Avient Corp (AVNT) 2024 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to Avient Corporation's webcast to discuss the company's second quarter 2024 results. My name is Shannon, and I will be your operator for today. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the call over to Joe Di Salvo, Vice President, Treasurer and Investor Relations. Please proceed.

Thank you, and good morning to everyone joining us on the call today. Before beginning, we'd like to remind you that statements made during this webcast may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements will give current expectations or forecasts of future events and are not guarantees of future performance based on management's expectation and involve a number of business risks and uncertainties, any of which cause actual results differ materially from those expressed in or implied by the forward-looking statements.

We encourage you to refer to our most recent reports, including our 10-Q and any applicable amendments for a complete discussion of these factors and other risks that may affect our future results. During the discussion today, the company is both US GAAP and non-GAAP financial measures.

Please refer to the presentation posted in the Investors section of the Adient website where the company describes the non-GAAP measures and provides a reconciliation for historical non-GAAP financial measures to their most directly comparable GAAP financial measures. A replay of this call will be available on the website.

Information to access the replay is listed in today's press release, which is available at adient.com in the Investor Relations section. Joining me today is President and Chief Executive Officer, Dr. Ashish Khandpur; and Senior Vice President and Chief Financial Officer, Jamie Beggs.

I will now hand the call over to Ashish to begin.

Thank you, Joe, and welcome, everyone. I'm very pleased with our second quarter financial performance, which builds upon our strong fourth quarter results. As I have said on previous calls, one of our main areas of focus is to deliver organic top line growth with margin expansion and this quarter, we achieved both.

Starting with the top line. We delivered sales of $850 million for the quarter, representing 3% growth over the second quarter of 2023 on an as-reported basis. Sales, however, grew 5% on an organic basis, which excludes the impact of foreign exchange. This is particularly noteworthy because it has been seven quarters since the last time, the company delivered sales growth.

The organic revenue growth was broad-based across all geographies and in both of our business segments, color additives and inks and Specialty Engineered Materials, both segments benefited from gaining share, winning new product specifications and inventory destocking in certain end markets.

Our team's ability to grow revenue control costs and operate efficiently as well as raw material deflation helped us expand adjusted EBITDA margins to 16.9%. That's 100 basis points improvement versus the prior year second quarter. This all led to adjusted earnings per share of $0.76, which is a 21% increase versus the prior year and exceeded our prior guidance for the quarter by $0.05.

Our better than expected performance was primarily driven by the color additives and inks segment, which benefited from slightly better demand as well as favorable raw material costs. From an end market perspective, growth in packaging and consumer had the greatest impact on the quarter by growing 8% and 10% respectively. These are two of our largest end markets and both benefited from some restocking, particularly in Europe.

We also had strong growth in building and construction and health care. This was primarily due to new product specifications and gaining share to deliver above market growth. While macro indicators for building and construction remain somewhat weak, both the SEM and color segments in the US and Canada gained share and won new business.

On previous earnings calls, we have noted that healthcare destocking was lagging other end markets. I am pleased to report that we began to see a meaningful improvement in order patterns during the second quarter and grew healthcare sales 10% on a year-over-year basis.

Not only do we believe destocking has run its course. We are well positioned to capitalize in certain medical applications that are currently on trend, most notably in areas of drug delivery and monitoring devices. We have strategically partnered with key pharmaceutical companies and OEMs developing these devices, and we are growing with them as they benefit from strong underlying demand.

In the defense end market demand has been driven by overseas conflicts and specific NATO programs. Our second quarter sales were up modestly over the prior year second quarter, and we continue to expect full year sales growth. It will be in the low double digits.

Telecommunication and Energy, which together constitutes 7% of our sales, remain the more challenged end markets with sales down double digits in the second quarter, but telecommunications end market is primarily impacted by destocking in the US and continued weak demand in Europe.

As we start the third quarter US demand, which accounts for more than 60% of our sales is improving. And we expect overall telecommunication sales to return to modest growth in the second half of the year.

It is a similar story in the energy end market where customers have been managing down inventory levels in the first half of the year. We see improving trends as we start the third quarters, in particular for applications designed to harden the electrical transmission grid.

Our composites business provides innovative materials and applications such as cross arms and insulator rods, which play an important role in ensuring the reliability of the grid in a sustainable manner. We expect the broad category of energy to grow in importance over time, and we will continue to focus on developing innovative solutions in this space.

