Element Fleet Management Corp

TSX:EFN

Good morning, and welcome to Element Fleet Management's First Quarter 2025 Financial and Operating Results Conference Call. You are reminded that this call is being recorded.



Element wishes to caution listeners that today's information contains forward-looking statements. The assumptions on which they are based and the material risks and uncertainties that could cause them to differ are outlined in the company's year-end and most recent MD&A and AIF. Although, management believes that the expectations expressed in the statements are reasonable, actual results could differ materially.



The company also reminds listeners that today's call references certain non-GAAP and supplemental financial measures. Management measures performance on a reported and adjusted basis and considers both to be useful in providing readers with a better understanding of how it assesses results. A reconciliation of these non-GAAP financial measures to IFRS measures can be found in the company's most recent MD&A.



I would now like to turn the conference call over to Ms. Laura Dottori-Attanasio, Chief Executive Officer. The floor is yours, ma'am.

Good morning, and thank you for joining us. Element is off to a strong start in 2025, building on the momentum of a record year in 2024. Our strong financial and operational resilience, combined with ongoing commercial momentum resulted in solid net revenue growth year-over-year even with meaningful movements in foreign exchange rates. And as we communicated last quarter, our adjusted operating expense growth moderated, and we expect this trend to continue throughout 2025.



Our business fundamentals remain strong. We believe that key elements of our business, such as the impact of capital cost inflation and our growing portfolio of services help counterbalance potential economic pressures. The evolving global trade dynamic presents opportunities to deepen relationships with existing clients and establish new ones. Clients increasingly rely on Element's expertise and industry leadership to navigate complex challenges. In times of change, our purpose and value proposition become even more essential.



We're committed to helping clients lower their total fleet operating costs while delivering an exceptional client experience. For example, our strategic advisory team identified over $1.5 billion in data-driven savings opportunities for clients last year and an additional $380 million this quarter. We remain confident in our ability to adapt, sustain momentum and create lasting value for our clients and our shareholders. Several factors underpin this confidence.



Our ongoing commercial momentum continues to grow with 34 new clients added this quarter. These included converting self-managed fleets and gaining share from our competitors. Additionally, we saw another solid quarter of share of wallet growth, adding 246 service enrollments. Our client order volumes have been strong over the past 2 quarters, which we expect will drive increased originations.



Our Dublin-based leasing initiative remains on track to meet revenue and operating income targets. Early feedback on our recently launched insurance initiative has been promising with clients actively engaging with our commercial team. Our digital strategy is progressing as planned, highlighted by advancements such as our digital driver app, enhanced client reporting portal and continued investment in our ordering platform. Lastly, we are committed to investing in our digital capabilities to enhance existing service delivery, further elevate the client experience and deepening digital engagement with clients.



Before I turn it over to Heath, I want to acknowledge the continued efforts of our global team. Thank you all for your dedication and your commitment as well as your consistent focus on delivering for our clients and our shareholders. Heath, over to you.

Thank you, Laura, and good morning, everyone. We started the year with solid financial performance, driven by our resilient business model and strong balance sheet. Year-over-year, net revenue growth and positive operating leverage resulted in adjusted operating income of $151 million, free cash flow per share of $0.36 and earnings per share of $0.28. Additionally, our return on equity continues to expand, reaching 16.7% this quarter.



Before turning to the financials, let me address 2 key factors influencing our Q1 results. First, significant foreign currency movements impacted our comparisons on many metrics. Year-over-year, the Mexican peso depreciated by 20% against the U.S. dollar, while the Australian dollar declined 5%. This reduced net revenue by $17 million, operating expenses by $4 million, adjusted operating income by $13 million and diluted EPS by $0.02. And second, in Q1 2024, services revenue benefited from $7 million in certain non-recurring items disclosed last year.



Now let's turn our focus to the key growth drivers for Q1. The figures discussed will be on an adjusted basis and exclude the impact of the $7 million in non-recurring services revenue from Q1 last year. Net revenue increased 8% year-over-year to $276 million this quarter, driven by growth across all categories. This compares favorably with the 5% growth in adjusted operating expenses over the same period, resulting in positive operating leverage of 2.9%.



