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spk00: Good afternoon, everyone, and welcome to Price Smart Incorporated's earnings release conference call for the second quarter of fiscal year 2024, which ended on February 29, 2024. After remarks from our company's representatives, Robert Price, Interim Chief Executive Officer, and Michael McCleary, Chief Financial Officer, you will be given an opportunity to ask questions as time permits. As a reminder, this conference call is limited to one hour and is being recorded today, Wednesday, April 10th, 2024. A digital replay will be available following the conclusion of today's conference call through April 17, 2024 by dialing 1-888. 660-6264 for domestic callers or 1-646-517-3975 for international callers and by entering the replay access code 59511. For opening remarks, I'd like to turn the call over to PriceSmart's Chief Financial Officer, Michael McCleary. Please proceed, sir.
spk01: Thank you, operator. and welcome to Price Smart, Inc.' 's earnings call for the second quarter of fiscal year 2024, which ended on February 29th, 2024. We will be discussing the information that we provided in our earnings press release and our 10-Q, which were both released yesterday afternoon, April 9th, 2024. Also, in these remarks, we refer to non-GAAP financial measures. You can find a reconciliation of our non-GAAP financial measures to the most directly comparable GAAP measures in our earnings press release and our 10-Q. These documents are available on our investor relations website at investors.pricemark.com, where you can also sign up for email alerts. As a reminder, all statements made on this conference call, other than statements of historical fact, are forward-looking statements concerning the company's anticipated plans, revenues, and related matters. Forward-looking statements include, but are not limited to, statements containing the words expect, believe, plan, will, may, should, estimate, and some other expressions. All forward-looking statements are based on current expectations and assumptions as of today, April 10, 2024. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks detailed in the company's most recent annual report on Form 10-K. the quarterly report on Form 10Q filed yesterday, and other filings with the SEC, which are accessible on the SEC's website at www.sec.gov. These risks may be updated from time to time. The company undertakes no obligation to update forward-looking statements made during this call. Now I will turn the call over to Robert Price, Pricemark's Interim Chief Executive Officer.
spk03: Thank you, Michael. I want to extend my appreciation to everyone at Pricemark for contributing so much to a very successful second quarter. I especially want to acknowledge a few of our warehouse club managers whose locations were challenged operationally because of the very high sales volumes during December. I also want to thank our merchandising teams in the U.S. and in our countries for their outstanding management of inventory flow during the holidays, resulting in strong sales, low markdowns, and excellent inventory turn. Now, I will ask Michael to continue with his presentation.
spk01: Thank you, Robert. We had a strong second quarter as both total revenues and merchandise sales reached almost $1.3 billion. During the first half of our fiscal year, total revenues and net merchandise sales reached almost $2.5 billion and $2.4 billion, respectively. During the second quarter, net merchandise sales increased by 13% or 9% in constant currency, and comparable net merchandise sales increased 8.8% or 5.2% in constant currency. For the first half of the fiscal year, net merchandise sales increased by 11.9% or 8% in constant currency, and comparable net merchandise sales increased by 8.4% or 4.7% in constant currency. By segment, in Central America, where we had 30 clubs at quarter end, net merchandise sales increased 12.4% or 8.8% in constant currency, with an 8.1% increase in comparable net merchandise sales or 4.6% in constant currency. All of our markets in Central America had positive comparable net merchandise sales growth. Our Central America segment contributed approximately 500 basis points of positive impact to the growth in consolidated comparable net merchandise sales for the quarter. We opened our sixth warehouse club in Guatemala in November 2023 and our fourth warehouse club in El Salvador in February 2024. In the Caribbean, where we had 14 clubs at quarter end, net merchandise sales increased 7.2%, or 8.9% in constant currency, and comparable net merchandise sales increased 6.3%, or 8% in constant currency. All of our markets in this segment had positive comparable net merchandise sales growth. Our Caribbean region contributed approximately 180 basis points of positive impact to the growth in consolidated comparable net merchandise sales for the second quarter. In Colombia, where we had 10 clubs open at the end of our second quarter, net merchandise sales increased 34.5%, or 11% in constant currency, and comparable net merchandise sales increased 20.7%, but decreased 40 basis points in constant currency. Columbia contributed approximately 200 basis points of positive impact to the growth in