And I will now hand it off to Jamie to discuss our second quarter results in more detail and to provide an update on our 2024 outlook.

Thank you, Ashish. I was also pleased with our strong performance this quarter, which unfolded largely as expected. As Ashish highlighted, total company sales grew 3% on an as-reported basis and 5% on an organic basis. Excluding the impact of foreign exchange, adjusted EBITDA grew 9% and adjusted EBITDA margins expanded 100 basis points over the second quarter of 2023.

Margin expansion was helped by strong operational and cost control discipline by our teams as well as raw material deflation. Our adjusted EPS of $0.76 translates to 21% growth versus the prior year. In addition to the EBITDA growth, adjusted EPS also benefited from lower interest expense, resulting from a $100 million paydown in August of 2023 as well as repricing of our term loan at that time and again in April of 2024.

To share some perspective on regional sales performance. We provided this slide to reflect organic sales growth by region, beginning with the US and Canada, which makes up 41% of our total sales. The team delivered 5% growth versus the prior year.

New product certifications and share gains underpinned the growth in our largest region. The consumer end market was also strong, benefiting from restocking of personal care products and household goods. We expect to build on this growth in the US and Canada in the second half of the year as we are also seeing increasing momentum for composite applications to replace conventional building materials and improving trends in the US telecom and energy end markets.

Latin America, while only comprising 6% of our total sales had a very strong quarter and grew sales by 19%. Packaging is the primary end market we serve in this region, which benefited from strong demand and applications used in food and beverage as well as cleaning supplies.

The increased demand for such products was likely influenced by recent flooding in South Brazil as well as high temperatures and drought conditions in Mexico. Our presence in Latin America is also strategic, allowing us to serve global OEMs and brand owners who are looking to near-shore their supply chains in light of political uncertainty with trade flows and tariffs.

We are well positioned to participate in this trend and expect to see continued long-term growth in this region. Sales in EMEA grew 4% as the region benefited from restocking and packaging, particularly in food and beverage as well as in the consumer end market. This was partially offset by weaker demand for telecommunication applications.

The sales growth in EMEA as a positive sign that we remain cautious. While there has been some favorable inflation signals correlated with the June interest rate cuts by the European Central Bank, the manufacturing PMI dropped from May to June, which may weigh on business and consumer confidence in the near term.

As such, we expect year-over-year growth will likely remain muted for the region as we move through the balance of the year. In Asia, sales grew 1% as new business gains and health care was largely offset by weakness in building and construction.

While economic uncertainty in China remain, we are seeing share gains and encouraging trends in the order book for the region's two largest end markets, which are packaging and consumer. Accordingly, we expect Asia to grow during the second half of the year.

Turning to a review of segment performance, I'll start with color additives and inks, which grew 5%, excluding the impact of foreign exchange packaging end market, which represents about a third of segment. Sales was up high single digits during the quarter. Most of this growth in the end markets stemmed from Europe and Latin America. As discussed previously, building and construction also contributed to colors performance during the quarter.

This growth was primarily driven by new business wins using our functional additive solutions and construction materials as well as some modest restocking by US customers. The segment was able to maintain net price benefit from continued raw material deflation, along with a focus on cost reductions, particularly in Europe, which help expand overall EBITDA by 15% and EBITDA margins by 200 basis points.

Specialty Engineered Materials segment grew sales 4% organically. The sales growth was primarily driven by restocking in the consumer and health care end markets as well as share gains in wire and cable applications, which helped grow Building and Construction sales. Consumer sales primarily benefited from restocking in personal care and household goods as well as for composite applications used for outdoor sports and other high performance composite fibers.

SEM's base health care business, which was impacted by destocking for several quarters started to see momentum with new orders during the quarter. Examples of applications that showed order pickup included materials for respiratory care and monitoring devices.

Weaker demand in telecommunications and energy partially offset the growth in consumer healthcare and building and construction. Adjusted EBITDA grew 7% and EBITDA margins expanded by 80 basis points, driven by raw material deflation and favorable mix from consumer and healthcare applications, which have accretive margins.

