Federal Signal - Earnings Call - Q2 2014
July 29, 2014
Transcript
Speaker 0
Good day and welcome to the Federal Signal Corporation Second Quarter Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brian Cooper, Senior Vice President and Chief Financial Officer. You may begin.
Speaker 1
Good morning and welcome to Federal Signal's second quarter twenty fourteen conference call. I'm Brian Cooper, company's Chief Financial Officer. Also with me on this call are Dennis Martin, President and Chief Executive Officer and Jennifer Sherman, our Chief Operating Officer. We'll refer to some presentation slides today as well as to the news release, which we issued this morning. The slides can be followed online by going to our website federalsignal.com, clicking on the Investor Call icon and signing into the webcast.
We have also posted the slide presentation and the news release under the Investor tab on our website. Before we begin, I'd like to remind you that some of our comments made today may contain forward looking statements that are subject to the Safe Harbor language found in today's news release and in Federal Signal's filings with the Securities and Exchange Commission. These documents are available on our website. Our presentation also contains some measures that are not in accordance with U. S.
Generally Accepted Accounting Principles. In our news release and filings, we reconcile these non GAAP measures to GAAP measures. In addition, we will file our Form 10 Q today. I'm going to start by addressing our financial results, then Dennis will provide his perspective on our performance and Jennifer will comment on some of our operations and our outlook. Looking at the financials for the second quarter, our consolidated results reflect solid growth in revenue, expanding margins and robust orders and backlog.
Consolidated operating income was $23,900,000 which represents a 31% improvement versus Q2 last year. Sales were 5% higher and operating margin rose to 10.2%. Interest expense was $900,000 down from $1,700,000 last year. And adjusted net income from continuing operations for Q2 was $17,100,000 or $0.27 per share. In last year's second quarter, as most of you know, we recorded a significant income tax benefit associated with the release of valuation allowance against deferred income taxes.
Excluding that benefit, our adjusted EPS last year was $0.17 per share and this year's $0.27 per share represents a 59% improvement. We also continue to see strong order growth with consolidated orders increasing by 21% to $253,000,000 in the quarter. Strong order flow contributed to a very healthy backlog of $356,000,000 which is also up 21% compared to Q2 last year. ESG reported an excellent second quarter with sales increasing by 9% to $139,000,000 The increase reflects higher shipments of street sweepers, sewer cleaners and hydro excavators, which were enabled by increased production throughput in our manufacturing facilities. Operating income was up 46% to $23,100,000 This translates to an operating margin of 16.6% compared to 12.3 a year ago.
Orders at ESG were up 44%. We saw especially strong demand for Street Sweepers, including large fleet orders in U. S. And international markets. There was also continued strong demand for hydro excavators and sewer cleaners.
Both municipal and industrial demand were encouraging. At SSG, orders were down 7% in Q2, primarily due to the timing of large orders received in the 2013 within our Police and Outdoor Warning Systems businesses. Ordering was also somewhat slower for Industrial Systems products. SSG sales were up 8% compared to last year, primarily driven by increases in U. S.
And European public safety markets. Operating income more than doubled from the prior year quarter, which included inefficiencies connected to the implementation of our ERP system in May 2013. Operating margin improved from 6.3% to 12.2. Sales at the Fire Rescue Group during the quarter were $34,100,000 down 9% on lower unit volumes and FRG reported a nominal operating loss. Orders were up 5% contributing to a significant backlog of $112,000,000.28 percent higher than at June 30 a year ago.
Jennifer will go into more detail about FRG later in this call. Corporate operating expenses were $6,400,000 up compared to $4,600,000 last year. The increase reflects higher incentive and stock compensation expense, higher medical costs and an unfavorable comparison on restructuring activity. In total, Q2 operating income was $23,900,000 up 31% versus last year and operating margin increased to 10.2%. When we compare income from continuing operations, there are a couple of other key items affecting the quarter.
These are interest expense, which was down $800,000 and income taxes, which was $5,700,000 of expense this year versus a benefit of $101,400,000 last year. As already noted, income taxes last year contained a benefit of $102,000,000 related to valuation allowance. For 2014, the effective tax rate for Q2 was 25.1%, which benefited from some changes in tax reserves during the quarter that were worth about $02 to our earnings per share. We anticipate that the full year effective tax rate will average about 32%. From a cash perspective, we paid little tax in The U.
