Silgan Holdings Inc (SLGN) 2011 Q2 法說會逐字稿

Thank you for joining Silgan Holdings second quarter 2011 earnings conference call. Today's call is being recorded. At this time I would like to turn the conference over to Mr. Malcolm Miller, Vice President and Treasurer. Please go ahead, sir.

Thank you. Joining me from the Company today I have Tony Allott, President and CEO;Bob Louis, EVP and CFO; and Adam Greenlee, EVP and COO.

Before we begin the call today, we would like to make it clear that certain statements made today on this conference call may be forward-looking statements. These forward-looking statements are made based upon management's expectations and beliefs concerning future events impacting the Company, and therefore involve a number of uncertainties and risks including, but not limited to, those described the Company's annual report on Form 10-K for 2010 and other filings with the Securities and Exchange Commission. Therefore, the actual results of operations or financial condition of the Company could differ materially from those expressed or implied in the forward-looking statements.

With that, let me turn it over to Tony.

Thank you, Malcolm, and welcome, everyone, to our second quarter 2011 earnings conference call. The agenda for this morning, as usual, we will review the financial performance for the quarter, make a few comments about our outlook for 2011. After these prepared remarks, Bob, Adam and I will be pleased to answer any questions you might have.

As you saw in the press release, we had another solid quarter, delivering report adjusted earnings per diluted share of $0.53 compared to a very strong prior year quarter of $0.48. Our businesses did a nice job of combating overall inflation and effectively managing cost pass-throughs, and each of our recently acquired businesses delivered positive operating results in line with our acquisition models.

Overall, we are pleased with our second quarter results. As expected, we did have to manage through a volatile resin market and broader uncertainty around the macroeconomic environment, which was further compounded by a cooler and wetter start to the summer. Yet we remain on track for another record year and anticipate double digit share earnings growth for the full year.

In addition, I'll comment on the large gain we recorded as a result of the Graham Packaging acquisition termination fee we recorded for the quarter. We did receive in the quarter a $39.5 million contractual termination fee, of which $27 million was gain in excess of transaction costs. While we were disappointed to have the deal move away from us, we believe our patience and discipline is what has driven our outsize return to shareholders over time.

Often on these calls we've indicated for every completed deal we pursue at least ten others. Unfortunately, since this was a public transaction, you all had to live the ups and downs of that one with us this time. As a consequence, we are now back to our work on analyzing other strategic alternatives to deploy capital on behalf of our shareholders. We continue to believe good acquisitions are the most compelling opportunity, but have a variety of opportunities open to us.

Finally, as we move toward our peak season, we've confirmed our full year guidance of adjusted earnings per diluted share to be in the range of $2.60 to $2.70, as resin inflation is beginning to abate, the hot summer weather has returned through most of the country, and our overall volume outlook remains steady. Achieving this estimate would represent a 17% to 22% increase over our record 2010 results.

With that, I will now turn it over to Bob to provide review the financial results in more detail and provide additional information around our earnings estimates for 2011.

Thank you, Tony. Good morning, everyone.

As Tony highlighted, the second quarter of 2011 was a record quarter, as we delivered adjusted earnings in line with our expectations and 10% above the second quarter 2010. Keys to the quarter are positive contributions from our recently acquired businesses, the operating performance in our plastic business improved modestly as we anticipated, and the second quarter experience continued earnings headwind as a result of the lag pass-through of resin cost to our customers as resin prices peaked during the quarter. The resin situation affected both the Plastic business and plastic portion of our Closures business.

As a result, we delivered second quarter adjusted earnings per share of $0.53, versus the prior year quarter of $0.48. On a consolidated basis net sales for the second quarter of 2011 were $822.2 million, an increase of $128.3 million or 18.5%, primarily as a result of higher unit volumes in the Metal Container and Closures businesses, as they each benefited from the recent acquisition. Net sales also benefited from higher average selling prices across each business as a result of the pass-through of higher raw material costs and the impact of favorable foreign currency translation. These benefits were partially offset by slightly lower unit volumes in the Plastic Container business.

Net income for the second quarter was $51.2 million, or $0.73 per diluted share, compared to second quarter of 2010 net income of $36.3 million or $0.47 per diluted share.

Foreign exchange remained neutral to earnings as we continue to be effectively hedged, having financed the international businesses in their local currencies, and we maintain a business practice of balancing out cross-border activity to help mitigate the effects of currency on our earnings.

