Safilo Group S.p.A.

Good evening and welcome to the Safilo Group third quarter and nine months 2020 trading update. 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 Gressler, Chief Financial Officer, Barbara Ferrante, Director of Investor Relations. At this time, I would like to turn the conference over to Mr. Angelo Trocchia. Please go ahead, sir.

And thank you for attending today's conference call on Safilo's first nine months 2020 trading update, focused on the key facts and figures of the third quarter. We entered the second half of this complex year, continuing to prioritize those key levers that make a business sustainable and successful in the present and in the longer term. This third quarter was thus for us again focused on execution of the key strategic topics, starting from the continued greatest attention and care to the health of all our people worldwide, continuing to support our communities and the many workers involved in the COVID-19 emergency. At the same time, we maintain a strong grip on our cash, providing the company with additional resources and we progressed on the key strategies of our group business plan, including the new collaboration with the Ocean Cleanup to give a tangible contribution to the protection of our planet. The way in which we decided to organize the work of our people in this month played a significant part on everyone's morale and productivity. In the context of the implementation of the highest health and safety standards at our headquarters, subsidiaries, and production plans, we decided to continue making extensive use of smart working, minimizing as much as possible the need for people to go to the office, while providing support for the relocation of the activities. In the quarter, we then had other important objectives to achieve, and I'm very pleased with the positive outcome. On one side, we secured additional liquidity for the group. It was still a pending topic when we talked at the end of July, and by mid-September, we were in fact able to finalize a new-term loan facility of €108 million guaranteed by Sacha to support our business in a period characterized by a high level of uncertainty and volatility. On the other side, in line with our industrial plan of restructure to optimize the production footprint, realigning it to our current needs, we sold the Italian plant in Martignanco to a local entrepreneur, which we consider an important step, not just for us to recover a sustainable economic profile, but also for the workers and the local communities. In the quarter, we then continued sizing the opportunities provided by the current market environment to accelerate our digital transformation strategy, gaining additional speed and relevance in the direct-to-consumer channel thanks to our recent acquisition, Blender's Highway for its advanced e-commerce platform and Prevariable, leveraging on its social marketing skills to expand its reach offline and online. We are also actively sharing and reapplying best practices in e-commerce, digital marketing, product and wholesale go-to-market between the new two brands and Smith. Staying on our digital transformation strategy, in August we launched also our new B2B e-commerce platform in Europe. while just days ago we went live with the new CRM customer relationship management system. Two state-of-the-art technologies which go in the direction of reshaping and enhancing the relationship, the engagement and the way we do business with our main auditions. I will come back on this project at the end of the presentation in order to add a little bit more color and flavor on what is going on in this area. Let me now move to the key dynamics which draw the performance of our third quarter, which was indeed a period of significant recovery, both top-line and bottom-line. The quarter benefited from the full contribution derived from the recent acquisitions of Privet Evo and Blenders, two brands which are currently performing strongly on the back of their surging D2C business, and the gradual offline expansion of Privet Evo. as I will detail a little bit better later on. But the quarter also recorded the significant recovery of our organic business. Back at the end of July, we had already commented on the sales rebound recorded in July and how this was a consequence of an expected catch-up effect after the strong H1 pandemic impact. What we experienced during the rest of the summer was instead the prolonged solidity of a few key markets, in premise of the U.S. market, where the significant work we did in the last two years to strengthen our organization and the sales force, coupled with a supportive market environment, made the independent Trios channel the key driver of our organic business recovery in the third quarter. But we should also and we need also to outline the outstanding growth we achieved in mainland China, which almost doubled its business in the period, while all our core markets and channels recorded an improvement in the third quarter compared to the first half of the year, with a more evident progress delivered by some of the main European countries and markets, such Italy, Germany and France. Another meaningful point to make for the quarter is that our organic wholesale business was driven by the mid-single-digit growth of the prescription frames business, clearly outperforming independent trios channels. In the third quarter of this year, our online sales most quintupled compared to the same quarter last year. And this was thanks to both the ongoing progress on Smith by the way, we launched the new D2C platform, and the sales to our internet pool payer, and clearly the significant contribution of PreVariable and, above all, on this front, Blender's D2C sales. The positive sales development came together with the ongoing implementation of the group cost saving action to continue gaining a structurally leaner cost structure, plus the utilization of contingency measures in the context of COVID-19. From the key facts to the key figures of the quarter, group net sales were €219.1 million in Q3, up 3% reported and 6% at constant exchange rate, with the adjusted EBITDA positive again at €14.3 million for 6.5% of sales and growing by 9.3% compared to the Q3 2019. This result reduced the gaps of the first nine months of the year with the group net sales at 554.7 million euros down 21.7 reported and 21.1 at constant exchange rate and the adjusted EBITDA reducing the loss to 13.9 million euros compared to the loss of 28.3 million euros recorded in the first half of the year. Our group debt at the end of September stood at €201.7 million post-IFRS 16, €155.8 billion pre-IFRS, a bit higher than the position at the end of June, but in line with our expectations. I stop here and I move on to some additional details and comments on our economic and financial results.

