Cineplex Inc

Hello, everyone, and welcome to the Cineplex Inc. Third Quarter 2023 Earnings Conference Call. My name is Daisy, and I'll be coordinating your call today. If you would like to ask a question, please press star four by one on your telephone keypad. I would now like to hand over to your host, Master Vijayali, Vice President of Corporate Development and Investor Relations, to begin, so please go ahead.

Good morning, everyone. I would like to welcome you to Cineplex's third quarter 2023 earnings release conference call hosted by Ellis Jacob, President and Chief Executive Officer, and Gord Nelson, Chief Financial Officer. Before we begin, let me remind you that certain statements being made are forward-looking and subject to various risks and uncertainties. Fresh forward-looking statements are based on management's beliefs and assumptions regarding the information currently available. Actual results may differ materially from those expressed in the forward-looking statement. Information regarding factors that could cause results to vary can be found in the company's most recently filed annual information form and management's discussion analysis. Following today's remarks, we will close the call with our customary question and answer period. I will now turn the call over to Ellis Jacobs.

Thank you, Matza. Good morning and welcome to Q3 2023 conference call. It is a pleasure to be with you today to provide details on our best quarter in Cineplex history. Before I get started, I wanted to take the opportunity to share the exciting news that the actors have now joined the writers in reaching an agreement to end the strike. On behalf of exhibitors and the millions of moviegoers, thank you. Let's continue doing what we do best. bearing beautiful performances with exceptional experiences best enjoyed in our theaters. Now back to our best quarter in Cineplex history. We achieved the highest EBITDAO ever, even surpassing pre-pandemic levels, and we are extremely proud to see our thoughtful strategies deliver such strong results. Our adjusted EBITDAO margin of 18% was significantly higher than the third quarter of 2019, demonstrating the power of the operational improvements we implemented over the past couple of years. Over the past two quarters, free cash flow generation has enabled us to repay $55 million in bank debt as part of our focus on deleveraging the balance sheet and strengthening our capital base. Our outstanding third quarter results can be attributed to our record-breaking box office but just as importantly, the success of our diversification strategy. We achieved third quarter record box office revenue of $188 million, which represents 106% of 2019 levels. Impressively, our third quarter results outperformed North American market share by 310 basis points. By driving guests to premium experiences, our PPP reached a third quarter record of $12, and through expanded concession offerings, CPP achieved $8.44. These results clearly indicate the multiplying effect of the sustained enthusiasm for our premium theatrical experience and our enhanced food and beverage offerings, paired with our unique ability to offer guests diverse content personalized experiences, and a variety of entertainment options across our venues. Looking at our theatrical business, we have seen consumer demand for premium experiences and compelling content continue to hold strong. July was our highest box office month ever, with Barbie generating the highest July attendance at Cineplex theaters nationwide, Oppenheimer and Mission Impossible, Dead Wrestling Part One followed in second and third places respectively with strong performances. The Oppenheimer phenomena generated 2.5 billion in global box office revenue since their respective releases. We capitalized on this demand by using rich consumer data to personalize outreach and bring guests into more premium experiences And this resulted in 35% of third quarter box office revenue coming from our premium margin accretive experiences like VIP, Ultra AVX, and IMAX. Launching new concepts like Cineplex Junction enhances the guest experience drawn strong per patron spent across box office, food, beverage, and gaming with the aim of maximizing guest revenue per square foot. There's been excellent progress made on film release volume over the last two quarters, and we continue to work closely with our studio partners. Now with both the writers and actress strike behind us, any slight movement of content will not have a material impact. We're excited about the diverse film slate for Q4, and there's something for everyone in the coming months. Action and adventure abound with the marvels, Aquaman and the Lost Kingdom, and acclaimed director Ridley Scott's Napoleon. Ferrari, described as a gripping and masterful drama with a star-studded cast, tells the story of legendary sports car magnate Enzo Ferrari during three critical months in 1957. Much anticipated family features are also coming to our theaters, including Migration, Trolls Band Together, Disney's Wish, and Warner Brothers' Wonka, the original story of Charlie and the Chocolate Factory starring Timothée Chalamet. Non-traditional studios like Amazon and Apple are also building on their commitment to theatrical releases. As mentioned previously, streamers are expressing intentions to scale theatrical film production over the next few years, bringing a wave of new content to our theaters. Apple had another big theatrical film release in October with Martin Scorsese's Killer of the Flower Moon. Over the past several years, we've been ahead of our peers, driving demand for alternative content not tied to Hollywood studios. Remaining focused on our content broadening strategy helped us to navigate supply shifts. Our international content is making a meaningful contribution to our overall box office performance. In fact, four of the top 20 films in the third quarter were international titles. Films like Jawan and Carry On Jata 3 outperformed