Q1 2025 Douglas Dynamics Inc Earnings Call
Good day and welcome to the Douglas Dynamics First Quarter 2025 earnings conference call. All participants will be in a listen only mode. Should you need assistance please signal a conference specialist by pressing the star key followed by zero.
After today's presentation, there will be an opportunity to ask questions.
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Please note, this is that is being recorded.
Speaker Change: I would now like to turn the conference over to Nathan Elwell, VP of IR. Please go ahead.
Speaker Change: These forward-looking statements are subject to risks that could cause our actual results to be materially different.
Speaker Change: Those risks include among others matters that we have described in yesterday's press release and in our filings with the SEC.
Speaker Change: Please note, we've published a one page back sheet on our I.R. website that summarizes our results for the quarter.
Speaker Change: Joining me on the call today is Mark Bangeren, President and CEO , and Sarah Lauber, Executive Vice President and CFO .
Speaker Change: I will provide an overview of our performance followed by Sarah at Viewing at Financial Results and Guidance. After that, we'll open the call for questions.
Speaker Change: With that, I'll hand the call over to Mark. Please go ahead.
Mark: Thanks Nathan and welcome everyone to our call. My first is CEO of the company. I've been in the chair for about two months now and we've been busy.
Mark: I've had the chance to visit many of our facilities across the country, walk the manufacturing and
Mark: We're from attachments. They've seen me for years. In solutions, these were my initial visits and I'm coming up to speed quickly. In both cases, it's great to see the engagement of the teams. Our business is running at a high level of efficiency and effectiveness right now.
Mark: We continue to develop and nurture our corporate culture, which we see as a real differentiator that allows us to optimize during the tough times as well as when things are going well as they are now.
Mark: One of my initial areas of focus has been to make sure we have the right leaders in place across the company At the corporate level, Sarah and her team operate like a well oiled machine
Mark: I'm pleased with the partnership she and I have created as we look to the future of Douglas Dynamics.
Mark: Janine Vleeger has ramped up quickly in her role as Senior Vice President of People and Culture, and our latest addition to the team is Chris Bernauer, who joined us in February as President of Work Truck Attachments.
Pat Miller, President of the Jana
Pat Miller: and Chad Barker, Vice President and General Manager of Henderson, round out our executive leadership team.
Pat Miller: I would also like to take a moment to thank Jim Janik, Janik and Bob McHorman, both former CEOs of the company and both incredibly knowledgeable about this business given their years of experience at Douglas Dynamics.
Pat Miller: Their support and guidance over the past five years have been a reason I've been able to hit the ground running in this new position.
Speaker Change: As many of you recently read, Jim Janik has decided to step down as chairman, but I'm glad to say will remain on as a board member.
Speaker Change: Don Sturt event, formally our lead director, assuming the role of board chairman. I look forward to continuing working with Jim, Don and our entire board in the future.
Speaker Change: So this really was an excellent quarter for our company across the board, with both segments executing successfully and delivering robust results.
Speaker Change: We rarely generate a profit in the first quarter because of the seasonality of our business, but this year we produce record revenue and record adjusted EPS, truly a tremendous achievement.
Speaker Change: Worktruck Solutions delivered its fourth consecutive quarter of record results, and with more snow of this winter compared to last, Worktruck attachments delivered an excellent quarter as well, driven by strong parts and accessory sales.
Speaker Change: Before I jump into the performance by segment, however, let me address what is on everyone's minds these days, which are tariffs, and specifically, how we think about them and their potential impact on Douglas Dynamics' future performance.
Speaker Change: Our operations, supply base, and sales are primarily domestic in nature, and in the near term, our unchanged guidance for 2025 reflects a comfort in our ability to offset the impact of tariffs on our operations this year.
Speaker Change: For reference, our sales outside of the United States and our purchase components from outside of the United States are each less than 10%.
Speaker Change: Let me run strong performance in each segment, starting with worth truck attachments.
Speaker Change: Results improved significantly across the board with net sales increasing just over 50% led by higher sales of parts and accessories.
Speaker Change: These sales were driven by stronger winter weather conditions in certain corn markets.
Speaker Change: This past winter saw notable cold spells and polar vortexes influenced by a weak Leninia. For example, during the coldest period in February nearly 90% of the lower 48 experience below freezing temperatures.