Services revenue grew 9% year-over-year to $152 million, driven primarily by higher penetration and utilization from new and existing clients. Excluding foreign currency translation, which had a $6 million impact, services revenue grew by a robust 13% year-over-year. Net financing revenue grew 4% year-over-year to $112 million, led by strong growth in financing income driven by pricing and funding initiatives. This was partly offset by higher funding costs associated with the increased interest expense from debt associated with our preferred share redemption and Autofleet acquisition.



Gain on sale declined year-over-year due to the unfavorable currency translation, but higher unit volumes continue to offset used vehicle price normalization. The aggregate impact of foreign exchange translation reduced net financing revenue by $11 million year-over-year. While origination volumes were down year-over-year, this was largely a function of foreign currency translation impacts. Excluding FX, originations were up modestly.



Origination activity in our largest region, the U.S. and Canada, saw an impressive 13% quarter-over-quarter increase, an encouraging sign of our strength and business resilience. This growth was largely tempered by declines in Mexico and Australia, where activity stepped back from Q4 due to seasonal factors.



Client order volumes have been strong over the past 2 quarters, which positions us well for higher originations and continued growth in net financing revenue in the coming quarters. In addition, our core vehicles under management increased 4% year-over-year at the high end of our expected 2% to 4% annual range. Net financing revenue continued to benefit from improvements and diversification of our funding sources and pricing initiatives.



In March, we completed a private offering of $650 million in senior notes. This will replace notes due to mature in June. Importantly, the spread we were able to achieve in this transaction represented a 247 basis point improvement versus our maturing notes, indicative of our reduced cost of funding.



We syndicated $574 million assets this quarter, a 21% increase from Q1 last year, but down from Q4 due to the $346 million bulk syndication of a Canadian lease portfolio to Blackstone in December. Syndication revenue increased by $3 million or 41% year-over-year, largely attributable to higher net yields and higher syndication volume. The higher net yield in Q1 reflects a favorable syndication mix, offsetting the scheduled reduction in bonus depreciation in 2025. This quarter, we strategically delayed certain syndication activity to the second half of the year, anticipating U.S. tax legislation changes that could reinstate bonus depreciation back to 100%.



Turning to expenses. Q1 adjusted operating expenses totaled $125 million with year-over-year growth moderating to 5% as anticipated. This trend is expected to continue throughout the year. Solid net revenue growth and moderated expense growth resulted in adjusted operating margin of 54.7% in Q1, which represents expansion of 125 basis points year-over-year. We remain focused on disciplined expense management in order to deliver on our 2025 adjusted operating margin target range of between 55.5% and 56.5%.



Our debt-to-capital ratio ended March at 74.9% at the midpoint of our 73% to 77% target range. We returned $77 million to shareholders through common dividends and share repurchases. We repurchased 2.2 million shares in Q1 for total consideration of $40 million with an additional 600,000 shares repurchased in April. It is worth noting that our heightened NCIB activity in 2025 reflects an opportunistic approach that is not indicative of the future quarterly run rate.



Looking ahead, our momentum is strong. We remain ready to adapt, innovate and drive forward at pace to further enhance the client experience while consistently delivering value to our investors and clients.



Thank you. Operator, we are now ready for questions.

The first question we have will come from Vasu Govil of KBW.

Congrats on the strong quarter. Just, Lauren, Heath, one high-level question on macro and tariffs. Obviously, the situation seems to evolve every day. Just wanted to get a feel for your latest thinking on the impact to your business, if any. And we've also seen some macro weakening in the U.S. as well. So just curious what you're hearing from your clients, if they're taking any actions related to that? And I wanted to gauge your confidence in the outlook just given all that uncertainty.

Yes. Thanks, Vasu. I have to say managing fleets is certainly becoming much more complicated in this environment, which, of course, is great from our perspective, given our value proposition, which is to help clients decrease their total cost of operation for their fleet. So while the recent auto tariff relief, I would say, is a positive, I'd also say that vehicle and repair costs are still likely to increase and supply chains are still likely to experience some form of disruption.



So our priority continues to be that we're going to support our clients. We're going to help guide them through all of this global trade dynamic. I'd say of interest to your question. So, just a reminder, every year and sometimes more often, part of what we do is we propose actionable ways to our clients to decrease their fleet expenses. I'd say, historically, our clients, they'd action, let's say, 30%, maybe up to 35% of those savings that we would identify. This past quarter, given the -- I'm going to say, the pressures that are here now and on the horizon from a cost inflation perspective, what we've seen is that 30% to 35% in the last quarter actually increased to 52%. So what we're seeing is our clients were ready to take, I'm going to say, more aggressive or more proactive action to look to trim their costs just given sort of market outlook.



