Q3 2020 Earnings Call
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Good morning, I would like to welcome everyone to this what conference presenting any markets don't restarts financial results for its third quarter of fiscal 2020, all lines will be kept on mute to prevent any background noise.
After the presentation, we will answer questions that were forwarded to us before hand by analysts.
We would like to remind everyone did this webcast presentation will be available on our website for 90 day period.
Also please remember that some of the issues discussed during this webcast might be forward looking statements, which are provided by the corporation with its usual caveats. These caveats or risks and uncertainties are outlined in our financial reporting.
Therefore, our future results could differ from the information discussed today.
Our financial results will be presented by Mr., Brian Harnisch, President and Chief Executive Officer, and Mr. Cook to see Chief Financial Officer, Brian You May begin your conference.
Alright, Thank you John Mark and good morning, everyone. Thank you for joining us for this presentation.
Strong third quarter 20 top 20 results, but before I turn to the results of the quarter I want to discuss how cobot 19 is impacting your operation Center business debate.
As you all know this is a very fluid.
An uncertain situation.
The size of our global network and millions of customers. We interact with every day, we've been acted emergency procedures and preparations knowing each of our regions and business units will need to take additional measures de necessary.
Checked our people are customers.
As we attempt to limit further broaden the virus.
At all times, we're following the advice of local and global health authorities and putting the health and safety of our employees are customers at the forefront of our decision making.
All of our support center teams are hard at work to keep our businesses operating.
And assist our stores and customers.
Good portion of that office work is now being done remotely to support critical business continuity, such payroll I T supply chain ordering and HR support and also to reduce the density our office locations.
Well, we've issued information for brand health procedures tough chose handwashing proper handwashing as well as strict guidelines for hygiene and cleaning inside our stores that are pumps to protect our employees and our customers.
Perhaps most important for the health of our norm North American Audi store employees would also instituted an emergency sick care plan. So that these workers have some financial relief if they need to stay away from work to be tested for Tobin 19, well bring diagnosed with the virus.
Also carefully assessing our regional workforce capacity and scheduling keeps doors open operating in serving our customers in this time a crisis.
As we make these necessary contingency plans for business and supply chain continuity I want to stretch to start isn't a very strong place to face the financial volatility in headwinds created by the cobot 19.
We have good cash liquidity very healthy balance sheet and sell contingency plans, which enable us to stay focused on meeting the needs of our people and our customers.
I also wanted to briefly comment on where we were out with our proposal to acquire Caltech, leading Australian integrated downstream company mid February we made a revised nonbinding indicative offered to the board of Caltex to acquire 100%.
Capex by means of a scheme of arrangement with the price of 35 25 Australian dollars per share.
What does not guarantee in agreement will be reached or transaction will be concluded. We're now actively engaged due diligence work with caltex.
As we said before Costar is focused on strategically developing our Asia Pacific presence to drive continued growth in that region in the future.
Let me turn to the results for the quarter, we had an overall strong performance, especially on the could mean side of the business same store sales during the quarter were solid despite cycling against strong results from prior year and U.S.. We saw an increase in same store merchandise revenue of 3% compared with the same quarter last year in Canada same store merchandise revenues increased by 4.2.
Per cent and in Europe same store revenues increased by 2.1%.
Across the network, we can seem to see positive benefits driven by the successful rebranding activities.
Continued improvements to our offerings as well as various initiatives to drive traffic into our stores.
Shifting to fuel in the U.S. fuel volumes were stable and once again outperformed the industry with same store road transportation fuel volumes, increasing by 0.1% compared to the same quarter last year and fuel margins continued to experience positive trends, even as we cycled against exceptional performance last year.
Canada same store road transportation fuel volumes decreased by 3.4 cents and in Europe by 0.8% both decreases it triples that competitive landscape and softer demand in those regions.
The presence of our circle K fuel brand continues its growth in North America, this quarter with more than adding more than 2300 sites. We're also testing modified Brent branding strategies with our fuel business in that elevating the circle K brand awareness, where we're positioned probably on the canopy either on Oh.
On its own or next to that of our fuel branded partners.
To date, we have 150 sites participating in these tests in four markets across the U.S.
And there's also been generally positive.
Also in the U.S. are easy pay program, which provides fuel discounts everyday chart. Most of all customers is now in all markets, except northern tier.
The program continues to show strong attachment by customers delivering increased trip frequency and growing transaction sizes.
