M/I Homes Inc (MHO) 2003 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the M/I Homes year end conference call. (OPERATOR INSTRUCTIONS) I would now like to introduce your host for today's conference, Mr. Phil Creek. Mr. Creek, you may begin.

Thank you for joining us on our conference call. Joining me today are Irving Schottenstein, our Chairman; Bob Schottenstein, our CEO and President; and Steven Schottenstein, our Chief Operating Officer.

First, to address Regulation Fair Disclosure, we encourage you to ask any questions regarding issues that you considered to be material during this call because, as you know, we are prohibited from discussing significant nonpublic items with you directly. We did provide our 2004 earnings guidance in our press release.

And as to forward-looking statements, please note the section in our press release regarding forward-looking statements and the Safe Harbor statement under Private Securities Litigation Reform Act of 1995 filed in my Annual Report on Form 10-K the year ended 12/31/02.

Be advised that certain statements in this call may constitute forward-looking statements within the meaning of this Act and that actual results could differ materially from those described in such statements. Be advised that the Company undertakes no obligation to update any forward-looking statements made during this call, the audio of which will be available on our website through February of '05.

It should also be noted that certain information related to the use of non-GAAP financial measures required by SEC Regulation G is posted on our website. This information can be accessed by logging onto the M/I Homes website at www.mihomes.com, click on the investor relations section of the site, and select non-GAAP financial disclosure reconciliations.

Now I will turn the call over to Bob Schottenstein.

Thanks Phil and good afternoon everybody.

2003 was a tremendous year for M/I Homes in a whole variety of ways. First, we had our eighth consecutive record income year, producing $135 million in pretax income. Our year-end backlog was at a record level. And our 2003 fourth quarter was not only a record fourth quarter, but it was the best quarter ever in our 27 year history.

For the fourth quarter, pretax income of $41.5 million generated fourth quarter record net income of $25 million and for the quarter diluted earnings per share of $1.69. Each of those represent more than a 50 percent increase compared to 2002's fourth quarter.

For the year, our annual pretax income, as I said, reached a record level of $135.1 million, a 24 percent increase over the $109 million recorded in the year 2002. Net income for the year was $81.7 million with diluted earnings per share of $5.51, representing an increase from 2002's net income of $66.6 million and $4.30 cents per share, increases of 23 and 28 percent respectively.

In 2003 we also enjoyed record-setting gross and operating margin levels, not only for the fourth quarter, but as I said, for the year. Fourth quarter gross margins reached 24.3 percent, up from 23 percent in '02, while annual gross margins for '03 improved 140 basis points to 25.5 percent, up from the 24.1 percent recorded in calendar year '02. Fourth quarter operating margins increased to 12.8 percent, up from 10.4 percent in 2002. And year-to-date operating margins increased to 13.5 percent compared to 11.9 percent in '02.

While it will be challenging to continue and in fact improve these margins, we are determined to do so. And based upon the strength of our backlog, we feel that we are in a good position to keep and maintain, and hopefully we will try to do all we can to improve these margins.

As far as sales or new contracts, for calendar year '03 it was an all-time record for M/I Homes, recording 4,485 contracts, a 9 percent increase over 2002's level. Our fourth quarter sales were down four percent, as previously reported. This, however, was primarily due to a reduction in available subdivisions. Our subdivision count was down slightly for the quarter, and that occurred as a result, frankly, of selling out of communities a little bit faster than anticipated during the summer and fall months.

On the other hand, we're very pleased with our sales for January of '04. We had the best January ever in our company, with new contracts or sales up 23 percent over the January '03 level. Our traffic also was up three percent during the month of January.

Cancellations for the fourth quarter were 26 percent compared to '02's cancellation rate of 24 percent. It should be noted that historically our cancellation rate is highest in the fourth quarter. For the year our cancellation rate was 21 percent, the same as in '02.

It should also be noted, as we have stated in numerous call over the last several years, the large preponderance of our cancellations occur within our entry-level product, and the majority of these result from financing issues. Moreover, most cancellations occur prior to the commencement of construction.

As you know, we're not a spec builder; we build primarily to contract. And in that regard, at the end of '03 we had 99 specs in various stages of construction, representing an aggregate investment of about $12 million. This compares to approximately 125 specs at the end of '02, with an aggregate investment at the end of '02 of around $16 million. We're very comfortable with these spec levels and with the fact that our cancellation rate for the year was flat.

