Q2 2024 Steelcase Inc Earnings Call
Speaker 1: Good morning. My name is Rob and I'll be your conference operator today. At this time I would like to welcome everyone to the Steelcase second quarter fiscal 2024 conference call.
Speaker 1: All lines have been placed on mute to prevent any background noise.
Speaker 1: After the speaker's remarks, there will be a question and answer session.
Speaker 1: If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad.
Speaker 1: If you would like to withdraw your question, again press the star 1. Thank you. Mr. O'Meara, you may begin your conference.
Thank you, Rob. Good morning, everyone. Thank you for joining us for the recap of our second quarter fiscal 2024 financial results. Here with me today are Sarah Ambroser, our President and Chief Executive Officer, and Dave Sylvester, our Senior Vice President and Chief Financial Officer.
Our second quarter earnings release, which crossed the wires yesterday, is accessible on our website.
This conference call is being webcast and this webcast is a copyrighted production of Steelcase Inc. A replay of this webcast will be posted to ir.steelcase.com later today.
Our discussion today may include references to non-GAAP financial measures and forward-looking statements. Reconciliations to the most comparable GAAP measures and details regarding the risks associated with the use of forward-looking statements are included in our earnings release and we are incorporating by reference into this conference call the text of our Safe Harbor statement included in the release. This request is renewables of the
Following our prepared remarks, we will respond to questions from investors and analysts.
I will now turn the call over to our President and Chief Executive Officer, Sarah Unbruster.
Thanks, Mike, and hello everyone, and thanks for joining the call today. So our second quarter results were much better than we expected as both revenue and adjusted EPF finished above the guidance range that we provided in June .
So halfway through the year we are pacing ahead of the fiscal 2024 targets that we shared in March.
And on the strength of our favorable first half performance, we are projecting our full year adjusted EPS will finish between 80 cents and 90 cents, which is higher than our target of 55 cents to 75 cents.
We're pleased with the progress we're making in many areas of the business and believe our strategy is helping to drive these improved financial results.
Our second quarter adjusted operating income margin of 6.2% is 210 basis points higher than the prior year.
This is driven largely by the success we've had implementing our profitability improvement initiative.
Our sales teams have continued to capture pricing benefits from the price increases we implemented over the past two years in response to the extraordinary inflation we incurred.
And our operations teams around the world are continuing to make near-term efficiency improvements while also working to redesign our operational model to drive a lower overall cost structure.
We captured additional savings this quarter, and we remain confident in achieving our target of driving over $50 million in annualized net cost of goods sold reductions over the next several years, which is what we communicated at our investor day in May.
The world of work continues to evolve and we're seeing a growing number of company leaders talking about the importance of being in the office more regularly and in a coordinated way.
Many large companies are implementing workplace strategies that bring their people together in the office on some combination of days. They recognize that being together is a key contributor to shaping their culture and driving business outcomes.
And as a strategic partner to many of those companies, we're being asked to help improve the functionality and feel of their workspaces.
They're investing to support in-person collaboration, and they realize people need privacy for phone and video calls along with their focused individual work in the areas that enhance informal connection and well-being.
And our recent acquisition of Halcon has accelerated these efforts and is really helping us win a greater share of wallet with these customers.
As part of our strategy to lead the workplace transformation, we've prioritized investments in research and product innovation and we're seeing some evidence of success.
In the Americas, our year-to-date revenue from large corporate customers is ahead of our expectations and our win rates remain strong.
We also had double digit order growth in our continuing business, which we believe is indicative of large corporate customers making changes to existing spaces.
But it's not just the fact that these customers are making changes. They're choosing us as their partner.
They recognize Steelcase has the insights and solutions they need to help them reimagine and transform their workspaces.
We've also been investing to enhance our ability to serve customers in segments beyond those large companies.
In those segments in the Americas, our revenue is a little behind our expectations, most notably in our consumer business, and we believe that's related to the broader slowdown in household spending on goods.
In healthcare and education, we saw nice growth in our sales into clinical healthcare spaces and learning spaces such as classrooms.
even as investment levels for administrative and traditional office spaces are pressured.
Our international businesses are being impacted by the macroeconomic environments in Europe and China, and that led us to initiate our previously announced restructuring actions.
I'm also happy to say that we're seeing results against the goals we've set to support people and the planet.