You know mobility work, we just passed a milestone of 400 fast Chargers at our sites in Norway.
Based on internal survey circle, K isn't really the best known charging destination Norwegian market among <unk> drivers.
We also continue our deployment by oddity or other European markets have rolled out our first okay branded Chargers in Sweden, an island this quarter.
No in the fourth year of the global rebranding project.
All in completion for work in Europe, we now have more than 85% I've been scope North American sites displaying the new circle K bring it.
All of them former C. S. T sites in the U.S. had been rebranded the circle K and more now progressing nicely on the Canadian locations.
It's one drives across the network in the U.S. in Europe in parts of Canada, now probably showing unified okay brand across the majority of our markets.
I continue to be pleased with the traction we're seeing what's a meaningful reversed synergies from holiday integration in particular, we scaled holidays labor program on a new I see platform, which not we now have rolled out across their entire U.S. network.
Combining best impressed best in class Labor model with a labor schedule is allowing us to optimize our investment in people make sure we have the right capacity to meet our customers' needs.
Well so good teams continue to bring holidays homegrown promotional activities and tools to widen network such as a smart value program, which we continued to expand and accelerate across our global footprint.
And of course, there's the food pilots, which I'll touch on separately in a moment.
I'm sorry, okay, its best practices.
We finished installing left our usual upsell platform into all the holiday locations this quarter as a way to helped in dry basket and market share gains into that market.
I want to turn now to growth and innovation in our stores starting with the rollout of our food at scale pilot, which is based heavily on the holiday food program.
We're hoping nearly a dozen stores a week and plan to accelerate our pace as we approach this spring.
The strong engagement across the company with multiple cross functional teams established to gather insights and quickly react the learnings as we optimize this program.
We've rolled out the food program to different format stores intentionally to help us understand how we can make this work broadly across the network.
Feel great about the performance and learnings were receiving so far.
Potential this program provides for our customers as well as it related sales and traffic impacts for our stores. This exciting I couldn't be more pleased with positive results in customer acceptance that we're seeing thus far.
Yes.
In hot dispensed beverage based and over 90% cliche completion of our coffee in the man machines across U.S., We've launched a national media campaign in January to drive incremental trial with incredible value starting $1 during their campaign period.
We have approximately 13500 beanie cutting machines installed serving fresh coffee 24 hours a day.
Dispensed beverages, our foster program is now and over 140 sites in Europe argument, Ireland, where we had tremendous success. This past summer we plan to expand the rollout to most of our business units in the region by the end of the fiscal year.
In addition, we've expanded our <unk> presence in Canada to additional 110 stores in the quarter.
Packaged beverage sales continue to add to same store sales growth in the market share expansion in Q3 energy drinks contributed nicely to growth in the category, we saw strength across all the top brands.
Not a number of other bright spots, including hard self service and low calorie beer options helped offset some of the softness that we're seeing traditional premium beer brands.
Other tobacco products continued to be a main driver of our overall nicotine sales with paper products continuing to provide the largest gains in the U.S. and Canadian markets. This quarter brought significant regulation change this category in the U.S., but the signing into law that build that raise the minimum age sell them all tobacco.
Products to 21.
In addition, the FDA announced all flavored easing pods be removed from retail locations limiting the sale to tobacco and menthol flavored pods.
Well changes are significant well our focus remains squarely on making sure that we're selling responsibly to those of age we're monitoring the impact on the business in the coming months.
That said, we're seeing robust growth in other areas of ODP in particular with modern white nicotine products, which had been a key driver of growth in the smokeless category in the U.S.
Our new store concept in Europe continues to focus on enhancing the customer journey and experience in drive new traffic into our stores. We've now built 240 newly refurbished circle K remodel stores across all of our nine European countries and we're piloting some were approach here in the U.S.
Lastly by the end of quarter lift or basket building program was in more than 7700 sites in North America, and we continue to see strong engagement from our customers associates driving increased Walton market basket growth from the platform.
Some of the pause here, let Claude take you through more of our third quarter financial results Claude.
Thank you, Brian maybe isn't gentlemen, good morning.
For a toward quarter of fiscal 2020, we're happy to report net earnings attributable to shareholders of the corporation of $659.5 million or 59 cents for sure on a diluted basis.
Excluding certain items for both comparable periods adjusted net earnings for the third quarter fiscal Twentytwenty would've been approximately $583 million or 52 cents per share on a diluted basis compared with 53 cents per show for the third quarter fiscal 2019, which represents a 1.9% decrease.