North American market share by 28% and 77% respectively. Through our relationships with international content suppliers and our ability to understand consumer preferences, we have attracted new audiences and have a proven ability to outperform the North American industry on these titles. We've got an incredible lineup of international films coming in in our fourth quarter, including four indie films, Tiger 3, Animal, Dunkey, and Salar Part 1, Ceasefire. Furthermore, non-traditional content like concerts, opera, stage performances, and sporting events continue to grow in popularity and are performing well at the box office. October brought the record-breaking concert film Taylor Swift, The Heiress Tour, which generated over $165 million in box office revenue at the domestic level and fast on its heels. Next month is Renaissance, a film by Beyonce. Fans are reimagining their local theater, transforming it into a venue where they can be front and center with their favorite artists. soaking in the concert experience with ultra-premium sound and singing and dancing along with their friends. Finally, through our distribution business, Cineplex Pictures, we are sourcing feature film content from all over the world, including homegrown Canadian content like the light-hearted drama The Queen of My Dreams, Japanese animated film The Boy and the Heron, And as part of our distribution partnership with Lionsgate, the much-anticipated Hunger Games, the Ballad of Songbirds and Snakes. Moving on to our diversified businesses, our location-based entertainment business had a strong performance in Q3, generating record third-quarter revenues of $34.2 million. LBE continues to be a growth opportunity for us as we have two new LBE locations opening in the second half of next year and more to come. Our amusement solutions business, P1AG, generated record third quarter revenues of $49 million and an increase of 7.7% compared to prior years. On the media side, both Cineplex Media and Cineplex Digital Media perform well despite the challenging macroeconomic environment. While there are some economic headwinds in the advertising sector, cinema media continues to outperform other traditional advertising mediums. They both had a strong third quarter and are displaying significant momentum as we head into a traditionally strong fourth quarter. The Cineplex digital media team is focused on new client growth to significantly expand its digital out-of-home network. As we keep consumer needs at the forefront, we are excited to announce the launch of our new Cineplex app, creating a more seamless guest experience, greater personalization, and improved visibility of other Cineplex businesses like the Rec Room and the Cineplex Store. We are also excited to announce the launch of mobile food ordering. While mobile ordering has been available in our VIP theaters for several years, we are expanding it across the entire circuit with a rollout by region over the next few months. This new functionality improves and enhances the guest experience and provides upsell and cross-sell opportunities throughout the guest journey. The ScenePlus program is another example of what sets us apart from our peers. With over 17 years of data, we are able to drive profitable guest engagement across the Cineplex ecosystem. The program has grown significantly over the past year and ScenePlus now boasts over 14 million members. The addition of Empire with their grocery banners and home hardware to the program is enabling us to identify and convert non-movie goers into Cineplex customers and bring them into our ecosystem. For our guests, this means broader and more attractive content and personalization, and as we think about our complete ecosystem, there's tremendous opportunity to further leverage this data across all our lines of business in the future. Before I wrap and turn the call over to Gord, I want to provide a brief update on the Competition Bureau's allegations regarding our online booking fee. We are currently conducting various preliminary steps necessary to have this heard by the Competition Tribunal during the first quarter of 2024. As I've said before, we strongly believe that we have complied with both the letter and spirit of the law. We believe the Competition Bureau's allegations are unfounded and we continue to seek an early determination of this matter. As we look forward, we are extremely proud of the momentum coming out of our record-breaking quarter, reinforcing that our strategic initiatives are driving results. The strength of the third quarter film lineup, paired with the strong results of the company's diversified businesses, saw Cineplex achieving the highest quarterly EBITDA in our history. This remarkable quarter proves we have the ability to capture more value even though attendance levels were at 90% of 2019. We are also focused on deleveraging and using cash from operations to reduce debt levels. We remain confident in the strength of both our theatrical and diversified businesses. Our diversification strategy is one of the several compelling factors that will continue to differentiate Cineplex from our North American peers. Cineplex is an innovative exhibitor when it comes to guest experiences, from premium formats and enhanced gaming in our venues to new entertainment destinations like Junctions. Our content broadening strategy reinforces our leading market position in international cinema and alternative content. We are using our theaters for non-theatrical events to maximize our return on the real estate footprint we have across the country. The consumer data we collect is utilized across the CinePlus ecosystem to drive additional revenue and create efficiencies within our business operations. Overall, Cineplex is well-positioned to achieve great success and will build on these industry-leading results. I'd like to thank and congratulate our team for their tremendous work this past quarter. With that, I will turn things over to Boris.

