Fresh Del Monte Produce Inc (FDP) 2024 Q3 法說會逐字稿

Good day, everyone and welcome to Fresh Del Monte's produce, third quarter, 2024 earnings conference call. (Operator Instructions)I would like to introduce. I would like to turn today's call over to the Vice President, investor relations with Fresh Del Monte produce, Miss Christine Canella. Please go ahead, Miss Cana.

Thank you Chris.

Good morning, everyone. And thank you for joining our third quarter 2024 conference call. Joining me in today's discussion are Mr Mohammad Abu Ali, Chairman and Chief Executive Officer and Miss Monica Vicente, senior Vice President and Chief Financial Officer. I hope that you had a chance to review the press release that was issued earlier via business wire. You may also visit company IR website at investor relations dot fresh dot to access today's earnings material and to register for future distribution. This conference call is being webcast live on our website and will be available for replay after this call. Please note that our press release and our call today include non-GAAP measures, reconciliations of these non-GAAP financial measures are set forth in the press release and earnings presentation which is available on our website.

I would like to remind you that much of the information we will be speaking to today including the answers we give in response to your questions may include forward-looking statements within the safe harbor provisions of the federal securities laws in today's press release. And in our sec filings, we detail risks that may cause our future results to differ materially from these forward-looking statements. Our statements are as of today, October 31st and we have no obligation to update any forward-looking statements we may make during the call. We will provide a business update along with an overview of our third quarter, 2024 financial results followed by a question and answer session. With that. I will turn today's call over to Mr Mohammad Abu Ghazaleh . Please go ahead.

Thank you Christine and thank you for joining us for our third quarter, 24 earning results.

As we reflect on the third quarter of 2024 I am pleased to report that we continue to see solid performance across key areas of our business.

Despite certain challenges in the broader market, fresh demonte has remained resilient and focused on delivering value to its shareholders.

I would like to address the important update we shared earlier this week regarding man packing as we have finalized the strategic path forward for our vegetable division after a comprehensive review of our operations which included exploring various potential avenues.

We decided on a three p approach to streamline man packing.

This includes consolidating facilities, refining product offerings and divesting excess assets by becoming more efficient. We aim to improve profitability, elevate our business offerings and deliver even greater value through innovation, reinforcing our commitment to future growth, operational excellence and staying ahead of evolving customer and consumer demands.

Having covered this important update, I would like to shift focus our third quarter performance compared to the prior year period. Gross profit was up by 26% driven primarily by our fresh and value added product segment, net income attributable to fresh, what they produce was $42 million for the quarter compared with $8 million in the same period last year, reflecting more than 400% increase starting with our fresh and value added product segment.

Fresh del Monte continues to solidify its position as the global leader in pineapples.

Our holo pineapples and pink glow pineapples are prime examples of the kind of innovation that drives our business.

These varieties have become consumer favorites contributing to strong demand and reinforcing our leadership in this in this space worldwide.

In fact, demand for our pineapples continues to outpace supply.

We are actively exploring opportunities to expand production to meet this growing demand.

Earlier this month, we opened the waitlist for our ruby grew pineapple in Europe for 22,025 delivery delivery following the successful launch in China and the US earlier this year, the early entrance in this high end luxury variety has been encouraging further, demonstrating our ability to innovate and meet global consumer preferences.

We are continually exploring exploring ways to add more financial innovations to our portfolio ensuring we remain at the forefront of this category by apple volumes and margins were up for the quarter driven by strong demand for our popular multi quality innovations.

Next, let's turn to the fresh cut division of our fresh and value added products which continues to be a strong performer worldwide. In the US, we have built a solid foundation over the years, we continually seek ways to expand our reach with current and new customers and explore new product lines to meet evolving market demands.

Furthermore, our proactive approach to defense 204 rule positions us as a leader in regulatory compliance.

We have assembled a dedicated team and established robust systems to meet the stringent requirements for enhanced flexibility of high risk foods.

This strategic investment strengthens our risk management framework, improves operational efficiency and fosters greater consumer cost in our products. And our supply chain resilience.

Ultimately, our commitment to F 2,204 compliance creates a significant competitive advantage and drives long term value creation for our stakeholders in Asia. We officially completed consolidating our fresh cut facility, improving efficiency, reducing costs and enhancing, enhancing customer service.

Our fresh cap facility is excelling in the UK with increased profitability and further expansion plans.

