JBT Marel Corp (JBTM) 2011 Q3 法說會逐字稿

Good morning, and welcome to JBT Corporation's third quarter 2011 earnings conference call. My name is Rachel, and I will be your conference operator today.

At this time, all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)

I would now turn the call over to JBT's Director of Investor Relations, Ms. Cindy Shiao to begin today's conference.

Thank you, Rachel. Good morning, everyone, and welcome to our third quarter 2011 conference call. With me on the call are our Chairman and CEO, Charlie Cannon; and Vice President and CFO, Ron Mambu.

Before we begin, I would like to remind everyone that forward-looking statements in today's call are subject to the Safe Harbor language in yesterday's press release and 8-K filing. Our 2010 Form 10-K also contain information regarding certain risk factors that may have an impact on our results. These documents are available on our Investor Relations website.

Now I would like to turn the call over to Charlie.

Thanks, Cindy, and good morning, everyone. We are reporting this quarter with decidedly mixed results. On a positive note, AeroTech turned in yet another strong quarter. This reflects an improved airline industry that continues to achieve profitability despite a challenging economic environment. We are also very pleased with the strong cash flow generated in this period. However, our FoodTech operating margin was significantly lower for the quarter affecting our overall performance.

As of our second quarter earnings call, we had indicated a $0.04 to $0.05 earnings per share impact of the stronger Swedish Krona. In this quarter, the impact was on the order of $0.03, resulting in a year-to-date unfavorable impact of almost $0.15 to our earnings per share.

In our last call, we also discussed our initiative to increase our freezer manufacturing capability out of the US and China. We are pleased with the progress we've achieved thus far. We are currently on track to manufacture 12 freezers in the US and five in China by year-end. As we ramp up the learning curve, this will help mitigate the negative currency impact, improve profitability in the longer term and improve our manufacturing flexibility globally. However, the combined negative impact of learning curve cost in currency in the quarter more than offset what would otherwise have been positive sales and margin growth for freezing equipment. The lower FoodTech operating margin was also driven by higher material cost within the fruit processing equipment business. Some of these costs will not repeat in the fourth quarter.

With regard to inbound activity, AeroTech markets remain healthy. In FoodTech, we are experiencing some order delays in certain markets. We do not yet believe this is indicative of a longer-term trend. Though, given this uncertainty, we have asked our FoodTech Vice Presidents to develop cost reduction contingency plans including restructuring options that may result in a material year-end charge.

Now I'd like to provide some color on our two segments. First, JBT FoodTech. Order activity for freezing and protein processing in Germany and Eastern Europe continued to be strong in the quarter. This was, however, more than offset by order delays and continued soft activity across France, Italy and Spain. In light of the current Eurozone debt crisis, we are closely monitoring European markets.

Moving to North America, order activity for the quarter was essentially flat year-over-year, but declined sequentially. Corn prices at over $6 per bushel, while down from the peak of nearly $8 per bushel in March, are still 20% higher than September 2010. Furthermore, poultry prices are more than 25% lower than last year.

Although, some of our poultry customers continue to invest to improve operating efficiency, we are experiencing softening demand as a result of the sustained high corn prices and lower poultry sales prices. As such, we expect demand from the US poultry segment to remain soft for the remainder of the year.

Asia-Pacific activity level remains robust and order size seems to be improving. Quarterly inbound orders were lower relative to last year, primarily timing related as larger orders generally take longer to finalize. Additionally, while Thailand represents a small market for the Company, we have a few orders at risk of being pushed out due to the severe flooding. Our Bangkok office was closed last week as part of a declared national holiday. Our heartfelt best wishes go out to our JBT colleagues and others affected by the devastating floods.

The Latin American market continues to improve, albeit, from a small base. The Sadia, Perdigao merger was finally approved by the Brazilian antitrust regulator, Cade. This is welcome news for the industry for the longer term. Though considering the current overcapacity in the region, we do not expect the poultry segment in Brazil to improve in the near term.

Turning to fruit processing. The US Department of Agriculture has projected the Florida orange crop for the 2011, 2012 season at 147 million boxes, up 5% from last season. There is some incremental benefit to us from the higher forecast and the favorable trend also bodes well for the general industry profitability. We also continue to make significant inroads in emerging markets, notably in the Middle East, whether it's increasing demand for processed juice products. Our recently announced order for Juice Processing line in the Middle East reflects that demand. We anticipate fruit processing order levels to remain healthy through the end of the year.