S. Where our income continues to be offset by use of deferred tax assets consisting of net operating loss carryforwards and tax credit carryforwards. On this GAAP basis, we therefore earned $0.27 per share from continuing operations in Q2 compared with $1.87 per share in Q2 last year. There were no significant unusual adjustment items in Q2 this year. However, to facilitate earnings comparisons, we have been adjusting for unusual items recorded last year, including restructuring activity, debt settlement charges and income taxes.
The income tax expense included in our adjusted earnings per share for 2013, therefore, reflects a normalized effective tax rate of about 32%, which excludes the effects of unusual tax items, most notably the change in valuation allowance. On this basis, our adjusted EPS for the quarter was $0.27 compared to $0.17 per share in Q2 a year ago. Looking at the balance sheet and cash flow. Cash generated by continuing operations was $30,700,000 during Q2, which is up from $24,100,000 in last year's quarter. During the quarter, the company paid down an additional $12,500,000 of debt, which reduces the company's total debt balance to $76,000,000 compared to $92,000,000 at the 2013.
Our net debt dropped to $51,000,000 its lowest level in over twenty years. Our leverage ratio of debt to adjusted EBITDA continued to improve as well dropping to 0.8 times. That compares to 1.1 at December 31 and two point one a year ago. Interest rates on our debt remain low. The company also funded dividends of $1,900,000 and share repurchases of $3,300,000 in the second quarter.
That concludes my overview of the numbers and I would like to turn the call over to Dennis.
Speaker 2
Thanks, Brian. From my perspective, our consolidated results for the quarter were excellent, largely driven by outstanding performance at ESG and much improved results at SSG. Orders, backlog, sales, earnings and EPS were all strong and our operating margin of 10.2% is the highest quarterly result in more than eight years. That is an important milestone, which could not have been reached without the focus and dedication of our people over the last several years. At ESG, we benefit from continued strong order growth and operating leverage.
With the recent improvements we've made in our manufacturing facilities to add capacity, any additional volume that leverages our existing operations makes a strong contribution at the bottom line. I continue to believe that we're doing the right things to improve productivity and output. Our products are well positioned and the markets are progressing. We continue to expand market coverage with investment in our sales force and the recent introduction of a new service center in North Dakota. The second quarter results benefited from our new production line at Vactor.
And across ESG, we've done a good job. We had good demand from both industrial and municipal markets. SSG reported a much improved quarter with operating income more than doubling. Some of this was attributable to the fact that the prior quarter included inefficiencies associated with last year's ERP system implementation, but the majority of the improvement is due to improved sales volume in our domestic and European public safety markets as well as the effect of increased productivity. On the Industrial Systems side, we continue to invest in developing new products and an expanding coverage significant markets.
Jennifer will talk more about operational challenges that FRG experienced in the second quarter. However, we believe that with its increased backlog, FRG is well positioned to improve its results and have a solid fourth quarter. Across our businesses, I believe we are seeing improvement in municipal spending, which has been depressed since 02/2008. Since that time, our businesses have become more efficient and we've adapted to lower levels of demand. For example, both our Elgin sweeper and our public safety system businesses have significantly lowered their breakeven points.
The stronger foundation is what we've been able to leverage as orders pick up. Finally, I'd like to touch briefly on a couple of items designed to return value to shareholders. As Brian noted, we repurchased approximately 232,000 shares during the quarter for a total of $3,300,000 and paid $1,900,000 for our first dividend in over three years. We also announced last week that Federal Signal's Board of Directors declared another dividend of $03 per share. As I stated previously, neither the dividend nor our share repurchases limits our growth opportunities.
We are fortunate to have attractive opportunities for growth within the company and we're pursuing them. Most of these do not require significant capital either as again we have the capacity and the capabilities to leverage our facilities. We will also continue to look at acquisition opportunities that would build on our core competencies and that we can leverage for profitable growth. We intend to be disciplined and strategic with those efforts. Now I'm pleased to turn the call over to Jennifer.
Speaker 3
Thank you, Dennis. I want to start with an update on a couple of legal items that we reported recently. First, we were successful at the appellate court in Illinois in overturning a Cook County trial court certification of a class action related to hearing loss. The verdict reaffirms our belief that a class action trial is not an appropriate mechanism to litigate hearing loss claims. We strongly believe in our life saving siren products and we will continue to defend them aggressively.