Turning next to guidance. We're providing estimates today for the third quarter and an update to our full year 2024 guidance range. We expect third quarter earnings per share of $0.62, which reflects a 9% increase over the prior year. We expect a second quarter trend of year-over-year growth to continue in the third quarter.

Regarding input costs, in the first half of the year, we realized approximately $35 million in raw material deflation, which was in line with our expectations. However, this benefit is not expected to repeat in the second half of the year as we are seeing modest levels of inflation across the majority of our raw material basket including hydrocarbon-based materials such as polyethylene and polypropylene as well as pigments and certain performance additives.

Additionally, as previously discussed, we have also factored in a $30 million year-over-year headwind from variable compensation in the second half of the year. Taking all of this into consideration, our expectations for the back half of 2024 are largely unchanged from our previous outlook provided in May.

As such, we are adjusting our full year guidance range to reflect the better than expected second quarter results and increasing adjusted EBITDA to a range of $515 million to $540 million and adjusted earnings per share to a range of $2.55 to $2.70. Our full year adjusted EPS guidance now represents 8% to 14% growth over the prior year.

Interest expense expectations are unchanged at approximately $105 million for the full year 2024. We do have a portion of our debt maturing in May of '25, and we look forward to opportunistically refinance it in the near term, subject to market conditions.

If we were to refinance this debt during 2024, we do not expect it to have a material impact to our full year interest expense guidance of $105 million. We continue to expect our adjusted effective tax rate to be between 23% and 25% and our capital expenditures to be roughly $140 million, which are also unchanged versus our prior guidance.

Before turning the call back over to Ashish for closing remarks, I wanted to draw attention to the release of our 2023 sustainability report. We just published our updated report online and I detailed our latest performance metrics and provides examples of sustainability in action at Avient.

I like to call out a few highlights that we are particularly proud of, as I know, are important to all of our stakeholders. First is our reduction in greenhouse gas emissions. Since 2019, we have reduced our Scope one and two emissions by 48% and are quickly approaching our goal of a 55% reduction.

And second are the independent rating agencies that recently updated our scores since our last report, EcoVadis increased even to gold moving us in the top 5% of all reporting companies and CDP increased our score to an A-minus which showcased our alignment with the task force on climate-related financial disclosures. I'd like to thank our employees who contributed to improving our underlying sustainability performance and helped us earn these top-tier scores.

I will now turn it back over to Ashish who will share some exciting news about our upcoming Investor Day.

Thank you, Jamie. Since joining the company, I have been speaking with many stakeholders, including customers, employees and investors. Those conversations, along with collaboration among my leadership team, are forming the basis of a strategic plan that we are finalizing and will share with investors on December 4, in New York City. Registration details will be forthcoming, but for now, please save the date.

I want to close by saying a big thank you to the global Avient team who worked tirelessly to deliver a strong second quarter. I am particularly proud of our teams for delivering organic growth for Avient after a long seven quarters, while expanding margins on the bottom line.

That concludes our prepared remarks for today. Operator, we are now ready to begin the question-and-answer session of today's call.

(Operator Instructions) Mike Harrison, Seaport Research Partners.

Hey. Good morning and congrats on a nice quarter.

Thank you, Michael.

Ashish, I was hoping that maybe you could share some of your thoughts about visibility into the second half. It sounds like your outlook on demand hasn't really changed a whole lot from where it was a few months ago. But I'm curious what you're hearing from customers and maybe what you're seeing in order patterns in some of your key markets that helps to provide some confidence that you can continue to see some growth momentum into the second half?

Sure, Mike. I mean, as you know, on an organic sales growth basis, we finished Q2 at 5%. And when we look at our order book and how we finished July, we feel like of you know, we are right on track with our meeting, our range that has been provided for revenue growth for the year.

So if you think about it in the first half and second half of the year, first half, we have grown as printed sales by 0.5%. And so I to think about it that way. So second half rent accordingly comes down to from low-single digits to high-single digits. So let's take the midpoint of mid-single digits is the expectation.

So that's where we finished Q2. And then as we are looking into Q3, you had some momentum in our order book that that's the kind of a that's very consistent with what we are providing for guidance here. I just want to also talk about a little bit about in Q1 in Q2, we had seven of our nine segments that grew year over year, and that's more than 90% of our revenue mix.

