Ternium SA (TX) 2016 Q2 法說會逐字稿

Good morning, my name is Melissa and I will be your conference operator today. At this time, I would like to welcome everyone to the Ternium Second Quarter 2016 Results Conference Call. All lines have placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you.

Mr. Sebastian Marti, you may begin your conference.

Good morning, and thank you for joining us today. My name is Sebastian Marti, and I am Ternium's Investor Relations Director. Ternium issued a press release yesterday detailing its results for the second quarter 2016. This call is complementary to that presentation. Joining me today is Mr. Pablo Brizzio, Ternium's CFO, who will discuss our performance. At the conclusion of our prepared remarks, we will open up the call to your questions.

Before we begin, I would like to remind you that this conference call contains forward-looking information and that actual results may vary from those expressed or implied. Factors that could affect results are contained in our filings with the Securities and Exchange Commission and on page 2 in today's webcast presentation.

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

Thanks, Sebastian. Good morning and thank you much for participating in today's conference call to review Ternium performance in the second quarter. As we usually do, I will briefly describe our performance in the quarter and then also, as usual, we will have our Q&A session.

Let's begin on page 3 of the webcast presentation. As you may have seen in our press release issued yesterday, we are glad to report a very strong second quarter. EBITDA in the second quarter 2016 was $393 million. This was 30% higher than EBITDA in the first quarter and close to 2 times EBITDA in the same quarter last year. The chart in the upper left side of this slide shows that EBITDA has been improving consistently over the last 12 months.

A substantially lower cost of raw material, purchased slabs, another inputs gradually went through our inventories and the steel price environment improved during 2016.

Our guidance for EBITDA in the third quarter continue to move in the flat. EBITDA margin continued to increase reaching 21% in the second quarter, equivalent to an EBITDA per ton of $151. In the second quarter 2016, we had net income of $174 million, equivalent to earning per ADS of $0.78, an improvement compared to earnings per ADS of $0.48 in the first quarter of this year and $0.21 in the second quarter last year.

Let's go to the next page now, to review the latest development in our main markets. Our sales in the Mexican market increased in the second quarter 20% sequentially, supported by 10% increase in shipments, which reached a new record of 1.75 million tons in this quarter, a 9% increase in revenue per ton, reflecting with some lag related to the regular price reset contained in industrial customer sales contract, the substantial improvement of steel prices environment in the Americas in the first half of this year.

We expect a sequential decrease in the steel shipment in Mexico in the third quarter despite steady end market demand condition, we anticipate decrease in shipments mostly as a result of inventory buildup in the Mexican commercial markets over the past few months as well as third quarter seasonality in the automotive and in the heating, ventilation and air conditioning industries.

In addition, although steel market price has been stable over the past few months, we expect to see a sequential increase in average realized price in the third quarter 2016, again as a result of the lag to show in our financial, the steel market price improvement due to the industrial customer sale contracts, which in average reset prices every three months.

Let's go now to the Southern region market in the following page. In this market, net sales decreased 3% in the second quarter of the year with 2% decrease in shipment and 1% decrease in revenue per ton. As I commented in our last quarter conference call, the Argentine steel market is adjusting to a period of slower economic activities. We believe this market could begin to recover [with the] end of the year or beginning of the next one. So the third quarter should continue to show some weakness.

On the next page you can see the combined [FX] development in our two main markets has on our consolidated sales, shipments and revenue per ton. The increase in shipments in the Mexico got us to a quarterly record of 2.6 million tons in consolidated shipments, with Mexico accounting for 67% of Ternium's shipments; the Southern being 21% and the other market, mainly Colombia, the US, and Central America, accounting for the remaining 12%.

On the following page, we can see the components of the sequential improvement in EBITDA in the second quarter 2016. EBITDA per ton improved as a result of higher revenue per ton, partially offset by higher cost, and increase in shipment also helped. In Mexico, cost decreased slightly while in Argentina, cost sequentially increased, as a dilutive effect of the Argentine peso depreciation on the value of our Argentine subsidiary inventories gradually wear off.

We expect to have slightly higher cost per ton in the third quarter 2016 sequentially. It is interesting to note here that the significant increase of slab market prices during the first half of this year, which peaked on May, should (inaudible) pass through to Ternium's cost of sales, although we will only do so (inaudible) beginning of the first quarter of the year.

