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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
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Hello, and welcome to the 2023 First Quarter Sales and Financial Data Call. My name is Jess, and I'll be your coordinator for today's event. [Operator Instructions]. I will now hand over to your host, Stanislas de Gramont, Chief Executive Officer; and Nathalie Lomon, Senior Executive Vice President and CFO, to begin today's call. Thank you.
Thank you very much for this introduction. Without further ado, we'll get going. We'll cover today, it's a quarterly sales review. So we will cover, of course, Q1 sales highlights. We will look at our sales performance analysis with a glimpse on the FY net financial results. And then we will conclude with the outlook for 2023.
Starting for the sales highlights of the first quarter, our sales total performance declined by 3.7% like-for-like, 4.9% reported. And that graph highlights the very high level that we maintained for first quarter, we are close or very or slightly below the level we had in 2021, so it's a very strong first quarter and that minus 3.7% has to be taken in the context of that very strong historical number. As you know, that strong historical number will not be so prominent in the next 3 quarters of the year. It's a soft start of the year as we anticipated.
We've been saying since December, January, February, that our first quarter sales would be soft. And in fact, it is in line with group expectations. We've been used -- and as usual, we have a gap between the performance of our consumer business, which is down 6.6%. But it's worth highlighting the Professional business, which is up 29% like-for-like and 34% total. That is a very, very strong performance, better than our expectations.
Our consumer business has been penalized this quarter by the following elements. The first -- fifth and last consecutive quarter with a high comparable base. That should disappear from Q2 onwards. We still have some tough key markets performance in France, Germany and the U.S. U.S. is mainly a question of phasing. And we have a soft performance in China and we will come back to that. Professional has a very strong start. Great momentum in all geographies, a very strong, sound core business trends driven by both machine sales and services, and we have new contracts in the PCM business, which is very exciting and pulling the growth. Nathalie, you want to take us through the key numbers?
Yes. Thank you very much, Stanislas. In the first quarter of 2023, Group Service reported sales of EUR 1,822 million. As you can see on this chart, it's quite a contracted performance as Stanislas has already highlighted as well, with the consumer declining 6.6% like-for-like facing high comps, and we'll get into more details in a few minutes regarding the performance of the Consumer segment, whereas the Professional segment has delivered EUR 209 million and 29.1% growth like-for-like, an outstanding performance.
If we move to the usual bridge of sales comparing the first quarter of 2022 to 2023, you see here the organic growth of minus EUR 72 million, accounting for minus 3.7%, a negative effect in currency for EUR 27 million and a positive impact coming from scope. This is reflecting the first quarter of sales that we record in 2023 regarding Zummo. And I want to highlight that we will consolidate La San Marco, the business we have acquired in February this year as of June 2023.
Moving to the currency impact, the minus EUR 27 million that I have just highlighted. You can see on this chart, all these currency impact is broken down on sales with a strong positive contribution from the Russian ruble and the U.S. dollar and on the far extreme of the chart, negative contributions, mainly coming from emerging countries with fluctuating currencies in Colombia, in Turkey and Egypt and also a negative impact coming from the Chinese Ren.
Thanks, Nathalie. We've tried to look at the sales performance in the context of the previous 2 quarters of sales Q4 and Q3 last year. So this chart works this way. You have the first call on its Q1 2022, the second one, Q1 2023. We have the variation from '22 to '23 reported in like-for-like. Then we've reminded you of the Q4 like-for-like numbers and the Q3 like-for-like numbers. And the lines are classical geographical split -- now what's interesting, if you go to the bottom of the chart, we had Q3 at minus 8% like-for-like. Last year, Q4, minus 5.6%, and we post Q1 '23 at minus 3.7%. So we see that there is a clear recovery of sales performance year-on-year, in part mainly due to the comp's numbers. And you see that, that recovery is a factor of the consumer slowing down its decline, 8.8 negative in Q3; 7.3 negative in Q4; 6.6 negative in Q1. But also the acceleration of the Professional business that we were expecting we've been saying since the second half of 2021, that Professional will be recovering, and we're expecting this business to come back to spill with a strong growth and profit generation.
