Sykes Enterprises, Incorporated
Q2 2020 Earnings Call Transcript

Published: 9 Aug 2020

[Operator:]

Good day and welcome to Sykes Enterprises Second Quarter 2020 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] On the call today are Sykes management team including CEO, Chuck Sykes; CFO, John Chapman; and IR Head, Subhaash Kumar. After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. Management has asked me to relay to you that certain statements made during the course of this call may relate to the company's future business and financial performance are forward-looking. Such statements contain information that are based on the beliefs of management as well as assumptions made by and information currently available to management. Phrases such as our goal, we anticipate, we expect and similar expressions as they relate to the company are intended to identify forward-looking statements. It is important to note that the company's actual results could differ materially from those projected in such forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements were identified in yesterday's press release and the company's Form 10-K and other filings with the SEC from time-to-time. And now I would now like to turn the conference over to CEO, Chuck Sykes. Please go ahead sir.

[Charles Sykes:]

Thank you, operator. Good morning, everyone, and thank you for joining us today to discuss Sykes Enterprises' second quarter 2020 financial results. On today's call, I will provide insight in how our business is doing operationally and John will walk you through the numbers, and then we'll turn the call over for Q&A. I want to begin by thanking all of our employees worldwide for their dedication in response to the ongoing hardship that this pandemic has unleashed. They are doing absolutely all that they can do to alleviate what's within their control. I also want to recognize the critical work our leadership teams are doing across the world. They remain relentless in the phase of this pandemic as they deliver for our employees, our clients and our shareholders. As the pandemic continues to pace, we remain ever vigilant about maintaining operational safety with the latest safeguards while minimizing disruption to the livelihoods of our employees and their families that depend on them. With the full quarter of operating performance now under our belt since the COVID-19 lockdown began, second quarter 2020 results were truly exceptional, thanks to our strong market positioning, led by our differentiated home agent platform and the in-house proprietary technologies and processes that underpin it, we were able to achieve and even break records across many key financial metrics. These include absolute revenue levels, constant currency organic revenue growth, operating margins, earnings and operating cash flows. All of this culminated in the further strengthening of our already robust balance sheet. John will discuss all of this in more detail later. The results in the second quarter were driven by broad-based demand and share gains, along with strong fundamental operational performance. Fundamentally, we continue to target and achieve lower agent absenteeism and attrition levels, which drove agent utilization and productivity. Customer satisfaction scores and key performance indicators remain robust on balance as we had roughly 70% of our former brick-and-mortar agents working from home, more than 25% working in brick-and-mortar facilities, and less than 5% were idle. We maintained discipline on our discretionary spend, but some of those savings were redeployed toward agent safety and home agent experience, particularly offshore with a focus around basic ergonomics. Meanwhile, we continue working through some of the infrastructure constraints offshore. This includes limited bandwidth capacity and reliable electricity connection outside of major metro areas. In all, despite a very fluid environment, we are extremely proud of our outstanding quarterly financial results and the job our teams did in the quarter. As we look toward the remainder of the year, we remain cautiously optimistic. We are seeing healthy levels of activity across our existing client base. Areas of growth span our whole vertical market complex, excluding the travel industry. Specifically, we are seeing opportunities with traditional and new economy market segments. Within the traditional segment, it is support opportunities for banks and credit card holders in addition to soft collections work. And programs related to the CARES Act. At the same time, we continue the program ramps across wireless health care and technology verticals. In the new economy segments, categories such as fintech, e-retail, e-commerce, online food delivery and do-it-yourself security systems are all seeing solid growth. This growth is being driven as a result of these disruptors scaling their business models within their existing footprint, entering new geographic markets and adding new strategic partnerships. In terms of new logo wins, we have seen an extension of our sales cycle of late. Moreover, it is still difficult to say how final demand for each of the clients across all vertical segments will hold up, given the uneven and unpredictable nature of economic openings worldwide. Meanwhile, we continue to look at ways to rebase our structural costs permanently, including our entire operational value chain. Efforts on this front have been fast track, and we have made some headway. But until clients give us firm commitments on what their mix of delivery strategy is between home agent and brick-and-mortar, our efforts are going to be limited in the short run. That said, we believe our differentiated breadth and depth of capabilities, combined with our solid balance sheet enhances our long-term positioning to overcome the challenges and capitalize on the opportunities and what is certainly an unprecedented situation. And with that, I'd like to turn the call over to John Chapman. John?

