revenues suffered from severe weather on the East Coast of U.S. and Canada. Turning to the cost side, this is the 5th consecutive quarter we have been able to achieve reductions in the cost per ASK. This is a significant achievement given the fact that the exchange rate depreciation generated significant cost pressures during the quarter. As I mentioned before, cost measured in pesos declined significantly and measured in dollars declined even more.

We made important progress in strengthening the Delta-Grupo Aeromexico alliance this quarter by inaugurating our new TechOps Mexico aircraft maintenance facility in Queretaro in which Delta and Aeromexico have made each 50% investment. TechOps Mexico will be the largest facility of its kind in Latin America, providing services using cutting-edge technology and the highest quality and safety standards.

Today, we announce that certain existing shareholders of Grupo Aeromexico entering into transactions to sell to financial institutions shares of the Company totaling approximately 2.3% of our stock. The purchaser elected to buy the shares in connection with a derivative arrangement entered with the Delta Master Trust which calls pension assets on their various employee pension plans sponsored by Delta Airlines.

Pursuant to the Company corporate bylaws, the board of directors of the Company approved the derivative arrangement and the potential acquisition by the Delta Master Trust of up to 4.9% of the outstanding shares of the Company if the derivative arrangements are eventually settled in shares of the Company which may or may not occur.

I would like now to briefly discuss some of this quarter's achievements related to our key 2014 strategies. First, regarding Aeromexico's network, our initiatives at the Mexico City airport continue to strengthen our position at our main hub. In April, we moved from a four bank structure to an eight bank structure and we expect to move to 12 connecting banks by the end of this year. This is a higher goal compared to the 10 connected banks we mentioned on our last quarter's call.

But we believe this new structure allows us to better take advantage of our strong position in Mexico City's lot-constrained airport. While making more efficient use of our slots, we have also continued to replace smaller aircraft with larger and more efficient ones. Thus we were able to reduce ERJ-145 departures from Mexico City by 35% during the quarter. In March, we enhanced our [Aeropuente] shuttle product [shuttles] to further strengthen our position in Mexico's three largest business markets. That's Mexico City-Monterey, Mexico City-Guadalajara and Monterey-Guadalajara.

In a couple of weeks, we will launch the new marketing campaign. Overall we are pleased with the initial load factor results but are even more excited about the opportunities that lie ahead for this product. As I have mentioned before, our [Aeropuente] shuttle will provide hourly flights with schedules that are particularly convenient for our business passengers with a consistent two-class product, improved amenities and with dedicated gates. As of today, we have on average 17 daily flights between Mexico City and Monterey and between Mexico City and Guadalajara.

Turning to the international market, we will continue strengthening our position here as well, providing our passengers with an improved product offering. Last week, we took delivery of our fifth Boeing 787 Dreamliner. By mid-May, our 787 fleet will be covering from Mexico City daily frequencies to Paris and New York, four flights per week to Narita and three weekly frequencies to London and Madrid each. As we continue to expand on the international side, Aeromexico U.S. dollar denominated revenues will actually improve, naturally hedging our non-peso exposure to better position our Company.

We have continued to experience success with our Aeromexico Contigo product. This quarter we reallocated some Contigo capacity due to seasonality in some markets and incorporated new services from Morelia and Leon, Bajio to San Francisco and from Morelia to Chicago. However, it's important to note that we have maintained and we will continue to maintain the same amount of capacity in this product. That is four 737-800s dedicated to the Contigo market. Aeromexico Contigo represents only 6% of Aeromexico's total ASKs and this new season our routes do not translate into additional capacity growth.

Finally, cost control remains an important pillar in our strategy. In 2014, we will continue to implement new and creative cost control measures in an effort to strength our earnings objectives in this area. Our cost control initiative surveys and our fleet renewal strategy, the streamlining of operational and administrative processes in 2014 and last but not least the ongoing rolling of new and more productive labor contracts. Our 2014 goal is to continue to improve profitability.

As part of these ongoing initiatives, I'd like to briefly comment on a series of organizational restructurings we have been planning now for a couple of months. I want to announce that effective tomorrow we will have (inaudible), who he as an executive who was the chief revenue officer in Qatar Airways, he will be starting again tomorrow, be the chief revenue officer for Grupo Aeromexico and (inaudible) who was the chief revenue officer, sine will be heading new division that will include all labor-related issues and industrial and industrial affairs.

That's all the regulatory environment of the airline. We believe that, you know, with these new organizational changes we are, you know, strengthening our management team. As you know, these changes add to the ones that we made last year. So we believe that we have the best human capital not only in Mexico but in the region as we prepare to strengthen our position going forward.

