Safilo Group S.p.A.

Good evening and welcome to the SAFILO Group's first half 2020 results. This call may contain forward-looking statements relating to future events and operating economic and financial results for SAFILO Group. Such forecasts due to their nature imply a component of risk and uncertainty due to the fact that they depend on the occurrence of certain future events and developments. The actual results may therefore vary even significantly to those announced in relation to a multitude of factors. Today's participants are Angelo Trocchia, Chief Executive Officer, Gerd Gwesler, Chief Financial Officer, Barbara Ferrante, Director of Investor Relations. I will now pass the call over to Mr. Angelo Trocchia, Chief Executive Officer. Mr. Trocchia, you may begin.

Thanks very much and good evening and thanks to all of you for attending today's conference call on the Safilo H1 2020 results. focus also on the second quarter trading update. Three months ago, we met to discuss the first quarter trading update and how a positive start to the year was interrupted by the spread of COVID-19, first in China and then since March in Europe, in the US and in the rest of the world. From the outset, our actions have been really focused, first of all, on the health and safety of all our employees, for whom we immediately and in a rigorous way implemented the safety and the prevention regulations provided by government protocols. Equally important for us was to focus on maintaining business continuity, ensuring production and service level which were clearly fine-tuned according to the different market scenarios, while in a very quickly way implementing smart working solution for office staff as we are still currently doing. The group has also reconverted some of its production line for the manufacturing of protective masks and visors to support the fight against COVID-19 and the development of some new projects. Cash protection has been a top priority for everyone in Buffalo as much as the work to be done to accelerate on the key drivers of our group business plan. As we had anticipated in our communication in May, in the second quarter, business drivers were extraordinary, given the massive shutdown of commercial activities across the world in April, and what was indeed a very gradual and patchy reopening of stores in May, as lockdowns were eased in many countries, mainly in Europe. In the months of April and May, this unprecedented business content result in a net sales drop of approximately 75% compared to the same two months last year and in a sharp deleveraging of cost and a negative economic performance. This clearly occurred, notwithstanding the cost savings plan launched at the end of last year and the contingency measures initiated in March following the COVID emergency. In June, store traffic and congestion rates started to improve. with our net sales in the month doubling compared to May and slowing down the pace of the decline compared to June 19 to around 35% on an organic base, excluding the acquisition. In our case, this initial business recovery was clearly led by some European markets, where stores were mostly up and running, with some clear business drivers, which we will discuss later. While the recovery in China, which we had started to experience in April, has been even farther, making China our best performing market in the quarter and in the semester. On the other hand, we have not yet experienced a sales rebound in North America, where the reopening came a bit later than Europe, and we're also temporarily impacted by social disruptions. On the other side, the growth of the U.S. market is materialized for us in July. Key emerging markets, in particular Latin America, continue instead to suffer behind the ongoing spread of the virus. In such a challenging business context, we have not stood still. Quite the opposite. As in this second quarter, we have moved forward with our medium-term group business plan, laying down additional significant milestones. On top of everything, effective 1st June, we closed the acquisition of 70% of Blenders. And this is a milestone after the acquisition of Pre-Variable for us. Blenders is now our digital inactive hardware brand, which goes to enrich our proprietary brand portfolio with its strong e-commerce business model. This took place in a crucial moment for our group development and for the evolution that our industry is going through. Blenders offers a compelling price-to-value eyewear product which appeals to a broad range of consumers with a focus on millennials and Generation Z. Blender is for us a business accelerator. I would say a crucial business accelerator, both in terms of providing new state-of-the-art D2C capabilities and boosting our e-commerce business. The global pandemic has, without any doubt, elevated the importance of digital. As the search of the e-commerce business has been demonstrating, continuing to grow even today at Story Open, and we are working to be frontrunner in this new business opportunity. In this first six months of the year, our organic online sales, so without taking into account the acquisition, have grown by around 31% at constant exchange rate. after gaining further acceleration in the second quarter at plus 38%, driven by both our US e-commerce business and the group sales via its internet pool player customers. And at the end of June, if we also include blenders and just the e-commerce bit of Privé Réveau, our total online sales doubled compared to last year, representing 11% of the group's net sales from around 4% in 2019. So, a meaningful progress on our digital transformation strategy while we also kept working on the reshuffle of our licensed brand portfolio. June was again the month in which we announced the signing of a new agreement for the design, manufacturing, distribution of Ports branded sunglasses and optical frames in mainland China. Ports was founded in Toronto in 1961 and was the third luxury fashion label to enter the Chinese market in the early 90s. The brand is a new business opportunity in our brand portfolio as we also look for locally relevant brands in strategically relevant markets. Isabel Marant that we signed in February is such a brand for France and now Porte is meant to play a relevant role for us in the fashion luxury segment in China. As we had already anticipated after first quarter in which we reported net sales down by 11.5%, with a profit of 5.8 million at adjusted EBITDA level, the second quarter was much heavier, top and bottom line, due to the well-known disruption of the commercial activities I was talking before. Total net sales in Q2 dropped by 53.7% at Constant Forex, taking the first semester decline to 32.7%. This severe top line shortfall resulted in an adjusted EBITDA loss of 34.1 million euros in the quarter and of 28.3 million euro in the semester. While in the course of this month we took all the necessary actions to aggressively manage our industrial and operating expenses, identifying all possible efficiencies across the organization, we also worked tightly and very to protect our liquidity to contain the group net debt. which at the end of June stood at 188.5 million euro, but importantly substantially in line with the end of December last year, excluding obviously the impact of the acquisition. I stop here and I hand over to Gerd for additional details and comments on economics and financial results. Gerd?