Our avocado program as a whole continues to be a key growth driver for us particularly in North America.

By leveraging our established sourcing network and brightening capabilities. We remain committed to growing demand and maintaining a solid competitive position in the market.

Strengthening, our leadership has been a top priority as we drive growth and innovation across our key categories.

In quarter three, we were proud to announce several key leadership hires.

Danny Duas rejoined us as North American, senior Vice President of sales marketing and product management, bringing over 35 years of industry experience.

We are happy to have him back.

We also welcome Doctor Nizar had there and Doctor IMA had two globally recognized experts in their fields leading our efforts in biomass optimization and developing higher margin value added products.

We see great potential in harnessing the full value of our biomass to unlock transformative opportunities across our portfolio.

However, it's important to remember the day you plant the seed is not the day you eat the fruit just as our fresh cut fruit success took time.

This initiative is in its early stages and we will share more as it evolves.

Yet we believe our vision, strategic approach and proven track record position us to unlock nature's potential maximizing every part of the fruit to drive sustainability while creating higher margin products.

Two weeks ago, we released our 2023 sustainability report which outlines significant progress across several key areas.

Notably, we achieved our emissions reduction target seven years ahead of schedule an accomplishment that underscores our unwavering commitment to sustainability.

Building on this momentum, we are actively pursuing additional innovative opportunities to further reduce our carbon emissions and drive meaningful environmental impact.

I encourage you to explore the full report now available on fresh demon dotcom to get further insight into our efforts and continued dedication to responsible business practices.

Lastly, I'm proud to share that pred Monte was recently recognized with two prestigious awards, Newsweek's world's most trustworthy companies and the humankind. 100.

These recognitions reflect the dedication, passion and integrity of our 81,000 global team members. I couldn't be prouder of our team and these well deserved accurate with that. I would then over to Monica to discuss our third quarter, 2024 results in the year.

Thank you, Mr Abu Gali and good morning everyone and thank you for joining us on today's call. Let's begin with an update on our map man packing operations. We recently finalized our decision which includes the consolidation of three facilities into a single facility facility at our Gonzalez California location.

This move allows us to streamline operations and enhance overall efficiency. We anticipate these actions will allow us to improve our profitability by approximately $15million to $20 million annually beginning in 2025.

As part of this decision, we will discontinue several product lines and have agreed to sell certain assets of freshly farms, a wholly owned subsidiary of our man packing business. The assets sold as part of the transaction include a manufacturing facility and equipment in Arizona as well as the Fresh Leaf Farms brand and we will be exiting two lease facilities in California.

The sale which is subject to customary closing conditions is expected to close in November of 2024.

Not that we've covered the update on man packing operations. I'd like to shift the focus to two other important topics. First, I'll address the IL A strike and then I'll move to discuss the effects of recent weather related events in the US, the I A strike which affected the east and Gulf ports in the United States during the third quarter caused a three day disruption. However, we experienced no disruptions in the ports we utilized in these areas during the strike.

Shifting now to the recent weather related events in July 2024 hurricane Barrel, a category one storm impacted the Houston and Dallas Texas area causing adverse weather and power outages including at our Houston facility. This disruption necessitated the rerouting of inventory and adjustments in our logistics and transportation plans.

Despite these challenges, the financial impact was minimal at approximately$ 1 million. And we're working with our insurance provider in September, Hurricane Helene, a category four storm affected several states while our facilities in the areas hit by the storm were not impacted and we experienced minimal disruptions with our operations. We remain deeply aware of the broader impact of the storm to so many.

Most recently in early October hurricane Milton made landfall in Florida as a category three storm resulting in damages to our Port Manatee facility south of Tampa Florida.

Service from the Port Manatee facility were disrupted for a short period of time.

During this time, we rerouted and discharged one vessel in Freeport Texas and distributed our products to other facilities not impacted by the hurricane.

The extent of the damage and disruption to our port man operations including incremental logistics charges as a result of shifting service to our other facilities is being assessed. We do not believe that the damage or disruption caused by hurricane Milton will have a significant financial impact. We also have insurance coverage and we're currently working with our insurance providers to assess the overall impact from the storm.

However, there can be no assurance that insurance proceeds if any for hurricane Beryl and hurricane Milton will cover any damage or incremental expenses identified.

Now, let's move on to our financial results for the third quarter. Of 2024 net sales were a billion, $20 million compared with $1-3 million in the prior year period.