Looking ahead to this year, we will continue to pursue our differentiate pricing and revenue management strategy that recognizes the importance of our value-added products. We are confident in our ability to maintain a known fuel cost per ASK, declining year over year with a trend of topline growth as the Mexican economic activity picks up during the rest of the year.

We have successfully weathered what was a difficult quarter for most industries in Mexico but particularly for the air carriers. We are therefore pleased with the results we have been producing, which combined with our well-defined strategy and focus on the significant opportunities ahead, will allow us to continue delivering strong results while we strengthen Aeromexico's market position as Mexico's premium revenue carrier. With that, I'll hand the call over to Ricardo who will review with you our financial results. Thank you very much.

Thank you, Andres. And thank you all for joining us on today's call. Let me begin by discussing some of this quarter's financial highlights. Andres already described the difficult challenges faced during the first quarter of the year. Despite these challenges, our topline grew 6.6% year-on-year supported by higher passenger revenues as well as to higher cargo, excess baggage and other ancillary revenues.

This is the second consecutive quarter for which we have had significant year-on-year increases in cargo and ancillary revenues. On the cargo front, we believe that the 787's extra cargo capacity combined with an improving economy will continue to positively impact Aeromexico's cargo revenues moving forward. On the ancillary revenue side, we believe there are substantial opportunities as we increase the distribution of our current products that include upgrades, baggage fees, cancellation fees and so on and consolidate and develop new products as our AM+, concierge program and others. We expect ancillaries to remain strong going forward.

On the expenditure side, our cost reduction strategy remained on track, reflecting the excellent work of the entire Aeromexico team. In the first quarter of 2014, our total cost per ASK in pesos decreased 3.3% year-on-year, while our CASK excluding fuel decreased by 3.6%. It is important to note that this positive result was obtained despite the negative impact of a 4.6% depreciation in the Mexican peso.

CASK excluding fuel denominated in dollars decreased an 8.3% year-on-year. This is our fifth consecutive quarter with year-on-year decrease in unit cost, a result that is in line with our long-term cost containment goals. Salaries and related costs showed a slight year-on-year reduction due to implementation of cost containment initiatives, another decrease extraordinary costs associated with crew member training in anticipation of the 787 incorporation.

We have a positive momentum on cost containment and more importantly we expect this trend to continue due to the strong pipeline efficiency and cost reduction initiatives that we phase in place. During the quarter, for example, we placed orders for a split [scimitar winglet] for our 737-800 aircraft. We expect this highly denominated winglet to generate additional savings of around 17,000 liters of fuel per aircraft per year. We will install our split [scimitar winglets] in 13 of our 737-800 aircrafts by the end of the year. This is just an example of the different initiatives currently ongoing to drive fuel savings.

We also are working in streamlining our maintenance processes and our back office functions through new technology and organizational restructuring. In airports, we also continued executing our co-location efforts with Delta. For example, we have implemented co-location and co-handling agreements with Delta in Bajio, Mazatlan, (inaudible) airports in Mexico and we expect to extend the co-handling process to Miami, San Antonio, San Francisco, Paris, Madrid and Sacramento airports in the rest of the year.

Now, let me discuss one of the most productivity initiatives, our fleet plan. We returned two 737-700s this quarter, ending the first quarter with a fleet of 115 aircraft. We will continue to phase out the Embraer 145 from our Mexico City operations throughout the year, a strategy that has allowed us to strengthen our position in the Mexico City market. The number of Mexico City airport big bay departures of the Embraer 145 decreased 35% between April of 2013 and April of 2014.

It is important to underscore the fact that unlike most of our domestic competitors, Aeromexico has significant opportunity for continued growth at the Mexico City airports. In 2013, we operated 84% of our flights from this airport through our Embraer fleet and out 737-700s. This provides us with considerable growth flexibility in the future ahead. As we continue this upgrading strategy, our seat count in Mexico City should increase, further strengthening our position in Mexico's most important premium market.

Also, as Andres mentioned, we responded to the current weak economic and market environment by adjusting our seat capacity this quarter versus our base plan. The adjustment so far has consisted of a temporary delay in the incorporation of certain aircraft while continuing to retire aircraft as planned. Let me provide you with some details. Using some flexibility in our contracts, we have delayed the reception of three Embraer 190 aircraft by an average of 5.3 weeks per aircraft compared to our plan.