Speaker Change: This reinforces that we are often seeing more extreme weather at both ends of the spectrum these days.
Speaker Change: In aggregate, Snowball across the United States was mixed as above average total in the mountains out west and much of the east contrasted to parts of the Midwest that experienced low average snowfall.
Speaker Change: In total, the season ended with snowfall 12% down compared to the 10-year average.
Speaker Change: But importantly, the total was higher than last year, reversing a three-year trend.
Speaker Change: Furthermore, the number of ice events the country experienced was significantly above average.
Speaker Change: This combined with the fact that we recently redesigned our hopper spreaders means that we are seeing a lot of interest and purchases from dealers and users around these ice mitigation products.
Speaker Change: and we'll have more exciting, copper product news to share at Sima, the snow and ice management association conference coming up next month in Grand Rapids, Michigan.
Speaker Change: where our team and all of our snow and ice brands will, as the leaders in the industry, be very well represented.
Speaker Change: We also continue to see dealer-plow inventories moderate, and hopper inventories are generally low, which highlights that dealers were selling through product as we come off a stronger snows season than the last two.
Let's talk about pre-season.
Speaker Change: As a refresher, we receive a large percentage of our annual orders from dealers in the second and third quarters and ship during that time as well in advance of the upcoming snow season.
Speaker Change: Well, it's still early, preseason is off to a decent start. More specifically, P&A and Hopper sales are trending slightly higher than anticipated, and flowers are somewhat mixed depending on geography.
Speaker Change: That said, the uncertainty for the remaining pre-season sales period is heightened this year by the unknowns related to a weather driven elongated equipment replacement cycle, a more uncertain economic outlook and the potential impact of tariffs.
Speaker Change: As I mentioned, like all companies, we are monitoring this closely and so far we aren't seeing major changes in our demand or supply chain related to the terrorists.
Speaker Change: Operation Lee in Work Truck Attachments, we are in a very strong position. Our operations have been adjusted to match market condition. Production plans are right in line and both are raw materials and finished goods inventory are in good shape.
Speaker Change: That said, our operating model leads us well positioned to increase volume should demand ramp up beyond our current expectations.
Speaker Change: When looking at all of the factors we can influence, we are playing off our front foot. We remain cautious yet optimistic about the year.
Turning to work truck solutions.
Speaker Change: The team exceeded expectations delivering another record performance, or the fourth consecutive quarter.
Speaker Change: What we have seen some softening in the dealer business as our end users are approaching the current economic environment cautiously, our fleet business continues to perform well and our municipal business is on a roll. The supply of chassis is stable and our backlog is robust.
Speaker Change: We continue to maintain strong relationships with all of our OEM partners. We'll also continue in to a droidly adjust our business to match evolving marketplace conditions.
Speaker Change: In general, OEMs have been allocating a higher percentage of truck chassis to their fleet customers and directly to dealers.
Speaker Change: There are several examples that come to mind which illustrate our continued focus on driving demand and growth in the solutions segment.
Speaker Change: Our Baltimore facility has been the focus of operational optimization focused on improving our cargo truck business, where we are consistently delivering more trucks at a higher margin.
Speaker Change: Our municipal service parts business continues to perform well and grow due to both our investments and optimization efforts and because of stronger demand due to the improved conditions last winter.
Finally, Backlog and Solutions remains near record levels.
Speaker Change: We are booking production dates into 2026 and are currently in the process of investing in additional capacity to come online next year We are proactively positioning well for the foreseeable future
So overall, continued strong performance in the Solution segment.
Speaker Change: With our current operations cohort, I'd like to touch on the future for a moment.
Speaker Change: I've had a chance to meet with many of you our owners and potential shareholders since becoming COO last year and more recently in my new role. I've often been asked about my specific thoughts on our capital allocation strategy.
Speaker Change: I am a strong believer that as a company, our focus needs to be on operational cash generation to cover the dividend.
Speaker Change: Yet, as we have become a more efficient organization, we are also focused on managing our financial performance to incorporate select acquisitions in the future.
Speaker Change: Specifically, we are in a position to consider and act on small and medium sized acquisitions when we find the right opportunity.
Speaker Change: Ideally, these opportunities would be in the work-vehicle attachment space, have strong brands and growth potential as well as being a good cultural fit.
