Sonic Automotive Inc (SAH) 2010 Q2 法說會逐字稿

Good morning, and welcome to the Sonic Automotive second quarter earnings conference call. 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.) As a reminder, ladies and gentlemen, this call is being recorded today, July 29th, 2010.

Presentation materials, which Management will be reviewing on the conference call, can be accessed on the Company's website at www.sonicautomotive.com by clicking on the For Investors tab and choosing webcasts and presentations on the right side of the monitor.

At this time, I would like to refer to the Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995. During this conference call Management may discuss financial projections, information, or expectations about the Company's products, markets, operating strategies, or otherwise make statements about the future. Such statements are forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from those statements.

These risks include, without limitation, economic conditions in the markets in which we operate, new and used vehicle industry volume, the success of our operational strategies, the rate of timing of overall economic recovery or further decline, and other risks and uncertainties detailed in the Company's Annual Report on Form 10-K for the year ended December 31st, 2009, and Quarterly Report on Form 10-Q for the quarter ended March 31st, 2010, and our other filings with the Securities and Exchange Commission.

Please refer to slide two in the presentation materials for more information regarding forward-looking statements.

Certain non-GAAP financial measures as defined under SEC rules may be discussed on this call. Management uses non-GAAP financial measures to analyze the underlying operating trends in our business. Reconciliations are provided in our press release and in our earning call presentation materials, which are available on our website at www.sonicautomotive.com.

Thank you. I would now like to introduce Mr. Scott Smith, Co-Founder and President of Sonic Automotive. Mr. Smith, you may begin your conference.

Great. Thank you. Good morning, ladies and gentlemen. I'm Scott Smith, Co-Founder, President, and Chief Strategic Officer. Welcome to Sonic Automotive's second quarter 2010 earnings conference call.

Joining me on the call today are the Company's Vice Chairman and Chief Financial Officer, Mr. Dave Cosper, and our Executive Vice President of Operations, Mr. Jeff Dyke, our Executive Vice President, Mr. David Smith, Greg Young, our Vice President of Finance.

Today I'll be discussing an overview of the quarter, then I'll turn the call over to Dave Cosper for a detailed financial review. Jeff will follow Dave and give an update on our operational trends. I'll then summarize and make closing comments.

Please turn to the next slide? Overall results Q2 2010, we had a solid operating quarter with strong results in every area of our business. The combination of some economic stabilization in key areas of our footprint, along with the continued execution of our operational playbooks resulted in 16% growth in total revenue.

Our new vehicle revenue was up 19%, and our used vehicle revenue was up 23%. Our used vehicle playbook continues to drive consistent performance in this area. Jeff will go into more detail, but let me give you a little color and highlights.

Our used to new ratio was one to one for the quarter. We've previously stated our goal of averaging 100 used vehicles sold per store per month. Our store averaged 75 vehicles in the second quarter.

Our used vehicle playbook continues to also drive growth in parts and service and F&I areas. Our F&I revenue grew by 18% over Q2 of last year, which was driven largely by an increase in our vehicle sales volume. Jeff will provide you more color on the more recent roll-out of our playbooks in other areas of our business.

The SAAR came in at $11.3 million for the quarter, which is right in line with our expectations. We continue to build our plan on an $11 million SAAR for the full year.

Our balance sheet continued to improve as we completed our refinancing of our senior subordinated notes, and also continued to repurchase debt in the open market as we move forward on our goal of further de-levering the balance sheet over the next several years. We're beginning to see the results of our interest rate, as costs are down $3.2 million for Q2 from last year.

With that, I'll turn the call over to our Chief Financial Officer, Mr. Dave Cosper. Dave?

Thank you, Scott. And good morning, everyone.

Overall, I'm pleased with the results for the quarter. We saw good revenue growth, as Scott mentioned, in all parts of the business. Total revenue was up 16%, and gross was up 10%. Adjusted profit for the quarter was $15.6 million, up 41% from a year ago.

Adjusted earnings per share were $0.27 for the quarter. On our last call I mentioned I was comfortable with the low end of analysts' expectations for the year, specifically $0.90. I continue to believe $0.90 is appropriate, and feel that results for Q3 and Q4 will be about equal at $0.24 to $0.25 in each of those quarters.