Similarly, we made some adjustments to our 787-a delivery calendar and production plan. As we mentioned during our last conference call, our original base plan included an estimated growth in ASKs between 15 and 18% for 2014. Our adjustment plan - our adjusted plan will now translate into an estimated ASK growth between 12 and 15% for the 12 months of 2014. A significant component of this growth will continue to result from engaging our current fleet in line with our strategy of consolidating existing markets.

This will allow us to obtain original cost savings coming from more efficient and productive aircraft. We still expect to end this year with 123 aircraft in operation as per the original plan. As Andres has stressed, we will continue to monitor market conditions in case product capacity adjustments are required.

Finally, moving on to our bottom line, first quarter operating profit for non-operating revenues and expenses reached 31 million pesos with a 0.3% margin. With this result, we have achieved 16 consecutive quarters of positive debit margin which reflects our commitment to profitability. First quarter net loss reached 9 million pesos which compares to a net operating loss of 122 million pesos as reported in the first quarter of 2013.

During this quarter, Aeromexico did not receive capital stock reimbursement from its subsidiaries accounted on the equity method, PLM and AM DL MRO. However, these subsidiaries recorded net profits of 57 million pesos and as such we expect to resume the reception of capital stock reimbursement in the second quarter of the year.

Operating activity generated a positive cash flow of 184 million pesos during the quarter, this despite the challenging environment and some seasonality pressures on our working capital. We are committed to maintaining a strong balance sheet. During the quarter, our net adjusted financial debt ratio compared to adjusted EBITDA amounted to four times which is in line to our target and places us better than the median of the industry. With this, I would like to conclude my remarks. Thank you once again for joining our call today and we would like now to answer and questions that you may have.

Thank you. (Operator Instructions)

We'll take our first question from Michael Linenberg with Deutsche Bank.

Yeah, hey. Good morning, everybody. Just a few questions here. Going back to the 12 to 15% ASK increase for 2014, how many percentage points of that is actually driven by up-gauging Mexico City?

Hi, Michael. This is Andres. Thank you for ...

Hi, Andres.

Again, as Ricardo mentioned, we are reducing ASK growth between from 15 to 18 to 12 to - from 15 to 18% to a range of between 12 and 15. Of this, we expect now, you know, international growth in terms of ASK and that is mostly from Mexico City to be between 15.5 and 19%. And growth in the domestic market in terms of additional ASKs will be between 7 and 10% and that again provides more units distributed between Mexico City and other cities in Mexico. But again, the most important even for domestic flights is between - it's obviously origin in Mexico City.

Okay. No, that's helpful. On a second question, I want to go back to the Delta - this Delta Master Trust as in Delta Airlines increasing their stake, right. I just - I want to make sure that I heard that correctly.

Yes, yes it's correct. What we - before the call we released to the market is that again this Delta Master Trust bought from certain investors 2.3% and also that we have already, you know, board approval that this can - that the amount that this Delta Master Trust can acquire is up to 4.9%. So it may or may not happen. They already again bought today an additional 2.3 and they can acquire as much as 4.9%.

Okay. So what - but now Delta - I thought Delta's stake was initially already 3 - is that separate, what Delta had, not part of the trust, the 3^, 3.5%?

Yes, yes.

I see, okay.

Delta already has 4.2% and this is basically, you know, the Delta employees pension plan. We set into this trust an additional 4 - well, 2.3^ and up to 4.9^.

I see. So Delta and its entities could collectively own, you know, up to, you know, call it 9.1% maybe is the way to think about it or if they exercise the full 4.9%, Delta and its entities under its control will own 9%.

That's correct. If they exercise that, that's correct.

Perfect, okay and then just the last question on, you know, I'm sure someone else is going to ask about trends. Question on Mexicana, now that that has formally been, you know, declared bankrupt and the courts will no longer hear the case that has been essentially I guess, you know, put to an end, what does that mean for you going forward? You know, so for example, are there any route authorities or slots that now essentially you either can have control over because I realize that some of the route authorities were originally Mexicana's that various carriers were using.

Are there any assets at Mexico City airport or any of the other airports where there may be some facilities like aircraft hangars that were tied up in the bankruptcy that now maybe you would be interested in? What are - like, the fact that it's now come to an end, what are some of the things that you can do or is there anything - are there any opportunities? Maybe there are not.

Yeah, okay. Well, first of all, today if you look at passengers move, you know, through the domestic - well, Mexican carriers and number of operations, today it's significantly larger if you compare it to, you know, before when Mexicana stopped flying. So basically the space that was left by Mexicana is already covered by somebody else. In our case, we already have slots. We had the routes. So basically we have been operating with our own resources. What Mexicana used to use in terms of slots and routes was basically - is basically now operated by our competitors here.

