Cushman & Wakefield Ltd (CWK) 2022 Q2 法說會逐字稿

Welcome to Cushman & Wakefield's Second Quarter 2022 Earnings Conference Call. (Operator Instructions)

It is now my pleasure to introduce Len Texter, Head of Investor Relations, Global Controller and Chief Accounting Officer for Cushman & Wakefield. Mr. Texter, you may begin the conference.

Thank you, and welcome again to Cushman & Wakefield's Second Quarter 2022 Earnings Conference Call. Earlier today, we issued a press release announcing our financial results for the period. This release, along with today's presentation, can be found on our Investor Relations website at ir.cushmanwakefield.com. Please turn to the page labeled cautionary note on forward-looking statements.

Today's presentation contains forward-looking statements based on our current forecasts and estimates of future events. These statements should be considered estimates only, and actual results may differ materially. During today's call, we will refer to non-GAAP financial measures as outlined by SEC guidelines. Reconciliations of GAAP to non-GAAP financial measures, definitions of non-GAAP financial measures and other related information are found within the financial tables of our earnings release and appendix of today's presentation. Also, please note that throughout the presentation, comparison and growth rates are to comparable periods of 2021 and are in local currency unless otherwise stated. For those of you following along with our presentation, we will begin on Page 4.

And with that, I'd like to turn the call over to our CEO, John Forrester.

Thank you, Len, and thank you to everybody joining our call today. I am pleased to announce another exceptionally strong quarter of earnings. We posted record results for the second quarter, reporting fee revenue of $1.9 billion and adjusted EBITDA of $263 million, reflecting year-over-year growth of 21% and 23%, respectively. Over the last 12 months, we have now delivered 27% revenue growth, adjusted EBITDA growth of 64% and margin expansion of approximately 315 basis points. The strength of our comprehensive, diverse and resilient global service offering is evident in our performance, and highlights the progress we have made in our multiyear strategy of prioritizing investment in the long-term growth sectors of our industry.

Our focus to grow our company, create value and generate strong performance is unwavering, and our performance this quarter reflected it. In terms of service line performance, recurring revenues in our property facility and project management service line continue to generate very pleasing growth for both occupier and investor clients, increasing 16% in the second quarter year-over-year. These services comprise nearly half of our total fee revenue, and historically have proven to be increasingly resilient through times of volatility. In fact, we've seen clients often accelerate strategic decision-making in harsher economic environments.

Our project management business has also grown significantly, up 45% in the second quarter versus prior year as occupiers and investors alike reevaluate their post-COVID occupancy requirements and sustainability objectives. On our last earnings call, I noted that project management, like many of our operations benefit from client activity, not just incremental changes in the amount of space occupied. And this pickup in activity can be seen in our growth. In addition, our global occupier outsourcing platform continues to win mandates of increasing scale as clients turn to Cushman & Wakefield to help reduce costs and drive further real estate operating efficiencies within their organizations. Our leasing business has been strong through the first half. In the office sector, the leasing environment continues to improve steadily. U.S. office using employment increased 1.9%, adding 635,000 jobs in the first half. There are now 1 million more office-using workers in the U.S. as of June 2022 than prior to the commencement of the pandemic. And as we know, more jobs over time means more demand for all types of useful space, particularly office. And more broadly, global office leasing activity continues its recovery as preliminary data shows an increase of 21% in the first half of 2022 or the prior year, while about 50% of office markets globally registered positive demand for office space in the first half. Part of this growth in recovery is attributable to the emergence of areas like Life Sciences, which now represents around 10% of all U.S. leasing.

Lastly, within the office sector, we continue to observe other trends consistent with pre-pandemic norms. Specifically, the split of new leases versus short-term renewals and average lease lengths that are both reverting back to pre-pandemic levels. The industrial logistics sector continues to perform strongly, given the persistent supply/demand imbalance driven by the secular ramp in e-commerce activity. As of the second quarter, U.S. vacancy rates are at a new record low of 3.1%, and rental growth increased 19% year-over-year. For the first half of the year, the market has absorbed over 236 million square feet, which is broadly in line with the record setting levels of 2021.