Interest expense for the quarter increased $4.5 million to $16.5 million versus $12 million in the same period a year ago. This increase was driven largely by incremental acquisition borrowings and additional borrowings from the refinancing of our credit facility in July of 2010.

Capital expenditures for the second quarter of 2011 totaled $47.7 million, compared with $23.7 million in the prior year quarter. On a year-to-date basis, capital expenditures totaled $81 million in 2011, versus $47.6 million in the prior year. The incremental capital spending is the result of the timing of capital so as to optimize tax deductibility under the new tax laws and capital spending related to footprint expansion in the Silgan metal packaging business. As foreign currency rates continue to strengthen against the dollar and our international expansion activities progress, we anticipate capital spending for the full year to be in the range of $160 million to $170 million.

Additionally, we paid a quarterly dividend of $0.11 per share in June, with a total cash cost of $7.8 million.

I will now provide some specifics regarding the financial performance of the three businesses.

The Metal Container business recorded net sales of $482.3 million for the second quarter of 2011, an increase of $104.2 million versus the prior year quarter. This increase was primarily the result of inclusion of net sales from Vogel & Noot, and higher average the selling prices as a result of the pass-through of higher raw material costs.

Income from operations in the metal container business decreased $1.1 million to $42.9 million for the second quarter 2011, versus $44 million in the same period a year ago. The decrease in operating income was the result of a charge of $3.3 million related to the resolution of a product liability dispute, the negative year-over-year comparison relating to the delayed pass-through of changes in manufacturing costs, higher rationalization charges and a less favorable mix of products sold. The product liability dispute is a prior period item involving a long-term contract customer and does not have any ongoing impact on revenue or profitability for that customer.

Net sales in the Closures business increased $18.7 million to $184.5 million for the quarter, primarily due to the inclusion of IPEC and DGS, favorable foreign currency translation of $9.9 million, and higher average selling prices due to the pass-through of higher raw material costs. These increases were slightly offset by the weakness in the single serve beverage markets as a result of the impact of the cool wet weather experienced across much of the country during the spring and early summer months.

Income from operations in the Closures business for the second quarter of 2011 decreased $1.3 million to $22.7 million. This decrease is the result of the lag pass-through of increases in resin costs, partially offset by the inclusion of IPEC and DGS and the ongoing benefits of cost reductions and manufacturing efficiencies.

Net sales in the Plastic Container business increased $5.4 million to $155.4 million in the second quarter of 2011, primary as a result of higher average selling prices due to the pass-through of resin cost increases and the impact of favorable foreign currency of $1.9 million. These benefits were partially offset by lower unit volumes and a less favorable mix of products sold.

Operating income in Plastic increased to $4.5 million in the second quarter of 2011 versus $4 million in the prior year quarter, as resin costs, which peaked during the quarter, remained volatile during the period. As a result, operating income for the quarter continued to be muted by the negative impact of the lag pass-through of these increased costs to our customers. In spite of volatility, operating income improved due to better operating performance and lower SG&A costs, partially offset by lower unit volumes and a less favorable mix of products sold.

Turning now to our outlook for 2011. We are pleased with first half performance, as we delivered adjusted earnings of $0.94, an increase of $0.06 or 7% versus a very robust first half of 2010. Based on our year-to-date performance and outlook for the remainder of 2011 we are confirming our full year estimate of adjusted net income per diluted share in the range of $2.60 to $2.70, which excludes the impact of the Graham acquisition termination fee, costs associated with announced acquisitions, rationalization charges and the impact of the past product liability dispute resolved in the second quarter of 2011. The midpoint of our earnings estimates represents an increase of $0.43 per share, or 19.4% versus a very strong 2010 result.

As indicated in the press release, we also expect to complete a refinancing of our bank credit facility shortly. We expect the terms and conditions to be favorable to our current agreement, providing for lower costs and increased flexibility for acquisitions. The impact of that potential refinancing is also excluded from our estimates of adjusted earnings.

