Siemens AG Q1 Earnings Call Transcript

123jump.com Staff
31 Jan, 2010
New York City

Revenues fell 11% to

Siemens AG ((SI))
Q1 2010 Earnings Call Transcript
January 26, 2010 2:45 a.m. ET

Executives

Mariel von Drathen – Head of Investor Relations
Peter Loescher – President and Chief Executive Officer
Joe Kaeser – Chief Financial Officer

Analysts

Andreas Willi – J.P. Morgan
Scott Babka – Morgan Stanley
Peter Reilly – Deutsche Bank
Gaël de Bray – Société Générale
Olivier Esnou – Exane BNP Paribas
Michael Hagmann – Nomura
Colin Gibson – HSBC

Presentation

Mariel von Drathen

Good morning, ladies and gentlemen and welcome to Siemens'''' first quarter fiscal year 2010 conference call. As usual, all relevant documents like the earnings release, the flashlight and other documents were published at 7 a.m. this morning. You can download all these files from our website. This morning''''s presentation is now online and this morning''''s call is being webcast via the IR website.

Our President and CEO, Peter Loescher and our Chief Financial Officer, Joe Kaeser, are here this morning to review the Q1 results. After his speech, Peter will have to leave for the annual shareholder meeting. We will then have time for Q&A with Joe. And with that I would like to now hand over to Peter.

Peter Loescher

Thank you, Mariel. Good morning to everyone. It''''s our first earnings call of the year and may I just wish you all a very successful year ahead. I''''m glad to point out that Siemens had a robust start to the fiscal year 2010. And with then, without any further delay, I would like to just walk you through the highlights of the quarter. As expected market development was mixed in the first quarter.

On a comparable basis, order were down 11% versus first quarter 2009 but stabilized at the level of the fourth quarter, supported by some very large orders. Let me name a few. In Industry, the Mobility division won a major contract of up to 580 million euros to supply regional trains for the 2014 Winter Olympic Games in Sochi.

In Energy, we saw continued activity in renewables with contracts for six large onshore wind farms in North America worth 600 million. In addition, our transmission won a 128 million euro contract to provide the grid connection for the largest offshore wind farm, London Array. Revenue as expected was down 8% year-on-year on a comparable basis, backed by our robust backlog from 2009.

However, profits at Siemens rose strongly across the board with total sector profit up 11%, reaching a record high of 2.3 billion euros. There are a couple of factors working together here to produce these exceptional numbers. Clearly, the cost actions we took at a very early stage, like our SG&A program and progress in our supply chain initiative are now paying off.

For example, our SG&A costs for the quarter are 2.5 billion euros, down from almost 2.9 billion euros in Q1 2009. This combined with our continuing efforts to further increase our efficiency and working capital and CapEx is having the effects, we wanted on profitability as well as cash flow. I would also like to point out that demand is stabilizing in the short cycle industry businesses albeit on a low level and continuously sluggish end market demand.

Customers in this area ran their inventories down drastically throughout 2009 and some of them spent the last three months of the year restocking just as drastically at above normal rates. You can see this for example at Industry Automation and OSRAM which additionally benefits from strong LED demand. Other than in previous years, we started the year with outstanding positive free cash flow of 725 million euros fueled by strong cash conversion across all sectors.

In addition, we continued strengthening our strategic focus. In the first quarter, we divested the Draeger Medical stake and the airfield lighting business, which was part of our Mobility division. Within the industry sector, we have transformed the Low Voltage business, transferred the Low Voltage business from Industry Automation into the Building Technologies division and integrated all Low Voltage activities into a new business unit called Low Voltage Distribution.

With this move, we strengthened our Building Automation focus and we create synergies in both technologies and market access. Looking at our overall performance, we can take considerable comfort in the health of our order book.

The stabilization of first quarter orders from the fourth quarter led to a book to bill ratio of 1.09. The ratio was above one in all sectors and across all regions. This helped increase the backlog from 81 billion euros at the end of the first quarter to over 83 billion in the first; of which around 32 billion will convert into sales in the remainder of this year and 51 billion in 2011 and beyond. As I''''ve said, it was a quarter where we showed our improving ability to convert top line into even better profit performance through our stringent execution and cost management.

Despite revenue levels well below last year, the sector profit performance was impressive. Net income showed a significant improvement of 24% and this led to a basic earnings per share of $1.70 in the first quarter.