Thank you, Angelo, and good evening to all of you on the call. Let's start from our P&L and more specifically from a more thorough overview of our sales. As already said, second quarter net sales declined 53.7% to 114.5 million euros, dragging down the first semester by 32.7% to 335.6 million euros. The contribution to these numbers from the acquisition of Privé de Vaux effective February 10th and Blender's effective June 1st was a total of 15.7 million euros in the quarter and 21.2 million in the semester. Our organic performance was thus equal to minus 60% and minus 37% in the respective periods. Staving our total net sales, In adding some color to the overall performance of our brand portfolio, I'd highlight that after the double-digit growths recorded in January and February by Carrera, Polaroid, and Smith, Safido's own core brand sales declined around 53% in the second quarter and 27% in the first half. The outperformance compared to the rest of the organic portfolio was led by the boost provided by Smith's e-commerce business, while Polaroid and Carrera each substantially in line with the average decline, were among the drivers of the growth recorded in June in some European markets. Looking at our regions and markets, our biggest one, Europe, representing 49% of our total business in the six months to June. Stripping out the caring business, our European wholesale revenue declined 55.9% in the quarter and 34% in the first semester. Leaving aside April and May when the business was indistinctly down and focusing on the initial recovery recorded in June, by the beginning of the month, the majority of the European markets had reopened with traffic and in particular conversion rates starting to improve. June on June, sales in Europe to the independent opticians channel turned slightly positive, clearly driven by the business rebound we recorded in Italy, France, and to a lesser extent, Spain. which were the first countries impacted by the outbreak of COVID-19 in Europe and the first to suffer extensive lockdown measures. In all these markets, what we recorded was, on one side, consumers favoring the purchase of brands in the contemporary and mass-cool segment, and on the other, small and medium-sized towns outperforming historical cities, outlets, and shopping malls more affected by the lack of foreign tourists. Among the northern European countries, Germany recorded in June the strongest improvement, driven among other things by the double-digit growth of the online business. Online was a very positive exception also in the UK, where the commercial activities remained pretty much locked until mid-June, with a very slow reopening phase afterwards. Moving to North America, total net sales represented 38 percent of the group's net sales. recording a decline of 46.1% in the second quarter and of 26% with constant forex in the semester. Looking at the organic wholesale business, this was down 65% in the quarter and 38% in the semester. As noted by Angelo, the month of June was not yet the period of growth for our wholesale activities as store reopenings came somewhat later and with more additional disruptions compared to the business context in Europe. anticipating a later topic while the retail activities of our customers in North America experienced a sales rebound in June at the wholesale level the way it is longer and therefore occurring for us in the month of July. What was clearly on the positive side during the entire quarter, including June, was Smith's e-commerce business up around 40% in the period, allowing for a more moderate total brand decline of approximately 9%, at constant exchange rates. In June, the reopening of the brick-and-mortar sports customers contributed to Smith's double-digit sales growth compared to the same month of last year. To give you a sense of how our new acquired businesses of Privé Réveaux and Blenders performed in the second quarter compared to their respective businesses last year, both more than doubled their sales compared to Q2 2019. As a reminder, Blenders is basically all digital commerce, but Privé de Vaux is roughly 20% digital, the rest wholesale, including TV commerce. To note that Privé de Vaux made its planned entry into Europe, with Grand Vision being a key European retail partner for this affordable, celebrity-backed eyewear industry disruptor, as Grand Vision has recently called Privé de Vaux. The second quarter remained extremely difficult for the majority of our emerging markets, with sales in Asia Pacific declining 65.5% at constant exchange rates compared to the same period of