At the start of this year, many commentators reflected concerns that the logistics market would face supply shortages. The fact that some high-profile occupiers are pushed base back into the market has provided other active tenants the opportunity to participate. In terms of capital markets fundamentals, capital inflows to the commercial real estate sector remain elevated given the general attractiveness of real estate assets across multiple sectors despite rising interest rates. As evidenced by real capital analytics, U.S. transaction volumes are $190 billion, up 17% for the second quarter and above pre-COVID levels. Traditionally, Cushman & Wakefield continues to take share with our transaction volumes rising 116 basis points in the quarter compared to prior year. Our strategic investments made over recent years in those property sectors, which we believe would benefit from outsized growth are reflected in our strong performance, and will continue to drive further value for our clients and shareholders. We are capitalizing on the growth of the U.S. multifamily sector by building an industry-leading multifamily full-service platform with further opportunity for continued growth globally.

The asset class landscape is evolving. According to RCA, multifamily comprised about 45% of the overall U.S. capital transaction volume in the quarter. While our business continues to perform with deep-rooted momentum, we have at least not yet seen material evidence of change in client behavior. However, we are monitoring the changing macroeconomic environment and growing uncertainty closely. While there are areas within our industry that may be impacted by economic volatility, we continue to see strength across the fundamentals of our portfolio. In addition, I would reiterate that we continue to build our capabilities and scale in key sectors where expansion is anticipated despite the potential of more difficult economic environments ahead, areas such as life sciences, biotechnology and data centers. This all positions Cushman & Wakefield better than at any time in our history regardless of the economic environment.

In addition, our exceptional leaders and dedicated teams in the field continue to deliver exceptional service every day to our clients around the world. I would like to highlight a couple of examples that illustrate both our leadership in the industry, but also the exceptional performance of our teams. Cushman & Wakefield is among the first group of companies to have its Net-Zero target approved by the SBTi's recently launched Net-Zero Corporate Standard, the world's first framework for Corporate Net-Zero target setting in line with climate science. This is an important progression of our long-standing commitment to sustainability and our journey to take bold action for the future of our firm, our industry and society.

Our European, Middle East and Africa operations have long been a center of excellence and leadership in the many diverse and unique markets found in the region. But I'm particularly pleased to congratulate our talented leaders in their discipline and focus which has resulted in our business achieving industry-leading earnings and profit margins.

Finally, I'd like to touch on our capital allocation framework. We are continuously winning the most attractive returns to drive shareholder value. our continuous improvement initiatives, highly accretive M&A record and our talent recruiting capabilities, alongside our strong balance sheet have positioned us extremely well. We will continue to deploy capital into the most accretive areas as opportunities present themselves, whether that be through service, the market expansion, all back to our shareholders.

We remain confident about the performance of the business and our progress against our strategy in the ever-expanding market for our services.

And with that, I'd like to turn the call to Neil to discuss our financial performance. Neil?

Thank you, John, and good afternoon, everyone. Overall, the momentum in our markets continued through the second quarter, and I'm pleased to report that we delivered record results for both the second quarter and the first half of the year. For the second quarter, fee revenue of $1.9 million grew 21% over prior year, and adjusted EBITDA of $263 million grew 23% over prior year, resulting in an adjusted EBITDA margin of 13.7%. A margin for the quarter reflects strong revenue growth, particularly in brokerage, and also includes our equity investment in our Greystone joint venture. Partially offsetting these trends was the impact of COVID-related lockdowns in China as well as our continued focus on balanced investments in our business to support future growth.

On a trailing 12-month basis, our margin of 13.9% represents just under 100 basis points of expansion from the end of 2021. Adjusted earnings per share for the quarter were $0.63, an increase of 26% versus prior year. Taking a look at our fee revenue by service line. In the second quarter, leasing and capital markets increased 24% and 33%, respectively. Leasing fee revenue exceeded pre-pandemic levels, increasing 14% over the second quarter of 2019. We continue to see improvement in the Americas office sector as well as ongoing strength in the industrial logistics sector, with demand outpaced supply for the seventh quarter in a row.

In capital markets, despite higher interest rates, investment appetite remains strong with near record levels of available capital, particularly in the Americas, where all property sectors reported growth. As can be seen in our strong growth this quarter, the investments we've made in fast-growing sectors like industrial and multifamily continue to be important growth drivers for the business given the long-term secular trends.

The performance across our entire PM/FM service offering was again strong this quarter, particularly in our project and Facilities Management businesses with PM/FM and valuation and other service lines, up 16% and 8%, respectively.

