WW International Inc (WW) 2014 Q4 法說會逐字稿

Good afternoon and welcome to the Weight Watchers fourth-quarter and full-year 2014 earnings conference call.

(Operator instructions)

Please note this event is being recorded.

I would now like to turn the conference over to Corey Kinger, Investor Relations.

Please go ahead.

Thank you Amy, and thank you everyone for joining us today for Weight Watchers International's fourth-quarter and full-year 2014 conference call.

With us on the call are Jim Chambers, our President and Chief Executive Officer, and Nick Hotchkin, our Chief Financial Officer.

At about 4:00 PM Eastern Time today, the Company issued a press release reporting the FY14 fourth-quarter and full-year results.

The purpose of this call is to provide investors with some further details regarding the Company's financial results, as well as to provide a general update on the Company's progress.

The press release is available on the Company's corporate website located at WeightWatchersInternational.com.

Reconciliations of non-GAAP measures disclosed on this conference call to the most directly comparable GAAP financial measures are also available as part of the press release.

Before we begin, let me remind everyone that this call will contain forward-looking statements.

Investors should be aware that any forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those discussed here today.

These risk factors are explained in detail in the Company's filings with the Securities and Exchange Commission.

Please refer to these filings for a more detailed discussion of forward-looking statements and the risks and uncertainties of such statements.

All forward-looking statements are made as of today, and except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

I would now like to turn the call over to Jim Chambers, President and Chief Executive Officer of Weight Watchers International.

Jim?

Thanks, Corey.

Good afternoon, everyone and thank you for joining us.

Our remarks today will focus on 2014 performance and an assessment of early learnings from our winter season launch.

We will also provide detail on our strategic and financial plan for 2015.

When we unveiled our multi-year transformation plan, we knew that 2014 would be a challenging year, but we hoped to achieve positive recruitment sometime during 2015, leading to revenue growth in 2016.

Our plan was based on strong cost management, reposition our brand, improving our product offer, and targeting new channel growth in healthcare.

While we still believe firmly in our underlying strategies, our execution at start of year was not what we had hope for, and I'm disappointed to say that we are not yet where we expected to be and that our turnaround will take longer than we had anticipated.

That's why we are taking aggressive steps to adjust our marketing, to continue to improve our consumer offerings in both meetings and online, and to right-size our cost structure.

Nick will discuss the 2014 results in more detail, but to summarize, 2014 revenue declined 14% to $1.5 billion.

End-of-year global actives declined 15% to 2.5 million, with 1.5 million online and 1.1 million in meetings.

2014 adjusted EPS was $2.03, and cash flow from operations totaled $232 million.

During the fourth quarter, we introduced a number of digital product enhancements, including improving our search functionality, enhancing the ease-of-use of our food and activity tracking, expanding our food database, and creating video content to enable members to more quickly master the program.

In addition, a key 2014 goal was to enter into a nationwide partnership with a leading healthcare player and we are excited about our alliance with Humana.

All Humana members in qualified employer-sponsored health plans now have free access to six months of Weight Watchers through an integrated wellness program.

While I'm proud of the work the team did to improve our 2014 top-line and bottom-line performance versus our expectations at the start of the year, given adjusted 2014 EPS was 48% below prior year, I am not at all satisfied with our 2014 performance.

We entered the 2015 winter season with two objectives: to significantly improve our marketing execution and to launch enhancements to our products.

We were optimistic that new creative would be a driving force and the introduction of our coaching and expert chat support platforms would contribute to making 2015 the inflection point for our Business.

As I will explain, some of these initiatives worked well, but others fell short of our expectations, and in total, led to disappointing results.

Recruitment trends, especially in the critical first few years of the year were significantly weaker than we had expected and down substantially versus 2014 levels, particularly in North America.

Let's begin with marketing, on which we were relying heavily at start of the year.

In our core US market, we made the decision to take a different tack in our communications than we have in the past.

We crafted a two-step marketing strategy, beginning in late November with the launch of advertising spots which were meant to create a new conversation about our brand to be followed up by call to action spots beginning post-Christmas.

While the early spots did drive the conversation, for example, our my butt piece generated over 2 million YouTube hits, they did not contribute to the ability of subsequent step two ads to create awareness of our new offerings, and the step two ads themselves did not have a strong enough call to action to drive recruitments.