We had anticipated a very strong fourth quarter in terms of homes delivered, and that is exactly what occurred. During the quarter we delivered a record high 1,339 homes, up 13 percent from 2002's fourth quarter closings.

In terms of our backlog units, the sales value of our backlog and the average selling price of our homes in backlog at year-end was the highest in Company history. Units reached 2,658 with a sales value of over $700 million and an average sale price per house of approximately $265,000. This represents a 15 percent increase in units, a 24 percent increase in sales value, and a 9 percent increase in average sale price when comparing '03 year-end backlog with '02 year-end backlog. And the strength of our margins in backlog is also at a very high level.

As we stated in our press release, we purchased $220 million of ground in the '03, as planned. We're very excited about our land position, which we will talk about in more detail during this call.

With 2003 coming to an end, we thought we would take a few minutes to talk about where we are now and what we see happening in our Company in '04 and peeking a little bit towards '05. All of this assumes that the economy and housing market conditions stay about where things are, and we're hopeful that they will.

Number one, let me talk a little bit about customer service and profitability. In terms of customer service, M/I Homes has enjoyed over ten consecutive years of a positive homeowner approval rating of at least 95 percent, and in calendar year 2003 our homeowner approval rating reached an all-time record of over 99 percent. We believe that this standard of acceptance and approval by our homeowners is unmatched by the large builders in our industry.

We feel very good about the markets we're in. We have no present plans to open up in any new markets. Our primary growth strategy will occur as a result of increasing our penetration and increasing our market share in most, if not all, of the markets that we're in.

We're very large Midwestern builder, delivering approximately 3,000 homes annually across Columbus, Cincinnati and Indianapolis, and we intend to grow that amount in '04 and in '05.

We've also enjoyed significant growth in our three Florida markets -- Tampa, Orlando and Palm Beach County. We delivered approximately 1,000 homes in Florida in '03, purchased over $50 million worth of ground this past year, and believe we will continue to grow in these Florida markets.

We're also very pleased with our Washington D.C. operations. They continue to produce some of our best margins and profits.

We have struggled a little bit in Charlotte and Raleigh, but as we will talk about in a few minutes, we know that we're headed in the right direction in both of these markets. Expect to see significantly improved results in '04 and looking ahead also to '05.

In general, while our community count is down slightly from a year ago, we feel very good about our overall land position. Having premier locations, along with innovative product, has always been a key to our business. It will continue to be. We spend a tremendous amount of our time on land and new locations. And we currently expect to purchase significantly more land in '04 than we did in '03 to continue to grow our business. We expect the amount of ground that we will purchase in calendar year '04 to reach somewhere near $300 million. Again, this compares with the $220 million of ground we purchased in calendar year '03.

In terms of where we're going, while we have had eight consecutive record income years and experienced tremendous growth and improvement in our balance sheet, a close look would show that in terms of our units, our unit count has been relatively flat over the last several years. But on the other hand, when you compare 2003 to over the last three years, you'll see that our revenues have grown over 14 percent, units delivered is up slightly 2 percent, income is up over 80 percent, stockholders' equity has improved by over 75 percent. And we think these are all -- we feel very good about this and we think that the market should as well.

We believe now that we're very well positioned with our strong balance sheet, land position and record backlog to deliver significantly more not just revenue growth, but also unit growth in the next couple of years. Specifically, we expect to deliver over 4,500 homes in '04 and over 5,000 homes in calendar year '05, which would represent a 20 percent increase in deliveries over a two year period.

We anticipate our estimated 10 percent unit growth in '04 coming primarily from our Florida operations, North Carolina, and Washington. Our subdivision count probably will not change significantly this year from last year, which will lead some to question where the growth will therefore come from. But the fact is, many of our new subdivisions are larger in terms of total lots than they have been in the past, and we feel that the uniqueness and also the quality of these positions will allow us to have greater absorption per community than we have had in some of our prior years. And as a result, notwithstanding the subdivision count, we fully expect to achieve the unit growth that I just referenced.

Specifically, just to take a few minutes and walk through the markets, Columbus Ohio -- which has been our base operation and the city we began doing business in in 1976 -- 2003 was our best year ever in Columbus. We had very strong margins and results. Our backlog is very strong. Our land position is the best it's ever been. We fully expect another record year in Columbus in 2004 and expect to grow our units in Columbus over the next two years.