Next, moving to the sterilization product line, North America continued to recover from relatively lower levels in 2010. In Asia, major canned food manufacturers are actively expanding. Growth is expected to continue, driven both by new installations and by replacement projects.

In summary, FoodTech order activity for most product lines was in line with our expectations for the quarter and remained steady. In light of the recent order delays in Europe and softening demand in North America for freezing and protein processing, we are closely monitoring inbound.

We expect FoodTech margins to improve sequentially in the fourth quarter, driven by leverage from higher overall sales and non-recurrence of certain expenses incurred in the third quarter. However, given the continued margin pressure noted earlier, we expect FoodTech fourth quarter margins will be lower relative to the prior year quarter.

Moving to JBT AeroTech. In September, the International Air Transportation Association raised its industry profitability forecast for 2011 from $4 billion to $6.9 billion. This was driven by higher expected air traffic volume for the end of 2011 and improved capacity allocations by the airlines. Reflecting continued industry profitability, airline sentiment remains positive. Inbound orders for ground support equipment in the third quarter were lower relative to the prior-year quarter largely due to an unfavorable comparison against two large deicer orders received last year. Overall, quoting activity has remained steady going into the fourth quarter.

Our gate equipment business remained strong, bolstered by a substantial domestic and international prospect list. Third quarter orders were lower relative to prior-year quarter, partially due to large orders slipping into October. We recently announced two October contract awards totaling about $10 million to supply gate equipment for domestic airports. Given our strong performance year-to-date, we expect gate equipment to end the year with higher sales relative to last year.

Moving onto airport services. Recent airline mergers have slowed the outsourcing trend. However, we continued to see numerous smaller sized projects come up for bid. We remain committed to this business and expect continued topline growth, albeit, at a slower rate. But as we have been indicating throughout this year, we are expecting continued margin pressure in this business given the slowdown in growth.

Looking forward, we expect AeroTech's orders to remain healthy. We also expect 2011 revenue will be higher compared to last year based on year-to-date performance and current backlog. Moreover, 2011 full-year margins for AeroTech should continue to improve over 2010 reflecting the leverage of higher volume.

In conclusion, we are pleased with the continued strong performance in AeroTech and with the strong cash flow generated in the quarter. However, we have recently seen some softness in FoodTech, particularly in Western Europe and North America. On the margin front, we anticipate full-year consolidated margins to be down versus 2010 levels due to the margin pressure in our FoodTech segment. As a result of these headwinds, we are revising the full-year earnings guidance range to $1.30 to $1.36 per diluted share. We are confident in the Company's financial strength and we remain committed to delivering shareholder value.

Given our record low net debt level and strong cash flow, the share repurchase program that we announced yesterday is an effective way to return value to our shareholders, while we continue to implement our 4G strategy for long-term earnings growth.

With that, I will now turn it over to Ron Mambu to provide more detail on our financial results.

Thank you, Charlie. Revenue for the quarter increased 6%. However, diluted earnings per share for the quarter was $0.28, down from $0.32 earned in the same period last year. Inbound orders were down 12% quarter-over-quarter and backlog was down 9% from the prior year quarter. Cash flow was a bright spot for the quarter. We generated $31 million from continuing operating activities. Net debt at the end of the quarter was $116 million, a record low for us, down $24 million from the second quarter of 2011.

I'll now comment on our operating segment performance and then on corporate items. FoodTech's third quarter revenue of $130 million increased 4% from the prior year quarter. This was driven by the shipment of a large tomato and fruit processing project in the Middle East, higher aftermarket revenue and favorable foreign currency translation. The increase was partially offset by lower sales in freezing equipment due to a softening North American market. In constant currencies, revenue was essentially flat.

Operating profit of $8.2 million declined 31% from the prior year quarter, primarily driven by the continued impact of a stronger Swedish Krona, learning curve costs related to establishing freezer manufacturing capability in the US and China, and lower margins for fruit processing equipment. As we mentioned in previous calls, the stronger Swedish Krona continues to compress margins for our freezing equipment. On average, the Swedish Krona appreciated against the US dollar by 12% from the prior year quarter.

