Aptargroup Inc (ATR) 2004 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the AptarGroup's 2004 fourth-quarter and annual results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Introducing today's conference call is Mr. Ralph Poltermann, Vice President and Treasurer of AptarGroup. Please go ahead, sir.

Good morning, everyone. Before we begin, I would like to point out that the discussion to follow includes some forward-looking comments and that actual results or outcomes could differ materially from those projected or contained in the forward-looking statements. To review important factors that could cause actual results to differ materially from those projected or contained in the forward-looking statements, please refer to the Company's SEC filings.

The information in this conference call is relevant on the day of this live call. Although the Company will post a replay of this conference call on its website as a service to those investors who are not able to listen today, the information contained in the replay will be dated and should be used for background information only. The Company undertakes no obligation to update material changes in forward-looking information contained therein.

Our speakers for today are Mr. Carl Siebel, President and Chief Executive Officer of AptarGroup, and Mr. Steve Hagge, Executive Vice President and Chief Financial Officer. I would now like to turn the conference over to Mr. Siebel.

Thank you, Ralph. Good morning, ladies and gentlemen. This is Carl Siebel. I will briefly discuss the quarter and outlook before turning it over to Steve Hagge, who will provide more detailed information about our results.

In yesterday's release, we reported record fourth-quarter as well as record annual sales and income. Overall, our sales growth was primarily driven by increased volumes, higher custom tooling sales, and the impact of the weaker dollar on the translation of foreign sales. Excluding foreign currency translation effects, sales increased to all of our markets. Demand for our Dispensing Systems was particularly strong from the food, pharmaceutical, and fragrance/cosmetic markets.

Several factors constrained further improvement in fourth-quarter profits compared to the prior year. These include the higher cost of imports to the United States, increased cost of materials, and continued price competition.

We are proud to report that the year 2004 was one of our most successful years and that we continued our string of consecutive years of annual sales increases, which now stands at 39. These results were accomplished despite the challenges of competition and pressure on the cost side, particularly in the area of raw materials and independent audit costs.

We announced that we have agreed to purchase a company in Switzerland that has proprietary aerosol valve technology, generally referred to as bag-on-valve systems. This very unique design provides a physical separation between the product to be dispensed and the propellant. These packages are considered more environmentally friendly due to the use of more neutral propellants. From a functional standpoint it works exceptionally well for spraying when that can is held in any direction, even upside-down. The feature is great for inverted applications such as sun tan lotions, where ultimate convenience and ease-of-use is important to the consumer.

In 2004, we took a couple of actions to improve shareholder value. We doubled our dividend, beginning with the dividend paid in the third quarter of the year. We also were more aggressive in our share repurchases activities. Our balance sheet continues to be strong; and as a result we are well positioned to take advantage of strategic opportunities in the future.

Looking forward, we presently expect sales in the first quarter of 2005 to be moderately above the prior year's level, and we expect the diluted earnings per share for the first quarter 2005 will be in the range of 58 to 63 cents per share, versus the 57 cents per share recorded in the first quarter of 2004. I would like now to turn it over to Steve for his comments.

Thanks, Carl, and good morning, everyone. I will review our financial highlights; and then the Carl and I will be happy to answer your questions. First looking at the quarter, reported sales increased approximately 23 percent, whereas sales excluding the impact of foreign currency translation grew at approximately 16 percent over the prior year. Custom tooling sales increased by approximately 7 million over the prior year, with most of that increase in tooling coming from our pharmaceutical market.

Looking at sales to each of the markets for the quarter, excluding changes in exchange rates, our personal care market grew 5 percent; sales to the fragrance/cosmetic market was up 14; pharmaceutical was up 27 percent in the quarter; household 13 percent up; and finally food was up a little more than 40 percent.

Cost of sales as a percent of sales during the quarter was somewhat higher than we reported in the prior year, for the reasons Carl already mentioned. Bottom line we reported earnings per share of 65 cents compared to 54 cents per share a year ago, or an increase of 20 percent.

From a geographic standpoint, sales to our customers by our European operations represented approximately 63 percent of net sales in the quarter, versus 62 percent a year ago; and sales to customers by our U.S. operation accounted for 29 percent of quarterly sales in both periods.