Now by regions, you will have the opportunity to look at the details. Two potential hiccups in this trend of quarter-on-quarter performance. In Americas, we're expecting it because it's a high comp number in the first half of the year, driven by '21 and '22. And in China, it is a very specific moment in part due to -- mainly due to the fact that China last year, Q1 had a very, very robust 11% growth performance. Now a bit more flesh around this performance, starting with the Professional business. It's a very strong business. We have double-digit growth across all regions.
Yes, China is riding the pack. But in Germany, in the U.S. and in the U.K., we also have some very strong performances. We have a 50-50 mix in machine sales growth between large deals and core business. You will remember that during the COVID lockdowns we did work on expanding our customer base, and we reap the benefit of that now. Deals have come back but core business, smaller outlet, smaller customers are still there and that's, I think, driving the business.
We see also a strong recurring revenues from service and maintenance. The growth is in line with the World Professional business, and that's great news. And last, we see that we have a solid new product momentum. We had a great customer reception and the [indiscernible] in March, which is probably one of the biggest, if not the biggest fair for Professional material, coffee machines in particular. And we have a very strong push from customers for our new products. And finally, you will remember that we've consolidate La San Marco in the first part of this year, and that will bring great complementary products to our PCM offering.
Moving on to the Consumer business, starting with the EMEA. In EMEA, we have a contrasted performance between Western Europe, which is at minus 9.6% like-for-like and other countries which are back to growth at plus 6.7%. In Western Europe, we were expecting that we have soft markets in Western Europe during Q1.
We still have a strong comparison base for 2022 Q1 as an extension of Q1 2021, which was absolutely exceptional in France and Germany, in particular. We see some continued reduction in inventory level with some retail partners. We had high inventories in trade in the first half of last year. Those inventories in trade went back to kind of historical normal loan in the second half of last year. And now we see some retailers going further down in their inventory level. And of course, that impacts our ability to convert a stronger sellout into selling.
And thus, we see that there's a good momentum for several best sellers. We have at last 5 years, which are growing fast. We have engineering cookware and that includes a loyalty program in France that is working very well. So we see that we have some good driver and some good momentum in Western Europe on some key product lines. Other EMEA countries are positive overall. We have in Central and Eastern Europe, high inflation in the region. And despite that, we put a good performance with share gains in several countries. We see the market recovering in Ukraine, and that is leveraging group's strong historical leadership positions and still gaining share. And we have a strong local demand in Turkey and Egypt despite a highly volatile currency environment.
Moving on to Americas, disappointing or a low minus -- it's not disappointing. We're expecting it low minus 22% like-for-like performance in North America. Again, something that we're expecting. We are in a context, in a market that is pretty soft. We are gaining share and expanding our leadership position in Cookware. Cookware, the bulk of our business is in North America, and we are gaining share in Tefal and in All-Clad. And here, again, we are impacted by some retailers' focus on inventory levels and cash management, that is something that is in the papers.
Mexico keeps posting very strong performance. We are developing positively across all categories. We have successful new launches in fans and blenders. We have reinforced our leadership in Cookware. And finally, in South America, Brazil and Colombia, we are growing. Colombia, both through cookware and kitchen electrics. And in Brazil particular, we have a good back of season fan performance.
If I move on to Asia. In Asia, we had a soft start to the year in China as expected. We have a very high comparable base. Last year, Q1, we were up 11% like-for-like versus Q1 2021. And the timing of the Chinese New Year is -- was mid-February last year and is the last week of January this year, which means the inventory build has been in path on Q4 on December 2022. So that makes the comparison base more difficult. We see that we are continuously gaining shares in both cookware and kitchen electrics in both online and off-line. I remind you that we are now, of course, #1 in cookware, both online and offline. And combining on and off-line in kitchen electrics, we are now the market leader in China, ahead of Joyoung and ahead of [ Miele]. So that's a credit to our innovation and activation strategy. We have a very, very powerful hubs in China, both in terms of product development and expansion and in terms of activation of the traditional trade on the traditional online platforms, but also on the new platforms like Douyin, we see strong performance.
There's a lot of talks in China on the economy reopening. We don't see yet that supporting demand for cookware and SDA products. A lot of people look at that and we see that hospitality, catering and travel are the sectors that are benefiting more. We are confident that we will end up benefiting from that. We were in China a few weeks ago, and we see this business back to growth in revenue for the remaining 3 quarters of the year. I think it's something that we are very comfortable with.