I'd probably like to share maybe before talking about Element because I think it's important that when I think of the OEMs because they're very important partners to us, and we are in constant communication with them for our clients. So they've confirmed that they are committed to delivering commercial vehicles that our clients require, notwithstanding some of what you're seeing in the news where some models are being cut. Those aren't the models that are being used by our clients.



So I'd say the overwhelming majority of our commercial clients have models that will continue to be produced. Our order to delivery cycle times that we're seeing, while they're up, they're up marginally, which is good. We're not seeing any order cancellations outside of historic norms. And again, unlike what you're seeing in the consumer space, where there was a large pull forward that dealers were seeing of orders in that, I'm going to say, March, April period as people were worried about the future, we saw very little of that in our client base. So we are feeling good. That's why we reconfirmed our guidance.



As we shared last quarter, the biggest potential impact to our company, we felt would have been FX volatility. And as you've seen this quarter, that actually did impact our results. And if it wasn't for that FX volatility, our net revenue would have actually grown 14%. So I think it's worth a highlighting that and also worth highlighting that our order volumes, as Heath was talking about, they remain strong, and we expect them to drive strong origination and net earning asset growth this year. So we're feeling good.

And then just a quick follow-up on services revenue. I sort of got the comment on the one-timers, the FX headwinds. I know some of that was already contemplated in the outlook, but I just wanted to see if there was any variation versus what you were expecting. And then on a reported basis, should we still expect that you guys will be able to hit the low double digit for services revenue this year?

Yes. I'll take that one. So service revenue growth for the quarter, excluding the impact of those one-off items and FX was 13% on an underlying basis year-on-year. So really strong growth, and it's actually our second highest service revenue number we've ever delivered. Q4 of last year was a really strong number and probably not indicative of a true run rate. There was some timing-related numbers in Q4.



So if we think about services going forward, we still expect that the service revenue growth will be our fastest-growing revenue line item. And given the sort of the pent-up demand from the orders that we have, some of the initiatives we implemented, whether it be the Autofleet acquisition, insurance, those sorts of things, coupled with just the general growth of the business, we expect it to continue to grow through 2025.

And next, we have Stephen Boland of Raymond James.

Just the first question is just on, you mentioned, I don't know if it's margin, but basically some of the pricing adjustments. Is that part of that global initiative you announced last fall that you're kind of reviewing all the pricing for all your service products? I'm just wondering how that review is progressing?

Yes. Stephen, so if you're referring to sort of margin and how we increase margin, obviously, part of it is appropriate expense management, the digitization of our operational function, which is a key reason for the Autofleet acquisition. I guess in addition to that, there's the optimization or continued optimization and standardization of our business. Primarily, that's been driven out of our leasing business. So you'll recall, we've got a targeted revenue of $30 million to $45 million coming out of that initiative and translating to $22 million to $37 million of AOI. That initiative is going really well. Chris Gittens is leading that function, and we're starting to see the benefits of that coming through.



The second thing that I would call out that's helping us to drive further margin is the continued evolution of our funding model. So in Q1, we implemented a commercial paper program that enables us to opportunistically reduce our cost of funds when that program is up and running. And then the other item that I would say, and while that hasn't yet hit Q1, it just shows the work we've done from a funding side of things. We actually raised our bond at a rate of 103 basis points in Q1. That will replace a maturing bond in June that was raised at 350 basis points 5 years ago. So that sort of just shows the impact we've made from a funding side of things to bring down rates over time.

And maybe just a follow-up there. You mentioned the commercial paper timing of that and also the off-balance sheet securitization facility, not the bulk one that was kind of announced last year. I'm just wondering the timing on that as well.

Yes. So the commercial paper program is in. It's up and running. We actually utilized that facility in Q1. We did pay it off by the end of the quarter, so you won't see it in the sort of the balance sheet at the end of the quarter. So we did get some benefit from that in Q1. In terms of other off-balance sheet structures, we are working through another structure. It's probably too early to announce anything from that side of things. However, we are making good progress and are on track to deliver that in the back half of the year.

The next question we have will come from John Aiken of Jefferies.