We have an excellent record of success. Since February, we have prevailed in nearly eighty five percent of all hearing loss cases that have gone to trial and many more individual claims have been dismissed prior to trial, including all cases filed by firefighters in New York, Maryland, Missouri and New Jersey. The second item is an adverse court ruling on a commercial dispute in Latvia. We are extremely disappointed with the initial ruling and will file an appeal to be heard by a three judge panel that is likely to have deeper experience with some critical aspects of the dispute. After careful and thorough analysis, we continue to believe that we should prevail on appeal.
As a result, we did not record a liability for this matter in the second quarter. The appeal process is projected to take approximately two years. In the event that our appeal is unsuccessful or not fully successful, we would expect to record a charge that could range up to about $5,000,000 As you've already heard, FRG, which is our Bronto Sky Lift business had a disappointing quarter. Over the last few months, we've been working to improve the configuration flow of our manufacturing facilities, including the installations of a new paint system, new robotic welding and a new machining center. These capital investments have taken longer and caused more disruption than we had anticipated.
In addition, we've experienced supply chain delays following the bankruptcy of the supplier of some key cylinders. These disruptions translated into higher cost in the first half of the year and resulted in unit deliveries being deferred to the second half of the year. At the same time, we also have a significant number of shipments of low margin orders concentrated in the third and second and third quarters. We had expected many of these issues to be resolved in the second quarter, but it became almost a perfect storm. We have focused on resolving these challenges, but given the results we have recently formalized a rigorous improvement plan.
We are moving toward completion of the capital projects and we believe that the new supplier will stabilize our cylinder deliveries. We are also encouraged by a very healthy backlog of $112,000,000 which is 28% higher than a year ago. Based on our progress and plans, we believe that Bronto will return to profitability and should have a strong fourth quarter. About two years ago, we also began to pursue an improvement plan in our Public Safety Systems businesses within FSG, which include products for the police, fire and amber markets. Faced with the contracting market, we resized our operations, implemented a number of aggressive eightytwenty measures to simplify the business and introduced a productivity element into employee compensation programs.
We are seeing benefits from these initiatives with plant productivity levels up 13% compared to the second half of last year. We also identified a number of opportunities including development of some new products to gain share in key markets. These actions are beginning to gain momentum with orders from our domestic and international police markets up 5,400,000.0 Sales and operating income have also improved considerably in these businesses since last year. I would like to conclude with some brief comments about our outlook. Coming out of a solid second quarter performance, most of our businesses carry strong momentum into the second half of the year.
We expect improving results from the Fire Rescue Group as our improvement plan gains traction and it should deliver a solid fourth quarter. On a consolidated basis, we expect that our third quarter may slow down compared with an exceptional second quarter, but our strong backlog supports an improved outlook for the company for the year, particularly for our fourth quarter. We therefore feel comfortable raising our earnings outlook for the year to a range of $0.83 to $0.87 per share. With that, I think we're ready to open the lines for questions. Operator?
Speaker 0
Thank you. And we'll go to our first question from Shivangi Tativeness with Global Hunter Securities.
Speaker 4
Hi. Thank you guys for taking my question. Okay. My first question would be on the guidance. You upgraded the guidance by about $04 to $07 from the previous $0.79 which includes a sequential slowdown in quarter three as well.
And even the tax rate is expected to be slightly higher from the earlier one maybe on an average of the first half. So I was wondering if you are expecting the entire backlog and the orders of 21% to actually convert to sales? And how much of the 112,000,000 backlog from the FRG is actually includes the deferred deliveries?
Speaker 1
Well, just to be clear about orders and backlog, count our orders when they're firm orders very rarely, extremely rarely do we ever not have an order go through and become a sale. And they remain in backlog until they do. So all of those orders will convert. Now will they all convert in the third quarter or fourth quarter, especially for Bronto? No, because those are longer delivery cycles.
The backlog feeding all of our businesses and they all have strong demand today.
Speaker 4
So what gives you the actual confidence that you the EPS actually increases by 4% to 7% considering that not all of the backlog would actually convert to sales?
Speaker 1
Well, again, the backlog is orders that are ready to be filled. We're also constantly receiving new orders. So there's good demand. And as we look at the businesses well, as we look at the businesses, they all have good momentum.
