Copa Holdings, S.A. (NYSE:CPA) Q1 2019 Earnings Conference Call May 9, 2019 12:00 PM ET
Raul Pascual - Director, IR
Pedro Heilbron - CEO
Jose Montero - CFO
Conference Call Participants
Duane Pfennigwerth - Evercore ISI
Hunter Keay - Wolfe Research
Savi Syth - Raymond James
Michael Linenberg - Deutsche Bank
Conor Cunningham - Cowen and Company
Dan McKenzie - Buckingham Research
Ricardo Alves - Morgan Stanley
Rogerio Araujo - UBS
Ladies and gentlemen, thank you for standing by. Welcome to Copa Holdings First Quarter Earnings Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this call is being webcast and recorded on May 9, 2019.
Now, let me turn the conference over to Raul Pascual, Director of Investor Relations. Sir, you may begin.
Thank you, Valerie. And welcome everyone to our first quarter earnings call. Joining us today are Pedro Heilbron, CEO of Copa Holdings; and Jose Montero, our CFO. First, Pedro will start with our first quarter highlights, followed by Jose, who will discuss our financial results. And nearly after, we will open the call for questions from analysts.
Copa Holdings financial reports have been prepared in accordance with International Financial Reporting Standards. In today's call, we will discuss non-IFRS financial measures. A reconciliation of the non-IFRS to IFRS financial measures can be found in our earnings release, which has been posted on the Company's website, copa.com.
Our discussion today will also contain forward-looking statements. Not limited to historical facts, but reflects the Company's current beliefs, expectations and/or intentions regarding future events and results. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially, and are based on assumptions subject to change. Many of these are discussed in our annual report filed with the SEC.
Now, I'd like to turn the call over to our CEO, Mr. Pedro Heilbron.
Thank you, Raul. Good morning to all and thank you for participating in our first quarter earnings call. First of all, I would like to congratulate all of our co-workers for their efforts during the quarter, including the ongoing hard work to minimize the impact of the MAX grounding on our customers. Our team's commitment and dedication keeps us at the forefront of Latin American aviation.
Today, we're pleased to report solid results for the first quarter and reaffirm our full-year margin guidance despite a higher fuel outlook and the impact resulting from the MAX grounding.
As you can see from our results, unit revenues are still lower than the first quarter of 2018, but came in better than expected and should continue strengthening going forward. Among the main highlights for the quarter, passenger traffic grew 2.3% year-over-year, outpacing our capacity growth of 1.9%. This resulted in a strong 83.3% load factor, 0.4 percentage points higher year-over-year.
Yields came in at $0.121 cents, 8.8% lower than in the first quarter of 2018, although 2.5% higher over Q4 '18. Unit revenues, or RASM, decreased 7.7% year-over-year to $0.105. On the cost side, ex-fuel unit cost came in at $0.061, or 2.9% lower year-over-year. As a result, our operating margin came in at 16.8%.
And on the operational front, Copa earnings delivered an on-time performance of 93% and a completion factor of 99.8%. Again, among very best in the world and a testament to the commitment and dedication of our co-workers, whose efforts placed us at the top of the worldwide on-time rankings in 2018.
Regarding our MAX fleet, we currently have six 737 MAX 9 aircraft and another seven are scheduled to be delivered during the remainder of 2019. Upon the grounding of this aircraft, our team once again rose to the challenge and implemented several initiatives to maintain the integrity of the schedule and minimize the impact to our customers.
We are proactively making the necessary cancellations, schedule changes and passenger rebookings assuming this aircraft will not be in service until the end of July. We will continue to monitor progress on the recertification efforts and adjust our assumptions and capacity plans accordingly.
At this point, we're not providing a financial impact figure for the MAX groundings, but this impact, as based on our assumed timeline, is included in the operating margin and capacity figures provided in our guidance.
Turning now to the rest of the year, we are seeing improving yields in forward booking curves and we now believe the second quarter will produce unit revenues at about the same levels of the second quarter of 2018.
Regarding our network, so far this year, we have announced one new destination, Paramaribo, Suriname, starting in July. Copa service will be the only connection between Suriname and Latin America, providing much needed connectivity to the region. After this addition, Copa will provide service to 81 destinations in 33 countries in North, Central, South America and the Caribbean.