So again we've been growing with our own resources. It may be the case that, as you know, a new - it's called here in Mexico, [sindico], you know, a right to the Company and provides a list of the assets that are subject to be sold and thus to pay the liabilities that Mexicana left. There may be some things and we will be monitoring closely what is available and again if there are things that could, you know, complement our strategy, we will certainly take a look at them.

Perfect. Okay, great. Thanks, Andres.

Thank you.

Thank you. We'll take our next question from Pierre Safa with Tree Capital.

Yes, hi. Thank you very much for taking my question. It's a little bit more of a general question. You know, can you please describe a bit, you know, the environment you're seeing in Mexico and, you know, how, you know, the competitive trends you're seeing. That's my question.

Yes, thank you, Pierre. Well, the Mexican economy has been, you know, has been stagnant. Really we've seen basically, you know, a very slow first quarter. We expect economic activity to pick up also because we have, you know, a low comparison base because the Mexican economy also slowed down last year. So you know, we are working today with a growth assumption in terms of, you know, economic growth, GDP growth of between 2% and 3%. This is our best guess.

But again we have the flexibility to react and adjust if that doesn't happen. In this context of slowed growth, capacity, you know additional capacity in the industry has been significant. For example, last year ASK growth was 10%, 8% to 10% while growth, you know, economic growth -economic growth was 1%. So this has put, you know, downward pressure on yields particularly on domestic yields.

But one trend I can share is that we are seeing a slight recovery of those shares in the quarter. You know, as we approach the end of the first quarter gradually domestic yields, you know, have been improving. So that bodes well going forward but still, you know, we are not, you know, too optimistic about, you know, yields picking up significantly to the level where they were, say, 18 to 24 months ago in the domestic market.

Understood, understood. And so what - you know, what percentage of your revenue is international and domestic?

Well today now basically for the end of the year we expect now to have more international revenues than domestic. It will be broadly between 53, 55 international and between, you know, 45 and 47 domestic. And as we mentioned, you know, during the initial comments, this will also, you know, even strengthen our position to hedge to, you know, foreign exchange movements, you know, as we have a natural hedge to offset, you know, the expenditure pressures we have when the exchange rate depreciates.

Excellent. Thank you very much.

Thank you.

Thank you. We'll take our next question from Glenn Engel with Bank of America.

Good morning. First question is coach seat revenues with your international partners you said was up 38% in 2013. What's it up so far in the first quarter?

You know, I don't have here the number with me in terms of coach fare revenues. But we can relay that to you and they are up compared to last year. But we haven't mentioned it in the initial comments. But I will certainly you know will relay you that information.

Is the - can you talk about the business versus leisure markets? Is the competition we're seeing mainly in the leisure markets? How is business traffic performing versus leisure?

Well, the business traffic in Mexico is performing well. I mean, what we are seeing, you know, the three main cities which are Guadalajara, Monterrey and Mexico City. Traffic between the three cities has been - has been strong. Again, you know, we've experienced pressures and yields both in the business and in the leisure segments in Mexico.

But it's holding, you know, pretty well and this is important in the context of weak economic activity. Other business markets, for example New York in the U.S. has been performing well. Overall, you know, traffic between Mexico and the U.S. has been strong. Broadly in terms, if I can qualify, you know, developments in international market, broadly, again it's been probably weaker in South America but Europe, the U.S. and Asia look, you know, pretty good compared to last year.

And again, I want to stress that, you know, this pressure in yields that we're saying has - and probably I didn't stress that in the initial comments, not only have to do with the weak economic and base of comparison but in international market we've added like 70, 80% capacity in our wide bodies with the 787 that replaces the 767. And to introduce the plane we were aggressive in selling those seats and that brought the average yield. It has been extraordinarily received by customers. So we expect after the introduction that for the summer we will see yields picking up in our wide body fleet.

And can, you know, Volaris reported yesterday so it's clear what they're doing. Can you help us out with the Interjet and VivaAerobus, what they are doing competitively in 2014?

Well, what we see in the market - I mean, you know, they are not public but what we're seeing, Interjet has announced with their - you know, with the aircraft that they've been receiving, the Sukhoi jets, they've been entering some of our markets, particularly, you know, probably markets that are less than a thousand kilometers from Mexico City.

But we believe that we have a better product in our Embraer 190s and we are competing head to head against them and again in our product, for example, in the case of an important market like Leon-Bajio we have as much as six, seven frequencies per day where they have maybe one or two.