[John Chapman:]

Thank you, Chuck. I would now like to discuss our quarterly financial results, particularly key P&L, cash flow and balance sheet highlights. As Chuck mentioned, our second quarter results were a standout by almost every measure. In the quarter, we reported record revenues of $416.8 million versus $389 million last year, a growth of 7.2% in the quarter. Second quarter 2020 revenues included a $4 million negative foreign exchange impact. Excluding the FX impact, second quarter revenues were up approximately $32 million or 8.2% constant currency organic revenue growth, which is the highest in a decade. As Chuck alluded to in his prepared remarks, our agility in responding to our clients' needs, coupled with our diverse business mix as well as existing and new program growth, enabled broad-based growth. By vertical market and on a constant currency basis, technology grew around 24%; financial services was up 14%; health care, up 12%; all of which more than offset the 7% decline in the travel and transportation vertical and roughly 3% decline in both communications and other verticals. Second quarter 2020 operating margin increased to 6.5% from 3.9% for the comparable period last year. On a non-GAAP basis, second quarter 2020 operating margin was a decade high, up 8.5% versus 6% in the same period last year. The increase in the comparable operating margins was due to solid demand execution combined with higher agent productivity, increased capacity utilization and expansion discipline. Second quarter 2020 operating margin reflects the expense of approximately $1.8 million or approximately 40 basis points related to a market -- mark-to-market adjustment of stock-based deferred comp program. Second quarter 2020 diluted earnings per share were up 106% to $0.55 versus $0.27 in the same period last year. Non-GAAP basis second quarter 2020 diluted earnings per share were $0.71 versus $0.41 on a comparable basis. Of that $0.30 per diluted share of comparable increase, roughly $0.24 was driven by operations, with the remainder split between $0.04 positive swing in interest and other net of tax, and approximately $0.02 benefit from lower share count. Turning to our client mix for a moment. On a consolidated basis, our top 10 clients represented approximately 46% of total revenues during the second quarter, up from 43% in the year ago quarter. The top-10 clients in the second quarter of 2020 compared to the top-10 clients in the same period last year grew roughly at almost 15%, driven by existing and new program wins as well as share shift from competitors. We have no 10% client in both comparable quarters. Now let me turn to select cash flow and balance sheet items. During the quarter, cash flow from operations more than tripled to $58.1 million from $17 million with the increase due to strong earnings and working capital swing factors. Capital expenditures decreased slightly to 2.7% of revenues from 2.8% in year ago period. Trade DSOs on a consolidated basis for the second quarter were 80 days, up five days comparably, but unchanged sequentially. The increase in DSOs compared to last year is primarily due to a drop off in clients that were mandating receivables factoring. The DSO was split between 80 days for the Americas' region and 79 days for EMEA. We collected roughly 14 days' worth of DSO in a couple of weeks from quarter end. As we have stated before, we expect some clients to continue to stretch out payment terms even further as we manage liquidity needs more aggressively. Our balance sheet at 30th of June 2020, remains strong with cash and cash equivalents of $129.1 million, of approximately of which 81.9% or $105.6 million was held in international operations. During the quarter, we repurchased 0.5 million shares at an average price of $26.01 per share for a total of $13 million. Year-to-date, we have purchased around 1.4 million shares at an average price of $26.41. We have roughly 2.2 million shares remaining under our $10 million share repurchase program authorized in August 2011 and amended in March 2016. At quarter end, we had $49 million in borrowings outstanding, down $26 million sequentially under our $500 million credit facility. We continue to hedge some of our foreign exchange exposure. For the third quarter and full year, we're hedged approximately 43% and 50% at weighted average rates of PHP 51.72 and PHP 52.15 to the U.S. dollar. In addition, the Costa Rica colón exposure for the third quarter and full year 2020 is hedged approximately 54% and 44%, respectively, at weighted average rates of CRC 583.72 and CRC 588.46 to the U.S. dollar. Now let's review some seat count capacity utilization metrics. On a consolidated basis, we ended second quarter with approximately 48,600 seats, up approximately 1,200 seats comparably. Virtually all of this capacity is demand driven and was contracted at the start of the year. The seat expansion split roughly 2/3 Americas and 1/3 EMEA. The second quarter seat count can be further broken down to 40,400 in the Americas and 8,200 in EMEA. Capacity utilization rates of the end -- at the end of the second quarter of 2020 were 73% for the Americas and 69% in the EMEA region versus 70% for Americas and 74% in EMEA year ago quarter. The increase in Americas utilization was driven by higher demand while the reduction in EMEA was due to the timing of capacity additions contracted at the start of the year. The capacity utilization rate on a combined basis was 73% versus 71% in the year ago period, with the increase mainly due to higher demand, coupled with our ability to rapidly mobilize our brick-and-mortar agents to the at-home to service demand. Before closing, I would like to say at this point, we believe it's prudent to hold off providing further quarterly and annual guidance. What is giving us pause is the frequent changes in our clients' forecast due to limited visibility they have into the final demand for their products and services. This is stemming from the uneven nature of economic openings and the related touch-and-go restrictions in place due to the unpredictable part of the pandemic, which is also resulting in record high levels of unemployment. That said, given our record second quarter, coupled with our highly differentiated business model, we believe we are well positioned long term to capitalize on a large and highly fragmented marketplace as well as the potential dislocation among competitors in our industry. With that, I'd like to open up the call for questions. Operator?