I'm also pleased to report we are now using five gates in the new Terminal 2 in Panama Tocumen Airport and expect the rest of the terminal to be fully operational by the end of the year, enabling our future growth and improving our overall passenger experience.
We continue making progress developing and launching new IT tools such as our redesigned Web check-in system and Copa app, which allow us to be more responsive to our customers, while further lowering our unit costs.
Finally, Wingo, although a very small 2% of our revenues, continues to do well, both financially and operationally. In January, Wingo was recognized by KAYAK based on their customer reviews and ratings as the best low cost airline in Latin America and third best in the world. Another great recognition for the fantastic Wingo product and exceptional Wingo team.
To summarize, we're off to a good start in 2019 and expect to continue seeing an improving demand environment throughout the year. We continue growing and strengthening our network, the most complete and convenient hub for intra-Latin America travel and our team continues to deliver world-class operational performance, while achieving industry leading unit costs.
Lastly, we're as confident as ever in our business model and our financial position. We have the strongest network for travel within the Americas, exceptional operational performance that results in high customer satisfaction, an extremely flexible fleet plan, the lowest unit cost and a very strong liquidity position with low leverage and a highly committed team.
Now, I'll turn it over to Jose, who will go over our financial results in more detail.
Thank you, Pedro. Good morning, everyone, and thanks for joining us. Let me begin by joining Pedro in congratulating our entire team for all their outstanding achievements during the quarter.
During these past few weeks, in particular, our team worked exceedingly hard to ensure that the grounding of the MAX fleet had the least possible effect on our customers.
I will start the discussion of our first quarter results by reminding everyone that, as of 2019, we have adopted the new accounting standard, IFRS 16, which is related to leases. Our method of adoption was what is known as the full retrospective method.
This method of adoption allows the reader of our financial statements to compare 2019 results to the restated 2018 results that we included as part of our Q1 earnings release.
In terms of our P&L, the expenses related to aircraft leasing now appear within the depreciation and amortization line.
During the quarter, we grew capacity by 1.9% year-over-year, while revenue passenger miles increased 2.3% year-over-year, which resulted in a consolidated load factor of 83.3%, a 0.4 percentage point increase versus Q1 2018.
However, passenger yields came in 8.8% lower year-over-year, which combined with a higher load factor resulted in a unit revenue decrease of 7.7%, from $0.114 in Q1 2018 to $0.105 in Q1 2019.
Consolidated revenues decreased 6% to $672 million. On the expense side, our first quarter operating expenses decreased 1.4% year-over-year on the 1.9% capacity growth, which resulted in our cost per available seat mile decreasing 3.2% to $0.087.
For the quarter, our effective oil and fuel price averaged $2.09 per gallon, a decrease of 3.5% versus the $2.16 per gallon that we averaged in Q1 2018. The cost per available seat mile, excluding fuel, ex-fuel CASM, decreased 2.9% from $0.062 in Q1 2018 to $0.061 in Q1 2019, mainly as a result of maintenance, related to the return of lease aircraft made during 2018. As well as to lower other operating and administrative expenses, mostly related to timing.
It is important to mention that some of these expenses will show up in Q2. And our Q2 CASM ex-fuel will also be affected by the MAX grounding. So, our expectation is for our ex-fuel unit cost in Q2 to come in above the full-year guidance of $0.062.
Consolidated operating earnings for the quarter came in at $112.9 million, resulting in an operating margin of 16.8%. Looking at non-operating income and expense, first quarter generated a net non-operating expense of $14.8 million, mainly driven by net interest expense of $8 million and a $5.9 million translation foreign currency loss related to the Argentina and Mexican currencies.
In terms of net results, net earnings for the quarter came in at $89.4 million or earnings per share of $2.11. I will now turn to the balance sheet, which also reflects the capitalization of leases, given our adoption of IFRS 16. We closed the first quarter with a very strong financial position. Assets totaled $4.6 billion, owners' equity totaled $1.9 billion, our debt balance including our lease liability totaled approximately $1.7 billion, and our lease liability adjusted net debt to EBITDA ratio came in at a very strong 1.1 times.