Thank you, Angelo, and good evening to all of you connected in call and webcast. Let's take a deeper look into the quarterly dynamics of our top line by geography. As said, Q3 net sales were up 6% at constant exchange rates, reflecting the full quarter contribution of the acquisitions, which added a total of 26.5 million euros to our North America business. Excluding M&A, our organic business achieved a significant recovery compared to the previous quarters of the year, down 6.7% at constant exchange rates or 5.5% at the wholesale level, excluding sales to Kevin Eyewear. We come back shortly to our acquisitions, and I focus now first on the organic performance. This was indeed led by the rebound of North America, up organically 12.1%, mainly thanks to the solid sales recovery we recorded in the U.S. independent 3.0 stores, which are our most important distribution channel in the region. The recovery there was broad-based across our brand portfolio, although particularly evident are some of our core licensed brands, such as Kate Spade, Tommy Hilfiger, and Jimmy Choo, which enjoyed solid momentum driven by the growth of the prescription frames business. The quarter in the U.S. was a strong confirmation for our Smith products, The brand recorded double-digit growth in the sports stores channeled and more than doubled its turnover in its online channel. All-in, group total sales in North America, including blenders and pre-variable, stood at 113.1 million euros, up 41.5% at current exchange rates and 45.9% at constant exchange rates compared to the same quarter of 2019. In Europe, our net sales equaled 79.3 million euros in Q3, down 16.4% at constant exchange rates, 15.2% down the wholesale business, excluding the sales to Kering Eyewear. This was a clear improvement compared to the minus 56% and minus 34% recorded by our wholesale business in the second quarter and first half of this year, respectively. In Europe, recovery trends were mixed. particularly among the different channels. What we registered broadly on the more positive side was both the performance of 3Os, so the independent stores, sustaining the recovery of those countries where this channel is more relevant, particularly Italy, Spain and France, and the ongoing strength of the internet pure players outperforming in Germany, UK and the Nordic countries. On the other hand, order taking remains subdued, although improving compared to Q2 in specialty channels such as boutiques, in the travel retail channel, and also in some of the big chains, with these latter having possibly been more equipped to enter into the summer with products already in stock, in particular in terms of sunglasses, which is the product category which suffered more in the periods. The recovery was more meaningful for us in Asia Pacific, with sales at 15.9 million euros, down 6.4% at constant exchange rates compared to the same period last year, significantly reducing the gap compared to the 65.5% of the second quarter and the minus 45.9% in H1. The continued hardship of the travel retail business, which in Q3 2019 accounted for approximately 26% of the regional sales, and in this quarter was down around 63%, was more significantly upset by the surge previously mentioned by Angelo in mainland China, which benefited both from a very supportive domestic demand and from the contributions of the new brands in our portfolio, in particular Levi's and Ports. Q3 sales in China were up 83% at constant exchange rates. To conclude on our regions, Brazil, India, and the Middle East countries making up for the vast majority of our rest of the world region. While the area more than halved the 74% drop recorded in the second quarter, it still registered a very meaningful negative 35.6% as these countries remain strongly impacted by the pandemic and the economic downturns. Zooming back into the sequential acceleration of our online business, In Q3, our online organic sales grew around 94% at constant exchange rates, from plus 38% in the second quarter, thanks to the growth of Smith's D2C business and our sales through the internet peer players, which in turn grew around 75% in the period. As commented by Angelo, our total online business is today greatly benefiting from our new acquisitions, particularly Blenders with its digitally native business model, In the third quarter, the share of the total online business grew to 16% from around 3% in the same period of 2019, while the share of the channel moved up to 13% in the first nine months of the year from around 4% in the first nine months of 2019. Moving to our economic performance for the quarter. This also represented a strong rebound, which was made possible by the positive sales developments we've just discussed, supported by the continued implementation of the structural cost savings envisaged by our group business plan and the additional contingency savings obtained in relation to the COVID-19 emergency. Two areas which contributed in about equal parts to a combined positive P&L impact of around €13 million. All this allowed us to restore in the quarter a decent level of gross profit and margin and to resume some positive operating leverage. Gross profit stood at 112.6 million euros in the quarter, up 3.3% compared to Q3 last year, with the margin of sales moving from 51.2% to 51.4%. While up slightly as reported, here we had some plus and minus aspects explaining the industrial performance of the period. which stripping out depreciation as we are reasoning at the EBDA level slightly contracted by 40 basis points compared to the same quarter last year. The key dynamic at the industrial margin level where on one side a lower burden from obsolescence products thanks to the tight control we kept in our stock levels and the positive channel mix effect thanks to the accretive growing online business. On the other side, the supply chain performance remains subdued compared to Q3 last year, given the lower production volumes in the overall macro context. Below the gross profit, the total of our SG&A expenses, excluding depreciation and amortization, were just very slightly up compared to last year, almost completely reabsorbing the new costs, mainly of selling and marketing, of two acquisitions. In fact, our organic SG&A expenses were down around 14% in the quarter, thanks to the structural savings and contingency measures, which totaled 9 million euros in the period. Overall, below the gross margin, we recovered 70 basis points, arriving at an adjusted EBDA margin of 6.5% from 6.2% in the same quarter last year. 14.3 million euros compared to 13.1 million euros. To conclude on the KPIs of the period, at the end of September, our group net debt post IFRS 16 stood at 201.7 million euros, 155.8 million pre-IFRS 16, and 44.2 million when excluding also the cash out for the two acquisitions. This was a 13.2 million euros increase compared to the position at the end of June. which was substantially in line with our expectations in terms of higher working capital requirements following the tight management which supported our liquidity needs during the second quarter.