[Operator:]

[Operator Instructions] And the first question comes from Josh Vogel from Sidoti.

[Joshua Vogel:]

Thank you, good morning Chuck and John. Thanks for taking my questions. Pretty impressive results in light of the environment out there. My first question is when looking at the performance in Q2, what percent of revenue, if any, came from temporary programs in the quarter? And also, any sense of how much of this 8% constant currency growth was from the share gains you referenced?

[John Chapman:]

In terms of temporary programs, and they're spread out across the globe. There is one in Europe and the U.S. It's about 1%, Josh. So if you look at our revenues, you'd say, okay, we've got a 1% benefit from those temporary programs. They may or may not continue beyond Q3. But again, as you can imagine, we've also got an offset due to COVID, which is related to the travel weakness bit overall, temp programs 1%.

[Joshua Vogel:]

Okay, and then the part about...

[John Chapman:]

In terms of where we are winning the business from, it's really hard to tell. As we've said, and one of the reasons why we're not giving guidance is clients have been adjusting their forecast, they're going to give us week by week, not daily, but certainly, we see it moving around more than normal. So exactly where we're taking that share from, whether it's real increase in volume or whether unlike our achievements, either our clients internally have struggled to get their supply chain productive or maybe our competitors have, it's hard for us to tell. All we know that when we look at the volume that we've been asked to deliver to take, it was much higher than what we anticipated. It's obviously a significant increase year-over-year, but we really don't know how much of that is because we are just delivering - we're doing - just in a better job either compared to the clients' internal centers or competitors or there's a real increase in volume out there. So that's what makes it a little bit unknown, but what we are is we're really pleased at how well our company has been able to get our employees productive in the quarter, I mean it's in unprecedented conditions. We're really super pleased about how we've executed, kept our employees safe, but execute on behalf of clients to deliver what for us is a record Q2 year-over-year growth number.

[Joshua Vogel:]

Yes thank you. So, understanding that you're refraining from giving any guidance, can you share the monthly revenue trends in Q2 and also what you saw through July?

[John Chapman:]

Well, I would say, I'm not ready to give you - talk about July, but if we talk about Q2. If you remember when we did the conference call, we explained how we had kind of a dislocation really in 2 places, El Salvador and Manila at the start of the quarter. What I would say is April was low but May and June were pretty much on par with each other, April lower simply because we're ramping back in our agents. And I know you're really asking in terms of the trends going into Q3. And the only thing I would say, Josh, in terms of Q3 is, if you look historically, we could sometimes get 2% to 4% seasonal increase. The only thing I would say on that because of the 10% program and probably because as well, I suspect travel, although it was weak in Q2, maybe a little bit weaker again in Q3 that maybe that seasonal 2% to 4% is a little bit - again, I don't want to guide, but I would say that would be, in my view, a little bit aggressive. And I would see us trending down not outside our 4% to 6% year-over-year annual revenue growth target, but kind of around those lines. But as I said, client forecasts and volumes, there's just so much more uncertainty out there than there's been in the past, but in terms of revenue trends and looking at May and June and possibly in July. That's kind of commentary I would give you to try and help you understand where we think it is.