Turning to our segment results for the quarter. Americas fee revenue was up 22% year-over-year driven by strong performance across all service lines. Leasing and capital markets improved 31% and 29%, respectively, year-over-year. Total leasing was above 2019 pre-pandemic levels, while the office sector was generally in line with 2019 pre-pandemic levels for the second quarter. Adjusted EBITDA of $211 million improved $53 million versus prior year, principally due to the performance of our brokerage business and our Greystone joint venture, which performed in line with our expectations for the second quarter.

In EMEA, revenue growth of 22% was driven by growth across all service lines. Leasing and capital markets grew 21% and 56%, respectively, with broad-based growth across nearly all markets and sectors. We generated adjusted EBITDA of $35 million, up 29% versus prior year, which reflects strong brokerage activity and continued focus on cost discipline. It is worth pointing out that our EMEA business has performed exceptionally well throughout our strategic realignment and multiyear transformation, growing margins more than 300 basis points over the last 12 months, a testament to the exceptional teams we have in the region.

In APAC, revenue growth of 11% was driven by the performance of our PM/FM service line, which grew 22% for the quarter. Partially offsetting this growth were declines in our leasing business of 15% versus prior year, which was principally driven by the impact of COVID-related lockdowns in China. As a result, adjusted EBITDA was down 40% versus prior year.

Moving to our balance sheet. Our financial position remains strong. We ended the second quarter with $1.6 billion of liquidity, consisting of cash on hand of $477 million and availability on our revolving credit facility of $1.1 billion. We have no outstanding borrowings on our revolver. Net leverage was 2.6x at the end of the second quarter, unchanged from the first quarter. We are well positioned to continue to fund both operations and investments, and have an active pipeline of investment opportunities, which we are constantly evaluating. As John mentioned, we will continue to deploy capital in areas that provide the most accretive returns to our shareholders.

In conclusion, we are encouraged with the performance of our entire portfolio for the first half of the year. We have a diverse global business that is capitalizing on secular growth trends. While the first half performance was similar to the momentum we saw last year, we do recognize that we are now balancing the second half of the year with a differing macroeconomic backdrop, specifically in capital markets, where we expect second half comparisons to be challenging given the performance delivered a year ago. Consistent with our typical practice, we are not providing an update to our full year 2022 guidance. We will revisit after the third quarter.

Our business model has proven to be very resilient over an entire cycle and our diversified revenue streams, disciplined cost management and recent investments in growth sectors provide us with greater confidence as we head into this period of economic uncertainty. We believe we are well positioned to manage through any number of scenarios and continue to deliver value to our clients and our shareholders.

With that, I'll turn the call back to our operator for the Q&A portion of today's call.

(Operator Instructions) Our first question will come from Anthony Paolone with JPMorgan.

Neil, maybe I'll start with you. I understand not wanting to address guidance until there's a little more clarity on the fourth quarter. But just looking at the PM/FM business, if we go back to your original guidance there being up, I think, mid-single digits for the year. It's just been running stronger. Just wondering, it's one of the more stable business, a little bit less seasonality and it's -- what's keeping that from potentially being stronger than mid-single digits this year?

Tony, it's a great question. And certainly, we've been exceptionally pleased with the performance of that business through the first half of the year. Some of it is the timing of contracts as they come into the business. So I'd encourage you to look at a slightly longer run. So if you look at the last 9 to 12 months, it still is a very strong performance. And we would expect the higher momentum to continue as we look through the back half of the year. As you said, it's resilient to economic conditions, and certainly, it's something we're very pleased with.

Okay. And then, John, you've been in the seat now for a couple of quarters. Just curious if you could update us on how you're thinking about your growth priorities, and any parts of the business that have struck you as needing more or less attention now?

Tony, well, I think I said this on the last call, which is -- yes, I'm new in Chair, but I've sat around the table and been in the room with Neil and Brad on these calls for an awful long time and be involved with the build of our portfolio. I'm really pleased most part with the -- how the multiyear strategy of the secular (inaudible) of our investment in resource build is showing up. We've always been a very strong globally diverse business, more so on the transactional side going back 5 to 7 years. But as you touched on the first question with Neil, the really strong build year-over-year that we've seen in our recurring revenue businesses and really exceptional margin growth in those businesses is very pleasing. One thing we are keeping an eye though is how we go in the second half. And we've already begun to do what we do really well here at Cushman & Wakefield. We need to be very, very careful about how we use every dollar in the company. And so for me, that's where real heavy focus lies today.

