Q1 2023 Commercial Vehicle Group Inc. Earnings Call
Speaker 2: for questions with instructions to follow at that time. As a reminder, this conference is being recorded. I would now like to turn the conference over to Mr. Andy Cheng, Executive Vice President and Chief Financial Officer. Please go ahead, sir.
Speaker 3: Thank you operator and welcome everyone to our conference call. Joining me on the call today is Harold Beavis, President and CEO of CVG. This morning we will provide a brief company update as well as commentary regarding our first quarter 2023 results. After which we will open the call for questions.
Speaker 3: trends, cost-saving initiatives, and new product initiatives, among others. Actual results may differ from anticipated results because of sudden risks and uncertainties. These risks and uncertainties may include but are not limited to economic conditions in the market in which CVG operates. Factulations in the production...
Speaker 4: I will now turn the call over to Harold to provide a company update. Thank you Andy and good morning everyone. I want to apologize in advance since I have a small cold and I might cough a few times. And I also want you to know I sound worse than I am.
Speaker 4: We're very happy to be speaking this morning and as is our usual format, we'll be referring to an earnings presentation which is found on our website. While you locate that, I wanted to say a few opening comments. Our business performance in the first quarter was strong and consistent with the qualitative comments we made in the past.
Speaker 4: Profitability was meaningfully improved as well due to better price cost spread realized in the quarter. In addition to strong financial performance this quarter, we continue to deliver significant business growth for the future, adding approximately $85 million in additional new wins at full annual value.
Speaker 4: A record amount of new business awards for a single quarter. And we are revising our 2023 100 million new winds guidance to 150 million of new winds. 90% of the first quarter winds were in our electric systems business and 90% of the winds are on electric vehicles including vans, trucks and other non-electric vehicles.
Speaker 4: our built up COVID insurance layers. And we are back to more historical working capital levels as a percentage of sales. COVID is behind us as far as material supply chains are concerned. And our net debt leverage is back to two times and headed into the ones this year. On the customer front.
Speaker 4: on many electric vehicle platforms globally.
Speaker 4: We broke into the China market in Q1 with an electric vehicle customer who will be our anchor partner for a new high voltage electrical system. Our customers are satisfied and we are working with many of them globally to advance their electric vehicle platforms and we're proud to be doing so.
Speaker 4: with new customers and getting onto new vehicle platforms, both internal combustion engine power trains and electric vehicle power trains. We're transforming our cost profile organically as well by automating processes, moving to low cost countries and lowering our cost of quality.
Speaker 4: We believe that we are delivering best in class quality and service to our customers.
Speaker 4: With the progress we've made in our strategy, we also believe that we are on track to deliver against our long-term sales goal commitment of $1.5 billion in 2027. Our current revenue run rate combined with the ramp-up of our cumulative $500 million in new annualized wins since the start of this program three years ago.
Speaker 4: gives us improved line of sight to that target already. And we intend to win another $500M in new business between now and the end of 2007. We also are making meaningful progress towards our long-term EBITDA goal of 9% in 27.
Speaker 4: We have caught up on price cost and we continue to ramp up our $30 million per year of cost out program to protect our margins and offset new wage inflation that we are still seeing. We expect additional accretive margin flow.
Speaker 4: from our new business ones as well and it will drive us towards our 27 target of 9%. Our 23 outlook continues to be positive. Our quarterly sales and EBITDA margins through the year should look very similar to Q1.
Speaker 4: with the possibility of a minor slowdown in top line in the fourth quarter, which is tied to lower industry truck wheel forecast. A new business win rate is on track for 150 million a year. The year is off to a strong start.
Speaker 4: Maybe even an inflection point for us and our best performances ahead of us And CVG's future is very bright. We're already reporting out at a 1 billion revenue run rate While still ramping up many of our new wins Our profit rates are already improved and we plan to maintain them and grow them with an aggressive cost.
Speaker 4: And for what it's worth, we're also at record employment and added over 600 people in the first quarter alone. We're off and running as a company and one of our core values is to have fun while we work and we're absolutely having a blast.
Speaker 4: Now I'd like to turn to the investor deck starting with page one please. Our team delivered strong results in the first quarter highlighted by record levels of revenue and profitability levels that were in line with our long term targets.