Speaker Change: To be clear, as a leadership team, we will maintain our disciplined approach, but we are investing more time and energy on the search today.
Speaker Change: So to conclude, well there is uncertainty about the economic overall outlook.
Speaker Change: Our company is well-positioned with the US-focused business and operational flexibility and we will stay ahead of any careful related impacts to the business.
Speaker Change: This past winter, while not quite an average snowfall winter, was better than the last two from a snowfall perspective and much better than average from an ice perspective.
Speaker Change: Our work truck attachments business has weathered the last couple of years of low snowfall and has emerged lean and agile and our work truck solutions business will seeing some softness in the dealer business continues to see strength in our fleet business and a solid backlog in our municipal business.
Speaker Change: We have a fantastic team in place to address the opportunities, and that is a strong position
Speaker Change: I'm tremendously proud to be leading this amazing company, and our leadership team is working together to do one thing, find ways to deliver profitable, sustainable growth over the long term.
Sarah.
Sarah Lauber: Thanks, Mark. I will start with a summary of this great quarter and then more around our guidance, which will include a discussion on the impact of terror.
Sarah Lauber: Q1 results are a great start to the year. Solutions delivered their fourth consecutive quarter of record results on higher volumes, primarily on the municipal side.
Sarah Lauber: Before jumping into the numbers, please note that unless stated otherwise, all the comparisons they'll make today are between the first quarter of 2025 and the first quarter of 2024.
Sarah Lauber: Consolidated net sales increased 20.3% to a record 115.1 million, and the growth margins increased by 470 basis points to 24.5%.
Sarah Lauber: This translates to break even on a gap earnings per share basis, a significant improvement compared to negative $0.37 in 2024.
Sarah Lauber: As a reminder, in the first quarter of last year, we recorded restructuring and impairment charges of 2.1 million as part of the implementation of the 2024 cost savings program.
Sarah Lauber: Now, in its second year, we continue to expect the 2024 cost savings program to deliver annualized savings of 11 to 12 million in 2025.
Sarah Lauber: A jocidipata increased significantly to 9.4 million, and a jocid net income improved by 8.7 million to 2.2 million.
Sarah Lauber: This created a record-adjusted earning per share of 9 cents, and an adjusted evadom margin of 8.2 percent. Major improvements all around.
Now I'll walk through the results for the two segments.
Sarah Lauber: Mark discussed the market conditions earlier but suffice to say results at work truck attachments improved significantly across the board.
Sarah Lauber: net sales increased 52.9% to 36.5 million and a drop to the Ibiza increased 4.8 million to 300,000
A much better quarter and well executed by the attachment team.
Sarah Lauber: Now as I mentioned earlier, work truck solutions continues to set records.
Sarah Lauber: net sales increased 9.5% to 78.6 million based on higher municipal volumes and improved price-increased realization.
Adjusted EBITDA for the quarter increased 51.7% to 9.1 million.
Sarah Lauber: Margins increased 320 basis points to 11.6%, which is a record for quarter margins for the segment.
Sarah Lauber: This is the fourth consecutive quarter of record results at Solutions, and it's great to see this team sustain their improved profitability.
Sarah Lauber: The team has come a long way in the last few years driving operational efficiency and taking advantage of more favorable market conditions.
Sarah Lauber: However, it's important to remember that 2024 was a record year for solutions and we will start to face more difficult comparison in the coming quarters.
Sarah Lauber: I want to reiterate our previous comments that we expect solutions to 2025 results to be roughly similar to 2024 or slightly better
Sarah Lauber: Overall, our backlog remains near record levels, and demand remains solid overall
Sarah Lauber: Municipal demands remain strong, and we have great visibility for that business into 2026.
Sarah Lauber: As Mark mentioned earlier, Ed Dijana, the situation is more complex with our fleet business continuing to show strength and other areas showing some softness based on end user hesitancy and price sensitivity.
Sarah Lauber: With Segment Resolved Covered, I'll turn to Bouchy and LaQuinnity [inaudible]
Sarah Lauber: We paid our dividend of 29.5 cents per share as usual at the end of the quarter.
Sarah Lauber: Netcash used in operating activities decreased substantially from 21.6 million last year to 1.3 million this quarter.
Sarah Lauber: This was primarily due to improved earnings as well as favorable changes in working capital.
Sarah Lauber: In March, we successfully amended our credit agreement, which now includes a 115 million senior-secured term loan and a 125 million senior-secured revolving credit facility due in 2030.
Sarah Lauber: Total inventory was $171.5 million at the end of the first quarter, similar to the $174.8 million last year.
Sarah Lauber: However, although it looks similar at first glance, it's worth noting that our inventory mix has changed between the segments.
Sarah Lauber: Attachments have significantly reduced its inventory over the past year and is in really good shape headed into pre-season.
Sarah Lauber: Their reductions were offset by a planned increase in inventory and chaffey in the solution segment.
Sarah Lauber: These changes relate to several large projects that require us to take ownership of chassis and equipment inventory.
Sarah Lauber: That isn't something we've done to a material level historically, but our backlog in 2025 and in 2026 includes some large contract wins that were made possible with just chassis supplies.
Sarah Lauber: It's worth pointing out that the effective tax rate looks unusual at 69.8% of this quarter compared to 16% last year.
Sarah Lauber: The first sentence is high because we're so close to break even for the quarter, so please don't read too much into these numbers [inaudible]
Sarah Lauber: We expect the situation will return to normal in the coming quarters and we still expect our 2025 effective tax rate to be between 24 and 25 percent.
Sarah Lauber: Capital expenditures, so far this year returned towards more typical levels, increasing to 2.2 million.
Sarah Lauber: As a reminder, our CAPEX was artificially low in 2024 as we curtail spending given the environment.
Sarah Lauber: We still expect CapEx to be towards the higher end of our usual range of 2-3% of net sales in 2025 for two reasons.
Sarah Lauber: One, we're catching up on some projects toned from last year, and two, we're accelerating some projects based on the sale lease back agreement.
Sarah Lauber: I am pleased to report the leverage ratio at the end of the first quarter was 2.1 times, much lower than the 3.3 times at the same point in 2024 and well within our goal range of 1.5 to 3 times.
Sarah Lauber: Clearly, our work to improve the balance sheet plus improved earnings means our leverage about a very manageable level today.
Sarah Lauber: As we stated last quarter we planned to stay well within our goal range this year and at this point I would expect it to hover around two times for the remainder of the year. Here we go.
Now let's review our outlook for the year.
Sarah Lauber: Clearly, 2025 is off to a strong start. We're pleased with our results.
Sarah Lauber: So you may be wondering why we aren't raising our guidance.
There are several reasons [inaudible]
Sarah Lauber: One, the elongated equipment replacement cycle and the potential impact on our pre-season demand.
Sarah Lauber: Two, we're seeing some areas of softening demand in our commercial solutions business, and three, the uncertainty of the economic outlook and tariffs.
Sarah Lauber: Therefore, with these unknown factors, we think it's prudent to maintain our guidance, which we issued in late February
Sarah Lauber: Our range typically encompasses a wider range of scenarios and demands levels at this time of the year, and we plan to narrow the ranges later in the year as we usually do.
Sarah Lauber: Let me go a little deeper into what we're seeing right now.
Sarah Lauber: Well, there still remains some uncertainty to dealer demand in light of the elongated replacement cycle. The midpoint of our range assumes attachment, shipment, and 2025 will be similar to 2023.
Sarah Lauber: As early indications of preseason, we would categorize the first month as off to a good start.
Sarah Lauber: The initial phase of orders is mostly in line with our expectations, with plows next, depending on geography, but we are seeing more robust offer of orders.
Sarah Lauber: We expect the mix of pre-season shipments to be 55% in Q2 and 45% in Q3, which is a departure from last year's mix of 65% in Q2 and 35% in Q3.
Sarah Lauber: Within solutions, municipal demands remain strong, and we have good visibility from our back
Sarah Lauber: However, we are carefully monitoring commercial order trends as this part of our business is most influenced by GDP and the recent economic uncertainty could negatively impact demand.
Sarah Lauber: As far as margin expectations, we expect Douglas's EBIT down margins to remain relatively flat to 2024 for the year.
Sarah Lauber: With the hard work and solutions and the cost savings program in attachment, we have helped stabilize our margins in light of an elongated replacement cycle.
Sarah Lauber: Let me take a step back and talk to you. As Mark mentioned, we believe we are better positions than most companies to manage through the current tier of uncertainty for the following reasons.