The increase in net sales was primarily driven by higher net sales in our fresh and value added product segment. Due to higher sales volume as well as increased per unit selling prices, principally of pineapple and avocado. As a result of strong market demand, the increase was partially offset by a decrease in banana net sales.

Gross profit for the third quarter of 2024 was $94 million compared with $74 million in the prior year. Gross margin increased by 180 basis points to 9.2% compared with 7.4% in the prior year.

The increase in gross profit was primarily driven by higher sales volume and higher per unit selling prices in the fresh and value added product segment partially offset by the higher per unit production and procurement costs, lower sales volume in the banana segment. And the negative impact of fluctuations in exchange rates primarily related to a stronger Costa Rica colon adjusted gross profit for the third quarter of 2024 was$ 94 million compared with $83 million in the prior year.

The increase in adjusted gross profit excludes$ 0.6 million of other related product charges. Net primarily as a result of $1 million of logistics and inventory write offs as a result of hurricane Burl during July 24th, partially offset by$$ 0.6 million of insurance recoveries related to shipment disruptions in the Red Sea. During the second quarter of 2024 operating income for the third quarter of 2024 was$ 54 million compared with $25 million in the prior year.

The increase in operating income was primarily driven by higher gross profit. Combined with a higher gain on sale of property plant and equipment adjusted operating income was $47 million compared with $34 million in the prior year.

The increase in adjusted operating income excludes$ 0.6 million of other product related charges net that I shared earlier and$ 0.2 million of acid impairment and other charges. Net due to heavy wind and rainstorms in Chile and an $8 million gain primarily from the sale of a warehouse in Chile.

Other income expense net for the third quarter of 2024 was a gain of $0.1 million compared with a loss of $7 million in the prior year.

The change was primarily due to a gain in an investment this quarter and lower foreign currency losses as compared with the same period last year.

Net income attributable to fresh Del Monte was $42 million for the third quarter of 2024. Compared with $8 million in the prior year and adjusted DP. Net income was $37 million compared with $17 million the prior year adjusted DP net income for the third quarter. 2024 excludes the previously mentioned adjustments and the associated $2.3 million tax effect.

Our diluted earnings per share were 88¢ in the third quarter compared with 17¢ in the prior year adjusted diluted earnings per share with 77¢ compared with 35¢ last year.

Adjusted EBITA for the third quarter was $68 million or 7% of net sales compared with $50 million or 5% of net sales in the same quarter last year.

This represents a solid improvement over the prior year period.

I will now go into more detail on the second quarter on the third quarter, performance of our segments beginning with our fresh and value added product segment.

Net sales for the third quarter of 2024 were$ 624 million compared with $574 million in the prior year.

The increase in net sales was primarily a result of higher sales volume as well as higher per unit selling prices in our avocado, pineapple prepared food and fresh cut fruit product lines.

These increases were partially offset by lower net sales of vegetables due to lower sales volume as a result of strategic volume rationalization.

We are pleased to report that gross profit was$ 63 million compared with $36 million in the prior year.

The increase in gross profit was primarily driven by higher net sales and lower per unit production costs of pineapple and fresh cut fruit partially offset by the negative impact of fluctuations in exchange rates. Primarily a stronger Costa Rica colon gross margin was 10.1% compared with 6.3% in the prior year.

This marks our second consecutive quarter, delivering a double digit gross margin in this segment.

Gross profit for the third quarter of 2024 includes$ 0.2 million of other product related charges. Previously mentioned in our banana segment. Net sales for the third quarter of 2024 were$ 345 million compared with $385 million in the prior year.

The decrease in net sales was primarily due to lower sales volume in our North America region due to competitive market pressures which we have discussed in prior quarters. Additionally, lower sales volume in our Asia region were caused by a decrease in supply from the Philippines due to weather related events.

The decrease was partially offset by higher per unit selling prices in Asia resulting from the lower industry supply.

Gross profit was $21 million compared with $32 million in the prior year and gross margin was 6.2% compared with 8.3% in the prior year.

The decrease in gross profit was principally driven by lower net sales, higher per unit production costs and the negative impact of fluctuations in exchange rates due to a stronger Costa Rica Colon. Partially offset by lower per unit. Ocean freight costs gross profit for the third quarter of 2024 includes $0.4 million of other product related charges previously mentioned in our other products and services segment. For the third quarter of 2024 net sales were $51 million compared with$ 44 million in the prior year.