And then as we look into Q3 and Q4, we expect that trend to continue. So we are coming from a place where we are seeing some market demand come back. We are seeing some restocking taking place. But also, we are seeing our teams take more share and win new programs and develop new applications, which is really helping our growth to go into these mid-single digits in the second half of the year.

All right, thank you. And then was hoping that you could talk a little bit about what you're seeing in healthcare it sounds like maybe the destocking process has run its course. But maybe more than that, it sounds like you're seeing some growing opportunities around drug delivery and monitoring.

Can you talk a little bit about some of the partnerships that you've developed there and kind of how you see the health care as segment evolving over the next quarters and maybe next couple of years.

So Mike has just said healthcare, the destocking we believe is finally or and we are seeing restocking both in our own account. We keep and make our accounts or OEMs as well as our distribution we are seeing and of the sales growth and on both those channels.

So that's a good signs, indicating destocking is largely or we are also, our teams have also pivoted to winning more share and new applications in some of the high-growth areas, especially around a drug delivery of obesity and a as monitoring glucose monitoring drugs, kind of applications.

So that's a pivot to winning applications in areas which are growing in health care fast is really helping our health care sales to grow at double digits as we are short in Q2. Now when I look into what's happening up in both battery, both CII. providing additives and color but and as well as SCM side are growing in healthcare. So that's a good sign.

And on the specific devices side, medical equipment and devices side, we are seeing good robust demand, again, restocking for our catheters, inhalers and other drug delivery like syringes type devices, which is our conventional stuff. So we are winning where which what we would call our core businesses, but we are also building some new applications in this fast growth on drug delivery devices.

And just as a context in point, we have been growing our health care equipment and drug delivery business at Gallagher of 14% since 2019. So it has been a good, healthy business is quite profitable and it's growing fast, and we continue to innovate in that area.

All right. Very helpful. Thanks very much.

Frank Mitsch, Fermium Research LLC.

I'm assuming that's the legal drug delivery type of businesses that you're referring to because when you see such high margins, you would you one has to wonder.

It is also legal, Frank. Thank you for clarifying that for us.

Absolutely. With the star in 1Q, is that 38% growth in defense and you mentioned that it was up modestly year-over-year in the second quarter. Can you provide a little more color there and what your expectations are for the balance of the year in that business?

Yes, sure. Frank. So as Q1 was very strong in defense and that helped not only our growth but also our margins. But Q2 sequentially was down, but year-over-year was modestly up versus last year. And as we look into Q3, we still see strong growth in that area.

And more in line with what our results have been in Q2 from a from a revenue perspective, but since the comps last year were quite weak, we see double-digit plus growth our in Q3 for defense. And for the rest of the year included the for full year, we expect it to finished up, as Jamie said in our prepared marks remarks at double digit levels.

And again, good solid momentum in that business. We are winning new programs, not just with the NATO countries, but also with specific programs with local law enforcement agencies, capital police, as well as you know, some new applications with both in Germany and Spain apart from the other NATO countries that we have orders from. So good momentum there.

Very helpful. Thank you. And Jamie, you talked about raw materials being a positive for 2Q, but then expecting inflation impacts in the balance of the year. Is there any way to quantify that?

I think order of magnitude was deflation, something like a [$10 million] benefit in the second quarter and your expectations on 3Q as to what your what you're going to see?

So Q2's deflation number was about $15 million for the first half. It's about $35 million gross or $38 million for the first half. The back half, we're expecting between $5 million to $10 million headwind right now, the way the curves look, it may hit a little bit more in Q4 versus Q3, but that's our current outlook.

All right. So flat in 3Q?

I would expect some that I'm sorry, some inflation in Q3. But to me, that's on the lower end side. I think we'll see a little more in Q4.

Very helpful. Thank you so much.

Michael Sison, Wells Fargo.

Hey, good morning nice quarter. In terms of the second half outlook for sales growth at mid-single digits. Will that mostly the volume growth? It sounds like you have good momentum in the third quarter. Hopefully the Guardian can keep up there as well.

And then just a follow up in terms of R&D, Ashish, any changes that you've made that you're sort of seeing some momentum there, product development or such?

Yes Mike. On the first one, on our second half outlook, this would have even for Q2, all our growth, as you see, is volume related growth. So it's very strong volume growth that we have seen. And then that momentum will continue in second half and second half growth is again, volume related.