In addition, some technical and executional issues on our sign-up website associated with the transition to our new offerings contributed to the significant fall off in recruitments during the last week of 2014 and the first three weeks of January.

We quickly revised our US advertising tactics.

Our new ads, which featured Weight Watchers coaches and more clearly addressed creating awareness in offerings began to run by the middle of January and we saw an immediate improvement in the recruitment trends versus what we experienced earlier in the month.

Finally, with the launch of our Super Bowl spot and the accompanying promotional offer, we integrated creative that drove engagement with a strong call to action.

Our ad was ranked number two by Forbes for social media engagement on Facebook among Super Bowl ads, and combined with our Lose 10 Pounds on Us promotion, drove a significant improvement in trends versus prior year in the several weeks that followed, and attracted new members at higher rates than we had been attracting previously.

This is clear proof that when we get strong marketing execution, we can move the needle.

But I should caution that while this combination of marketing message and strong promotional offer drove short-term strength year-over-year, year-to-date recruitments still remain more negative than the already suppressed levels we witnessed in 2014.

Let's move to our new product activity.

We introduced several new platforms that have a lot of potential, but we are still clearly in the learning phase.

In mid-December in the US, we launched a premium Personal Coaching product, and added 24/7 Expert Chat, providing one-on-one personal advice from Weight Watchers experts to online members for the first time, and an additional touch point between meetings for meetings members.

These offerings are targeted to leverage in the digital realm, the increased motivation and accountability that results from the interaction and support that takes place between our members and service providers, that have been consistently validated in our meetings business.

In key international markets, we focused on our Flavors launch, a program enhancement that introduced personalized tracks for food preferences including high-protein, gluten-free, and vegetarian options.

These initiatives represent meaningful first steps in our strategy to bring more personalization and community to the Weight Watchers experience.

Importantly, Personal Coaching is receiving extremely positive feedback from our members.

Over 90% would recommend it to a friend, demonstrating the power of personal support and accountability on member experience and success.

While the take-up rate for Personal Coaching has been low so far, with about 3% of recruits choosing this option, over the course of the year, we will actively explore ways to bring this rich experience to more people.

24/7 Expert Chat is a platform that allows for the immediacy of communication with our experts and is clearly a step forward, but we have not yet developed it to its full potential.

We believe we can leverage this beyond purely question-and-answer-based support, to empower new types of interaction with Weight Watchers members.

The launch of Personal Coaching and 24/7 Expert Chat require the addition of new capabilities to our technology platform and field operations.

We trained 4,000 of our service providers and built the underlying scheduling and communication technology platforms to bring live member interactions into the digital setting.

We believe that, given the highly favorable member feedback, with more focus on driving awareness, we can meaningfully increase the penetration of and consumer value derived from these platforms.

In our UK and European markets, we have received an encouraging response from members on our Flavors personalization strategy, but recruitments have not met our expectations.

The UK is feeling pressure from competitive offers, while some markets such as Germany and Sweden, performed better due to stronger marketing campaigns.

Now let me step back a minute and speak more broadly about our category insights and the implications for our action plans as we continue to push our core strategies of strengthening the brand and improving the offering.

The weight loss category continues its rapid and significant reframing, driven by societal and technological changes.

While losing weight remains important to consumers, it is increasingly being viewed as part of a more holistic equation, where becoming what consumers would describe as a healthier, more confident me is the top priority.

Consumers ascribe less direct interest in diet as a standalone need.

The underlying desire for weight loss is still a very important part of the equation, however, the consumer wants to get there through a more holistic mindset of generally healthier eating, wellness, and fitness, with weight loss being a critical element of his bigger picture.

This new mindset is more forgiving and allows for success across many metrics and less emphasis on the number on the scale.

The tie-in between fitness and smarter food choices has become inextricably linked in the mind of the consumer as a pathway to a healthier, more confident lifestyle.

For example, while losing weight and working out are always in the top New Year's resolutions, in 2015 working out moved to the number one slot, followed by being happy at number two, and losing weight at number three.

As we have deepened our insights on these changes, although Weight Watchers has historically been perceived as more of a diet, we are encouraged by research that strongly suggests that the Weight Watchers brand has permission to play in the space, I'll again refer to as a healthier, more confident me.