consolidated comparable net merchandise sales for the quarter. In terms of merchandise categories, when comparing our second quarter sales to the same period in the prior year, our foods category grew approximately 7%, Our non-foods category increased approximately 13%. Our food services and bakery categories increased approximately 24%. And our health services, including optical, audiology, and pharmacy, increased approximately 48%. Membership accounts grew 5% versus the prior year to almost 1.9 million accounts, with a strong 12-month renewal rate of 88.3% at the end of our second quarter. Membership income for the second quarter was $18.5 million. an increase of 14.6% over the same period last year. In the first six months of fiscal year 2024, we raised the annual membership fee for two cards by $5 for all membership types in both markets. Platinum membership accounts were 9.6% of our total membership base as of the end of our second quarter, an increase from 8.2% as of the end of our prior year second quarter. Total gross margin for the second quarter of fiscal year 2024 as a percentage of net merchandise sales decreased 30 basis points to 15.7% versus 16% in the second quarter of fiscal year 2023. The 30 basis point decrease in rate was primarily due to the removal of a COVID premium from merchandise pricing and a reduction in liquidity premiums for items sold in Trinidad. Total gross margin increased $19.7 million, or approximately 11%, versus the same quarter of the prior fiscal year. Total revenue margins decreased 20 basis points to 17.1% of total revenue when compared to the same period last year, primarily due to the decrease in total gross margin as a percent of net merchandise sales. During the second quarter, our average sales ticket grew by 2.7%, and transactions grew 10% versus the same period in the prior year. For the six-month period, our average ticket grew by 2.5% and transactions grew 9.1% versus the same prior year period. The average price per item increased approximately 3.9% year-over-year, with average items per basket decreasing approximately 1.4% compared to the same period of the prior year. Total SG&A expenses decreased to 12.2% of total revenues for the second quarter of fiscal year 2024 compared to 12.6% for the second quarter of fiscal year 2023. This 40 basis point decrease is largely due to $7.7 million of separation costs associated with the chief executive officer departure recorded in the prior year period. General and administrative expenses increased 3% of total revenues for the second quarter of fiscal year 2024 compared to 2.8% for the second quarter of fiscal 2023. The 20 basis point increase is primarily due to increased compensation costs and travel along with certain non-recurring professional fees. Following our second quarter purchase of our formerly leased Via Brazil Club in Panama, we expect annualized after-tax savings over approximately $1.1 million from reduced rent and depreciation to the longer useful lives expected from this property as a result of its acquisition. However, this will initially be largely offset by approximately $1 million in related annualized after-tax financing costs. Operating income for the quarter increased 18.2% from the same period last year to $63.6 million. operating income for the first six months of fiscal year 2024 increased 11.4% from the same period last year to $121.8 million. In the second quarter of fiscal year 2024, we recorded a $7.1 million net loss in total other expense compared to a $6.2 million net loss in the same period last year. This increase is primarily due to increased foreign currency revaluation losses of $1.2 million which were primarily related to the impact of the strengthening of the Costa Rica cologne on our U.S. dollar cash balances and an increase in transaction costs for conversion of illiquid currencies of $0.4 million. These expenses were partially offset by higher interest income of $1.3 million from significantly more investments of surplus cash at higher yields. Our effective tax rate for the second quarter of fiscal 2024 came in lower than last year at 30.5% versus 34% a year ago. The decrease in the effective tax rate is primarily due to non-recurrence of the separation costs associated with the CEO departure in the prior year and the discrete impacts related to foreign currency transactions during the quarter. On a go-forward basis, we estimate an annualized effective tax rate of about 31% to 32%. Net income for the second quarter of fiscal year 2024 was $39.3 million or $1.31 per diluted share compared to $31.3 million or $1.02 per diluted share in the second quarter of fiscal 2023. Net income for the first six months of fiscal 2024 was $77.3 million or $2.54 per diluted share compared to $64.3 million or $2.07 per diluted share in the comparable prior year period. Adjusted net income for the second quarter of fiscal 2024 was $39.3 million, or an adjusted $1.31 per diluted share, compared to adjusted net income of $38.5 million, or an adjusted $1.25 per diluted share in the comparable prior year period. Adjusted EBITDA for the second quarter of fiscal 2024 was $84.1 million, compared to $79.4 million in the same period last year. Adjusted net income for the