Eurazeo Paris Ord

Ladies and gentlemen, welcome to the Eurazeo first quarter 2022 conference call. I now hand over to Mr. William Kadouchiassin, General Manager of Finance and Strategy and member of the Eurazeo Executive Board. Sir, please go ahead.

Thank you very much. Good morning to all. Thanks for taking the time to connect to this call. It's a pleasure to present to you Eurazeo results and particularly for me, as it is for the first time, I would present Eurazeo's Rezons. I joined the company and a great team of entrepreneurs two months and a half ago already in order to participate to the exciting ambition of growth and transformation of the company under the stewardship of Virginie Morvan. The Rezons we publish today are, in a sense, a very good illustration of the dynamic in place with Eurazeo. We published this morning very good figures for Q1 on all fronts. Fundraising, AUM, management fees, asset rotation, and the performance of the portfolio company. Let me take you through all these points, starting with the dynamic of growth of the company. Eurazeo continues to grow at a high pace, as you have seen in the press release, both as an asset manager and as an investment company. The asset management activities, as I mentioned, continue its development at a robust pace. AUM are up 41% year on year at 32.2 billion euros end of March. Fundraising is strong in the first quarter. Over the last 12 months, it's been in total amounting to 5.3 billion euros. For the quarter solely, we raised 876 million euros, which is up 12% relative to the first quarter of last year. We continue to see strong demand for our funds across the board. with good flows in venture, growth, buyout, and private debt in particular for this quarter. On top, and as you know, this is one of the key strengths of the company, we continue to collect money on the retail side very dynamically, which further strengthens our leadership in wealth management. We raise 100 million in the quarter of retail money and we are about to launch new innovative funds very shortly. Management fees are up 34% adjusted for change and perimeter effects, with fees from third parties up 45%, which obviously echoes what I said about the dynamics in terms of money collection, but also the strong fundraising that we had in the past quarters. That's for the asset manager, which continues again to grow at a high pace. Let me turn to the investment company, or the balance sheet, which is also supported by a solid momentum of growth. The economic revenue of the consolidated portfolio is up 31%, in the first quarter 2022 compared to the same period of last year at constant currency and Eurazeo perimeter. The growth, and this is a very important point, is very broad-based in the portfolio across sectors, across sides of companies, across strategies, which echoes or underpins the strengths of Eurazeo positioning on segments with structural growth outlook. Obviously, the travel and leisure companies continue to rebound strongly in the quarter, but outside of travel and leisure, the revenue growth amounts to 17%. And again, as I mentioned, this is very broad-based across companies and strategies. In addition to the consolidated portfolio, Looking at the gross portfolio, the digital assets we own, which are not consolidated, we continue to enjoy very strong momentum, benefiting from a digital native positioning. Revenue are up another 50%, 5-0, in Q1 2022 relative to the same period of last year. The good performance of the portfolio companies in the first quarter reflects, obviously, the relevance of Eurasio's sector choice. We all have seen the volatile economic environment and uncertain environments we've been going through in the first quarter. The group, however, benefits, including in such a context, from a diversified, high-quality portfolio positioned in structurally growing segments such as healthcare, business services, digital with strong consumer brands, and the energy transition. Second point I'd like to stress is the fact that the asset rotation is satisfactory and goes according to plan. deployed 1.7 billion euros in the first quarter of this year, of which 600 million from our balance sheet. This means 1.2 billion in private equity, focusing again on companies where we think there is structural growth in healthcare, case in point, Cranial, for example, in the U.S., Business services, digital enabled business services, such as Dili Trust, which is a legal tech leader in France and Europe. And energy transition, we just completed an investment in Icaros in the photovoltaic space. We also invested 500 million in private debt, which continues to be very well sustained, and is a sector where we benefit from being in an environment of floating rate, meaning we have a natural hedge against what's happening in the interest rate environment these days. We continue to benefit from a very strong balance sheet and position for further investment with 4.7 billion dry powder, a net pro forma position, treasury position in excess of 200 million, And we obviously continue to have 1.5 billion of committed line by our partnership banks, which is a mid-term commitment. Very importantly, our exit program is executed as planned. We completed or signed roughly 1.2 billion equivalent in Euro terms of deals year-to-date, which is 400 million realizations in the first quarter, on top of the deals we had announced already, which you know, Aurelia and Reden Solar, for a total amount, again, of 1.2 billion. I'd like to stress that all these exits are performed in good terms, and sometimes, as we already mentioned in the first quarter, very good terms. Third point, we continue to progress in our non-financial ambitions, our ESG commitment. As you know, Eurazeo aims for leadership in ESG with two major commitments, two key pillars, environment and inclusion. This quarter, we made particularly progress, further progress on the environment front. with two key elements I'd like to underline. Our carbon footprint target for the group, core Eurasia group, is validated or has been validated by the science-based target initiative. We aim for a decline in carbon impact of 55% through 2033, and 30 versus 2017. And this is what this trajectory represented and submitted to the science-based target is about. Beyond Eurazeo as a company, including the portfolio companies, we aim for carbon neutrality through 2040. That's also why, and this is the second point, we have deployed further the decarbonization plan at portfolio level on top of what I just mentioned for Eurazeo Group. Fourth point, we aim for an attractive return to shareholders. You know that we have already decided to pay a 3 euro per share dividend with the coupon DPH on the fourth of May, after the General Assembly had validated it, today we announce on top the share buyback program of 100 million. The acquired shares are to be consoled. We believe this is a relevant step towards improving the return to shareholders, particularly in the context of the discount to our next asset value. But further beyond that, we want to show the confidence we have in both the quality of our portfolio and the fundamental valuation of our assets and the strength of our balance sheet. To sum up, in the first quarter, I'd say that in an uncertain environment, we've shown the capacity of Eurazeo to grow on all cylinders and execute on the strategy, both financial and non-financial. Going forward, which being obviously vigilant and on the potential impact of the environment on the future performance, we remain confident with the outlook. As you have seen in the press release, we confirm our ambition to reach 60% billion AUM in the mid-term, combined with an improving operating leverage. I'll stop there and open the floor to questions. Thank you for your attention.