The increase in net sales was primarily driven by higher per unit selling prices in our poultry and meat business as well as higher net sales in our third party ocean freight services due to higher rates, gross profit was$ 9 million compared with $6 million in the prior year and gross margin was 18.2% compared with 14.2 last year.

The increase in gross profit was primarily a result of higher per unit selling prices and lower per unit production costs in our poultry and meat business.

Now moving to selected financial data, our income tax provision was $8 million for the third quarter compared with 4 million in the prior year.

The increase was primarily due to increased earnings in certain higher tax jurisdictions partially offset by the prior year. Tax effects related to the sale of stock of a subsidiary and asset sales in the Middle East and North America.

We expect our effective tax rate for the full year to approximate 20%.

Now let's turn our attention to our financial position focusing on our net cash and capital spend for the quarter, net cash provided by operating activities for the 1st month of 2024 for the first nine months of 2024 was 187 million compared with 180 million in the prior year.

The increase was primarily due to higher net income during the first nine months and proceeds received this quarter as a result of the termination of our interest rate swap, the increase was partially offset by the impact of working capital fluctuations primarily related to inventory long term debt decreased by 33% to $270 million at the end of the third quarter of 2024 compared with $285 million at the end of the second quarter this year and $401 million at the end of the same quarter. Last year, we have achieved the lowest level of long term debt since the end of 2017. Demonstrating our dedication and commitment to maintaining a prudent capital structure and enhancing long term value for our shareholders by reducing our debt. Our leverage ratio is now 1.01 times adjusted EBITA as it relates to our capital expenditures. For the first nine months, we invested$ 34 million compared with $41 million in the prior year. We expect capital expenditures for the year to be in the range of $55million to $60 million.

As announced in our press release, we declared a quarterly cash dividend of 25¢ per share payable on December 6th, 2024 to shareholders of record on November 14th, 2024 on an annual basis, this amounts to $1 per share, which represents a dividend yield of approximately 3.4%.

I'll look for the year. I would like to provide an update on our expectations for the remainder of the full year 2024 by business segment in our fresh and value added segment. We anticipate that net sales for the full year to be in the range of 3 to 4% higher compared with the prior year, primarily driven by our avocado pineapple and fresh cut product, fresh cut fruit product lines.

Currently, our gross margin, we also we expect it to be in the range of 9 to 10% for the full year 2024 over time. As we improve the mix in this segment, we are confident in our ability to deliver double digit gross margins in the low 10s. This positive trend underscores our strategic focus and highlights the promising future of our fresh and value added segment to further improve our gross margin. We're in the process of implementing several strategic initiatives. Firstly, we're continuing to optimize our operations by consolidating facilities to reduce operational costs and improve margins. For example, as I shared earlier, we're consolidating three facilities in our man packing operation into one which aims to reduce costs and enhance efficiency And in the second quarter of 2024 in Japan, we consolidated two facilities into one.

We also completed an expansion of our Fresco facility in the UK this year which has optimized our efficiency and improved our gross margin for this market.

We continue to innovate and introduce new product offerings particularly in our pineapple and fresh cut fruit product lines.

And we're actively managing our production and procurement costs regarding our banana segment. For the full year, we reiterate a 5 to 7% decrease in sales volume and a 4 to 5% reduction in per unit pricing compared to prior year. These projections are consistent with what we shared with you last quarter.

Historically, the gross margin for this segment has been in the range of 5 to 7% and we believe this will be the range for this year as well.

Despite the challenges we've incurred this past year, it is essential for us to remain in this segment to serve our customers and maintain a solid market position. We recognize the importance of bananas as a key entry point into retail supermarkets which supports the visibility and sales of the other products in our portfolio.

Our expectations for the remainder of 2024 for the other products and services segment remain consistent with the results reported in the first nine months of this year.

This concludes our financial review. We can now turn the call over to Q&A Christa.

Thank you. (Operator Instructions).

Your first question comes from the line of Mitch Pinheiro with Sturdivant & Co. Please go ahead.

Yeah. Hello there. Good morning, everybody.

So I have a bunch of questions. I guess first just that I appreciate the update on man packing. My question was did I hear this right? Monica, that, that you expect to save $15 to $20 million or is that an increase in gross profit next year as a result of all these actions?