Heath, in terms of the FX, I guess I'm going to try to squeeze in a 2-part question. First, philosophically, any thoughts in terms of hedging? And secondarily, you spoke to the revenue impact, but can you give us a sense in terms of how the FX volatility impacted expenses in the quarter?

Yes, absolutely. So from a revenue standpoint, it was $17 million reduction. And then from an expense side of things, it was $4 million. So your expenses did benefit from the FX side of things. Having said that, even adjusting for FX year-on-year expenses are up 6%, of which $3 million was actually the acquisition of Autofleet.



In terms of your first question around hedging of the P&L, obviously, the impact of FX doesn't impact our business model or our value proposition or anything like that. It really is just the translation of those revenues from a peso and an Aussie dollar and New Zealand dollar perspective. 65% of our revenues are in U.S. dollars. So that's the bulk of our business has no impact. And it really is just those other currencies. The main one is the peso, which has been highly volatile over the last 12 months or so.



In terms of hedging, it does create a level of volatility if you hedge your P&L. We do look to do intra-quarter hedging to lock in rates from a peso perspective, which we did in Q1 and in Q2 and that just helps to reduce some of the volatility. But from an overarching principle, the rates are at relatively all-time high levels, and we expect that they'll normalize over time towards the mean.

The next question we have will come from Tom MacKinnon of BMO.

First question, just on this deferral of the syndication that you're talking about right now. I assume that the demand remains robust, but if we don't get any volume for syndication in the second quarter, that all that volume would be moved into the third and into the fourth quarter. Is that the way we should be looking at your decision to delay syndication here?

Yes. So the first thing that I would say is the reason why we delayed syndication volume is that there's a potential that the 100% bonus depreciation gets reinstated in the back half of the year. That will increase our syndication yield. So that's the reason why we've delayed it. In terms of appetite for our paper, it remains really robust. So we could have absolutely done more syndication volume if we wanted to in Q1. So it was purely a strategic reason to delay it to the second half of the year.



Now regardless of what happens from a tax legislation perspective, we can absolutely have the capacity to do more syndications in the back half of the year. So if you look at Q2, Q3 of 2024, we syndicated the best part of $1 billion. So we have the capacity to ramp it back up in the second half of the year regardless of what the outcome is of the bonus depreciation.

But are you suggesting there's going to be hardly any syndication volume in Q2 of '25, just given the fact that you've decided to this or delay it?

No. So we'll continue to syndicate some volume in Q2. We don't want to do nothing and then have a huge amount that we need to do for Q3 and Q4. So we'll continue to do some syndication in Q2, just like we did in Q1, but we're strategically delaying some portion of our normal volume to the back half of the year.

And if you could just let us know a little bit more about the insurance solution that you've done in strategic partnership with Hub now. Is it largely just getting a share of commission here? Are you taking any insurance risk? Are you taking any claims risk here? Like just if you can flesh that out a little bit for us, please?

Tom, it's Laura. I'll take that one. Give you some comfort. We are not taking any underwriting risk. It is more of a referral program in terms of our partnership with Hub. So we are off to, I would say, a good start. So you'll recall, we announced in January that we had launched what we're calling our Element Risk solutions. We went, I'm going to say, live into the market on March 31. So it's been 1 month.



So still incredibly early days, but we're seeing some strong interest from our clients. I should say, how we've chosen to go at the market is looking at clients that have insurance renewals that are coming up within the 60-day window. So we've got a strong pipeline in this last month, and we've got about -- I'm going to say it, perhaps, this isn't the right term, but a 20% conversion rate into active negotiation, meaning our clients have signed a consent form and we've moved to quote. So early days and quite frankly, still too early to tell how well this one will go, but we are off to a good start, and we're very happy with our partnership with Hub.

Next, we have Paul Holden of CIBC.

I want to ask a question on the strong customer orders to start the year. And I think Laura probably already addressed the original question, which I wanted to ask, which is, is this simply a pull forward of demand as a result of the anticipation of higher vehicle prices due to tariffs. And it sounds like the answer is no, but throw it out there anyways. And if it's not, does that suggest then obviously, there's other drivers behind the strong demand that there is good probability that strong demand continues throughout the year?

Paul, its Heath. I'll take that one. So you're right, in Q4 2024, we had really strong order volume. So in the U.S.A. and Canada, that was up over 25% from a year-on-year perspective. And that momentum has translated through the first half of this year. So our order backlog is up to $2 billion at the end of March. And then in terms of April, we still see strong order volumes. We did see some pull forward in numbers in April, but in the grand scheme of things, it is marginal, and it's more of a pull forward from things that would have been ordered later in 2025 into the April month.