Cincinnati -- sales and closings for calendar year '03 were down slightly from a year ago. We believe that the local economy there was the primary reason for that. We had a very good year. Our margins were strong. Our community count in Cincinnati is expected to increase slightly this year. And we expect both unit and revenue and income growth in Cincinnati in '04 and through '05.

Indianapolis -- 2003 was a record year for M/I Homes. It was the best year we ever had there with almost 400 closings. This is our most affordable market in terms of average selling price. Our average sale price in Indianapolis is around $170,000 a house. The Indianapolis market -- and I think it's been well-documented -- has been spotty. Many builders have reported struggles in the Indianapolis market. And we believe that M/I Homes is outperforming the market there and we're very happy about that.

Moving to Florida, which you probably would like to do given the weather outside right now -- in all seriousness moving to our Florida markets, we surpassed previous records in Tampa with our sales up in Tampa over 25 percent and our year-end backlog up over 30 percent. Our average sale price in Tampa is around $230,000 a house. In Tampa we closed around 550 homes in calendar year '03, a 10 percent increase in '02. We had another outstanding year in that market with very strong margins. Our community count today is slightly below a year ago. However, we will be opening a number of new communities in Tampa this year. Our land position as we look out over the next 18 to 24 months is the best it's ever been, and we feel we're very well positioned for significant growth in the Tampa market, anticipating to close well over 600 homes in '04 and at least 10 percent more than that in '05.

Orlando (technical difficulty) we had our best year ever in Orlando and we expect an even better '04. Our sales in Orlando reached a record level, up over 15 percent from the prior year. Our backlog is 40 percent higher than a year ago. We anticipate delivering over (technical difficulty) homes in Orlando in '04 and expect to improve upon that in '05.

West Palm, for the last several years we have stated during these calls that our biggest struggle in West Palm has been our land position. We significantly -- I want to repeat that -- we significantly improved our land position in the West Palm market in '03, and we will really begin to see the results of that during the latter part of '04 and in '05. While we only delivered about 100 homes in West Palm in '03, our margins and profits were (technical difficulty) exceptionally strong. Our closings in '04 should be up over 25 percent at approximately 125 homes in '04. And we expect to close well over 200 units in the West Palm market in '05, which would be a significant increase from where we stand today. It would be over a 100 percent increase.

Charlotte, we went through over the last couple of years some changes in management and a significant repositioning. As a result, our operations in Charlotte, though profitable, have not been where we would like them to be. While our closings improved about 20 percent from a year ago, we're still not where we want to be there now. But the real key is we have improved our land position in Charlotte. We've taken what we believe to be very significant steps forward, purchasing new land, new communities we will be opening up later this year, and selling off some of our communities that just weren't performing at a level that we expected them to. We expect to have much improved operating results in Charlotte in '04, with a significant improvement expected in '05.

Raleigh, we also had what we would just call an average year in Raleigh. Though profitable, like Charlotte Raleigh is not where we would like it to be either. We did sellout of some underperforming communities. Our sales for the year were off 10 percent in Raleigh from '02 levels and our closings were down slightly. But we expect '04 to be a better year than '03, with deliveries improving from '03 of slightly under 150 to about 200 closings in Raleigh this year.

Finally, the Washington market, we had a very strong year in Washington with strong margins and strong profits. Our sales and closings were down slightly from '02. This was anticipated due to our land position and new communities taking longer to get entitled than we would like them to. Although, the Washington market, it -- because of the situation there with the entitlement process, it simply takes longer to take deals through the zoning and approval process (technical difficulty) but we have significantly strengthened our land position in Washington. We're very excited about where things look in '04 and '05. We purchased approximately $70 million worth of ground in calendar year '03. We continue to see very strong market conditions and expect to have a very strong year in Washington.

Before I turn it back over to Phil, I just want to close by mentioning that our Phoenix market, which we closed (technical difficulty) a little over a year ago. Our exit is now 100 percent complete. We closed our last few lots in Phoenix in '03, and have now completely and successfully exited the Phoenix market.

With that, I will turn it over to Phil for to further review our financial highlights.

Revenue increased 18 percent in the fourth quarter and 4 percent for the year compared to the same periods in '02. The average sales price for the fourth quarter was 255,000, up from 240,000 from last year's fourth quarter. And for the year the average sale price was 246 versus 238,000 in '02.

