JOST Werke AG
XETRA:JST
Earnings Call Analysis
Q3-2023 Analysis
JOST Werke AG
Despite a challenging landscape, JOST reported resilience as it navigated market headwinds in the third quarter of 2023. Sales experienced an 11% decrease to EUR 292 million, mainly due to a significant drop in agricultural demand and currency headwinds, compounded by a strong previous quarter related to delayed orders from the 2022 Ukraine conflict. Even with declining sales, JOST successfully enhanced its profitability, with the adjusted EBIT margin ascending to 11.4%, a 2.1 percentage points improvement.
The company's adeptness in overcoming sales obstacles is evident in their adjusted earnings per share, which saw a 7% increase to EUR 1.46. Furthermore, an impressive 91% surge in EBIT to EUR 13.4 million for the quarter reflected efficiency gains, supply chain ease, and a stronger aftermarket business segment. This also led to an improved EBIT margin by 4.6 percentage points, establishing an upward trajectory in profitability.
JOST's performance across various segments showed mixed results. The strong truck markets led to a 21% increase in Europe and stability in North America and the APA (Asia-Pacific-Africa) region. Contrarily, the trailer markets softened, particularly in Europe, and the agricultural sector continued its downward trend, prompting a conservative approach to cost management and profitability maintenance in North America and other regions.
Strategic acquisitions made in Q3 2023 not only catered to key markets but were neatly financed through robust cash flow, reinforcing JOST's resilient business model. Cost controls and capacity utilization in the transport segment, along with aggressive cost management in agriculture, have been key to maintaining stability during sales declines.
A showcase of financial discipline is JOST's management of Return on Capital Employed (ROCE) at 20% and an equity ratio of 37.5%, both showing a positive increase from the previous year. The net debt ratio remained steady at 1.26%, unshaken by dividend payments and acquisition costs. The strong cash flow narrative continued with a rise in free cash flow to EUR 23 million and a cash conversion rate reaching 1.0x for the first time in a while. As JOST heads into the final quarter, it expects overall sales to parallel the previous year's EUR 1.265 billion and projects an uplift in adjusted EBIT to high single-digit growth from last year's EUR 124 million. The company is optimistic, anticipating a double-digit increase in EBIT and an advancement in EBIT margin from the previous year's 9.8%.
JOST's investment in the future is calculated, with CapEx controlled below 2.5% of sales and working capital efficiency better than the prior year. Market expectations for the remainder of 2023 look robust for trucks, especially in Europe and APA. However, softness in European trailers and a negative trend in agriculture pose challenges that JOST is prepared to tackle with its robust business model and recently added strength from acquisitions Crenlo and LH Lift.
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Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining JOST Werke 2023 Results Conference [Operator Instructions].
Our speakers today are Joachim Durr, CEO of JOST Werke SE; and Oliver Gantzert, CFO. I would now like to turn the conference over to Joachim Durr. Please go ahead.
Thank you very much.
A very good morning and a warm welcome to our JOST Q3 2023 Investors and Analysts Conference. It's a pleasure to have you with us, and it's also a pleasure for me to introduce to you Oliver Gantzert. Oliver started first of September of this year as our new CFO. He has a lot of background in the industry, so he has had a flying start here at JOST SE and he will cover the financial part of the presentation.
So let's go straight to the highlights of the quarter of Q3. JOST was able to boost the profitability further in the third quarter of 2023 with an adjusted EBIT margin going up by 2.1 percentage points to 11.4% compared to Q3 2022. The absolute EBIT increased to EUR 33 million. That was an increase by 10% despite a declining sales of 11% to EUR 292 million.
Reason for that is the ongoing market weakness in agriculture and the negative currency translation effect. On top of that, there's 1 reason that also that last quarter or that Q3 of 2024 -- '22, I'm sorry -- Q3 of 2022 was extremely strong because a lot of the orders were delayed in 2022, especially in Europe, because of the Ukraine conflict that was going on.
The acquisitions of Crenlo do Brasil and LH Lift in Q3 2022 -- '23, sorry, could be financed with the strong cash flow that we have generated. This opens the doors to strategic key markets and also strategic key customers for us, and that will further increase the resilient business model that JOST has had in the past.