Further, consumers continue to offer the Weight Watchers brand strong praise, giving us high marks on effectiveness and expertise, with strong personal connections and recommendations from family and friends who have had success on the program.

Weight Watchers is known to be a program that works, backed by expertise, and more than a collection of tools and devices.

Given our brand assets and permissions, we have a genuine opportunity to broaden our messaging and product offerings to meet this new consumer framing by marrying our historical strengths in program, food, and support with a greater degree of emphasis on fitness, and doing so in a seamless, easy-to-use way.

Let me outline two implications.

First, fitness needs become a more important part of what we offer.

For the vast majority of our target members, fitness is not about training for a triathlon, it's about taking small steps on a guided journey to incorporate activity into the fabric of their daily lives.

While this does not represent a new strategy, it is clear that our members are looking to incorporate activity and fitness into their weight loss programs.

As example of this, hundreds of thousands of our members are already syncing Fitbit and other activity devices with their Weight Watchers experience through our API strategy implemented late last year.

Second, we need a more experiential product approach.

Consumers have been trained that participating in the digital product realm offers free experiences of products and services, either in the form of sampling or full access.

They expect that they can experience without an upfront financial commitment or a significant effort to assess a product's value proposition.

Therefore, we will continue to experiment with ideas that increase the size of our community, lower the barriers to trial, and facilitate conversion.

These opportunities apply to both our meetings and online businesses.

At the start of the year, we favored our online products with promotion and sign up placements that leveraged our digital innovation.

We remain committed to strengthening our meeting business, as well, as it represents the source of our competitive advantage and the most effective model for group interaction supporting consumer weight loss efforts.

Although we continue to work hard to improve the fundamentals of our Business, the tough start to the year on recruitments will have a significant impact on our financial performance.

As Nick will explain, our 2015 plan incorporates the steps to maintain strong liquidity for our Company, while preserving our strategic path to a better future.

To support this objective, we have begun implementing a new $100 million cost savings plan for 2015.

In 2014, we made significant progress on our technology transformation, while we launched new product platforms.

We have more to do.

In 2015, we will continue our tech transformation by investing to increase the speed and lower the cost of developing consumer-facing functionality, while being aggressive on cost reductions in all other areas of our technology operation.

To date, we have made a lot of progress in building our healthcare capability, as demonstrated by our recently announced partnership with Humana.

In 2015, we will not be investing ahead of the revenue curve, rather we will be adding capabilities more in line with the growth of the Business.

We will continue to take aggressive actions aimed at improving our performance in 2015.

We are and will continue to dynamically shift our media mix to areas that are producing results.

In our communications, we are looking at ways to elevate the value of our offerings in a positive member experience.

We are taking steps to improve our visitor website and update our mobile app.

While some changes are more visible than others, we are not standing still, but are focused on enhancing the visitor and user experience at all stages from consideration through active use.

And we are listening to our members and service providers and their feedback in meetings, online, Expert Chat, and Personal Coaching and exploring ways that we can better promote our strengths and address our weaknesses.

Weight Watchers is uniquely placed to bring elements of healthy living under one roof, building on our reputation of our effective program.

Despite the challenges in our competitive environment and our challenging start to the year, we remain committed to the transformation efforts of our Business.

Now I will turn it over to Nick.

Thanks, Jim, and good afternoon, everyone.

Let me start by highlighting a few key items in our 2014 financial performance.

Q4 operating results were in line with our expectation and included costs associated with our winter season program launch and the earlier Thanksgiving kick-off of our US marketing campaign.

For the full year, total Company revenue declined 14.2% to $1.48 billion, driven by lower meeting and online paid weeks compared to the prior year.

We executed well on the cost side, achieving our $150 million gross annualized cost savings target over 2013 and 2014.

Given the operating deleverage pressures indicated by a gross margin decline of 350 basis points for the year, we worked hard on G&A, decreasing our year-over-year expense for the first time in five years, despite increased investments in technology and our healthcare initiative.

On an adjusted basis, EPS was $2.03 for the full year.

This excludes a $0.34 per share non-cash charge in the fourth quarter, due to the partial impairment of certain intangible assets related to our Canada meetings business.

For the year, we generated cash flow from operations of $232 million.

During the year, we increased our cash balance by $126 million, to end 2014 with a cash position of $301 million.

Now I'll discuss our plan for 2015.