Gross profit dollars increased 16.7 million for the fourth quarter of '03 and 23.5 million for the year. As Bob stated, margins in the fourth quarter increased to 24.3 from the prior year's 23. Our margins have been exceptional in Columbus, Tampa, Palm Beach and Washington D.C. And our margin percentage for the year increased 140 basis points to 25.5. Our increased margin percentages -- again, the highest ever for these period -- reflect the effect of increased average sale price, our management focus on sales pace, our focus on margins by subdivision, and the favorable impact of M/I Financial's results.

Our general and administrative costs decreased 1.9 million for the year and 40 basis points as a percent of revenue, down to 5.6 percent from '02's 6 percent. These decreases are primarily from completing our exit from the Phoenix market; a favorable marked-to-market adjustment as our interest rate swaps get closer to maturity; lower insurance costs, which were offset in part by payroll related incentive increases, primarily related to our record results.

Selling expenses increased 3 million and decreased from 6.4 million to 6.2 percent of revenue for the fourth quarter (technical difficulty) due primarily to the significant increase in closings in the fourth quarter of '03. Selling expenses for '03 increased 3.7 million when compared to '02 and increased slightly as a percent of revenue to 6.4 from 6.3 percent. This increase is primarily due to increased commission and model home expenses. Having the best sales force possible and our best foot forward in our models is very comes is very, very important to our sales efforts, and we focus on those things.

Overall, our SG&A expense decreased to 11.4 percent of revenue in the fourth quarter of '03 compared to 12.6 percent for the fourth quarter of '02, and decreased to 12 percent from 12.2 for '03 when compared to '02. We're very (technical difficulty) pleased with our improved efficiencies.

Operating income increased to a fourth quarter record of 12.8 of revenue for '03 (technical difficulty) from 10.4 in '02's fourth quarter and to a record 13.5 percent of revenue from the year from 11.9 percent for the comparable period in '02.

Interest expense remained constant at 3.6 million in '03's fourth quarter when compared to '02, with the effect of increased average borrowings being offset by a lower average borrowing rate. We did have a higher capitalized interest amount, as we had more land under development and higher housing inventory than in '02. Interest expense for the year declined to 9.6 million from 13.8 million last year. The decrease for the year is primarily due to the fact that we had capitalized more interest during this year due to our increased land activities and also had lower average borrowings. For the quarter our average borrowings were 174 million compared (technical difficulty) the fourth quarter of '02's 111 million. And for the full year, 2003's average borrowings were 135 million versus 2002's 147 million.

We had 14.1 million in capitalized interest on our balance sheet at December 31, '03, compared to 11.5 million at 12/31/02. This is about two percent of our total assets. We continue to be very conservative in our capitalization policy, expensing interest when land is raw and when lots are finished.

Our effective income tax rate increased slightly for the year to 39.5 percent from 39 percent. The increase in this rate primarily reflects an increase in state taxes due to a greater percentage of our profits being generated in higher tax states.

Net income increased 57 percent to 25 million for '03's fourth quarter, an all-time high quarter for our company. Net income for the year ended also a record, increased 23 percent to 81.7 million.

We were also very pleased to bring 7. (technical difficulty) 6 percent to the bottom line. This is an increase of more than 100 basis points over '02 and again reflects the highest annual profit in our history.

Diluted earnings per share increased 64 percent to $1.69 for the fourth quarter and 28 percent to $5.51 for the year. We're very pleased to deliver this increase to our shareholders.

In my financial, which includes our title operations, revenue for the fourth quarter was 7.6 million, which was an increase of 34 percent from the 5.7 million recorded during '02's fourth quarter.

Revenue from the sale of loans during the fourth quarter increased from 2 million to 3.6 million and from 10.5 million to 15.1 million for the year ended December 31, '03. This increase primarily relates to the favorable interest rate environment, which includes the impact of selling loans at higher rates (ph) than market because we have certain customers lock their (technical difficulty) rates early in the sales process, and that is combined with our effective hedging of the interest rate fluctuation risk. Favorability also resulted due to the mix of fixed versus variable rate interest loans closed during the fourth quarter of '03 when compared to the same period last year.