Excluding changes in exchange rates, the Dispensing Systems segment sales increased by approximately 19 percent; and our SeaquistPerfect segment sales increased by approximately 2 percent.

Our cash flow from operations for the quarter was approximately 49 million compared to 29 million in the prior year. Capital expenditures in the quarter were approximately $44 million, compared to $21 million in 2003. During the quarter, we acquired for approximately $16 million one of our manufacturing sites in Germany that had previously been leased.

We spent approximately $13.5 million to repurchase approximately 257,000 shares during the quarter at in average cost of $52.50 per share. This brings the total number of shares repurchased during the second half of 2004 to over 1.1 million at a total cost of approximately $52 million or a cost of a little over $45 per share. We have an outstanding authorization at the end of the year to repurchase an additional 2.3 million shares.

Our return on average equity was approximately 11 percent, and our net debt to net capital is approximately 4 percent as of December 31.

Now taking a look at the full year, reported sales increased 16 percent, whereas sales excluding the impact of foreign currency translation grew at approximately 9 percent from the prior year. Tooling sales during the year increased by almost $26 million over the previous year.

Looking at sales to each of the markets for the year, excluding changes in exchange rates, sales to our personal care market grew by about 7 percent; fragrance/cosmetic was up about 6 percent; pharmaceutical up a little over 10 percent; household 16 percent, an increase; and finally food was up approximately 28 percent.

Regarding the breakdown of sales by product and market, the percentage of sales have not change significantly from those we reported in the previous year.

As we mentioned in the press release, increased audit costs also accounted for certain additions that we had in our G&A expenses. From an out-of-pocket standpoint, audit fees cost us approximately $1.7 million more in 2004 compared to the prior year, primarily due to cost of complying with Section 404 of the Sarbanes-Oxley Act. This does not include internal costs relating to the dedication of a significant amount of our internal resources related to this project, which we're not able to quantify.

Year to date, we reported diluted earnings per share of $2.51, compared to a reported earnings per share of $2.16 per share in 2003, or an increase of 16 percent. Our cash flow from operations for the year was approximately $183 million, compared to 140 million in the prior year, while our capital expenditures for the year were approximately $120 million, compared to 77 million in the prior year.

Now as we look forward, our total cash outlays for capital expenditures in 2005 are expected to the approximately the same level as what our depreciation and amortization are going to be. We estimate that the amounts to be in the range of 95 to $100 million depending on what the exchange rates turn out to be.

As we previously indicated, we filed for approximately 1.5 million of tax refunds relating to research and development expenditures incurred in the period 2000 through 2002 in the United States. We're going to record those benefits once we receive the refunds. Lastly, the effective tax rate for 2005 is expected to be in the area of 32 percent, excluding the prior-year research and development credits I just mentioned. At this time, Carl and I would be glad to answer any of your questions.

(OPERATOR INSTRUCTIONS) Chris Manuel from KeyBanc Capital Markets.

Good morning, gentlemen. Good afternoon to you, Carl. A couple questions, first of all, about the acquisition you did. Has the deal already closed? You mentioned that -- or when is set to close, I should say?

The deal was signed yesterday.

Okay.

There's certain conditions for the closing, which have to be fulfilled, which are usual conditions, government approval type things and this.

Okay, so sales will probably start to roll in, in second quarter?

We would expect, I think, at this point, Chris, to be able to close by the end of February; so we will start to the see the majority the impact in the second -- late first quarter, beginning of the second quarter.

Okay. Which specific markets does it serve? You mentioned sun tan lotion, so that would probably be personal care? Are there others that that presently serves now?

It is, Chris, a technology which is quite interesting, especially for certain pharmaceutical and what you might call cosmeceutical applications. A significant percentage of the business which this company has is in this area.

So it adds new valve technology to our portfolio, and the company owns considerable know-how, which represents also interesting barriers for entry to potential new competitors. So it is not a huge acquisition, but it's an interesting increase in our technology portfolio and our product portfolio.

Really what it does it is it separates the propellant from the product and this way improves product integrity, allows also to spray in all positions.

Okay. One last question on the acquisition. How do margins and things look compared to your current business? Will it be dilutive to margins initially?

No, it should be accretive.

It should be accretive to margins? Okay. All right, thank you. I will jump back in the queue.

George Staphos from Banc of America Securities.

