Q3 2021 Alamo Group Inc Earnings Call
Thank you.
By now you should have all received a copy of the press release. However, if anyone is missing a copy and would like to receive one please contact us at Q1 to 80 73746, and we will send you a release and make sure youre on the Companys distribution list.
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Play can be accessed by dialing 18882031112 with the passcode 794 to 443.
Additionally, the call is being webcast on the company's website at Www Dot Alamo dashed group Dot com and a replay will be available for 60 days.
On the line with me today are Jeff lenders.
President and Chief Executive Officer, Richard <unk>, Executive Vice President and Chief Financial Officer, and Treasurer, and Dan Malone Executive Vice President and Chief Sustainability Officer.
Management will make some opening remarks, and then we'll open up the line for your questions.
During the call today management may reference certain non-GAAP numbers in their remarks reconciliations of these non-GAAP results to applicable GAAP numbers are included in the attachments to our earnings release.
Before turning the call over to Jeff I'd like to make a few comments about forward looking statements.
We will be making forward looking statements today that are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Forward looking statements involve known and unknown risks and uncertainties, which may cause the company's actual results in future periods to differ materially from forecasted results.
Among those factors, which could cause actual results to differ materially are the following.
Market demand.
Silver 19 impacts, including operational and supply chain disruptions.
Appetition weather seasonality currency related issues geopolitical issues and other risk factors listed from time to time in the Companys SEC reports.
The company does not undertake any obligation to update the information contained herein, which speaks only as of this date.
I would now like to introduce Jeff Leonard Jeff. Please go ahead. Thank you Ed first I'd like to again. Thank all of you for joining US today, Dan will begin our call with a review of our financial results for the third quarter of 2021, I will then provide more comments on the results. Following our formal remarks, we look forward to taking your questions.
Dan. Please go ahead, thank you Jeff.
Key takeaways from our third quarter 2021 results or <unk>.
Total company net sales of $338 million were up 16% Industrial division net sales of $219 million were up 12% Agricultural division net sales of $119 million were up 25% operating income of $30 million was down 3%.
Net income of $17 $5 million or $1 49 per diluted share was down 13% adjusted net income of $18 $9 million or $1 59 per diluted share was down 8%.
Adjusted EBITDA was flat to the prior year third quarter.
And remained up 7% from full year 2020.
Total debt outstanding was reduced by $27 million during the third quarter and was down 20, 21% from the prior year third quarter.
And our backlog increased to $645 million, which is up 154% over the prior year third quarter.
<unk> third quarter 2021, net sales of $338 million.
Was 16% higher than the prior year third quarter, we continued to benefit from strong order rates and recent pricing actions, but supply chain constraints and labor capacity issues are still limiting our ability to ship finished product.
Industrial Division third quarter 2021, net sales of $219 million represented a 12% increase from the prior year third quarter.
Despite stronger customer demand. This division's top line result was particularly hit hard by truck chassis availability as well as other supply chain disruptions.
Agricultural Division third quarter, 2021 sales were $119 million.
Up 25% from the prior year third quarter during the quarter favorable agricultural market conditions, low dealer inventories and pricing actions continued to drive organic sales growth in this division.
Which was also affected by port delays and other supply chain constraints.
Gross margin for the third quarter of 2021 was $86 $3 million or 25, 5% of net sales compared to $78 6 million or 27% of net sales in the prior year third quarter.
The favorable gross margin impact, we would normally expect from higher volume and aggressive pricing actions was more than offset by continued material inflation production inefficiencies, resulting from supply chain and labor capacity constraints and a less favorable mix of service parts sales.
Operating income for the third quarter of 2021 was $30 million or eight 9% of net sales, which was down 3% from the prior year quarter.
The gross margin effects already mentioned were offset by a more normal level of operating expenses compared to the reduced spending levels of the pandemic affected prior year period.
As mentioned last quarter, while our recent pricing actions have been aggressive the effective impact of these actions continued to lag rising cost on a positive note September was the first month in over a year that we didn't see a rise in published mill pricing mill prices for hot rolled steel.
Net income for the third quarter 2021 of $17 5 million or $1 40 per diluted share was down 13% from the prior year third quarter, if we exclude from the current year quarter.
$1.4 million of after tax charges stemming from accelerated stock award vesting related to the retirement of our former CEO as well as more bark inventory step up expense from the prior year quarter.