Thanks, Ellis. I am pleased to present a condensed summary of the third quarter results for Cineplex Inc. For further reference, our financial statements and MD&A have been filed on CDAR+. and are also available on our investor relations website at cineplex.com. Our MD&A and earnings press release includes a complete narrative on the operational results, so I will focus on highlighting select items and providing commentary on our liquidity, balance sheet, and outlook. As Ellis mentioned, our Q3 results were spectacular. Total revenue increased 36.4% to $463.6 million, And our adjusted EBITDA was $83.1 million, which represents our highest quarterly EBITDA ever. We had record third quarter results in substantially all our key metrics. And rather than repeating these again, I would refer you to our earnings press release in MD&A. We continue to focus on revenue opportunities and cost management. and are extremely pleased with our Q3 EBITDA margin of 17.9%, and a combined Q2 and Q3 EBITDA margin of 16.2%. This combined total is higher than any quarter in 2019, and the full year 2019 total of 13.8%. Let's take a closer look at our segments and see this optimization focus in action as we compare Q3 2023 to the pre-pandemic Q3 2019. In the film exhibition and content segment for Q3 2023, attendance was 90% of 2019's levels, but total revenue and adjusted EBITDA were both higher than 2019's level. at 113% of 2019 and 135% of 2019, respectively. In addition, despite the attendance volume decline, our segment adjusted EBITDA margin increased to 19.2% in 2023 as compared to 16.1% in 2019. In the media segment, as we have mentioned previously, the cinema media business model post-pandemic has shifted to a CPM-based model. And as such, cinema advertising revenues are more dependent on absolute attendance levels. Decrease in attendance levels coupled with the current advertising climate as compared to 2019 has resulted in segment-adjusted EBITDA coming in at approximately 79% of 2019's level. Effective cost management has resulted in the segment adjusted EBITDA margin improving to 55.8% from 46.9% in 2019. Turning to our amusement solutions and segments, P1AG has continued to perform strongly with segment revenues coming in at 110% of 2019's level and adjusted EBITDA coming in at 133% of 2019's level. As a result of strong cost control and additional integration synergies, segment adjusted EBITDA margin has increased to 17.2% from 14.2% in 2019. And lastly, our LBE segment has benefited from additional locations and strong cost management. Segment revenues came in at 175% of 2019's levels, and segment-adjusted EBITDA came in at 427% of 2019's levels, with segment-adjusted EBITDA margin increasing to 25.4% in 2023 from 10.4% in 2019. The above are concrete examples of this focus on revenue opportunities and cost management. In looking at the last 12 months, Our LTM EBITDA is closing in on $200 million at $195 million, with the last two quarters alone contributing $143 million of the $195 million total. As Ellis mentioned previously, it was only in April 2023 that we returned to regular product supply with multiple releases on a weekly basis. Finally, net income is relatively flat to the prior year as the $63 million improvement in an adjusted EBITDA was offset by the inclusion of a gain of $50 million on the reorganization of CNLP in the prior year and the inclusion of non-cash deferred taxes of $11 million in the current year. I would like to now move on and speak to our balance sheet and, in particular, our liquidity positions. As a result of the past two strong quarters, we were able to pay down approximately $55 million under our credit facilities. This left us with $301 million drawn and approximately $232 million available under our credit facilities as at September 30th, 2023. As at September 30th, 2023, We reported a senior leverage ratio of 1.48 times as compared to a covenant of 2.5 times. Although not tested, our total debt ratio was 2.63 times, well within our 2.5 to 3 times target range, and demonstrates our commitment to deleveraging. In addition to deleveraging through operating results, we will continue to evaluate value-creating liquidity events which could include asset sales. Now I'd like to take a few moments to look forward. I want to revisit the world we've described here in our past analyst calls. This was a world where we could potentially achieve pre-pandemic adjusted EBITDA levels on 75 to 80% of pre-pandemic attendance levels due to our diversified business models and use free cash flow to deliver. With the return of product on a regular cadence for the second and third quarter combined when comparing to 2019, we achieved 108% of 2019's EBITDA on 83% of the attendance and delivered by $55 million. This continues to give us confidence that this world is real and here today. We may have a few bumps ahead of us because of release date changes due to the various strikes, but the long-term view is solid. Our business is typically traded at a premium given our market share and diversified businesses. However, with the positive results of our business and momentum in the industry, we have not seen the same valuation return that our peers in the U.S. have experienced. As of yesterday, we were trading at an approximate 30% discount to our target price. We understand that our Canadian listing means we are subject to more of a show me view. But we would expect that our Q2 and Q3 results should give you some confidence that we are continuing to show you. Let's talk about our balance sheet. At the end of Q3 2023, we had approximately $867 million face value of debt including $316.3 million in convertible debentures, which have a conversion price of $10.94. All our equity research analysts have a one-year target price in excess of the conversion price. In the 75% to 80% attendance world, we believe that the convertible debentures would convert to equity, and as mentioned earlier, we would be within our target leverage ratio range of 2.5 to 3 times and on the path to consider the reintroduction of a dividend. Now let's talk about initiatives to optimize our capital structure. As I said last quarter, I want to make it clear that we're primarily talking about the composition and maturity of our debt stack, including items such as rating strategies, mix of bank versus private versus public debt, US versus Canada, and not dire measures such as issuing common equity to reduce debt. The strong return of our business in Q2 and Q3, you will see us moving forward with these initiatives, including extending maturities, removing restrictions and financial covenants, and ultimately reintroducing a dividend. With our recent record-breaking operating results and our commitment to strengthening the balance sheet, there's a lot to be excited about. And with that, I would like to turn things over to the conference operator for questions.