Next slide, please? This slide shows EBITDA for our business, together with industry SAAR, and it really highlights how resilient the business model is. We generated solid cash even with an industry decline of over 30%. We continue to believe that we can achieve 2007 cash generation at an industry volume of about 13 million units.

Next slide please? Adjusted SG&A as a percent of gross was 79.9% for the quarter. We've been working on costs, and I'm pleased with the improvement from the first quarter, it was a reduction of 340 basis points. We're up 70 basis points from last year, and I'm comfortable with this, given the several significant business initiatives we have underway that offer great profit potential going forward. We expect to see SG&A at 80% to 81% for the balance of the year.

Next slide? This slide shows our liquidity position, which has really improved substantially in the past six months. We have readily available cash of $137 million. During the quarter, as Scott mentioned, we bought back (inaudible) primarily our 8-5/8s coupon bonds. Further, we've called an additional 20 million of our 8-5/8s bonds, and those will be taken out next month. Obviously, this will reduce our interest cost going forward.

As we've stated many times, we remain focused on reducing our debt level over time. One exception is mortgage debt. As we move on our strategy to own more of our properties we'll substitute mortgage debt for leases. We expect to own much more of our land and buildings going forward, especially as we approach lease end dates.

Next slide, please? A very quick slide here, just to show that we're comfortably compliant with all our debt covenants, even with the covenant step-ups that occur through our facility through 2012.

Slide -- my last slide here is on capital spending. And spending for the net of mortgage proceeds was $12.5 million for the quarter, and $19 million for the first half. Net spending for the year is projected at about $40 million. As I've mentioned on previous calls, we're spending on two very large projects that had been on hold during 2009, and we've resumed work on those facilities and hope to finish them up later this year, first part of next year.

With that, I'll turn the call over to Jeff.

Great. Thanks, Dave. And good morning, everyone.

As mentioned on our previous calls, our attention to associate satisfaction, associate retention, and our ability to execute our E-sales and pre-owned playbooks continued to contribute to the success of our new vehicle sales. Total new retail volume was 24,850 units, a year-over-year increase of 15.2%. And as you can see on the slide our new vehicle revenue was up 19.3% and our new vehicle gross was up 20.1%. On a quarter-to-date basis new vehicle margin was 7.1%, up 10 basis points from prior year and flat with first quarter.

We continue to manage all new car inventory ordering on a centralized basis, and are proud to report our new car days supply is in outstanding shape at 49 days, significantly better than last year's 62 days. We're down from first quarter of 54 days, and as we've seen inventories tighten through better manufacturer and dealer inventory management practices.

I'm proud to announce that we have just completed the first draft of our new vehicle playbook, which we plan to be introducing in our stores in late Q3 of this year. We've worked hard to develop this playbook based on the successes that we've had in pre-owned, and look for similar results on the new vehicle side of our business. We continue to believe that there is substantial up side to our new vehicle volume levels, regardless of the SAAR, as we continue to take share and execute our processes.

Next slide, please? We continue to gain momentum in our pre-owned business, as we posted our strongest used car revenue, volume, and gross quarter in Sonic's history. This marks our fifth straight quarter of double-digit growth as our pre-owned team continues to execute our playbook. It's important to note that we've been able to sustain this level of growth on top of double-digit growth last year in Q2. Simply outstanding performance by our pre-owned team.

We grew used vehicle revenue just over 23% for the quarter, and grew our used vehicle volume by 20%. And the great news is that July looks strong again as we're tracking up 25% for the month, as we continue to grow our used vehicle business even while comping against double-digit growth from prior year.

As we discussed in detail in previous quarters, our used car gross margin percentage has stabilized, as we projected our margin percentage was about 7.7% for the quarter, and you should expect our margin percentage and gross per unit to remain relatively flat throughout the remainder of 2010.

As Scott mentioned earlier, our used to new ratio was one to one for the second straight quarter, as we continue to work towards our goal of achieving a sales average of 100 pre-owned units per store per month. We ended the quarter with an average of 75 units per store.

We're very excited about several different processes we're adding to our used vehicle playbook, and look forward and sharing them with you in the coming quarters. But one, in particular, we made you aware of last quarter was that we were in the beginning stages of developing our buying organization that we call CBS, our Central Buying System. We established CBS purely out of necessity to support our volume needs, and are beginning to add more brands and regions to this process. As of today we have 12 buyers in CBS that are buying a total of about 700 units per month, and we obviously expect that to grow.