We closed the quarter with approximately $1.4 billion in debt, more than 60% of which is fixed, with a blended rate including fixed and floating rate debt of approximately 3.2%. In regards to cash, short and long-term investments, we closed the quarter with close to $900 million. During the quarter, our free cash flow generation was close to $82 million and our cash balance at the end of the quarter represents approximately 34% of last 12 months' revenues.
In terms of fleet, we ended the quarter with 105 aircraft, 68 737-800s, 14 737-700s, 17 Embraer-190s, and 6 737 MAX 9s. For the remainder of 2019, we expect to receive 7 more MAX 9s , although we are assuming that the delivery dates of these aircraft is to be delayed versus the original delivery month.
Finally, I'm pleased to announce that the Board of Directors has ratified the second quarterly dividend of $0.65 per share to be paid on June 14 to all shareholders of record as of May 31st.
So, going back to our results and to recap, we delivered solid financial results for the first quarter. We expect demand for air travel in our region to start improving during the second half of the year. We have very competitive unit costs. We have one of the strongest balance sheets in the industry and we continue to return value to our shareholders.
Today, we're also updating our guidance for 2019. And here, I want to remind everyone that, as we mentioned during our February earnings call, the full-year guidance that we issued back then for full-year 2019 already included the effects of the adoption of IFRS 16 as does our current guidance.
Also, please keep in mind that our guidance includes the impact of the grounding of the MAX fleet from March until the assumed return to service date in the end of July. Any changes in the assumptions related to the MAX could have an effect on our guidance for the year.
We are reducing our capacity growth in terms of ASMs to approximately 1% for the year. And despite a higher fuel assumption for the year and the negative effects related to the grounding of the MAX fleet, we reaffirm our operating margin range of 12% to 14%.
Our 2019 full-year guidance is based on the following assumptions. Load factor of approximately 84%, a higher RASM of approximately $0.104, CASM ex-fuel of approximately $0.062 and a higher effective fuel price per gallon including into-plane of approximately $2.25.
Thank you. And with that, we'll open the call to some questions.
Thank you. [Operator Instructions] Our first question comes from Duane Pfennigwerth of Evercore ISI. Your line is open.
Thanks. Can you revisit why the quarter closed so much stronger than you expected in early March?
Duane, ultimately, I think we had a set of late bookings coming in in March that made it stronger. Even though we had the Easter shift going into Q2, March simply came in stronger than we were expecting and that was a good trend to see in terms of recovery. And that also led to our improving of our full-year RASM guide, given the trend that we saw on a positive way during the latter part of the quarter.
Can you offer an early view on what you're seeing here into 2Q relative to the down 8% RASM that you posted in 1Q?
Yes. Q2 year-over-year, we are seeing it slightly positive year-over-year. Back in February, we were seeing Q2 RASM slightly down year-over-year and now we're seeing it slightly positive. Very flat to slightly positive versus Q2 of 2018. And taking that into the latter part of the year in the second half, we're seeing that in kind of low single-digit improvement on a year-over-year basis. So, the trends are more positive than what we were seeing back in February.
Thank you. That's really helpful. And then just for my last one, I wonder if you could frame, to the extent you can, the joint business with United and with Avianca and to the extent you'd have any willingness to be a co-investor in Avianca. And thanks for taking the questions.
Thank you. This is Pedro now. So that agreement and that JBA still in place, our teams continue to work toward filing a probably in the next few months attorneys are involved, so that usually takes a little bit of time, I cannot comment on the rest of your question because it's really not something that's on the table for us right now. So I would be speculating.
Thank you. Our next question comes from Hunter Keay of Wolfe Research. Your line is open.
Hi, everybody. Question for you on the -- well, it's proxy season, I guess, Pedro. And I'm wondering how your Board, which usually sets pretty aggressive targets every year, is thinking about 2019 and what you might be willing to share with us around targets or metrics that will drive the executive comp this year? Thanks.
As always, executive comp is well tied to financial results. Also, to objectives. But for top executives, it's very much aligned with financial results. And it's going to be line with the higher end of the margin guidance. So, if we're within range, there's going to be compensation tied to that. But it's going to be better if we're in the higher end of the guidance. That's usually how it works in Copa.
Okay, good. And then, Pedro, can you tell us what the maybe corporate view of the new president is and what your personal view is as a Panamanian? What should we expect policy-wise out of the new administration? Thanks.