Third quarter, adjusted net income of $18 $9 million was down 8% from the prior year result.
Income before taxes was up <unk> 3 million over the prior year third quarter, mainly due to lower interest expense net income was lower due to an income tax provision for stock based compensation and anticipation of a 28% full year effective income tax rate as well as the <unk>.
Non deductibility of compensation expenses related to the retirement of our former CEO.
Third quarter 2021, adjusted EBITDA was flat to the prior year third quarter. Adjusted result is.
Trailing 12 month, adjusted EBITDA of $155 $3 million remained flat to the trailing 12 months results that we reported at the end of the second quarter 2021. This remains 7% above the adjusted 2020 EBITDA.
During the third quarter of 2021, we continue to Delever the balance sheet by further reducing debt $27 million on the flat adjusted EBITDA performance. We ended the third quarter of 2021 with a record high order backlog of $645 million, which.
Which was an increase of 154% over the prior year third quarter, we continued to see strong customer order rates and no significant order cancellations despite supply chain induced shipping delays.
To recap our third quarter 2021 results total company net sales of $338 million were up 16% Industrial division net sales of $219 million were up 12%.
<unk> Division net sales of $119 million were up 25%.
Operating income of $30 million was down 3% net income of $17 5 million or $1 49 per diluted share was down 13% adjusted net.
Net income of $18 9 million or $1 59 per diluted share was down 8%.
Adjusted EBITDA was flat to the prior year third quarter.
But remained up 7% from full year 2020, total outstanding debt was reduced by $27 million and was down 21% from the prior year third quarter, and our backlog increased to $645 million up 154% over the prior year third quarter.
I'd now like to turn the call back over to Jeff.
Thank you Dan I'd like to start by again, adding my personal welcome to everyone who has joined the call. This afternoon as we review Alamo groups third quarter results.
Before discussing our results for the quarter I'd like to offer a brief update regarding COVID-19, I am pleased to report that during the third quarter. We experienced very few cases of COVID-19, among our employee population, while the direct impact of Covid was far less this quarter than what we've experienced during the last several quarters the lingering indirect.
Facts of the pandemic significantly impacted our operations during the third quarter.
As I commented in the earnings press release during the third quarter Alamo group simultaneously.
Potent market tailwind and operational headwinds our markets remained strong during the quarter fairly across the board and our order bookings for the quarter increased sequentially again as they have done every quarter of this year.
In the agricultural market prices for corn, soybeans and livestock, while off from their previous peaks remained at historically attractive levels.
Tractor sales were also modestly higher than they were a year ago. Although recent demand growth has been skewed to the larger tractors are somewhat less meaningful to Alamo group sales of attachments.
<unk> and our governmental markets also remained strong.
<unk> County, and municipal governments continue to invest in equipment to update their right of way maintenance fleets. In addition demand for our industrial products from industries, such as steel cement and mining also continued to rebound.
Finally demand for our forestry and treat care products has been very strong as we anticipated when we acquired the more bark Ricoh and Denise I'm off brands late in 2019.
The increased pace of order bookings brought our backlog to a new all time record of $645 million by the end of the quarter to.
To date, we've not observed any signs that the momentum of our markets will change in the near term nor have we experienced any meaningful order cancellations due to the extended lead times. We are currently experiencing.
So long as dealer inventories remain at the current low levels, we expect demand for our agricultural divisions products will remain strong with minimal risk that orders will be canceled or postponed gover.
<unk> mental agencies by their nature don't purchase equipment on speculation warrant advance of known fleet renewal requirements. So we don't foresee significant risk of order cancellations from these customers non.
Nongovernmental buyers of our industrial products, including operators of our forestry and tree care equipment place orders to meet expanding demand for their own products and also in anticipation of their cart equipment, reaching the end of their expected lifecycle.
There is some risk that these customers could cancel orders in the event of a recession, we do not anticipate this recurring in the near term thats occurring in the near term.
Turning now to Alamo group's operations in the third quarter, we experienced significant disruption in our normal manufacturing process flows during the third quarter as a result of instability in the supply chain, we experienced extended delivery times for a wide variety of components, we required to manufacture our products, including shortages and delivery delays of truck.