Thank you. As a reminder, if anyone would like to register a question, please press star followed by 1 on your telephone keypad. When preparing to ask your question, please ensure you are unmuted locally. And if you would like to withdraw your question, please press star followed by 2. So that's star followed by 1 on your telephone keypad to register a question. Our first question today comes from Adam Shine from National Bank Financial. Adam, please go ahead. You're on your date then.

Thanks a lot. Good morning. Obviously, good results and great news out of Hollywood. Ellis, can you talk a little bit about, I mean, you touched on Q4. Can you talk a little bit about the 2024 film slate? And obviously, you know, there's more to come as we get a sense as to how production reboots. But how do you characterize the slate and any additional information that you might be aware of in terms of further strengthening it?

Yes, Adam, and there were real concerns as to how the slate would roll forward, and we saw a number of movies like Dune and Ghostbusters move, but we still feel quite strongly. I think the only two films I look at it as far as moving out of 2024 was Snow White and and Mission Impossible. Those were the two big ones, but now with Dune in the first quarter and Ghostbusters in the first quarter, that should help. And I don't know if you saw, but the Hollywood group are ready to get back, and Deadpool, Gladiator, Venom, Beetlejuice are all starting production very, very shortly. So that should help as we move forward. That's not to say, Adam, that there aren't going to be minor disruptions, but still feel good moving forward.

Okay. Thanks for that. Obviously, you referenced the Taylor Swift movie, and you've got Beyonce concert movie coming up as well. A number of questions we've had relate to the film cost profile, and I don't know if you're able to talk to it, whether there's something unique about it or whether sort of it just comes in as a similar average to the usual film cost splits with the studios.

Well, in the case of the concerts, we are basically the Canadian distributor for them. So it's a little bit different than what we would do on a regular film. So it's part of the whole process, but there are give and takes between us and the AMC distribution company.

Okay. And just maybe one for Gord. Gord, obviously we've seen tremendous strength out of P1AG in recent quarters and still very strong results. But just curious, Anything in particular in the Q3 in regards to a bit of a step down we saw from the trend in Q2, which was exceptionally strong, and just the context of margins as well? Yes, up year over year, but maybe moving a little bit lower within the usual range that you talk about.