Our adjusted earnings per share went up by 7% to EUR 1.46 per share in this quarter, supported by a strong operating earnings performance in the quarter 3 of this year. So overall, I think very strong results for Q3 that had a little bit of a negative impact in sales. But again, that shows only the resilience of our business model.
So what do we expect from the markets or what is the information of the markets that we get for the remainder of the year -- sorry, for the Q3 or for the year-to-date in 2023? So we were supported by very strong truck markets, up 21%, especially in Europe. In Europe, the truck markets are still outperforming and very strong compared to last year because last year they still had a lot of delays of missing parts due to the Ukraine conflict.
In North America, we saw more or less the flat markets, minus 2%. And in APA for trucks, we had a strong market, supported by a recovery in China and also a fairly strong Indian market.
On the trailer markets, we saw a softening already in Europe with around 11%. North America continued more or less on a flat level, a little stronger than last year. And in APA also, supported by China and a little bit of India, also an increase in trailers by 10%.
Tractor markets were weaker in Europe and in North America, and quite honestly, I think the actual numbers in the market are higher than that. It just takes a while to adjust them for the consultants that we work with.
Our sales were impacted, as I mentioned, in Europe by minus 11%, in North America by minus 20% and in APA by plus 7%.
So for the details, I would like to hand over to Oliver.
Thanks, Joachim, and thanks for the quick introduction. Happy to join you with financial conference here; for me, the first time. As usually, we go now in our reporting segments, starting with Europe. And within the segments, I will focus on the quarterly results before then coming to the group results afterwards.
So when we look into the sales development of Europe, Joachim already mentioned that we were affected by a sharp decline in the Agricultural business and also a softening in the trailer demand, which could not fully offset by the still-remaining robust truck demand. And on top, we incorporated into our European sales the consolidation of Crenlo do Brasil and LH Lift, contributing to EUR 6.8 million sales in the month of September.
On top, and that was also already mentioned a little bit by Joachim, is that compared to prior year, we had the effect that the seasonality was more pronounced this year because the shift of quarterly sales from the second to the third quarter has happened last year, wasn't the case this year. And on top, a third big effect affecting us in the sales development of Europe, which is a weakening Swedish krona versus the euro, resulting of minus 2.1 percent points in sales decline, leading then to an overall decline of 10.6%, down to EUR 154 million coming from EUR 172 million in the prior year's quarter. And as I said, adjusted FX, that would have been minus 8.5%.
Total different picture when we look into the EBIT development. The EBIT grew sharply by 91% to EUR 13.4 million in the third quarter, and that despite the declining sales during the quarter, as mentioned before. Yes, we did a very good job in both segments. We benefited from efficiency gains in the Transport business as well as fast and big execution of cost control measures in the Agricultural sector.
That overall led to an improved EBIT margin by 4.6 percent points, up to 8.7% in the third quarter, driven then on top by the ease of the supply chain [indiscernible] as well as much lower freight costs versus prior year. And on top, overall, we benefited from a growing share of aftermarket business in the mix between the segments, so to speak.
So that means overall, very strong profitability improved in Europe, and we are quite happy about that development, especially when we compare to the prior year.
If we now go to the North American segment, we see that despite sales declining, we maintain here very good profitability. And as Joachim mentioned before, both truck and trailers demand remained strong. Truck not on the same level like in Europe, but still are supported here the development as we were affected by, also like in Europe, a sharp decline in the Agricultural business, especially for the compact loader segment. And as a result, sales decreased by almost 19%, down to EUR 86 million in the third quarter, and more than in Europe also here affected by the FX effect the USD was in last year's third quarter, quite strong now, weakened versus the euro, affecting for roughly 7.2 percent points down in nominal sales volume.
The M&A activities had no effect into sales of this segment, as they were consolidated in Europe and Asia.
If we look on the adjusted EBIT, it went down by almost 18% to EUR 9 million, fully in line with sales. And that meant on the other side that the EBIT margin could be held stable at 10%, even slightly improving versus prior year. The reasons here are that we benefited from a strong capacity utilization in the Transport business as well as much fewer logistic disruptions and lower freight costs.
And also, like in Europe, we acted fast and deep into cost control for the Agriculture business, and we are quite successful here. All in all, also here like in Europe on top, supported by a growing share in the aftermarket business, then resulted in a good profitability development in North America as well.