Does that create a priority in terms of your cash usage between hiring, debt reduction, stock buyback, M&A, anything you can address there?

I think on the basis you laid out there, 3 or 4 areas is exactly how we think about it. We look at each area with a myopic view that we continue to want to hire into those secular growth areas at weight, at global connectivity. And then the flips are being very careful on those sectors where there's less growth. Overall, it drives the portfolio richness and diversity. If we are going to go into any form of downturn globally, I think as a company, we're going to go in as a very different business than to any prior downturn, much more strongly, much more resilient than before.

Our next question will come from Chandni Luthra with Goldman Sachs.

So I would like to continue with the last question that was just asked. So if we do go into a recession, help us understand what levers do you have to pull, and how do you think you are a different company now versus, say, 2020? I completely understand it was a black swan event. It wasn't really a traditional recession. But just help us understand what levers do you have to pull in order to manage your cost structure?

Thank you, Chandni, and thank you for the question. If you go back only the short period to late 2019, we first started talking about the opportunity that we had as an organization to lean into significant cost withdrawal. We said to the market, we'd take upwards of $250 million of fixed long-term cost out of the company. And we have done that, and we're still coming to the very back end of that tail of cost out. It's a big part of our margin story.

It's also a very big part of how we look at as a management team, running the business. So you've got your fixed costs, you've got variables that sit in the market such as travel, marketing, research, support, all of which we can boil down on a sector-by-sector location-by-location basis and ensure that we're not allowing any part of the business to either be starved of resources for growth, which is critical as much of our portfolio will continue to grow through a downturn. But also we will be very sharp on cost as we always have been in any other area, which sees less than the positive growth. But as a global business, upwards of 54,000 colleagues now, I believe, that's a large portfolio on which you have many, many levers to pull on cost. And our management team globally -- I can't overemphasize this enough. Our management team globally is highly match fit in this area of management.

Okay. I appreciate that color. And switching gears to the outlook for PM/FM business a little bit and just thinking about that in the event of a recession. One thing we've kind of -- you guys have talked about in the past in these last 2 years has been that cross-selling opportunities have been something that bodes very well. You get these good transactions and then you have opportunities to cross-sell PM/FM within that. How should we think about the outlook for PM/FM in the event of a tougher economic setup?

I think as very short, we will continue to have high expectations of growth through whatever economic scenario we see out there other than something that's entirely unforeseen. In the prepared remarks, I touched on the reality that in downturns, the outsourcing business actually tends to expand pretty strongly as our client base themselves seek cost shelter through working with an organization that's got the scale of the Cushman & Wakefield to take onboard their services and drive value. So getting the portfolio, the diversity of our business is absolutely our strength.

Our next question will come from Michael Griffin with Citi.

Maybe just touch on inflation for a second. I'd be curious to see sort of where you're feeling the effects of inflation sort of most across your business lines? And what's the best way you found to sort of mitigate the effects?

Yes. Michael, great question. Look, inflation, while it does impact the business, it's not one of the material factors that drives the business. And the reason is inflation really impacts the PM/FM business most. But the majority of our contracts have inflation adjusters or contracts that are cost-plus. And so while inflation is certainly something we're watching closely, we don't see it as a material risk to the business as we go forward.

We'd be very careful around our employment cost inflation. I think as everybody has been, particularly in the private sector. But I'll just focus on 1 additional point. We are not exposed to say, the real estate development market, the direct development market, where we will be taking on any risk of construction cost inflation, for instance. So that's not a business that we're in and have any risk in.

Got you. That's helpful. I appreciate the color on that. Maybe switching gears to the office leasing side of things. Your commentary seemed relatively more positive definitely compared to sort of what the sentiments sort of been in the space as of recent. I'm curious if you're getting a sense of kind of what kind of tenants you're seeing drive a lot of this demand, if it's any specific sectors, geographies? Any additional comment there would be helpful.