Sure. As most of you know, we had elections this past Sunday. As always, in Panama, elections are very peaceful and very straight and transparent. And by some time that same evening, we know the winner. So, it's really quite a show for strong democracy.
And the other good thing is, all of our candidates, or at least every candidate that has any chance of winning or placing, has a very similar economic agenda and economic plan. So, we do not expect major changes from the previous government or from governments of the past. And we're very confident that this government is going to put together a strong team of ministers, and they will be pro-business as always. So we're really positive.
Thank you. Our next question comes from Savi Syth of Raymond James. Your line is open.
Hey, good afternoon. I just wanted to understand a little bit more, if you could give a little bit more color on the MAX impact, in the sense --I know you don't want to call out kind of a financial number. But I was kind of curious that the guidance is stable despite kind of the MAX headwinds. Is that because MAX is not necessarily a big impact to Copa because you're able to do some offsets or if it is a big drag and kind of the underlying is much stronger than 2019 guidance.
Yes. So, this is Pedro again, Savi. We have included the impact in our guidance as far as we can know because, obviously, this situation is not completely solved yet. So, we are going by what we know right now and our assumption of the airplanes flying after the end of July.
But it is having an impact, in the sense that we're having to cancel flights, we're having to schedule delays. In some cases, long delays. We're changing schedules, so we can rotate aircraft in a more effective way. And we're also reaccommodating passengers that would otherwise -- that are filling up seats that would otherwise have generated higher yields.
We also are without the Dreams product, which is our new business class, which is a higher-yielding business class in the new MAXs. Plus, the MAXs are low fuel consumption, lower operating costs than our 800.
So, overall, there is an impact. We are managing it the best way we can and our team has done a great job so far in minimizing that impact. But it is affecting us and we can assume that we would have been raising our guidance if it was not for the MAX grounding.
That's helpful. And if I might follow-up on the unit revenue question on -- if you could give a little bit more color on how kind of Brazil and Argentina acted in 1Q. And I'm guessing the two are going to have two different path as they go forward, but just kind of generally how you think about the trend there?
Okay. So, Argentina still not looking great. The revenue outlook remains weak and it's weak over -- even over the easier comps that we will have from now on in second, third and fourth quarter. So, it looks down from a very down previous year. So, again, still weak outlook for Argentina.
Brazil is improving both in load factor and yields. Plus ASMs are down, not only Copa's, but also from most other airlines. However, it's still a volatile situation. I would say, the currency, we cannot say that it's back to strong levels of the past. So, we are very much aware of that and on top of everything, but the trends in our forecast are all positive.
And with that strength that Jose mentioned, is that related to Brazil or was it kind of broad-based, that late March strength?
Yes. I think it's more broad-based. Brazil has a portion of it, but it's more broad-based, I'd say. Again, I want to again make emphasis on the fact that Argentina is still seeing a lot of difficulty on a year-over-year basis on unit revenues. It's still challenged for the remainder of the year as far as -- as we can see.
Yes, but most other markets are showing positive trends.
Thank you. Our next question comes from Michael Linenberg of Deutsche Bank. Your line is open.
Yes. A question -- I don't know if it's Pedro or Jose. When you look at how your assumptions or guidance has moved over the last sort of four, five, six months since you first introduced it, I think the original RASM was at $0.0104 and then it dropped down to $0.0102 and back up to $0.0104 and it's been following the movement in fuel prices. And I know, at this point, just looking at the margin differential year-over-year, you're clearly not recapturing a 100% of the move in fuel. But it sounds like that percentage will improve as we move through the year. Maybe, Jose, can you tell us sort of where you are as it relates to recapturing that higher fuel through revenue and where do you think you are by year-end? And I know that, in the past, you have had quarters where you were able to recapture 100%. We've seen that in the past. So, do we get to 100% by year-end or is that just being too aggressive on our part?
I think we are still in recovery mode. And I'd say that the rest of 2019 is still in recovery mode. The trend is positive in terms of RASM going forward, and we're seeing that. I wouldn't say necessarily that we will capture every single cent of fuel increase in the yield, but it is certainly in a very positive trend right now, in the way that we're seeing it. So, Q4 year-over-year is looking better than Q3 and which is looking better than Q2.