Congratulations on the year. I guess a couple of questions just hitting on growth rate. Steve, perhaps you should take these. You obviously had very, very strong performance in fragrance in the quarter, if I got my numbers down correctly. However the comparison was obviously a bit easy versus last year. Not trying to take away from the performance, how much of the growth was truly driven by momentum you're seeing in the market; and how much of it was just because of the comparison, if you wanted to relay it that way?

Then, broadly speaking, we are now into early February. What kind of trends, what kind of momentum are you seeing early in the new year?

Maybe Steve, you take first part of the question.

I think frankly you're right, George; we didn't have a strong fourth quarter last year in terms of the fragrance market. But I think a good part of the growth that we are seeing in this is volume related. And much more, I think -- and Carl can touch a little bit more on this -- but we saw that the Christmas season for our customers has been reported as being pretty strong. We're seeing more product introductions coming out and getting ready to come out in 2004.

So I think we were, with the new products we also have in the area, I think the majority of the growth was coming from strength in the marketplace. It is just a good comparison.

Got you.

Frankly, normally we would have expected, and you saw also the forecast which we made beginning of October for the quarter, we were normally expecting a slowdown in the November/December area, with customers trying to destock. This has been the tendency over many years. So we were surprised about the strength of the demand in November and December.

We also see, since you touched also on 2005 first quarter, we also see continued good order income in the first quarter up to now. So basically it seems that there is an overall, maybe overall economics-supported increase in the demand in those kind of consumer goods which we are serving.

Got you. Realize again it is a broad question, your initial views on '05, that would be pretty much across the board. It isn't weighted in any one sector?

Essentially, if we look at the first quarter, we have a good outlook in most of the markets we service, the exception somewhat being the pharmaceutical business. In the pharmaceutical business, while we still expect to be somewhat above a first-quarter 2004, which was quite week, but like in previous years we see some weakness in the pharmaceutical business in the first quarter. There was also the first quarter of 2004 major tooling sales in the pharmaceutical business, which do not repeat in the first quarter of 2005.

Okay. The inventory destocking that had been done in pharma by one or two of your customers over the years, that is largely done from what you can see?

The specific customer who was very slow in the first half of 2004 seems to be more back to more regular purchases.

There is, however, another trend which is in the generic side; there was pipeline filling in 2004 by some customers for generic products, expecting the FDA approval. This FDA approval at this point has not been given yet to any of these generic suppliers for this specific medication. Therefore we see some slowdown in the demand from these generic customers.

With will happen with the market demand, once the generics come in, we don't have experience and this is not possible for us to predict. So we cannot make any -- it is more difficult to make a forecast for the pharmaceutical business in 2005.

Okay, Carl, that's helpful. Last question and I will turn it over. You always have the standard comment in your press release about price competition; and based on history usually it is at the lower end obviously. Is there any change in those trends or is it pretty much the standard level of price competition you're seeing?

I would say, George, that we always have price competition.

Sure.

We saw some more of this coming with the evolution of the Asian competition. I would like to say there that we have to keep in mind that we are an industry supplier. If -- our customers are extremely demanding not only on quality but also on just-in-time delivery, service, and so on for their production. So it may not be that easy for Asian competitors to comply with these requirements on a long distance.

So see that -- the Asian competition we see in two ways. One, by finished goods being imported from China into Europe and the USA. So that is an indirect competition. We also see some competition trying to get business from us by directly exporting our products. But again from what we believe today, there may be some inroads, but we are let's call it cautiously optimistic that we will prevail, based on our innovation, on our new products, and specifically also on our capabilities to service best our customers around the world.

Thanks, Carl.

Greg Halter, LJR Great Lakes Review.

Congratulations on a good quarter and 39th consecutive year of up sales. Regarding the acquisition, is the management of the company going to remain?

Absolutely. That has always been our strategy that we are interested in acquisitions which add something to us, whether geographic expansion, whether new technologies, and so on; and specifically to buy good companies with good management. Therefore we need to keep the management. We may be not as interested at all or much less interested if we would lose the management. So this management is judged very positively and they have committed to stay with us.

Is there any earnout related to the payment, the purchase price?

No.

How long have they been in existence? Approximately how much have they been growing revenue-wise in the last couple years?