The rest of Asia had a challenging performance. We have, in particular, in Japan and South Korea which are our biggest markets outside of China, some challenging situation. We see that currencies, the Japanese yen, in particular, at [ 147 ] makes it very difficult to maintain, to keep our business with a steady level of performance. We've had some crisis in Japan and Korea in the past. We know that -- it may take some time, but we are confident that fast these historical numbers of Q1 last year, we should start to see a sequential improvement in this region as well.
For sale, Nathalie, you want to take us through the profit outlook?
Sure, Stanislas. So in the first quarter, the group has delivered off of EUR 65 million. That is 3.6% of margin. So before getting into some comments on this number, I just want to remind you that because of the seasonality of the activity of the group, the first quarter operating profit is not representative of the full year performance. . So as we said, because we're delivering lower sales in the first quarter for sure there's an impact directly in the operating results.
We still have quite high COGS in the first quarter because they are made of products that have been manufactured or sourced in 2022 at higher cost compared to what we currently see in the beginning of the year. And this has a negative impact that we estimate to be close to EUR 50 million in our profitability in the first quarter.
And then second, as we're delivering lower revenue, this is creating a negative operating leverage on our OpEx. With more details on raw mats, freight costs and FX and I will start with the raw mats and the freight cost. We see them decreasing in the first quarter. And as we said, when we delivered the 2022 performance and 2023 outlook, in February, that negative impact or cost decrease will materialize in the second quarter in our margin. In the first quarter, we have a very limited impact coming from FX on the operating profit and moving forward, we expect to see more negative impact coming from FX that will offset the positive impact we expect on the lower production cost on raw mats and freight.
Moving forward, this means that we expect that the offer margin will improve quarter-on-quarter from Q2 and for the rest of the year. If we move to the net debt of the group, so we're closing the quarter with a net debt at EUR 1.864 billion -- it's a decrease of EUR 109 million when compared to end of last year. This is coming from a strong cash flow generation which is above EUR 200 million for this quarter, mainly fueled by a further reduction in inventories. You may recall that we have started to decrease our inventory with an action plan that has been triggered at the end of the second quarter last year. And since then, we are sequentially reducing our level of inventory. So we're still on that way. And another explanation for the gap between the evolution of -- in the net debt between the free cash flow and the reduction of the net debt is coming, of course, from the acquisition of La San Marco. We're closing the quarter with still a very healthy and well-balanced financing structure, and that is worth noting as well. Over to you, Stanislas.
Merci, Nathalie. We are confirming our full year outlook. We see a progressive recovery in consumer sales started in March. We see that confirmed through April. We confirm a strong growth in Professional sales and of course, the very strong outstanding stellar first quarter can only encourage us in this direction, [ although not so loud ] in Professional, that business is not coming from a particular huge deal. Of course, we have big deals but not only, we have also a sound ground growth of our business.
And we still see that we will increase the full year group performance of our margin. We have, as expected, a low margin in the first quarter. The bulk of it is due to this cost embarked from 2022 Q4 that will -- that disappear from Q2 forward. So we confirm our outlook, and now we are ready and happy to take your questions.
[Operator Instructions] First question comes from the line of Charles-Louis Scotti from Kepler Cheuvreux.
I have 4 questions, please. The first one on top line. Stripping out the year comparison basis, what makes you more a bit on the consumer demand for the balance of the year? If you could share with us any evidence or early signs of improvement. This will be very helpful because it seems that the macroeconomic data are somewhat worsening in recent weeks.
Second question on the cost base. If we look at the freight cost, it has kept falling year-to-date, and it's approximately 85% below the average level of 2021. If I remember well data , EUR 244 million is your headwinds on your cost base. How much do you think you can recoup from those headwinds? And it seems that it's a little bit -- your guidance is probably a little bit conservative when you say that FX will completely offset the expected margin tailwinds coming from the falling input cost base. So if you could elaborate a little bit on that, it will be helpful.
And 2 other questions on the Professional business. Have the Q1 sales being boosted by any one-off contract or is it fair to assume that the business will keep growing at the same pace for the balance of the year, i.e., in the low mid-20s for the full year on average? And finally, if I'm not mistaken, you are a supplier of Tim Hortons in Canada. But I'm just curious to hear if you're also a partner of Tim Hortons on the huge expansion plan in China or if your contract with Luckin Coffee is exclusive there. And if you can remind us also the breakdown of PCM business by region, it would be very helpful as well.