So that momentum will continue. And so we are seeing strong in our program wins, new application wins and then goes back to your second question, really with respect to what changes we have done and how, if anything is it's bearing any results yet.

So we have done a lot of our pivot around, our sales team really changing our strategy with respect to how we are addressing different regions of the world. So for example, in Asia, we pivoted to go into more local key accounts apart from the multinational accounts that we were serving, for example, in China because we were seeing the business move away from some of those, you know, between those two local versus global multinational accounts.

And so our teams pivoted there and one share there. We in EMEA, which is, as is a low on growth area, low GDP growth area. Our team's focus is now on winning share and that and we are doing that with new applications as well as just basic blocking and tackling in the business.

And then in US we are seeing momentum with respect to some secular trends with hardening of the electrical grid taking place and other applications like that. And we are our teams are winning there as well with the new products and new applications.

So I think the what you're seeing for our volume growth is a combination of not just the restocking of some market demand come back in certain areas of the world, but also significant amount of growth coming from our new product development and new application development and our share wins that is happening across the globe.

Got it. Thanks. And then in terms of the strategic plan, I know are you going to keep a lot of that is still developing a lot of it, but what metrics do you think are most important for investors to think about and that you're focused on. You'll maybe kind of highlight it there at the Investor Day in December.

And any thoughts about sort of the longer-term earnings power as you have been there for since the beginning of the year?

Yes. So obviously, I mean, I would ask for some patience until December 4, when we actually come back and give the numbers. But just so that, you know, Mike and I, we have highlighted in our past earnings calls, the three top of mind areas for me is really growing organically the top line while expanding the margins on the bottom line, amplifying innovation, which will feed into that top line and profitable bottom line growth.

And then the third thing is building the leadership and talent for Avient of the future. And our strategic plan is really going to address all those things. And really, that's what I can share at this point in time.

But that's where we are focused on how to grow, how to build, make innovation as a central part of our growth strategy, so that not only are we growing the top line in a sustainable way, but also differentiate ourselves from competition and improve our margins

Great. Thank you.

Thank you.

David Huang, Deutsche Bank.

Good morning. Hey, Ashish, I did see that you're hiring a Chief Technology Officer and another person to be in-charge of marketing and new business development. Can you remind us how those organizations are currently structured in your company? And I guess, what do you wish to change or achieve with these new hires?

Sure, David. So the CTO part currently, we are structured both the R&D structure, both in the businesses as well as the central team of technology. And so it's kind of most of the R&D folks are in the business right now and some are in the center of the corporation.

So we want to just activity when we bring the CTO, we are also trying to see how we can really build a flywheel of innovation that that continues to deliver. So we think in terms of Horizon. So Horizon one could be sitting in business, for example, and Horizon two and three could be, either in the business or, being incubated a little bit away from the business. So whilst we're connected very directly to the customer.

So I think that's an R&D model that we are trying to get going. And we have started actively consolidating some of our R&D structures, especially in high-growth spaces to get capacity and capability. So we have some of this R&D scattered around different parts of the company because it came into the company through different acquisitions.

But we have now started pulling them together to build enough scale in areas where we can. We really want to grow fast so we have started doing some organizational changes on that front and the CTO would obviously be part of that story. And then though on the marketing side, you know, we are as we look into some of the new the world is really changing fast and technology trends are changing the world fast.

So if you think about, you know, what is happening with artificial intelligence, it's really going to create a lot of usage for electric power distribution and generation. And so and that has a derivative effect on our businesses because we can supply in those areas. Similarly, semiconductors are needed for AI.

And we need to be at a material provider and we can play in that pastoral area once again. So all of these trends are happening, whether it's mobility, whether it's electrification and so on so forth. And we can become part of those fast-growing markets. And so we need to understand those markets in a better way.

And our and also our go-to-market models, we have a lot of technology, but sometimes how do we approach those markets to commercialize these things is equally important. So this now a new marketing position that we have advertised is going to be helping out in that area.

Got it. And then just going back to the share gains you mentioned, I guess how much this year against contributed to the volume growth in the quarter. Sounds like they're more related to systems, sustainable solutions and composites. I guess if you look at the organic volume growth for those two platforms, where are they today?

And I guess, is there any fundamental underlying competitive dynamic change that contributed to some of the share gains?