Speaker 4: As is outlined on the slide, we delivered net sales of $263 million, which is up 7.5% year over year, and adjusted EBITDA of almost $20 million, which is up 47% year over year. This results in an adjusted EBITDA margin of 7.5%.
Speaker 4: putting us on track to hit our long-term target of 9% as we continue to win new business, optimize our costs, and improve profitability. As I mentioned earlier, we had a very strong quarter for new business wins. Furthermore, we continue to see the realization of our pricing efforts and we are delivering our best for all.
Speaker 4: of our electric systems, new business wins, and we're committed to driving costs out as well to improve profitability as we go. We have good visibility to the remaining of 2023, and we fully expect to accelerate our efforts positioning us further along our growth trajectory. Our revenue run rate is already reporting at 1 billion.
Speaker 4: We continue to win new business and electoral systems and it's a key focus for us. We set a record for wins in the quarter and as I mentioned we're increasing our guidance to 150 million for this year. Combined we've already won over half a billion dollars in cumulative new revenue across 300 new vehicle platforms and a few other industrial.
Speaker 4: Similar to the comments from the last quarter, our demand and market outlook is promising for the remainder of the year. Supported by healthy forecasts across our key markets on this slide, we are increasingly confident in our positive 2023 outlook.
Speaker 4: Also, our large public customers are reporting strong year-to-date results, healthy order books, and are expecting continued momentum and growth across the markets this year. These trends and results give us confidence that we are well positioned to participate in the growing demand from our customers and the industry.
Speaker 4: and that we will build on a record level of revenues and new business wins we are achieving. And of course we are doubling down on normal market growth via our new wins program and business growth on top of this market growth. These are additive.
Speaker 4: Turning to page six, our business wins continue to cumulatively increase and so does the contribution by year. This chart shows an increase expected contribution from new business in hand versus our last update. During the quarter, 90% of our new business wins were within electoral systems business and more specifically title.
Speaker 4: expand our electric systems manufacturing operations in China. And we have already ordered the equipment to do so. Turning to page seven.
Speaker 4: As we have highlighted in previous quarters, CVG stands to benefit and is participating in the secular transition of ICE power trains to electric vehicles.
Speaker 4: Our secret sauce in this space continues to be proprietary manufacturing software to make and test our products quickly and efficiently. Our speed, nimbleness, and process engineering sets us apart from our competitors and is a key contributor during new business prospecting.
Speaker 4: This methodology and successful business prospecting has allowed us to move quickly and accurately and secure creative new business and electric systems. We are continuing to target low to medium volumes, which we believe allows us to achieve a better margin profile. In terms of our targeted customer base, CVG targets customers...
Speaker 4: plan for European production in Morocco. And we will cover these expansion projects in a moment. Please turn the page to slide eight. As we've discussed previously, CVG has a large-scale global capacity expansion program underway, bringing on a significant amount of state-of-the-art capacity.
Speaker 4: and expected to be ramped up and making electric system products before year end 2023. These new facilities are in low-cost country locations that are close to end markets and our customers, and also provide a springboard.
Speaker 4: to enable a higher continued rate of additive new winds. All these projects are on schedule. We are being aggressive, but measured in our approach to adding capacity. Turning to page 9, as you can see our strategic focus on reducing cyclicality.
Speaker 4: expanding our customer roster, and increasing our exposure to secular growth trends is paying off. We've reduced our exposure to Class A trucks, we've grown our revenue share of electric systems, and we've reduced the weight of large customers in our mix. Our strategic focus here, as well as our continued strong pace of new winds, will shift the mix even more.
Speaker 4: and we are delivering improved profitability in our ongoing business. And we are improving or exiting unprofitable or risky business. We'll continue driving out costs and allocating our capital and resources to support strategic growth opportunities. The work we've done to reposition our portfolio is evident in today's results.
Speaker 4: and we look forward to continued execution of our strategic priorities. We're deepening our exposure to the secular trend in electrification and automation, increasingly winning new business which improves our growth outlook, diversifies our customer base, and reduces the cyclicality of our business. We expect to generate meaningful cash flow which will further fund our growth.
Speaker 4: drive debt pay down, and allow for strategic acquisitions and increase our exposure to this powerful trend. According to page 11.