They have been in the high double digit growth area in terms of their performance. It is not a very old company, because it is also a very new technology which was developed. So really they based their penetration of their markets on developing, inventing and developing this technology.

So if I remember right, I don't know whether you know it, Steve, but I remember it must have been in the early '90s. It is an older company which was transformed from a different technology for the watch industry in Switzerland into this kind of manufacturing and this kind of technology. That started in the early '90s, if I remember right.

That is correct.

Interesting. Regarding the resin situation which you discussed last quarter, has anything been resolved there? Is that back to normal?

Your talk about the quality issue we had?

Yes.

Yes. Absolutely. It has been resolved in the sense that we have naturally replaced the product, which we had to replace in 2004 and were able to serve the customer without interruption. However we have not yet recorded any compensation from the supplier.

Is that still a possibility, to record something?

This is still a possibility. We're still negotiating.

Okay. Regarding the repatriation issue, Steve, I noted your comment about the 32 percent tax rate, but is there anything else that is going on with that that you're considering?

No, I think if you come back, Greg, we brought back around $48 million from Europe to the U.S. this year. We're anticipating bringing back in the neighborhood of another 30 million into '05 from Europe. So we will continue to repatriate. The new law that was passed does not have a huge impact on Aptar, because most of the countries where Aptar is present are basically at around the same tax rate levels as the U.S. So the money we bring back also brings back credits with it. So there is not a huge impact in terms of the new tax law that has been enacted here in the United States.

Okay. Discussing the tooling, you talked about the $7 million incremental, and I think it was 26 for the year. What was the actual figure for the quarter and the year, if you have that?

It is roughly 18 million for the quarter; and I think around 58 million, 59 million for the full year.

Okay. All right. I think your debt has been about 40 percent, if I am not mistaken, on a variable-rate basis. Is that still the case?

Yes. It's about 40 percent variable, 60 percent fixed, at about an average rate of about 4.5 percent.

Are you looking at fixing any of that?

We have done some of that over, throughout the last 2 years. So at this point given the cash flow situation, I don't think we have got anything of substance in mind right now.

Okay. Carl, you usually talk about some new product examples and things in the water market and so forth. Anything of note that we should be aware of that you're coming out with?

First of all, if we look at what is happening at our customers' level, we are continuing to see a large amount of interest in our Simpli-Squeeze system, as the chocolate syrup for Smuckers which has come out lately; there is a lotion which uses a tube with our Simpli-Squeeze system.

And we have also -- I think we mentioned already the sun tan lotion which uses both new technologies. On one side the bag-on-valve system; and on the other side our locking actuator, which has received tremendous interest on the market over the year of the first months of introduction.

You do not need an over-cap anymore. It is a very good-looking product also. It is being launched also with new innovative containers, and it is launched, it will be on the shelf by several major marketers with new products over the months to come. It is specifically interesting to have this new actuator combined with the bag-on-valve technology.

We see continued interest in our Simpli-Squeeze systems. Also on the water market, and we expect -- we're working on the -- as you know on the pharmaceutical side everything we do is very long-term, especially in innovation. But we have several very promising projects in the pharmaceutical side, which will help us over the years to increase sales and profits.

Okay. Last question, I know you have had some price increases in the past to kind of offset some of raw material issues on resins, plastics, steel, so forth. Have those been met with any sort of negative reaction? Or how is that process going?

You have to make a distinction between the closure business and the rest of our business. In the closure business, particularly, it has been the tradition in the market to accept and to use price pass-throughs, cost increases -- and by the way also in case of price decrease, also cost decrease, also price decrease. That has gone reasonably well as in the past; no major change. There is naturally always a time delay between the effectiveness of the cost increase by our supplier and the effectiveness of the price increase to our customer.

For the rest of the business, we have been able to pass through now also on essentially most of our, if not all our business, the cost increases as of December 31, 2004. We see additional cost increases coming in the first quarter of 2005. We will continue to try, as competition permits, to pass those through also. But essentially we are reasonably satisfied with our success in pushing these price increases through.

Great, thank you.

Kathy Peters (ph) of Capital International Research.

(technical difficulty) expecting only modest sales growth in Q1. Is that because you won't have as much custom tooling, or is there another reason? Could you quantify what custom tooling was in Q1 2004? Thank you.

Can you answer this, Steve?