Speaker 2
And the second quarter increased, which is giving us the confidence as well.
Speaker 4
Okay. Okay. Sounds good. My second question is on the capital projects and the investments. Do you expect you said you expect to complete all your capital projects and the investments in FRG in second half.
So do we expect to see any incremental CapEx in 2014? Or that's going to be the same as you had earlier in your thoughts?
Speaker 2
It would be pretty close to the same as we've had earlier. We are evaluating a number of high speed machine tools in a few of our businesses, but it won't have a major impact on the third and fourth quarter.
Speaker 1
And that's not specific to Bronto. That's it's really in other businesses where we're making some investments. As we've said previously in the year, our capital investment will be a little bit higher this year. It has been running probably more like $15,000,000 in prior years and it's more likely to be around $20,000,000 this year. And that's because of the opportunities for growth that we're pursuing.
Speaker 4
Okay. Sounds good. And you talked about apart from the operational inefficiencies and the supply chain issues, there were also a product mix the unfavorable product mix in BFRG. So do we expect that to continue as a headwind in the second half? Or you expect it to get better?
Speaker 2
We've resolved the supply vendor issue on the cylinders. So that will get better. And the final installation of a lot of the capital equipment that was purchased for the rearrangement of Bronto is being installed during the third quarter, should be finalized in the third quarter. So we certainly expect the fourth quarter to be much stronger than the third quarter at FRG, but we'll start to see improvement from here out.
Speaker 1
And on the product mix side, we do have some lower margin orders, which should primarily be completed by the end of the third quarter. There are always some, but we've had a higher concentration of those in the last couple of quarters.
Speaker 4
Okay. Sounds good. Thank you, guys. I'll get back in the queue.
Speaker 1
Thank you. Thank you. Thank you.
Speaker 0
And we'll go to our next question from Robert Kaczewski with Sidoti.
Speaker 5
Good morning, everybody. How are doing?
Speaker 2
Hey, Rob. Good morning.
Speaker 6
Just a quick question on backlog and it kind of centers around the Environmental Group and the Fire Rescue Group because I know at least in Fire Rescue you're doing some operational improvements. And Environmental you have had extended lead times previously. And I'm wondering the backlog growth how much is back order versus good backlog growth? Any way you can kind of discuss that?
Speaker 2
Well, I think it's probably all good back order growth at this point. We're making progress on our ESG shipments. We've had an increase in sweeper orders. So there's more backlog there, but it's all timed appropriately we think for delivery to the market. And really the FRG, we talked about that the issues they've had getting product out because of the manufacturing shuffle in the plant.
But we feel like we're making progress in all the areas with productivity. And we're just blessed with a lot of good orders.
Speaker 6
Okay. So at least with the environmental group you feel good about where lead times are right now and the backlog we see right now is just a great business conditions going forward?
Speaker 2
Right. We feel good about them. We like to have in all the orders and we're dealing with them.
Speaker 6
Okay. And then as far as the margins on the Environmental segment, was this a perfect storm in a good way getting to that 16.6% because it's well ahead of the range that you the goal that you have. And I'm just wondering sustainability of this level of profitability.
Speaker 2
As we've talked in the past from quarter to quarter, orders will go up margins will go up and down from order to orders quarter to quarter. But we had an excellent mix of products. We had very high productivity rates out of Vactor, good operations out of our Elgin business. And so really, if you want to call it perfect storm, it's true. I'd like to have one of those every quarter, but it was probably ahead of where it will be on a normal run rate.
Speaker 0
Okay. And then I guess just staying within environmental one other question. Some of
Speaker 6
the new fleet orders that you got for StreetSweepers, are these replacement business or are they share gains?
Speaker 3
In most situations, they were replacement business. They were customers that we had long term relationships with.
Speaker 6
Okay. And then finally on the SSH
Speaker 3
StreetSweepers products across North America.
Speaker 6
Okay. Good. And then finally on the SSG side, what I know you mentioned some productivity improvements that you're seeing right now on the police side. And I'm wondering kind of what the bridge is to get to that 14% to 16% margin goal from where we are right now. I know it's probably 10% or so on average in the first half of this year, but it was a good second quarter.
I'm wondering what we need to see happen to get to that higher margin rate?
Speaker 2
The biggest part of the bridge is return of business in the European markets and return of volume in The U. S. Markets on the police side.