Ladies and gentlemen, if you wish to ask a question, you may press 01 on your telephone keypad. So it's 01 on your telephone keypad. So first question is from Mr. Geoffroy Michelet from O2BHF. Please go ahead.

Hi, gentlemen. Thank you for taking my question and congratulations for the good set of figures and well-oriented KPI. Two questions for me. First one on the growth private equity strategy. We've seen some fundraising that were maybe smaller than in the past or at a slower or slowing pace. Could you update us on the trend that you see in your portfolio and on the market? And second question, could you remind us the impact that rising interest rates may have on your portfolio? Thank you.

Thank you, Geoffroy, for your questions. I'm happy to meet you again On the first, I mean, it's clear that the buying environment for growth companies that we've seen with high interest by investors in the past years and obviously high valuation, particularly in the US, has somewhat changed in the past quarters. particularly in the US, let me stress, and it's more US topic if I'm thinking about multiple than the European topic, but it makes clear that there's been some adjustments. It is, I wouldn't say, however, that we see less appetite for growth companies these days. There is certainly more sensitivity for the quality of the assets we talk to, i.e., People are looking more at leaders relative to contenders. There is certainly more price sensitivity. That's a clear factor. But there continues to be a strong interest for growth funds because the fundamentals that drive these companies remain very strong. The digitalization of the world. particularly on the continent with Europe, the public money that is there to support the NASKing European growth and venture environment. You remember the announcement on scale of Europe, for example, remains a key fact. And you see that some of our competitors also are quite ambitious in terms of developing their growth strategy. The point that is very important as far as Eurazo is concerned, I think, is to come back to the fundamentals of the growth companies. Again, 50%, more than 50% growth in the revenues. That shows that beyond what the moment we may be at in terms of perception of the pricing for these assets, the fundamental dynamics that was alluded to remains very strong, and the assets we've invested into continues to perform, in fact, not only very well, but also very much according to plan. You had a question, you have a question on interest rate. We obviously not immune to the macro environment, with GDP inflation, interest rate. Interest rate, in my view, can affect a company like us, I mean, I would say broad-based comment I would do, not specific to Eurazeo, in three ways. It can affect, theoretically, the relative attractiveness of the alternative asset class. It can affect the valuation of portfolio companies and the ability to exist in good price. Or it can affect the performance through the increased cost of funding. In that context, I do think that we have a a number of key mitigants. I mean, generally speaking, when you look at the interest rate, I mean, let's start with Europe, with the OAT, for example, at 1.4%, and inflation, which is going towards 6%. I mean, it's easy to see that the performance that private equity can deliver, not only is less volatile, but will remain much more attractive than any interest rate-related performance you can achieve. So we continue to think and to see, in fact, more allocation towards our sector. In terms of return and the exit price, it is very important to remember that The best correlation in the asset price, particularly on the equity side, is to be seen with real interest rates. We continue to operate, particularly in Europe, in negative interest rate environments. So I'm not implying that there is no impact. There is an impact, but this is obviously a key mitigant. And as far as we are concerned, again, this is a much more specific comment. On the cost of debt, remember that we tend to be rather cautious in terms of using leverage in buyouts. But beyond buyout, we have also many strategies where we don't use leverage. Simply put, I mentioned private debt with a floating rate, but venture and even brands, which is usually focused on high growth company, doesn't use much leverage.