last year, and the rest of the world down 74.3%. In the quarter, our sales performance in Asia was heavily impacted by the complete lack of business in the travel retail channel, which represents around 40% of the regional business, while business conditions remain tough in the majority of the markets, certainly in Hong Kong, Korea, Japan, and the South Asian countries. China was actually our best performer worldwide, with the month of June gaining further speed compared to April and May, up high single digits compared to the same month last year, while the second quarter turning slightly positive. To note also Australia, whose business was up double digit in the month of June. finally the rest of the world was heavily affected by the persistent of important outbreaks of the virus in key markets such as brazil and mexico latin america was down roughly 80 in the second quarter and the most recent news is unfortunately still not very supportive same arguments for india currently the fourth country globally for number of cases and where retail business is running at about 20 to 40% of the normal level, depending on the stores and location. Trading conditions in the Middle East markets remain patchy and volatile, with initial improvements hampered by the persistency also of new cases. Moving to our economic performance, as already highlighted, the massive reduction in sales over proportionally weighed on our industrial and operating cost structure. notwithstanding the extensive saving actions we continued implementing in line with the group business plan and the contingency measures we initiated in March, including the extensive use of applicable personal temporary layoff programs in Italy and across the world. These two areas of interventions totaled a relief of 28 million euros in the semester, of which 9 million with structural cost savings and 19 million due to COVID-related measures. That said, in the second quarter, our gross profit declined 71.2% to 39.2 million euros compared to 135.9 million last year, while the gross margin decreased by 20.5 percentage points from 54.7% of sales to 34.2% this year. Beyond the strong impact of volume decline, the industrial results was also impacted by around 7 million euros deriving from higher accruals for obsolescence, product returns, order cancellations, and some fixed asset write-offs. In the first semester, gross profit declined 44% to 148.6 million euros compared to 266.2 million recorded in the first half of 2019. with the gross margin decreasing by 9.4 percentage points to 44.3% of sales versus 53.7 last year. Excluding depreciation and amortization, gross profit declined 16.5 percentage points in the quarter and 8 percentage points in the semester. Below gross profit in the second quarter are selling, general, and administrative expenses, excluding DNA, decreased by 33.7% compared to the same period last year, with their incidence in sales drastically increasing from 48.9% to 70.4%. More specifically, selling expenses decreased by 40.4% compared to the second quarter last year, on the one hand benefiting from the strong adjustment made by the group to all discretionary marketing and advertising plans and activities. On the other, suffering from the more fixed burden represented by the accruals for the guaranteed minima to license source for royalties and marketing contributions. General administrative expenses decreased by only 7.5% over the previous year period as they included the impact of higher prudential bad debt provisions for an amount equal to around 6 million euros. Finally, in the second quarter, our adjusted EBDA equaled a loss of 34.1 million euros compared to a profit of 21.2 million euros last year, representing an adjusted EBITDA margin of 29.8% compared to the 8.5% in the second quarter last year. The adjusted EBITDA loss equaled 28.3 million euros in the first semester compared to the profit of 41.2 million recorded last year, representing an adjusted EBITDA margin of minus 8.4% on sales and a decline of 16.7 percentage points compared to the 8.3% last year. In the semester, DNA on a reported basis increased as a result of a non-recurring higher depreciation we incurred in the second quarter for write-offs of some industrial assets following the closure of the Martinaco plant, plus higher recurring amortization in GNA in relation to the acquired assets of blenders and prevailable. On an adjusted basis, excluding the non-recurring higher industrial depreciation, DNA decreased slightly by 3.4% compared to the first semester of 2019 as the just mentioned higher operating