Resin costs for the Plastic Container business and the plastics portion of our Container business started to decline in the second quarter, therefore we expect to benefit from lag pass-through of these resin price declines in the third quarter, and purchase accounting headwind is behind us for the recently announced acquisition. However, we are forecasting a later than normal harvest, particularly on the West Coast. As a consequence, we are providing a third quarter 2011 estimate of adjusted earnings per diluted share in the range of $1.05 to $1. 15, which excludes rationalization charges, costs related announced acquisitions and any charges related to the pending refinancing. Comparatively, we delivered adjusted earnings of $0.90 per diluted share in the third quarter of 2010.

Additionally, you should note that given the magnitude of the third quarter and potential impact of unforecasted movements in harvest dates, the earnings at the back half of the year with shift meaningfully between quarters.

We are forecasting free cash flow for 2011 to be at the higher end of our original range of $180 million to $220 million, as the benefit of termination fee partially offset by higher capital expenditures, as I indicated in my capital expenditures comments.

That concludes our prepared comments. We can now open it up for Q&A, and I will turn it back to Jessica to provide directions for the Q&A session. Jessica?

Thank you. (Operator Instructions). Now we will go to Ghansham Panjabi with Robert W. Baird.

Good morning.

Good morning.

A lot of peers in the sector commented on the sharp decline in volumes, particularly in the month of June as the customers have faced with the [spectre of] raised prices and consumer spending is weak and the commensurate inventory reduction. Have you seen any of that in your businesses so far?

Ghansham, if you look through the quarter, June was our slowest month in the quarter, which is some what typical for us. But I wouldn't say we had a sharp decline. We had just a smaller decline in June versus the balance of the quarter. So nothing significant.

Okay. And as it relates to the back half of the year outlook, it has been a very warm summer, particularly the last couple of weeks with the heat wave, et cetera. I think you commented on the West Coast crop; I assume that is tomatoes. But seeing any pause for some of the other types of crops or vegetables or anything like that? Are your customers starting to get cautious just based on the amount of heat this country has experienced the last few weeks?

No, I think if you look at the crops and kind of where stand right now, number one, theywere actually planted late for the most part. Probably one to two weeks late in the Midwest. And really that was because of the cool wet weather we had early in the summer. So I think you're right. I would say it has been very warm the last few weeks, but for the most part it has been cool in kind of our growing region. So we think the pack is going to run a little bit late this year.

If you look at some of our other businesses, specific to single serve beverage on the Closure side, we have seen a slight slow down due to that cooler and wet weather early in the quarter. We will see how the last few weeks of the warm weather really impacts kind of the finished goods at retail for single serve beverage, but atthis point I think we still continue to feel very good about not only the crops, but about the recovery of single serve beverage with a warm summer hopefully coming forward here.

Okay, great. Then just the last question, maybe for Tony. Tony, thinking back to the Graham Packaging episode, and maybe that is the best word to describe it, and perhaps the structuring of the initial terms. Can you share with us any lessons learned as it relates to how you might consider the next transaction from a structuring standpoint? Just the breakup fee, or whatever else there is.

I obviously saw a note on that. First of all, if you go straight to the breakup fee at the negotiation process, and I think that there is nothing that we would do differently in there. It was a hard negotiated point through that, so I think we would go in and negotiate hard on that point again, and probably in the end up somewhere in the middle. I know compromise is out right now, but that essentially --

I think the learning here more broadly is that we really believe what you pay for a business upfront is to critically important to the ultimate success you have. Every once in a while a business comes along that is just a must have at -- I'm not going to say at any price, I'm not even able to say it. But every once in a while a deal comes along that you are going to pay up for. And frankly, I think Graham, we did -- we were willing to pay up for to a degree. In the end price matters a lot.

And so one learning here is that public deals -- we don't typically buy on auctions very often. We try to find things that make a little more sense [and find them on our own]. One learning here is that a public deal is essentially always an auction, and it kind of has to be by definition. And so that is always going to be a bit harder for us to get to a [clearing] price where we feel confident we can create the kind of value that we've had so much success doing in the past. So that is -- it's not very helpful learning, but that is probably the one learning.

Okay, great. Thanks so much. Good luck.

Thanks now.

We will now go to Alton Stump with Longbow Research.

Thank you. Good morning. I guess if you could just comment on how your food can volumes fared in the first quarter organically? I think it was implied in the press release that they were up slightly. Is that correct?

That is correct. For the second quarter that is correct. Obviously for the segment we've included the Vogel & Noot acquisitions. So including Vogel & Noot, we're up high single digits. If you look at the organic volume per your question, we are up slightly in the US business. Looking at a growth in pet food and some increase in soups and sauces as well.