Okay. That's helpful. And then, just back to the MAX question. I know that, at this point, you're not giving us a number. But I'm curious about what the response has been from passengers in some of the markets where you rolled out the MAX 9 with the flat-bed product. If I look at a market like San Francisco-Panama, it's over 7 hours. The fact that now you're back to an 800 and I suspect that you're probably dealing with some tech stops in some of your markets on certain days of the week or certain times of the year. Have you seen a fall-off in your revenue in some of those markets? Are people booking away from you and taking a flat product on, say, a US carrier or another carrier in some of these connecting markets? Anything that's discernible? Or is it just you're holding on to the passengers and they're just dealing with a less attractive product on some of these longer hauls?
Yes. It's hard to tell, Mike. It's very, very hard to tell. We're keeping up our loads, so we would think that we are holding on to passengers. But I'm sure we're losing some. It's just kind of very hard to tell right away. We'll probably have better visibility later as this progresses, but there is a mix of everything. So, I'm sure some are staying with a lesser product.
Our premium product on the 800s, which is what we are flying in long markets like San Francisco, it's quite okay. And it's what we had for a while. But, obviously, the Dreams product is a few notches above that.
And then, we are also suffering from tech stops, of course. But still kind of a short-term impact. So, I don't think it's affecting us that much in the sense of what you're seeing right now.
Our next question comes from Helane Becker of Cowen. Your line is open.
Hey, guys. It's actually Conor Cunningham in for Helane. Just -- sorry to ask about the MAX, but at what -- so you have the plane out through July. At what point would you be forced to take the plan out for longer? Is it like late May or what's the date on that? Thank you.
We don't mind a MAX questions. The MAX, it's going to be a great aircraft medium to long term. It had very serious issues, obviously. Nothing more serious an an accident or two accidents, to be more precise. But we know it's going to be fixed and we have full confidence on the aircraft.
But in the meantime, we're dealing with a tough situation. So, we're going through the end of July and we expect to have much better visibility by the end of May. So, by the end of May, we should know if the July date is the right one or if we need to extend it. And if it can fly before, we'll fly it before even if it would be hard to add back the flights that were canceled, but we'll put it in the air and we'll cover San Francisco and markets like those if that was to happen. So, again, at the end of this month, we should have much better visibility.
Okay, great. And then, on Wingo, I was a little surprised to hear the positive commentary about that. We've heard consistently throughout earnings season that leisure demand was challenged in 1Q and into 2Q. And just curious on how Wingo outperformed that trend in a seasonally weak demand period?
Well, I think that our commentary on Wingo -- first of all, we don't really publish results related to Wingo. But our commentary on Wingo was mostly related that it's making -- it's a great product that passengers like in the Colombian market and it is performing ahead of our expectations in terms of where we were before Wingo. And we believe it's a great product and it's a good -- it's a good entry into the LCC landscape.
Right. But it's still only 2% of our ASMs. Wingo is still a small part of Copa Holdings. And the Colombian market, it's a tough market, domestically and internationally. So, we did not necessarily say that Wingo, it's doing -- outperforming the market or anything like that. But it's doing as well or better what we expected at this point in time.
Fair enough. And then, my last one is just on your network. So, despite all the issues that have happened in Latin America and the problems with MAX, the network has been pretty balanced and consistent over the last couple of years. I'm just curious about over the next three to five years, like where do you see the largest amount of growth opportunities for you, especially as the MAX becomes a larger portion of your fleet? Thank you.
Yes. In the last few years, we've been very careful with capacity additions and we've kept capacity in a way and at a minimum growth rate. And I think that has helped us to conserve our strength and have positive results even in a tough market. But we have a lot of flexibility in our fleet plan. So, we're in a really good position to take advantage of any growth opportunities in the future as they will probably arrive.
And we plan to continue strengthening our current business model, which we've had for a while, and it's based on a very strong hub in Panama connecting all of the Americas, adding frequencies and destinations. So, we're going to stay true to that business model. And obviously, we will also take advantage of any opportunities that will present for Wingo. And we mentioned in the last earnings call that, at the end of this year, we're going to a switch the four Wingo 700s for 800s and we're also going to add a fifth 800 early in 2020 and will add additional 800s to the Wingo fleet as they continue succeeding and having more opportunities.
Thank you. Our next question comes from Dan McKenzie of Buckingham Research. Your line is open.