Our certified pre-owned mix was at 34% for the quarter, that's right in line with our target. Inventory ended the quarter at 29 days, a little lighter than I would have liked for this time of year but we do not feel it's cost us any business. We're just getting better at replenishing our inventory on a weekly basis, and we expect inventory levels to be in this range for the remainder of the quarter.

Next slide, please? We're also very excited about our fixed operations business. We're in the second year of our playbook rollout with fixed operations, and the results are improving with each quarter. As you're aware, we designed our playbook to combat reductions in warranty gross and to help deal with the lower SAAR levels, and these moves are all paying off for us.

As you can see on the chart, overall our fixed operations revenue was up 4.8%, while our gross was up 3.3% to last year. Our customer pay revenue was up 2.1%, and our customer pay gross dollars were up 0.3%, while our margin customer pay was 56.5%, down 100 basis points to last year and flat with Q1. The margin reduction can be attributed to an aggressive tire campaign that we have implemented, and we'll comment on in a minute. Warranty revenue was down 7.7%. Warranty continues to be in the 16% range as a percent of our total fixed revenue.

Our internal and sublet gross from fixed operations was up a combined 23% or $10.4 million for the quarter. This increase is a direct result of our used car playbook and the significant increase we're seeing in used vehicle volumes. As manufacturers continue to cut warranty times and support it's imperative for Sonic to drive revenue and gross through customer pay and increased volume in used cars, and we are doing just that.

Our fixed operation teams continue to improve, and we're very excited about the growth opportunities that we have. We made you aware last quarter of the progress that we are making in our body shop business. We're in year one of our body shop playbook rollout, and experienced our first quarter of year-over-year growth in quite some time. we're up about 5.1% in revenue and continue to improve this very important area of our fixed business.

We've also established a new tire program, as I was talking about, that we're in the beginning stages of rolling out. We believe that tires are a great way to attract non-warranty customer, pay customers to our shops, and are aggressively selling tires in our service drives.

We've increased our tire business year-over-year by 29%, and look to continue to use tires as a way to generate incremental business to our stores, allowing us to bring back the shopper that has traditionally left dealerships to shop with mom-and-pop or chain service centers. And we'll have more detailed updates for you on our progress here in the coming quarters.

Before I hand the call back to Scott, I'd like to thank all of our Sonic Automotive associates for their hard work and dedication to the execution of our objective of making associate satisfaction our number one priority. Our turnover continues to track to be in the range of 25% for the year, which will mark the third straight year of significant improvement in associate satisfaction, and supports our mission to create one of America's greatest companies to work and shop. Thank you very much, team.

Scott?

Thank you, JD, for the operational update.

In summary, as we described last quarter, we budgeted in 2010 for an $11 million SAAR, and at the end of the second quarter that's where we are. There's still many analysts and industry leaders projecting a higher SAAR, and if that occurs obviously we'll have up side to our current goals for the year.

We're optimistic that we're seeing a slowed new vehicle recovery, and we're poised to take advantage of the growth opportunity as the recovery continues. We're very excited about the introduction of our new vehicle playbook at the end of Q3, and expect similar results and successes to what we had seen in our pre-owned.

We expect the second half of the year to be fairly evenly split between Q3 and Q4. We expect our Central Buying System team to continue to strengthen as we improve our processes and add more regions and brands.

Our used vehicle revenue volume and gross continue to grow at a double-digit pace, and we don't see that slowing down. Our fixed operations continues to have terrific up side as we get better at the execution of our playbooks.

Our F&I business is strengthening on the execution of our F&I playbook and increased volume levels, and we're up nearly 19% in gross as we work to achieve our two products per vehicles sold.

We'd like to thank all of our Sonic Automotive associates for their hard work and dedication to the execution of our objective in making associate satisfaction our number one priority. Our turnover continues to track to be less than 25% for the year, which marks the third straight year of significant improvement in associate satisfaction and reductions in turnover, and supports our mission to create one of America's greatest companies to work and shop. Thank you, team.

It's an honor and a privilege to lead our Company, and at this time we'd like to open the call for your questions.

(Operator instructions.)

Your first question comes from the line of John Murphy with Bank of America Merrill Lynch.