Now let''''s take a closer look at the geographical development, how the orders are shaping up in the sectors and quarterly margin performance. The regional shift in demand towards emerging countries can be seen in our top line. Important regions like China and India showed 8% and 15% organic revenue growth year-on-year.

On the other hand, we clearly see a continued weakness in our core European end markets. Looking at the order side of our businesses, we don''''t believe that we have seen the end of volatility and uncertainty. In our longer cycle businesses such as Industry Solutions, Building Technologies and in parts of Drive Technologies, order activity has continued to slow.

With the exception of renewables, we also see a similar slowdown in the energy infrastructure markets, which typically lagged macroeconomic cycles. Market contraction leads to price pressure in the energy markets. In general, margins in the first quarter came in at improved levels within all divisions.

Clear stand-outs were OSRAM, with improved capacity utilization which was fueled by strong LED demand and the lighting season. LED accounts now for 14% of our lighting business. Imaging and IT supported by a favorable product mix and positive currency effect and Fossil Power generation combining strong project execution with excellent development of the service business.

We continue to move forward with actions to realign our capacities, where necessary to match customer demand in a concise but also in a responsible manner. We''''re seeing improvement both internally and externally, but challenges are real and in some cases increasing, so we''''re not out of the woods yet and our expectations for the year reflect this. We are realistic, given the volatility of the markets and the work we have had.

With these final remarks, over to you, Joe.

Joe Kaeser

Thank you very much, Peter. Good morning. A very warm welcome to all of you and I do realize that it''''s, kind of, early West of the Atlantic. I''''ll keep my part short and simple this morning by showing only two slides before we move straight into the Q&A and the first slide is about our net debt development.

Mostly due to our stringent asset management efforts as well as a very decent EBITDA development, we kept the lower leverage -- we kept the low leverage ratio of about 0.3 times adjusted net debt over EBITDA. This provides continuous financial and strategic flexibility in still at times volatile markets.

Strong profitability and further progress in working capital management drove operating cash flow to 1.1 billion euros. Trade receivables constituted approximately 300 million euros to operating cash flow, compared to a negative 536 million euros in the prior year''''s first quarter.

Net working capital turns remained at a -- what we believe, satisfactory level of 8.2 times even due to the fact that billings in excess were declining in parts caused by reduced levels of customer prepayments. All these efforts contributed to an excellent cash position of 10.4 billions and a reasonably low net debt level of 8.6 billion. We continued our stringent approach with regards to CapEx; however, with CapEx rates unusually low in fiscal Q1 2010, you will see a catch-up of investments in the coming quarters, especially considering the expected mid-term shift in regional demand.

Even with this, we plan to stay well within the CapEx target rate of 0.95 and 1.15 times depreciation. Before moving to your questions, a remark on our working assumptions for fiscal 2010, which we have laid out at our analysts'''' conference in London, December 3, 2009 and also posted on our Investors Relations Internet site January 11, 2010.

We''''re not going to change that assumption today. We will review them after we have the second quarter results. While we realize that fiscal Q1 numbers have been strong and our cost actions such as SG&A were effective, there is still little support from most of our end markets, neither coherent nor sustainable in our view. We have also experienced favorable impact from items like commodity and currency hedging as well as a favorable product mix.

We maintain our working assumptions that demand in long cycle businesses will continue to slide in the first half of 2010 and the short cycle units are expected to pick up in the second half of the year. Management actions to improve the businesses and their cost structure will continue in a specific and tailored business by business approach. As announced previously, we do expect substantial severance charges in the coming quarters of fiscal 2010 and cash outflows related to charges such as capacity adjustment measures from prior quarter.

With that, ladies and gentlemen, I''''d be happy to take your questions.

Question-and-Answer Session

Operator

Our first question now will come from Andreas Willi with J.P. Morgan. Please go ahead.

Andreas Willi – J.P. Morgan

(technical problem) as those may be relative to Q4. And the second question on your Low Voltage business which, where you disclosed the financials yesterday. It''''s basically around breakeven for a business that for some of your competitors does 15% plus. Maybe you could give us a little bit more information on what''''s wrong with that business, both is it a company specific issue or is it the geographies it''''s in or just less attractive than what we normally see in Low Voltage industries?

Mariel von Drathen

Andreas, we did not hear your first question. Could you repeat it, please?