Speaker 4: We are highlighting where we are relative to our long-term commitments we've made to you. On our last call, we told you that we were set up to win and make money in 23, and deliver a year of record revenue, hire EBITDA, and continued free cash flow and debt pay down. After the first quarter, we were set up to win and make money in 23, and deliver a year of record revenue, hire EBITDA, and continued free cash flow and debt pay down.
Speaker 4: We're even more confident in these statements, and we're more confident in our ability to achieve our long-term targets. These 2027 targets are well within our reach, and we just need to continue doing what we're already doing. In addition to our expected 150 million in new wins this year, we're still targeting at least 100 million.
Speaker 4: and new wins each successive year, concentrated with intellectual systems. We expect these wins to diversify our product portfolio, our customer base, and drive growth and profitability. We expect strong cash flow, which combined with our disciplined approach to working capital, will be prioritized for additional debt pay down.
Speaker 4: and to potentially fund bolt-on M&A. Our business transformation remains on track, and we are increasingly confident in delivering against our committed goals of $101.5 billion of revenue and 9% EBITDA margins. Turning to page 12.
Speaker 4: And before I turn the call back over to Andy.
Speaker 4: I'll just quickly update you on how we are envisioning 2023 playing out compared to 2022. We expect 2023 to be our third record revenue year in a row on the back of steady vehicle demand as forecasted by ACT and FDR. Higher pricing. COVID19 is an arm and the last time we were near COVID19 I remember I sat on a sofa at
Speaker 4: and new business revenue.
Speaker 4: We expect both gross margin and EBITDA improvement with pricing ahead of inflation, new business ramp-ups, and additional cost out. The cash flow generated will drive down our leverage ratios through further debt pay down in addition to higher EBITDA levels. We expect to secure $150 million in new business.
Speaker 4: at 2023 in a better financial position than we entered it with a strong future outlook and a strong balance sheet that provides optionality to drive additional growth. With that I'd like to turn the call back over to Andy as he gives you a more detailed review of our financial results and I get a new cough drop. Andy I'd like to turn it over to you.
Speaker 3: Thank you, Harold, and good morning, everyone. If you are following along in the presentation, please turn to slide 14. First quarter 2023 revenue was $262.7 million as compared to $244.4 million from the prior year period. The increased revenue was primarily driven by increased pricing to offer the most value.
Speaker 3: The company reported consolidated operating income of $14.6 million for the first quarter of 2023, compared to income of $8.4 million in the prior year period. The increase was driven by higher margins, partially offset by higher S and GNA.
Speaker 3: The first quarter of 2023 adjusted operating income was $15.4 million. Adjusted EBITDA was $19.8 million for the first quarter, up 47 percent year-over-year compared to $13.5 million in the prior year. Adjusted EBITDA's current budget was $1.8 million per year, up $1.3 million in the prior year.
Speaker 3: as compared to $2 million in the first quarter of 2022. Net income for the quarter was $8.7 million, or $0.26 per diluted share, as compared to net income of $4 million, or $0.12 per diluted share in the prior year period.
Speaker 3: Turning to the segment results on this slide, you can see the performance of our three vehicle-related segments on a combined basis. The combined revenues increased 20% to $253 million compared to $210 million in the year-ago quarter. Combined adjusted operating costs were $2.5 million.
Speaker 3: that are focused on price cost management as well as growth in the electrical systems and aftermarket segments have on our bottom line. In our vehicle solutions segment, first quarter revenues increased 15% to $160.6 million compared to the year ago quarter.
Speaker 3: primarily due to increased sales volume and increased pricing to offset material cost increases. Operating income for the first quarter increased 112% to $13.4 million compared to operating income of $6.3 million in the prior year period. First quarter 2023 adjusted operating income
Speaker 3: million, an increase of 37% compared to the year-ago first quarter, resulting from increased pricing to offset material costs passed through and new business wins. Operating income was $6.1 million, an increase of $4.3 million compared to the first quarter of 2022. Tole's
Speaker 3: resulting from increased sales volume and increased pricing to offset material cost pass-through. Operating income was $5.6 million and increase of 82% compared to operating income of $2.6 million in the prior year period. The increase is primarily attributable to increased pricing, offsetting moderating cost inflation.
Speaker 3: million dollars a decrease compared to the operating income of 3.7 million dollars in the year-ago quarter due to volume reduction in restructuring expenses. Adjust operating loss was 0.2 million dollars compared to income of 4.1 million dollars in the prior year period. Restructuring airports...
Speaker 3: The sequential improvements were driven by pricing, our focus on operational excellence, and new business launches. Additionally, our net leverage continues to decline as we have generated increasing profitability. Therefore, we believe our net leverage will decline further in 2023 as our strategy to increase our investment in the market is determined by our
Speaker 4: to Harold for some closing comments. Harold. Thank you Andy. I'd like to thank all of our employees for the contribution to our solid financial results and strategic priorities. And the pace of the progress that we've been able to achieve in our strategic plan has been better than we thought.
Speaker 4: and is fueled by a strong focus on our transformation strategy and a clear prioritization of our initiatives and our large and vibrant and growing and new customer base. We're a much stronger company in 2023 and we're ready to capitalize on secular growth and higher profits and the trends towards vehicle electrification.
Speaker 2: Should you have a question, please press star followed by 1 on your touchtone phone. You will hear a three tone pram, a clanging request, and your questions will be bold in the order you received. Should you receive the client from the billing process, please press star followed by 2. If you are using the speakerphone, please leave the handset before pressing any keys. One moment please for your first question.
Speaker 2: Your first question comes from Joe Gomez with Noble Capital. Please go ahead.
Speaker 5: Thank you for taking the questions and good morning. Good morning, Joe.
Speaker 5: So I was wondering, on the vehicle related segments, could you kind of break out for us, you know, what was the contribution from volume versus pricing in the quarter?
Speaker 3: Joe, so for the quarter, we say with 20% growth in terms of revenues in three vehicle related segments, thinking about roughly 60% of that came from volume and 40% of that from pricing. Excellent.
Speaker 5: Great. And I know you had talked in the past, I think you had like one more major contract that you needed to work on pricing.
Speaker 4: Have you been able to get that finalized or is that something you're still working on? Yep, we were able to finalize it and we'll get extra contribution from that contract beginning April 1. So it's already in place.
Speaker 5: Okay, thank you for that. I noticed corporate and other SGN expenses rose.
Speaker 5: a fairly big on a percentage basis in the quarter. What was behind that? Was that just on the cost reduction program expenses? Are there other things that would drove that?
Speaker 3: Great question. A couple of things there. One is we invested in some of the SG&A costs to drive our cost reduction program. So we see some opportunity to invest and drive higher profitability there. And then the other thing that contributed to it was some of the...
Speaker 3: variable compensation. Last year was lower in terms of incentive com, so those are the main drivers for SG&A. Okay, and one more if I may. On
Speaker 5: On the new plant startups, just wondering how they're going, how they're proceeding, are they all on schedule for all the new plants?
Speaker 4: Yes, so, Adama, which is near Chihuahua, Mexico, is significantly ahead of schedule. We may get to open that one up a quarter early. And Morocco and Agapietta are on schedule. Agapietta is scheduled to produce Q4 in Morocco in Q3.
Speaker 4: And we have, they have to start up too, Joe. We have new wins for new vehicles that are ramping up, both in Europe and in the United States that need our electrical systems inside of them. So we're on the clock and we have backup plans in case some or for unforeseen.
Speaker 5: Great. Congrats on the quarter and I'll pass it on for other questions.
Speaker 2: Thank you Joe. Thanks Joe. Thank you. Your next question comes from John Franz Please go ahead
Speaker 6: Good morning guys, congratulations on a great quarter.
Speaker 6: Thank you, John . I'd like to start with the margin profile. Either the gross or the operating, whatever you want to address it, but increase significantly. And it seems to me there's a bunch of buckets that could have drove that. It could have been volume, pricing, cost savings, new business, or the exclusion of startup costs.
Speaker 3: Can you kind of walk through the puts and takes of how those changes impacted the growth and operating margin? Yeah, so I think you're right John . So all of the above you mentioned. I would say the biggest impact is Pricing our recovery of the inflation that we saw last year. So our price
Speaker 3: that really added to our profitability is the cost reduction. So as Harold mentioned, we are on track and we are very confident of our course, our programs, so that's helped us a lot in that. And then lastly, last year as you remember, the supply chain disruption as well as the Ukraine war generated some inefficiency.
Speaker 6: in the business and we were able to recover and get back on the efficiency level. So those really help us in driving the strong result. Now, Andy and Harold, I think you deferred to giving specifics on the cost savings plans.