<unk> industrial engines, gearboxes, cutting blades hydraulic components, and even such relatively mundane items as wiring harnesses and specialty assembly hardware, our operations depend on reliable and timely supplies of these kinds of components to operate efficiently when the supply chain has significantly disrupted as we experienced broad.
In the third quarter, our workforces less productive as they have to shift production priorities frequently based on what products can be completed with the materials on hand, when a component needed to assemble needed for the assembly of our products has delayed our work in process inventory also increases beyond what is normally expected as orders increase in.
Put cost inflation was also a significant issue during the third quarter, while our teams have been closely monitoring supplier cost changes and adjusting our prices regularly there is a lag effect until these pricing actions materialize in our margins. Our agricultural division has had success renegotiating pricing for orders and backlog. However, it is not really pop.
<unk> for our industrial division to renegotiate prices for orders and backlog from governmental customers.
Shortages of skilled labor. We're also more impactful during the third quarter than we had experienced earlier in the year, while we've been able to partly address the shortage of welders by increasing the pace of our deployment of robots skilled assembly technicians with experience in electronics hydraulics and pneumatics remain difficult to recruit although this was certainly less.
Impactful to our results in supply chain bottlenecks. It also has contributed to restraining sales growth in some of our operations.
Transportation costs were another headwind, we encountered during the third quarter, particularly costs associated with inbound shipments while transportation costs were higher across the board. We also incurred additional cost to expedite inbound shipments of components to complete production in order to achieve the earliest possible delivery dates to our customers as a result of the <unk>.
<unk> pressures I've described our margins in the third quarter were lower than they were in the third quarter of 2020. However, our margins were actually slightly higher in the third quarter than they were in the second quarter of this year and I think this indicates that better pricing in the backlog is beginning to flow through.
Finally sales general and administrative costs were higher in the third quarter as expected selling costs increased it's COVID-19 related travel restrictions eased in our sales teams were able to travel more regularly to serve our customers in person and to attend trade shows many of which were suspended last year.
With our higher sales in the quarter Commission expenses also increased the.
The increase in administrative expense, primarily involve nonrecurring costs related to the retirement of our previous CEO.
Our effective tax rate in the third quarter was 37% compared to 27% in the third quarter of 2020, the higher tax rate was primarily the result of a provision for stock based compensation and in anticipation of a full year 2021 tax rate of 28%.
So as you can see there was a lot going on during the third quarter and this is reflected in our results at the moment. There is no clear evidence that the external business climate will be meaningfully different or better during the fourth quarter. One positive note is that we've recently seen steel prices begin to stabilize albeit at higher levels than we would like otherwise inflation.
Generally it seems to be gradually gaining momentum at least in the United States.
Fight of this I remain optimistic about the future prospects for our company our strong record high backlog gives us confidence and good visibility to allow us to make appropriate investment plans concerning the development of our people our products and our facilities.
He was also very pleased to announce the acquisition of timber Wolf limited last week. Although this is a small company. They are UK market leader with a very nice range of brush and limb shippers. They have a comprehensive dealer network spanning the U K Europe and other areas that will provide important access points into these markets for our full range of <unk>.
<unk> Street tree care and recycling products at the same time timber wolves shipper products fill an important product offering gap in more barks range that will complete and strengthen our tree care offering in North America.
Finally, I want to take this opportunity to remind the investor community that commencing in the fourth quarter. We will report our business through two new segments, namely vegetation management and industrial equipment, all of Alamos products that cut or process organic material will be organized under vegetation management. This division combines all of the brands of our.
Former agricultural division with the governmental mowing forestry and tree care operations that had previously been part of our former industrial division more specifically this means that our Alamo industrial Tiger mowers more bark raiko and Denise I'm off brands will be reported as part of vegetation management going forward, our industrial equipment does.
<unk> includes our excavator vacuum truck Street sweeper leaf removal and snow removal brands I believe this structure brings improved strategic clarity and more closely balanced as the size and scope of our two operating divisions.
This concludes our prepared remarks, we're now ready to take your questions. So operator. Please go ahead.
Thank you if you'd like to ask a question. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure Amy function is journal July you said, Mr. Richard Glickman.
Again star one to ask a question. Our first question comes from Mike Slutsky with D. A Davidson.
Hi, good afternoon guys.
Hi, Mike.