Decreased.
Year over year for reasons, we will explain shortly.
That's good news were $1.8 billion for the first three quarters of fiscal 2020, compared with $1.5 billion for the comparable period of the fiscal 2019, an increase of 15.3%.
Diluted net earnings per share stood at $1.58 compared with dollar 36, the previous year.
Excluding certain items from the net earnings for both comparable periods net earnings would have been approximately $1.7 billion compared with $1.6 billion for the previous year, which represents an increase of $143 million or 9.2%.
Adjusted diluted net earnings per share would have been that the older 51.
Three first three quarters of fiscal 2020, compared with the dollar 38 for the corresponding period of fiscal 2019, an increase of 9.4%.
As we previously announced on November 19, 2019, we sold our interest in C. B elsewhere in the amount of $190 million, which resulted in a pretax net gain on disposal of $61.5 million.
On the same date, we also announced the mix and I said to exchange agreements, which CPL under which a portion of or U.S. wholesale little transportation fuel operation will be exchange against the <unk>, 17.5% limited partnership interests in CST fuel supply.
Bringing our interest in this entity 200 person.
This transaction is expected to close during the first Persepolis calendar 20 Quinn.
I will not go over some key figures for the quarter for more detail. Please refer dry and de available now on our website.
During this most recent quarter, excluding see appeals revenue as well as the net negative impact from foreign currency translation for installation merchandise and service Rubin service revenues for the third quarter.
Fiscal 2020 increased by approximately $337 million or 3.3%.
This increase is primarily attributable to continued strong organic growth, even as we cycled against a strong third quarter last year.
For the first three quarters of fiscal 2020 on the same basis merchandise and service revenues increased by $355 million or 3.2%.
For the third quarter of the fiscal 2020 on this thing basis merchandise and service gross profit increased by approximately $61 million or 4.2%.
They need to be attributable to all organic growth.
Our gross margin increased by 43% in the United States to 34% and by 45% in Europe to 42.3 person.
This strong performance reflects changes in our product mix towards higher margin categories.
In Canada, our gross margin decreased by 8.2% to 32.9% due to the conversion of our stores from the agent model to the corporate model.
Parts are also partially offset by improved supply conditions.
During the first three quarters of the fiscal 2020 on the same basis consolidated merchandise and service gross profit increased by approximately 823 million or 3.2%.
The gross margins it was 34 presenting to you on the United States.
An increase of 4.2% it's was 41.7% in Europe, a decrease of 0.1% and it was 32.8% in Canada, a decrease of 0.9%.
Now moving on to the fuel side of our business in the third quarter fiscal 2020, our road transportation fuel gross margin was strong at 27, all four per gallon in the United States. A decrease of two point 38 cents per gallon compared to the markedly high fuel margins in the same quarter last year.
In Europe the road transportation fuel gross margin was up 8.5, you with fence per liter an increase of 42 U.S. cents per liter well in Canada. The road transportation fuel gross margin was up 8.06 cents per liter comedian a decrease of <unk> 0.05 cents Canadian.
Per liter.
The road transportation fuel gross margin in the first three quarters of fiscal 2020 was 27 point Teresa seven cents per gallon in the United States.
Eight points 43, U.S. sense for a leader in Europe, and seven point 81 Canadian sense for leader in Canada.
For the third quarter fiscal 2020 grow to normalized operating expense was 3.7%.
Excluding the conversion of our stores from the agent model to the corporate model. The remaining variance for the third quarter fiscal 2020 would have been 3.4% driven by normal inflation.
Your labor cost due to the increasing minimum wages.
And it's like LIBOR bike market backdrop, as well as the incremental investments to support our strategy, notably in the area of data and analytics.
In line with our strategic initiatives and objectives. The optimization of our cost base would remain focused my focus area over the next quarters.
Excluding the specific items described in our in more detail in R&D any you adjusted EBITDA for the third quarter decreased by $35.6 million or 2.9% year over year.
Mainly from lower road transportation fuel gross margins in the U.S. to higher level also those initiatives throughout the organization the disposal of our interest in CPL as well as the net negative impact from foreign currency translation, representing approximately $5 million, partially offset by organic growth.
During the first three quarters of fiscal 2020 on the same bases the adjusted EBITDA of $3.3 billion increased by $152 million or 4.8% year over year.
Mainly attributable to the higher ROE transportation fuel margins in the U.S. and Europe into organic growth.