All right. And then I guess just one quick follow-up to it. I think you already touched on it there. I was surprised to see that growth, given how weak soup can volumes have looked industry wide the last quarter or two here. Was it mostly pet food was the key offset there?

Pet food has been strong for some period of time for us. It just continues the growth trajectory that we have been on. And soups, I would say it wasn't necessarily a surprise to us. It is up slightly in the quarter, so really pretty much in line with our expectations.

Okay, great. That's all I have, thank you.

Thanks a lot.

And we will now go to James Armstrong with Vertical Research Partners.

Good morning. Looking at the Plastic segment, after a few challenges in 2010, you are on track for a much better year. Do you still believe that you can manage the resin price volatility to see an increase in Plastic operating income for the year?

Sure, this is Adam. And, yes, I think that is correct. I mean, we still have expectations for better performance out of our Plastic business. We saw that to some degree in the second quarter, although it was muted from an operating standpoint by the lag pass-through of the resin increase. As we look forward now for the remainder of the year, we do see some stability in resin. It was very volatile in Q2, but Q3 looks to be more stable, and so we will have the catch up of the lagged pass-through. So we do anticipate further improvement in our Plastics business.

And it will be gradual. So we are expecting some modest improvement. You can already see it in the numbers so far that , despite the resin headwind, it is a bit better so far, but it is going to be gradual. It's not going to be everything we want it to be in 2011. It will take up some time

Okay. And then switching topics. Assuming that you don't have any major acquisitions that come down the pipeline in the next few months or in the next few quarters, could we see another significant buyback like we saw in 2010 this year or maybe next year?

That is not on the forefront of our minds. I think we do have some authorization that exists from the buyback. I think the idea that we would do some amount of ordinary market type buyback is very plausible. But right now what is on our mind is, we watch the balance sheet. We are kind of the low end of what we view the optimal leverage range, but we're not way outside of it, sounlike a year ago where we were way outside the optimal range. That is not the case today , because of the acquisitions we did late last year.

So really I -- in the near term it would be much more modest than that. We do think the acquisition opportunities are significant out there. We continue to believe that is the greatest value that we can drive for the shareholder is great acquisitions that help build or enhance the franchises of the business. And so I would think the right way to view it is there would be some buyback in the mix, but I wouldn't necessarily think of it as a big

Okay. Thank you very much.

(Operator Instructions). We will now go to Mark Wilde from Deutsche bank.

Tony, just a follow-up on that question. Can you give us a sense of kind of how long it takes you to get back on the horse from an acquisition standpoint? I mean, Graham was so big, I assume it put everything else off on the side.

Yes, good question, and the answer to that is no. We certainly put a lot of time and effort into Graham, but we kept other things moving along at the same time. And so, again, we viewed this as until it's done, it's not done. We have been through it too many times. And so I would say that we still had a backlog. We are still working a backlog. We will still probably turn down nine of every ten we see, so you never know when it will come. But if the idea is that the slate is totally clean and now we are out trying to figure out what is next, that would not be the right way to think about it.

Okay. And would you care to share any thoughts with us on just domestic versus offshore, or different business segments on the acquisition side?

Mark, this is Bob. I will kind of take that one. Really the pipeline is not a lot different than where we were before the Graham deal came around. We said pretty openly we are not constrained by geography, we are not constrained by which segments we would like at. That continues to be the case. I think we have a fair bit of opportunity across geographies and across footprints. Now the magic will be in which one we can get a deal done that we think meets our return metrics and meets our franchise valuation. So time will tell on that front. But not at all constrained in any front from an acquisition standpoint.

Okay. And then just as one follow-on. You mentioned some investment in the Metal can business. I'm assuming that was over in Europe with Vogel & Noot, but if you could give us a little more color on that?

Sure, if you look at our CapEx, we are up year-to-date some $36 million versus the prior year. Essentially that is coming in kind of two fronts. One, there is some acceleration of capital into 2011 as we kind of look to take advantage of the new tax deductibility. So about $9 million of that incremental or so comes in our US can business, which is largely incremental capacity around easy open ends, and that is just supporting further penetration around fruit and vegetable categories.

