Just Energy Group Inc.
Q2 2018 Earnings Call Transcript

Published: 9 Nov 2017

[Operator:]

Good day everyone and welcome to the Just Energy Second Quarter Fiscal 2018 Conference Call and Webcast. All participants will be in listen only mode. [Operator Instructions] Please do note that today’s event is being recorded. I would now like to turn the conference over to Deb Merrill, co-CEO. Please go ahead.

[Deb Merrill:]

Thank you very much. Good morning, everyone, and thank you for joining us for our fiscal 2018 second quarter earnings conference call. My name is Deb Merrill, I’m the co-CEO of Just Energy, and I have with me today, our Executive Chair, Rebecca MacDonald; my co-CEO, James Lewis; as well as Pat McCullough, our CFO. Pat and I will discuss the results for the quarter as well as our expectations for the future. We will then open the call to questions. Before we begin, let me preface the call by telling you that our earnings release and potentially our answers to your questions will contain forward-looking financial information. This information may eventually prove to be inaccurate, so please read the disclaimer regarding such information at the bottom of our press release. I will start today’s discussion by first providing some perspective on the near-term results in operations, before I conclude the call with an update on some of the exciting longer term activities that tie into our growth strategy. Our second quarter results reflect mostly nonrecurring headwind that impacted our financial results and the industry at large. Pat and I will take you through the detail of earnings results, but we are also going to highlight some very positive trends on for business. The EBITDA was below our expectations due to the impact of abnormally mild summer weather in North America and hurricane and tropical storm patterns, including destruction caused by Hurricane Harvey. These weather patterns yielded lower consumption, usage reduction as high as 25% worse than one year ago. The impact of consumption was not just fail and directly affected the areas, but across the continent impacted in Midwest, East and Canadian regions. Competitive market conditions also resulted in one time reduction in taxes renewal margin, the lower EBITDA in the quarter was also attributable to the company’s investments in strategic sales growth initiatives that are already showing positive results in our customer base. Our financial result to take the $22 million year-over-year impact to the second quarter due to mild weather and Hurricane Harvey, I would also like to point that Q2 fiscal 2017 was an exceptional quarter due to the higher consumption where technical, electricity price check. The company spent $8 million more in new markets and channel development in a period versus last year as we expand retail sales and deploy our royalty reward program. There are obvious benefits to these investments that I will detail in moment. The remaining $6 million in the combination of nonrecurring taxes renewal margin softness and a smaller customer base from a year ago. Due to the first half financial results, management revised guidance for fiscal 2018 to $175 million to $190 million, while maintaining our dividend at present level. Despite these new term challenges we also had some very promising results during the quarter as well. We achieved a record low 11% attrition for trailing 12 months with improvements in both consumer and commercial attrition, while maintaining a consistent renewal rate. Our ability to add new RCE to strengthening and we posted a positive net additions for the first time in the last two years. We have significant sequential and year-over-year growth addition growth in both divisions and net RCE additions also increased. We continue to receive great customer reception and feedback around our growing suite of value added program in long-term royalty program, and we remained confident we can build on this momentum. In line with our expanding product offering, we are beginning to shift our focus to a total consumer count metric. Our total customer count has increased 7% to nearly $1.6 million total customer since fiscal 2017 year end, a trend we’re confident will continue. This positive trends and testament to the fact that our customer CF is a value partner in energy needs and not just a vendor. We are also aggressively pursuing the milestone of reaching 1 million customer thresholds for enrolment in our customer royalty program Just Energy. We see clear evidence that our royal reward program lead to more customer lifetime value for the company. We are also seeing steady improvement and internally track net promoter score, which is a leading customer royalty metrics. Overall our more profitable consumer base is turning the corner towards the same growth. As a leader in retail energy space, our strategic initiative is to further our international operation, expand our retail sales channels and continue to invest in product and geographic growth opportunities are top priority. As we looked over these markets, the U.K. continued to perform well. This now represents 11% of our total RCE having grown net addition by nearly 23% year-to-date with strong growth in both the consumer and the commercial business. The company had successfully launched its selling operations in Ireland and we are currently signing up new customers every day. We are selling through multiple sales channels and our products are truly differentiated from the competition, as well as business development activities continuing in Germany and Japan as well. Our retail channel expansion effort also continued to exceed expectation. We’ve expanded 237 new stores across 11 retail partners and we plan to be in 500 stores by the end of fiscal 2018. At the 237 stores level we currently have, the company is selling at an annual rate of 140,000 RCE a year in new addition. We are ahead of our internal plan for store deployment and we’re confident that we will achieve our 500 store target by the year end. Pat will now take us through some of the financial highlights.