So orders are very strong. In terms of how we expect to see that translate into originations, we did see some of that start to translate in Q1. So the U.S.A. and Canada originations was up 13% quarter-on-quarter. That was partly offset by Mexico and ANZ, which is just seasonal. So it's the summer period in ANZ, there's always lower originations in Jan and then it builds from there, just as an example. So from all of our metrics, we expect those higher order volumes to translate into higher originations in Q2 and Q3, which will, in turn, drive our NFR and various service revenues.

And then second sort of, I guess, somewhat related question, I specifically want to better understand any potential change in customer behavior in Mexico in particular. I mean even if I adjust for FX, originations year-over-year were maybe sort of flattish. And obviously, with the Investor Day you did last year, we're expecting relatively high growth rates in Mexico over time. So there been kind of any pause in activity because of, let's call it, elevated or heightened tariff risk for that geography in particular?

Yes. So specific to Mexico, you're right that adjusting for FX year-on-year, the originations were largely flat. At this point in time, we don't see any major concerns coming through from our clients and growth and volume continues to be robust there. Having said that, it is probably the area that potentially could be impacted the most by tariffs and those sort of things from a growth perspective. But at this point in time, the business continues to perform strongly.

Next, we have Graham Ryding of TD Securities.

Laura, you mentioned that you're not seeing any orders being canceled. Can you just remind us that $2 billion that's sitting in your backlog, are those contractually guaranteed? Like how would orders being canceled actually flow through your business if that were to happen?

Yes. So as I mentioned before, we haven't seen anything outside of normal course. And so when orders are placed, I would tell you they can be canceled up until the time they are accepted by the OEMs. Once they're accepted by the OEM, our clients are contractually obligated to purchase the vehicles. And so when we talk about orders or what we've been referring to here today are orders that have been accepted by the OEMs.

My next question would just be on the bonus depreciation. If that does move back to 100%, can you give us or can you remind us what the expected impact would be on your syndication revenue, either in annualized dollar amounts or that syndication yield?

Yes, absolutely. So from an annualized dollar amount perspective, the impact would be a positive $25 million to $30 million. So if that comes in, in the back half of the year, obviously, you're not going to get the full amount of that, but it is a material upside to us, which is why we've taken the decision to delay syndications.

The next question we have will come from Jaeme Gloyn of National Bank Financial.

First question is just on the moderating OpEx growth guidance. Just want to make sure I understand that. Is that moderating on a quarter-to-quarter basis or just relative to the prior year's quarter? So for instance, should we see growth below 5% that was reported in Q1 in the next few quarters?

Yes. So from an OpEx perspective, the moderation we talked to is based on or versus the 2024 growth rate. So we will continue to invest in the business based on the growth that we're seeing. So you shouldn't expect that each quarter expenses will come down. But certainly, from a year-on-year perspective, the growth rate will moderate versus 2024.

And then my next question, just looking at the VUM growth, obviously, understanding clients coming in, clients coming out. Just wanted to get a little bit more color as to perhaps what's going on with the 6,000 vehicles that declined with existing clients? Is that just a case they can't get their vehicles in and replaced? Or what kind of decision process is going on there? I know it's small, but just curious.

Yes. So from a VUM perspective, nothing really material to call out from that perspective. It is a metric that we look at more on a longer-term trend. And if you look at from a year-on-year perspective, core VUM is up 4%, which is at the higher end of our target range of 2% to 4%. You always have some quarterly volatility, which is normal. In terms of the specific 6,000 that you referred to, no real major callouts there. Clients will sell business or something like that, and therefore, they might have a reduction in their fleet. So no real call out from there. And our focus really is continuing to have strong client retention and then converting our new business wins to grow throughout 2025.

And then lastly, obviously, the Autofleet acquisition is still pretty new, but what can you tell us about some of the, I don't know, new client wins or new service products rolling out from Autofleet and how that's contributing in this quarter?

Well, Jaeme, it's Laura. I'll take that. I might be able to talk us even past the 9:00 time slot. So everything I would tell you is not only progressing as expected, but better than expected. So we acquired Autofleet October 1, 2024. And I have to say that we thought we were doing and we picked up a world-class team. They've got the scalable digital platform built on a modern stack. And so what we're starting to see is how bringing Autofleet into Element, we are starting to see those new revenue streams and more importantly, the efficiencies within our business.