Angelo, back to you. Thanks, Gerrit. In the third quarter, we delivered sales growth and the recovery of a satisfactory level of adjusted EBITDA. And while September results were relatively slower than the trend during the summer, Business development in October was positive, confirming positive organic growth driven in particularly by North America and strong trends in mainland China and some of the other Asian markets. Online sales remained a solid growth driver in the U.S., but also in Europe, where uncertainty rose again across most countries following the rise of the infections. Given the persistence of a market environment still burdened by the virus resurgence and fresh government restrictions on people movement in several countries, we continue to maintain a very prudent stance for the remainder of the year. And while we are not today in a position to foresee how November and the holiday season will play out, we remain committed to providing you and all our stakeholders with timely information on the development that the health emergency may have in the coming months on our economic and financial results. But let me put a couple of additional keynotes from my side. And these notes are on further development relating to our group business strategy, which took place during this month. As we discussed in December last year, our task is to develop SAFILO into a modern and successful customer-centric business model, which means that the opportunity to become the best possible partner for our many existing customers and the opportunity to attract new ones is a real priority. And as we announced last year, this includes for us a three-year investment journey into the latest B2B technologies to redesign and dramatically improve our sales and customer care operation with multiple initiatives and different execution waves for the various projects we have in the pipeline. The first execution wave was the rollout of a new generation of B2B e-commerce platform, which we designed with the opticians for the opticians, naming it for this reason UN Safilo. This is a strategic renewal to align all our European markets to the best practice, enhancing the user experience in terms of commercial productiveness and services. Within our new B2B ecosystem, we just recently went live with the new CRM, Customer Relationship Management System, used by the entire SAFILO European Customer Care Team. This is another execution way which underlines the importance for us to improve the relationship and the service offered to our customers. With you and SAFILO and with the new CRM system, we are putting the basis for a digital 360 customer approach, where customer satisfaction and loyalty are the key priorities for, at the end, increase the share of our B2B business. We launched UN South Florida in August to react faster to the complex market environment. The challenges of this month have indeed shown the importance of state-of-the-art digital tools and confirm that this platform will be key for our future. This first release focuses on the points that customers indicate as a priority in the survey we conducted with them, including a new design, simple and pleasant to serve, with a dynamic research catalog, useful image galleries to immediately find and easily buy the best product for them and their clients, the possibility of ordering spare parts and replacement fast and independently. Clear information and product availability and detailed delivery times. Clearly, the entire platform is also accessible via mobile. Feedback from our European petition is enthusiastic, and we aim to have the majority of them on board within the coming 12-18 months. Back for a moment on our new brands. blenders, and pre-variable, there are strong outperformers in the current environment. In the first nine months of 2020, up respectively 79% and 96% in their pro forma performance versus the same period of a year ago. Blender is all about data to consumer, and we are very happy how the team led by Chase Fisher continues building on its current