On page 8, we see the same information on a six months basis. In this year-over-year comparison, you can see the strong forces that got us to a 32% increase in EBITDA, which almost reached $700 million in the first half of this year. Although steel prices has been improving in the first half of 2016, revenue per ton was 18% lower than in the first half of last year, or $150 per ton. On the flip side, cost of purchased slabs, raw materials, energy and labor decreased substantially from last year. In addition, cost decrease as a result of the devaluation of the Argentine pesos I have just mentioned.

On the following page, there is a description of the drivers of net income in the second quarter of the year. The main reason for the sequential improvement was increase in operating income we have just discussed (inaudible) financial result offset by higher income tax, in part due to the higher effective tax rate, principally related to the non-cash effect of deferred tax of the 8% devaluation of the Mexican peso against the US dollar during the period. The six months view on the next page is exactly similar to that.

So let's see now -- review the free cash flow generation in the quarter on page 11. Working capital decreased by $49 million and CapEx was $132 million. After deducting cash financial results and income tax, we ended up with a strong free cash flow generation of $231 million in the second quarter. On a six-month basis, Ternium generated free cash flow of $371 million in the first half of the year, with $230 million CapEx and $47 million accumulated decrease in working capital.

Finally, in the last page of the presentation, there is a description of quarterly performance of cash flow from operations, CapEx, and free cash flow. We continue to show consistent cash innovation over the quarters and a stable CapEx. This has been related into a steady reduction of net debt, although it increased a little at the end of June 2016, during the second quarter we paid $228 million dividend to shareholders and non-controlling interest, we made $114 million cash contribution to Usiminas in connection with its capital increase process, and we lent $29 million to Techint, the joint venture that is very close to inaugurate its state-of-the-art power plant in Pesqueria, Mexico.

So we continue to have a very strong financial position, with net debt of $1.1 billion, our net debt to last 12-month EBITDA ratio of only 0.9 times.

So these were the main issues I wanted to share with you of our second quarter results. Now let's go to the Q&A. Thanks.

(Operator Instructions) Thiago Lofiego, Bradesco BBI.

First one, if you could touch on the capital allocation issue going forward. So you just mentioned your net debt to EBITDA levels, which are quite low, below 1 time. So I just wanted to understand what we can expect in terms of capital allocation going forward? Should we expect you to announce growth -- further growth project, increase dividends, payout ratio or eventually look at further acquisitions? That's the first question. And the second one, if you could touch on demand prospects for 2017 for both the Mexican and Argentinian steel market and where do you see the downside risk for your baseline deal for both markets for 2017?

Okay, Thiago, hello, welcome back. Let's start by the capital allocation question. You are right that we continue to have a very strong cash flow generation and you have seen the allocation that we leave at the beginning of this year. Basically what we use our cash flow was to pay the dividend that was quite significant. At the moment of paying the dividend, the dividend yield was around 7%, with the new numbers that we have, it's closer to 5%, in any case, very strong dividend yield. And as you know, the intention of the Company, though we do not have a dividend policies to continue to pay strong dividend as we have been doing in the last year, as you know, we have sustained the dividend payment year-after-year.

The second point is that though probably you're right that our CapEx has not been that significant during the last year. In fact, the CapEx level has been around for $150 million per year in the last year including this one. But we have already [restated] our announcement on CapEx, especially in our Mexican operations. As you know, we announce expansions in our galvanizing facilities in our last conference call, and if you recall, during the Investor Day that we have in New York just a couple of months ago, we described the possible pressure that we could have in the near future.

So we continue to be very positive on the alternative that the Company has coming forward because we continue to believe, and probably linking with your second question, that the opportunity that we have in Mexico and in Argentina are quite positive. The demand in the Mexican market, we continue to see steady and positive. Though we are expecting to see some reduction in volumes in this third quarter, this coming quarter is due to some very specific reasons, but we are positive on demand in the coming quarters and in 2017.

The steady growth that we are seeing in Mexico with GDP growth per year in the range of around 3% is something that we continue to believe is (inaudible) to see in the coming years. In the case of Argentina, though we are seeing some weakness at the moment, which by the way something that we have expected, and we have commented in different conference call at the end of last year, is something that we consider could be recovered by the end of this year or beginning of next year. So 2017 should be a positive year in our view in Argentina if we compare that to 2016.