The variation in exchange rates I didn't they get he's been pack of approximately $32 million.
Excluding specific items described in more detail there and you need the income tax rate for the third quarter of fiscal 2020 was 19.6%.
Compared with an income tax rate of 18.7% for the third quarter fiscal 2019.
The adjusted.
Income tax rate for the first three quarters of fiscal 2020 was 90.6% compared with an income tax rate to 18% for the comparable period.
The increase for both the third quarter and the first three quarters is mainly stemming from the impact of different mix in our earnings across the various jurisdiction in which we operate.
I was up to answer your second 2020, our return on liquidity remained strong at 22% in our return on capital employed at 13.7%.
During the quarter, we continued to generate significant free cash flows and SAR adjusted leverage ratio declined further to 1.8 import times and in the third quarter fiscal 2020, we fully reaping maturity.
Our 600 million U.S. dollar dominated senior unsecured notes and our 450 million Canadian dollar dominated senior unsecured notes.
We also issued.
1.5 billion of U.S. dollar dominate senior unsecured notes at favorable terms.
As of the February you second a 2020, our liquidity position remained strong with $1.8 billion and cash which adds to the $2.5 billion available through our revolving unsecured operating credit facility.
As many as mentioned by Brian we are comforted by the health of our balance sheet and available liquidities and are proud of the financial discipline that we had.
To exit it to exercise here in the near how to please the company in this enviable position.
As we <unk> you evolve through this crisis, our financial strength and stability permits us to focus on operational execution and meeting the high expectation of all our stakeholders.
Importantly, we will continue to apply or typical discipline and hard work and culture to protect our customers are people as well as the value for our shoulder going forward.
It is also worth noting that we are monitoring our potential exposures daily and have plans in place to mitigate our financial and customer credits risk should any issues arise.
In keeping with our usual approach remain proactive and see I'm facing this challenge and.
As we have further disruptions in the past.
Well, we are we rely on our experience or conditions financial strength nimble execution in constant sharing of best practices across organization to get through this difficult period.
We are confident that we will come out on the other side in a solid position to come to new meeting the needs of our people in our customers.
During the third quarter and the first three quarters of fiscal 2020, we repurchased 2 million and 7.8 million class B subordinate voting shares respectively.
These repurchases were settled a four net the month of 64.2 million and $236.9 million respectively.
On March 17, 2020, we announced subject to TSX approval, our intention to renew our share repurchase program, which will allow us to repurchase up to 4% of our class B supported me could.
Voting shares.
Finally on the same date the board of director declare declared a quarterly dividend of seven cents per share to be paid on April 920, 20, which represents an increase of 12% and demonstrates.
Confidence in our team and indeed exhilaration of our strategy. Despite the recent volatility in the industry.
On this thank you for you or your attention and now back to you Brian.
Thank you Claude in in closing I want to take a moment to thank all of two stars dedicated leaders and employees now for the my sincere thanks, and how they're operating in the face of the spread of the current virus.
Yeah. These are truly unprecedented times I'm deeply proud of how we come together to make important sometimes difficult decisions for the health and safety or employees and our customers and for the continuity the business.
We know our customers depend on us during these times the crisis.
And we are in a solid financial position to focus on meeting their needs and the best possible manner.
Out of the next several weeks, we'll be making prudent financial decisions open a global and local level to protect and potentially grow the business and the value for our shareholders well now answer the questions we receive from analysts.
Thank you Brian the first set of questions comes from their delay at Canaccord Genuity.
Can you comment on Canadian same store fuel volumes during the quarter why is the Canadian fuel environment looking increasingly competitive.
I'd say as a few factors going on you know certainly the soft economy in Western Canada continues to hurt volumes. When we look nationally a industry data like can we.
We believe we are performing largely in line with overall Canadian demand.
Yeah, we're disciplined operator, and we're focused on maintaining that approach, we don't want to chase volumes of expensive margins were trying to maintain a good balance and overall was pleased this quarter to see industry margins are our margins at least a over eight cents, a a leader which has stabilized year over year.
The second question from Derrick delay with respect to Cobank 19, how do you expect the pandemic to impact your business will you be store business benefit from pantry loading how we'll covert 19, coupled with lower oil prices impact fuel volumes over the coming months.
Yeah, I'd say through this past week results have actually been strong and fuel margins and been good but we fully expect sales volumes to soften as people travel less.
George and then uncharted territories that we won't know for sure how Vince will unfold and we're not in a position or provide any forward looking information.