Thank you very much.

Thank you, sir. Next question is from Mr. Patrick Jusson from the city general. Please go ahead.

Hello, good morning. Can you hear me?

Patrick. Very well, Patrick, and I'll take the opportunity to say you hello as the next colleague.

Hello, yes, absolutely. Hello, William. Yeah, quick question on NAVEE. If I'm not wrong, the NAV was 119 euros as of 31 of March, but it's essentially based on the figures at the end of December. So could you provide us with an estimated NAV as of today, including dividend payment and including the impact of the drop in equity markets, please?

As you know, and you have the page in the press release, our NAV is not updated every quarter. However, we provide you with some adjustments we make in a quarter. The adjustments pertain to a few elements. One is related to the perimeter when we make an acquisition, but usually will be offset with the treasury position, which is to your point, of the company, so that neutralize it. And you have another element, obviously, which is the realized prices, which are to the extent that they are above or below NAV valuation. I mean, we correct the NAV for that. So the main impact, in the first quarter, obviously, relative to the end of the year, is what we had already mentioned in Q4, which is the gain of Hedden above the value of Hedden in the NAV, to put it short. So what you have here, there is not much adjustment you would have to make on top of that, except maybe for the fact that in these first quarter figures, you don't have, obviously, the cash out pertaining to the dividend, and obviously not the cash out pertaining to the share buyback. But if I come back, not beyond the NAV to the treasury position, as I said, pro forma, if you take the 31st of March, And pro forma, the announced sale of Ray-Ban and Aurelia, but also pro forma, these cash out events I just mentioned, i.e., on the one hand, the dividend, on the other hand, the share buyback, you would end up with a net positive treasury position of about $200 million.

My question was more on the fact that when you release the full year results, you provided an estimate of the net asset value per share. As of the day, the full year results were relieved because between, I think it was on 10, between end of December and I think it was on 10 of March or something like that, there was some drop in equity market. And I think there was a difference of something like six, seven year old between the two. And I was just wondering, because essentially the NAV that you published this morning is the one as of 31st December, plus minus some adjustments. Do you have a view, an assessment, an estimate on what should we consider as a negative impact on the equity market of net asset value since end of 2021?

Well, thanks, Patrick, for precising the question. So again, as I said, we don't, revalue NAV every quarter. Yet, it's true that when we, you remember well, that when we issued the full quarter, I mean the full year results, we mentioned with Philippe that should we update at the time of the publication the NAV, just using the spot multiples, which by the way is not the methodology, the customary methodology, the impact on the NAV would be roughly 6, 8% off, so a tad lower relative to the 117.8 euro at the time we had published. Now, we are adjusted for the factors I mentioned before, closer to 119. We obviously have a view. We do run our numbers quite frequently. And using exactly the same methodology, which again is not the custom methodology to value a portfolio, but just to make it comparable, the 6% to 8% would be roughly 10% today. Remember that we had, on top of the cautious approach to NAV that you're used to, as Philippe and Pierre had the opportunity to mention to you over the past years, On top of it, we had done a few additional adjustments. For example, on the growth segment, we had already taken a haircut for about $270 million on the valuation. Obviously, today, most of these shortcuts would have been absorbed, but taking all in consideration, the six to eight would become 10%. In essence... We continue to see that there is a strong upside, obviously, in the valuation of the portfolio, despite the adjustment of the multiple.