As Jim mentioned, an aggressive focus on cash generation and conservation is required, given our lower level of revenue and to maintain our strong liquidity.

Specifically, our plan incorporates the steps needed to end the year with a targeted cast balance of at least $350 million.

This targeted cash level will provide ample liquidity to pay down our debt maturity of $300 million during 2016 and to run and invest in the business, and this is without accessing the additional cushion of our undrawn $50 million line of credit.

As a reminder, while given our $2.4 billion debt, our leverage is high compared to our current financial performance.

Our capital structure does not have any restrictive debt-to-EBITDAS leverage ratio covenants.

To support our cash generation plan, we have launched a new $100 million gross cost savings goal that we expect to achieve in 2015, with savings split fairly evenly between operating expenses, marketing, and G&A.

As you would expect, these cost cuts will include headcount reductions.

We anticipate restructuring charges associated with this effort to total approximately $10 million for the year.

In addition, as Jim mentioned, while we will continue to invest in technology and healthcare, we are applying the same high level of scrutiny to these investment areas.

And now, I'd like to provide our detailed guidance for 2015.

Due to the impact of the stronger US dollar, I will provide some color on our FX impact as I go through the P&L.

Given that we started 2015 with a lower starting active space versus prior, combined with the weak recruitment trends we have seen earlier this year, particularly during the critical first few weeks of the year, we expect revenue to be roughly $1.2 billion for 2015.

Note that this guidance includes the impact of a stronger US dollar, which alone drives a $60 million decline in revenue versus prior year.

For 2015, we expect full-year adjusted EPS to be in the range of $0.40 to $0.70.

Our EPS guidance includes an approximately $0.15 negative impact from unfavorable foreign exchange related to the sterling and euro, but excludes the restructuring costs of our headcount reductions.

We expect Q1 to be our weakest quarter, given the disappointing start to the year, and because our cost efforts will primarily impact Q2 to Q4, and therefore, for Q1, we anticipate being marginally profitable on the operating income line and to report an EPS loss.

In the remainder of my comments, I will speak to the mid-point of our full-year guidance range.

Total paid weeks are expected to be down in the high teens for Q1, with modest improvements for the rest of the year, with meetings paid weeks performing better than online.

Now for some segment detail, all on a constant currency basis.

In North America, we anticipate that first-quarter and full-year revenues will decline in the low 20% range.

In Q1, total paid weeks will decline in the mid-20%s, with meetings paid weeks performing better than online.

In the UK, we expect revenue for Q1 and the full year to decline in the mid-teens and Q1 total paid weeks to decline in the mid-teens with meetings and online performing similarly.

For Continental Europe, we expect revenues to be down in the low single-digits for Q1 and for the full year and the Q1 paid weeks to be down in the mid-single-digits, with online performing better than meetings.

Now to some detail on expenses, which factors in the $100 million cost actions that I have outlined.

We expect our gross margin to decline by over 500 basis points in Q1, which reflects our lower volumes, as well as the added cost for 24/7 Expert Chat and Coaching.

Our $100 million cost reduction plan will start having an impact over the balance of the year and we expect full-year gross margin to be down approximately 450 basis points versus 2014.

This includes around 25 basis points of unfavorable FX impact.

We expect Q1 marketing spend will be approximately $95 million and the full-year marketing expense will be approximately $220 million, as we focus our spend on key media that generates results.

This represents more than a $40 million reduction versus prior, approximately $15 million of which is driven by foreign exchange.

G&A is expected to be down slightly in Q1 year-over-year, and to be in the $200 million range for the full year, primarily driven by headcount reductions and overall cost vigilance, including approximately $10 million of FX favorability.

This represents a decline of more than $30 million versus 2014.

Below the line, for the year we expect interest expense to be approximately $125 million and our tax rate to be approximately 39%.

We expect CapEx of less than $40 million in 2015 and D&A in the $55 million range.

Generating cash to pay down debt is our clear capital structure priority.

In addition, uses of cash could also include selected tuck-in acquisitions to expand our technology capabilities.

In summary, 2015 is expected to be another challenging year on the bottom line for Weight Watchers, but importantly, our plan incorporates the steps needed to manage our liquidity and to continue to transform the business.

I'll now turn the call back to the operator for Q&A.

(Operator instructions)

Glen Santangelo, Credit Suisse.