And then the big portion of that uptick is certainly in our European operations, as we kind of accelerate growth opportunities in the growing Eastern market. And that was kind of -- we had communicated that was an opportunity for us when we competed the Vogel & Noot operation, and that is certainly still on target. And in fact the commercialization of those opportunities looked to be on track or accelerated from what we were originally thinking, so that -- we view that as favorable.

Okay, that's very helpful. Thanks. Good luck in the third quarter.

Thank you.

We will now go to Christopher Butler from Sidoti & Company.

Hi, good morning, guys.

Hi, Chris.

You had mentioned on the Plastic side of the business that there was some benefit from restructuring the corporate admin functions. Could you quantify the benefit you saw from that here in the quarter?

Sure. Chris, it's Adam. We did initiate a reduction in force in our Chesterfield headquarters in the fourth quarter of last year. Essentially for this quarter the change was about $1.5 million favorable.

And shifting gears to Metal cans. It was mentioned that manufacturing costs were higher in the quarter and that was to be passed through. My understanding is that labor can get passed through, but most of the manufacturing benefits or weaknesses is something that you would keep. Is that what we are looking at here?

No, actually it is just a lagged pass-through. So the costs do indeed get passed through to the customers.

The contracts vary a bit, but generally we pass through labor and other costs on a lag basis. And so, again, the thing that is going on with cans is a year ago we had the higher price in our price and deflation in our costs. We are now comparing to a point where we have the inflation in the costs, and we haven't yet passed that through to those customers.

And just finally, with the harvest it didn't sound in your comments that you thought there was any risk to the harvest as we push here in to the fourth quarter. I know if it runs too late things tend to -- the harvest tends to weaken, but that doesn't sound like what you are saying at this point, correct?

I think you probably hit is right on the head. The later the harvest goes, the greater the risk of a frost is, certainly in the Midwest, and also out on the West Coast withpotential conflicts with the products that -- mold that goes into our package with tomatoes, et cetera. I wouldn't say there is any greater risk than other yea, but just the later it goes the risks do come up.

I appreciate your time.

Thanks, Chris.

We will now go to Alex Ovshey from Goldman Sachs.

Thanks, good morning, guys.

Alex.

Can you comment on what steel template prices did in Europe in -- or the outlook for steel template price in Europe for the back half of 2011 and whether that might have any impact on the Vogel & Noot business?

Sure. The back half of 2011 for steel pricing in Europe will see roughly a mid single digit steel cost increase, and that will impact our Vogel & Noot business as well as our Closures businesses in Europe. Both businesses are structurally set up to pass through those costs to their customers. So material I don't think there will be any impact to our business, but there is inflation that is taking place in Europe. We did not see a midyear price increase in the US market.

Okay, that's helpful. So are the contracts in Europe for Vogel & Noot, are they very much similar to the way the contracts are set up in North America, where you are essentially not taking any metal risk and fundamentally the change in metal cost is passed on to the customer in pretty real time?

No, they are a little bit more like our White Cap business. Kind of negotiated on an annual basis, and on an annual basis we come back and look for that inflation from the marketplace from the customers.

So the structural point Adam is referring to is that knowing that there was a risk of a midyear increase, we basically went out at the beginning of the year and left ourselves open for room to come back with an increase in the midyear if in fact inflation goes up.

I got it. Very helpful. And, Tony, a questions for you. Now that you guys [claim] the Central and Eastern European food can market with Vogel & Noot, if you can compare and contrast the competitive landscape in Central and Eastern Europe to what North America looked like in the mid '90s when Silgan was about 10% of the market for food cans?

A great question. Some similarities in that there is more captured self-manufacture in Eastern Europe. And so one similarity is that it's in a lot of hands and it's self-manufactured. One difference is that you obviously have more players focused on growing in the markets now. You have developed Western European players who all looking at those markets. So I think the good news for us is what we like is growing with our customers and growing with those markets and finding the opportunity for self-make, and they do sit there. I think the other thing we like is there are a lot of players, and so -- and again, this is a bit more of a similarity again. There are quite a few consolidation opportunities, I think, will present themselves over time. And I've said before on that call, and I'll say again, the team that we have in place is so entrepreneurial, so focused on the growth opportunities here they are hunting hard for the opportunities, and our expectations is that they will find some interesting ones over time.

Okay. Thanks, Tony.

Thanks.