Well, I think the biggest item in 2004 was approximately $7 million, which related to a project they had with a major pharmaceutical company. So we were probably up around $12 million, I am guessing, in the first quarter on the total numbers. Then the other side, I guess, Carl, maybe you can talk about on where we sit, and I will try to take a look while you do that on what the actual numbers were.

Could you please repeat your question? I did not quite understand the second part.

Sure. I was just trying to understand why you were predicting only modest sales growth in Q1.

There's two reasons. One reason is this comparison on the tooling as mentioned before. There was a specific project in pharmaceutical in the first quarter which will not repeat itself. On the pharmaceutical side in total, we expect a modest increase over the preceding year, but only a modest increase because one major reason being the generics business. Last year we had considerable sales starting in the first quarter to companies preparing themselves, pipeline filling, for generic products, which were not yet approved by the FDA where the patent in a specific case was running out middle of the year. And these customers of ours were expecting a fast approval of their products after the patent has run out. However, that did not happen up to this day.

So the products which we have supplied to the generics have not been used, have not been brought to the market. These customers are now reducing their orders to us for very understandable reasons. For the rest of the business, we are quite optimistic. Our order income in the first -- in the beginning of the first quarter is solid. We see good growth in most areas up to this point and, therefore, we believe that we will have a reasonable increase there. And this is only reduced by the two major factors which I just explained.

Kathy, just go back, we had about $13 million worth of tooling sales in the first quarter last year. Seven million of that related to our pharmaceutical -- that one pharmaceutical project.

Great, thank you.

George Staphos farm Banc of America Securities.

Steve, if you have the information handy, perhaps you could just give us the tooling sales over the last four quarters quarter-by-quarter, if you have that. If not, I don't want to tie up time on the call.

No, I can give that to you. In total, we were about 13 -- a little over 13 million in the first quarter, 9.2 million in the second quarter, 17.9 million in the third quarter, and around 18 million in the fourth quarter.

Okay, great, thanks. That's helpful. In terms of looking at the quarter net transaction versus translation, did you lose a little bit on that in total?

Again, we would lose on the percentages; the margin percentage would contract. But net, we were a net positive between translation and transaction. But again, because of the way the numbers work, we get a small margin contraction percentagewise, but in terms of the gross numbers, it was actually a small positive.

Interesting. In prior quarters if the dollar was weakening, while it would hurt your revenue, it was helping you on the importation and usually it was a positive in dollar terms from what I remember. So you have now crossed the line where it is now a negative for you in dollar terms, too?

Again, if the dollar would strengthen, we'd probably have to go back and we'd probably be a slight negative if the dollar would strengthen over the next couple of quarters. We have probably got today, given the size of our European operation and the growth, that the translation impact is offsetting the transaction impact today.

I understand. What was it then? Was it over a million, less than a million?

It is under a million, in that neighborhood.

Okay. Fair enough. In terms of cash flow, free cash flow, Steve, in '05 with CapEx equaling depreciation, what can you do above and beyond say prudence in capital spending? Although no one I think would argue that you're overspending, given the results. Are there projects that you can work, in working capital? What might your cash taxes look like, such that you can leverage your net income above and beyond that net income, to get to a stronger free cash flow number?

Certainly you're going to see some improvement I think in terms of cash flow, because this year we will be spending -- in '04 we spent above depreciation by around 20, $25 million. Next year we would anticipate that being equal to depreciation. So there is an additional 25 million of cash flow that we would anticipate coming in.

We actually in terms of looking at our working capital position, we showed about a net increase in terms of working capital this year. Around $6 million on pretty strong growth. So I think we have done a good job of controlling some of our receivables and the inventory. As usual the Company's focus will be continuing to work on the inventory area to try to make that as efficient as possible.

Okay. The strategic initiative, has it been paying off the way you would expected it would, either on manufacturing or working capital?

At this point, I think you can come back and say that from a cost perspective it has paid off pretty much in line with where we thought. What we thought we would also get is some inventory savings in terms of inventory we have got around the world. We are still not at the levels we had hoped to; and I think that is one of the efforts that we are focusing in on 2005.

Why would that be the case, Steve?

I think right now we have probably stocked more of the componentry in the different areas than what we had in the original plan. Some of that has been I think just getting used to the new program. We are working with each of our business managers in each of those operations. So as we get more -- as we go through time, we think those numbers will come down, and we are aggressively trying to move those down in '05.