So maybe I could start first.
Touching on.
Well, you just mentioned about timber wolf.
Sure.
Do you think that's going to be an avenue to expand more box distribution outside of the U S is that one of the reasons why you bought it.
It is Mike in fact, that's a very significant reason why we bought it you know more bark traditionally within North America company with only a few distribution points in Europe that actually werent very effective and.
And timber Wolf is a young rapidly growing company and they build out a tremendous network, but conversely, the U K and most of the continent of Europe and also some other places in the middle East and other areas that can be interesting markets for us.
And as I said in the press release, they have a very nice range of smaller chip or starting with six inch shippers and aliens shippers, which are areas where more bark traditionally has not been very successful competitive. So we plan to also cross brand those products back into the more bark range and bring them back into North America. So we see synergies in both directions, both market and product synergies in there.
Acquisition.
Great Thanks for that.
Just maybe talk about probably also about the order trends, obviously, great numbers great backlog.
Unfortunately in an inflationary environment can you maybe give us a sense as to whether you think that the two are connected.
Are you concerned that people are just trying to or all they can now before they get their prices jackup on them again.
And is there a potential that things have just been pulled forward from 2022 from an order perspective, yes.
Yes, that's a great question, Mike I mean, let's take the easy one first you've heard me talk about this before I mean, the governmental stone order on speculation you regardless of pricing and so on so I really don't see any risk score erratic behavior in the governmental side of our business, which is a very large chunk of our company.
On the AG side of it if you look at it I've said before the tipping point will be when dealer inventory start to meaningfully rise and I think that'll be a signal to dealers that maybe it's time to back off a little bit I'm sure with some of the dealers. There is some speculative buying going on but at the moment. It seems they are retailing everything they can get their hands on as quickly as they can get their hands.
On it.
So I think that will eventually come but I don't see it in the in the mirror yet I don't see it coming at least in that segment of our business forestry and tree care, particularly the bigger industrial machines and the more bark range. Those are big ticket items that demand has just been frankly overwhelming impressive to say the least and of course were new to that space. So we don't know what.
As well as some of the ortho markets that we've been in for a very long time, I guess, if I have one area of concern that might be it that we may eventually see some cancellations or let's call them repricing actions by some of the customers in this space, but again I want to emphasize there is no evidence of that yet absolutely none on the horizon at all.
No discussion about cancellation or trying to do.
Cancel and reorder and of course, the problem is anybody that would cancel an order now has to get in the back of the line with another supplier or with the supplier. They were originally in line with so you know it obviously just compounds the problem.
So until I actually see the demand itself softening I don't see much risk of that to be candid with you.
Can I follow up that Jeff.
Would you say that the government customers that are.
If you're a government customer.
The orders are.
Is it more a more rational.
Not growing as quickly as the private sector right now is that a fair statement.
I mean, they're not growing as fast as the AG businesses I mean, obviously the AG market is in a cyclic upturn. It's just in a very good place generally.
That's just market driven as I mentioned in the remarks, the forestry and tree care space. These are big ticket long lead time items and when the lead times go out beyond a year for those pieces of equipment. If you're an operator, if you have any doubt about the longevity of your machine if you've got a machine that's reaching the end of lifecycle youre going to get in line for sure and that's the area.
Whereas I said, there just might be a little bit of risk, but I honestly I'm not too concerned about it Mike because there's just no evidence yet there is no discussion about Gee I Wanna steels tipping down can I renegotiate the price or are you guys going to move away from the pricing you put in place we've had no context like that at all thus far so the momentum just feels.
Really good Micah and as I said, it's across virtually all of our business. The only part that hasnt seen the momentum really tick up sharply yet as snow removal, but even there our snow removal backlog is sharply upward from where we were last year.
So I'm not concerned about that we're just heading into the snow season. So I think you'll see even further demand.
Got it.
Just throw one more out there for you.
On capital allocation.
So you pay down more debt.
This past quarter were 20 million plus.
Like your leverage levels are.
Basically at this point are healthy and really of no concern I would imagine to anybody at this point.
Yet you appear to have with your backlogs are pretty giant.
Let me EBITDA coming in especially if inflation abated at all.
Is there an update you can give us as to what your capital allocation plans might be going forward.
Is there are there any major M&A deals with matter other ways to take some of that cash then it'd be coming soon and put it.