[Patrick McCullough:]

Thank you, Deb. As Deb mentioned, this quarter’s financial results were challenged by mostly nonrecurring headwinds. First, I’ll cover some of the highlights of the second quarter and then provide some added color in certain areas. Our second quarter base EBITDA declined 64% to $21 million, due to the mild summer weather, Hurricane Harvey and Irma, and investments in strategic growth. The decrease in base EBITDA was partially offset by savings from cost improvement initiatives we took during the quarter. We updated our disclosures in our MD&A and press release in order for a greater transparency into the results this quarter given the moving pieces. As you’ll see the decline of second quarter base EBITDA was driven by approximately $16.5 million due to mild weather, another $5.6 million due to Hurricane Harvey, and the remaining $14.3 million due to performance, which is mostly investments in strategic growth. The remainder can be described by more competitive market conditions, we believe most of this performance explanation is nonrecurring, as we have fully implemented Just Energy Perks in Texas market, which helps us differentiate versus competitors and combat margin compression. During the quarter, gross margin declined 22% to $143 million as a result of lower sales due to mild summer weather usage associated with hurricane and tropical storm patterns in North America. A consumer division gross margin decreased 18%, as a result of both the extreme weather conditions and the competitive market conditions, while the commercial division gross margin declined 33%. Average realized gross margin over the trailing 12 months ending September 30, 2017 was $253 for RCE in the consumer division representing a 3% decrease from the prior year period, and $88 for RCE in the commercial division, which represents an 11% improvement from the prior year period. We believe that clear opportunities exist for ongoing margin for customer improvement and have been more selective in our marketing strategy to secure additional commercial customers. During the quarter, we drove customer attrition improvement of 4 percentage points year-year-year for the trailing 12 months. Our improving combined attrition rate was a result of our focus on becoming our customers trusted advisor and providing a variety of energy management solutions to our customer base to drive customer loyalty. This is evident within each division as well. Consumer attrition of 22% improved 4 percentage points year-over-year and increased 1 percentage point sequentially. Commercial attrition of 5% improved 3 percentage points from the year ago period and improved 2 percentage points sequentially. The renewal rate was 61% for the trailing 12 months consisted with the weighted average renewal rate reported one year ago. Consumer renewal rate decreased by 5 percentage points to 73%, while the commercial renewal rate decreased by 1 percentage point to 52%. While both segments declined the renewal opportunities grew in the higher converting consumer segment, while the opportunity shrunk in the commercial segment creating a flat year-over-year condition. Moving back to the income statement, general and administrative expenses for the second quarter remained relatively flat with the year ago period at $47 million, as cost containment effort offset by higher cost we occurred to support customer growth additional international expansion and new strategic initiatives. Revenue marketing expenses decreased 1% year-over-year to $59 million, despite growth additions being almost 50% higher than one year ago. The majority of the year-over-year increase in customer additions came from channels that are expense as residual commissions. Now I’ll review some of our other key financial metrics and balance sheet items. Base funds from operations of $8 million decreased 85% from the year. The decrease was largely driven by lower sales resulting from cooler summer weather and customer disruption due to the late summer hurricanes. The payout ratio on base funds from operations was 279% for the quarter and 153% for the first six months of the fiscal year. On a trailing 12 month basis, the payout ratio is currently 106%, because we experience a nonrecurring profit pressure in this period, the trailing 12 month payout will step up to 100% until the abnormal quarter rolls off next year. We expect to move back to a 60% trailing 12 month payout ratio, when this quarter rolls off the calculation next year. Cash and cash equivalents of $56 million were down 53% year-over-year, as a result of our lower growth margin in the fiscal quarter, but that was offset by $49 million withdraw on our credit facility. Managing our balance sheet has been a priority for several quarters. Our long term debt increased 8.5% to $540 million from March 31, 2017, due to the credit facility withdrawal. This resulted in Just Energy’s book value net debt increasing to 2.6 times on a trialing 12 month basis, which is higher than we reported last quarter, but roughly in line with the 2.4 times reported one year ago. We remain committed to improving our debt ratios. Turning to our outlook, we now expect to deliver fiscal 2018 base EBITDA in the range of $175 million to $190 million compared to previously issued guidance of $210 million to $220 million. This change reflects the impact of our first-half financial results on the full-year. With that, I will turn it back over to Deb.