Yeah, so look at, Adam, and, you know, it was a record third quarter result for the P1AG businesses, which has continued to kind of deliver record results and significant increases over a prior year. There is a little bit of a seasonality to the business. Yeah. So in Q2, we absolutely saw, you know, some of the benefits of that seasonality. The business, you know, we're extremely pleased with, you know, we're hitting those target margin ranges of 15% to 17%, which we've kind of highlighted since some point in time last year. So it continues to perform exceptionally well, and we're really excited on the outlook as you look forward in this business, given sort of the explosion of new FEC concepts across North America.

Okay, super. Thanks. I'll leave it there and queue up again. Appreciate it.

Thank you.

Thanks, Ed. Thank you. Our next question is from Maher Yagi from Scotiabank. Maher, please go ahead, your line is open.

Great. Thank you for taking my questions and great quarter, guys. I wanted to maybe start with the most pressing and questions we get on Cineplex, and that is, you know, dealing with the leverage situation. I'm happy, Gord, you said you're not contemplating any equity issuances at this point in time, which is good to hear. However, I just wanted to maybe touch base on the upcoming refinancings that you have coming up and how you are going to handle these refinancings. You mentioned you're looking to refinance some of these maturities. Can you maybe just elaborate a little bit on that? I think a lot of our investor base is hoping to get more clarity on that. Thank you.

Sure. Good morning, Marin. Thank you for your comments. As I mentioned in the call script, our focus is looking at extending the maturities. We'll look at the composition and the mix between bank debt, public debt, private debt, and our focus will be on extending the maturities. So, you know, we do have, and as I said, I wouldn't be surprised if you see us go out and get a credit rating to provide optionality on what we may do. I also have said historically I wouldn't be surprised if you saw us, you know, approach, you know, our bank group to ask, to extend the maturity of the existing credit facility to give us additional flexibility as we move sort of through these turbulent economic times and ensure that we have flexibility on when we want to choose and execute on a strategy related to the debt. So our focus will be starting very soon to some point in time in early 2024 to look at extending maturities, changing the composition of mix. And as part of my comments were that the, you know, that converts, you know, we believe, well, nothing solved themselves, given the strong results and the outlook on the business. You know, additionally, as I mentioned in my prepared comments, too, is we've delivered from the strong operating results by $55 million over the last two quarters. And my comment, we will continue to deliver and we would also consider potentially any asset sales to the extent that we thought they were accretive.

Okay, great. Maybe just a follow-up on the results. When you look at 2024, assuming a steady slate of movies coming out from production and hitting the theaters. Anything you want to highlight that you had in Q3 that would be abnormal or non-recurring that is affecting either up or down your free cash flow? Just trying to you know, make sure we have the right pace of free cash flow production going into 2024. Thank you.

Yeah. So, Mayor, I think one thing that you're seeing in the business is we have focused over the last three years on optimizing the cost structure. I highlighted, you know, some of the results of the work when I provided you know, the EBITDA margins of each of the segments and how it will significantly improve those EBITDA margins as compared to the pre-pandemic period. And the third quarter results is really the material operating leverage of the business. Once the attendance is there, you know, the incremental flow through to free cash flow is massive. So this is the world that we believe we operate in.

Thank you. Our next question is from Derek. Sorry, go ahead.

Sorry, just wrapping up here. So, sorry. You know, as Mayor, as we mentioned, $150 million of EBITDA in the last two quarters, $55 million of debt pay down. So, to that regular cadence, you know, we're very confident about the ability to de-lever off of the strong free cash flow that this business will generate going forward.

I think we can go to the next question now.

Thank you. Our next question is from Derek from TV Cohen. Derek, please go ahead. Your line is open.

Yeah, good morning, Ellis, Gordon, and Matt. First of all, congrats on an awesome quarter and happy to see a labor piece for the next three years. Maybe on that topic, Ellis, I think some of the concessions that the studios made could, I think they were saying, could be worth up to a billion dollars. Just wondering, or do you think that studios try to maybe recoup or cost some of that back through, you know, movie costs to exhibitors?

A lot of the concessions that they gave had to do with streaming and post theatrical. So, uh, you know, we feel at this point in time, I haven't had anything, uh, you know, as far as significant discussions, uh, as it relates to this, but, uh, You know, we've been great partners with the studios, and we'll do our best to get the maximum box office that we can derive, and that's something that we work together with them to deliver. And that, to me, is really important.