Karel Luketic, Bank of America Merrill Lynch.

Actually this is Felipe Hirai. I just have two questions. First, if you could talk a little bit more about Techgen, the plant is already operating and if it expects you to have more capital outflows or to the company?

And second is related to volumes, if you could be a little bit more specific on how you see volume trends are in the third quarter? You mentioned that we should expect some weakness both in Mexico and in Argentina, just wanted to know if you could quantify that a little bit for us. Thanks a lot.

Okay. Hi, Felipe. In the case of Techgen, the moment of announcement of these investment almost three years ago, we said that the starting point of the facility was expected for October 2016. We are approaching that month, we are glad to say that we'll fulfil that commitment and the facility will be up and running by October this year.

We are in, if you want, in testing mode at the moment, the facility is going through the last month of testing and we are expecting to be completing and initiating the production of Techgen by the month of October or during the fourth quarter. So we expect no delays or no changes in the original plan in respect to that facility.

In relationship to the capital contribution to Techgen, that was also expected, remember that we financed a significant portion of that CapEx and at the very end of the investment process, we needed to contribute some money to get to 100% of the CapEx expected. So we are doing that and we are expecting to have finalizing these contribution by the third quarter and in the fourth, go into production. So this project is working and not only expected in time, but also is perfectly on budget.

In relationship to volume, we are expected to see some weakness in the coming quarter, the third quarter, of course comparing to a record level that we saw in the second quarter. So the combination of different issues, especially in Mexico, is putting us in a situation of seeing some reduction in volumes of around 5% in the third quarter in comparison to the second quarter in the Mexican market.

But this is not to say that we are seeing some weakness in the market itself, it's related to some inventory buildup during the first half of the year, when the prices of the steel was going up, which is very normal to happen in the market. And with some seasonality effects, specifically in our industrial market, mainly in the auto sector and in some other sectors. But we continue to be positive, we continue to have a good perspective of demand for the following months.

Of course, in the fourth quarter, as you already know, is also the seasonally lowest quarter of the year in Mexico, but we will keep seeing very good level of shipments in the Mexican market in the next two quarters.

In the case of Argentina, we will continue to see the weakness that we saw in the second quarter and because we have expected to see a turning point yet and we are expecting to see that approach in year-end or beginning of next year.

So basically, this is our view on the market in the coming and in the fourth quarter of the year.

Carlos De Alba, Morgan Stanley.

First question is regarding the impact that the devaluation of the Argentine peso has on cost through the inventory accounting. Have we seen all the impact from this driver or do you still expect to see a little bit more in the second half of the year, perhaps mostly in the third quarter?

And then the second question, also on Techgen, has to do with the terms of the loan, the almost $30 million loan that the Company granted in the second quarter, can you talk a little bit about the terms of this? Are you charging interest, and when do you expect to get back the money?

And also going forward, what are you planning on doing with Techgen? Do you plan to keep it as an equity investment, plan to sell it or what is your thoughts regarding that asset?

Okay, Carlos, hi, how are you? Regarding the devaluation affecting Argentina, almost 100% of it has been through our financials in the second quarter. Of course, the currency exchange rate continue moving, but the significant effect that we had of the devaluation, the initial portion of the new government in Argentina, which was very positively impacted in the numbers of the first quarter, is already over basically. So you have some very, very minor effect, but in general terms, we can say that it is already over.

And you can see now in the numbers, when you have, and you can look at the second quarter numbers, you can see that there is an increase in cost in Argentina in relationship to the first quarter, because mainly not a significant increase in cost, but because we are not having the same positive effect that we had in the first quarter.

In relationship to Techgen, we are planning to keep this investment as we have it today, as an equity investment, and the fraction that we are financing is like a capital contribution to Techgen from the shareholders. This is our net debt and against the bank, so it's longer term that they want from the banks, and we are of course charging interest for that in (inaudible) type of transaction. So nothing else to comment in that respect.

Leonardo Correa, BTG Pactual.

My first question regarding steel pricing in North America, specifically in the US, right, I mean, looking at the current level of HRC prices, for example, we're seeing a spread to Chinese references of almost $300 per ton, right? That's a level that when compared to historical levels is very high, right? So I just wanted to get your thoughts on how sustainable you think these spreads are?