amortization was counterbalanced by last year's write down of fixed assets and more generally by the lower level of CapEx investments we are making. DNA incidence on sales was in any case up 2.5 percentage points. In the first six months of the year, our adjusted EBIT equaled a loss of 55.2 million euros compared to the 13.3 million recorded in the first half of 2019. The adjusted operating margin declined 19.2 percentage points from 2.7% to minus 16.5% of sales. Below the operating result in the first semester, net financial charges increased to 11.6 million euros compared to 2.9 million in the first half of 2019, mainly driven by negative exchange rate differences reflecting the strong appreciation of the euro against the Brazilian real and other emerging market currencies impacting related working capital items and to a lesser degree due to the higher average gross debt. The higher incidence on sales of net financial charges were partially counterbalanced by the recognition of deferred tax assets in the period. Ultimately, we closed the first semester with an adjusted net result equaling a loss of 63.7 million euros compared to the adjusted net profit of 8.5 million recorded in the first half of 2019. The adjusted net margin declined from 1.7% to negative 19% of sales. Let's now move to our cash management and how our group net debt moves in the period. In the first half of 2020, we implemented a strict cash protection approach, which allowed us to close the period with a slightly positive free cash flow generation before the investment we have for the acquisitions. The changes in working capital led to a positive cash flow of 56.3 million euros, which more than counterbalanced the negative economic result of the period, equal to cash outflow of 39.3 million euros. During the second quarter, our operating cash requirements were driven by the measures we put in place to maximize cash inflows and minimize cash outflows with the result of a temporary positive flow from working capital. On one side, our trade receivables decreased as a result of the continued, although subdued, cash collections from our customers and the very weak revenues recorded in the period. On the other side, inventory levels were tightly under control, including reducing purchase commitments and consolidating seasonal collections on fewer SKUs, and supplier payment terms were extended either based on specific negotiations or were applicable under government relief schemes. Cash flow for organic investment activities declined to 9.3 million euros in the first six months, mainly related to maintenance capex and the rollout of IT systems to support the group's digital transformation strategy. After accounting for the cash payments for the principal portion of the lease liabilities under IFRS 16, equaling the first half to 5.3 million euros. Our free cash flow before acquisitions equaled a small positive amount of 2.5 million euros, which we consider a great achievement given the very negative business dynamics of the period. Net cash paid to acquire Previsable and Blenders equaled 11.7 million euros, taking our total net free cash flow to an absorption of 109.2 million euros. At the end of June, the group's net debt post IFRS 16 stood at 188.5 million euros, a position substantially in line with the one we recorded at the end of December 2019, excluding the M&A and excluding also IFRS 16. Group net debt stood in fact at 27 million euros versus 31.4 million in March and 27.8 at the end of December last year. In order to maximize cash management flexibility and responsiveness, as previously commented, in March we had already fully drawn our term and revolving credit facility equal to 150 million euros, of which 5 million were repaid in June as part of the term loans amortization schedule. As a result, at the end of June we had a cash position of 110.9 million euros compared to 99.6 million at the end of March. and 64.2 million at the end of December last year. Given the high level of uncertainty still surrounding the future recovery of consumption in the different economies, and in order to support the funding of current working capital and investment needs for activities located in Italy, we are today in the final stages of negotiations with our key relationship banks for an additional term loan under the framework of the Italian decreto liquidita. The new financing would also include a new set of covenants which would come together with the cancellation of the covenant test in the current debt at the 30th of June, 2020. Angelo, back to you for your final remarks.