Delighted to, Michael. I'd start by reiterating something that Brad and I have actually both said on earnings calls, which is we did expect it to be through 2024 before the office market on a like-for-like basis came back to pre-pandemic levels. And we still feel we're right on track for that to occur. So whilst our office revenues are now -- sorry, our office-defined revenues are substantially higher than pre-pandemic levels. We've seen an expansion within that or what you might call the alternatives like biotechnology life sciences, which largely come out of office are the prior used offices going into that type of use, are defined as such within our calculation. So expansion more certainly in the secular growth areas. And there's a flow around the world of tech drove the last 7 to 8 years, now tech is a little bit on the back foot, particularly large tech is a little bit on the back. Professional services growing strongly in the office sector globally. And I think what we're seeing -- I'd point back to, again, a fundamental that I continue to reiterate. It's not the amount of space that is utilized primarily that drives our revenues. It's the activity within the sector, and we're beginning to see this accelerated pickup in activity driven by environmental sustainable issues. So much of the office stock globally is obsolete, and organizations are now highly focused on upgrading the quality of their accommodation, irrespective of the fact they may or may not have a lease event, or at lease expiry in the near term. So the activity levels are driving the general office sector and high growth coming from the secular growth trend areas.

Our next question will come from (inaudible) with Morgan Stanley.

Great. Just sticking on the office leasing questions, if I could ask it a different way. Is there a way to break it out, whether a big, small user or by sectors? Or is it sort of all across the board, the activity that you're seeing?

So well, I'd say there is activity across the board. But between each tier of quality of office, it's a different type of activity. So core high-class offices performing outstandingly well, not just in the absorption rates globally, but also in true rental growth. Again, I think a lot of that is about the return to the office high-performing environment, organizations wanting to give their staff something to come back to as well as the environmental sustainability focus.

And as you get away from that high quality down to the poorer quality of getting this obsolescence factor coming into the B and C, where ultimately, there may be no ready market. So the buildings go into the redevelopment portfolios and become something else. There's a very agile market out there globally, re-purposing buildings for different uses, and moving away from the traditional office, let's say, to re-purposing them for whether it's laboratories, for the life sciences or even moving into multifamily and the re-purposing of space is driving the activity in the B and C stack, certainly the C sector. Does that answer the question?

Yes. That's exactly right. That's really helpful.

(Operator Instructions) Our next question will come from Stephen Sheldon with William Blair.

This is actually Pat McIlwee on for Stephen. So first of all, the $3 million step-up in interest expense this quarter, I thought it was pretty modest given give or take, $3 billion in floating rate debt. Is there any detail you can provide on your hedging activities there? Or any context you can give us as we think about how that might trend?

Yes. Sure, Pat. We are actually in pretty good shape. So in addition to the senior notes, which are fixed, we are about 75% of our net debt is actually fixed with interest rate swaps. So only about 25% is floating. And so that's why you're seeing less of an impact on our interest cost. We feel like we're in good shape.

Great. Okay. And then can you just elaborate a little bit on what you saw in APAC during the quarter? Obviously, not a huge piece of the business, but fee revenue grew around 11% constant currency but the regional EBITDA obviously took quite a big step back. I'm sure there's a variety of factors that play there, but just any additional color would be helpful.

Yes, happy to. It's primarily a mix issue actually because we saw strong growth in our PM/FM service line, which drove the top line of APAC really nicely. But where we saw the constraint, which as Neil said in his prepared remarks, was in the area -- on the whole, centered in China, centered in leasing and brokerage relating to -- largely the whole quarter being in one form of lockdown or another. The margin within that was -- is very healthy, and therefore, when that type of business falls away a little bit, the margin is not replaced by simply the type of growth we've seen in PM/FM. But China is going to come back. It will be active again. Our recurring revenue business will continue to grow, as we've said. So actually, we feel very good about the prospects for APAC, although we're very sensitive to when the timing of China's return will actually show up now.

Understood. And then if I could sneak one quick one in here. Can you just provide an update on what your pipelines are looking like in capital markets and leasing.

Okay. I'll start with leasing, first of all. And again, you -- the sophistication now of the market means you have to look at each use class separately because of the dynamics that are driving each use class are different. I'll start with retail, actually, which is something that's not been spoken about by us or our peers for quite some time. We're in our fourth quarter of material revenue growth in retail globally, which signals a real U-turn in that long-term reduction as physical retail was really put back to the market primarily. Retail developers, owners and occupiers have found, I think, the way to the future. There's a real keen understanding that retailer is going to remain a big part of the shopper experience and the retail -- physical retail itself needs upgrading. And that's a lot of activity for us and our teams around the world in doing that. So the pipeline for retail is growing and looks strong. Industrial -- for us, we went into COVID with as much as 65% of our leasing revenues coming from office. We can certainly see a longer-term mix is closer to 50% or even slightly below as the strength in industrial and alternative uses comes through very strongly in us, as said in the prepared remarks, industrial leasing continues based on the secular trend.