And also balancing those arguments with the fact that you now see a series of anti-dumping cases popping up in the US and other countries? So I just wanted to get your thoughts on whether we are now close to a peak or at a peak in terms of steel pricing and what to expect going forward, that would be very helpful. And just as a follow-up on that question, if you can remind us what exactly you're seeing in terms of the spread HRC to slabs, that would be very helpful.

And the second question, just on capital allocation, moving back to some of your initial comments, I mean clearly there is a quite significant cash buildup in the Company during the next quarters and into the next years. In terms of projects, has anything changed in terms of the, let's say, the pecking order? Are you now more inclined to investing in the, let's say, the old integration projects that we've been talking about for several years? Have you been reconsidering adding slab making capacity in Ternium now given that your cash position is so healthy and there's so much flexibility? So I just wanted to see what exactly is the pecking order in terms of capital allocation when you think about projects going forward?

Okay, Leonardo, hi. In respect to the pricing scenario, let me first make a general comment as we usually do, which is extremely difficult to predict prices in this sector in the long run. But we have a clear view, at least the idea on prices in the coming months and pricing scenario in the second semester of the year. Though you are completely right, that the spread between the price in the US and the price in China is very high, probably could lead you to believe that at some point there should be an adjustment. We are not expecting to see, if this adjustment is supposed to come, we are expecting to see that during the second semester, which as you have heard us many, many times is the longest that we venture to predict prices.

We are expecting to see prices in the second semester of the year in line within certain range with the price that we are seeing today, especially, as you mentioned in the US, due to different reasons. One of that reasons is the one that you mentioned, the anti-dumping cases that are being taken by the US government, and are being taken by the Mexican government and not only that, you are seeing that in many different countries around the region, and in countries that probably -- you could never believe that they will do that, like Colombia or Peru or Chile in some cases. And this has a very clear reason, the unfair trade practices by Chinese exporters. So we are expecting to see these sustain by the government in the region and this is putting some sustainability to the price in this scenario.

Second, we are seeing the production in the US sustain at reasonable levels and demand also being positive in the coming quarters. So with the caveat that is extremely difficult to predict prices, we are confident within a range that the price could be sustained in the coming quarters. But while the outlook that we are giving for the coming quarter, especially the third quarter, of an increase in our margin in the whole market.

You are right also, that the spreads between slabs and hot rolled coil is high and it's also feasible to believe that at some point, there should be some adjustment on that. But the slab market is also showing some signs of new entrants like, so you see in Brazil, being running almost at full capacity, a new facility also in Brazil, CSP, had just entered into production adding new capacity for this market. So we continue to see a positive trend on that side.

And as you know, it's something that we have been taking advantage in the last year. And if you could relate that to your second question, as we have commented many, many times, and especially in the last Investor Day, we continue analyzing which is the best alternative that we have in sourcing our slabs. We believe that continuing the way that we are doing right now is reasonable and we continue analyzing the possibility of increasing our production of slabs through different ways, but we have not taken yet any decision in that respect and we are analyzing the different alternatives that could be presented in the market, either through investing or through acquisitions, as has been traditionally the case for Ternium, but we don't have anything new in that respect besides what we have already commented. So I believe I answered your question, but if not, please let me know.

Ivano Westin, Credit Suisse.

The first one is on Usiminas. We've been seeing a quite a few media reports spoken about the possibility of a split of assets. I would like to get your thoughts on what's your strategy and how can we expect the final outcome on Usiminas?

And in addition to that or linked to that, on your capital allocation strategy, you already mentioned your low leverage, your solid balance sheet and you're considering alternatives moving forward. So would it make sense for you to once more consider the acquisition of Thyssen's CSA plant in Brazil as you have done in the past? Those are the points, thank you very much.

Okay, Ivano. Good morning. In relationship to Usiminas first, let me comment that we are seeing a change in the situation of the company and we're viewing this as a positive change. You have seen the results from Usiminas in the last, especially in the last quarter where you saw a reversal on the results of the company and we believe that it is very positive. This is -- if you want our main goal at the moment, which is to help Usiminas to recover its position in the market, the position as a profitable company, and we have been helping Usiminas, not only by participating in the capital increase, which was a successful one and is already completed. So the company Usiminas has now BRL1 billion more cash now than a quarter before and this will help Usiminas to go through the difficult period that Brazil unfortunately is suffering. And that also we are starting to see some positive changes in the macro in Brazil, but it will take time.

