Hello, and welcome to the Signify First Quarter Results 2024. Throughout the call, all participants will be in listen-only mode, and afterwards there will be a question and answer session. Please note, this is limited to one question plus one follow-up. Today, I am pleased to present Eric Rondolat, CEO, Željko Kosanović, CFO, and Thelke Gerdes, Head of IR. Please go ahead with your meeting.
Good morning, everyone, and welcome to Signify's earnings call for the first quarter, 2024. With me today are Eric Rondolat, CEO of Signify, and Željko Kosanović, who has recently been appointed as Signify's CFO, succeeding Javier van Engelen. During this call, Eric will first take you through the first quarter highlights, after which Željko will present the company's financial performance. Eric will then come back to discuss the outlook for the remainder of the year, and after that, we will be happy to take your questions. Our press release and presentation were published at 7:00 A.M. this morning. Both documents are available for download from our investor relations website. The transcript of this conference call will be made available as soon as possible. With that, I will hand over to Eric.
Thank you, Thelke. Good morning, everyone, and thank you for joining us, today. Let's start with some of the highlights, for the first quarter, 2024 on slide 4. In the first quarter, we saw improving dynamics in our U.S. professional OEM and consumer businesses, while the market in China remained soft and the European professional business was substantially below our expectations. We increased the installed base of connected light points from 124 million, in Q4 last year to 126 million at the end of, Q1 this year. LED-based sales were 87% of total sales, compared to 82% one year ago. Nominal sales declined by 12.5% to EUR 1.468 billion, including a negative currency effect of 2.6%.
Comparable sales declined by 10.1%. Overall, the Adjusted EBITA margin decreased by 60 basis points to 8.3%, due to the under absorption of fixed costs, despite an improvement of the gross margin. Net income came at EUR 44 million compared to EUR 28 million in Q1 last year. The year-on-year improvement is mainly driven by lower financial expenses and higher income from operations. Finally, we delivered EUR 80 million of free cash flow during the quarter as we continued to improve our working capital. During the first quarter, we successfully implemented our new organizational structure, effective April first. It has received strong support internally and externally, as it brings an enhanced focus and accountability to our businesses from an end-to-end market perspective.
In terms of our reporting this quarter, we will only report sales and comparable sales growth by business, as during the first quarter, proceedings with our social partners were still pending. As of Q2 2024, we will report sales and adjusted EBITA by business. We will provide 2023 and Q1 2024 comparable financials for sales and profit by business by the end of June 2024. So let's move to slide 5, starting with the professional business. Nominal sales in Q1 were at EUR 943 million, with comparable sales showing a decline of 7.6%, mainly due to weak professional sales in Europe, offsetting moderate growth in India and emerging markets. We saw a much more resilient performance in the US market from a top-line pricing and also bottom-line perspective.
Moving on, to the consumer business on slide 6. Nominal sales were at EUR 299 million, with comparable sales showing a decline of 5.7%. Overall, we saw sequential improvement compared to previous quarters of our connected business. We also saw inventory levels of retailers return to normalized levels. Continuing with the OEM business on slide 7, nominal sales in Q1 were EUR 103 million, with comparable sales showing a decline of 7.4%. On a sequential basis, we are starting to see improvements as inventory levels of OEM returning to normalized levels in the majority of our business. And finally, the conventional business, moving to slide 8.
Nominal sales in Q1 were EUR 119 million, with comparable sales showing a decline of 34.1%, reflecting the full impact of the fluorescent bans in Europe, while in Q1 2023, we benefited from a pre-buying effect. Let's move to slide 9, where I would like to discuss a couple of business highlights, starting off with two highlights of our professional business. So in Austria, we equipped the Vienna City Hall with Color Kinetics connected LED lighting. We completely renovated the festive lighting and installed over 1,100 Color Kinetics luminaires. The installation results in lower operating and maintenance costs, while generating energy savings of up to 50%. We also introduced LumXpert, an industry-first application for professional installers. The app simplifies and accelerates lighting projects.
The in-app design tool enables project management and professional lighting calculations. Users can buy all Signify brands directly from our distributors with competitive delivery times. We expanded the collaboration between Philips Hue and Samsung SmartThings, aimed at optimizing the interaction between the Philips Hue Sync TV app, Samsung's TV, and the SmartThings ecosystem. So the Philips Hue Sync TV app is available to consumers on a monthly subscription basis as a one-time purchase, or as a one-time purchase. We have seen particularly good traction so far for the subscription model. Next, we achieved two test victories for Philips Hue and WiZ in the German Stiftung Warentest. The test compared 10 smart lamps, seven with a base station and three without.
The Philips Hue White and Color Ambiance lamp with Hue Bridge was the overall test winner, due to its lighting properties, smart functions, and the interaction between the light bulb and the bridge. The WiZ Tunable White and Color E27 lamp won the category Smart Lamps Without Base Station. In addition, the WiZ lamp was highlighted for its affordability and environmental properties. Next, I would like to discuss our sustainability performance on Slide 10. We have now entered the fourth year of our Brighter Lives, Better World 2025 sustainability program, and during the first quarter, we were ahead of schedule to achieve our 2025 target to reduce emissions across the entire value chain by 40% against the 2019 baseline, doubling the pace required to the Paris Agreement 1.5-degree scenario.
In addition, the company has received approval from the SBTi for its ambitious, 2040 net zero target, with a 90% absolute reduction of Scope 1, 2, and 3 emissions. Circular revenues increased to 34%, surpassing already the 2025 target of 32%. The main contribution was from serviceable luminaires, with a strong performance from both consumer and professional. Brighter Lives revenues remained at 31%, on track to reach the 2025 target of 32%. This includes a strong contribution from consumer products that support health and well-being, mainly eye comfort. The percentage of women in leadership position decreased to 28%, one percent decrease versus the last quarter, and slightly behind our target.
Signify continues its actions to increase women representation through focused hiring practices for diversity across all levels, and through retention and engagement actions to reduce attrition. In addition, we received several external recognitions. