Q2 2023 Gentherm Incorporated Earnings Call
Speaker 1: Greetings and welcome to the 10-term second quarter earnings conference call.
Speaker 1: At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference has been recorded. It is now my pleasure to introduce your host, Ye-Jing Brintano.
Speaker 2: for joining us today.
Speaker 2: Additionally, a webcast replay of today's call will be available later today on the investor relations section of Jenthem's website.
Speaker 2: During this call, we may make forward-looking statements within the meaning of federal security laws. Statements reflect our current views with respect to future events and financial performance.
Speaker 2: And actual results may differ materially. We undertake no obligation to update them except as required by law.
Speaker 2: CC Gensum earnings release and its SEC filings, including the latest 10K and subsequent reports for discussions of our risk factors and other risks and uncertainties underlying such forward-looking statements. M whole and everyone under approximately 18 Kindle loans have scramble to access the equation. cultural difference has skylineghanan and?oulder Zumba project platforms.
Speaker 2: During the call, we may discuss non-GAAP financial measures as defined by SEC Regulation G, including certain pro forma measures related to the Altmyer acquisition.
Speaker 2: Reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are included in our earnings release or investor presentation.
Speaker 2: On the call with me today are Phil Eiler, President and Chief Executive Officer, and Mattel Inversa, Chief Financial Officer.
Speaker 2: are Phil Eiler, President and Chief Executive Officer, and Mattel Anversa, Chief Financial Officer. During their comments,
Speaker 2: Phil and Mateo will be referring to a presentation deck that we have made available on our website at gensdom.com slash events.
Speaker 2: After their prepared remarks, we will be pleased to take your questions.
Speaker 2: Now, I'd like to turn the call over to Phil. Thank you, Yijing. Good morning, everyone, and thank you for joining us today.
Speaker 3: I am pleased with the continued strong execution of the Global Gen-Therm team as we delivered another solid quarter of financial and operating results.
Speaker 3: While we have seen some stabilization in automotive production and signs of easing inflation, we continue to strengthen our operational execution and further improve productivity.
Speaker 3: For the second quarter, we achieved record revenue of $372 million, growing 43% year-over-year.
Speaker 3: These outstanding results also included record quarterly organic revenue of over $300 million, the highest ever quarterly revenue for our climate controlled seats, and the highest ever quarterly revenue for steering wheel heaters in the company's history.
Speaker 3: Demand for our thermal comfort, massage, and lumbar solutions continues to accelerate.
Speaker 3: This momentum has carried into 2023.
Speaker 3: In the second quarter, we achieved a quarterly record of $670 million of new automotive business awards.
Speaker 3: Year to date, we have secured nearly $1.2 billion of new awards. Recall that in 2022, we secured record wins of $1.8 billion for the full year.
Speaker 3: With this extraordinary strength and new business wins, we're preparing to gear up to meet the production demands of our customers along with creating a more optimal cost structure in our manufacturing footprint.
Speaker 3: And I'm pleased to announce that we are investing in two new manufacturing plants.
Speaker 3: one in Morocco and one in Monterey, Mexico.
The new factories will be ready for production in 2024.
These new plants will not only allow us to meet the capacity requirements of our record levels of new business awards, but also support our plan to keep expanding gross margins.
Turning back to our Q2 results, which Matteo will cover in more detail in a few minutes.
Our adjusted EBITDA margin rate improved 300 basis points year-over-year on a pro forma basis.
We generated $34 million of cash flow from operations.
repaid $16 million of debt, and repurchased $10 million of shares in the quarter.
We have officially kicked off our Fit for Growth 2.0 program to execute our previously announced Profitability
to reach Hyteen's adjusted EBITDA margin rate by 2026.
Specifically, we have identified several hundred initiatives to reduce product costs through value engineering, sourcing excellence, improve manufacturing productivity through automation, and implement lean best practices across our network. Additionally, the program will drive operating expense efficiency,
Now, turning to the automotive highlights on slide 4.
In the second quarter, we launched our automotive solutions on 20 different vehicles across 10 OEMs, including Ford, General Motors, Great Wall, Hyundai, and Toyota.
We continue to see tremendous momentum for our CCF solutions.
In the second quarter, our CCS solutions were launched on the Buick Lacrosse, Buick E4 EV, Chevrolet Blazer EV, Ford Mustang,
Hyundai, Verda, as well as several EV models of Great Wall vehicles in China, including the Tank 700, the plug-in hybrid Blue Mountain SUV, and a Hval Xialong Max.
Now, let me give you a quick update on Clientsense.
We are progressing well in preparing for the flawless launch of the two upcoming
And in addition, we continue to work on several development projects with OEMs around the world, including recent work with a few electric vehicle manufacturers.
The demonstrations of range extension enabled by ClimateSense have also driven higher thermal content.
Higher tank rates and adoption on electric vehicles.
which have resulted in a significant number of awards in the quarter.
In addition to ClimateSense, our advanced engineering team continues to integrate thermal with lumbar and massage to create innovative full system solutions. The combination of heating and cooling the body with our proprietary pulsating massage is opening vast opportunities for health and wellness experiences.
alertness enhancements, and physical recovery in the car. We are perfectly positioned to be a major player in the software-defined vehicle of the future by integrating our proprietary software and algorithms. Our Altmyer integration continues to deliver more value for our customers.
We are now the clear market and technology leader in thermal and pneumatic lumbar and massage solutions. Thank you for joining us today. We hope you enjoyed this presentation. We will see you in the next video. Thank you.
Our strong position as the largest independent provider is a powerful differentiator with our customers.
We are actively engaged with OEMs and Pier 1 seat manufacturers in North America, Europe , and Asia to collaborate on breakthrough integrated comfort
These solutions provide industry-leading comfort performance, reduced space requirements in the seat and the interior, less weight, and a significant improvement in seat assembly efficiency through reduced complexity.
As a partner to over 25 seat manufacturers around the world, our scale and capabilities are unparalleled.
As the leading innovator in this market, we can collaborate with our customers to create customized solutions and leverage Gentherm's scalable platform across multiple customers. Also, our engineers are simply the world experts in integration as we work with nearly every car manufacturer, They 99% support health, Database Development and
and every seat maker and configuration. We believe our partnership model is a unique and sustainable competitive advantage.
Now, on to slide 5, where we'll discuss our record awards.
While the pipeline of pneumatic opportunities remains very strong, the majority of the new awards secured in the second quarter were for thermal solutions.
where we had a truly breakthrough quarter.
We won CCS awards on the Chevrolet Silverado EV.
GMC Sierra EV.
Ford Explorer EV, Ford F-150 Lightning EV,
Kia EV9, and the Subaru Forester.
We continue to gain momentum in China.
We won CCS awards for the Chevrolet Equinox EV, several great wall plug-in hybrid models.
Honda CR-B and Li Auto's electric MPV.
Of special note, we won our second Climate Control Seat Award with the world's largest EV manufacturer by volume BYD for its popular song EV.
Importantly, we won a highly desirable and contested award with BMW. Our CCS solutions will be on the next generation electric and ICE X-Series SUVs.
including the X5, X6, X7,
and the IX5, IX6, and IX7
In fact, the new BMW X7 and IX7 will also feature Gentherm's active CCS solution.
In the second quarter, we also received 11th Steering Wheel Eater Awards across 7 OEMs.
These included bright drop fans from General Motors.
on the ridge line.
Nissan Murano and the Renault Megane.
In addition, we won hands-on detection enabled steering wheel heater awards for several Chang'an EV models in China. If you recall, we had an extremely strong pneumatic comfort winds in the first quarter, including breakthrough conquest winds with Jaguar Land Rover and General Motors.
In the second quarter, we won a pneumatic lumbar award for the Audi A4.
In addition, I'd like to congratulate our team in China for winning a combined thermal, comfort, lumbar, and massage full system award for the Volkswagen Lomondo EV.
further validating the value proposition of the combined technologies of GenTherm and the acquired Altmyer.
The momentum of pneumatic lumbar and massage awards is accelerating rapidly.
And I am pleased to share that we just won in July our first lumbar and massage award with Stellantis on the Jeep Compass, Alfa Romeo Stelvio, Alfa Romeo Giulia, and Maserati Levante.
This Conquest Award was enabled by Jentherm's strong customer relationships and Althmaier's industry leading technologies.
Let me remind you that we have already won six Conquest Pneumatic Lumbar and Massage Awards since the close of the acquisition. We are well ahead of our revenue synergy plans.
Now, onto battery performance solutions.
In the second quarter, we won an Air Cooling Battery Thermal Management Award for Hyundai across six electrified vehicle platforms.
With this award, we will be cooling 80% of Hyundai's mild hybrid and plug-in hybrid vehicle batteries.
So in summary, our record awards in the second quarter are strong proof points of our ability to grow market share through conquest winds, as well as growing penetration of thermal and pneumatic comfort solutions.
Now let's turn to slide six for discussion of our medical business.
As a result of continued financial pressures and muted capital spending at hospitals in the United States,
and a large one-time order by the United Nations in the second quarter of last year.
We saw a reduction in medical revenue in the quarter.
Given the change in purchasing behaviors in the medical device space post-COVID,
We are working on bold moves to adapt our medical go-to-market model to leverage large partnerships, distribution, and white label opportunities.
Accordingly, I am pleased to announce that we are strengthening our partnership with SourceMark Medical, a certified minority supplier headquartered in Nashville, Tennessee.
to provide world-class patient warming solutions to the US healthcare market.
SourceMark has a proven track record of driving growth by providing superior service and solutions to hospitals and medical providers.
With this partnership, we expect to significantly increase our ability to win business with our patient warming solutions.
With the successful integration of Dachen Medical, we continue to win new accounts and hospitals in China.
In the second quarter, we added 24 new hospital accounts in China, replacing competition. And in the US, we added more units to the existing fleet of Blanketrol 3 systems at the Boston Children's Hospital to support expanded usage.
In addition, we were awarded the Blanketrol 3 and Cool Kit business at Children's Healthcare of Atlanta, a brand new hospital.
We are confident that these actions will help us accelerate our growth in the patient temperature management solutions.
With that, I'll turn the call over to Matteo for a little more color on the financial results.
Strangling with your automotive segment, automotive revenues were 362 million, reflecting a 45% increase compared to the prior year period. Adjusting for the 65 million contribution from Alphmeyer and foreign currency translation, automotive revenues increased by 19%. And this compares to an 18% increase in the actual light vehicle production in our key markets of North America, Europe , China, Japan, and Korea.
We outperform the light vehicle production volume by over 100 basis points. Excluding the non automotive electronics business, which we are in the process of phasing out.
As a result, an indicator of impairment was identified and an inter-inconvitative assessment was performed. And the results of this assessment indicated that the caring value of the reporting unit exceeded the fair value. As we outlined in the press release earlier this morning, we recorded a non-cache goodwill impairment charge in our medical business of 19.5 million or 52 cents per share of the facts.
Our cash position at the end of the quarter was approximately 169 million. During the quarter, we reduced our net debt to 49 million from 68 million at the end of March, primarily due to strong cash generation from operating activities. As a result, our net leverage ratio was 0.3 at the end of the second quarter, down from 0.5 at the end of March and well below our target, OLA of 1.5 times.
at a mid-single-digit rate in 2023 versus 2022. The midpoint of our guidance implies a growth rate of 11% on a pro forma basis and we continue to expect adjusted beta margin rate to be in the range of 11.5% to 13.5% for 2023. We still expect our adjusted full year effective tax rate excluding the impact of the goodwill impairment to be in the range of 28 to 32% and capital expenditures to be on the lower end of the guided range of 60 to 70 million.
So with that, I would turn the call back to Phil. Thanks, Mateo. Now let me summarize. I'm proud of the Global Gen 13 for continued strong momentum in winning awards.
delivering record revenue and expanding profitability.
In the second quarter, we secured a record $670 million in new automotive business awards, bringing us to nearly $1.2 billion in the first half. Leveraging Outmires industry-leading technologies and gender and strong customer relationships.
We have won six Conquest, pneumatic lumbar and massage awards since the close of the acquisition, including a breakthrough award from Stalantis in July .
We're investing in two new manufacturing plants and implementing our Fit for Growth 2.0 initiatives to deliver high teens adjusted EBITDA margin rate by 2026.
The momentum on revenue and awards combined with the steps we're taking to optimize our footprint and cost structure will drive gender and flywheel of profitable growth.
With that, I'll turn the call back to the operator to begin the Q&A session.
Thank you.
We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
You may press star 2 if you would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start keys. Our first question comes from Ryan Segal with Craig Holland Capital Group. Please go ahead.
Good morning, guys. Thanks for taking our questions.
Good morning guys. Thanks for taking my questions morning, Ryan
If you'll just start with medical and then we'll move over to Otto, but given the challenges there, does it make sense to operate that business given kind of post-COVID changes and given it's becoming increasingly small relative to the Otto business with Elfmeyer and all the traction you have there?
Well, we think so. We certainly continue to link it back to the automotive business.
Remember, one of the huge value propositions for us is that through our medical business, we developed strong skills in the science of thermophysiology, which ties right back to our climate sense development.
So those centers use back the automotive are getting stronger and stronger. No doubt that at least for the moment, the med device industry, especially related to hospital financial struggles, is stressed. And that's what we've been dealing with for the last several quarters.
But we really believe we have a plan to grow that business and to make it accretive for the company.
adaptions that we're making, that we're working on making right now, is to kind of pivot, especially in North America market, to partnering with some of the large players that can open up the doors in the hospitals for us to move our product, which has been very difficult post-COVID.
And one of those we announced was the partnership with SourceMark. I've been personally involved with that team at SourceMark. And, you know, they have very established relationships with the GPOs and the hospitals. And I think that's going to accelerate our growth. We have great products.
our teams in automotive and medical are collaborating very well. So, I still feel pretty good about our roadmap. Good. No one will move over to Ado. A couple of questions there. So, congrats on the breakthrough
with Stellantis, curious what model year or when that starts, will start to impact the financials and the shipments start there. And then secondly, how much additional opportunity do you think there is to expand beyond those initial models?
Yeah, it was a huge win. I believe it's Model 26 that it would launch. But anytime you win a first platform with a new customer, it's your opportunity to prove yourself and to scale across.
other platforms within the customer. Certainly that's the way we are viewing this and our job now is to go FAQ in a world class way.
And then on all the new CCS EV awards, a lot of the trucks' SUVs with your core customers, good to see that expansion. I guess, curious, is that heat cool, heat bent? Curious with the content kind of going into EVs if it's higher or lower than kind of other core CCS platforms with those OEMs. And then I'll maybe stop there, then one more.
Yeah, I mean, first of all, we are so excited about the win rate of CCS. And I think it shows by some of the announcements that we're making on which vehicles. The content is high. The take rates are high. You know, clearly showing that our technology is going to make a difference for EV manufacturers.
As we called out, the many, many collaborations and partnerships that we've done on Climate Sense have really opened the door for us to show the value of not only Climate Sense, but CCS in terms of power consumption savings and range extension. So we're really excited about that.
We announced the specific CCS active product on the X7 and IX7, but for the most part we're still seeing VENT.
ventilated CCS as the primary technology. Great. Well, last one for me, just on the industry, elk production. So even if you adjust for the various FX and elk mire and the one-time kind of spot purchases last year, I mean, 400 bps of elk performance, you guys had been trending quite a bit better than that. You had...
award, kind of booked to bill a lot higher in the past several years. I'm just curious if there's anything else in the quarter to call out because it was a little bit of a decel. Yeah, yeah, we kind of look at it as 400 basis points of outperformance, year to date 600. And essentially, you know, most things happened as expected. The one thing that was an anomaly was
time for various reasons. And then there's a couple vehicles that are ICE sedans that last year we had some pretty you know pretty high content that they're changing out those vehicles so it's a little bit of a timing issue. We expect all that to normalize and expect to continue our outperformance trends.
various reasons. And then there's a couple of vehicles that are ICES and DANS. That last year we had some pretty high content that they're changing out those vehicles. That's a little bit of a timing issue. We expect all that to normalize and expect to continue our performance trends. Thanks, Phil. Good luck, guys. Thank you.
Our next question comes from Glantine with Keyport Research Partners. Please go ahead.
Our next question comes from Glenn Chin with Keyport Research Partners. Please go ahead. Good morning folks. Thank you.
Hello. A couple more follow-up questions on bookings.
So you mentioned that you've had six conquest, pneumatic, and lumber awards since the acquisition. And I don't recall the exact wording in the press release, but it seems to allude that they were revenue synergistic, meaning that they would have been less likely to happen with Alpmeyer on its own. Can you confirm that? Exactly.
No, we haven't been splitting that, but definitely this quarter was the majority thermal. And we're actually really excited about that because the pipeline of pneumatic awards is really strong. We pointed out that the Stellantis win was in July , so it was outside of the quarter. A lot of opportunities in the back half on the pneumatic side as well. But the confidence I have on our thermal business and the partnership model that we've created is very high. We are the largest independent supplier in the space. We can work with any OEM, any tier one seat manufacturer.
and pneumatics. Yep, okay, very good. And can you just talk to us about your win rate? Has it been, I know it's been elevated, has it moved up or down?
Significantly. Continues to be very strong.
I think you can look at a lot of the name plates that were winning and many of those were head to head competitive wins. So it's a very strong win rate. Yep, seems to run the gamut. OK, and then last question. So one of your competitors this morning in earnings release.
in their press release it seems like they're attempting to encroach upon climate census turf. They say that they've agreed with Valio to explore integration of HVAC and radiant panel technologies.
with air thermal compass heating technologies to optimize, this is a quote,
Occupant comfort and user experience while extending EV range. Anything you can tell us about values, capabilities there? I wasn't aware that they had.
Yeah, sure. I think the best thing for me to do is talk about our strategy and go-to-market model with ClimateSense. First of all, as you know, we've developed our own ClimateSense software and algorithm at ===
can control the microclimate of every position in the vehicle. And that is done
by integrating our software with any HVAC controller on the market. And we've developed our software that has an easy API, one platform that can be integrated with any HVAC system.
I think it's really important and we've obviously worked with almost every OEM around the world and it's important to understand the dynamics of HVAC as it stands today.
OEMs by and large develop in-house their own HVAC controls and their own HVAC algorithms and software. Our ClimateSense integrates with the OEMs developed software and algorithms. They also architect
their own HVAC systems for the most part and basically purchase the individual modules and components, you know, create that integrated system in the car. So our model has been to work directly with the OEMs.
I believe that's the right model for us. It's paid off so far. So that's kind of where we're at. We have all of our own proprietary thermal effectors including radiant panels in house.
So I think we're really well positioned. That said, as OEMs desire, we're happy to work with anybody. We can partner with anybody and that's been our model, that kind of open.
partnership model and we're excited about that moving forward.
I know in the past story you talked about a lot about the software component of the climate system. Is it fair to say that is the
I don't know, for lack of a better term, is this a crystal so does be? Definitely, definitely. I mean, well, we certainly believe we have next generation innovation on all of our devices, but the climate since software is...
it's the heart of Climate Sense and it can be it can be employed on a full system, you know, where you have all the components in the vehicle plus you're controlling you know the interface with the HVAC software, but it can also as you'll recall we've also set up more scalable model where we've integrated
the climate since software into smart devices. So essentially the smart CCS or the smart heat, smart neck conditioning smart gradient panels, those can all on their own.
integrate with an HVAC control architecture. So we have really ability to scale climate sense.
in any way that helps an OEM. I think that's really been appreciated by the OEMs and we expect to see continued momentum.
Yep, and can you clarify, is the software.
In climate since patent protected.
and patent protected? Yes.
Okay, very good. That's it for me. Thanks very much. Thank you. Thanks.
Thank you, Glenn.
Our next question comes from Matt Coranda with Roth MKN. Please go ahead.
Hey, guys, good morning and thanks for getting me into the queue. So just a few have been answered, but I wanted to kind of focus in on the outlook for the year that you guys provided. So there's, I think, a decent amount of outperformance versus industry production implied in the 2nd half outlook. So just wondering if you could maybe call out, is there a pickup and take rate or just vehicle mix that you're seeing?
the releases that you've got from customers that you can call out to give us a little bit more confidence in the back half numbers.
Sure, new launches is going to be one of the heavy drivers for us. We've got a lot of those queued up for the second half. We expect some recovery. We talked about the Japanese OEMs, those we don't see persisting in the second half.
and those are primary drivers. We have clear visibility with our releases.
So, that's what created the forecast.
Okay, fair enough. And then on the margins for the back half, I think you've got to be kind of north of 13% to hit the midpoint of your EBITDA margin guide. So maybe, Matteo, if you could bridge us from the first half performance, which I think was in the mid 11s into that kind of mid 13% range.
the buckets that you called out in gross margin in the release or core gender margins versus Altmyer I'll let you take your pick on that
Sure, I'll do it both ways. So you're right, the first half was about 11.5%. We need, in order to hit the midpoint, we need the second half to come in at about 13.5%. So you have a 200 basis point lift sequentially. And there are really three drivers. One is the volume
So that would give us, as we are expecting revenue in the second half to be a little higher than the first half, will give us a lift of about 100 basis points. The second aspect is Alfmeyer. Alfmeyer has been running in the first half of the year.
at the low single-digit EBITDA rate. We're expecting to hit mid-single-digit by the end of the year, so you're going to have a lift on the Asmeyer rate. And that's fundamentally driven by further acceleration on the price recoveries where Asmeyer has been.
a little bit behind compared to the legacy general business. So that's about 40 bits of expansion sequentially. The rest will come through sourcing savings. As you know, most of the sourcing savings, particularly around rebates, tend to come later in the year, as well as a little bit of a further improvement in productivity.
thing to note, particularly as it pertains to the revenue, is that the current outlook that we provided this morning does not assume any impact of a potential UAW strike, which clearly isn't known right now.
Okay, that's great and very clear on the breakouts there. Thanks, Matteo. And then I guess just the last 1 wanted to address was. That the plant expansion in Morocco and Mexico, maybe just speak to the capabilities in their facilities, what that provides you.
Why the footprint expansion and then just in terms of the, it sounded like you said you're going to be on the lower end of your capex guide. Does your capex outlook for this year incorporate costs from those new plants and then maybe just if you could address total costs in terms of expansion there.
what we have seen in the capex. Yeah, Matt. I'll just talk about the plants. First of all, we've done an extensive search for the appropriate location and we're very excited about expanding our footprint in Morocco and Monterey for multiple reasons.
And what's really driving it, to be honest, is just growth. We've got, you know, our record awards within a couple of years, we're going to outstrip our manufacturing capacity around the world. We have to do it. There's no real choice. And, you know, the other side benefit to expanding in these locations is going to give us a lot more flexibility.
optimize our footprint and how we manage our high labor content production in the most cost-effective way. So we believe not only it's going to allow us to reach the growth in front of us but also to drive our gross margin improvement.
Okay, excellent. I'll leave it there guys. Appreciate it.
Thanks Matt. Thanks Matt.
Our next question comes from Luke Young with FIRED. Please go ahead. Good morning. Thanks for taking the questions for me this morning. Phil, for starters, I was just hoping you could discuss some of your puts and takes in terms of maintaining the sales guidance. I think you're now expecting mid-single digit production growth versus low single digit previously, but we also have a question from the audience.
of excitations sitting here mid-year on the top line.
Yeah, I mean, we first of all, we do it bottoms up. So we're looking at all the releases from our customers, the vehicle launches, the timing, you know, it's a very precise process that we go through as we're putting it together. Of course, you know, in some ways by vehicle, we'll have to look at your delivery side, most of
Okay, fair enough. And then for my follow up, just hoping bigger picture you could expand on what you're seeing in the Chinese market more broadly right now, especially as animated by your bookings. We know there's some competing forces there in Amelan thinking the desire by some Chinese OEMs to keep things in house versus the drive to include more tech and comfort features in the car, which you can obviously help with. Just where do you see that pendulum today and reflected in the conversations that you've had this year with those customers? Thank you. Sure. Well, you know, obviously the rate.
at which EVs are coming out in China is very high. And I think that's pretty clear on our part by the announcements that we made. And along with that, there's two things, two dynamics happening with the EVs in the space. Number one is, you know, it's very competitive to grab the attention of
and believe that's also having a good impact on the win rate. We have a very strong footprint in China, both from a product development side, sales side, customer management side, and of course production. So it's a very localized business model. China moves at an incredible pace, and you have to be there responding 24 hours a day basically to be successful. I'm really proud of our team. We have just an awesome team in China that is competing hard and winning in that market. I'll leave it there. Thank you.
That concludes our Q&A session in today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Have a good day.