Good morning, guys.

Hey, John.

Good morning. Maybe I'll start with a, first with sort of a longer term question. I mean as we look at the lease renewals coming up maybe over the next couple of years and the opportunity you're taking to own real estate as opposed to leasing it, what could be the impact on SG&A over time? And what percent of your real estate do you think you may ultimately own?

Yes, John, it's an interesting question. I mean today we've got about $120 million of mortgages. It's a little over 10%, maybe 12%. And we've got a lot of leases coming up in the next five years. And then there's opportunistic things that happen that we take advantage of.

I hadn't thought about so much the -- I guess rent today in total is 8.3% of SG&A and of course all it does is move it from SG&A down into interest. But one of the principal reasons we do it is because it's lower cost financing, plus all the operational benefits of putting improvements on to something you own versus something somebody else owns.

So I guess if we get to 50% owned, maybe there's another three, four points that would come out of SG&A. That isn't the principal driver for us, it's really about improving our balance sheet, having better control of our assets and our stores, and the financial benefits are pretty significant, a $1 million to $2 million net present value improvement for each store. So we like it, and that's our plan. We're going to stick with it.

Got you. Second question just on inventory running at 49 days' supply on the new vehicle side, that's pretty tight, especially considering that sales are relatively depressed. I was just wondering if there was any constraint on your ability to deliver or would you like more inventory in certain segments so there's opportunities to make more sales if you had them?

Hey, John. This is Jeff Dyke. Actually, I feel pretty good about where our inventory levels are. That's not to say that we don't, there's some high line brands that we wouldn't like to have more inventory of, the five series for BMW, et cetera. But I think the manufacturer is doing a much better job of managing inventory, and so are we. And I really don't think it's costing us any business, whatsoever. It's, you know, it's as close to Nirvana as you can get in terms of days' supply. Could the mix and a few model lines, could we use a little more inventory here or there? Sure we could. Like I said, on the [five series]. But other than that I'm very comfortable with where we are.

A great thing to hear for the industry. Then on the CPOs, obviously you guys are doing a good job there, you know, that business is through the roof. I was just wondering as you see those customers come in, as used vehicle prices are increasing, the CPO prices are increasing, do you foresee a period of time soon where they may start flipping into just buying a new vehicle and buying less CPOs? I'm just trying to understand the balance of the consumer, looking at the value proposition in CPO versus a new vehicle currently?

Well, you've got some situations where your nearly new vehicle, a CPO is approaching a monthly payment that's more than a new car. And so, yes, I do. I see that opportunity existing, although I don't think it's going to make a lot of difference in our used car business in total just because we -- it only represents about 30% of the total mix, and we've been able to make it up in other areas.

So I think for a period of time as the off-lease cars shrink, and they've been shrinking but they're really going to start shrinking as we move closer to Q4, and for a period of time inventory is going to get tighter, it's going to push margins down and the selling prices up. And so, yes, that opportunity certainly exists to sell more new because of that.

Okay, and then just lastly on parts and service, just wondering if you could remind us of the break-down between warranty, customer pay, and internal sales, just as a percentage of gross?

Yes, sure. Well, let's see here. I can tell you parts and service we were down 7.7% in warranty, customer pay excuse me, warranty represented 15.9% of the overall mix, customer pay was 45.8% and was up 2.1% for the quarter. Wholesale was up or is 12.2% of our overall mix, and we were up 8.6% for the quarter. And then the internal, when you combine sublet and internal, about 19% and we were up 23% for the quarter.

Great. Thank you very much.

You bet. Thank you.

Our next question comes from the line of Rick Nelson with Stephens.

Good morning. I'd like to ask you about the growth rate in used cars, same-store? I know you mentioned that July was up 25%. We also begin to bump-up against some really tough comparisons. And given what you were just suggesting about this potential switch-out from used to new, what sort of growth rate do you think is sustainable, that obviously is a big driver to the internal within service and parts, too?

Yes, Rick, great question. You know, we think that the third quarter is going to end up being similar to the second quarter, maybe even a little better, just because cash for clunkers last year pushed down the used vehicle volume so far last year. So that might expand, that increase, and then fourth quarter I don't see any difference.

I mean I think we're going to be able to continue in the range that we're at for the remainder of this year, and we'll see going forward. But I'm very, very comfortable at the level that we're at today, and I think we'll continue that on through the end of the year.