In addition, the increase in revenue from the sale of loans is also due to a higher average loan amount and increased servicing premiums. Revenue for loan origination fees increased 15 percent compared to the fourth quarter of '02. This increase was the result of a six percent increase in the number of loans originated and an increase in the average loan amount. For the year, revenues (technical difficulty) from loan origination fees increased 3 percent to 6.1 million with the effect on the decline in the number of loans originated -- 3388 in '02 to 3290 in '03 -- offset by higher average loan amount. For the year the average loan amount was 198,000 compared to 187,000 in '02. And revenue from other sources, primarily loan application fees and title fees, remained relatively constant for the quarter (technical difficulty) and for the year when compared to last year.

Our loan to value on our mortgages for the year was 87 percent in 2003 compared to 85 percent in 2002. And for the year, 68 percent of our loans were conventional and 32 percent or FHA VA. The FHA maximum mortgage loan that is in the markets that we operate in range from $160,000 in Florida to almost $300,000 in Virginia.

And pretax income in the fourth quarter and year ended '03 increased 54 percent and 29 percent respectively when compared (technical difficulty) to the same period in the prior year. These increases were the result of these increased revenues with a relatively fixed operating expense base.

The percentage of customers that received down payment assistance in 2003 remained steady at 17 percent in '03 when compared to '02. And in 2003, the average mortgage balance on these down payment assisted originations was 170,000 compared to 166,000 in '02. The (technical difficulty) majority of these customers are in our Indianapolis and Columbus markets and buy our entry-level product.

We sell our mortgages along with their servicing rights. Our contingent repurchase obligation due to loan delinquency is primarily limited to the first couple of payments being made timely. And for the year we did not repurchase any loans.

Our mortgage operation captured about 87 percent of our business in '03, which is a slight decline when compared to last year's 90 percent. We believe this decline is due to increased competition with the mortgage business slowing, and we constantly focus on our capture rate as M/I Financial only serves M/I Homes' customers.

Overall, our mortgage and title businesses produced 14 percent of operating income during '03, slightly higher than '02's 13 percent. And we were very pleased with our record-setting mortgage operations results.

The balance sheet summary? We (technical difficulty) these changes were in line with our expectations. Our raw land tends to the highest at year-end due to seasonality. Our total unsold land investment at December 31 '03 was 317 million, and that compares to 231 million a year ago. And (technical difficulty) this is a significant increase, it still is significantly lower than our $402 million of net worth. And we always strive to finance our longer-term, riskier assets with equity dollars. We owned 11,900 lots at December 31, '03, of which about 4,000 are either developed or finished. I'm sorry, 4,000 are either under development or finished of the 11,900. We had an additional 11,100 lots under our control. So in total today (technical difficulty) we own a 2.6 year supply and control about a five year supply of lots, for a total under control of 23,000. And this is about 5,000 more lots than we had a year ago. We feel very good about our land position, given our strategy of internal growth and the very competitive land environment. And as previously mentioned, our backlog units are up 15 percent and backlog sales value is up 24 percent versus a year ago, record year end amounts.

From a financing standpoint, we have a 315 (technical difficulty) million dollar line of credit with 95 million borrowed at the end of the year. Bank One continues to be our lead bank with 12 banks in our line, and our line expires in 2006. We currently estimate our peak (technical difficulty) completes our formal presentation. We will now open the call for questions and comments.

(OPERATOR INSTRUCTIONS) Greg Halter (ph), LGI Great Lakes.

Terrific results. I saw today I think it was Toll (ph) had a comment out that it's taking longer to build due to whether factors, as well as government regulations. And I'm just wondering what those would be and if you're seeing any of that.

It depends upon the market. Certainly the weather in the Midwest right now, and even all the way down into the Carolinas, has been a bit of a challenge. But I don't know that that's anything particularly new.

The government regulation side is just something that we're all dealing with. It takes longer to get parcels of ground zoned, it takes longer to get development rights secured, and in some submarkets the ability to obtain a building permit is delayed either because of backlog within the government bureaucracy or in some cases some of those delays may be, very frankly, an intentional attempt by the local governments to try to slow the pace of growth. But there is a little bit of that.

I would presume that's why the land position is such an important aspect of your operations.

Yes.

Phil, do you have a figure for cash flow from operations for the year or the quarter?

I don't have that handy. I will follow-up with you on that.

My last question is of your backlog amount, is it appropriate to take your cancellation rate and look at? Or are none of those subject to be canceled? How does that --?