In addition to moving some of our freezing manufacturing to the US and China to provide production flexibility, as well as to minimize the impact of currency fluctuations, we were able to offset some of the negative impact through currency hedges. Hedging results are reported as a part of corporate items.

Lower fruit processing margins reflected a one-time write-down of inventory in a foreign location and unfavorable variances from higher material prices. Some of these costs will not recur. As a result, we anticipate FoodTech margins will rebound to double-digit levels in the fourth quarter. However, FoodTech's full-year results will be impacted by the unfavorable year-to-date performance.

FoodTech inbound orders of $126 million were essentially flat from the prior year quarter, but increased 5% in constant currencies, reflecting improved demand in sterilization equipment, partially offset by project delays in Europe for freezing equipment. Backlog of $128 million increased 9% or 10% in constant currencies from the same period in 2010.

Moving to AeroTech, third quarter revenue of $99 million increased 13% from the prior year quarter, driven by higher sales volume across most product lines. Record demand for Automated Guided Vehicle equipment and increased shipment of ground support equipment contributed to the strong performance.

AeroTech operating profit for the quarter was $8.7 million, up 40% quarter-over-quarter, and operating margin of 8.8%, improved both quarter-over-quarter and sequentially. This reflected strong margin performance in most product lines. Inbound orders of $83 million declined 22% due to two large deicer orders received in the prior year quarter. Backlog of $183 million declined year-over-year by 19%. Quoting activity remained strong for both ground support and gate equipment reflecting continued investment by our AeroTech customers.

Now regarding corporate items, income tax expense in the third quarter was slightly about 35% and in line with our guidance of 34% to 36%. Total corporate items, excluding net interest expense for the quarter were $2.6 million, an increase of $1.1 million versus the third quarter 2010. This increase was primarily driven by consulting expenses related to margin improvement initiatives, higher healthcare costs and additional LIFO expense reflecting our expectation of higher year-end cost inflation.

On a year-to-date basis, total corporate items excluding net interest expense are favorable versus 2010. On a full-year basis, we now expect total corporate items, again excluding net interest to be flat year-over-year. This assumes no significant foreign exchange movement and no further restructuring charges. However, as Charlie previously mentioned, our FoodTech Vice Presidents are developing cost reduction contingency plans, including restructuring options that may result in a material year-end charge.

Capital expenditures for the quarter totaled $4.5 million and depreciation and amortization totaled $6.4 million. For the new facility in Lakeland, Florida, we now anticipate the majority of the expenditures to be incurred in 2012 and 2013. Therefore, we are reducing our 2011 capital spending forecast to be between $22 million and $24 million.

Now turning to cash flow. We are pleased with strong performance in the quarter. We generated $31 million from operating activities and $44 million year-to-date, after an $8 million contribution to our US pension plans in the third quarter. Net debt, at the end of the quarter, was $116 million, which is a record low. Finally, net interest expense for the quarter was $1.5 million, a reduction of $500,000 from the prior year quarter reflecting a lower debt level and lower interest rates.

Turning to the share repurchase program we just announced, this program authorizes the repurchase of up to $30 million of our common stock through December 31, 2014. The program will be financed with cash flow generated from operations. We believe this is an effective use of our cash, considering our continued strong cash flow generation and existing credit capacity, we have more than sufficient liquidity to pursue all of our 4G strategic initiatives. We plan to file our 10-Q tomorrow, so there would be more detailed information readily available for your review.

In summary, we are pleased with AeroTech's continued strong performance and expects its full-year margin to improve year-over-year. We are also pleased with the strong cash flow generated during the quarter and anticipate this favorable trend will also continue into the fourth quarter. We expect significant sequential improvement in FoodTech's fourth quarter margin, but is projected to be lower than the prior year quarter. Given this impact, as well as some of the softening in certain FoodTech markets, we are revising our full-year earnings per share guidance to the range of $1.30 to $1.36.

Lastly, considering our record low net debt and strong cash flow, we feel the share repurchase program is an effective way to return value to our shareholders, while we continue to implement our 4G strategy for long-term earnings growth.

With that, we'd like to take your questions. So, operator, please open up the call for questions.

(Operator Instructions) Jason Ursaner, CJS Securities.

Good morning.

Hi, Jason.

Good morning, Jason.