This fall, we're releasing the 2023 Steelcase Impact Report, which highlights our progress to date and shares how this work is making a difference.
And I'm proud to share that this year 12 of our suppliers set science-based targets to reduce carbon emissions in their own operations.
This isn't expected to help improve just steel cases scoped through carbon emissions. It should help all of these suppliers' customers better track indirect emissions.
And this effort earned us global recognition for supplier engagement from CDP, where we were in the top 8% of companies globally and the only company from the furniture industry to be recognized for helping our suppliers tackle climate change.
So I hope you'll download our impact report and read more about our work and our commitment to use our business as a force for good. The report is scheduled to be live on our website on October 4th.
So, to summarize, halfway through the year we're ahead of our target and we expect that to carry through for the full year.
We continue to navigate a dynamic environment, but our demand levels have been fairly stable.
We're optimistic that as more companies announce requirements for in-office presence and their employees return more substantially, investment levels will increase.
We're pleased with the progress we're making in our strategy to lead the workplace transformation, diversify the customers and markets we serve, and improve our profitability.
So with that, I'll turn it over to Dave to review the financial results and share more details regarding our outlook.
Thank you, Sarah, and good morning, everyone. My comments today will start with the highlights related to our second quarter results, balance sheet, and cash flow. I will then cover our outlook for the third quarter and the full fiscal year.
Overall, we delivered strong results again this quarter, with both revenue and adjusted earnings exceeding the top ends of the ranges we provided in June .
And for the full year, as Sarah just mentioned, our adjusted earnings outlook is between 80 to 90 cents per share, which is significantly above the targeted range of 55 to 75 cents that we communicated in March.
Through the first half of the year, our profitability initiatives have driven higher gross margins
And revenue from our largest corporate customers has also been above our expectations.
In addition, our operations have benefited from less supply chain disruption.
as well as the adjustments we've made, which are contributing to faster order fulfillment patterns and improved operational efficiencies.
Our better than expected revenue of $855 million was driven by strong performance in the Americas, which benefited from faster order fulfillment patterns and favorable pricing benefits.
The revenue from International was slightly ahead of our estimates due to favorable project timing.
On an organic basis, our consolidated revenue declined 1% compared to the prior year and included 1% organic growth in the Americas and an 8% organic decline in international.
Our better than expected adjusted earnings were primarily driven by the Americas due to the favorable revenue.
Operating expenses were slightly above our Q2 estimate, primarily due to higher variable compensation expense driven by our better than expected earnings.
In addition, we had lower than anticipated gains from the sale of an aircraft and other aviation assets.
The macroeconomic environment across our international markets remains mixed.
which drove our organic revenue declines and adjusted operating losses in the international segment in the first and second quarters and led to our previously announced restructuring actions.
Over the second half of the year, we expect our international adjusted operating income to approach breakeven due to the projected benefits of those actions becoming more fully realized as well as seasonally higher volume.
Sequentially, as compared to the first quarter, operating income increased by $34 million driven by a $103 million increase in revenue. And the sequential increase in revenue was driven by normal business seasonality, which includes Smith System and other education projects that tend to shift during the summer months. As it relates to cash flow and the balance sheet, we generated $120 million of cash from operating activities in the second quarter, primarily driven by adjusted EBITDA of $77 million and a reduction in working capital of $39 million.
Lower inventory was the largest contributor to the reduction of working capital, as improved supply chains are driving shorter lead times for raw materials and component parts.
largest contributor to the reduction of working capital as improved supply chains are driving shorter lead times for raw materials and component parts, which is enabling reductions in safety stocks.
Our increased cash balance also benefited from approximately $15 million of proceeds related to the sale of aviation assets.
Our liquidity totaled $315 million at the end of the quarter. Our trailing four-quarter adjusted EBITDA of $251 million represented an increase of 63% compared to the prior year.
Our leverage metrics have improved significantly over the last several quarters, with net debt now approximating half of our trailing four-quarter adjusted EBITDA.
To be at least I got the sense, there was little bit of excitement that we may be we're reaching an inflection point and it seems like youre seeing.
Seeing some of that with the return to the office and the continuing business.
Do you think that there is.
Anything big.
Beyond the macro going on with the project environment, meaning.
Refreshing.
Officers or tweaking of offices are going to happen in a bigger way continuing business might drive the growth longer term and we will see fewer projects or is that am I overthinking that and this is just maybe.
A simple macro.
Push out.
I don't think so reuben lesser add onto this but if.
If I think back to what.
Some of the retirees told me about recessions back in the eighties.
Think about what we experienced in the early 2000 <unk>.
Typically continuing businesses what comes back first and project activity restarts over.
<unk> had a long period of time, but sometime after.
That makes sense.
<unk>.
CEO and CFO confidence improves capital spending starts to improve as well and so you start the rhythm of what I was talking about before.
Supporting moves and adds and changes in the business.
And smaller.
<unk> that are often.
Order through our continuing agreements with our accounts.
But as as things improve further this is when management teams start thinking about larger initiatives may be a move to a different facility may be new construction.
Maybe taking advantage of low lease rates and negotiating.
Different footprint and a different building et cetera, that's when we start to see project activity.
Improving my sense is that we're going to see the same thing because the office or the workplace is installed on this density model.
Everyone was pushing towards before the pandemic.
And with.
Living on video now we need more privacy in the office to support it not only in conference rooms, and collaborative settings or in enclaves, but even in the open plan, which is why Sarah talked about some of the products that we have to to support that so.
So I think it's going to happen I just don't know.
Over what timeframe.
Yeah, I'll just add on I think Thats I think thats right continuing business first followed by project activity.
And I would say that I think as companies start out not just theyre sort of workplace strategies, but also start out their real estate strategies I would anticipate that we should see more project activity. In fact, I was talking to a CEO of a large financial services institution.
<unk> ago and.
His comment was that during the pandemic like like all of US right everybody got sent home.
And as they were independent they shed some of their real estate holdings, because they didn't need them and his comment to me with now that we are bringing everybody back we actually don't have enough space.
To have everybody so theyre looking at investing.
And new facilities, which would drive project business more than continuing business. So I think if you start to see one and then a few and then many of those kinds of situations unfold.
And to me that that bodes well for our opportunity to capture that kind of business.
Other client example, I was with a tech company in the summer out on the West coast and while they are imagining shrinking their real estate footprint, what they said to us in our dealer at the time is that the imagine changing everything within the remaining footprint.
They were very focused on a dense model and they know they need to change and they are driving their people back in the office.
I don't think if they are changing everything thats going to probably show up as project activity.
Okay, Great very helpful last one for me.
Liquidity was at least somewhat of a concern from investors over the last year and you guys have obviously you have it.
Fantastic operating performance over the last year generated quite a bit of cash flow. This quarter can you just kind of update us on where that sits.
Yes, I think first of all a shout out to the operations teams, who have done a terrific job managing through.
Supply chain volatility.
Made a lot of changes to our supply chains.
Health strengthen it.
But also a lot of suppliers have also worked through the chaos. So we've been able to work inventories down to a more much more I would say normal level I think there's probably a little bit more to be had there but I.
I don't know that youre going to see another quarter of a $30 million reduction in inventory you might see a few fives and tens.
Here and there and the receivable book is in pretty good shape.
And our days payable are averaging what we expect them to average as well. So I think from a working capital perspective, Youll see more youll see it moving more in sync with the revenue.
Growth as we go forward.
Great. Thanks, guys. Congrats on the strong results and good luck.
Okay.
Your next question comes from the line of Budd <unk> from water Tower Research. Your line is open.
Good morning, and my congratulations on the excellent operating performance as well.
Sarah.
Hi, Hugh.
Talk to Ceos, a lot and I know you talked for large companies Ceos.
Probably the smaller companies Ceos and their.
Part of the debate has been compliance of associates to some of those.
We want you back in the office and now I think turning into mandates maybe could you give us a little bit of color. If there is there any dichotomy on that.
I guess I would say that as I talk to Ceos, even just over the past couple of weeks.
I will say this is the this is anecdotal so take it for that but I do hear more.
Ceos talking and using language that speaks to more willingness.
To put some teeth into these policies and mandates I think I think many ceos from the very beginning of the pandemic has felt that some level of in person presence people being together in the office is important for culture, it's important for innovation and it's important for driving business strategies and outcomes.
But there was obviously for various reasons, whether it was the pandemic or the <unk>.
War on talent E&P reluctance to push hard and I definitely hear Ceos talking more about that in fact I was last week with a CEO of a kind of fortune Ken size firm <unk> talked about now chime.
Their return to office policies to compensation.
No bonuses, so as Phil again, I don't know that Thats I don't know that I would say that thats widespread at this point, but I do here.
More business leaders are feeling pretty insistent about turning up the dial on expectations and saying this is how we work at this company and if you are.
Employed at this company, we want you to be kind of onboard with how we do business here.
Andrew.
The mandates moving from three days a week five days a week or can you I mean, we were definitely seeing we're definitely seeing some of that.
I do think that we have seen some companies move to four days a week or take policies for example, where they have flexibility in terms of the days per week with they say your return to our year on year.
And employ a work from home has to be limited to no more than <unk>.
Few weeks per year kind of go out those days as you see fit so I do think that there are companies who are fueling.
More emboldened and feeling more conviction in being able to set those expectations and.
Turning that dial now thats not everyone of course, but we are we are seeing that.
Last year, if I remember right you opine that you thought that post pandemic the industry could be 20% to 25%.
Lower than it had been pre pandemic have you changed any of that view.
Not really I mean, it was a projection based on a lot of different assumptions and it was really more communicated more too.
Illustrate why we were leaning into our revenue diversification strategy.
We update that model, we still think the industry is likely to be smaller.
Especially around large company.
But to what degree we don't have a strong view on whether it's.
Smaller than what we originally estimated or or larger.
And I know you've given guidance for the third quarter as to the revenue guidance and you're right during the last year.
And the conference call up our right you said down 20% for the first couple of weeks.
September and I think the quarter came in down 17% so modestly.
Pretty close to the same PUC orders.
If orders are now up 20% for the first three weeks do we get that same 3% drawdown in the what do you think orders will be in the third quarter of year over year.
Well that's a good question.
I don't know that I have orders guide to share today, but.
It did start to decline fairly quickly and significantly last year in the third quarter.
I said in my scripted remarks, there might have been some pull forward from.
From Q3 into Q2 of last year because of the price adjustment and surcharge that we did in July .
So that could have exaggerated the decline a little bit we don't we don't know because it was we did the adjustments in the middle of July .
But it's possible there was some pull forward effect, but because it declined as much as it did last year and because our orders have been as stable as they've been.
For the better part of several weeks or quarters couple of quarters. It's you can certainly imagine that.
You would expect to see order growth in Q3.
And you are seeing in your training in terms of stability you were talking about the order pacing the incoming order pacing in <unk> per week.
The ability of your ability.
And I think that I think we could have stable orders that post.
Year over year growth versus.
Last year in Q3 that would not so surprising to me.
And you've gone back to this is the first time in a couple of reports of our member right. If you actually parse between continuing business project business.
And in marketing programs and.
It's a bit interesting that I'm not I'm not quite sure. What the project is right now I always thought of a project with new real estate and <unk>.
Our hiring of an architect and designer to specify and now it looks like it could be the existing real estate.
Redefining the space or somehow.
Moving moving your desks around.
Yes. This is Mike so what we find typically is a customer will use a project quote when they're doing something more significant which we can generalize as a new space or a significant.
Redo of an existing space. So that's how we kind of generalize historically versus a continuing as where they leverage their continuing agreement with standardized pricing and terms and they just order, which is what we think is sort of where theyre going first as they bring people back to the offices leveraging that continuing agreement to make incremental changes to improve the space, but not.
Necessarily changing all of the space over or moving to a new location. So.
That's why we think the continuing with a little stronger right now, which is why we started to call. It out because it was more meaningful is hardest trying to understand maybe where things are going to go from here.
Yes.
Sure.
I am confused about that.
Hopefully maybe you can help elucidate us as we as we go forward on that.
The asset sales in terms of <unk>.
If my next kind of a target.
They come back into an airport against drove the operating.
Results show the gains are at least the gains on the cash flows obviously goes into the operating cash flow.
How do we think about that.
Delta versus that.
Improved year over.
Year over year that you're getting to 90 right now.
What's in that that new 90, <unk> it wasn't in which you plan. When you were talking about the 70% or so in terms of the gains from asset sales.
That's a good question there is one item that's in there that was not planned.
And it will help us.
The fact that we're selling the aircraft and aviation assets for lower gains than we planned.
There might be a little bit of benefit versus our initial target if any are too, but we're not talking about five or 10.
And when you are netting it you're netting it against also the Delta.
Variable comp or incentive comp.
Helps offset too yes.
Yes.
So really that so really apples to apples with what youre, saying, David maybe except for a penny.
A couple of pennies.
Okay, a couple of times, Okay alright.
Well again, congratulations on the financial condition.
It's.
Remarkable I've seen this industry due to this through the two most incredible periods I've ever seen in my life, which is coming out of Y two K and coming out of the pandemic nobody nobody wanted to either of these periods and you all have been able to.
To show remarkable strength and resilience during back to and you're going to be congratulated on that.
I know, it's not a lot of fun on a day to day basis, but when you look at it over a longer period of time.
It's really a real testament to the culture and the strength, we see okay. Thank you.
Thank you Budd, we appreciate that recognition and before we move to the next question I just want to clarify something in my scripted remarks, apparently I mentioned that in our Q3 guide that operating expenses, we expected them to be between $2 15, and $2 10.
<unk> meant $2 15, and $2 20.
And again, if you would like to ask a question Press Star then the number one on your telephone keypad and your next question comes from the line of Steven Ramsey from Thompson Research Group. Your line is open.
Hey, good morning, maybe.
Maybe just start with that.
It's more mandates for return to office or coming from companies are you finding the companies are spending on their office ahead of bringing those workers back or do they do it after <unk>.
Bring employees back and make adjustments as they.
Get more experience with the new format of work.
Yeah. Good question. So I think our experience thus far has been that it's a little bit of all of the above.
Because remember all of these companies as they bring people back theyre starting from different points as far as our physical spaces go so of the year. The company that had just done a significant remodel and it really invested just before the pandemic to think about technology integration social spaces, wellbeing et cetera, you might.
Be closer to what you need today as you bring people back and therefore, maybe need to make modest changes.
Whereas there are other clients, we serve huge spaces before the pandemic, where what we would describe as pretty outdated in terms of how they support the ways of working to those clients have been much.
More significant task ahead of them both to attract people back and then to support.
The way people want to work today. So I think we see some companies who know they need to make investments doing it before they bring people back I think other companies are taking more of a pilot approach will bring people back well iterate will get employee input, we'll sort of do a bit of a bit.
Kind of a bit here and there as we go.
Some of all of the above.
Okay. That's helpful.
The continuing business being stronger.
You've talked about a lot of verticals in the prepared commentary which was helpful.
That continuing business strength is that primarily in the corporate.
Segment or are there other verticals that are helping to drive the continuing business.
I don't know that I have that granular level of detail, but I think I'm looking at Mike to see if he agrees I think it's reasonable to assume that is mostly driven by large companies. They are the ones that we tend to have.
The contracts with.
We also have contracts with large health care institutions and large education.
Institutions, but Sarah commented.
In those cases, they're admin investments are down while they are investments and they are off carpet or clinical in classroom.
Settings are up I think.
Fair assumption that it's mostly large company related.
That is driving.
The improvement in continuing business.
Okay that makes sense.
Right that makes it so if I kind of bridge that to the longer term as you gain share and mature in other vertical aside from just large company corporate office.
Do you think continuing business.
As a natural part of those customer relationships over time or is the nature of how you manage those other spaces.
It's conducive to continuing business that compares to large corporate.
Well certainly some of those verticals like health care and education will have project and continuing business.
With but.
Small to mid sized companies, we do have continuing agreements with some companies that are in the <unk>.
Let's say three to 500 employee size, but a lot of that business is more.
One and done so to speak and then of course on the consumer retail there are no agreements with.
But that business as well.
Okay.
And on the strong cash flow that you've generated in now a high level of cash.
Sitting on the balance sheet, how do you think about.
Putting that cash to work to returns or debt reduction or do you.
Sort of think keep it elevated for the time being and the uncertain macro.
Oh, well that's a good question Steven.
<unk> had a hit.
History in the last half dozen years of acquisitions even in the.
Over the last couple of years, we've done two acquisitions with <unk> and Alcon and they've been very supportive they and the others that we've done have been very supportive of our strategy.
So we continue to look and continue to imagine the possibility of another bolt on acquisition or two.
So there's always that possibility.
We also.
Continue to attempt to offset.
Dilution related to equity awards that are tied to variable compensation and on occasion, we have been.
More opportunistic and repurchased additional shares.
The dividend is a strong dividend at 10 cents a quarter that the board approved yesterday and I imagine that that are kind of strong dividend philosophy is going to continue into the future.
As well, but yes, I mean I also would like to see liquidity continue to build we are a conservative company that is in a cyclical industry.
Having a strong balance sheet has always been part of our DNA, it's very strong today, but it's not quite as strong as it has been in the past.
So you could also see US just continue to strengthen it as well.
Okay helpful. And then last quick question for me this quarter beat grades when you had an expected organic decline of 3% to 6% for the second quarter.
Yes, similar expected organic decline for Q3.
My question is are the factors that drove the beat in the second quarter are those potentially going to repeat again in the third quarter or is some of those factors kind of behind you.
Well, we outperformed this quarter because of faster order fulfillment.
<unk> benefits.
Our guide go forward now that we've seen a couple quarters of.
More normalized fulfillment patterns. Our guide go forward assumes that that will continue so we've already baked that in.
And on the pricing benefits.
The magnitude of those benefits year over year, or we will get much smaller as we move forward.
And so I don't it's hard to imagine that those could come in significantly higher.
What we've guided.
Prospectively.
I don't know.
Every every guide that we provided as we call. It a 50 50 I mean, okay. Maybe it's a 60 40 with a tad more upside than downside, but.
We guide based on what we know in the last couple of quarters, we've had.
Good outcomes from the hard work that people are driving across the business.
Excellent. Thank you.
Yes.
And we have a follow up question from the line of Budd <unk> from <unk> Research. Your line is open.
That was a new one.
Alright.
Yeah.
The pronunciation of my name.
You had made that point David.
The industry is stabilizing and weekly pacing and if my math is anywhere near right. It's about $60 million a week on average and do you do you see that holding really through.
Andrew deviation on that week to week, not very high because youre seeing that come in.
I haven't run a standard deviation on it so I can't speak to that specifically, but it has been.
Remarkably stable.
As we look at it.
Average.
Daily orders per week I see that chart every month and it's remarkable how steady is bad.
And when we look at that.
We havent gone lean and.
You deliver you can deliver probably half of the orders in a quarter or more in that quarter is not typically what happens when you look at there.
If the lead times are more in the 4% to six week range, yes that we can do that.
Well to do that.
And as our earn back to normal almost on every product maybe not everyone single product, but all of the large runners.
Our standard lead times, which range between a few weeks maybe six weeks.
So in the past one of the things that you.
This jumbo through and explain to investors what happened to the projection of that backlog in terms of how much of it was deliverable in the next 90 days, we haven't heard that number. This this call. What do you think the backlog how much of the backlog gets delivered or what is project.
For delivery in this quarter.
A much more normalized percentage, which is quite high.
The normalized percentage is 80% or so right 70 to 80.
I don't know if I know the percentage exact percentage, but that doesn't sound unreasonable.
Okay, Alright, thank you well and so the last part of it will then cause <unk>.
Dichotomy in order growth and revenue growth in some of the quarters, even in the last 30 last third quarter. We had we had that order Greg degradation of 17% yet origin. I think revenues were up year over year. So I'm just trying to get to when do we get to a normalized pattern where.
All of it looks like it's worn on the same direction and that's a question that I think everybody is struggling with.
Yes, I understand.
Okay.
I don't know I don't know the answer, but I mean, what I again, what I'll go back to is the average daily orders per week.
Remarkably stable in our core business.
In the Americas and international it's a bit more mix.
Some markets are growing others are are declining.
And we tend to be more project oriented in Asia than we are say in Europe or in the Americas. So it is a little bit more lumpy week to week.
In our largest market, where we have 70% of our revenue in the Americas. It has been pretty steady.
Okay.
For pretty long time, now and every time I hear you.
No. The taxes you got the same issue trying to get to a pretty definite your opinions.
Well.
Okay.
I think you bring much alright. Thanks.
And there are no further questions at this time, Ms Armbruster, I turn the call back over to you.
So thank you all for joining we appreciate your interest in Steelcase as we continue to focus on driving improved results and I Hope you all have a great day.
This concludes today's conference call you may now disconnect.
Thank you.
Okay.
Okay.
Yeah.
Okay.
Yes.