And for the business passenger, that's - you know, that's important. But again, you know, in terms of cost base, it's better. We are prepared to face this - again, this competition because, again, the investments that we made in terms of the product of the regional fleet that we have, particularly in Mexico City, we believe it a much better product than what our competitors have.

Thank you very much.

Sure.

Thank you. (Operator Instructions)

We'll take our next question from Bernardo Velez with GBM.

Hi, good morning. Thanks for taking my call. Just a couple of questions. First, what can we expect from yields going forward, especially after it appears that if that Volaris would be - wouldn't be fighting any more in terms of pricing and given an unexpected pickup in the consumption environment.

Well, thank you, Bernardo, for the question. Again, we - broadly we prefer to be, you know, conservative and we are not working our projections in pickup in yields. But what we've seen during the quarter is that yields have improved. And again, you know, for example in the last week of March, the first weeks of April, we have better domestic yields than what we saw at the beginning of the year and if economic activity picks up in Mexico and there is more rational competition in terms of traditional capacity in the industry, we would certainly, you know, see better yields and better results for the industry as a whole during the rest of the year.

Okay, perfect. And my second question is regarding the performance at PLM and your MRO. It seems that it's a 57 million gain compared to 2.3 million again last year. Would you please expand more in these numbers?

Okay, yes, thank you, Bernardo. This is Ricardo. Well, we had a very strong quarter for both companies. Most of these results are basically coming from PLM, that I have seen recovery in their numbers. Last week as the economic situation was weak and sluggish, PLM which is based on consumption saw weakness in its revenues.

But we have seen some pickup. So we expect that as the economy recovers we will see PLM going forward with better numbers as well. The MRO just started operations so we think also as it stabilizes a profitability will be maintained. As I mentioned, even though we had these positive numbers in these subsidiaries, we did not receive any cash flow, any capital reimbursement or dividend. But given that the numbers are good, no, we expect that these reimbursements will continue or will be restarted during the second quarter of the year.

And let me just to compliment Ricardo's answer stress one point. During the quarter we saw positive operating, you know, cash flow inflows from our operations. In the context of again the weakest quarter of the year and with no money, for example, paid in dividends as opposite to last year from PLM and from the MRO, it's a very, very positive result. And also this is in the context that our air traffic liability in terms of numbers of days, it's lower than what we have at the end of last year. So we have been able to maintain a very solid cash position without incurring an additional air traffic liability and with no inflow from our subsidiaries.

Okay, so would you say we could expect similar numbers of PLM during the year?

Well, PLM has a different seasonality than what we have, no. Basically also for us it's a very weak quarter in terms of passenger revenue. For PLM it's a good quarter in terms of retention and revenue recognition. So I mean, it will have volatilities but we expect that PLM numbers should be there this year compared to last year overall.

Okay, great. And just lastly, could you give more insight regarding this financial derivative regarding the Company shares and I guess the second part of the question is who will provide the additional shares to cover above the current 2.3% stage.

Yeah, I mean, what we know is that this master trust not enter into certain derivative arrangements with certain financial institutions and these financial institutions, these financial institutions elected to purchase this exposure, no, for these operation, no.

What we know as part of the board as the approval that we have in the board is that this operation can go up to 4.9%, no, and in the end it depends if the master trust elects to execute or not these derivatives. But right now they are getting this additional exposure to the shares. Where are the shares coming from? It might be from other exiting shareholders, no. It's something that would be an arrangement outside the Company. But we ...

So there is no current arrangement of, I don't know, say with Banamex to provide the rest of the shares?

We don't know who are these certain - these additional shareholders that might be selling or not, no. It is something that if it happens we will complement the announcement. But so far this information is that we have. These are private transactions outside the board, no, the Company.

Okay, and just if I may, you know, how does this derivative actually works or does it play against direct acquisition of the shares?

I mean, what we understand, there's a derivative, no, that the master trust entered into a derivative arrangement with a financial institution and this financial institution elected to purchase the shares to cover this exposure, no. That's basically the way it works. That's how we know.

Okay, fair enough. Okay, thank you very much for the call.

Thank you. And it appears we have no further questions. I'll turn the conference back over to our presenters for any additional or closing remarks.

Well, thank you very much for joining the call. We look forward to seeing you in the next call and we will continue working to strengthen our results and to, you know, be the best in class. Thank you very much.

Thank you. Ladies and gentlemen, this does conclude today's presentation. You may now disconnect.