What's important to remember in this time is that we are starting from a position strength, we have a strong balance sheet.
Low leverage and a $2.5 billion credit facility available.
Also I would say our decentralized model allows us to react quickly nimble share best practices and keep in touch with our local local markets.
You were being very proactive I'm pleased with the preparation work and contingency planning that has taken place.
The health and safety of both our employees and our customers are key priority.
Yeah, we've been through localized crises like Hurricanes and we've got good processes and dedicated teams that will be there for our customers.
We've taken a hundreds of actions taken small to prepare a some examples include for shipping the clean hygiene supplies to the stores early in the during early in this event, we've increased the frequency cleaning provide the hand, sanitizers, probably gloves to customers the four courts where possible.
And we certainly been working with our supply partners to ensure that we have what we need for our stores and our customers.
We feel good about our ability to stay in business today.
But that said, we're looking at other scenarios that a if were forced to close or corn close at least the store portion or business that we're prepared to do so.
Okay.
The next question comes from Patricia Baker at Scotia capital.
In your press release in the discussion of operating expense trends in Q3, you cite a tight labor market and incremental investments as impacting the quarter and you know you will be doubling your efforts control expense growth can you provide some background on where we will see this effort and perhaps your outlook on that front in the coming quarters.
So thank you Peter Patricia so.
We have a comprehensive program in place to use our scale at maximum level on expenses.
As much as we're doing it.
On our products and ER with our vendors. We're also looking at it themselves on all vendors on the expense side. So we are we are putting a global procurement effort in a cost optimization program that is going on a into a laws to focus on specific hi rewards area, where we have important expenses.
So chart, such a expenses our supplies maintenance will sort construction.
Sector, we're looking into an IP and also marketing services store level or that we're focusing on.
We're also continuing on journey to deploy our labor model in our stores, that's going to help us to control our constant <unk> labor costs and also looked at throughput to position activity.
<unk> Robotization of classic also in our shared services and also AI to help us to be more efficient when you do see our work in our stores. So once you know.
With one hour see in productivity in the store, we can multiply that by thompsons or if we were able to deploy if it could be those those knew there was new saving so it's a very important initiative that's going on now.
The next set of questions comes from Irene the tell at RBC capital markets.
In the current uncertain environment, how do you think about M&A in general and if you're willing to answer how do you get comfortable with the outstanding Caltech conditional nonbinding proposal of interest.
Yeah, I mean, we've built a accompany that we think has a very strong and geographically diversified foundation I think it's very likely that the landscape for credit and M&A multiples.
I will change dramatically and our goal is to be ready if the right opportunities present themselves.
With regard to Caltech specifically.
We're in the middle of our due diligence process and we'll get comfortable by applying our usual rigor and discipline around M&A, our first and foremost goals to make sure that any transaction, we do will deliver appropriate returns the long term value for all of our stakeholders.
The second question from Irene though.
We continue to see a discount.
Court and backward performance with four court under pressure in back toward delivering nice same store sales growth can you talk about the factors driving the backcourt has the competitive dynamic you referenced in the release that's moderating the forecourt.
Right.
Yeah up until recent weeks I was very very pleased with the performance of the backward they're benefiting from a lot of different initiatives that are in last couple of months since we've seen some the strongest traffic trends that we've seen in a number of years.
Yeah, no silver bullets, it's a lot of a lot of activity across all fronts targeted traffic campaigns, including gate game location.
Our lift program, which we continue to increase penetration, which builds are baskets.
The smart value program, which is also a bit basket building.
Promotional program that we bought stolen from holiday Inn deployed throughout North American now into Europe.
As I mentioned in the comments, the OLTP or nicotine category continues to see good growth, particularly in Canada.
Hot dispensed beverage a with a new coffee program coffee and demand has continued to perform well.
No I mentioned the National campaign supporting that that we had in January and again packaged beverages, new innovation like hard self service you continue to drive strong growth in some of those categories.
Beyond the four court.
I'm very pleased with the fuel performed a overall strong margins globally that have continued.
The tougher environment. So we referenced in Canada, and Europe is I think a reality a man's just been softer in those areas while in the U.S. growth has been stable and we've outperformed our public competitors.
The next set of questions come from Vishal Shreedhar at National Bank financial.
Management indicated that he would proceed with the restructuring of certain operations can you describe the scope of benefits expected and should we anticipate more restructuring initiatives in the near term in order to maximize efficiency.