Also we are helping working with Usiminas in the restructuring of the debt that is another process that the company is going. So we are positively looking at the new reality of Usiminas.

In relationship to your question of split, we know that this is something that has been discussed widely in the press and as you mentioned, it's not the first time I heard this discussion probably in the last three years. But we have nothing to report at the moment, and it's nothing and we are not considering at this point in time something like that. It has been mentioned in different places as a possible theoretical solution for different issues, but it's nothing that we are considering at the moment.

In relationship to your second question, which is the CSA facility, I would link that to my question to Leonardo, where I mentioned that we are analyzing different possibilities and different strategy in our sourcing portfolio of slabs. And we never rule out either acquisition or internal CapEx. But this should be in connection with the feasibility or the possibility of these happening in the market, and this is public information that we analyze that in the past, we decided not to participate, so if this is something feasible in the future, of course, we will analyze it and we will consider it very seriously.

So we have never stopped doing that, but we feel very comfortable with the situation and the decisions that we took in the past when we decided to invest further in downstream and delayed any investment in upstream proved to be a very reasonable and very profitable decision. And we will very seriously consider, analyze any possibility that appear and which will be the best alternative for Ternium in respect to the increased demand of slabs for our production.

John Brandt, HSBC.

Two quick questions for me. The US auto industry, there's some speculation that we're seeing a slowdown and that the peak of the market was last year. I'm wondering if, what you're seeing in Mexico, are you still seeing investments into the industry? Is there any views on a potential US auto slowdown and what percent of your volumes, either directly or indirectly, go to the US auto industry?

And secondly was on demands, you mentioned that Argentina should start to see a pick up later this year or at the beginning of next year. I'm hoping you can elaborate on that a little bit. Are you expecting sort of a U-shaped recovery, slow and steady, or do you see a pretty significant bounce sometime early next year?

And also in Mexico, if you could elaborate a little bit, you mentioned that there was some restocking efforts in the second quarter, I'm wondering if you can talk a little bit about inventory throughout the chain, how you see it, is it relatively stable or do we have excess inventories throughout the value chain there? Thank you.

Okay, John, a different question within the one that you made. Let's start by the auto sector. We continue to see increased production in Mexico, and not only that, but also new facilities being built, OEMs being built in the Mexican territory, and we have seen no reduction on that, and we are expecting not to see that because only considering the facilities that have been announced, and are in process or being built, there is extremely good chance and certainty that the level of production of cars in Mexico would reach almost 5 million units by 2020. So the possibility of a reduction on that is not that significant because not only you have the demand from the US market that is a significant portion of that, but you have an important improvement in the demand of the local market. So we are not seeing a risk, a significant risk on -- slowdown on the production of cars in Mexico. Of course, you have seen some movements but the auto producers are putting quite a significant amount of money in building new facilities in Mexico.

The inventory buildup that we mentioned or I mentioned during the opening remarks is something that is very reasonable, when you see or the customers see increase in prices as it was the case, especially during the first quarter or the beginning of the second quarter, they increased the purchase of material in order to take advantage of a possible further increases down the road. So it's normal that you see inventory buildup during these processes, and when prices reach a stable situation like the one that we're seeing today, especially in the price in the US that you have seen very steady prices in the last couple of months, the customers start to use that inventory, and in some point, start to stop buying products expecting a possible reduction in prices.

Clearly, what I mentioned is in the commercial market, because it's totally different from industrial sector, that is much more concentrated in long-term view on different issues. So for us, it's quite normal and also as we mentioned, there are some seasonality effect which makes companies to reduce a little bit the volume of purchases.

In the case of Argentina, we tend to be pretty confident that the recovery will come. The new government implemented new policy, and of course, as happening in any place, when you have a significant change in policy, it will take some time to evolve and to show positive signs. I will not -- if you want, take our numbers, but if you take the numbers of consensus from different economies, in Argentina, what you get is that the GDP growth expected for 2017 is at least 3% or between 3% and 4%, and in some cases, you can get higher numbers. So this is reflecting that there is certain degree of confidence that growth will come back to the Argentine economy and clearly, as a provider to different industry, we have always taken advantage of the growth and it should be reflected in our sales. So we continue to be very positive on the development on the Argentine economy.