And if we now look into the Asia-Pacific-Africa region, we could definitely [indiscernible] strong market is continuing. The overall sales development was positive by 7%, up to EUR 52 million, supported by an ongoing strong demand in all areas of that segment including a recovering Chinese market, which is important to mention there also because we are then -- need to talk about a little bit about the mix effect.
And a slight inorganic growth of EUR 0.4 million, driven by the acquisition of LH Lift and then the sales that, we are producing here in the Chinese plant of LH Lift, are incorporated in that segment as well.
FX effects were even more deep than compared to the North American region, and amounted to minus 14.2 percent points in nominal sales down. The euro is basically strong versus all the currencies of the region affecting that year in the nominal top line.
The overall EBIT declined by 13%, down to EUR 10 million, mostly driven by a shifting product mix. As you know, we are always arguing, okay, it depends a bit on what are the sales, especially in China, off-road or on-road couplings. At the moment, on-road couplings, we are seeing a steep incline. LNG transport business and so on is growing here very fast. For us, overall, very good business but just from a mix perspective. That is a bit dilutive to the EBIT margin here, but still very strong at almost 19%, and that's why we are overall also quite happy with the development in Asia Pacific.
Just 1 thing to mention here because we are talking from time to time about that, we started the operation of our new agricultural plant in Chennai quite successful. So it's now in operation, and we are expecting here for the future quite nice profits.
If we now go on to the JOST group level, I can talk a bit about the quarter but also on the 9 months figures. JOST sales went down then consolidated by almost 11%, down to EUR 292 million versus prior year. And as you can see in the orange speck part of the column, it's sharply driven by the Agricultural decrease of nominal minus 40% and even adjusted for FX effect, that's minus 35%.
Transport sector remains strong, is nominal, minus 1%. And in the quarter then adjusted for FX, almost 5% plus. JOST achieved a strong sales growth in the Asia-Pacific-Africa region, as I mentioned before. And altogether, the sales contribution from the acquisition amounted to EUR 7.2 million in the quarter.
When we look on to the adjusted EBIT number, it increased by 10%, up to EUR 33.4 million in the third quarter. And the adjusted EBIT margin, as a result, grew significantly by 2.1 percent points, up to 11.4%, probably all-time high or very close to an all-time high of the third quarter of JOST since the IPO, so very successful here. We are very proud of that.
And as I mentioned before, supported by the efficiency gains of capacity, utilization, transport sector. It was also driven, and we have to thank our teams here by a strict and very fast cost control in the Agricultural sector all over the 2 regions, North America and Europe.
The supply chains are continuing to stabilize. They are becoming more reliable, and therefore, also logistics costs went down, that supported us as well, as I mentioned before, a slight increase in the aftermarket mix share between the regions.
So that's about the P&L and the segments in detail. Let's jump on our EPS development. We are now, after 9 months, at a net income of EUR 58 million. As usually, if we are then adding up the taxes and the financial results, the reported EBIT is at EUR 84 million, then adjusted for the D&A. It's for the depreciation of the PPA charges as well as other exceptionals. We are ending up with an adjusted EBIT after 9 months of EUR 110 million so quite strong.
The exceptionals, as usually, are driven by the PPA and -- yes, some other adjustments, especially this year then the due diligence costs of the 2 acquisitions and also, to a fair share of the exceptionals that we had to incorporate for the ramp-up of the plant in India.
And if you then deduct again the actual financial result of minus EUR 12 million as well as our adjusted taxes, we end up with an adjusted net income of EUR 78 million. That's an increase of 12% versus the 9 months prior year and results then in an adjusted EPS of EUR 5.25 per share versus prior year of EUR 4.68.
If we then go to the capital and capital efficiency measures, you can see that driven by the strong result as well as our balance sheet, I would say discipline in combination. We end up with an ROCE after 9 months of exactly 20%, which is a significant increase compared to the 18.3% of last year. And that results then also in an equity ratio, which has went up to 37.5%, driven by the operating results as well as the strong balance sheet disciplines, in keeping the net debt under control.
As you can see on the very bottom of the chart, the overall leverage -- EBITDA leverage is at 1.26x versus 1.28x at year-end 2022. So even after paying out almost EUR 20 million of dividends in May as well as the net, it's EUR 52 million cash out for the 2 acquisitions end of August, beginning of September.