To work.
Well I mean, obviously, Mike we're always active in the M&A space, but as I've said to you before I think but I think one of the things we want to do is pick the deals we want to do timber Wolf was one of those it was a private sale we contacted the owner there were no. Other players some meaningful players anywhere at the table and we were able to buy that business at an attractive valuation from our point of view.
Other than that I am sure Richard waiting to jump in here and make a comment about our inventory among other things.
A couple of things Mike I think our cash is obviously up it's at 89 million for the end of the quarter. The majority of that is overseas and it it's somewhat tied up already with exchange rates and we were somewhat hesitant to bring that back to incur a bunch exchange rate losses. So.
So yes, we'd like to use those funds as much as we can especially in the case of what Jeff was mentioning to you for the timber Wolf acquisition. Our inventories are up our turns are not up but a big problem with the turns out being up is we're not able to get all the components and as Jeff mentioned to you closing out work orders and getting products shipped to the customer so I do believe hopefully.
We get moving forward I think that cash I mean that inventory probably will go up a little bit more but I think we're trying to balance that out with with with whats going on with the deliveries themselves. So.
We had taken a first derivative and this quarter, Mike with regard to paying down the debt because of the rising inventories and we expect until the supply chain problems abate.
Tories are continued to rise demanding more working capital over time at least in the short run.
But beyond that our balance as you said our balance sheets in very nice shape, and we're going to keep doing the things. We do we're going to keep acquiring businesses and reinvesting in the businesses that we have we had a very interesting discussion with our board about.
Improving the not only the operational efficiency, but also the environmental.
Efficiency of our facilities and that's an area, where we will be increasing our investment over time as well.
Got it.
I'll leave it there guys. Thank you so much good Tom.
Thanks, Mike.
Thank you. Our next question comes from Chris Moore with CJS Securities.
Hey, good afternoon, guys. Thanks for taking a few questions.
So good afternoon, I'll say steel showing some signs of letting up.
As you talked about giving you don't typically.
The price that we can't meet government orders.
Your best guess at this point as you still have a couple of more quarters.
Of lower margins on the government orders.
I think that's true I wouldn't say couple, but I'd say, probably at least one of Chris's. My guess I was pleased to see our gross margin actually tick up a little bit from Q2 in spite of the fact that we did some inventory revaluation in the quarter. So I think that's a sign that the better pricing is already beginning to show in that space and for example in our snow removal space.
Where we ended the year with a larger backlog than we normally have.
We have started to see some of that re price coming through now in the snow removal businesses are big bidding can skip back to a more traditional level of margins. So I'm really encouraged to see that along the way also an RMR excavator and vacuum truck segment I've seen evidence of that better pricing starting to flow through in fact that group had an excellent quarter tremendous quarter.
Got it that's helpful.
Revenue up 16% roughly.
The price volume kind of split.
I don't know Dan what would you say about that you've got a guess at that I mean, I think on average if you think about that being 5% to 6% on price and the balance probably unchanged absolutely had guests absolutely and I also think too Chris If you go back and look I can't really say, we don't show you. The numbers are new orders for the third quarter were.
Tremendous they were high and even though our backlogs up two we did experience some of the backlog that got left in there because we weren't able to ship inside the quarter, but the majority of the increase in the backlog came from straight up new orders and those do have pricing.
Increases in them.
You know one thing Chris that we faced this quarter came to a close was having truck chassis is delivered to us without chips and building machines on them in anticipation that the chips, we're going to reach at some time to get these out for the quarter and in some cases that didn't happened both in our sweeper operations and in our vacuum truck operations. We've also got a few X.
Conveyors that were built that are awaiting axles, where we built the entire machine and we're waiting on an inbound supply of and ask her to go underneath it. So those are the kinds of things, we're running into and in one extreme case, we're waiting on trying to find some small electrical connectors waterproof electrical connectors that are very inexpensive items that are just in a shortage globally.
Our European companies are trying to find the same parts and you just can't find them anywhere we've scoured scoured high and low and that's partly due to defense demand among other things, but it's just a very interesting time to try and operate in when you get the big things like the axles in the chassis in place there's something to always popping up and in fact, I got a notice today of a disruption in the supply.
Hi of hydraulic cylinders related to a strike at an arcelor mittal for star facilities. So.