[Joshua Vogel:]

That's helpful, thank you. And just one more, but it's basically a three part question. I guess when we think about -- could the new normal be maybe like a 50-50 split between at-home agents and brick-and-mortar centers or even greater than that? I think Chuck referenced that it was 70% at home last quarter. And if so, could this change your long-term margin profile targets of 8% to 10%? And then just lastly, does that give you an opportunity to maybe scale down the real estate footprint and what could that entail?

[Charles Sykes:]

Josh, so on the long term, yes, right now, we're about 65%, 70% work from home. And we've been talking to our clients and everything, trying to get understanding about where they're positioned. So I would say that based on those conversations, we don't believe work at home will really go below 35%. But could it remain at 50%? I think that's possible. But right now as we look long term, we're thinking it will probably regress back to about 35%. Now as for long-term margins, it's -- when we say 8% to 10%, I wouldn't say that the 10% goes higher, but the 8% could come up. So the range from quarter-to-quarter would be tighter, which would make the company overall on an annual basis, have slightly better margins. The bigger issue about work at home is not as much about superior margins as it is about speed to growth. So we're able to capture opportunities much easier because we're not limited by where we have physical inventory which is critical. And that, in turn, removes the lumpiness from our business and everything. And yes, if we have 35% of our current workforce, long term staying at home, which keep in mind prior to COVID, it was only 5%. So it's a significant shift. We definitely have opportunity to eliminate real estate without a doubt.

[Joshua Vogel:]

That's really helpful, always great to hear your voice Chuck. Thank you guys for taking my questions.

[Charles Sykes:]

All right, thanks Josh.

[Operator:]

Thank you. And the next question is from Bill Warmington with Wells Fargo.

[William Warmington:]

So, good morning everyone. So with - So Subhaash, with the stock up almost 20%, definitely take a bow and I think on Wall Street, we call that the Kumar effect. Also this - just limiting the three questions, I bring to mind the saying that you can always sell a sell side analyst, you just can't tell them much. So I'll keep it to three. It looked like the attrition levels and the high utilization of working from home really helped you guys a lot. And I wanted to ask about what the attrition levels were and the utilization levels were in home agent pre-COVID and whether you consider these improvements sustainable?

[John Chapman:]

Yes. I mean, Bill, it's really hard to compare any two programs, whether they're work at home and brick-and-mortar, we really need to compare what a program was like in brick-and-mortar and probably that same program now that is work at home. That really probably is a better comparison for you. And what I would say is if you look at programs that have effectively got the same management, same agent pool, we've seen annualized attrition. And again, it varies. It's not one size fits all. But - and in terms of an annualized number, we've seen it go in some places down 50% and some 20% reduction in annual attrition. It varies by geo and it varies by program. So that's what I would say in terms of the impact. But again, we're dealing in different times. So seeing all of that simply because we've moved to work from home is difficult to say. In terms of absenteeism, we've obviously seen improvements. When we look at the same pool of agents in terms of going back - going from the office environment to work at home. And in terms of absenteeism rates, some places it's only a 1% to 3% change. But in others, absenteeism, that maybe was running at 10% before is down at 5%. Doesn't sound much, but that makes a big difference to our numbers. Now we're not naive. We understand that some of that benefit, both in attrition and absenteeism is simply because of the situation we are in the employment levels, but we also do believe that some of it's a result of the expertise we have in terms of managing those agents that are now moved to work from home. We've kind of had the knowledge as to how you do that, we've had tools in place to how you do that. And we think some of it is because those tools have helped us transform not just the agents to work from home but to transform managers who used to manage in line of sight to manage a distributed workforce that they can't see. So yes, we've seen nice improvements comparing the same brick-and-mortar programs to work at home. And we're working to make sure that those improvements are not short term, that they're actually longer term and the improvements stick.

[William Warmington:]

Well, now, I seem to remember that revenue attrition typically runs about 2% to 3% and back in the last recession, I think it got as bad as 8%. And I wanted to ask about your thoughts on revenue attrition going forward.