strengths and planning for the future. Blender is today working on the expansion of its blue light optical frame collection, plus they dropped the most anticipated snow collection in history, launching the new snow goggles and accessories in mid-October. While getting ready for the launch in a few weeks, or their new snow helmets. Starting from October, Blenders is also stepping into the RAX business with its new Blenders RAX collection, single vision glasses and reader style with fashionable frames from five of their best selling collections. An RAX project has already been started this year also by Preverivo. and needless to say, this could represent a meaningful new business opportunity for both brands. Blender is then speeding up the build-up of its website capability today to take its direct-to-consumer business internationally, and we are clearly all looking forward to it. The other side, pre-level, purges an omni-channel strategy. In the first nine months of the year, the brand's D2C business grew its share of the total private business to 28% from 21% last year. On the other hand, the brand took further significant steps forward within its offline expansion strategy, even if the pandemic environment has not allowed all the plans to come to fruition yet and is allowed to continue more gradually. We have already mentioned the launch in Grand Vision stores, Germany, Benelux, Poland, UK, and Turkey. And Privet Revolve will launch in 2021 in all stores in Italy, Hungary, Czechoslovakia, Spain, Greece, and Mexico. The further meaningful achievement for Privet Revolve this year was its partnership with American Best Content and Eyeglasses, part of National Vision, one of the nation's largest optical retailers. providing quality, affordable eye care and eyewear. After a very successful pilot program at selected American's Best Location in 2019, in 2020 Preverible was listed and made available at all American's Best Location nationwide. And it was just recently awarded by the Optica retailer itself the Product of the Year. I would like to conclude our presentation by mentioning a new project which we are very proud, I'm really personally very proud, and which we have developed in conjunction with the Ocean Cleanup, the well-known Dutch non-profit environmental organization that developed advanced technology to extract plastic pollution from the oceans. We will produce, we have produced, the first eyewear product from recycled plastic an investment which is part of our commitment to people, products, and planet. More than a year ago, Bojan Slav, founder and CEO of the Ocean Cleanup, called us and explained the project he had in mind. And we felt honored to be part of this mission to give a second life to the plastic collected from the ocean. Our design team worked hard to combine our history of eyewear manufacturing with material innovations. to ensure the high-quality, stylistic content and uniqueness of this final product. The Ocean Cleanup sunglasses are made with injection plastic, derived from the Great Pacific Garbage Patch, using an innovative upcycling process, able to include types of plastic that have traditionally been more difficult to recycle, turning them into high-quality and safe materials. This wheel, a limited edition 25,000 pairs, each carrying a unique QR code that directly connects the user to background information about the product, the project, and the specific place where the marine plastic pollution was removed from. The Ocean Cleanup estimates that with the proceeds from each pair of glasses, sunglasses, an equivalent of 24 football fields worth of the of the plastic can be cleaned and when every pair from the first batch is claimed that will equate to approximate half a million football fields of cleanup in the in the great pacific garbage patch the sunglasses will be available exclusively on the ocean cleanup website and 100 of the proceeds will go to the continuation of the cleanup mission this concludes our presentation, and we are now ready to take your question. Back to you.