Every day is a new day right now and that's you know, we're just working our way through this past weekend.
Got it.
On the chassis side, how would you characterize your competitive positioning in terms of your ability to source. The chassis is there is it a level playing field is it you know you guys are big players does that give you a bit of advantage nature.
We are a big player and certainly our competitors are to I don't want to tell you we're bigger than some of the other players in our space at all.
But all manufacturers typically have to buy through distribution, that's kind of the rules of buying truck chassis and we've aligned ourselves with a particularly good set of dealers who have a great deal of influence and.
Information flow coming out of the major truck Oems. So if you look back a couple of quarters, where several of our competitors were meaningfully impacted by the truck chassis situation, we had not been and it's begun to catch up now.
With us as well because I mean, frankly, just nobody can get chips at the moment and even down to small things like the heavy duty pickup trucks that we build our smallest sweepers on there just in very very short supply.
Can't get them at any price right now so I don't think were meaningfully better or worse than any of our competitors in this quarter in the third quarter and I think at this point everybody's kind of dealing with the same deck of cards.
We've all received notice notifications from the chassis builders about what the impact is going to be on the 2020 to build.
And how that's likely to be you know pretty disappointing and we're working our way through that we've been able to source some chassis from some other manufacturers.
Which should offset that as long as those manufacturers deliver to their promises. So we're doing all we can to secure our future performance and I like where we are obviously I'm concerned about it but I think our teams are doing the right things and we're getting very very good information from our suppliers and we know they're doing everything they can do to protect our interests.
Got it I appreciate that and I will jump back in line.
Thanks, Chris.
Thank you again that is star one if you'd like to ask a question. Our next question comes from Greg Burns with Sidoti <unk> Company.
Good afternoon.
Hi, Greg when we look at.
Okay. So looking at looking at the backlog could you just.
Maybe give us a little bit more color on the breakdown of the growth in that backlog between AG versus industrial.
Yeah, I mean the.
The backlog has been growing very rapidly.
And demand has been frankly, a euphoric I don't know a better word than that I mean, it's you know these are happy times in the AG business and it's been really really good in the industrial side. If you look at our forestry and treat care business as I said, that's been overwhelming particularly on the large end of our product range. The big machines that more bark is really good at making and also in the.
<unk> products that are Denny Smith brand producers through our raiko operation.
They are actually we have a significant challenge to ramp up the production, we've got an opportunity there to do a lot better if we can expand production and we're working on that we're looking at leveraging a couple of other facilities to get that growing a little bit faster in.
In the traditional governmental space, it's been more steady, but that's what you expect from governmental agencies. So as I said, they they don't increase or decrease buys based on things like supply chain disruptions. They plan their fleets typically five years out they have to go through a procurement process involving town council or state governments, and so that tends to be less affected by the the.
Ebb and flow in the supply chain and then the other parts of our business. So while everything is up right across the board in our business. The biggest movers had been our AG sector, and our forestry and tree care sector inside of industrial.
Okay and then.
Is there any way that you can quantify how much.
Revenue the supply chain and labor issues cost this quarter.
I don't know that I could give you a discrete number but I would hazard a guess to say it was a good $15 million to $20 million.
Yes, and maybe a bit more.
Okay.
Okay.
And then I know <unk>.
There's a there's a strike going on at Deere I don't know if that overlaps with the products that you compete with them with but has there been any impact on your business from that.
There hasnt been yet in the facilities that are on strike and Deere are not the ones that we source our tractors from so that's the first bit of good news on the other hand at the facilities that are on strike feed parts into those facilities that we get our trackers from so I think what youre going to see is a worsening effect that the longer the strike goes on at the moment, there's really not been.
Any impact on our business yet.
But I think if that strike goes on another month or two then I think we're going to see a real shortage of tractors emerged just like we're seeing in the chassis space.
Okay.
Alright, thank you.
Thanks, Craig.
Thank you there are no additional questions at this time I would like to now turn it back to management for any closing remarks.
Okay. Thank you very much.
I appreciate you all joining us today, we look forward to speaking with you again on our 2021 fourth quarter and year end call in February. Thank you very much.
Yeah.
Thank you ladies and gentlemen. This concludes today's presentation you may now disconnect.
Okay.
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Okay.
Good morning.
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