[John Chapman:]

I'll be honest, Bill, even with our 8% growth, our revenue attrition is what we call because of our once largest client, it's actually over 5% just now. So it even shows more impressively how well we've grown existing and new logos as well as expand and deepen existing logos. So I suspect this year, our actual attrition, as you call it, is probably going to be at the higher end of the 3% to 5% range. Now we don't think that's where it's going to go. We do believe that's really the result of last year's actions, remember, when we spoke about our once largest client in telco as well as another telco client that we're exiting. But that number would be this year about the 5%. But we don't see the long-term trend change, but this year it will be higher.

[Charles Sykes:]

Yes. Bill, one thing I want to go back on to with your first question, about home agent. I would focus on 2 things. One is that before COVID, the type of employee that really wanted to work at a home environment, it was always more around lifestyle versus someone that didn't necessarily has to work. The second thing is that clients were using the home agent for a particular type of call type, it typically had a lot of seasonality and stuff. And so through the year, when we have to hire a whole bunch of people and then the volume goes away, just the nature of that work will create higher attrition. But if we are truly in the so-called new world of work, where the main core call type is now being moved from a facility to work at home, and the worker is now -- I'm not a wide worker, but a worker looking to build a career, then I think you're going to see a more stable type of environment to where the margins that we had today are sustainable. And so it's going to change what that work environment looks like quite a bit for the better, actually. So anyway...

[William Warmington:]

Okay. And so for the third question, the G&A leverage this quarter was impressive. I mean it looked like you basically grew revenue 8% with a flat G&A. So we don't see that, that often. So I wanted to ask about maybe a little color on that and how much of that you think is really sustainable going forward.

[John Chapman:]

Yes. I mean I think if you look at it year-over-year, as you say, it's relatively flat. We don't see much change in G&A this year compared to the first two quarter's levels. What I would say, Bill, is if we look, there's clearly a benefit from not - I mean no business is traveling. So there's a lot of what you just call discretions, in some ways, travel, seminars, those kind of - even utilities in our buildings that are - they've got less people in them, we're saving cost. However, what I would say is overall, that's not really - yes, I mean it might look great in terms of the G&A, but we probably got an equal and opposite cost that's sitting inside gross margin. So if we look at our margins in the quarter, it looks like, yes, you may be saved on G&A, but above the line, we're obviously having to pay to get agents connectivity. We're obviously having to pay, especially in offshore, to get agents to work. We've had to pay for a significant amount of money to keep agents in hotels near sites to allow them to be productive. So although you're looking at it and saying, your G&A looks lite, I would tell you that there's an equal and opposite, in fact, more than that in the GP line. So yes, once we're out of this, there will be some element of that G&A comes back. However, once we understand, as Chuck spoken about, clients' expectations in terms of how much of work at home is going to stick. We will then be able to also look to reduce G&A permanently in terms of adjusting our footprint. And that's where, I think, as Chuck said, if we can do that, and we can get a significant proportion staying work at home, it will allow us to grow in a more unrestricted way. But if you think about always the drag on our margins in the last couple of years, it has been having G&A sites that were sitting less than 70% full. Obviously, the more work at home that we can get, the less facility costs we'll have as a company and the less the potential impact of lower utilization will have in our operating margins. And again, that goes back to Chuck's point of if you think of the 8% to 10%, maybe it doesn't move the 10% higher, but it maybe - it moves the 8% towards 9% so that we've got less variability in our operating results.

[William Warmington:]

Got it, all right, well thank you very much for the insight guys.

[John Chapman:]

Thanks Bill.

[Charles Sykes:]

Thanks.

[Operator:]

Thank you. [Operator Instructions] The next question comes from Vincent Colicchio with Barrington Research.

[Vincent Colicchio:]

Yes, Chuck or John, with communications ticking up in the mix, are we nearing a bottom here?

[John Chapman:]

Yes, Vince. Yes, we've always said - I mean I think we'd hope that it's going to be Q2, it was getting much closer. But again, our once largest client kind of still contracted a little bit more than we thought. We definitely see Q4 growth. Whether we see it in Q3, we're not sure, but I suspect you'll see a turnaround definitely then. Because again, if you look at it, excluding our largest client, we had growth in that vertical, excluding that.

[Vincent Colicchio:]

And the financial services vertical, what is driving the strength there? Did I hear credit card companies? I'm not sure on that.