Okay, so 119 minus 10% minus 3 euros for the dividend. Yes. Okay. Very clear. Thank you very much.

Thank you. Next question is from Mr. Alexandre Girard from CIC. Please go ahead.

Yes, good morning, William. Two questions on my side, if I may. This morning, you reiterated your ambitions for that 60 billion euros of AUM in five to seven years' time. Can we have a more precise idea of what you target for 2022? And also, for example, on the corporate debt category, which seems to be less in favor currently, can we have your gut feel on whether that category is going to be in line with what you have in mind, knowing that you have a program which is currently marketed by your teams? Second question, can we expect an OPEX coverage ratio for 2022 at or above 100%, knowing that last year, if I remember well, you were close to that.

Alexandre, sorry to cut you off, but would you mind repeating the second part, the second question? Because we have trouble hearing you. Maybe put your mic a bit farther from your... Can you hear me well?

Better?

A little bit, sir.

Go ahead. So my first question was related to your target in 2022 on the fundraising side. Do you expect to raise at least $5 billion like last year? And also on the corporate debt category, which seems to be less in favor in 2022, can we have also an update? knowing that you have been, if I remember well, one of your funds, which is being marketed currently. And the second question was on the OPEX coverage ratio. Can we target a ratio above 100% in 2022, knowing that last year you were close to that threshold? Thank you.

Well, let me start. Thank you very much, Alexandre. And sorry for having you repeating your questions. There was background noise. We don't provide a target for fundraising on a yearly basis because, obviously, it also depends on the sequencing of the marketing of our funds and And it's not necessarily linear. I think you have heard that for some time now from Philippe and Tim. And the reason why we would rather be cautious. Having said that, as I mentioned, we have a dynamic collection in the first quarter. You see that we are up 12%. year-on-year in the first quarter in terms of fundraising. So far, we are obviously on track to continue in the perspective of a good fundraising year. Also, in the AUM globally, there are other impacts, other important factors, which pertains to the balance sheet. As you know, with the NAV, we mentioned Before that, we continued to have a very strong growth in the companies, and despite the adjustment in the multiples, obviously that should translate in some expansion. So that's for the year, but allow me to be cautious. We don't like to give each and every year a target, basically, on fundraising. All I can say today is that things are going on track. with CLAN. The corporate debt, let me make sure I understand it, I think it was related to the category of the asset class, and there I would say we continue to have dynamic fundraising in debt, and we continue to have a strong deployment for our funds. So this is a category that remains Again, this floating rate, so this natural hedge I mentioned, this is usually home to maturity, so you don't have, on top of what I mentioned before, the same mark-to-market issues that you may have on some portfolios of debt. And the risk profile, which is a bit your question, is very well managed. surprised, positively surprised to see coming from a bank that the cost of risk of the portfolio is effectively rather low and somewhat lower than what I would have expected relative to the categories. So that's an area that we continue to be content with. On the coverage ratio of cost, I mean, our guidance is not so much on on coverage ratio of cost. Our guidance is more, as you know, on FRE margin. So we have close to a 31% margin in 2021. 30, sorry, margin in 2031. We aim for operating leverage in sync with the scaling up of our funds and some efficiency, obviously, that we are very focused on. In mid-term, 35% to 40% margin. So we already cover our costs. And that's obviously something that we are also focused on. But I think the best metric to look at is the free margin.

Thank you, sir. Next question is from Mr. David Ferdinand from Kepler Chevron. Please go ahead.

Good morning. Most of my questions have been answered. Thank you. But I have a few for you. The first one is regarding your staff. At which extent have you expanded your staff dedicated to investment? First question. Second question is regarding your I would say your relative performance versus your peers. So can we have a view on the performance of your funds compared to the competitors? And the last one, do you think that investment should be more and more oriented towards some debt investment? So do you expect private debt funds to to be in a better shape than the private equity. Thank you.