Yes. Hey, thanks, guys. Just based on the conversations I've had this morning, investors are trying to differentiate Copa self-help initiatives just versus broader trends getting better. So, the question is really on all of the small initiatives that can collectively make a difference to ancillary here. So, on the ancillary side, what was the collective revenue contribution from the new initiatives in the first quarter? And if you could, wonder if you can just break out kind of the bag fee contribution versus premium upsell ramp-up and maybe comment on other initiatives that are just pulling up here.
In terms of ancillary, we have communicated and guided to an additional $20 million in 2019. And we should say that we're on track to achieve those $20 million this year. It's not going to be equally distributed by quarter. It will pull up as the year progresses and there will be more in the second half of the year than in the first and second quarter. So, I would not say that there is a great difference in Q1 '19 versus Q1 '18 based on those small initiatives. There are cost initiatives and there is a cost benefit, but on the revenue side, it's mostly regular passenger revenues more than the other stuff.
I'd say the only thing, Dan, is that -- ancillaries for us is about a 3% to 4% of total revenue and that is, I think, encased in seats, in upgrades, our baggage program and loyalty, and that includes kind of the net effect of loyalty, including the non-air part and kind of the net effect of the air miles. And actually, as per the way that we present our revenues, the non-air side, you can see it in other operating revenues. So, you can see there that Q1 '19 versus Q1 '18, there is an increase of about $3 million. Most of that is related to the non-air mile program growing as a program they are -- ConnectMiles program is growing.
Okay. Appreciate that. Secondly, I wonder if you can comment on leisure versus business bookings. The booking data that's out there is just a partial picture, but it did show strength at the end of the 1st of March and that's consistent with the commentary. But it seems to be showing a little weaker start to the second quarter, which suggests volumes are down, pricing is a little bit higher. But just sort of what you're seeing specifically on the corporate side versus the leisure side.
On a passenger basis, passenger percentage breakdown is around 35% for the year so far. And that translates to around -- almost half of our revenues from business passengers. And then, the rest is leisure. So, leisure being 65% of our passengers in the year, which is really not that far away from where it has been in prior years. And that's, of course, leisure and VFR, of course, right.
Yes. But what are you seeing in the trends there, Jose? Are they [Multiple Speakers]
No real discernible change in the trend so far in the year.
Thank you. Our next question comes from Ricardo Alves, Morgan Stanley. Your line is open.
Hi. Thanks gentlemen. Thanks for the call. I apologize if I missed this. I got disconnected for a bit. But just -- I just wanted to move away from the Brazil and Argentina discussion, if you guys could give just a quick update on other markets on the competitive dynamic that you see in the capacity additions. I was interested specifically on Colombia, if you see going forward a little bit of more rational environment in terms of capacity. So, interested on that market. But, also, if you could give just an update on the Caribbean and Central America routes, those that are related to the US because we saw some added competition, I think, I guess, from some US carriers earlier this year. So, just wanted an update there as well. Appreciate your time.
Okay. So I'll give you like an overall overview to cover all of those questions. So, in general terms, we're seeing positive -- we have a positive PRASM outlook in most markets, which results in a net-net positive PRASM outcome for the Company. For the second quarter, Jose already alluded to that. So, flat to slightly positive. And then, a more positive for the third quarter. And again, that comes from most markets with a few exceptions.
And in terms of capacity from other airlines, most of the adds that we're seeing are from US airlines, mostly US LCCs adding capacity to Central America and the Andean Pact. That's where we're seeing the most capacity increases. The rest of the market and airlines, including ourselves, are keeping capacity growth quite under control. In the case of Colombia, Columbia is getting some capacity additions from the US, as I just mentioned. And then, we've heard Avianca make some announcements about reducing their fleet and delaying deliveries in the coming quarters and years and some route cancellations. So, we would expect capacity growth in and out of Colombia to also come down as a result of that in the coming quarters.
Thank you. Our next our next question comes from Rogerio Araujo of UBS. Your line is open.
Hi, gentlemen. Thanks very much. My question was just answered. Congratulations on the results.
Thank you, Rogerio.
Thank you. Okay, thank you all. I believe this concludes our earnings call. Thank you for being with us today. Thank you for your continued support and we'll see you the next time. Thank you very much.
Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.