[Deb Merrill:]

Thanks, Pat. With the last year’s refining and innovating new differentiating value driven products, which are showing positive results in our customer base. We are happy that our progress in sale channel expansion and we will continue to add new channels and partners to further ensure that we are able to grow our business. In summary, while we’re are not satisfied with the current quarter financial results due to the one time nature of notes to the headwinds, we feel confident that our customer growth and efficiencies in operations will lead to a stronger overall company enable us to - enabling us to deliver strong results. We want to thank our loyal shareholders for their support of our strategy. And, really quickly before I go into Q&A session, I want to touch on the devastating weather events that affected our community in Houston. As Houstonian, we witnessed first handed devastation of city in [Derek] from Hurricane Harvey. We also saw our employees, our friends, and our neighbors unit together to begin healing and rebuilding process [Technical Difficulty] help our Houston back. We’ve never in more proud to call Houston home and we’re proud to be an active member of the community there. And, now we will open it up for questions. [Technical Difficulty].

[Carter Driscoll:]

I understand the hurricane effects; I understand the investments in growth initiatives. I’m a little confused there’s to why your hedging strategy didn’t kick in a little bit, I mean, across multiple territories, so it’s not just the East that was warmer - cooler than expected in summer and then in Prime EC territory, but you’re talking the Midwest, Ontario, I mean, is this effect more from really low volatility and therefore, hedging wouldn’t have been effective? But it just seems like the outsides whether effect was even beyond what I would’ve expected this quarter, so I was hoping you could address that first then I have a couple of follow ups. Thank you.

[James Lewis:]

Yes. Carter, its James Lewis here. I think the follow up - whether year-over-year so there are a couple things that are not right ahead in strategy. On the - in the summer, we’re usually looking for extreme temperatures on high end. So that’s what we - our weather strategy has it. On the cool side while we looked at, weather hedges let’s say for the weather not showing up or the heat not showing up, it really have not cost effective in the past when we try to look for those options. So our strategy focuses more on the extreme weather events, pricing going to $9,000 or so.

[Carter Driscoll:]

Okay. So, you’re basically saying it just wasn’t cost effective or you didn’t anticipated to be a cool summer?

[James Lewis:]

We had to normal. So, when you look at normal weather that was our highly charges looks towards and then we put on whether hedges for the extreme weather on hot, hot summer. On the cool side, yes, we didn’t expect it to be cool that sure across-the-board year-over-year. Deb Merrill And Carter, I think, just add a little bit there, I think we said - as we talk about our hedging strategy we say, we’re always refining it, and we’re always looking for cost-effective ways to manage the risk. And, we have looked at especially for Texas, warm cool summer hedges as Jay mentioned, but we haven’t been able to find the right structure at the right cost to be able to do that. So, we focus on the extreme high end, not the low end so far, but we’ll continue to look to refinance our options available that will be cost-effective in the future, but as of now we didn’t have cost-effective options available to us.

[Carter Driscoll:]

All right. So, that will extrapolate that to the current quarter where we are over a month end into the current quarter, it’s been a warmer than expected winter so far where at least fall period to October. What is your - has your hedging strategy been modified in response to Q3, 4Q or?

[Deb Merrill:]

Yes. So, for winter, we actually do have cost-effective strategies for mild winters on the extreme side, on the high side and the low side. So, that is already in place and we have that - we have been doing that the last several years; we do find products that work for us there. It's just – it’s the summer that isn’t managed, we haven't been able to find structures to manage it on the mild side.

[Carter Driscoll:]

All right, the next question is - so you talked about, I guess, being in 253 stores, I remember at the end of the quarter, end of October and you still launch - 137, excuse me, you’re basically on tracking your estimate to more double app by the end of fiscal 2018. Is there - before you were talking about in a pilot kind of trial somewhere between three quarters and maybe some as high as two people or they have been signed up, you talked about - where the average is ranged over past 90 days or so?