Charlie, as you got to next year, I'm not asking you to provide guidance, but at a high level, how are you thinking about topline growth? Just because I hear you talking more about stable activity in the business lines, revenues flattened out a bit ex-currency, pretty similar with orders after you make some of the adjustments for the deicers. So I guess just generally how are you thinking about topline growth, I mean other than clearing of the impact from the Krona. How do you grow earnings next year if you don't have a strong topline growth environment?

Yes, we're not going to provide guidance for next year. And as you know, we have three, four, five months visibility at most. So I'm usually pretty [bad apply] macroeconomist. But the way we're kind of thinking about it is, we had the downturn and we've now bounced back from the downturn throughout the back half of '09 and -- through 2010 and through the first part of 2011. Reading the newspapers like you do and looking around the world, it looks like there's not going to be a double dip recession, but it looks more and more like we're going to be on a sort of slow growth kind of muddle-along economy globally with some places doing better than other places.

So I think the way we're looking at it is, going into next year in terms of what we can control is we're being very, very cautious about headcount additions and expense controls. We mentioned we're asking for some contingency plans on further cost reductions because given our initiatives we think even if the topline is flat, we're going to see -- we believe we can grow earnings in those segments next year. So that's kind of the way we're looking at it. Does it answer your question?

Yes. No, that was good. And in AeroTech, we talked a little bit about the large deicer orders last year, it's making a tough comparable. Are you back to the sort of onesie twosie small ball thing or are the orders out there and it's more of a, I guess, a timing issue and that you could have this activity flow through?

Yes. We [can't have] the two orders because well, let me just talk deicers in particular, the -- I think, it was delta in the China order, but there were two big orders and if you subtract out the two big orders, the deicer sales for the year, small ball as you call it, will be up pretty good over the last year except for those two big orders. I mean, we just got our inbound numbers for the month and we're very pleased with ground support activity in October.

On the Jetway side, you saw a couple of press releases where we -- they were also off year-over-year in terms of inbound, but couple of, I think, 10 million worth of order slipped into the first couple of weeks of October. So right now the activity level remains solid. Now, given the worldwide economic situation, again we're being very cautious and being very careful about headcount additions and expenses in AeroTech as well. But, right now it still feels good.

Okay. And in citrus, I think you previously discussed some of the factors that could have potentially led to this year being a very strong growth year. When you look at that 5% growth to 147,000 boxes, is that sort of in line with what you would have been thinking or, I guess, and has there been hope that it could been closer to that '08 level, closer to 160,000?

Well, I don't want to digress into a big discussion of weather conditions and humidity and temperature and the boom in Florida and all the factors going into it. We would have hoped that it would have rebounded a little faster, but that's Mother Nature. So, I think the longer haul, we do believe that Florida after the hurricanes and freezes that it hit bottom. And we should see some moderate growth in their crops going forward.

Okay. And then cash flows, obviously very strong in the quarter, you announced the authorization on the buyback. Is this a signal that your, I guess, sort of giving up on the acquisition strategy we've heard about a lot, are you not seeing targets out there or is this just another way to get returns back to shareholders?

I think the way I would have answered is, we've -- you've asked this and then some of our shareholders have asked this, so since we respond, what are our priorities for cash flow, we always answered that. We want to internally develop products, we want to do bolt-on acquisitions, as our (inaudible) our top priorities. Absent that, we will pay down debt and if we can't find enough acquisition candidates to take advantage of our cash flow, we're going to wake up one day and have a high quality problem.

And so, I think, what happened with our record low net debt at the end of the quarter, Ron and I've been discussing it for several months with the Board. We're deploying -- the priorities haven't changed. We're so actively working on bolt-on acquisitions, but we basically have such a -- such access to liquidity and with the net debt so low that we thought it's an opportune time to return some cash to shareholders and so, that was our logic.

Okay. Great. I appreciate the commentary, and I'll go back in the queue.

Gary Farber, CL King.

Yes, good morning.

Good morning, Gary.

Just a couple of questions. One, can you talk about your manufacturing footprint longer term, given the some of the changes you're talking about making with your FoodTech business like a year, three years out? Do you see opportunity to change it at all?

Yes. That's a good question and we in fact, that's -- we are reacting to the currency, but it's also an indication of the footprint changing over the long haul. I mean, over the long haul, we have had growth in the developing world that has been in that slightly higher rate than growth in the developed world. And as you typically want to operate in theater, that sort of implies, we're going to be having a bigger footprint in Asia over the long haul and maybe less of a footprint in the developed world.