Speaker 6
Okay. The
Speaker 1
So other thing that will help drive it is continued growth in our systems businesses, which have good margins.
Speaker 2
Right. Because if you look at the police business, it's I haven't seen the latest numbers. Jennifer, do you have the latest numbers? But the police business, Rob, as we talked many times dropped from something like 85,000 police registrations in 2007 down to a low in the 30,000 range, a 30 high 30s. And then we think it's back up to the 50s.
So the police business side of the business has not recovered as fast as some of the other parts of the business. So the return of the volume would be helpful. And then of course, as I said, the European business is doing well, but it's still much reduced volume from what it was previously when we operated in those mid teens kind of margins.
Speaker 0
Okay. That's helpful. Then finally just with regarding some of the productivity improvements within SSG, how much
Speaker 6
of an opportunity is that from a margin expansion standpoint? Say the volumes don't come back, much can you see this better productivity lifting the profitability profile?
Speaker 2
Well, labor is a small part of the cost of these kinds of products. And our entire business labor is probably the it is the smallest component. So if the market doesn't come back, we'll continue to adjust size of our operations as well as productivity. But the productivity improvement in the last couple of quarters there has been significant in terms of efficiency and we think that will continue.
Speaker 0
Okay, cool.
Speaker 6
Thank you very much and good luck.
Speaker 0
And we'll go to our next question from Steve Barger with KeyBanc Capital Markets.
Speaker 5
Hey, good morning.
Speaker 1
Good morning, Good
Speaker 5
If I use 2011 as a base, your operating margin recovery has just been great about six twenty basis points based on where I'm modeling the 2014. Mostly that's come through SG and A leverage while gross margin is relatively flat over the past few years. And I know some of the reasons for that. But looking forward, can you talk about any specific initiatives you have in place make the direct labor aspect of production more efficient? Or is there anything you can do to reduce the time it takes to on a per unit basis?
Speaker 2
If we do a deep dive into the operations, which we don't generally share publicly, you would find that we are improving the productivity in our manufacturing lines that are adding to that rather than just SG and A leverage. So on an operating basis, as an example, we measure productivity in our truck businesses by number of hours to build a truck and we've seen significant improvements in those. The eightytwenty work has also created more standard product than customized product flowing down the line, not that we don't do customized product, but we let it interrupt the production lines as we did in the past. And we've seen a lot of that margin improvement you've seen or some of it anyways come out of that kind of improvement. So we've had some price, a lot of operation improvement and we're just higher sales activity of higher margin products, so better mix.
Speaker 5
And I know internal improvements are never truly done, but do you still feel like there's a decent amount of runway in front of you in terms of taking time out or improving per unit productivity?
Speaker 0
We do. Some of
Speaker 2
the production lines Steve we put in place are just coming
Speaker 5
up. Okay. Sorry, go ahead.
Speaker 2
As you said, the benefits are ahead of us. The work at FRG, we'll begin to see that as we move ahead here. We're putting robots in automated machining centers, a new automated paint system, things like that that will continue to drive margin improvement for the next years. And our new line at Factor is just up starting in April and that's increasing productivity every day. And we're working at Elgin with many productivity improvements that are going in place there including one piece flow and which stage for a new line to go in sometime in the fall toward the end of the year there.
So the gains are still ahead of us in a lot of ways.
Speaker 5
Got it. And obviously cash flow and your balance sheet are a lot healthier now than they have been in years past. Are there still opportunities to bring high dollar purchased items in house or bring in any outsourced services to bring total cost down?
Speaker 2
That's a balance Steve between the demand in the market and our ability to get the capacity out the door. So we constantly are balancing what we outsource or what we bring in the house. But we've been working diligently at redesigning components and bringing them back in where it makes sense. And likewise using eightytwenty, we put components outside that we think are really hindering our production. There's always opportunity.
Speaker 5
Got it. And so as you think about and this is kind of a backlog question, but as you think about the opportunities you have to improve your throughput, if you were to keep price and mix constant in ESG for instance, could you grow 10% on a unit basis next year if the backlog supported that?
Speaker 2
We could probably grow more than that physically, but I'm not predicting that that's what we'll do. But we
Speaker 5
I understand. I'm just trying to get a sense of your capacity before you have to spend money on physical infrastructure.