Thanks, Gerd. Thanks very much. I would just like to conclude our presentation by giving you an update on how the business has evolved after the closure of the first semester. Today we are closing the month of July, which on a preliminary basis points to a business rebound, with total net sales expected to turn positive compared to the same month of last year. Business performance in North America became a clear driver of the monthly sales uplift, followed by positive acceleration in both Europe and Asia. Looking at the third quarter, we ought to remain very vigilant about the reintroduction of localized lockdown and the different phases of the recovery across countries. The reason for which we expect our total net sales to decline moderately in the third quarter compared to the same period last year. As the evolution of the current COVID-19 pandemic remains really unpredictable, with the potential impact and effects as of today not determined, we are still unable to provide a new outlook for the full year 2020. We remain fully committed to continue to promptly update you on all our stakeholders on the development that the health energy will have on the group's economic and financial results. This concludes our remark, and we are now ready to open the line and take your questions. Thanks for the time being.

Thank you. Ladies and gentlemen, if you would like to ask a question, please press star and one on your telephone keypad and wait for your name to be announced. If you'd like to cancel your request, you can press the hash key. So once again, if you would like to ask a question, please press star and one and then it's the hash key to cancel. Your first question today is from the line of Cedric Rossi from Brian Garnier. Please go ahead.

Yes, good evening, Angelo, Gert, and Barbara. Actually, I've got three questions. The first one is about the monthly trend. So you highlighted the minus 75% in April and May, and it seems that you experienced some more abrupt recoveries on your peers with the minus 35% you were experiencing in June. So how do you explain these more sudden recoveries on your peers? Because you are more exposed to... to the independent optician channels that recovered faster than chains. And by the way, could you just remind us your sales split between independent opticians and chains in Europe and the U.S.? That's my first question. The second one is, so I understand your cautiousness on Q3. Your main peer said this morning that they did not feel any negative impact from the recent lockdowns, for instance, in Australia or in some U.S. states. So is it also the case for you? Or you are just extremely cautious because of the volatility? And my third question is regarding the obsolescence cost. Do you expect any additional obsolescence cost in H2? So I understand that probably the top line trends should be a bit better. So I assume that probably you could have a relief on that.

Thank you. Okay, so I will answer the first two. I think Gerard is going to comment on the last one. In terms, I think that you have summarized well. I think that we saw the big dip in April and May. As I said, then in June we had minus 30, minus 35. So all we saw is there and there. We see a rebound in July. I think for two reasons. First, a strong Europe rebound, and then even a stronger rebound in U.S. So I think U.S. especially, there is really a positive, we see a very, very positive trend in July. Obviously, we are structurally more dependent to opticians, so roughly 60% of our net revenue is generated in the opticians, and this is why we have this over effect in July. With reference to Q3, look, I think here, I mean, as I said, U.S., independently from what is happening on the virus, we see positive. But, for example, we were seeing positive in Europe, you know, now during these days, I mean, some announcement in Spain, some more cases also which are going up in Italy. So, honestly, I think the level of uncertainty is so high with the reality changing every day which I think this is why we are taking this kind of consideration into account when we talk about the Q3. As I said, we will keep updating as long as we see that things will get better. But I prefer in this phase to be a little bit more prudent because it's very difficult to really understand if something is going to happen again in Europe, then the impact may be big. So I think that we stick to our view on the Q3, hoping that the situation around the virus will get better. I leave to Ger to comment on the obsolescence.

So on the obsolescence, let me say that in principle we have been able to manage very tightly the inventory, which is why inventory has been a positive contributor also to our free cash flow. We already saw that clearly in Q1 for the drivers we explained at the time, but even in the second quarter we have been able to sustain the level of inventory despite the abrupt slowdown in sales. What we have not been able to do in the second quarter is to benefit from strong closeout sales, neither from any scrapping activities because scrapping clearly physical activity during the lockdown is something that we haven't done. Closeout sales have been pretty close in the period along with the market. We have accrued in the first semester, so the obsolescence expense in the P&L was approximately 4 million euros in the semester, higher than last year, and we had approximately 1 million higher than last year in the second quarter. I believe that we have been prudent in our obsolescence provision, so there is no, there has not been any, let me say, explosion of obsolescence costs compared to our regular accruals but we have been we have been prudent and then depending on how the sales will develop in the second half of the year if they develop well then I think there could be there could be a positive impact otherwise I do think that we have a sufficient level of provision on the books very clear thank you

Thank you. The next question is from the line of Marco Baccalio from Kepler. Please go ahead.

Yes, good afternoon. I have a couple of clarifications to ask. First is what is the impact of acquisitions on your July sales? I think that within the rebound of revenues from your awarding, the acquisitions are included, while last year they were not there. Second question is, you are experiencing, obviously, a decline in receivables, but flat payables based on what you said about the extended payment terms. Can you give us an idea of what is the benefit and whether this is, I think, a temporary one, but how much was that impacting your net financial position? And the third one is, if you can give us an idea of how much is such a state guarantee loan that you are negotiating in terms of total amount. Maybe just a rough number.

Thank you. Thanks very much. I take the third. July month is very strong without the acquisition. If we add the acquisition, it's even stronger, but we see both growth inorganic and on the acquisition. So overall, it's positive independently from the very positive effect that we got from the acquisition.