first six months of fiscal year 2024 was $77.3 million or an adjusted $2.54 per diluted share compared to adjusted net income of $73.6 million or an adjusted $2.37 per diluted share in the comparable prior year period. Adjusted EBITDA for the first six months of fiscal 2024 was $161.9 million compared to $154.6 million in the same period last year. Moving on to our strong balance sheet, we ended the quarter with cash, cash equivalents, and restricted cash totaling $182.6 million. From a cash flow perspective, net cash provided by operating activities totaled $127.7 million for the first six months of fiscal year 2024, compared to $116.7 million for the same prior year period. Shifts in working capital generated from changes in our merchandise inventory and accounts payable positions for the first six months of the fiscal year contributed $8.7 million of additional cash flow compared to the same prior year period. Net cash used in investing activities increased by $9.2 million for the first half of fiscal 2024 compared to the same prior year period, primarily as a result of an increase in purchases of short-term investments and additions to property and equipment. Net cash used in financing activities during the first six months increased by $89.3 million, primarily from the result of the shared buyback program we completed during the quarter and lower proceeds from long-term bank borrowings compared to the same period a year ago. When reviewing our cash balances, it is important to note that as of the end of our second quarter, we had $63.8 million of cash, cash equivalents, and short-term investments denominated in local currency in Trinidad and Honduras which we cannot readily convert to US dollars. On February 1st, 2024, the company's board of directors declared its annual cash dividend in the total amount of $1.16 per share, with 58 cents paid in February and 58 cents payable in August. This represents a 26% increase over last year's 92 cents per share dividend. The decision to increase the annual dividend by 26% by the board of directors reflects the board's confidence in Pricemart and the strength of its cash-generating activities. Additionally, the company has decided to distribute excess cash to stockholders in the form of a special dividend. On April 3rd, 2024, our board of directors declared a one-time $1 per share special dividend payable on April 30th, 2024 to stockholders of record on April 19th, 2024. Now onto our growth drivers. Starting with real estate, We are thrilled to have opened our Santa Ana Club in El Salvador on February 15, 2024. The Santa Ana Club is our fourth club in El Salvador and our 54th warehouse club overall. We have also purchased land and plan to open our ninth warehouse club in Costa Rica, located in Cartago, approximately 10 miles east from the nearest clubs in the greater San Jose metropolitan area. This club will be built on a six-acre property and is anticipated to open in early 2025. Once this new club is open, we will operate 55 warehouse clubs in total. Additionally, we are currently remodeling several of our high volume clubs, which are in San Pedro Sula, Honduras, Santiago, Dominican Republic, and Port of Spain, Trinidad and Tobago, as well as expanding one of our clubs in San Salvador, El Salvador. As mentioned previously, we have completed the purchase of our Via Brazil club in Panama from our previous landlord. Our Via Brazil club is the club with the highest sales volume in our Panama market. And we are very happy that through this acquisition, we can lock in long-term certainty as to our access to this key location in Panama. Finally, we continue to actively seek ways to improve our distribution infrastructure to better serve our members, lower the net landed cost of our merchandise, and enhance operating efficiencies. In this respect, we have made significant progress towards consolidating deliveries of merchandise purchased from local vendors directly to our new distribution center in Panama. We have also recently signed a lease agreement for a distribution center in Guatemala and approved plans to build a distribution center in Trinidad on lease plan. Turning now to membership value. As we've highlighted in previous calls, our private label members selection brand continues to be a significant area of focus based on the great value it brings to our members. During the first six months of fiscal year 2024, our private label sales represented 27.1% of our total net merchandise sales. That's up 120 basis points from 25.9% in the comparable period of fiscal year 2023. We also continue to focus on health services. We currently have 52 locations with optical centers and expect to have 53 open by the end of our fiscal year. Our optical program provides four free eye exams with every membership and we performed over 38,000 eye exams during the quarter. We currently have pharmacy centers in all eight of our warehouse clubs in Costa Rica and three warehouse clubs in Panama. We expect to open two more pharmacies in Panama and four in Guatemala during the fiscal year. With respect to audiology centers, we currently have 26 centers open. We expect to open two additional centers in Panama and one center in each of Jamaica and Trinidad