Andreas Willi – J.P. Morgan

The first question was on the hedging gains, whether you could quantify them for this quarter?

Joe Kaeser

Okay. All right. Good morning, Andreas. On the hedging gains, they are basically twofold, one obviously being currency and the other one being commodity hedging as far as the year-on-year comparison is concerned. On the currency hedging, we basically have favorable impact predominantly in healthcare which is about a 60 million plus hedging impact year-on-year, mostly in imaging. And as far as commodity hedging is concerned, there is about a 230 million swing year-on-year from Q1 2009 as compared to 2010, basically due to the fact that especially copper pricing has been way up for the market.

The mark-to-market gains obviously have turned from a sharp negative to a moderately positive market value. So that''''s just about the hedging impact. So the commodity hedging impact is about half industry and about half energy, just as a ballpark number. Hedging gains outside healthcare have been not really material. On the Low Voltage business, obviously, yeah, it has had a reason why we took actions here. The good news is if we are breakeven and the market allows 15%, it''''s got some potential obviously. But there is a series of actions we need to take. One is the regional distribution of resources versus markets. The other one is a go-to-market optimization. You may remember that both Peter and I have discussed the matter Building Automation and combining certain assets the company has within its portfolio in a meaningful way has been a strategic topic we''''ve been discussing for quite some time. Now, this is the main resolution to it. We do expect a better go-to market and better technology synergy and cost reduction actions from that move. But yet the move doesn''''t provide us any gains. We need to work that out by corresponding actions. Okay.

Andreas Willi – J.P. Morgan

Maybe on the hedging gains, you said it''''s a swing of two-third year-on-year. But what was the, in terms of the commodities, what was the -- basically just the positive in this quarter, what would it have been without the gain, the commodity hedging given it''''s a reasonably large number?

Joe Kaeser

Yeah. The quarterly gain has been much, much less than the swing of course because last year was basically fiscal Q1, the market values on all commodities has been about 180 million negative and that turned to 50 plus in Q1. So if you only look at the 50 at Q1, it''''s a 50 million, round about 50 million plus and that''''s about half between industry and energy.

Andreas Willi – J.P. Morgan

Thank you very much.

Joe Kaeser

Sure.

Operator

Our next question comes from Scott Babka with Morgan Stanley. Please go ahead.

Scott Babka – Morgan Stanley

Great. Good morning, Joe. Just a quick question on pricing. You talked that''''s the biggest swing factor or the reason for conservatism in the guidance statement. What have you seen so far in the quarter in terms of pricing on the backlog as well as what''''s been executed that can give you an indication for the rest of the year? Thanks.

Joe Kaeser

Yeah. Thanks Scott. On the pricing matter, first of all we need to, I think, clarify that our pricing number which we have laid out in our working assumptions, of course, also includes already pricing which is in the backlog and will materialize as price decline in 2010. I would assume that''''s about a third -- around about a third of what we have been laying out as this working assumption. The second topic is on pricing in general. From what we see is that especially in the shorter cycle business environment such as Industrial Automation, we see good pricing discipline even though there is a massive capacity under-utilization in terms of equipment utilization. And we have also not seen competitors taking advantage from a material deviation of the euro-U.S. dollar currency as compared to last year, so that one is reasonably disciplined, where we do see weakness in industry is definitely industrial solutions, especially in the metals environment, which goes mainly however into the backlog and is related to bookings, where we do also see pricing pressures is the drive environment where we do see especially local competitors being extremely aggressive.

We do know already about the topic of renewables onshore that has not improved if at all, that it gets more and more serious on onshore, offshore is still reasonably strong. And the T&D environment, as demand slows and the local competitors especially in the Asian, in the dynamic Asian region are getting more aggressive, we do expect this to be the center of weakening pricing environment. All in all, so far we have not seen anything which would basically lead us to a more unfavorable pricing judgment at this time. So if matters remain as they have been in Q1, there is definitely some upside on the pricing front.

Scott Babka – Morgan Stanley

That was great. Thank you very much.

Operator

Our next question now will come from Peter Reilly with Deutsche Bank. Please go ahead.