But reacting to the currencies as we have, in my comments, say, we're not only reacting to currency, we're going to be more flexible longer term. These freezers we're producing in North America are made for the American market, that's where the market for the high tech. These freezers are like over $1.5 million each, very complex, big freezers. And so it makes sense that we may come here as opposed to making them somewhere else and shipping them to America.

But we're going through the short-term pain of creating that long-term capability. Similarly in Asia, we're producing these, the freezer I'm referring to, our GYRoCOMPACT classic 600, which is a lesser, smaller capacity developed -- more common in the developing world and there we hope to actually capture more growth that we are not getting because of our cost structure and shipping from Sweden. So that's a short-term reaction of the currency, but long term it has implications just like you are hinting.

Right, okay. And then another thing, can you talk about, just watching your order flow and things like that. Can you kind of -- are there any sort of other data points that you're tracking by segment that are important to watch from the outside beyond sort of seeing your own inbound orders?

Well, we -- I mean, [I have to take apologies before]. We always watch FedEx and UPS, their earnings pronouncements. One from -- they're really good macro leading indicator. If you watch there just in terms of general economy, but in particular since they are both good customers, it's also a handle for us. We -- the poultry, the things I mentioned in poultry to softness. One of our customers had their earnings call this week and talked about in cutting capital spending. So we watch our end market conditions and customers for signal.

The reason we're hesitant to call on this, clearly, we are softer and we see the softness in North America in poultry and freezing. In Western Europe, we actually -- we saw some order delays and we haven't lost them, and in fact, it was a one sizeable order that we think we'll get this quarter that we were forecasting to be in the third quarter. I just spoke [to] Sweden this morning and October for that part of the world, [the imbalance are] fine. So we're just trying to see whether these order delays are going to add up to something more than individual customer actions or we don't want to kid ourselves.

Great. Okay. And then just lastly on the acquisition front. I mean, in the quarter, would you say -- it sounds like you are always actively engaged looking at acquisitions. I guess, during the quarter was -- are there properties that are actively out there being shopped, did you have the chance to bid on or how would you characterize the environment?

I don't want to get into too much detail on what's in the pipeline or what we're bidding on. We are actively looking at things. I would say there hasn't -- in the quarter there wasn't a lot of deals done in our space that I can point to. Most ones are done earlier. I'm not sure whether that's just a one or two small and so there's not -- I wouldn't call it a superactive M&A market in our spaces right now.

And would you say, your interest is weighted more on the food side than the AeroTech side?

No, we've always said that we're open to the best opportunities either segment.

Okay. All right. Thanks.

Liam Burke, Janney Capital.

Thank you.

Hi, Liam.

Good morning, Charlie. Thank you.

I didn't know you're online. I thought it was Liam.

Well, I didn't either but I guess so we've just kind of going to have to go with it. Good morning, Ron.

Hi, Liam.

You mentioned raw materials increases this quarter and you'd expect that to be one time. Is it because the raw materials are coming your way or do you have recourse to raise prices certain products?

Some of it is in our fruit processing line and relates to some of the formulations that we've used. And we've looked at reformulating to avoid some of the higher cost materials that we've had to date.

He is talking about our citrus quotings product line.

Right. Citrus quotings. So we don't expect a recurrence there. We've had some inventory adjustments in one of our subsidiaries in Mexico, so we don't expect that to recur. But we have seen a little bit of higher inflation and some of it, we pass along in terms of surcharges of its deal related in our AeroTech business or in our quotes if it's in FoodTech. But inflation still has an impact on our assessments with regard to inventory and cash flow and valuations, but as it relates to margins going forward, we would see some of that not recurring next year.

Okay, great. Charlie, AeroTech, [if I'm paying] attention, is it fruit processing had more of the value appeal? It looks like gate equipment is getting some traction internationally. Are there other AeroTech products that are getting similar attraction overseas?

Yes, we -- opening the facility in China has really helped us. It's given us the low cost position to serve Southeast Asia and actually other international locations. So that's been a big win for us. I mean literally four, five years ago, we were not a player outside the United States. So that's really improved. And on the other thing in Jetways, we've had some success with new products in the preconditioned air. We've served the commercial market, but five, six years ago, we got more involved with defense, starting with Israeli Air Force. We've had some success with new products, Boeing is actually a customer now for preconditioned air. So part of the growth in Jetway has been in the ancillary gate product lines.