in fiscal year 2024. Optical services are also an important component of our contributions to the communities in which our clubs are located. In partnership with Price Philanthropies Appendere Coursera Vision Program, Price Smart optometrists perform eye exams and Price Philanthropies purchases the glasses from our optical centers. We recently extended our Appendere Coursera Vision Program to Guatemala, where 40% of the children who participated in this program needed an eye exam and 90% of the children who received glasses received them for the first time. Our annual Juntos por la Educacion or Together for Education campaign is an important funding source for the Operandaria Crescera program. More than that, it is a prime example of Price Mart, its members, and the Price Mart and Price Philanthropies Foundations coming together to support education. Our most recent campaign took place in the fall of 2023 and set a new record of more than $2.2 million in donations collected from members, both in-club and through PriceMart.com. Price Philanthropies Foundation matched these donations dollar for dollar up to a maximum amount for each country, yielding an additional $850,000, bringing the grand total raised to nearly $3.1 million. Our third growth driver is to drive sales by providing omni-channel shopping options for our members. These sales are primarily generated through PriceMart.com and our mobile app and are complemented by other third-party last-mile delivery services. During the second quarter, total net merchandise sales through digital channels increased 31% versus the same period in the prior year and represented a record $63.7 million or 5.1% of total net merchandise sales. Total orders placed directly on Pricemark.com and our app increased 26.6% and the average transaction value increased 1.8% versus the prior year period. As of February 29th, 2024, Approximately 64% of our members had created an online profile with Pricemont.com or our app, and 16.5% of our total membership base has made a purchase on Pricemont.com or our app. We believe that there are significant growth opportunities in our digital channel, and we will continue to invest in this part of our business to provide an enhanced omni-channel experience and additional value to our members. Additionally, we are implementing a new tool called Relax to modernize our supply chain management. We started this project in 2023 and it should be completed in 2025. RELAX is positioned to become an integral part of our strategy to enhance our inventory planning process, making it more efficient by making our operations data-driven, autonomous, and adaptive. This partnership with RELAX is crucial as it resonates with our strategy to grow sales by offering high-quality goods at competitive prices, driven through supply chain efficiency and back-office productivity. We plan to use Relex to automate and increase the accuracy of our inventory forecasting, as well as for pricing and promotion management. Switching gears slightly, environmental and social responsibility continues to be an important component of how we approach our business and add value to the membership. We do our best to incorporate practices that use natural resources responsibly. Just to give a quick update, we currently have seven recycling centers open, with two in El Salvador, three in Honduras, and two in Guatemala. On average, around 15,000 pounds of recycled material is being collected monthly in each location. We are on track to open four recycling centers in the Dominican Republic and one more in Guatemala by the end of fiscal year 2024. You can find more information about Pricemart's philanthropic and corporate social responsibility efforts on Pricemart.org. Looking forward a little into our current third quarter. Our comparable net merchandise sales for the four weeks ended March 31, 2024, were up 5.6% or 2.9% in constant currency, with both Costa Rica and Colombia contributing positively from a foreign currency exchange rate perspective. It is important to note that this year-on-year comparison is impacted by the timing of the Easter holiday period. This year, Good Friday, when we close all our clubs, and Easter Sunday, when we close our clubs in Aruba and Barbados, fell in March, whereas last year they fell in April. In closing, We are proud of another successful quarter, a great start to our third quarter, and our team members who make it all possible. Thank you for joining our call today. I will now turn the call over to the operator to take your questions. Operator, you may now start taking our caller's questions.
spk00: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the pulling process, please press star followed by the number 2. If you are using a speakerphone, please lift the handset before pressing any keys. One moment while we queue up the questions.
spk06: Your first question comes from Mr. John Bratz from Oppenheimer.
spk00: Please go ahead.
spk02: Robert, you mentioned in your opening comments that, you know, obviously December was a pretty good month, but you said there were some challenges in meeting that demand. Can you speak a little bit about those challenges, and did it impact the – did you incur some additional costs?