Speaker 2
Yes. No, we could in all cases, could grow that or more without
Speaker 1
adding capacity. It wouldn't be major capital?
Speaker 2
It would be minor capital. Right. Elgin, FRG and Safety clearly have the opportunity to grow twice that twice the 50%. We could grow 50% in some of those businesses. The Jetstream business and the Vactor business still have healthy headroom in terms of growth based on the product lines assembly lines we put in place, the strategies we're using to deploy materials and all that.
So we have headroom without spending major capital.
Speaker 5
So when you think about all the progress you've made in terms of operating margin expansion over the last few years, do you look at this as just now getting to where the company should have been anyway and you still have the real incremental improvement coming from focused your own focused approach to how you want to run the business in front of you or No.
Speaker 2
I think what you're seeing out of ESG today is a good combination of all the business strategies we've deployed including pricing eightytwenty simplification of our product lines and we're operating at a highly leveraged level in Factor as an example.
Speaker 1
And so
Speaker 2
I think we've never operated at this level. So I think there's still headroom, but I won't say that this is a natural place. It's more of a natural place for us now because of all the good work our teams have done. But it's leverage dependent in a lot of ways too. Right.
And
Speaker 5
just conceptually across the portfolio, what percentage of your revenue is coming from the energy end markets now? And how fast is that growing,
Speaker 1
if you can quantify it?
Speaker 2
We don't specifically measure that. But we think our hydro excavator product line, a lot of our Jetstream product line is coming from those areas. We just opened a new operation in North Dakota to take advantage of the energy boom that's going on there. So we think it's a longer range stable growing part of our market. We've just taken two sales engineers and focused them as specialists in the energy area and we're thinking about adding a couple more.
So we see it as a long sustainable opportunity for us to take our products that we're good at and modify them for that market and penetrate the market even deeper.
Speaker 1
And I think it's
Speaker 2
At Safety, same way. With our Industrial Systems Group, that's all primarily all energy related on the high end systems business.
Speaker 1
And Steve, think you need to understand some of these things are a little difficult to measure. The same contractors who are working on energy and using our products might be working in a pulp and paper mill a week later. So we don't have an aggregate measure, but I think we have a pretty solid feel that the incremental growth is largely has a bigger percentage coming from the energy markets.
Speaker 5
Right. Okay. And one question as a follow-up. This is my last question from the last call. Can you update us on the police car upfitting pilot program?
I think last quarter you said that you were working with specifically somebody in California and that drew interest from other potential customers. How is that going? And is it offsetting what's been a weaker police car market?
Speaker 3
It's an important part of our growth initiatives in our Public Safety Systems business. We've seen strong interest from Los Angeles and those orders continue. And we continue to now respond to inquiries from both California and other parts of that region. So we're encouraged by what we see.
Speaker 5
Got it. Thanks. I'll get back in line.
Speaker 2
Thanks, Steve.
Speaker 0
We'll go to our next question from Robert Kaczewski with Sidoti. Just one other follow-up question. On the stock buyback, is
Speaker 6
this the level that we should be seeing on a quarterly basis? And just kind of any other thoughts on that?
Speaker 1
Yes, Steve or Rob, I'm sorry. We are going to continue with the authorization that we have in place. So that's not a bad level, but I don't know if it will be a steady state necessarily.
Speaker 0
Okay. And then one final business question. You noticed I noticed a big Middle East order and the StreetSweeper side.
Speaker 6
Is this a new end market for you to get a little bit more in international markets? Or is this something that you've already had exposure to
Speaker 2
Middle East has always been a good market for Belgian products primarily sweepers and also for some Vactor products and clearly for our Jetstream products. The thing about The Middle East is that with the tensions that occur there, the market ebbs and flows. So one year you'll have big activity and another year might be no activity. And our team has done a great job working over there in the market. And so these are existing markets and coverages.
It's just the cycle of their business.
Speaker 6
Okay. Thank you very much.
Speaker 2
Thank you.
Speaker 0
And at this time, we appear to have no further questions.
Speaker 2
Well, with that, I'd like to thank everyone for joining us today and sharing in this discussion of our business and we're excited about where we're going. And we'll look forward to talking to all of you next call.
Speaker 1
Thank you very much. Thank you.
Speaker 3
Thank you.
Speaker 0
And that concludes today's conference. We appreciate your participation.