There's still just so much up side in the used car business for our Company, it's unbelievable. Like I said, we ended the quarter selling 75 units per store. We fully expect to sell 100 units per store, and so all that up side is there for us to go get, we've just got to get better at executing our processes.

Thank you for that. Also, I wanted to ask you about the SG&A. We saw sequential narrowing this quarter, 79.9%, still higher year-over-year. And the guidance you talked about was 80 to 81%. Is there some expenses coming back into the financials that are pushing that ratio up or expected to push the ratio higher?

I don't think so, Rick. I think it's 79.9% is 80%, and I give myself a little slack, and I tend to be conservative anyway.

And do you see additional opportunities from an expense standpoint to perhaps deliver better than your estimates?

We're doing -- I mentioned some investments we're making, and that's probably what's bumping us up a little bit versus last year, and of course those investments, we're expecting growth in gross. And that's going to be the -- that's what's going to drive the ratio more than cost cuts or increases from this point. I mean we're always looking at costs. I think there's a few efficiencies, I mean there's always efficiencies. But we're investing in some very interesting things to drive volume and pricing, and that's where the real leverage for the bottom line is.

And, Dave, the add-backs in the quarter, the debt restructuring charges in particular, what debt restructuring was accomplished this quarter that we would have these continuing add-backs?

Yes, well, hopefully they're not going to be added back like that. That $7 million, we -- remember, we issued some 9% notes with the maturity of 2018, and we bought out $200 million of the 8-5/8s that were due in 2013. And there was a 2.4 some odd percent call premium on those notes, and so that's what we paid.

I mentioned we're calling $20 million of the bonds, and we'll take those out next month, and the call premium steps down to 1.4%, something like that. So it'll be just a few hundred thousand that would hit in this quarter, in this third quarter. So it's fairly small going forward. That was a charge, kind of an insurance premium to help insure liquidity for our business.

Okay, thank you and good luck.

Thank you, Rick.

Thanks, Rick.

Our next question comes from the line of [Collin Langen].

Just following up on the special charges. In terms of the interest on the swap, is that on -- I mean is that going to continue or is that really onetime in nature?

Well, Collin, hi, it's Dave. It's really a mark-to-market adjustment. We have some hedge in effectiveness related to the way we've reduced the business and restructured our facility, and we just had some swaps we couldn't match-up, and it is a noncash charge. It bounces around over time based on interest rate movements, and over the life of the swap it comes back to zero. So there's no cash, no impact on the business over the lifetime of the swap, and that's why we're calling it out. And it's unpredictable based on interest rates.

And the swap expires in?

Middle of 2012. It's been going against us, given where the interest rates are. It's going to come back the other way, and we'll call it out and not take credit for it at that point.

You also commented on sort of earnings for Q3, Q4 being $0.24, $0.25, why the sequential decline from this quarter? And why would Q4 actually be stronger than Q3 since normally the seasonality is better?

A penny for us is a million dollars of pretax profit. It's kind of tough to call. The signal I am sending is they're going to be close to equal. When I stare at what people are saying, they've got Q3 very high and Q4 very light versus what I think. And I think those should be closer together. And for a million or two I can't call it, frankly, in this business.

So should Q3 be down from this quarter? I thought Q2 and Q3 are pretty similar?

Yes, they are, but I don't know, it's kind of close to call, too close to call. We'll see how we do.

And why -- and from a sales perspective your sales, unit growth wasn't as high as the U.S. industry as a whole, I mean is that a function of geography or brand mix or --

Hey, Collin, this is Greg. I think it's a combination of those two things. I think the bigger of those two really is the geographic mix. Our footprint really isn't in some of those markets that really took a very sharp decline last year, like southern Florida and some of the areas, especially for the domestic stores in California.

We've put together a pretty interesting analysis, we go back to second quarter of 2008, before the downturn started, and if you look at just units for everybody for second quarter of '010 compared to '08, there's about four of us in a peer group that are right in that 77% of 2008 volume, so we've all come pretty much back in line with each other. It's just that we didn't go down quite as far in the second quarter of last year.

And we did the same analysis on the used side, and we're well above, we're about 134% of where we were for 2008, even in volumes in used. So I think you can combine the new and you combine the used together I think our sales folks really did a fantastic job this quarter.