We have maintained our deleverage on the same level, and this is due to a fantastic increase of the LTM EBITDA which, as you can see here in the footnote, is now almost at EUR 180 million for the time being, some extraordinary good results here as well.
And then coming to my last slide, looking a bit into the cash development and working capital. You also can see here, like we have announced, a very good development of operational cash flow, not only but the result also by very good measurement and development within working capital. Free cash flow increased to EUR 23 million in the third quarter. And then for the first time for quite a while, we were able to manage or push the cash conversion rate up to 1.0x.
CapEx is still well under control. So even with the CapEx incurred for the finishing of the Chennai plant, we were able to keep this below 2.5% in the first 9 months. It's actually a 2.1 percent points. And also in working capital, we have made some quite good development here.
You need to know when you look into the details that we have consolidated the balance sheet or at least the book we use at the moment of working capital of the 2 companies we have acquired. But even incorporating that, we were able to manage the working capital in present of sales down to 20.4% versus 21.2% in comparison to the same period of last year. So quite well on track here.
And with that, I will hand over back again to Joachim to give us the outlook going forward.
Yes. Thank you, Oliver. I think very solid financial numbers.
Let's look how the markets are expected to end at the end of this fiscal year. So you can see, Truck market remains strong, especially in Europe and in Asia-Pacific-Africa. And North America, it's still a slight increase expected for the year 2023.
For Trailers, softening in Europe, more or less same level in North America and an increase in APA. So softening a little bit in the European region. The rest of the world also solid or slightly increasing development. And agricultural Tractors are expected to continue the current weakness until the end of the year.
With that, let me come to the outlook. We have updated the outlook based on the results that you've just seen. Sales for the year 2023 will -- we expect to remain on the previous year's level, where we had EUR 1.265 billion in turnover. Adjusted EBIT, we have increased our outlook to a high single-digit growth year-over-year. Last year, we had EUR 124 million. And with that, obviously, same basis, double-digit increase in the EBIT. Our margin will significantly increase. Last year, we had 9.8%.
Our CapEx in the usual range of around 2.5% of sales, and our working capital will be below the 20% as we've been last year with 19.2%.
So to summarize it all up, I think we have achieved a very strong profitability in Q3, supported by the efficiency gains in Transport and the effective cost control measures in Agriculture. I think the results -- actually, I think it's the first time that we have results where we have a ROCE beyond 20%, equity ratio at 37.5%, net debt ratio 1.26%. So I think we have very strong development in the P&L and also in the balance sheet.
And on top of that, a very strong cash flow that enabled us to buy and integrate Crenlo and LH Lift. That integration is well on track and the first talks that we have with customers, OEMs and also dealers have been very supportive of this so I think this will be a very good addition to our already very resilient business model.
Market expectations, as I just laid out for the remainder of 2023, are very robust for trucks, softening in trailers Europe, a little stronger in the rest of the world in trailers, and we expect that the current negative trend in agriculture will continue until the end of this year. Based on that, we have raised our guidance for adjusted EBIT to high single-digit growth, and we expect a significant improvement of our adjusted EBIT margin while we expect sales to remain more or less on previous year's level.
With that, thank you very much for your attention, and we're looking forward to your questions.
[Operator Instructions] The first question comes from the line of Jorge Gonzalez with Hauck Aufhauser.
Joachim and Oliver. My first question is regarding Agriculture business. I was wondering if you plan to continue consolidating Crenlo do Brasil in the future in Europe -- under the Europe region? And also, I would be interested -- it would be interesting if you can give us the rough split between LH Lift and Crenlo do Brasil contribution in the quarter? That will be my 2 first questions, please.
I can do the first one, and then I will hand over to Oliver. We have decided to leave it in Europe for the PMI project that we're running, the post-merger integration, to keep it transparent. Typically, at the end of that integration, we have defined [indiscernible] where we then have the final situation.
We have not decided yet on how to show it or if this will be a separate region or if you integrate it into another region, that's why we're showing it in Europe right now, but we will keep it transparent for you so that you have that information until we have finalized our PMI project.
Okay. And then your second question, Jorge. So the split between Crenlo and LH Lift, so all -- both together, sales were EUR 7.2 million, roughly EUR 1 million or so is from the LH Lift group. So both now LH Europe as well as LH China.