I think that would be very misleading to do that because the very, very large majority of cancellations happen so early in the process that if you just applied the percentage it would improperly and negatively distort the backlog.

Okay. That's all I have at this point. Thanks.

Dennis McGill (ph), CS First Boston.

I appreciate all the commentary going through the market. That certainly helps out. Wondering if we couldn't start with your margin expectations for the year that are embedded in that $6 type guidance number you provided, especially knowing that -- I think as you commented on a little bit -- you have some pretty tough comparisons coming in the first half of the year.

As Bob stated, we spend a whole lot of time on that and focus on it, and we do think the margins are very strong in the backlog.

From a budgeting and planning standpoint, with lumber prices and some other issues, plus also being in a rising interest rate environment, we actually have in our plans a 50 to 75 basis point decrease actually in our housing margins, which we hope doesn't happen, but we did build that in. Also, for our mortgage operation the mortgages are worth more. We're able to realize more profits on our mortgage is also than we think perhaps we can this year.

So the short answer to you is that in the figure that we gave as far as guidance, there is some deterioration in there of margins built in.

And no one really knows what's going to happen tomorrow. We think that our budgets from a margin standpoint are appropriately conservative because to date we have yet to see actual results that would suggest that that deterioration is going to occur. It hasn't happened yet, but we have -- maybe in the interest of conservatism and just good planning -- budgeted for a very slight erosion.

Most of that would be on the growth line, as you would probably expect volume to help out on the SG&A side of things.

Yes, we would hope to get a little more efficiency out of that, just like we did in '03.

Exactly. If you were to look at first two quarters specifically, was there any type of mix issue, maybe from the D.C. or a couple of your higher priced Florida subdivisions that drove that up in the first couple of quarters in '03?

Not really. We try to continually focus on getting some more affordable product out there. If you look in our year-end backlog, it was up a little more than we thought. But no, nothing unusual.

So putting that margin together with a ten percent type increase in closings we would be looking at around three percent or so on price is what you're looking for for the year?

Yes, that's kind of -- we're looking for, as Bob stated, we're about a 10 percent unit growth and (indiscernible) our average sell price in backlog pretty much for closing the first two quarters. Of course the second half depends on what we actually sell the first couple of quarters. But yes, you're pretty much in line.

Could you run through your monthly numbers (indiscernible) as far as orders and traffic?

For the fourth order?

Yes, that is right.

As far as in October our sales were flat and traffic was down three percent. In November our sales were up one percent and traffic was down seven. The month of December our traffic was down 14 percent and our sales were down 12 percent. And as Bob stated, January of '04 was a record for us; our sales were up 23 percent and our traffic was up 3 percent.

Where specifically was a lot of that strength derived from in January?

It was pretty much across the board. Virtually every one our divisions had a very good, or in some cases excellent, January. Some of that, frankly, may have been because of where the holidays fell this year, almost the last two weeks of January felt like a holiday -- I mean of December felt like a holiday because of the midweek falling of Christmas and New Year's.

And as you mentioned earlier, there was no significant movement in community counts (ph) during that period either.

Right.

No, there was not.

And I think lastly, just to touch on the quarterly numbers again in the fourth quarter, can you maybe breakout specifically the Ohio and Indiana and then the North Carolina from the metro D.C. area as far as what we saw in the fourth quarter? Was Indy (ph) a particular drag on the Columbus market or vice versa?

Are you for talking as far as units, revenue, or --?

Units more particularly and the order side of things.

As Bob stated, we had an exceptional year in certain markets. We had a tremendous record year in Columbus. We had our best year ever in Indy. We had our second-best every year Cinci (ph) (multiple speakers)

Exactly. In some cases in the summer and fall we sold out of communities a little faster than we thought, which maybe distorted the fourth quarter sales because there was nothing left. You went dark in certain communities maybe a month or two or three earlier than you ever thought you would. And this was in the face of us continuing to push prices to try to not -- to try to avoid leaving money on the table.

That's fair enough. I appreciate it, guys.

(OPERATOR INSTRUCTIONS) I'm showing no further questions from the phone lines.

Thanks very much for joining us, and we look forward to talking to you as we release numbers this year. Thanks.

Ladies and gentlemen, thanks for participating in today's conference. This concludes the program. You may now disconnect. Have a good day.