Thank you. Well, starting with the staff, as you know, we ended up the year with roughly 350 people working for the company. As it has been highlighted already in the past quarters, or maybe the past two years even, Eurazeo, is clearly on the investment mode across the board, investment teams, and particularly on the front side, the investment teams, but also the sales and marketing teams, the client services teams. So this is where, if I look at particularly 2021, from 18, 19 to 21, we had the highest increase an aggregate rate of something like 15% in the past years. So we continue to grow some of these teams. Obviously, we're also mindful of the efficiency of each and every team, and we look at KPI across the board, but we are clearly a growth company, and we have opportunities to stay. So you have seen that We continue to increase the amount of money we do invest. We continue to increase, strengthen our capacity to exit and collect money. And obviously, we have this strategy of being a relevant platform, which is relevant both for the LPs and also for the target companies we may acquire. which goes with some investment in people. That is all very consistent with the ambition of improving operating leverage over time. That's for your first question. On the comparison with peers, I'm not a great fan of using a quarterly or whatever is a results publication to talk about peers. What I can say is that across the metrics, depending upon what you look at, performance of the funds where we operate, collection of money with LPs, and when it is available, of course not available with everyone because not everyone has an IC of the size of ours, we fare well relative to our peers. And there is obviously a connection between the elements because you don't collect money if your performance is not at least in line with the performance of peers. On your comment on debt, listen, we continue to expand the debt segment because we have a very good team, slow, good yield for investors. low cost of risk, as I mentioned, doesn't mean that we want to rebalance the portfolio. We continue to be very much geared towards the areas where we have an historical leadership, buyout, growth, venture, but clearly the whole strategy of diversification that has started in the past years means that we will continue to pursue the growth of the debt segment, but as well as the infrastructure and real asset segment at scaling points.

And if I may, the last question is regarding your appetite for asset management companies. So where is your pipeline for a new asset management company acquisition?

I will make a fairly generic statement for which I apologize in advance because we don't comment specifically on M&A, but as it's been mentioned, the strategy is to make of Euraseo a strong leader in the alternative asset management class. And we have strong growth organically. which is also tied to some investments we have to make organically, I mentioned before to your question. And we are happy to look at acquisitions. So I won't comment on a pipeline, but we obviously have identified areas where it would be interesting for us to go.

Roughly, my question was, have you... Have you been on some acquisition in asset management over year to date?

I won't comment on M&A. For those who have been with me at Soggen, I did always the same answer to the same question. So I think it's very uncautious for a company to comment on M&A. But as we mentioned and Philippe mentioned it very frequently, M&A is part of our strategy. So you should expect that we look at projects on a regular basis.

Okay, thank you.

Thank you.

Thank you, sir. Next question is from Mr. Mourad Lamidi from BNP Paribas. Please go ahead.

Yes, good morning, gentlemen. Thanks for taking my questions. The first one would be on fundraising activities, especially towards the end of the quarter and since the beginning of Q2. Have you seen any delay, slowdown, or pause in clients' due diligence due to the macroeconomic conditions, or maybe nothing has changed? First question. Second question on exits and realizations, especially from the balance sheet, so the number is quite small after a very strong year. Is it due to market conditions or to timing of... Should we expect exits to slow down, which would be relative to the macroeconomic context? Or are you expecting an average year in terms of exits from the portfolio, especially from the balance sheet? And finally, on deployments. so deployments were quite good in Q1. Have you seen valuation levels going down on those deployments or is it still similar to the past 12 months? Thank you.

Thank you. On fundraising, I mean, it's clear that you are an environment where people are generally speaking more cautious across the board, whatever the asset class. On top of it, the allocation, of course, continues to favor the private markets, but people, that's a sort of technical factor, having seen the decrease in valuation of their assets, public equity portfolios or debt portfolio in some cases. I mean, also see that mechanically the allocation to private market has already increased. However, as you may know, I'm sure you know, the expected fundraising for 2022 globally continues to be higher than... record year, such as 2021, because there is an expectation that it could maybe close to 1 trillion, which is again up relative to 2021. So we continue to see this strong appetite. So I wouldn't say there is a pause or people unwilling to look at fundraising. As I mentioned, the first quarter is up 12% relative to last year. I mean, clearly, people do their job quite seriously. They do it normally, and they would do it even more so in the context, looking at performance. Resilience, I think one important topic is obviously the resilience of performance that you can deliver. And in that respect, I would say that Eurazeo is rather well-positioned, given the historical capacity on the investments. On the exit, I wouldn't say that we have a low exit rate so far because you have to add again to the 400 realization of the quarter the already announced transactions which are soon to be closed for an amount of about 7 and 50 million. What is true, and I think we had mentioned it in the context of the full year results that we do expect that 2022 would be back to normal in terms of percentage of the balance sheet in terms of exit it was more than 30% and the normal is statistically that we've achieved is about 20% a year so if you take this 20% of the NAVX asset management, you see that we have already completed or announced for the equivalent of 50% and in good terms. So yes, the context is a context. I wouldn't say that people are not more demanding in terms of price, which ties to your last question in terms of deployment. We are also more demanding in terms of asset quality as well as in terms of pricing. We never did things crazy. This is not really the habit of this crew, and we are all the more cautious in the context. But when you have good assets, both on the exit side and on the buy side, they will remain good assets. And again, to my point on the portfolio performance in the first quarter, good assets, they may You may see that the multi-points are down in the context, but continue to grow organically and expand according to budget. So that's a context where we are in. I mean, it would be stupid to say that there is no impact of the context, but in that context, even the portfolio we have, we continue to deploy according to plan. So exit will not be lower because of the context. It's because we have decided that it would be a slower year.