Peter Reilly – Deutsche Bank

Good morning. Two questions, please. Firstly, can you give us a bit more color on what''''s happening in diagnostics? You talk about losing ground in large markets and I know there was some market share loss during the initial consolidation because of product overlap and so forth. But if you could explain what''''s happening in Diagnostics and how you''''re addressing that. And then secondly, there''''s an interesting comment in the Flashlight. You talk about in the Fossil Power Service business, a peak profit contribution from service. I just was surprised to see peak. I would have thought this would be the wrong time of the cycle to have a peak contribution. So can you explain why you think the Fossil Service has already peaked?

Joe Kaeser

Sure. On the diagnostics piece, I mean, if it''''s not satisfactory then we compare our business assumptions based on the acquisition which had a, as you all agree, a reasonably rich price tag. And if you compare that anticipated growth at that time to what we are seeing right now, it is not up to our expectations. On the Fossil Power Services, look, I mean, last year was a different behavior from our customers when they decided to have the turbine serviced. This year it was interestingly late in fall. I mean, we do what our customers expect us to do. It was important to us to give the market the prudent update on that fact that the Fossil, the oil and gas divisions have been benefiting from an unusually rich service business in Q1. That may not be the same in Q2. That''''s I guess what''''s behind that matter.

Peter Reilly – Deutsche Bank

And if I could just please come back on diagnostics, I know growth has been disappointing in that business and has been a challenge for some time. But are you saying it''''s continuing to be disappointing or it''''s actually getting worse than you expected three, six months ago?

Joe Kaeser

I don''''t know. I was just commenting on the performance of fiscal Q1 in terms of the top line. We are satisfied with the bottom line obviously which has also been supported by good progress in the integration now of the diagnostics division into Siemens. But by the same token the growth has not come up to our expectations and that was solely related to fiscal Q1 and we take it from here.

Peter Reilly – Deutsche Bank

Thank you very much.

Joe Kaeser

Sure.

Operator

And our next question will come from Gaël de Bray with Société Générale. Please go ahead.

Gaël de Bray – Société Générale

Thanks very much. Good morning, everyone. In the press call this morning, you highlighted that short-time work in Siemens cannot be really used where there are long-term structural changes to markets to the competitive environment or technological changes. Could you maybe discuss a bit more some of the specific businesses or geographies you are referring to in this statement? The second question is related to Industry Automation, which has apparently benefited from restocking by customers in Q1. Could you maybe help us understand a bit more precisely how much was the effect on the top line this quarter, how much was the effect on the margin? And maybe are you talking about restocking or simply the mechanical positive effect coming from the end of de-stocking? Thanks.

Joe Kaeser

Okay. All right. Thanks. Thanks, Gael. On the structural versus short-time work capacity, which has been said, as you have heard Peter say on the press call there, it was not really a specific division at this point in time. We will diligently discuss the matter with our workers'''' representatives the day after tomorrow and then we''''ll take it from there. It''''s just a matter of courtesy and respect. By the same token, if you have closely listened to the speech which we actually have been giving, then you''''ll probably know where the divisions, what divisions are being effected by. In general and we must all make that clear, we want to make sure that we do the best for all the stakeholders. It does not do any good to let people go and then hire them again in six or 12 months from now when the process resumes. So therefore we do very much appreciate it, the instrument of short-time work for everything which is of temporary matter.

If we see structural changes, that means that in any point in time we do not see the market recover to levels of 2008, then we, of course, take decisive actions in terms of reducing all the free allocating resources. And we''''ve talked about the matter several times that we do not expect the industrial world to be back any time soon on 2008 levels. But we are also, by the same token, reasonably sure that the geographic mix of a recovered industry sector will be materially different from what it used to be in 2008. And that''''s exactly what we are addressing by structural changes, which some of them we are going to announce the day after tomorrow.

On the Industrial Automation, it''''s difficult to say how much that will affect the top line of course because if distribution channels order again that would actually be desirable. The only one thing we want to make clear is that we do not yet see consistent signs of recovery at the end markets. Both of -- most of the recovery we have seen in Q1 was related to re-filling the distribution channel. On the margin, that helped a lot because there was some favorable mix in terms of toolmakers and high margin businesses which had products which had been ordered. So there was some significant material positive impact in Q1 which we do not expect to see in Q2 that early again.

Gaël de Bray – Société Générale

Okay. Thank you very much.

Joe Kaeser

Sure.

Operator

Our next question comes from Olivier Esnou with Exane. Please go ahead.