Just two quick ones.

Jim, if I heard you correctly, and I was writing fast so I apologize if I screwed this up, but basically, you said that only 3% of the members uptook the Personal Coaching.

Do you know what percentage of the members are using the online chat support?

We're just trying to figure out what type of returns you are getting on those investments that you made and how you expect to improve that penetration over the balance of the year?

Let me start by saying the reaction to the platforms that we introduced by our members has been very positive.

As I said in the script, we had a 90%-plus favorability rate on the coaching platform, and a strong rating as well on click-to-chat.

It's very early days, obviously, as we need to drive awareness of these offerings and cultivate the behaviors.

I don't have the exact statistic -- to get to the first part of your question -- as to the penetration of click-to-chat, but I want come back to stressing how favorable this reaction has been.

The reason I refer to it as a platform versus a product as consistently as I can is that, as these cultivate new ways to interact and drive engagement, there are lots of things that we can put through these vehicles.

So I'm very encouraged about, strategically, what we have done.

This was the imperative: to bring differentiating strength of our service providers and the Weight Watchers expertise into the digital realm.

Yes, the penetration is low.

We do have opportunity to drive awareness, but we're really encouraged with the start.

Maybe if I can just follow-up and ask Nick a financial question.

Nick, you gave us some cash details.

You're targeting $350 million in cash by the end of the year.

Could you just remind us the specifics of the 2016 payment?

And then maybe if I could ask you to look a little bit further, when we look at the bigger payment that needs to be made in 2020, it's pretty obvious that the debt is trading at a pretty heavy discount.

Could you maybe discuss what the strategy there is, in terms of how you would expect to handle that $2 billion payment coming up?

Glen, I'll be happy to.

First, our next meaningful maturity is $300 million, due in April 2016.

After that, we have $2.1 billion due in 2020.

Last year, you saw us focus on cash generation and increase our cash balance by $126 million to be sitting here, today, with $300 million of cash on the balance sheet at year end, equal to the debt repayment next year.

Our plan has us generating $50 million of cash this year, at least, to end the year with $350 million of cash at year end.

So strong liquidity to deal with the April 2016 debt repayment.

Beyond that, we know, and Glen, you know the history of this Company.

As we get the top line moving, the Company can generate an awful lot of cash, and so that's certainly our plan to return to recruitment growth as soon as we can.

Okay.

Thank you.

Eric Cohen, Barclays.

Actually, this is Meredith Adler.

I was wondering, I saw the press release about Humana, and I was wondering whether Humana ever considered giving members who sign up for Weight Watchers a discount on the healthcare premium?

Because, I think you've tried providing Weight Watchers services for free, and it's not that effective in getting people to really use the services because they don't have any skin in the game.

So I was wondering whether you've had discussions with them?

Is that something that they considered?

I won't comment specifically on Humana.

I'm sure they could provide color on that.

But I would say to the substance of the question, you do see health plans trying to connect behavior change with incentives for their participants and the reason behind that is obvious.

It's also what drives interest in us because our engagement is exceptional.

As is the case with Humana now, we are plugged into their integrated wellness offering, and that's clearly an attempt to use our engagement and their broad wellness platform to improve the health and improve the healthy behaviors of their populations.

And this agreement seemed to come before open enrollment.

Has Humana agreed at all to do any marketing to their members to talk about this new program, this new service?

Yes, Humana has been a consistent innovator, and they are aggressively looking at the relationship with Weight Watchers as an internal value creator for their members.

And so they are communicating it, they are marketing behind it, they are using their coaches and nurses to promote the penetration of this partnership, so yes, they are fully behind this, strategically, would be my characterization.

Okay, great.

Thank you very much.

R.J. Hottovy, Morningstar.

I had a bigger-picture question here.

Jim, I appreciate the color on the consumer changes that you're seeing and that weight management is becoming a part of the holistic approach that includes fitness.

In that context, have you thought about any broader brand changes or any strategies on that line?

As you see changes in the consumer environment, does the brand also need to change?

We have said, R.J., that one of our key strategic planks is repositioning the brand.

There are a lot of fantastic things about this brand, but there are things that we could do to bring it more on trend and put it in a different context.

The research that I was referencing was getting more crystalline about what that context is.

So, between the brand positioning and the product strategy, you will see the Weight Watchers brand showing up differently going forward.