Approximately 95% of our net sales are in the U.S.
Sarah Lauber: The vast majority of our steel is sourced in the U.S.
Sarah Lauber: Less than 10% of our direct materials are sourced from China, Mexico or Canada, and we manufacture all our products in the US.
Sarah Lauber: The most material impact of the announced Europe is on our China Source products which was less than 5% of our direct material spend in 2024.
Sarah Lauber: We have not yet fully mitigated this impact but will work to have it mitigated on a run rate basis by the end of 2025.
Sarah Lauber: But for 2025, our current guidance does include our expected exposure for the tariffs currently in place.
Sarah Lauber: That all being said, our guidance for 2025 is net sales expected to be between $610 million and $650 million.
Sarah Lauber: Adjusted EBITDA's predictive range from 75 million to 95 million.
Sarah Lauber: Adjust their earnings per share is expected to be in the range of $1.30 to $2.10 per share.
Sarah Lauber: The effective tax rate is expected to be approximately 24% to 25%.
Sarah Lauber: The South Locke assumes three things, relatively stable economic and supply chain conditions, and that four markets will experience average no-fall in the fourth quarter of 2025, and that the period of situation does not escalate significantly.
Sarah Lauber: To summarize, despite the uncertain macroeconomic outlook, we remain cautiously optimistic.
Sarah Lauber: We are in a great position of Stabilized Margin and ready to leverage the attachment business as demand returns.
Sarah Lauber: In the solution segment, we delivered record results driven by strong municipal performance, solid overall demand, and a robust backlog.
Sarah Lauber: With that, we'd like to open up the call for questions.
Operator
We will now begin the question and answer session.
Sarah Lauber: To ask a question, you may press star, then one, on your touchtone phone on your touchtone phone.
Sarah Lauber: If you are using a speaker phone, please pick up your handset before pressing the keys.
Sarah Lauber: If it any time your question has been addressed and you would like to withdraw your question, please press star
Sarah Lauber: At this time, we will pause momentarily to assemble a roster.
Speaker Change: The first question today comes from Mike Schultzky with DA Davidson. Please go ahead.
Good Morning!
Um, a lot.
Sarah Lauber: Yes, good morning. Why did you touch on your comments, Sarah, on the Solutions business in 2025 versus 2024?
Speaker Change: You had mentioned, you know, I guess by time the year is over when all is said and done might look real to be swimming to the prior year.
What I was curious, whether there could be um-
Speaker Change: Is that what your goal was for the entire year? I guess I always thought you wanted to really break past that 10% level and get to at least double digits or margins and you seem well for it to do that if you guys are past the hump in a lot of ways.
Speaker Change: Um, I guess what's holding that, that business back from, you know, wrecking through past 10-11% here?
Speaker Change: Absolutely. And you're right, Mike. We're in a great position. I mean, we landed really close to 10% at the end of last year with our goal being double digits to low teams.
Speaker Change: I still fully expect that solutions can achieve that longer-term target.
Speaker Change: For 2025 what we have planned is some additional investment in growth that we will be bringing in, layering in later in the year.
Speaker Change: And I would also say there's some uncertainty that I have factored in there on the commercial side just from a demand perspective.
Speaker Change: So, it hasn't flowed us down to working hard on that longer term low teens, but I would say this year has a little bit of mix of some risk and some end up met.
Okay.
Speaker Change: Also your comments, I think it was a big book you made with Mark, you kind of started off with it about M&A. That looked interesting as well. If the right target doesn't come along.
Speaker Change: I'd be curious as to what your cash priorities might be after that. So I'm guessing that the difference in that at least stay stable or possibly grow a little for the first ton in a couple of years here.
Speaker Change: But if Norman A. Kennedy shows up, do you have additional R&D playing? I just kind of suggested Sarah as a lot of money, or would you consider a shared buyback or other use of capital.
Speaker Change: I would say it's a combination of the both of those. Our primary focus is really
Speaker Change: You know, right now when I talked about it, we've emphasized some of our discussions, but I think there's some real opportunity out there with the...
Speaker Change: just the overall operational excellence that I think we have in the attachment space.
Speaker Change: of bringing additional brands and companies in under that pool. And we're in a financial position to be able to do that, you know, and as we continue to have these type of results.