Olivier Esnou – Exane BNP Paribas

Yes. Good morning. Olivier Esnou from Exane. Two questions please. I understood that part of the reason why Q1 came a little bit higher than your guidance a few weeks ago was the strong dynamic in December. Can you discuss a little bit more what kind of a trend you saw during the quarter and specifically which divisions surprised you in December? Secondly, there were some comments on the wires regarding M&A, acquisition and disposal. Can you tell us a little bit what is in your mind this year in terms of acquisitions and disposals? Thank you.

Joe Kaeser

Well, the second answer is a rather quick one. Yes, I could but we prefer not to do it at this time because we should talk results and not we think, not what we think is necessary. So please bear with us on that matter. There''''s a lot in the newspapers. We realize that but then again as soon as we have results anywhere we will diligently also inform the markets about those results. On the divisional aspects, I mean, if you looked at the trading update from January 11, 2010, you probably have noted there was a CFO who was in parts more optimistic than we used to be, especially we said we do see light at the end of the tunnel in some short or early cycle environments and the light will come from OSRAM. For the ones who have not figured it out at that time, know now what that was meant to be. We see a very, very active market in LED. And as you all know, LED is semiconductors and semiconductors can go up really fast in profitability, but they also can go down really fast. It''''s a kind of a fast-moving market. We have seen some real upside here which materialized in December.

I do not expect the dynamics of LED to come to an end any time soon, but then it can also go rather quickly. So we all know what we need to, how we need to deal with semiconductor environments. The other topic, of course, was that the service part in Energy was much more active than we thought. We also said that we will have a very clean and good execution on major projects. So all in all, I think there was some guidance towards a strong quarter. I think that''''s what I said, expect a strong quarter. So there was not a real surprise on the one hand. But we also do know that a favorable product mix, that currency and commodity hedging effects are topics which you just cannot expect to come in every quarter. So therefore, we are -- I''''m satisfied with the quarter in terms of profitability, but we do not see yet coherent support from the end markets. So we need to still be on top of cost efficiency, productivity and also do structural changes now as the market is in a situation where this is necessary to do.

Olivier Esnou – Exane BNP Paribas

Thank you.

Joe Kaeser

Sure.

Operator

We''''ll now take a question from Michael Hagmann with Nomura. Please go ahead.

Michael Hagmann – Nomura

Good morning. Several questions, if I may. First one is in respect to restructuring. And, Joe, I don''''t want to put you on the spot given that you said you will have discussions with the work councils in two days. But the pronounced weakness that we are seeing in the late cycle businesses and the price pressure that seems to be coming with it obviously calls for probably major restructuring. So any insights that you can give us on the restructuring that you think you may need to do, the cost associated with it for an indication if we will get a comprehensive update in two days would be very helpful. Second, on the situation in T&D it sounds as if the price pressure has been quickly spreading from distribution transformers into other areas, such as the high voltage transformers and the substations. If you could just give us an indication on how big that price pressure is? And maybe give us a bit more indication on the price pressure that you''''re seeing in Fossil? Thanks.

Joe Kaeser

Okay. Hi Mikey. On the restructuring, you said it already, there is not much to add on the topic. By the same token, one should not expect a major, major headline the day after tomorrow. I mean, we are going diligently site by site, business by business. This is not going to be a comprehensive, big, mass restructuring announcement. As Peter said, we are responsible and decisive. We look into the markets. We also take into consideration and I think that''''s very important. We also take into consideration the backlog. I mean of course there has been weakness in the billings last year. There has been a considerable year-on-year reduction in the bookings while quarter-on-quarter has been stabilizing. So one should not under-estimate the power a rich backlog gives in the long cycle environment. So do not expect major topics to be announced the day after tomorrow.

We work one matter after the other and make sure we do the right things for the shareholders, the companies and the stakeholder in a sustainable way. So therefore, one matter at a time and we understood -- want to understand the market, our opportunities and whether or not this is temporarily or whether it is structural. It''''s a hard task to calculate a business plan and the return plan, letting people go for half a year or a year and then hire them back. So therefore, one needs to be diligent and not jump into matters too quickly just because matters are difficult. And this short-time work, if someone does it right, then that offers a lot of opportunities too. On the pricing, you all know I''''ve been quite cautious on the matter that continued over-capacity eventually will lead to pricing pressure in that area and here we go. And you are right, Michael, it is about high voltage, it is about substation. And especially in substations we have seen projects go over the counter at 16% to 20% less of what they used to be last year. But there is also productivity on the other hand. So, yes, we do know about pricing. We have seen it coming much earlier than some have I guess have been willing to admit. The fact that we have seen it coming earlier should give you also the comfort that we take actions to cushion the negative impact.