Okay. Great. Also regarding Agriculture, I don't know if you can share this with us. Will it be possible to know also the -- more or less the contribution in Europe and contribution of North America? And also, how was the split last year in Q4, just to help us to make our numbers, to make our guess for the last quarter?
The overall contribution from an EBIT perspective is accretive of the Agricultural business. The distribution in terms of sales, we have changed that between the years because of different invoicing, so I don't know if we can have a straight answer here or if we have to follow up on that question because it has not -- we always look at the overall Agriculture business and that's, EBIT-wise. It's accretive, and turnover-wise, we always lay it out.
The split between the regions depends on the pricing between the regions that we have internally, and therefore, we typically don't show that because it doesn't make a big impact. But we can certainly follow up on that question to give you a bit more detail if you need from Romy or -- after the call.
Perfect. You were mentioning that this is still weak -- the demand is still a little bit weak. This means that we should expect a sequential decline in Q4?
For Agriculture now or...
Yes.
First of all, to explain a little bit the demand side, we have effects of a lower market but we also have a big destocking effect. With our products, what happens a lot since we sell a lot through the dealers that then install it to the Agricultural factors, what happens is that the dealers, when they have the financial capabilities, they stock. And after COVID, where they didn't have enough material, they increased their stock.
Now they're trying to sell the stock off also because of the higher interest rates, and that's the reason why we saw a stronger decline than we would typically expect.
Perfect. Okay. And maybe to finish, so regarding this year outlook then. So we should expect Agriculture to bottom out this second part of the year? Or is it still too early to say this destocking that you were mentioning [indiscernible] at some point?
It's too early to say. We don't yet guide for the next year. But overall, I think that's a statement that would support that we don't expect a further decline in Agriculture for the year that comes because we have seen some of that destocking. And now the new sales, they should then also go against the stock and against new production, not only against stock, and therefore, I would support your statement. But as I said, that's not an official guidance. We don't give that until beginning of next year.
The next question comes from the line of Nicolai Kempf with Deutsche Bank.
Nicolai Kempf, speaking from Deutsche Bank. Also a couple of questions. Let me take them 1 by one.
First, starting with the input costs. We saw many raw materials coming down, while rates are probably increasing. Are you trying to push for higher prices towards your OEM customer next year? Or are you thinking it can rather lower price next year?
I can cover that, Nicolai. The pricing that we have with our OEM customers typically is a base price and then what we call variable price components. And we have various variable price components, and they fluctuate more or less with the parameters that you mentioned, except the labor parameter. . So they fluctuate with material, with energy, sometimes with logistic costs. And you're absolutely right we've seen energy costs go up but less than we expected it to go up, so that was less pronounced than we had expected. Material cost was coming down. Logistic cost was coming down. Wages are coming up.
So overall, I don't expect that we will have strong negotiations on the base prices with our OEM customers next year. But obviously, we will fluctuate in the top line with the variable price components that we have in material, energy and logistic costs.
Okay. Understood. And maybe you come back to '24 and looking at the truck outlook, many OEMs have provided one. I know definitely provided an outlook for next year, but would you say their assumption of double-digit markets decline next year sounds fair as of now for Europe and North America, just looking at heavy trucks?
Of course, we also follow their announcements. We had very different inputs from them. On the logistics side, they still see a quite strong demand for our components. But in the official announcement that they have to the stock markets, they all speak about what you mentioned, about 10% decline or something like that. So I have no reason to question their view because they're obviously much closer to their markets, so that is something that we also take into our consideration.
Okay. Understood. And my last 1 is a bit more long-term and directed to the new CFO, Mr. Oliver Gantzert. I mean JOST have managed the last year pretty well, also managed different downturns, up cycles. I mean what topics will you kind of focus on? And what do you think you can improve at JOST Werke?
Thanks, Nicolai. Yes, I mean, you are totally right. JOST managed that quite well. And I would say, however, there's lots of internal potential when -- I mean, I'm now for 10 weeks in the company. My passion is a bit about digitalization, process optimization. When you go into the details, you see now we have a variety of ERP systems -- sorry IT landscape is quite diverse, so to speak. And that's definitely an area where I want to focus.
So to manage these good margins through the cycle, we not only need to have, I mean, strong cost disciplines also on as well we also need to have a good fundament -- good basement in terms of processes and systems. And there's lots of things to do, which will keep me busy for sure.