That reminds me of those Canadian years of mine. Thank you, Charles-Louis, for these questions. I'll take 1, 3 and 4, and then Nathalie will look at the cost base. We are -- when we look at the prospects of top line recovery in the consumer business, of course, the comparison base is Q1. Yes, you're right. There is no great news or news flow on the consumer demand or the economic growth, et cetera. Yet we see that we have some strong product initiatives coming up on [indiscernible] we see that we have very positive commercial agreements with our trade partners, in particular, in Western Europe. There will be a bit more promotional aggressiveness in the second half of the year than we had in the second half of last year, and that will generate stronger growth.
So the drivers -- we are big because of new product initiatives, because of customers' agreements and because of some promotional aggressiveness. On the Professional, we have -- I will not give you a precise number for the full year guidance on profit growth. I repeat that sales growth is balanced between contracts and core business. Q1 is probably a bit on the high side. That's because of Q1 last year was at the level of Q3 or Q4. So if you look at the comp number again, that is probably one of the main explanations for this very high 29%, but we see, again, Professional business with a strong growth through the year.
On Tim Hortons, we have no -- I mean, yes, Tim Hortons is expanding outside of Canada, in particular, in China. We do have some collaboration with them outside of Canada, and we don't have an exclusivity for Luckin Coffee in China. Yet, of course, we are mindful and conscious of the relationship with such and such customer, and we try and protect our relationship with our customers in the best interest of the company. Nathalie?
Your point regarding the freight cost, for sure, we benefited off lower freight costs in the course of the year. Have it in mind that they've been super high in the entire year 2022. And so as I explained, everything we have sold in the first quarter was sourced or shipped with high freight cost. So we will recoup 3 quarters out of 4 of lower freight costs in the course of the year. Then regarding raw mats, the situation is a bit different. We've seen a significant increase in raw mats and component costs in 2022 that will not be recouped in 2023. We have, based on the one hand, our hedging policy, and on the other hand, discussions that we have with suppliers some opportunities to see lower raw mats and component costs in the P&L in 2023, but we will not recoup the entire increase in cost that we have faced in 2022.
Okay. Did we answer your question, Charles-Louis?
Yes, perfectly. But just one of the question. Yes, on the geographical breakdown of the PCM business, can you share this data with us?
Not really. I mean, we -- I can tell you that we have 3 -- our 3 biggest countries are China, the United States and Germany. And those 3 countries are driving the growth and driving the pack but we don't know. We don't communicate [ by juncture ] by geography.
The next question comes from the line of Mourad Lahmidi from BNP Paribas.
Three questions for me. So the first one is -- last year, you commented on the trends in the market, especially in Western Europe, and you pointed to a reversal of the market in April last year. Maybe you can give us an update on where the market is going right now in terms of demand, especially in Western Europe. The second question is around what you indicated during the call that retailers are winding down inventories below the normative level? Is it something that you see across the board? Or is it only in Europe? And can you maybe share with us some sellout data in March and in the latest weeks.
And finally, I was quite surprised by the positive impact from ForEx in the P&L bridge. I thought that ForEx was going to be a headwind. So maybe you can give us some perspective on the phasing of the ForEx for the current year.
I take the one on Western Europe and inventories. On Western Europe, we -- the market is pulled by positive product initiatives liken Oil-less Fryer, as you know, which is a premium cookware. On the negative, there is some slight trade-down particular in France and Germany [indiscernible] food stores. But we saw last year a sudden negative impact on demand through March, April, and we see that this -- going through these comps against these comps, we have a better performance than we had last year. So that confirms the fact that the markets are pretty steady and the shots of the impact, the negative impact of last year are behind us.
We don't share sell-out data because if we start to share sell-out data and selling then we have to report every week or every month by country, by customer. And by the way, sell-out data is often confidential information that retailers share with us. So we don't share sell-out data. But we do see this, it is in the 20s in terms of million euros. We do see a gap between sell-in and sell-out. The regions involved are Western Europe and in particular [indiscernible].
There are some challenges on their financing and balance sheet. Will let you elaborate or find out who that is. But we also see in the United States, big online retailers or big offline retailers being confused on the inventory build. And again, they publish their results in the last 24 hours and you see that there is a clear intention to reduce inventories on their side. Outside of Western Europe and North America, we don't see that factor. Nathalie, ForEx?