Yes. So I think the share gains actually were not as much in composites this time as they were in our traditional engineered materials on the SEM side are fairly on the collaborative side, we saw broad-based share gains and taking market. I think we expect composites to play bigger, as I was mentioning earlier in my comments with respect to winning share in defense and other things with NATO countries.

So composites we're going to kick in, are there also we are seeing, you know, some of a product and building and construction area with respect to our own, panels and composite materials that are used in construction of homes that we are seeing momentum in.

So I think composites is going to be largely a second half story for us. And so but in general, we have seen share gain on the traditional Engineered Materials side. With respect to your second question, which was up.

And then a second question.

So David, maybe just add a bit more because I think you're looking for specificity between on the 5%, how much was related to share gain, how much was related to some new business wins. And then also we had restocking as well. And like she said, I think the applications that you called out with composites and sustainable solutions, that's really more on the new business gain side.

And like, for instance, in building and construction for the company, it was up 15%. And that really is because of the new applications, either in the functional additive space or in certain applications on the composite side that really started to take win with new applications. And then in other cases also in building and construction, for instance, in the wire and cable space, that's more of a share gain.

And then if I go to something like in your packaging, which is up 11% within the region. That really was driven highly by restocking in that space because the underlying market conditions wouldn't suggest that be the case. So really the mix between all three of those buckets for how organic growth grew within the quarter.

Okay, got it. Thank you.

Laurence Alexander, Jefferies.

Yes, good morning. This is Kevin -- for Laurence. So I guess about mix. I guess I'm just wondering how you guys expect your mix to evolve in the short to medium term, some of the back half of this year and maybe into 2025, 2026? Thank you.

And from a backup perspective, we're not expecting a whole lot from price mix come through. As Ashish mentioned earlier, it's really a volume story in the back half of the year. There may be some mix that comes through because it's $0.5 comes a little bit stronger in the back half that may help with margin expansion. But we're not expecting price mix to be material for the back half.

We haven't come up with estimates for '25 and '26. As Ashish mentioned before, we are interested in amplifying innovation in this as programs start to take more hold, we do expect margin expansion to continue on. So we expect that to be positive, but we'll give more specifics when we get to December 4.

Okay, understood. And I guess you talked a little bit about pricing, but I mean, just with raw materials coming down, I'm just curious, let's say, if that trend were to continue into 2025, I mean, would you expect any kind of knock on effects from, let's say, pricing pressures coming from customers further downstream? Or do you expect to kill about that?

Well, pricing is actually going up in the back half of the year. So like I answered with Frank, we expect $5 million to $10 million in the back half of the year. We have a strong history, if you go back to the last 8 to 10 quarters of being able to have a net price benefit, regardless of if it's an inflationary or deflationary environment. The teams have done a really nice job with that. I expect that to continue to be the case.

Okay. Thank you.

Vincent Andrews, Morgan Stanley.

Thank you and good morning. This is Turner Hinrichs on for Vincent. Can you help us what's can you help us understand what's going on from a cash flow perspective and what you expect from working capital for the year?

No for the year and maybe just a little bit of a comparison to prior years, we had a little over $185 million of free cash flow. And as we look into 2024, our capital expenditures for the year are slightly higher than last year. We estimate about $140 million So taking that to effect, we do expect and two things that changed for 2024.

One is the CapEx and the other is working capital. We do expect the higher sales level to also be a cash use versus we had about $40 million of a cash good guy in 2023, which won't repeat in '24 because of the sales good guy. Maybe as a reminder, our working capital's percentage of sale averages between 12% and 13%. We expect that to continue through the back half of this year too.

Great, thank you. And one additional question that I had on what parts of the raws basket is driving the expectation for additional inflation in fourth quarter relative to third quarter? And is this something that you all could see continuing?

Yes. So what we're seeing in the back half really relates to pigments, certain performance additives as well as our hydrocarbon basket, which is primarily driven by polyethylene, polypropylene and TPE. That's really what we're seeing in the current curves. I mean, obviously, that's dependent on kind of the evolution of as we kind of go through the back half, but that's the best visibility that we have at this point.

Great. Thanks. Appreciate the color.

Okay. With that, I think we'll conclude today's call. Thank you everyone for joining us. And we'll see you next quarter.

Thank you.

This concludes today's conference call. Thank you for your participation. You may now disconnect.