So Autofleet more specifically, that's going really well. They've got a solid pipeline of sales. So we're expecting a very positive outcome from them by the end of 2025. So that's progressing really well. And on the Element front, again, going really well, not only are we spending less than I would say we had previously planned on spending or would have had to have spent had we dealt with third parties. We've managed to be out. If you haven't seen it, we've got our driver app that's out. It's called Element Motion. It's live on Apple and Google Play Stores.



I'll just point out that it is an MVP, Minimal Viable Product. So it's got some of the basics there now, and there'll be more to come. But in it, if I could call it a one-stop shop to carry out sort of all the tasks that are required for a driver or a fleet manager to manage their fleet in a very digital way. So we're just getting started, but it has mileage reporting, a supplier locator, fleet management, inspection reports, and we can even do pool vehicle capability. So that's going really well. And before the year is out, we will have launched a new digital vehicle ordering capability. And then there's other things sort of inside the organization that they're helping us just move faster on the digitizing and automating. So it's going much better than expected.

And next, we have Graham Ryding of TD Securities.

Laura, I'll come back to you. You mentioned earlier on the call that you're seeing clients' uptake of actionable items that reduce their cost of fleet management. Can you give us some examples of what would be sort of key ideas that you would propose that they're responding to?

Yes, all kinds of things. So we look at, again, how can we decrease downtime for them? So it includes everything from whether it's taking on route optimization, whether we get them to do more what we call in-network spend from a maintenance perspective, might do less upfitting, different vehicles, changing the colors on the vehicles, racks, tires, types of vehicles, those types of things are where some of the, I'm going to say, more aggressive decisioning has been happening.



I'd say historically, when times are good, we tend to -- like we do with our own personal vehicles, we go for all the bells and whistles in the vehicle. And what we're seeing is things we tend to recommend is that some of these things are not required, and we're seeing that our clients are much more prepared to take action and to pull back on some of that spend to decrease their total cost of operation.

And one more, if I can just follow on the Autofleet. You mentioned the pipeline is building in 2025. Would that be more on a stand-alone basis, Autofleet services going to the market? Or is there any sort of cross-selling into EFN clients that's driving that pipeline?

So both. As you know, we said Autofleet, we acquired them, but they are still a separate platform. And so others can use them, including competitors if they would like to use their services as we don't see the data that they have if that takes place. So their sales on their own are going very well, and we are getting a lot of interest and a strong pipeline from our existing client base in terms of interest for the services that they offer. So we're seeing it on both fronts.

And next, we have Paul Holden, CIBC.

A couple follow-up sort of more boring modeling questions. But I wanted to ask about the sustaining CapEx this quarter, $5 million is the lowest we've seen in a while. Just want to see if that's a timing issue and no change to full year expectations.

Yes, it's largely timing, Paul. So just scheduling of various products or projects that we've got going on. So still committing to an $80 million amount annually.

And then also on that sort of the same free cash flow statement, I think the cash tax rate was a little bit higher this quarter. Again, there can be some timing issue there. So again, just trying to figure out whether that's just higher in Q1 and probably lower in future quarters or if anything has changed in terms of how we should model the cash tax rate?

Yes. So nothing has changed, again, timing on that one. So Q1 had some state taxes that were paid, and it was higher than the sort of normal amount. We expect that, that will trend back down to average out closer to that OECD minimum amount of 15%.

This concludes the question-and-answer session. I would now like to turn the conference call over to Ms. Laura Dottori-Attanasio for closing remarks. Ma'am?

Thank you very much, and thank you, everyone, for joining us today. We remain focused on generating consistent and sustainable long-term growth for our shareholders. We also continue to invest in innovation while maintaining a disciplined approach to capital allocation. These efforts will keep us agile and forward thinking, enabling us to adapt our clients' evolving needs and really strengthening Element's leadership in shaping the future of mobility. We look forward to reconnecting on our Q2 call in August. And until then, thank you once again, and enjoy the rest of your day.

And thank you, ma'am, for your time and the rest of the management team. This does now bring us to the close of today's conference call. You may now disconnect your lines. Thank you all for participating, and have a pleasant day.