spk03: Thanks for the question. I maybe didn't explain it very well. We have some locations. First of all, we did volumes in certain locations that really went beyond anything I think I would have thought they were capable of doing just based on the physical limitations of some of our locations. I really was trying to complement managers who were under tremendous stress just to move that volume through those locations on various days during December. I don't think, per se, that it resulted in additional expense, but I think it was very, very tough on our management team in a number of places just to deal with what was the throughput and sales and inventory issues. you know, on hand. But I think they handled it really well, and the expenses seemed to be well in line. But it was tough. I mean, I don't know if I personally had to run one of those locations if I could do it.
spk02: Okay, thank you. Turning to Colombia, the currency has strengthened there. You're Your comp store sales there were flattish in the quarter. It seems like the impression I'm getting is the overall market in Colombia is getting better. Can you speak maybe a little bit about the Colombian market and how you see it, generally speaking, in terms of the economic environment?
spk03: I think that politically as well as financially, There have been a lot of improvements in Columbia in the last year, and we're certainly reaping the benefits of those improvements. From my knowledge, I haven't been in Columbia in a while, and I'm planning a trip. I think we're running our business well, and I think our reputation there is really, really good from what we hear and the way our members seem to feel about us. There's been a lot of turnaround in Colombia, and I think the other thing to mention in Colombia is that we made a decision probably close to a year ago to reduce margins a bit and to change our pack sizes on some of the items that just had become too expensive under the large pack sizes, and I think Both of those actions have really strengthened our market position. I think we're in a pretty good place in Colombia. Unfortunately, it's still challenging to find locations in the big cities, Medellin and Bogota, and we can continue to work on that because we think there's more opportunity, but I feel pretty good about Colombia. I think we've got a good management team there. We have good buying there, and things are really improving.
spk02: Okay, and then lastly, Robert and Michael, the new Costa Rican store, I think you noted it was 10 miles from the nearest store. When you open a new store in Colombia and other places, there's a little bit of cannibalization. Would you expect anything more or less from this new store opening versus what you've seen in the past?
spk03: As far as the transfer of sales, there'll be some transfer of sales, and I think it'll be more or less the way we would have had in other Costa Rica locations where we're opening not too far away. On the other hand, our track record in Costa Rica has been that we backfill pretty quickly in terms of recovering those sales that had been transferred. And I think overall, because we're building our... Sales volume and market position in Costa Rica, we're going to buy better, distribute better, and probably overall it's going to help all the clubs just to have that extra club in the marketplace.
spk04: Okay, thank you.
spk00: Your next question comes from the line of Mr. Hector Maya from Scotiabank. Please go ahead.
spk05: Hi, thank you, Robert and Michael, for taking my questions. The first one would be regarding the kind of wide potential that you see for new openings down the road. And aside from Colombia, where else would you be seeing the most opportunity? And what would be the long-term potential for countries like El Salvador, Guatemala, or others in the Caribbean, like Jamaica, where potentially minimum wages could be a factor?
spk03: I mean, make sure I understand your question. Was your question about opportunity in countries other than Colombia?
spk05: Yeah, aside from Colombia, in markets like El Salvador, Guatemala, or even Jamaica in the Caribbean, the widespread potential that you see there.
spk06: I think that without getting too specific,
spk03: there continue to be opportunities in some of those countries, and we continue to identify the right properties to take advantage of those opportunities. I don't want to be too specific. I think I could say regarding Jamaica, however you want to say it, that it's been a good market for us and we think there is additional opportunity there. And I'd say the same thing about Guatemala and maybe El Salvador as well. I mean, you know, I think also I feel really pretty good about those regions because, you know, with the change in our approach to sourcing and in terms of the big picture macro moving more production out of Asia to the region we're in, I feel that there is a very positive sign for the region and also for us. And that would include all the countries you mentioned.
spk06: Got it. Thank you.
spk05: Very, very clear. Could you also please talk a bit more about the increase in general and administrative expenses with compensation on travel costs? And if you could give us also a sense of what happened in the non-recurring expenses there, too.
spk04: Hi, Hector.
spk01: Yeah, just basically, overall, we're continuing to review our compensation levels at all levels of management. And so there's some year-on-year increases there. And the non-recurring expenses were just some professional fees we incurred from some special projects that won't have an impact going forward. So, I mean, G&A in general, remember, we're investing in IT and we're investing in the management team. So, you know, it's going to fluctuate quarter on quarter based on, you know, sales increases and where we're going. And, you know, I can fluctuate up and down a little bit as a percentage of sales. Obviously, our goal in the long run is to leverage G&A. as a percentage of sales, because that helps us deliver better value to our members.