[Deb Merrill:]

Yes, sure. We target - we wanted to be over 1. 5 to do that, 1 to 1.5 half range, but we are seeing things, we are seeing conversions and customer count per day over 2. So, all of our economic for the sale channel are assuming lower, but we are seeing a better - we are still seeing a better customer contract per day than what our base assumption is.

[Patrick McCullough:]

This is Pat, Carter. When Deb talked about the 140,000 on an annual sales basis that’s assuming two sales per store per day, you can back into the math easy from 200 plus stores, when we get ourselves to 500 you’ll see that annual sales rate improved over 300,000.

[Carter Driscoll:]

Okay. Above what you’re expecting if I remember correctly.

[Patrick McCullough:]

Yes, it’s better than we had, better than at this point.

[Deb Merrill:]

We are good ahead on our strategy on the retail sale channel,

[Carter Driscoll:]

Okay. If shifting gears a little bit. You talk about, I mean, certainly sees from M&A in a while since like multiples are fairly elevated obviously in Europe but also in the U.S. So, like a lot of - I think your competitors driven to smaller targeted investments abroad, if you talk about may be Germany give us an update there, progress your expecting contribution latter part of calendar ‘18?

[Deb Merrill:]

Yes, so we are in Germany right now we’re running three really targeted pilots to go after customers that are on high utility rates and via various sales channels as well. So we're kind of in that discovery of understanding how to best approach the market base and testing various things and see how we can best get at that market. So, we're still actually pursuing that. Japan we're looking at potentially starting to sell in the next 30 days - 30 to 50 days we started testing that. And, as everything want to be new countries, we know take a little bit of time to get our feet underneath us, because we know is not going to act exactly as North America does, their culture difference and everything. So, we’re definitely in a testing phase, Ireland however has been a much faster start up for us, it’s mostly because have urged people, but it's very similar do the U.K., as it relates to culture and language and we’re managing, so we had a pretty quick start up base there. So, that one is actually leapfrogged some of other efforts that have been going on a little longer.

[Carter Driscoll:]

Okay. Maybe just last one for me. So, you take the bracket where you have taken a new guidance at the low-end, if you hit 175, you still feel comfortable you got enough of tail coverage dividends to safe at least through fiscal ‘8?

[Patrick McCullough:]

Yes, we do,

[Carter Driscoll:]

Okay, all right, I’ll turn it over to others. Thank you.

[Operator:]

And, our next question of today will be Sameer Joshi with H.C. Wainwright. Please go ahead.

[Sameer Josh:]

Good morning Deb and Pat.

[Deb Merrill:]

Good morning.

[Sameer Josh:]

As it relates to the new restrictions that you mention in your write up for marketing to consumers in Canada, are you making any adjustments to your sales strategy there or the sales organization there?

[Deb Merrill:]

Yes. So, the renewal rates in our Canadian markets have gone down, because of new regulations that make it very prohibitive for us to try to connect with customers. So, we are looking at ways that we can combat that, look, your question I’m sorry, Sameer, was that how we are combating that or what was your…?

[Sameer Josh:]

Yes. Are you making any adjustments to how you market and how you sell?

[James Lewis:]

Yes, I think one of the things we’ll look at retail as well in Canada, so we are doing what we've done which have been very well received. So, we’ll continue that and find customers in Canada just - as expected as we found in U.S. to our first program, which has helped us on nutrition side, it’s the difficulty on the new regulation is, but we can only contact the customer once every 30 days, and so that’s a contact, making them intent, so you don’t get contact for customer, one day you get another 10 to 30 more days, so that’s the regulation here.

[Patrick McCullough:]

Well, one thing to add, we’ve actually adjusted products we sell as well. Since the commodity products are highly regulated, we have been looking at bundling energy efficiency, conservation bundles and taking those to market. So, we’ve been doing that, those our efforts in the Canadian market as well.

[Sameer Josh:]

Okay. So, that’s a good segue way into my next question, which was about the value added products and services. Why hasn’t or how come that you didn’t see an impact of that in a better gross margin per RCE, I know you had trouble in the various geographies, but why didn’t this value added products with higher gross margins offset then?