Well what are you a mute.
So it was sort of isn't real quick sorry no.
As norm or close to normal cost restructuring nothing that is the third.
Thank you Michel So normal course restructuring nothing that is out of the ordinary for a company with large global operation like us So it's a.
Most of the initiatives that took place across multiple business units in Europe, right now and the <unk> you know, we're all those always looking to improve our operation and nor are we to do business and.
As we tend to need to do so we're still generating synergies.
In the benchmarking.
Our multiple views and we're continuing to refine our business model around the world and the dust is always a generating some synergies and restructuring going going on so.
The second question for me to show Shreedhar can you comment on any potential changes to the acquisition landscape because of concerns related to covert 19 does management believes that this may result in lower industry acquisition multiples potentially more available assets and less competition for assets.
What does management observed related to acquisitions in prior slowdowns.
If I look back over the years, you know I would say some of our best opportunities have come after a difficult period.
I think it's normal to see contraction in multiples during periods of crisis in after.
Yeah, we've seen a lot of activity in recent years or by consolidators, including private equity.
We don't think we'll have the same balance sheet flexibility.
Going forward.
No financing is going to be more difficult.
To obtain.
So as always our post has been to maintain clean balance sheet.
The able to get through these difficult times in good condition and take advantage of opportunities that may arise.
The next set of questions comes from Mark Patriot CNBC World markets could you. Please provide additional detail around the magnitude of the contribution from each of the primary drivers of your U.S. merchandise same store sales growth regarding the rollout of your food at scale program could you. Please update us on the state of the ROI.
A lot today and plans for Q4 in fiscal 21.
Yeah, I think we've already addressed the categories. The test it out for this quarter somebody go right to food.
With regard to what we call food at scale.
We've expanded this quarter to 100 stores I'm very pleased with the results not only in terms of the food sales itself, but the positive impact we're seeing it happened in other categories in the store.
And why what else you know there startup costs I'm very pleased with the efficiency in the program from a labor perspective.
So at this point happy to share that we push the button to scale. This program materially in the U.S. Our current a plan is to roll out to initial 1500 stores by fall of this calendar year.
Right now we're rolling out at a pace of 12 stores per year and looking to accelerate the significantly as we entered the summer that's of course barring any impact from the covert 19 virus.
The second question for Mark Petri, what if any impact have you seen your business, specifically regarding the availability of product and availability availability of labor as a result of the coven 19 pandemic and do you expect to keep stores opened throughout the outbreak.
Again, it's very fluid, but as of right now we've not seen any material issues in our supply chain, we have great long term supply partners and they've done a great job communicating with us and adjusting their operations to meet our needs.
We certainly seen some items of higher demand you. If you think about kinda staples that people are stocking up on Oh the water.
Tobacco products even beer.
You know again that far on the labor side, you know the health and safety or employees are customers has got to be a top priority.
We put in place a lot of measures to reinforce the right behaviors and decisions.
Including emergency sick plan in place for a large portion or U.S.
A workforce.
Under the current conditions, we planned or remain open, but it's again very fluid.
Communities, where we work and liberal out our locations more than ever for fuel emergency items and staples. So when we did experience. These types of situations in the past you think about hurricanes floods et cetera.
The industry's played a key role in helping our communities get through these situations will attempt to do the same here.
The next question comes from Michael that out that TD Securities your refinancing and terming out of $1.5 billion of debt earlier. This year looks timely at this point should you wish to complete an acquisition. In addition to the cash balances would you expect to have full access to your too.
5 billion dollar credit facility.
Do you think you could raise additional debt in the current market conditions, if attractive opportunities surface.
So yes, Michael So we don't know how the situation will involve and what impact it would potentially have on an M&A, but we were monitoring the situation very closely.
However, we know we are in the good position or like we said previously with an investment grade credit rating and that is recognized by investors and we are also we also have good liquidity strong cash position as we mentioned we have a full access to our 2.5 billion dollar could this facility.
And as I've known financing has nothing to write up for investment grade and the capital market.
We're still this is sitting them every day and were showing them on the right. There. So there's still a market out there.
So we saw good demand in our offering in the January so I'd teacher. Our credits is is wells well so and in the we also got the trick.
Effective terms so work on this still money sort of market.
You investors all are still looking for good quality bonus to invest in.
And the and we also think that's one said we will passed the peak of the occur in the virus crisis, or we're going to see a desirable and.
And this.