Okay. That's helpful. And I think, you know, in terms of the current slate, I was curious on whether exhibitors get any sort of heads up from the studios on potential movements or shifts.

Well, there was a big, as I mentioned earlier, there was a big article on Deadline that talked about them restarting ASAP, and they've named about six different movies that they are starting right away. And that, to me, is a good sign that they are moving back to full production of these films.

Okay.

And as we said many times, sorry, go ahead.

And I'll continue on, sorry.

No, but as I've said many times is with the situation we are in, it's not that the films are basically disappearing. They're just moving. So it's a positive positioning for us going forward.

Okay. And Gordon, maybe just a few for you, obviously. I think you've touched on some of it, but super strong year-to-date results and maybe Q4, maybe a little bit less, so I'll just give them a slate, but you look well-placed for covenant testing to resume in Q4 by my math. Just curious how you're thinking about the upcoming test and looking ahead to next year.

Yeah, look, we gave you, you know, I disclosed the total leverage number, which would be well within the compliance range, and, you know, as you recall, And that's an LTM ratio. So the Q4 last year was not a particularly strong quarter. So, you know, that'll fall off and get replaced with this one. So, yeah, we feel very strongly about where we are with respect to the covenants going forward.

Okay. And then just maybe on a bit of housekeeping, on the working capital side, there was a usage on what looks like the accounts payable. Just maybe... some color around there would be helpful.

Yeah, so look at what the ebbs and flows, you know, in a strong, we typically try and match our working capital position to the strength of the business. So, you know, with the strong business results, you know, we looked at sort of accelerating some of the payments to our suppliers from where they had been historically.

Awesome. Thanks for answering my quick questions, and congrats again. Great quarter.

Thank you very much. Thank you. Before we take our next question, I'd just like to remind everyone to register a question, please press star followed by 1 on your telephone keypad. Our next question is from Drew McReynolds from RBC. Drew, please go ahead. Your line is open.

Yeah, thanks very much. Just echo a fantastic quarter for you guys, Gord and Alex. I missed the first part of the call from my apologies for any duplication here. Maybe for you, Gord, just on the asset sales that you could explore, is there anything you can give us in terms of whether those would be non-core or perhaps something a little bit more core, so to speak, but in, you know, how you kind of size up, you know, an accretion potential on, you know, what your lens is there. And then secondly, maybe for you, Ellis, on the film supply and specifically from the streaming platforms, I think we're all aware that the optical window is increasingly a window that from streaming platforms are using. Has anything changed in terms of that pipeline, you know, over the last few quarters? You know, obviously, notwithstanding the delay due to strikes, do you still feel there's strong commitment there to release in the theaters? Thank you.

Thank you. And thanks for your comments. I'll take the first question with respect to asset sales. So throughout the pandemic, as we'd obviously looked at certain non-core assets, you know, our head office building, we sold an equity interest or, you know, sort of decreased our interest in our holdings and scene. So, you know, as we look forward and contemplate what are the other options is, you know, it'll probably be in non-core assets to the extent that there's an interest in sale and, And, you know, our businesses, we have a very, you know, complimentary set of strong assets that there's always been ongoing interest in. So to the extent that, you know, there's something that was a creative and made sense for us is we would obviously execute on something.

Okay. And to your question about the streamers, Well, I was looking at Apple and Amazon. As you know, Apple released a big movie in October, Killer of the Fallen Moon. The movie did quite well. And they've got another movie, Napoleon, coming out shortly. So they are very committed. And we are also working closely with them in Canada as it relates to their, you know, movies that aren't going through larger studios to distribute for them. And in addition to that, Amazon, as you know, with the acquisition of MGM, they've got a good slate of films that are coming out over the next number of months. Now, there has been a bit of a delay looking into 2024 because of the, you know, the strike situation. But I think they are both committed and they are looking to continue to release strong theatrical product through the next number of years.

Okay, super. Thanks very much.

Thank you.

Thank you. As a final reminder, if anyone would like to register a question, please press star plus one on your telephone keypad now. We have no further questions, so I'd like to hand back to Ellis Jacob to close.

Thank you all again for joining us this morning. We look forward to speaking with you in February for our fourth quarter and fiscal year 2023 results. Have a great day and enjoy your movie. Thank you.

Thank you, everyone, for joining today's call. You may now disconnect your lines and have a lovely day.