Correct? That's our estimate for next year based on the consolidation and reducing some of our product lines.

No, didn't you guys already consolidate some of the man facilities in a year ago or two years ago or is, am I, am I misremembering?

we did some consolidation but this further consolidates three facilities into one and then we're selling some of the excess assets for the freshly farm operation.

Okay. And so, you're going to have one facility at the end of all this, you'll have just one facility and are you and all of this savings or or increasing gross profit. It's, all due to the fixed cost consolidation. There's no other, there's nothing else going on there or is there? Pitch.

Mitch, good morning Mitch that we used to have 4to 5 facilities. Before the consolidation, we used to have across the facilities, transportation and logistic cost. We used to have inefficiencies. We used to have a very difficult situation with the supply chain. Now, as Monica just mentioned, we consolidated everything under one roof. All our product lines will be producing one under one roof. It will all the shipments will go from one location.

And that's why Monica just mentioned that we could expect $50million to $20 million in savings going forward, which means going to the bottom line ultimately.

And mitch and there's still room for growth. So this is based on like you say, on, on overhead savings. And this is what we expect on just that and there's still room for growth in the in the facility.

And then just one last question on that is just, is this, so that $15 to $20 million was for all of 2025?

Is it, back end loaded or should we expect to see like, you know, an even level, you know, four or $5 million a quarter? Throughout the year? How do, how should we look at that?

Well, it depends on the the seasonality of the product lines. But I would, I, I would estimate that should be in that region, which, but overall it would be on annual basis.

Okay. And then, you had a great quarter in the fresh and value added segment. And I'm curious, I don't, I haven't seen the queue yet. I guess we'll get that later today or. But, can you, it looked like it was mostly a lot of it was pricing driven in the avocado pineapple and fresh cut. I was curious what the volumes were in, avocado pineapple and fresh cut.

The, the increase was also was actually very significant and volume driven. Pineapple volume, fresh cut volume.

So it was both volume and pricing but significantly volume, volume driven.

Okay. So, I'll have to wait until the until the Q comes out. So, I mean, is it half and half? I mean,

I mean, no, it's primarily.

Volume. It's primarily volume.

Okay, good. Okay. Thank you.

And then the gross profit still double digit, it did decline sequentially. Is that just normal sort of product mix? Seasonality that causes that.

Yeah, seasonality. If you go back to other Q3, usually has a lot of competition from other fruits from summer fruit, you know, that are out there that people switch to. So usually Q3 has a lower margin. So we're very proud of the fact that we were able to achieve this margin this quarter because it's not an easy quarter.

Right.

So does, so should, is double digit gross profit in your fresh cut. Like sort of the new bottom end of the range?

I believe so.

And okay. And then, I mean, obviously, you know, the business that you're in, there's a lot of variability. But, but so it sounds like 10% on the bottom, you know, over time and then you said low teams gross margin. Did I hear that? Right? And value added?

Yeah, over time, we strive to have the low teams for the fresh and value added product segment, which obviously has a mix of different products and we're improving the mix as you can see by the improved margins.

Okay. But does over time is that, I mean, like, is that a long time or are we going to see like maybe hitting the high end of the range in a couple of years, like not too far out or is that just a long term goal?

No, as we said, we are just like I mentioned in my what II I presented right now, which that we are on a new chapter in our business. Let's say, outlook, we are going into many new products utilizing and leveraging our biomass and other areas that we are venturing in that it's very promising, it would take its time to mature and to develop. But we are already initiated the process. It's already in motion.

Just like we started the fresh cut, you know, 20 plus years ago and that was zero business when we started it now, it's almost over $500 million business.

And that's the kind of trajectory that we are aiming for, for other, for the, the new businesses or the new initiatives that we are taking right now. So it might take to see, starting to see results. Hopefully, by end of 25 we see something and then going forward, there will be a progress and development and of course, further improvements in the margins and, and the product, let's say offering that we would be putting on the market.

And if I add to that mitch, remember the, the man business, the fresh cut vegetable business is in the fresh and value added product segment. So by, with, with the steps we're taking that will take out cost for

$15 to $ 20 million annually in that segment. So that in itself will improve margins next year.

Right?