We're currently looking at some -- growing new products in the mobile aspects of 400 horsepower in PCA or preconditioned air, where we didn't play in before. Because we got a ground support equipment, it's a different channel than Jetway because you sell through the -- typically through the airlines for the mobile equipment. So there's the -- you're very perceptive, Jetway has gotten some traction here in the last three or four years, it's been really one of the drivers for AeroTech.

Great. Thanks, Charlie.

Michael Saloio, Sidoti & Co.

Good morning, Michael.

Hi, Michael.

HI, good morning. Could you talk a little bit about what's going on in the pricing environment about the hot and cold side of FoodTech, and if you could give comments on what pricing is like, by geography it would be helpful?

I don't see any major changes in the pricing environment. I think when we talk about the cost penalty of the, be it in the Swedish Krona, I think that put some pressure on the cold side on freezing because -- just because your starting point or where your costs are, as you definitely going to feel.

You can't obviously, if the Swedish Krona is 12% higher than it was a year ago, -- did I raise my prices 12%? And the answer is, no. So if you want to call that pricing environment, yes, that puts pressure on us in terms of the cost side. But in terms of the competitive pricing environment, I don't see any major changes hot or cold.

By region, I don't know, if I really have much commentary. I think that the biggest difference by region has less to do with pricing, it has to do with terms. We tend to get better advance payments and progress payments in the developed world, that's less common to get in places like Asia. So there's some differences in terms of balance sheet impact for orders, but not so much price.

Okay. Are there any change or is there any change in the outlook for the Halvorsen products looking out to 2012?

The -- I think, we said in previous calls, the Halvorsen -- the last production, Halvorsen for the Air Force contract was I think two years ago. And our goal is to try to keep the line alive by hook or crook until we can get to the rebuild program, which probably won't start for another two years from the Air Force. To rebuild all these units we started shipping in the year 2000, which will be a -- we think we'll be a very lucrative piece of business to do the aftermarket for to rebuild them. So in the meantime, we've been playing, and I hate these words small ball again, but we've been looking for other opportunities internationally. And we've had some success. I think, we produced 15 last year, which was a combination of onesie twosie in the Middle East and couple of state department orders. And actually one order is from a black operation -- black ops in Afghanistan or something. And we're trying to sell to army bases and other places.

This year I think, we're on track to ship maybe 12 or 13, something like that. And we've got prospects with the Boeing C-17 sale to India, the Halvorsen has been specified as the Loader of Choice, that could be a foreign military sale order we think coming up.

So we've got a laundry list around the world, and we're just trying to chip off as many as we can, so we can keep our hand in the game, so we can be sort of have a warm line for when the rebuild program happens. We would anticipate '12, I don't see a reason why we couldn't be a success while doing this one-off strategy as we've been in the last two years. That helps?

That's really helpful. I guess, just one last question. As you move manufacturing out of Sweden into the US and China, do you have any ballpark estimate as by, say, year-end 2012, what percentage of freezer production will still be there or it would be even more helpful about -- as you could help us out on the ballpark of what percentage of just FoodTech is going to be manufactured there or is it just freezers?

No, I think, mainly we're talking about freezer product line at the moment. We're still looking at other product lines in other regions, but mainly that we're talking about freezer. On the hot side, we produce all of the fryers and ovens etcetera in the US and we had never produced any of that in Europe. But with our acquisition of Double D a couple of years ago, we now have the capability of doing some hot side stuff in the UK.

So, I think, it's kind of incremental by product line and by plant. And, one of the things that makes it hard is you've got, we're technology-based. And so, you can't just sort of pick up and shut down and go somewhere else when you've got all your engineers and technical talent and know-how in a location. So that -- it takes time to transfer technology internally.

Okay. That's all the questions I have.

(Operator Instructions) At this time, there appear to be no more questions in the queue. I would now like to turn the call over to Ms. Cindy Shiao for closing remarks.

Thank you, everyone, for joining us this morning. A replay of our call will be available on our IR website later this morning. If you have any further questions, please give us a call. Have a good day.

Thank you, ladies and gentlemen, for your participation in today's conference call. You may now disconnect.