Yes. So regarding FX, we have, as I said, a very limited impact on the operating result, and I assume that's your question, you're not talking sales, right? And so we said that on the full year basis, we would expect a negative impact. That is still our assumption. You may want to recall that we have a high short position in U.S. dollar and in Chinese rand and that we have a prudent hedging policy. Last year, we have benefited when those 2 currencies that are strongly evolved from very positive hedging results as we have booked our hedges in average 9 months in advance. That will not be the case in 2023. And that's one, if not the major reason why we expect a negative impact coming from FX moving forward.
I think you probably have slight underestimation of the FX impact both in sales and profits, what I see in the consensus and the numbers that we have published.
The next question comes from the line of Alessandro Cecchini from Equita.
The first one, if you could elaborate a little bit more on the ForEx side for the year, what could be, I mean, an assumption in terms of headwinds of level for the full year? My second question is that is if you could, of course not in a precise way, but if you could -- so you are saying that in China now is 70% is online. I was wondering if you could update us about the online business portion of the market in Western Europe and in the U.S. also to better analyze the part of the business that in this moment is under pressure coming from the decision by retailers, physical retailers to reduce inventories. And then still on this kind of inventories, do you think that it's on specific categories, this kind of willingness to reduce inventories in Europe or is broad based.
You want to take the ForEx [indiscernible] first?
So when we released our 2023 outlook that was back in Feb, we said that there would be headwinds and tailwinds in the offer in 2023. So tailwinds coming from lower costs in terms of sea freight, in terms of raw mat and components. And the headwinds coming from FX. So as I just said, the most significant part of the FX headwind is coming from the change in our hedging results. And the sum of the two, the tailwinds and the headwinds, will be close to 0. So this is what we have disclosed in February, and this is still the way we see the P&L moving forward in the next 3 quarters. So you should expect that both headwinds and tailwinds will neutralize.
On the -- you have several questions on online. First, maybe a set of data. Online is getting close to 40% sales globally for the group, that's something that we see in all regions. With peaks in China, as you say, over 70%, but also the U.K. over 70%. We see the U.S. prominent as well. So online is now integral part of the trading picture of the group. And we have the same challenges on inventories management with online retailers as with off-line retailers. One of the big, if not the biggest online retailer is reducing inventories throughout. And of course, the rate of this retailer on our business impacts our selling.
We don't think there is a specific -- there is a category-specific reduction on inventories on the side of our retail partners. We see that they are under pressure to reduce their cash consumption and that applies, I think to all categories. If anything, they are probably tit-a-bit of our stock on most of electronic or TV sets and that, of course, impacts their ability to purchase on our categories as a side effect.
Okay. On the gap that you expect for the full year to be neutralized, roughly speaking, just to have in mind that, of course, you don't consider the cost that you spent last year to reduce inventories now, I think that inventories for you are at good level. So basically, the starting point now is minus 47 -- minus EUR 50 million, because minus EUR 50 million is inflation plus 3% ForEx is -- so you expect it to recover this kind of EUR 50 million that you lost in the first quarter, it's right?
Yes. Yes, that EUR 50 million is coming from the cost for producing in 2022. Then we have most of a negotiation on annual negotiation. So we're starting the year with new prices, being in terms of components or raw materials. And so we see that the cost of production are reducing, but that will materialize in cost of goods sold when we will sell what we are currently sourcing or manufacturing in the second quarter.
[Operator Instructions] And the next question comes from the line of Marie Fort from Societe Generale. .
Yes. I just would like to come back on the promotion that you mentioned for the second half of the year. Could you comment further and tell us if it's a worldwide policy? Or have you specifically targeted some market or some products category. The second question is about your cash flow generation, which is due to the fact that you reduce your inventory piece, did your inventories have been reduced for finished goods for raw mat. And lastly, my question is also -- no, sorry, that's it. It has been already asked.
Okay. I'll take the first one, Nathalie will take the one on cash. On the promotions, we know that we need to recover some slots that we lost last year because of the need to protect our margins. And that is mainly in Western Europe. But if you step back, I mean, our industry is an industry where pricing is very transparent between online, off-line, China, et cetera. So we need to stay in the market, and we will readjust our promotional intensity to the promotional intensity of the market.