Speaker Change: It will enable us in the future to really focus on acquisitions.
Speaker Change: That being said, we're not going to chase anything. We're not going to be dumb. In that event, we have to evaluate. We've got to open bybacks right now. We're not going to be dumb at all.
Speaker Change: What's the total we have? 40 million, so that's available. That would be something that we could potentially look at. We haven't increased the dividend. We look at doing that. So there's a couple of different opportunities that we would have. What's the total we have?
Great. Excellent.
Speaker Change: The next question comes from Bobby Schultz with Baird. Please go ahead.
Hey guys, thanks for taking the questions this morning.
Bobby Schultz: First, I just noticed on the press release that it's noted that we're off to a strong start this year, but partly related to the timing of certain projects, is there any way to quantify the timing benefit in anything we should consider from a timing perspective as we think about Q2 in the rest of the year?
Um, I would say I have not quantified it.
There are some projects that…
Bobby Schultz: are going to be lumpy for solutions depending on when we actually get the trucks out.
Bobby Schultz: That has been pretty consistent for solutions for many years. I would say this quarter, some of the volume that we had in municipal would have been pulled from the second quarter.
Bobby Schultz: In addition, we have some small pull ahead from a Canadian dealer. So there was some, but I wouldn't say it was overly material, Bobby.
Bobby Schultz: Got it. And then from a tariff perspective, do you think most of your competition has a pretty similar manufacturing footprint? At this point, have you seen meaning full price increases in the market to offset any tariff impact from competition?
Speaker Change: I can take that one. You know, I would say that if you look at the different divisions, you look at attachments.
Speaker Change: What we've seen from competitive pricing is in line with what we've done. I can't speak specifically to their manufacturing or sourcing footprint, but it's been.
Speaker Change: You know, it's been consistent. And as I noted for this year, Sarah talked to it as well. You know, we're committed in a figured out ways that within our current guidance to cover, you know, if the existing generous were to go into place and stay as they are right now.
Speaker Change: You know, here American company, we have made some pricing adjustments there as well to cover our tariffs, but overall I think in the case of Anderson, we're in a very, very good competitive spot right now.
Speaker Change: The next question comes from Greg Burns with Sedoti. Please go ahead.
Greg Burns: Good morning. Just wanted to ask me a little bit about the plan capacity.
Expansion, you have for the solution side of the business.
Greg Burns: Um, what is the timing of that coming online and I guess maybe what is the impetus for that is just, you know, the strong demand you're seeing or lead times too long like are you capacity constraint now?
As you look at the business
Greg Burns: Yeah, great question Greg. As we look at the Henderson business and where we are and the contract that we have, we have some pockets where we would like to expand. We've started those plans. We would not expect that to come online until 2026.
Greg Burns: We're not talking about a really significant, I would say, call it 10% additional capacity. We will be very prudent.
Greg Burns: in adding any fixed costs to the business and capacity and to ensure that we've got the backlog and the contracts in place before we do that.
For more information, visit www.FEMA.gov
Speaker Change: Okay, great. And then, um, you mentioned maybe some of the new...
Greg Burns: Product line extensions maybe were you were talking about on the hopper line, could you just maybe talk about
New Product Development, anything else that is in the...
the pipeline that might be coming to market and
Greg Burns: Any areas where you think you might be able to fill out the product line or take market share with new products?
Greg Burns: Yeah, I think it's a great question and certainly a tenant of my background coming in and I work for the attachments teams right now is very focused on.
They can more efficiently use product.
Benner, Fastard
Greg Burns: with more accuracy. You know, those are all the, I'd say, the main tenants that were focused on and when you look at our product pipeline over the next few years, it's certainly reflective of that.
Greg Burns: A good recent introduction that we had, we mentioned the upgrade to the Hopper lines which have been received well, the introduction of our pusher plow line.
Greg Burns: Similarly, the feedback from dealers is saying, hey, there are some cases where we're looking for bigger plows that attach to front-end loaders and skids to years and so understanding the market and coming out with those types of new products.
I wish I could share more, but yeah, see you. Yeah, no, no, that's great. Thank you.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Mark Ben Gendron with President NCEO for any closing remarks.
Speaker Change: Thank you and thank you all for your time today. We appreciate your continued interest in Douglas Dynamics and we look forward to talking with you all soon.
Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.