[Patrick McCullough:]

So, I think the answer to your question is, we have seen margin improvement over the last two years and that is partially attributed to superior bundles and value, let’s say differentiated products. And, one of the challenges with changing our business is, we have multiyear contracts where we’ve largely sold commodity base product. So, yet real penetration with a different type of product will take time, but I don’t think you’ll ever see majority of penetration of the book buying non commodity or bundle products with energy efficiency devices, etcetera. Having said that, pilots on selling smart home and energy efficiency integrated products are going well, Blackville structures are doing very well, getting great reception in Ireland and in the U.K. and fundamentally putting water conservation energy efficiency device in our product is a priority, it just takes time..

[Sameer Josh:]

Got it, and just a follow up on Carter’s question previously about the hedging strategy for weather patterns, do you also have some hedges against utility prices in general for example, raising oil prices and energy prices that can affect your business going forward?

[Deb Merrill:]

We hedge all of our requirements for our customers in the forward market. So, we hedge - we expect our customers to use a normal weather and layer in the winter time hedges for extreme up and down weather hedges. So, as oil prices move that correlate with natural gas, we’ve already locked in what our - what we expect our customers to use to with the term of the contract where [indiscernible], so it shouldn’t impact us.

[Patrick McCullough:]

Maybe you took an extreme example, Sameer like five year contract, we are pricing back to back, so we are locking in five years of expected volume devastate out of price, we’re marking that up on the pure commodity products and we’re locking in that design margin and normal weather and then we’ll put weather structures around that.

[Sameer Josh:]

Sounds good, thanks a lot for taking my question.

[Deb Merrill:]

Thanks, Sameer.

[Rebecca MacDonald:]

And, Sameer I just want to add something, it’s Rebecca. We are not very happy with our financial result that’s given, but we are clear on the long run and we can control a lot of stuff, but to control temperature set up normal in the summer is very difficult. When you see 25% contraction in customers need through our jurisdiction, it’s something that we could not extract, this surprise us totally, but we should never see in the sector for very, very long time, and maybe seen anything like it, which is almost like a perfect store. Deb said something earlier and I would like to add this time. Seeing what it can do to our margins, we will walk very long inside, so the next year whether we can sign something that works hedge-wise, we have not seen it so far, because I don’t really think anyone prioritized it too much, but we are going to be very, very careful of how we hedge next year in the summer.

[Sameer Josh:]

Understood, thanks.

[Operator:]

Our next question of today will be Sophie Karp with Guggenheim. Please go ahead.

[Sophie Karp:]

Hi, good morning. Thank you for taking my question. I was wondering, how does the economics of the customers that you sign in the new retail channel compared to the ones in other channels before? Thank you.

[Patrick McCullough:]

Thanks, Sophie. This is Pat responding. So, we are targeting over $250 of annual margin very consistent with what we are experiencing in the consumer space. And, there’s three models that we have piloted around the retail channel, one is to sell through a partner that operates kiosks in places like Sam’s Club, Costco, Wal-Mart. Another is to do it on our own, there’s two derivatives of doing on our own. If you look at the worst case economics, you see a 3.5 quarter payback on the combination of various salaries, gift cards, commissions that are paid for those sales agents, where we operate the kiosk ourselves is a better return in that, that $250, $260 margin will payback in little as 2.5 quarters. And, in summary that’s very similar to the door-to-door model, but it’s actually a bit better than the door-to-door model we’ve experienced in the past. So, we think it will fit very well with the expectations of our consumer business from a return standpoint.

[Sophie Karp:]

Thank you. That’s all for me.

[Operator:]

And, our next question of today will be Raveel Afzaal with Canaccord. Please go ahead.

[Raveel Afzaal:]

Yes, thank you. Thank you for taking my question. So, I’m thinking back to 2014, when we had the Polar Vortex condition, at that time it was pretty negative for the energy retailers in the short-term, but then bigger energy retailer is benefited from it, because the smaller retailers couldn't bear the volatility and we saw competitive environment kind of improvement later 2014, as a result of that. I'm wondering, given what we saw in this quarter, do you see some of the smaller competitive going out of business or suffering financially and as a result acquisition opportunities or the competitive environment improving for you going forward?

[James Lewis:]

I think the first half. Yes, we see some - more comparative - so that does open up opportunities for us and as we look at them, one of the things that we also think is going to happen, we’re going to see some tight net in the Texas market with some of the generations retired there, which we can be positive as well, one of the things we should see going forward is maybe some volatile back in the market and that's another thing that tends to readout from the smaller competitors or some of the folks who don't hedge.