(Operator Instructions). We will now go to George Staphos from Bank of America Merrill Lynch.

Hi, guys. This is Benjamin Wong filling in for George.

Hi, Ben.

Hey, guys. Could you talk more about the outlook for 3Q? I think we will see more ongoing price increases in food. For example, some big fall price increases in canned soup, for example. Is that baked into your volume expectations?

What is in our volume expectations, specifically for the food can, is a normal [pack] season, somewhat like we had last year. Obviously the timing of that we pushed a little bit into Q4. From a volume standpoint, between those quarter the packs going to be about the same year-over-year. As far as soup and their increases to the market, we really -- doesn't impact our volume per se, so we are just kind of steady state, and we have a plan for the full year that we continue to execute against for essentially our metal food can business.

There's also -- I'll just point out, there's a fair amount of promotional activity that's being discussed as well, so weare not expecting anything heroic from soup. Either side of it. We are expecting that the market kind of continues to hold its own going forward.

Okay. Understood. And then, it sounds like Vogel & Noot have performed well so far. Can you break out how much revenue Vogel contributed in the quarter, and any additional revenue how it is performing? Thanks.

Sure. The revenue was about $75 million in the quarter. You are correct in hearing us right that the business has done everything that he could have hoped from it. If you look kind of against its own performance of a year ago, its sales are up a bit. But more importantly, kind of against the expectations that had it continues to run on track right now. Bob alluded to the fact that they have got now four new plants under construction, which they are making pretty good headway on those, and we think opportunities will come from there as well.

And kind of the integration, the soft benefits have gone well in terms of working with our business and finding opportunities in our US business, working with our European Closure business and find opportunities between there. Again, I wouldn't characterize those as synergies, because there aren't huge synergies here, but the soft benefits of more footprint inEurope and more can experience in the Vogel & Noot business. All that makes it a stronger operating business for the future. And so that's -- we counted on some of that, and it has certainly been working as we hoped thus far.

Thank you.

Ben, the only thing I would add to that is just, as you look at the numbers, we haven't really gotten a financial benefit as of yet, largely because of the purchase accounting that we have recorded in the first six months. So that has been a slight negative draft on the EPS line on a year-to-date basis. And that is behind us, so we should start seeing that contribute to the EPS line in the back half of year.

Okay. Great, thanks.

We will now go to Mark Wilde from Deutsche bank.

Just one follow-up, Tony. I wondered if you could kind of give us an update on where we stand with the questions around can linings?

Sure. Adam can help me too here, but the --I assume what you are referring to primarily is around BPA?

Yes, exactly.

We -- as I think as we said on this call before, we -- because of concern that the consumer may have a preference here at some point in time, not because we have seen any compelling science, but as a result we have been kind of on a five year effort to provide the alternative opportunities to our customers to have a coating that is not adding BPA into the coating. So we continue to move forward on that. We have coatings identified for most every one of our products. Generally, across the board, they not by as good as the coatings that use BPA. They will not have -- shelf life will be a struggle for a period of time. My guess is in time we will get that worked, but immediately you do lose shelf life.

And then we have had to make -- in order to that we have spent millions of dollars on the development side. We have tested every kind of different lining system with different food products, et cetera, and then we've had to make some capital. I mean, one of kind of the noise elements behind the capital spending it there has also been capital put into that. So of all that is a long way around of saying we are within a, let's say, a year to 18 months from having an offering for most all if not all of our customers. But we are not there yet. But certainly there is progress being made on that.

Okay. And do you expect, Tony, once you have got the offerings ready to go, does it appear to you there are a lot of customers that will want to pick up on this immediately?

Depends what day you ask me.

[Today].

Because everyone is kind of caught in the same problem, which is if you look at the science, it is hard to determine where truth is. If you at the regulators, the ones you think would be the toughest, like in Europe, are the strongest in saying there is no health risk here. And so I think it is a tough decision for your our customers whether they make a move because of a public perception or they don't. So it really -- it swings a little bit. I think there are some customers who definitely will make a move, and I think there are some who will wait it out until science bears it out a little bit more.

Okay. Fair enough. Thanks.

And it appears there are no further questions, so I will turn the conference back to our presenters for additional or closing remarks.

Great. Thank you, everyone, for your time, and we look forward to talking about our Q3 results in the fall.

This concludes today's presentation. Thank you for your participation.