I had a follow-up question on the Humana relationship and really just looking forward here.

You had mentioned during the prepared remarks about investing in the healthcare business in step with demand.

I'm just curious what the pipeline might look like, in terms of the healthcare and demand, and whether or not the Humana partnership might have opened up some new potential relationships down the road?

We are focused on making Humana a success.

We have, for a year now probably -- don't hold me to that exact number, but for quite some time --consistently referred to getting a partner in 2015, and we are thrilled with Humana.

We're going to focus on their success.

I believe that, that success will put Weight Watchers in a good light, relative to the rest of the industry, but that's our priority.

R.J., it's Nick.

The only thing I'd add to that, obviously the health plan space is important for us.

We continue to focus on our strategic accounts business, adding customers every quarter, signed up Aon recently, for example.

It's still a relatively small piece of our portfolio, less than $30 million, but it is forecast to grow at double-digits this year.

Overall, if you go back to our investor day, we laid out a goal to get healthcare up to be a $300 million net business by 2018, so it's still a very important strategic focus for us.

The opportunity is there as much as we ever thought it was, but realistically, getting to that $300 million goal is going to be deferred beyond 2018 unless trends change.

That was actually my next question, so thanks.

Jerry Herman, Stifel.

Jim, I thought I'd just ask a different spin on the 3% penetration question.

You guys, now, have effectively four product offerings, let's say.

Can you give us an idea what that mix looks like, and also help us, maybe Nick, with the average selling price and what that's done, given the changes?

In terms of the mix of our business, if you look at how our businesses are performing, Jerry, part of what's hurting our profitability this year is that the online business is declining for a second year, with revenue down by about the same magnitude as last year.

That's why we're clearly focused on adding value to that online offering through the click-to-chat and the Personal Coaching offerings, but as we've said, we'll be focusing on growing our meetings business, also.

So the 3% represents the percentage of all subscribers, is that correct, that are using coaching?

That's the percentages of people who are selecting Personal Coaching.

Essentially, that's the new recruits who have chosen Personal Coaching since the start of the year.

I'd just like to stress, we talk about mass marketing being important for this business also.

As you know, Jerry, a key to our success is also word of mouth, and that's why we're very pleased with the great response rate we're getting from people who are trying Personal Coaching, getting excellent feedback on the products.

As Jim mentioned, 90% really like it, so that's why that we feel we've got a good platform on which to build.

And just a general question about guidance.

We should assume that the inflection in new enrollment in 2015 is a much tougher challenge at this point, is that correct?

Or off the table completely?

I would say if you look at the range of our guidance, $0.40 to $0.70, we're going to move fast and get the cost savings in any scenario.

So, the variability in our guidance is more driven by the top line at the low end.

It assumes really a continuation of the type of recruitment trends we saw during 2014.

At the high end, it assumes some modest improvement versus what we're currently experiencing.

That's what's driving the high end of the guidance, but we'll get to positive recruitments as soon as we can.

It may be towards the end of this year.

It may wait until our winter diet season in 2016.

But importantly, as Jim's outlined, our strategies are the same.

We know what we have to do to get there.

Just one last question, and I'll turn it over.

If you look at your subscriber base of 2.5 million, is there any way to calibrate the percentage or number of those users that fall into the category of an exceptionally loyal Weight Watchers user that have recurred and returned?

And really, the basis of that question is, is there some level of volume that you represent, or you believe is foundational volume, that, that volume you can depend on?

The recurring nature of our business model has always been a factor, so the mix of news versus re-joins hasn't changed materially.

History has shown that folks, even folks who have done Weight Watchers before, are more likely to come back when we have great new program news and market it well, and we're confident that, that can continue to drive the business in the future.

You could say there is a foundational behavior around returning to Weight Watchers as the program that worked.

Putting a number on that, as far as percentage of people, I don't have a guess for that.

But, certainly that behavior amidst consumers engaging with a chronic condition and trying multiple things, whether it's do-it-yourself programs, whether it's other activities, the sentiment coming back to Weight Watchers being a fully integrated program, that really does work and really does generate results, that is a consistent theme.

Great.

Thanks, guys.

I'll turn it over.

This concludes our question-and-answer session and the conference is also now concluded.

Thank you for attending today's event.

You may now disconnect.