Speaker 6: Now that it's starting to really impact the P&L, can you maybe talk a little bit of what the actions are you are taking and how much you realize of that $30 million so far in the fourth quarter?
Speaker 4: Yes, so we have multiple categories of cost out. We have procurement, we have cost efficiency, we have plant overhead consolidation, and we have global supply chain optimization.
Speaker 4: of cost out of the plan. So the plans are delivering. It's our, it's the highest amount of cost out we've attempted. And coupled with Joe's question and Andy's answer, we've added some talented people and continuous improvement. And we're opportunity rich. We're opportunity rich.
Speaker 4: And we're actually contemplating plans to increase our focus on this effort. But it brings some capex with it. And we'll report out on that in the future. We're not trying to withhold it. We were hesitant to make many public comments because it was a first time thing for us, John . But.
Speaker 7: Good morning Harold and Andy. Hey a couple of questions here just I just want to be clear. You were saying that the margins that you guys have attained in this quarter are pretty much sustainable throughout the year. Is that correct?
Speaker 7: Yes. Okay so
Speaker 7: And then as far as the SG&A expense, somebody asked a question about that. It is somewhat elevated. I think there was a couple of puts and takes there, but as we're looking at this, should it kind of stay at that almost 7.8% of revenue as we go through the year? Yeah, I would say that's about right. So for the year, again, we are capitalizing on a lot of...
Speaker 3: opportunities that we see. So there's a lot of good payback projects that we are very happy to invest. I think we'll stay around the level for the moment and continue to see the profit that comes with it. Okay. And then, I'm sorry, Errol, go ahead. I was just going to say that it's mainly people costs, so we'll be able to flex it if needed.
Speaker 7: Okay, when you guys released numbers for Q4, you said about 85 million, I'm sorry, 100 million of new business wins. You got 85 million of that in the quarter and raised it by 50 million. I mean, what was the surprise there that... How many people dropped by the 2012 services PaigeNER got together with their network at Q4 in Networks. And the answer to that was bar 20,000.
Speaker 7: occurred that caused it to your, you know, almost get that entire new business win in Q1 and then given the ability to raise it. Was there something there that you didn't think you were going to sign and it came, you know, came over the transom?
Speaker 4: So we have a big pipeline and in previous decks we've reported out on the size of the pipeline. And we are running about a 1 out of 6 hit rate. And so Gary it's around an 18% hit rate. And so at all times, including right now, we have a lot of work to do.
Speaker 4: We have finish line proposals that we've made to customers to produce their products for them. And they have a few people they're going to choose from.
Speaker 4: We were able to win a decent amount of business in the quarter because our pipeline the timing of our pipeline came in Into the quarters. It was not really a higher hit rate per se. It was really a timing of decisioning And if you look at the rest of this year and the timing of decisioning is it still at a high rate? There's a lot of awarding being done
Speaker 4: in our industry. And in the case of electrical systems, we have one of our main competitors, Gary's name, Leonie. They're a public company in Germany. And they filed bankruptcy in the first quarter.
Speaker 4: And so our amount of looks actually is increasing. And so we're organizing to do that and get our capacity lined up to be able to more aggressively bid. So our pipeline coupled with a big industry participant kind of in trouble.
Speaker 7: Does that German competitor, are they liquidating or are they just going to be restructuring?
Speaker 4: The German bankruptcy laws, they have the equivalent of a pre-pack. They have a white knight who is a well-known billionaire from Austria.
Speaker 4: went in with them, but it's gonna be like any bankruptcy, there'll be good old-fashioned litigation from the bondholders that have to take a haircut and all that. So it's gonna go on for a while, there's a court process, but it's well known that the vehicle industry is pretty tight.
Speaker 4: and they have constrained capital. We're getting more looks than we expected and we already had a vibrant pipeline. So we feel pretty confident in 150.
Speaker 4: and they have constrained capital. So we're getting more looks than we expected, and we already had a vibrant pipeline. So we feel pretty confident in 150. Okay, thank you very much.
Speaker 2: You're welcome. Thank you. Your next question comes from Barry Haim with Sage S Management. Please go ahead. Thanks so much and congrats on the great quarter. My question is on the various EV programs, could you give us a little thumbnail sketch on average? Yeah I'd totally agree.