spk03: One thing I'd add to that, though, which certainly I agree with everything Michael has said, I think the real fundamental nature of the club business is to continue to find ways to be more efficient in the delivery of merchandise to the ultimate consumer. And Michael had mentioned, I believe, that we had recently opened a Panama distribution center. We are soon to open a Guatemala distribution center, and we're building a distribution center for Trinidad. Those are very strategic decisions that we believe can leverage and improve expense ratios and inventory turn because of the fact that we can flow merchandise in a much more efficient way, we believe, and we've kind of proven it in Costa Rica where we already have a distribution center, and those distribution centers have many other possibilities beyond just the flow of merchandise to our clubs as we get more into online shopping and dealing more with business-to-business members, we think these distribution centers will become quite strategic. The way I think of the distribution center is going back to the early days of Price Club in 1976. In a sense, we were a distribution center. So, in a way, it's going back to our roots, and especially as we focus more and more on the business-to-business segment in our business and our operation.
spk06: Excellent. Thank you very much.
spk05: That was a very, very good caller. And the last one, too, if you could also share some further details on the performance seen in the other income and expenses, particularly with more color on the spike in other expenses during the quarter.
spk01: Yeah, I think Hector, I mentioned in the call that that's pretty much from FX, and I called out two things in particular. You know, we have this unique situation where we're sitting on a lot, I think we've talked about this in prior calls, we're sitting on a good amount of cash that we convert into U.S. dollars from local currency. We hold that in our bank accounts in Costa Rica, and the strengthening of the clone has had the unusual effect of hitting us from a P&L perspective. So that's essentially... unrealized losses on our U.S. dollar balances. We're a U.S. dollar-based company in the whole, and we think from a long-term perspective that it's the right thing to do to convert our local currency balances into U.S. dollars, and that's what we generally do in all of our markets as long as we're able to. And we generally hold that because then we can redeploy it easier within the company. So we have some unusual fluctuations from foreign currency sometimes in some of the countries. In the past, you may recall, we've had similar issues with Jamaica. So hopefully that's a transitional issue. And then I also mentioned that we continue to pay extra costs to convert the illiquid currencies that we have, such as Honduras and Trinidad, into U.S.
spk04: dollars, and that's also impacting that line.
spk05: Got it. I understand. Thank you. Thank you very much, Robert and Michael, for taking my questions.
spk06: Thank you. Thank you, Hector.
spk00: Your next question comes from the line of John Bratz from Oppenheimer. Please go ahead.
spk02: Michael, just a follow-up. Given the currency issues in Honduras, have you implemented any pricing actions in that country similar to what you did in Trinidad?
spk01: We've taken some pricing actions, but in Honduras, and that's something that we're continuing to review. So yeah, obviously, you know, our goal is to, you know, hopefully be able to pay for those extra, any extra costs we're incurring in countries where the currencies are illiquid. It may not, kind of like the, I mentioned for Costa Rica, it may not always match on a, on an accounting basis, but from an economic... Try to line those up.
spk03: I just add one thing to... This is very top of the agenda for Michael and myself. We've spent a lot of time talking about Honduras and trying to identify a variety of ways to balance the challenge we have with illiquidity, but also making sure that we
spk06: don't harm the business long-term. Right.
spk03: Balancing Act. And I think we're on top of it. But, you know, this is part of the nature of where we do business. These are countries that have a lot of challenges. We've gotten pretty good at it. But the reality is we go through these periods where it costs us money to reserve a business, a pretty good business. And... So we're looking at a lot of alternatives for how to deal with the Honduras situation. But it is a significant challenge, and we're on it.
spk02: Okay, good. And then lastly, Michael, are all the membership increases fully in place as of this time, or do you have some more to go?
spk01: Most of them are in place, substantially all of them, but not quite all of them. We haven't given any details about countries or volume, but most of them are.
spk04: Okay. All right. Thank you.
spk00: Okay. There are no further questions at this time. I'll hand the call over back to Michael McCleary. Please go ahead.
spk04: Okay. Thank you, everybody. That wraps up our call today. I hope you all have a great day. Bye.
spk00: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
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