[Raveel Afzaal:]

Perfect. That was my only question. Thank you.

[Deb Merrill:]

Thanks, Raveel.

[Operator:]

[Operator Instructions] And, our next question of today will be Damir Gunja with TD Securities. Please go ahead.

[Damir Gunja:]

Thank you, good morning. Previously you had expressed hope to return to double-digit growth next year in 2019, fiscal 2019. If we adjust for the $22 million weather impact would have returned to double-digit growth still be potentially on the table?

[James Lewis:]

We hope so, but we’re not prepared to give guidance for next year at this point. What we see about this first half is really this nonrecurring delta versus prior year, but prior year was a better and normal condition. So, we’ll be making adjustments on that, as well as looking at our growth additions, sales plan and factoring in, step up in retail, etcetera. And, pretty hopeful that there is going to be a nice earnings step forward next year, but unclear if we can answer your question directly at this point.

[Damir Gunja:]

Okay, that’s fair. You did make a nice, I guess, inflection point to positive net adds in the quarter, given the success you’re seeing in the retail channel, would it be fair to say, you could maintain positive adds for the foreseeable future?

[Deb Merrill:]

It’s really heavily depending on our commercial portfolio, but I find interesting about customer base and Damir is that, as I said earlier, we are now showing RCEs and customer count. And, you can see our customer count has increased, because we are losing some of the larger customers, but we are keeping some of the smaller commercial customers, it really depends on how - it might slow low a little bit, because the commercial renewal tranches that come up each quarter are very different. So, but as we - as our retail - I’m sorry, as consumer business continue to gain more traction that will start to overcome that even maybe some of the larger renewal quarters where you have some challenges on the commercial side. So, I think that’s eventually - it will absolutely overcome it.

[A –Patrick McCullough:]

And, I think if you think about the more profitable consumer segment, we agree with the bullish idea behind your question that we should be seeing positive net adds with that retail service that’s happening, it’s a renewal period on commercial that we are watching.

[James Lewis:]

Just to add one last point here. When we talk about Ontario or the Canadian markets on the renewal rate, it wasn’t for - that changed regulation there, you will see a greater net adds. So, the headwinds there’s more in the Canadian side that renewal rate as we look to continue to improve it, but with that regulation that does put a little bit of headwinds there that we’re overcoming.

[Damir Gunja:]

Okay. Okay, thanks. And, maybe just bigger picture, are there any strategic moves that you are thinking about either on the product sides or new markets, is Japan going to factor in at some point, does that a major potential catalyst, just anything you can add sort of bigger picture that could potentially swing things your way?

[Patrick McCullough:]

Yes, so I think the core strategy that we’ve spoken about quite a bit over the last two years is pursue growth through superior products, product expansion, through expansion of channels, getting into the new channels for the new geographies. And nothing’s changed, onetime nonrecurring hot weather condition isn’t going to change true north for the company. So, you’ll continue to hear us talk about new superior broader products, more channel expansion, and efforts to develop businesses in the new pilots.

[Damir Gunja:]

Okay. And, is Japan factoring to your plans or is that too early to discuss?

[James Lewis:]

As Deb said, what we expect to start signing customers up in the next 30 to 60 days here, and then we’ll take the same approach as we always had, we do some pilot there, see what’s successful and make modification as we move forward.

[Damir Gunja:]

Okay. And, just a final one for me, perhaps Pat, I might be little early on this one, but I guess, you do have a convert coming due next year in September, any thoughts on that and how you might approach that?

[Patrick McCullough:]

Yes, the $100 million convert that matures in 2018, which we have an early call option on. We do intend to exercise that early call option and retire that, and probably happen in the next three to nine month period, but comfortably ahead of the maturity.

[Damir Gunja:]

Okay. Thanks for that.

[Operator:]

And, ladies and gentlemen, this will conclude our question-and-answer session. I would now like to turn the conference back over to Deb Merrill for any closing remarks.

[Deb Merrill:]

Thank you very much, everybody. We really appreciate your questions and your support. Also I want to make sure - in every quarter we make sure we point out our employees that how hard they’re working and everybody is working hard to build our sales channels to get our customers, taking care of them. We just wanted to send a big thank you to everybody. And, we will see you again in February. Thank you very much.

[Operator:]

And, the conference is now concluded. Thank you all for attending today’s presentation. You may now disconnect your lines.