And I think some of it is also there's a couple of analysts out there that are still north of a $12 million SAAR, so when you look at us versus some of the models that are out there I think that some time over the second half that these models have got to start to adjust to what everybody thinks the SAAR is going to be. And so we expect some of those models to begin to adjust here in the next couple of months.

Okay, and if I can, just one last one? Can you talk a bit about the impact upon the Toyota recall on parts and services and maybe your outlook for parts and services? Obviously, it was up pretty strong this quarter. Is that sustainable for the rest of the year? I mean there's a lot of talk about the fewer vehicles out there, it'll be harder to actually keep servicing it.

Hey, Collin. Jeff Dyke. The impact from Toyota was less than 1%, so not a big impact, at all. And I think that our parts and service business, we've got so much up side, as Scott mentioned in his notes, that I think that the -- whether we grow at 5% or not, that's huge growth and an outstanding quarter, is yet to be seen.

But we should see positive growth moving forward from here on out. There's just too much up side. The tire program that we're doing and the amount of customers that we're driving in, our average car coming through our service drive right now is about five years.

And when you look at that and the up side that we have there, along with the growth that we're projecting for used cars, there is tons of used car business out there to have. And if we're going to run-up 20% then that internal is certainly going to be there for us, so we expect to have nice positive growth in fixed operations for the remainder of the year.

Okay. Thank you very much.

(Operator instructions.)

Your next question comes from the line of [Jordon Heimowitz] with Philadelphia Financial.

Hey, guys. Thanks for taking my question.

Hi, Jordon.

Hey, Jordon.

I had a question, increasing numbers of (inaudible) selling domestics are starting to take share back from the foreign manufacturers. Can you extrapolate that on were you guys in the quarter either (inaudible) in general or and even better if you could break it out between each individual brand and how the growth is comparing?

For some reason you're -- the question that you asked kind of got broken up. Can you ask that again?

Sure.

There you go, we can hear you better now.

There's been a couple of articles out recently that says customer preference is starting to shift towards the domestics from the foreign manufacturers. My question is two-part. One, are you seeing that? And, two, can you quantify how your (inaudible) in the quarter versus your foreign exposure?

We can, sure. First of all, let's start with the mix. Our luxury and import mix is about 85% of our total revenue contribution, so --

But you're putting Cadillac in that luxury and import mix, correct?

We are including Cadillac in the luxury mix. If you take it out, Cadillac is about 5.6% of the luxury piece, so -- or of the total. So if you take it out maybe it's 80% instead of 85%. So when you look at that, our total luxury business unit volume increase for the quarter was 17.7%. I think the industry was somewhere in the 17% range.

And we are seeing a little bit of -- I mean obviously the domestic business is growing, it's taking share, but it's such a light part of our overall business mix that we don't have the exposure that some of the other companies in our sector do, so it's very difficult for us to comment. The domestic brands that we have are obviously, they do very well, but in terms of the overall picture it's such a small percentage of our business that it's really hard to comment and answer your question.

Okay, and would you be increasingly interested in purchasing Ford or GM dealerships at this point or not necessarily?

No.

Yes, probably not, but it's nothing against them it's more our focus at the moment is on reducing leverage and improving the base business. There may be a small acquisition here or there but nothing substantial.

And Jordon, we think -- Jeff and I have been out on the road virtually all year, and we think that there's literally about 100% up side in the operations that we currently have. If we can just get all of our dealerships operating at a level that our top 10% of our stores are operating at, we'll have some great earnings calls.

Okay. Thank you.

Thank you, Jordon.

And what number is that, by the way? What level is the top 10% of your dealers earning at?

In terms of?

I mean however you want to define it, operating margin I would say?

Scott was referring to some of our operating initiatives that we have out there, the hundred used cars per store per month, the two F&I products per car, the 100% --

But that that all comes down to profitability so those top dealers, what is the top performers in your group operating at?

In terms of profit to sales, or --

Yes, that's as good a metric as any.

7%, 8%, our big stores are running in the 7%, 8% range, net to sales. I mean the up side is unbelievable.

Thank you.

At this time there are no further questions. Presenters, do you have any closing remarks?

We don't have any more. Thank you.

Thank you. This concludes today's conference. You may now disconnect.