[John Chapman:]

Yes. I mean, I think - I mean, if you've - our financial services vertical is relatively varied. I mean we've got major money center banks. We've got regional banks, we've got credit card, we've got soft collections, we've got fintech. I would say, across the board, we've seen strength in all of those pieces. So we're really pleased, both in - yes, we've got some big clients in there, which is understandable. But in terms of the spread across the different parts of that vertical, we feel pretty good about. Yes. So financial services, you're right, it's been a nice growth for us in the last 12 months.

[Vincent Colicchio:]

And part of your - is part of your share gain coming from benefiting from competitors in financial distress? And also related to that, are you seeing any opportunities to invest in financially distressed situations?

[John Chapman:]

No. I don't think we think it's coming from financially distressed competitors. Again, as I think we've said is, we're really not sure -- we can only tell you how well we are doing in terms of our supply lines, in terms of our ability to get our agents productive around the world. It's hard for us to understand whether us getting more volume than our clients expected and asking us to do more is about potentially them having a volume increase, them having supply chain issues, and whether those supply chain issues are with other vendors or with internal centers. It's really hard for us to kind of understand that Vince. But I wouldn't say we're winning it because we've got competitors who are in financial trouble. In fact, what I would say is, again, I mean, if you look at our competitors, who've already have reported, whether it be TP or Concentrix, I think our industry has proven to be very robust and an essential service, indeed, for many, many of our clients and many, many consumers out there. And so we feel really pleased that in an industry that's proven to be very adaptable and flexible in terms of our performance seems to be market leading, so we're really pleased. But I don't get a sense there's a lot of competitors out there who are struggling. There will be, if you're over indexed in travel say or you're maybe in one geography, you'll be disproportionately impacted. But again, we've always said this is about having a distributed delivery channel as well as distributed clients in distributed verticals. And again, that's where I think we benefit from right now as well as having obviously, the intellectual understanding of how to manage these diverse workforces when we've moved all of our -- or 70% of our employees to work from home.

[Vincent Colicchio:]

Okay thank you, congrats on a strong quarter.

[John Chapman:]

Thanks.

[Charles Sykes:]

Thanks.

[Operator:]

Thank you. And the next question comes from Robbie Bamberger with Baird.

[Robert Bamberger:]

Yes, thanks for taking my questions. So first, just an overall question on contact center trends, have you seen an accelerated shift to more outsourcing over the past few months as in-house operations struggle in the current COVID environment?

[John Chapman:]

I wouldn't say we've seen - I wouldn't see a trend, Robbie, is again - I mean I think it's very difficult for us to know quickly exactly what's happening in terms of whether there's a longer-term move. We have benefited from clients asking us to ramp new programs. We have asked for new lines of business. We have benefited from getting more volume than clients expected to get to us. We just don't quite know yet how much of that is coming from real growth versus shift of share because of our performance, really hard for us to say. And I think time will tell as to whether this makes people - I suspect - we believe that the quality we've shown and how well we've responded and our flexibility, clients will sit back and think that maybe this is something that should be outsourcing a greater percentage of. But as yet, I don't think we've seen that come through the numbers.

[Robert Bamberger:]

Okay, great. And just a question on costs. Margins were good in Q2, but were there any sort of onetime COVID costs in Q2 that will go away? And can margins actually be higher the next couple of quarters?

[John Chapman:]

I wouldn't say, if you look at the next couple of quarters, I think I've already said, I suspect G&A will not - excluding FX because that can always move, I don't see G&A levels being materially different. But what I would say is until we get back to normal, we will continue to have COVID-related costs similar to Q2. So I'm not sure I would model anything dramatic in there. But I certainly wouldn't think the cost of us making sure we get our - keep our employees safe, get our employees safely to the workplace, make sure they've got adequate broadband to support our clients, I don't see those kind of trends changing really much in 2021. I guess it's more of the same, more than a significant change in terms of up or down.

[Robert Bamberger:]

Okay, great, thank you.

[Operator:]

Thank you. [Operator Instructions] All right, as there is nothing else at the present time, I would like to return the floor to management for any closing comments.

[Charles Sykes:]

No. Just as always, thank you for your participation, and we look forward to catching up with you next quarter. Everybody have a good day. Thanks.

[Operator:]

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.