We will now go ahead with the written questions.
The first question comes from Lukas Spang with Tigris Capital.
The question is, can you please quantify the negative FX effects you have factored in your new guidance compared to the previous one? What is the expected inorganic revenue contribution for this year in your guidance?
So we are not changing or calculating with different FX effects versus prior quarter. So that means at the moment, in the 9 months, we have incorporated roughly minus EUR 35 million of nominal sales decline driven by the variances in the currency versus the euro, and this is just then rolled forward incorporated into the new guidance.
On top, we have incorporated in the guidance, I would say, roughly -- I mean, between EUR 25 million or EUR 30 million of inorganic growth stemming from the ramp-up of the consolidation of the 2 acquisitions. So that means altogether, it's around, let's say, EUR 60 million, I think, is a fair share, FX plus the inorganic topic from Crenlo and LH Lift.
We have a second question from Roland Konen from Value-Holdings. Could you please comment a bit on your view for next year in the different segments, truck, trailer and agri? What are your customers telling you about their own expectations for 2024?
Roland, for the question, I think we've covered a little bit of that already. And as I said, we don't provide a full official guidance until early next year.
But what I've mentioned earlier and what has been asked earlier that's the truck OEMs, and they are global OEMs. So more or less we're talking about global numbers when we talk about trucks. They expect a little softening in the range that we have discussed. So we -- as I said, I have no reason to question their judgment on that, and I think it falls well within to my market picture.
On the trailer, we've already seen a softening in the European market so I don't expect that we have a further decline to the basis that we now have in North America, and it could be a little bit different that it will more or less follow the truck level. And Asia, we expect that Asia will continue to grow, both on the local truck manufacturers and the local trailer manufacturers.
We've also discussed agriculture. The question was, is that the bottoming out? And as I said, based on the fact that a lot of the sales now went to -- final sales went from dealer stock to the customers and it was not refurbished by us or others. I expect that, yes, the new sales that are coming in will then also convert into orders and therefore, I see that a bit stronger than what we've seen in the last months.
[Operator Instructions] We have a follow-up from Jorge Gonzalez with Hauck Aufhauser.
It's regarding the trailer market. I have noticed that your guidance for the year is still more negative in general than your peers, with a decrease in Europe of something between 10% to 15%. Is this because you are expecting specifically weak Q4 or production just been delayed to next year? Is there any effect -- extraordinary effect? Or is just the result of the current run rate for the production of landing gears?
No, it's neither. We just follow the numbers that we get from the external consultants, and they may have had an update between the numbers that you've seen from others and our numbers. So these are the numbers that we get from clear consulting, in that case, that we use for this comparison.
Okay. And then what is your view more or less? Is in those ranges or...
Yes. Of course, in trailer, it always depends. [indiscernible] maybe affected a bit more by certain effects, tankers and tippers and others. So it's always difficult to talk about the average because when you look at specific products, then you have a totally different development. Tippers have been extremely low. They're now coming back. Coolers are still running very well. [indiscernible] have had a hit now in the last months. So it's always a little bit more complex than if you look at the average because it depends on which vehicle type you're talking about. But overall, yes, I see that as a correct number.
And sorry, looking -- I know that you are not providing guidance now for next year. But with this weaker development in Europe during '23 , do you think that if we see further softness next year is going to be not that bad? I mean, not at the rate that maybe we see for truck in U.S. or in Europe?
I think -- as I mentioned just in the statement, I think that the level of production that we see right now in trailer that will be more or less the level that we have for next year. But as I said, it's too early to really look into that. We will have to talk a bit more to our customers. But overall, right now, that would be my gut feeling, but far away from a guidance.
Ladies and gentlemen, there are no further questions at this time. I hand back to Joachim Durr for closing comments.
Okay. Well, thank you very much for your interest. For us, it has been a very strong quarter earnings-wise and on all financial numbers. I think we've had the strongest Q3 EBIT that we've ever had, despite the fact that we've seen a little weaker turnover. So I think to us, it demonstrates the resilience of our business model, and we're quite happy with the results.
We thank you very much for your attention, and we'll see you with latest -- with the Q4 numbers. All the best. Thank you.
Bye-bye.
Bye-bye.
Ladies and gentlemen, the conference is now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.