Okay. All right, guys, thanks. Good luck in the quarter.

Chris Manuel from KeyBanc Capital Markets.

I just have one more follow-up question on SG&A. In the quarter, it was significantly higher than both last year's levels and even sequentially. Was there anything unusual there? Or is this kind of a good run rate going forward?

I think, I guess, Chris, what we would come back and say is I think you had some FX hitting the quarter in the SG&A. I guess when we take a look, I think it is more representative to take a look at the full year. We're running about -- we have gone from a 15.4 percent SG&A level down to 15.

Frankly, considering the increases we have had in certain of the compliance areas, related to Sarbanes and those things, we think we have done a good job and we're going to continue to try to leverage the SG&A percentage as we go forward.

The other thing that I would point out in that SG&A percentage, as Carl talked briefly about, we have increased our spending in R&D this year. Particularly in the pharmaceutical area as related to our dry powder inhaler projects that we're working on. So again, despite those increases we are continuing to be able to net leverage the SG&A percentages.

The higher R&D spending, in the past you kind of said, I believe, up 10 to 15 percent on a year-over-year basis for R&D component. Is that still a good --?

Yes, I think this is a reasonable estimate. We have been spending between 3 and 3.5 percent of sales; and we will continue to be in that area. As Steve pointed out, that is in spite of a significant additional specific effort for this dry power inhaler technology, which we think is extremely promising for us for the future. We are invest -- we will be -- we have been (ph) started to invest in this in 2004. We will continue with a somewhat higher run rate in 2005.

We expect first income streams to start 2006, 2007. However, in spite of that, we think that we will maintain between 3 and 3.5 percent of our sales in R&D.

Okay. The last question I wanted to ask you concerned free cash flow usage. You talked about how your free cash flow should be up year-over-year, and we see you did an acquisition here in the last few days. As you look at the balance of the year, are there any other acquisitions that are potentially imminent or that you're looking at? Or what do you anticipate using the bulk of your free cash flow for? Continued share repurchase? What are your thoughts there?

We will continue the share repurchase program as announced. As far as acquisitions is concerned, we are continuously looking at strategically interesting acquisition potential. We have, like we had also in the past, we have certain projects which we are looking at, and we do not exclude that we will make more acquisitions in 2005.

Okay, thank you very much, gentlemen.

Ghamsham Panjabi of Lehman Brothers.

This is actually (indiscernible); I'm calling in for Ghamsham Panjabi. Quick question. Congratulations on the strong quarter. I noted you commented that most of that was stronger -- overall demand was stronger than expected. Was any of the sales that came out from -- do you have a breakout of -- as related to overall demand or new products or new contracts; pretty strong quarter I guess?

No, I think frankly it is just difficult for us to break that out (technical difficulty) time frame. Again what we have said is it is mostly volume based and there is a lot of new product activity, but it is difficult for us to get an exact number on that.

Okay. On the sales side, do you have any breakout for your price mix, I guess, for the quarter?

No, the bulk of it would have been volume based. There is not as much price in there. If anything, price would have been a somewhat negative.

Okay. Can you give us a little more of an update on the bag-on-valve technology? I noticed you guys made that acquisition. Are there any products that are ready to be commercialized right now?

This is an ongoing business. There are quite -- they already have a very interesting market position in so-called cosmeceuticals and pharmaceutical or parapharmaceutical products, certain nasal sprays, saline solutions, and so on, where they are. That technology lends itself to an improvement on the product performance for the marketer and for the consumer.

They have -- the company believes that it has considerable upside potential, specifically entering the U.S. market, being a smaller company. They are presently not yet operating in the U.S. They're working out of Switzerland exporting to other countries. Based on our own capabilities and our manufacturing presence, notably in the U.S., we believe that we will be able to justify very soon starting to service U.S. customers out of our SeaquistPerfect U.S. operations.

So there is an ongoing excellent new product portfolio for this Company on one side; and there is an additional potential by geographic expansion.

Okay, thank you.

I am currently showing no further questions. Mr. Siebel, you may conclude with your final remarks.

Okay. Ladies and gentlemen, thank you very much for participating in our call today. So thank you and goodbye until next our conference.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may all disconnect. Everyone have a great day.