Michael Hagmann – Nomura

Just on Fossil, if you could give us a little bit of an update on that.

Joe Kaeser

Yes. Fossil. Fossil has a rich backlog, rich in volume and also decent in margins so one should not expect worse margins in the backlog of Fossil as compared to what we have currently in the P&L. So that should give some comfort on that matter. So if and when the company executes well as it has done for several quarters in a row now in that division, that should actually be a stabilizing element. The question whether it''''s a -- whether the margins are as this quarter or as they have been a year ago predominantly are dependent on what the impact of the service volume is going to be. What we do see though in the sales funnel, so that''''s one before order intake, we do see that utilities and customers can wait in order to abort new contracts. And time will tell who blinks first, the utilities or the equipment suppliers, but there is reason to believe that pricing could be down as much as 5% to 10%. But then again, time will tell.

Michael Hagmann – Nomura

Right. Thank you.

Joe Kaeser

Sure.

Operator

Our final question for today comes from Colin Gibson with HSBC.

Colin Gibson – HSBC

Hi there. It''''s Colin Gibson from HSBC. Three questions please, if there''''s time. First of all, just could you give us any kind of color or comment on Nokia Siemens Networks this quarter? There have been press reports in Scandinavian media that Nokia Siemens Networks is more aggressively back in the market bidding for contracts at more “realistic” prices. Do you have any color you can add to that? Second question on Industry Automation, could you please clarify? You make some comments in the report about restocking. Where do you see that business in the restocking cycle and will that continue for one or more further quarters?

And lastly, this quarter brings you in quite a long way ahead of your -- the run rate implied by your full year guidance. I appreciate of course that there is always seasonality and other factors that means you''''re unlikely to track that run rate perfectly as you go through the year, but I think in Q1 you are 44% ahead of the guidance for the full year, 6 billion to 6.5 billion of total sector profit. What is it that''''s going to get progressively worse through the year? Is it just the pricing that you''''ve already discussed during this call or are there other factors that mean that we should be looking for total sector profit of 6 billion to 6.5 billion rather than the rather higher number implied by these results? Thanks.

Joe Kaeser

Hi Colin. Well, on NSN, the fact that we had a decent or we had decent quarter numbers in NSN does not mean that we are over the hill in that industry and with that asset yet. While I would not -- I would not overestimate some comments on NSN getting orders based on price because they have a very stringent limit of authority process also in the company. Truly, NSN still has the work of -- a lot of work to do. There, as you know and that''''s been announced, there will be significant restructuring charges in our fiscal Q2, which is their fiscal Q1. And so that will definitely give different numbers in our fiscal Q2 quarter as far as equity investors are concerned. So NSN Siemens has made its way back into the market, winning also especially important fourth generation network orders, but it is going to be a constant struggle in that industrial environment. On Industrial Automation, definitely the division has been benefiting from commodity pricing hedges and it has also been benefiting from a very favorable product mix in terms of distribution orders.

As you probably remember, I said distribution needs to at least have a $0.60 to $0.65 per euro drop to the bottom line if and when volume resumes. They have delivered on this one actually, a little more positive even. And that should actually continue; however, I would not expect, I would not expect Q2 to be as strong in the top line because due to the fact that we do not see the end market yet on a consistent recovery path. So, therefore, there should be a lesser top line and a materially lower margin what you can expect in Q2. In terms of guidance, I mean, of course it has been a strong quarter as I said and the downside to the working hypothesis has not become bigger. Let me put it this way and there is nothing else to say. We will review the guidance. We''''ll talk about it when we see us in April and with that I guess we should leave it at that.

Colin Gibson – HSBC

Thank you.

Joe Kaeser

Sure.

Operator

Ladies and gentlemen, that will conclude today''''s question-and-answer session. I would now like to hand the meeting back to Mariel von Drathen.

Mariel von Drathen

Thanks a lot everyone for participating in this call this morning. Give me or the IR team a call with any remaining questions. Have a good day. Bye-bye.