Daniel Sasson, Itau BBA.

My first question is actually a follow-up on the cost front in Argentina. We know that the country is having some problems with natural gas, power supplies, but recently there were some changes in the regulatory framework to stimulate investments in the area. How do you see those changes translating to your cost in Argentina? And when could we expect an improvement on that front? I mean, I understand that in the second quarter some of the benefits that you are having because of the more depreciated Argentinian peso did not play such an important role and this could be the case and this should be the case going forward. So from an operating perspective, when we could see costs going down in Argentina?

And my second question is actually a follow-up on Usiminas, but maybe more focused on the operating front. So it seems that some investors believe that the worst is now behind in terms of steel consumption. In Brazil we are seeing some early signs of recovery in demand. We might be approaching an inflection point in terms of demand in the country. How are we seeing volumes in Brazil specifically shaping up and would you consider to start up again the Cubatao plant or it's not something that is even being discussed currently? Thank you.

Okay, Daniel. How are you? In relationship to cost in Argentina and specifically in the energy and natural gas that you mentioned, first of all, let me tell you that we are not a significant user of natural gas and we have our own power plant. But in any case, we buy some natural gas in the market, and we did not have the subsidies that a residential consumer has. So though -- of course the rebalancing of tariff had some small impact in our numbers, this was already reflected in our second quarter number. So we are not expecting to see any change from that.

The main issue there is the residential consumption cost, which has been very, very low and the subsidies has been very, very high. This is what the government is trying to change, but it's not affecting significantly our structural cost, and in fact any impact of that is already reflected in our numbers.

In relationship to Usiminas, the only comment I will make is, on a general term, we already, I already mentioned when answering questions, I believe Ivano asked me about that, and I made a general comment on Usiminas, of course, the micro, or the reality of the different plants or the different situation within Usiminas is something that Usiminas should comment and not us.

In any case, we completed (inaudible) on the operational side. On Usiminas, we are seeing a positive trend. We are seeing that there are some new implementations that are positive for the market. And we agree with you that probably we are seeing bottoming out of the situation in Brazil, and there is some small and initial signs of turnaround from the bad situation that you saw and everybody saw in Brazil in the last year.

We have been looking at projections of consumption of cars, consumption of home appliances and we have started to see better projections in this month compared to just couple of months ago. So as we said before, we tend to see situation in Brazil that's starting to see or to show positive signs. And if you put together these with a better situation within the operational side in Usiminas, this should be a positive sign for the future of the company.

(Operator Instructions) Mandeep Singh, JPMorgan.

I have a couple of questions. The first is on Argentina. Could you also please talk about the pricing trends for the second half that you expect in the Argentine market?

And secondly, in Mexico, we saw very strong volumes in the second quarter. It seems like as you have been mentioning, inventory restocking could have played some hand in there, are you also seeing some market share gains and if yes, specific in what sectors? Thank you.

Okay. In relationship, Mandeep, to the prices in Argentina, Argentina prices will follow international price. The pricing scenario in Argentina is completely linked to international prices, in fact today price in Argentina are a little below prices in the US or in Mexico, but the trend of the prices will follow international prices, and we see no issue there.

In the case of Mexico, you're right that the market there that we have in Mexico has been improving. And we have in the -- for example, in flat products, we have a significant participation in the market that we have been increasing, if you take in the last 12 months, we have been increasing our market share in the Mexican market, especially in industrial sector, not only due to the new investments in galvanizing and controlling, but new gains in market share in the last couple of quarters. And clearly this is reflected by the volume that we could ship to the market and the capacity utilization that we're having, the new facilities that we built are already working at full capacity. And this is a sign that we're able, not only to produce very good and quality product, but we can ship them to the market because the market demand that and we are able to sustain or gain market share.

So as we said from the very beginning, we continue to be moderately positive on Mexico. We believe that growth will be there. Of course, we have some ups and downs in the different market, seasonality effects, destocking, restocking, changes in prices, but on general terms, we continue to see positive trends in the market.

There are no further questions at this time. Mr. Brizzio, I'll turn the call back over to you.

Okay. Thank you all for participating in this call and giving the time to hear our comments. So as usual, feel free to ask any further question to us, hope to hear you in the near-term. Thank you.

This concludes today's conference call. You may now disconnect.