And then, and you've done a, you've done a, you know, very nice job innovating, you know, certainly on the pineapple side, you can see it. but it does take a while to grow out these new, you know, innovative varieties. How you know, obviously we don't disclose the, the, the amount of these new products, but, you know, pineapples is like, what a $625 million business for you? Like, what can you give us some sort of sense for like, you know, the sales level of the new products or where you think they could be in a year? I mean, obviously they're very high margin for you. But where, where do you think the sales level of these new like innovation?

Well, we cannot, we cannot disclose such information much, but we are very confident of our progress. And and and like we said, you know, in general terms, our margins will be quite high and like Monica said it would be in the low teams going forward so that can be our position.

Okay. Alright. And when it comes to the banana business, I and what II I may have missed the outlook. The Monica when you gave is for the full year 2024 sales to be down 5 to 7%. Is that what I heard with most of that?

Yeah, sorry miss volume. What I said was where's my volume? 4 to 5% 5 to 7% volume lower than last year and then 4 to 5% lower pricing.

So in total is 9 to 12% which is consistent with what we said last quarter.

Yes. And, like, the banana business, you know, I mean, you've done a nice job de emphasizing the banana business, like 10 years ago, I think it was almost 50% of sales and it's, you know, it's closer to 35% now. So, you've done, you know, a nice job of that and, and not sacrificing a lot of gross profit. But where any, can you provide a little outlook on the banana business as far as maybe why consumption just remains sluggish, you know, down a little bit. Is there, is it just we have more fruit competition or is there just are we hiring on bananas as a civilization? Like why, why are volumes down?

And or maybe are we getting better at less waste? And so, you know, we need less volume. Can you talk about that a little bit?

Yeah, but which the banana actual consumption maybe in some time of the year, there was a dip in the consumption but overall bananas are still consumed in, in very big volume and still a very important item in the supermarket shelves.

However, what you have to notice is that banana cost has been climbing up over the last 34 years nonstop. And I can tell you, you know, Ecuador, for instance, the official price that the government has established for this year, has been raised every year since the last three years have been embraced on annual basis. So banana cost is increasing is not been increasing.

I mean, if you look at the worldwide, if you look at the big macro picture in different parts of the world, you know, the Philippines has been hit by the disease, you know, with the Panama disease which is reducing their production and their volume year over year. The same thing in Ecuador now they are having some issue with electricity shortage, power shortage, you know, water as well as being kind of less rainfall for the last few months. And this is also impacting production. If you look at the countries like Costa Rica, we cannot grow more bananas.

They, it's already, you know, the land there is restricted and there is no more to grow but more or less in the same situation. So if you look at the map worldwide, you know, I predicted a few years back that banana prices or the cost of bananas will become almost $20.

And I still believe and I'm still sticking to my prediction that banana will come to a point where it becomes really expensive product to, to produce. So I'm not too, you know, we as a company, we are very kind of rational. We, we look at our bottom line and we conduct our business accordingly. So whether we can increase our volume or decrease our volume based on our outlook and how we would like to commercialize the, the fruit.

I mean, it's easy to increase volumes by 2,300,000 a week, you know, into North America. But that means you can, you have to sacrifice and, and compete on that, which is not our objective. Our objective is to maintain our reasonable margins of bananas and increase our other products and, and other offerings with much higher margins than, than bananas in particular.

But that doesn't mean that we will get out of bananas or forget bananas, we might come back and grow into bananas and we have other areas in the world where we are growing, which we cannot disclose at this stage. But that will make a big difference in a couple of years from now.

And then just a quick update where we are with some of your newer ventures, you know, whether it's you know, the fertilizer and, and things like that. Where are we on that?

Yeah, our Kenya operation, you know, we started about three months ago, our operation in Kenya and they buy fertilizer plant there. We started producing products in the trial base. Now we are using some of these products on our own plantation before going to the market. It's very promising.

Our partners in Spain are a very big help to formulating the products and registering, you know, in the different countries. So we are very optimistic on that front. It will take some time, but we are on the right track other projects that are undergoing as well. You know, we can hopefully sometime next year, we can start disclosing and updating you on on the new projects that is in the pipeline.

Okay.

That's all I have. Thank you.

Thank you very much.

Ladies and gentlemen, that does conclude our question and answer session. And now I'd like to turn the conference back over to Mr Mohammad Abu Khaali for closing comments.

Thank you very much for joining us today and look forward to talk to you again on our next call and have a good day. Thank you. Ladies.

Gentlemen, this does conclude today's conference call. Thank you for your participation and you may now disconnect.