Okay, and I have a follow-up one. You mentioned earlier that you've made a haircut on Eurasia growth. I didn't catch the number, and can you specify for which period did you make the haircut? Thank you.

Yeah, Mourad, what we've said for the full year, if you remember, is the last time NAV was published. Is that for assets which were mark-to-market through the P&L, the more volatile ones, so to speak, which effectively largely pertain to the growth area. In the valuation, there was a decision to factor a haircut on top of using cautious valuation approach. The number was 270 million or 267 to be more precise. So we had already in the NAV at the end of the year taken that caution on top of a cautious approach to the valuation. This is why I make the comment that what I see come back to the growth portfolio where there is clearly some questioning in the market as to what the tech companies worth today. I see two things. One is this growth portfolio performed very well. So there will be expansion in the core numbers, fundamentals. And on top of that, in terms of multiples, we've already taken some cautiousness in the approach. But that was already Q4.

Yeah, so that represents almost 15% haircut on the balance sheet exposure for your Azure growth. Is that right?

If you just stick to growth, it's about 17% of the portfolio. So no, it's more than 15%, closer to 20% equivalent haircut.

Okay, thank you very much.

Thank you, sir. Next question is from Mr. Oliver Caresta from Goldman Sachs. Sir, please go ahead.

Morning, Oliver Caresta here from Goldman Sachs. Thank you, William and team, for the presentation and results this morning. Just most of my questions have been answered, but just a kind of quick one on the buyback. You've given the, I guess, the rationale for doing it, but what was the logic behind 100 million? What was behind the size? And could you just confirm any expected timings of the buyback as well? That'd be great. Thank you.

Thank you, Oliver, for that question. 100 million suits us because we want to balance return to shareholders. Also, we have the conviction that the company today is underrated relative to its fundamental values, so the immediate value creation, I mean, to the rationale you mentioned. And also, we have a strong balance sheet, so this is a testimony to our confidence in the strength of the company. But we want to balance all this with the fact that we want to maintain good liquidity of the stock, which obviously is an important factor for investors, and I'm sure you as a sell-side analyst consider it's an important factor. So we do, if I take the average price of the past days, With that, we back around roughly 2% of the share count, even including taking into consideration only the free float. It will have a limited impact on the liquidity of the stock based on volume. So that's the balance we wanted to take. On top of it, as you know, we are a growth company. We offer already... stable, growing dividend. It's been the case for 15 years. So if you add up the 3 euros of dividend to this 100 million, i.e. 230 million, to this 100 million of share buyback, you end up with a yield which is very attractive based on the stock price today. So there is a limit, you know, to how attractive you want to be as a growth company, obviously. To your point, given the volumes and the approach we'll take to the buyback, which is obviously to do that in a very smooth manner, not impacting too significantly either volumes or price, obviously. If you take that level of caution, it will be done most likely before the end of the year.

Okay, thank you.

Thank you, sir. We have no other questions, ladies and gentlemen. I would like to remind you that if you wish to ask one, you may press 01 on your telephone keypad. So 01 on your telephone keypad. So we have no other questions. Back to you for the conclusion.

Well, thank you very much for attending this call. Again, this is a good quarter, as you've seen, a quarter that makes us confident in the outlook for the company, being mindful of the context as we discussed. It was a pleasure for me to present these results for the first time to you, and I'm looking forward to talking to you in the next days and weeks.

Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.