This is the Coruscant Conference Operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one under touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. We will pause for a moment as callers join the queue. The first question is from Cedric Rossi with Brian Garnier. Please go ahead.

Yes, good evening, everyone. Actually, I have three questions. The first one is regarding you and Cefilo Initiative. So we saw that the independent optician channel was a key growth driver for you in Q3. And so we are seeing the lockdowns coming up in Europe. So the big difference is that opticians will remain open this time compared to the spring lockdown. But probably the key challenge for them will be to drive in-store traffic. And so do you think that your initiative will be rolled out fast enough to help them to drive this traffic in stores in Q4? And what could be the other initiatives you have to help them drive this store traffic? The second question, so Gert, you talked about the exposure to travel retail in Asia. But probably the business also in Europe, especially in Spain and Italy, was also negatively impacted by lower tourist flows. So if we had to assess your entire exposure to travel retail in all regions included, what would be the percentage of sales exposed to the travel retail in all regions combined? And my third question, so it was reassuring to see that you had a lower obsolescence cost in Q3. But I was wondering, according to you, what are the inventory levels at the retailers, especially in Europe, that are now facing new lockdowns? Do you believe that the inventory levels remain healthy despite of new lockdowns? And so do you expect... also lower obsolescence costs in Q4 as well. Thank you.

Okay, I start from the first. I catch the first one. I mean, UN SAFILO is now rolled out in all Europe. So from an operational perspective, all the countries are already on the system. Related to your question on traffic, I think the good characteristic of this system is, first of all, it's very easy to use. It's a website, so the optician can access from iPad, personal computer, and mobile phone. But the good thing is that on the system, we have been putting not only the collection, but also all the marketing content and all the content that they can use for them social pushing. So to be honest, it's not only for us a system to take the order, but it's also to provide our optician with a lot of content that they can relaunch locally. So we are really working with the optician to give them any kind of instrument to try really to generate more traffic. But also because the system is so flexible, they can really also share with us performance on the best seller. So let me say, they can also direct the portfolio into the shop. So it's It's all information, it's content they can use openly, and these are, let me say, sharing information on the best seller in their shop, but also in similar area or in similar kind of shop. So these are the activities which are already operational, and we are already working with the optician. So should we expect a positive effect in Q4? I think so.

Thank you. Okay, on the second question, I think on travel retail, I mean, clearly on a global level, it has never been a very dominant channel for us. Let me say last year, more or less, travel retail represented about 4% of our global sales. So that's more or less the normal weight and quite heavily skewed to, let me say, the luxury part of our license portfolio. This year... I'm seeing travel retail weighing about 1% of the total sales, so it's clear that the channel has suffered quite a dramatic reduction in sales, and I think it will be a while until travel retail is going to come back to where it used to be. Now, travel retail for us is true that it's a global channel, it's true that it has also the business in EMEA and the business in North America. But let me say that the vast majority of the travel retail business is really in Asia and it is particularly in markets like Korea where it has basically dropped almost completely. Tourist flows is true. We have seen clearly in some of the markets that you were mentioning, especially in Iberia, we've seen a drop of tourists over the summer. We have also more generally seen, let me say, quite a decrease of sunglasses sales. What's been driving our business is optical frames, and therefore clearly sunglasses plus tourism areas plus travel retail, so that whole ecosystem, if you wish, has not yet recovered. On the inventory levels, let me say that until the end of September, we've actually been able to reduce inventory, and we have even reduced inventory in the third quarter itself. So as we were rebounding the sales, we still managed to reduce the inventory in the third quarter. What to expect for Q4 I think is not easy to predict. I think what we're seeing is that on the optical frames and on the independent optician's channel, possibly the business should continue if the hypothesis you mentioned is correct, that indeed they can stay open and people can still go to those shops. And with the opticians, we have, let me say, a faster rotation. What we were seeing with the bigger chains is that actually the business in the Q3 was quite subdued, which is why our hypothesis is that those retailers and the big sunglass chains, especially, they had the stock in Q3, they had the sell-through in Q3, so our reorders did not yet materialize, which is then something I would, under normal circumstances, have expected to happen in Q4, and would have started to see in the month of October, but now, in November and December, I think it's quite difficult to predict what will happen, but In general, I think inventory levels are quite healthy. Obsolescence levels have been good in Q3. At this point, I don't see a significant deterioration of that for the end of the year. But again, as I said, it will depend on how the next two months of sellout will go.