But it's mainly -- to answer your question, it's going to be mainly Western Europe and a bit in the United States. Yes.
So what to say that roughly, when we look at our inventory, we have almost 1/4 of that, which is a raw mat components and [indiscernible] WIPs and then the rest is made of finished products. And then the rest is made of finished products. So you could consider that the reduction is more focused on finished products than on the rest.
Okay. And I had recovered, my last question is about China. You've got 70% online. I would like to know if you still have room to progress on that side? Or if you think that now the business online is pretty mature on a current basis.
No, it's not us. We are making progress. It is the market and the consumer. I mean, Douyin is known in the Western world as TikTok. Douyin has 800 million visitors per week. So when they expand their offering of [indiscernible] to consumer on more product categories. This is what drives the evolution of the market from offline to online.
What we're sure is that we have a very strong position in all off-line retailers. We are establishing strong positions in all online retailers. We want to be #1 wherever we are. And then we let the market decide. We let consumers decide where they shop from and why they want to shop from T-mall, JingDong, or [indiscernible]
So it's difficult to answer. What we know is that our business is very interactive between online and offline when it comes to looking for information and looking for alternative solution, comparisons, et cetera. If there is -- so people are very easily attractive to online to look for our products. And if there is a good online selling and service offer than they buy online.
And we agree there is not any more, any mix impact on your profitability from online. .
No. We watch that very carefully because the models evolve very fast. I mean you can move from Logistics operated by T-mall and then the T-mall asks you to take control of logistics. So your P&L fluctuates between OpEx traffic building, margin price. So we watch that in a very careful manner. I mean our Chinese colleagues look at it every day or every week. We look at it at the root level every month. The mix of activities varies a lot, and we make sure that we keep a good control and a good balance of our P&L in all these [ times ].
Your next question comes from the line of Fraser Donlon from Berenberg.
So I had 2 questions. One was just on kind of people and wages. So maybe you could give a comment on the, let's say, global wage inflation you're seeing within the group based on the markets you're exposed to? And then within that, how should we think about volume of employees because I could see there was quite a big drop in China in 2022, which I guess is weighted to the back half of the year. So just any guidance you could give me in terms of how that pulls through in 2023 would be super helpful. And then the second question was just on the very nice kind of revenues in Professional. What kind of margin are you seeing at that kind of more than EUR 200 million sales in the Professional business.
Thank you, Fraser. Thanks for your questions. On people and wages, we expect salary inflation this year compounded around the world between 4.5% and 5%, that is a reflection of salary inflation in the Western world, but also in China and everywhere. We see this inflation hitting us. And you will note that the impact on Q1 numbers is still low because salary increases typically take place in March. So we should have more impact on that in -- from Q2 onwards.
Employment in China is a reflection of the variability of our production; we have big drops in production and exports and support in the second half of last year, and we've adjusted our workforce to do this big growth. We have a remarkable ability in China to let people go and to hire back people in our factories. This is a very well-oiled operations. So we are -- I think it's a great asset for us to be able to wind down our operation in China with that flexibility.
On the Professional profitability, I think we had a tough 2020, 2021. The business was lagging behind in terms of sales. It's a high fixed cost business. Now we are back into EUR 200 million plus in a single quarter. I would be very disappointed for anything below 15% of our margin. And Nathalie, you said, we said 15% is the target, I say. I would be very disappointed if we stay below 15%.
Did I answer any questions?
Yes.
[Operator Instructions] There are no further questions in the queue, so I'll now turn the call back over to your host for some closing remarks.
Okay. Well, thank you. Well, first, thank you very much for your continuous interest in our business. I did like that question session because I think -- you are on the key topics that we are focusing on. That means there's a good alignment and a good understanding -- a good mutual understanding of what we are up to do on our side and the way you see it and the way you see the business evolving. It is still a nonsatisfactory performance because every time the sales number is negative, I call that unsatisfactory, yet we see that the things are progressively improving, and we expect from Q2 onwards to have a much better progression to share with you.
Our next meetings will be for the midyear results. I think it will be on the back end of July. We have a General on the 17th of May. So in the meantime, thank you very much, and I wish you all a very good weekend. Thank you.
Thank you very much.
Thank you for joining today's call. You may now disconnect your lines.