Speaker 2: how the margin progression looks. You know, I presume there's some amount of cost before you start production, and then when you do start production, you know, how many quarters to ramp to normal, and then are the normalized margins on these programs anticipated to be, you know, less than equal to or greater than, let's say, your legacy truck OA margin.
Speaker 4: in first article testing and then the vehicle maker goes through some prototype vehicle testing and then we solidify and freeze the design and then we have to PPAP the bill of material in the manufacturing process so that they're repetitive and consistent.
Speaker 4: through every vehicle and set up for metrics for quality and on time and all that and We've been expensing that cost as we go and we started this three years ago. We were reporting out what our startup costs were because they were impeding our profits when we were just getting started.
Speaker 4: spend for up to today, we're more than covering those startup costs and they're in our number. And they're becoming less and less on a percentage basis because we're growing.
Speaker 4: We also reported that we were not going to aggressively pursue startup seating business because it had a very high startup cost. And we had a well-known one that was in the press last year. And we basically have focused in on our bullseye of electric systems. And actually the startup cost profile is minimal. With regards to the plant startups, the market is going to be a little bit more expensive.
Speaker 4: The reason why the electric systems business is accretive from an ROIC standpoint is their capex light. Our secret sauce in that business is actually software, it's not capital equipment. So we have a special internal software program that we've designed and we're using globally that allow us to take our designs.
Speaker 4: put them straight onto a plasma screen and have in testing that's automated. And we have really obviated the need for a lot of capital. And so we have a very good setup here. When a plant starts up, of course, there's some overhead inefficiencies.
Speaker 4: And the way we're playing the game here is that we're pre-selling out most of the capacity and then ramping up the plans, plans for business we already have. So it's actually about a one-quarter break even kind of a deal when we get started. But I'll now turn it over to Handy to talk further about margins.
Speaker 3: Yeah, so in terms of the electrical system margin, so you can see today we are already at a low double digit OI, operating income margin level. Just say that the new business are all coming in at a creative margin profile. So we are happy to continue to launch the business and that will actually continue to be a good thing.
Speaker 2: ahead. Hi guys. Hey Steven. So after Market Parts finally I guess you turned it on in the first quarter. How did the new you know how did the new business perform and what should we expect over the balance of the year?
Speaker 4: Yeah, so we're out of the gates on that and it's been performing as expected with a meaningful expansion of our profit margins. So basically it's a direct customer play versus going to an intermediary.
Speaker 4: And so the end customer has a price they're willing to pay. And so we have a direct channel to the end user there. And so you should expect to see our profit rates gradually increase in that business. The business itself grows.
Speaker 4: around 4 to 5 percent unit volume and another amount based on annual price increases. So you'll see modest growth relative to electric vehicles, electric systems where we're having explosive growth for us. So it will be a modest growth outlook.
Speaker 4: in the first quarter was $37 million. So it's well above the 100 million rate. And our goal in that business is in the 2027 business plan, our goal is to double that business and it involves. It's a good plan.
Speaker 4: replicating our business strategy in APAC, Asia Pacific. It involves replicating our business strategy in Europe and it involves expanding our product line into other aftermarket products other than classic truck seats. So.....
Speaker 3: When you look at 2027 from a margin perspective, what would you expect the operating margin of that to be? It will be accretive to our company average that we've articulated. So overall our long-term target is 9% EBITDA margin. So now we're well on our way there and clearly growing the electrical system.
Speaker 2: So can we expect to arrest or at least break even in that over the course of the year?
Speaker 4: Yeah, so it's bottomed out now. We think that we're nearing an inflection point up. If you look at the leading indicators from Amazon and other e-commerce shippers, they're suggesting that they're going to restart modest.
Speaker 4: rebuilding, so we get orders when they build new parcel distribution centers. That's the automation part of it that we participating in and we have non-warehouse automation business as well. So it's not gonna get worse, I can say that. instantly right
Speaker 4: And we have hope that in the second half is better than the first half. It's too early to say that though this is a PO business. If we had POs in hand, I would make more confident comments here. But as of right now, we're expecting a turn in the second half, but we're yet to see it. Thanks for watching!
Speaker 8: Right, and last year it started to fall off in the second quarter but really fell off in the back half, so the comparisons for that business get easier as we get through the year. Exactly right.
Speaker 3: All right, thank you. Thank you, Stephen. Thank you.