Okay. Thank you.

As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Domenico Ghilotti with Equita. Please go ahead.

Good evening. I am interested, first of all, in your online pro forma performance. You were mentioning the two brands on the pro forma basis in the nine months. I'm trying to understand if you are seeing that and acceleration or sustainability of these trends when the lockdown ended, and so something that is sustainable over time. And the second question is on your other own brands. So you didn't mention in the call performance of Carrera and Polaroid, if you can give us a feeling on the trend of total own brands. And last question, just a clarification. So I'm trying to understand, so the obsolescence that is below last year levels, despite the fact that you and your clients had clearly a weak performance compared to the initial prospect for 2020, how did you manage to get this lower cost?

I mean, I start with the first one. I think on our three, let me say, DTC legs, which is blenders, the DTC part of the Privé Riveau and the DTC part of Smith. I mean, obviously, the lockdown has helped the original trend, but to be honest, once the lockdown has been... installed haven't seen any decrease in the performance. So I think, to be honest, that that trend, obviously not at the rate I hope, but I can imagine with a lower rate, but honestly, I see a consistency of the trend. So I think that trend will... keep going also for next year. So I don't see that trend coming back because it's true for the three brands, Blenders, Previtable, and Smith. So I think it's more an issue to optimize the cost per acquisition and the media to be used. But the trend from a consumer perspective, I think, has been created there, was after the lockdown, and we see also today. So I'm assuming... heavily that it will stay also for the year to come and this is why we've been also investing behind the new Smith ECOM because I think it's going to be one of the growth engine together with the blenders and pre-variable leave the destination of Profoba together.

Yeah, and I think on the growth rates, I think on blenders, we haven't seen any slowdown at all in Q3, also when the markets have reopened. And we're looking at quite a strong Q4 as well. Clearly, the key months being November, where we have the important Black Friday and Cyber Monday consumption peaks. On pre-variable, I would say for the e-com business, the same is true as we're seeing on blenders. Prive Revodo, as we know, is a business that also has quite a component of, let me say, more offline or brick-and-mortar clients, and clearly there they are more subject to the performance of the overall market. But for online, at least we are seeing the trends continuing. On the Encore brands, let me say three different stories. On Smith, We actually are growing on a year-to-date basis. We are growing in Q3. Why? Because we have strong e-comm, because we have an exposure to the sports categories, and some of the sports categories like bike, for example, are doing very well, and we have a strong footprint in North America, which geographically is doing better. So Smith is growing. Carrera and Polaroid, let me say, as we were saying, the business recovery is was really mostly in prescription frames led by independent stores. So in the third quarter, Polaroid, which is mostly a sunglasses brand, and to a lesser extent, Carrera, were negatively impacted by the weak summer season for sunglasses, particularly in some of the reference markets like Italy, France, and Spain. So both Carrera and Polaroid were down in terms of sales in the quarter. On inventory, maybe let's go a little bit through the trend this year. First of all, we made a deliberate choice at the end of 2019, before COVID was even a topic, to increase our level of readiness, to anticipate our possibility to sell in the spring-summer collection right from the first days of January. So basically, We were shipping very strongly in January and February. As you may recall, there was the supply situation in China, and especially some of the big key accounts bought a lot of inventory that we had available and that many of the competitors didn't. So our initial inventory went down quite well. the beginning of the year then as covet became became the norm across the world we brought down the demand the production and the procurement quite significantly so we were able to to further decrease the level of stock in the first half year and as the as the as the sales of the q3 then rebounded we still had let me say the right levels of inventory to get through the third quarter without any service issues. In October, let me say, we had a very good month and we had a good growth versus a year ago. So here we then saw the inventory getting a little bit more tight, but I expect that in November and December also as the situation is clearly evolving that we should have we should have a sufficient stock and we should have a good landing point for the inventory at the end of the year.

Thank you.

Gentlemen, there are no more questions registered at this time.

Okay. Thanks very much. Thanks very much, everyone. Thank you. Good evening. Bye. Bye-bye. Thanks. Bye-bye.