On the second question, the observation is correct. Of course, we have on the one side a decrease in accounts receivable because we have less sales. But on the other hand, we have been very intent on collecting cash. there is still quite a significant amount of overdue from customers to us because we have seen, let me say, relatively few actual defaults of customers or actual bankruptcies of customers, but we have seen many instances of customers requesting to delay payments or requiring to delay payments. While on the other side, clearly the accounts payable balance is slightly higher than at the end of the year, even if we have reduced the expenses, which reflects the trend of having postponed payments, either where it's possible under the law or on the other side where it has been possible thanks to the relationship with the suppliers. I would say that the net effect between all of the working capital is worth somewhere in the range of 30 million euros. That is, let me say, a temporary benefit. On the SACE loan, let me disappoint you on the exact amount. We are, I think, very far along with the process. We have basically a term sheet which is agreed. We have the respective credit approval steps in the coming weeks. As this process has, however, not been completed yet, I will prefer to leave the actual size and any other detailed information to the closing of the transaction, which we will promptly publish with a relevant press release. But in any case, we are aiming for a significant amount, which would effectively bridge the company, even if we would envision some potentially more negative scenarios on the macro environment. Thank you.

Thank you. Once again, ladies and gentlemen, if you would like to ask a question, please press star and one on your keypad. And to cancel your request, you can press the hash key. That's star and one for questions. The next question is from the line of Domenico Ghilotti from Equita. Please go ahead.

Good afternoon. Just one question on the second half profitability outlook. I'm trying to understand. So you are commenting on moderate decline in sales in Q3. And let us assume that there is no additional restriction. So this kind of scenario is stabilizing growth. Should we expect to see profitability at least of last year level, considering the saving that you have put in place?

Let me say that we clearly expect in Q3 an improvement versus the Q2 and the H1 performance, which should be driven by more supportive net sales. Clearly, as we have seen in the second quarter, the EBDA in the third quarter will depend very much on the performance of the sales, despite all the cost interventions that we have done and that we are continuing to do also in the quarter. As Angela was commenting, July is a month that we view positively. For us, the most crucial month in the third quarter is, however, September, because it's the first month in which we start shipping the fall winter collection, so it's seasonally always an important month of the year. I would say, considering all the news flow of recent September, it feels almost like a long-term prediction because there's still a lot of uncertainty around how exactly the market will go. I would say that if the sales in the quarter should be supportive, then a return to a positive EBDA can also be possible for the quarter.

And on a year-on-year comparison, should we expect that some of the actions that have been executed could also expand the margin compared to last year, or you have other moving parts that are some way diluting this potential scenario?

Well, I think, I mean, our cost savings program, regardless now of the temporary relief measures, will continue. So out of the $28 million of cost savings that we posted, let's say that $9 million are the structural ones that are linked to our group business plan, and those are going to continue also throughout the third quarter. The remaining $19 million, they are temporary. They are linked to the various social amortizers. They will continue but possibly not at the same intensity of Q2 because the activity system of the company is clearly much higher now considering that the markets have vastly reopened. So I think if we have a strong level of sales in the quarter, we should also be able to have a decent level of profitability bearing in mind that Q3 is seasonally usually not one of the strongest quarters of the year. So I think it's difficult to say considering the usually low EBITDA base in the third quarter.

And the last question, is there any discussion, negotiation ongoing to review or to revise the minimum guarantees and the minimum marketing commitments given the current situation for 2020? I mean, not structurally.

Yes.

I mean, yeah, I think there is, with any of our licenses, there are different tables, and yes, there are discussions along the lines that you were mentioning. Most of the discussions are on the way, yes, but it's an open point of discussion with quite some of our, at least with the main of our license portfolio.

Have you booked any meeting in the first semester or are you waiting for the closing of the discussion?

In general, we always accrue for the minimum guaranteed amounts. There have been some brands in which we have been already in the second quarter been able to renegotiate some of the terms, and those have been reflected in the second quarter. And then we expect a few others where the fashion houses were holding out to see the real performance of the first semester. You know, we have some of those negotiations concluding, I would say, in these weeks, and I would expect that we can then reflect some of those benefits from the third quarter going forward.

Okay. Thank you. Thanks.

Thank you. Once again, ladies and gentlemen, if you do have questions today, please press star and 1 on your keypad. And to cancel your request, hit the hash key. That's star and 1 if you'd like to ask a question. There are no further questions at this time. Please continue.

Okay. Okay. Thanks very much and thanks for the participants. Have a nice evening. Thanks very much. Bye-bye. Bye. Bye-bye.