So we feel good about the pipeline there. And the worries of simply there being no real estate to acquire for our tenants isn't the case of some of the major global platforms put space back to the market. Office, and what I've talked about already, is there are many, many layers to office. Interestingly, this year, we have a very -- a relatively high level of lease expiries globally. And only around about 8% of leases come mature every year. So 92% is captive. But we had a lot of leases where the tenants kicked down the road over the last 2 to 3 years because of the pandemic and the uncertainty in the office market. So tenants were taking new 1-year or 2-year leases. So therefore, we've got quite a lot of opportunity this year. And I tend to look at that as a positive because as I continue to reiterate, the activity in the market, moving a client from A2B, agreeing a new lease, even if it's on a slightly smaller footprint. They're already opportunities. So the pipeline in the office market, driven by just the transparent level of expiries, it is relatively good.

I'm sure your question went a little bit to capital markets. Ultimately, -- and I think for us, looking at our continually strong performance in capital markets, to me, it seems that the client behavior, whether that's buyers or sellers is based on the fact that the headwinds, whether that's interest rate increases, supply chain issues, inflation, energy costs, all of these headwinds being around. They have been well known and understood now for upwards of 6 months. So the transaction that we're seeing going ahead tend to be based on strong deals with sophisticated buyers and sellers. And whether there's a deployment of capital either by sector, by price point, we do continue to see the market moving forward. So I wouldn't, to an extent, call it in a pause. That pause is a very strong word. But what I would say is there's a lot of people being very careful about where they put their capital.

And finally, pipeline really depends what you're asking the question of, is it about capital available to be deployed or is it about the amount of real estate for sale. Because when you have a bid-ask spread, which has been mentioned by a number of our peers on their calls this week, it really depends which question you're asking. So yes, there's a lot of real estate for sale at the moment. But the buyer market globally is not necessarily aligned with the sale prices. So the pipeline really depends on whether you're talking about record levels of real estate for sale or still record levels of capital to be deployed, but price to be found.

Next question will come from Patrick O'Shaughnessy with Raymond James.

It's actually David (inaudible) on for Patrick. I wanted to start with more of a strategic question for John. Cushman's name keeps getting thrown around as a potential buyer. So maybe regardless of whether or not these stores have any merit. As currently composed, do you feel that Cushman has the scale you need to achieve the margin targets and the strategic objectives would you aspire?

Yes. It's a good question. It's something we think about a lot as we consider our deployment of capital. We have -- as an organization, we have delivered really, really pleasing results quarter-over-quarter-over-quarter. So I would say that our journey to the types of margins that we've been sharing with since the share in the market since the IPO is well on target, and we have obviously the scale to achieve that. So strategically, I like the growing nature of our organization, the growing diversity of our portfolio, the growing resilience of our earnings. But I also ultimately see this industry as one which has further consolidation opportunities, large, small and midsize globally.

So we want to remain particularly active on the M&A front as we see opportunities to deploy our capital with higher accretive returns than the other uses we might put it to from time-to-time. Is that helpful?

Got it. That's very helpful. Yes, that helps. And then maybe switching gears to the WeWork partnership a bit. I was wondering if you could update us on the migration of the facilities management contract for WeWork. I believe that started in the second quarter. Can you speak to how the roll on of that contract impacted the sequential acceleration in the PM/FM line? And then maybe as a clarification, is that contract fully ramped within the facilities management business? Or is that roll-on happening (inaudible)?

So we don't talk to specific contracts in the -- we mentioned that, that was something (inaudible) to win through the investment in WeWork last year, but we don't talk to the specific machinations of each contract. What I would say is that, that contract was well understood when we looked at the expected performance of our global outsourcing business, and the FM business this year and everything is going extremely well.

Great. And then just the clarification on -- is that fully ramped now? Or is that rolling on (inaudible)?

I wouldn't speak to whether it's entirely and fully ramped because it is a progressive ramp but I'll have to check that out, and I'll get back to you.

This concludes our question-and-answer session. I would like to turn the conference back over to John Forrester for any closing remarks.

Thank you, and thanks to everyone who joined Neil and I on the call today and also for the questions. We look forward to speaking with you all again in 3 months' time. Bye-bye.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.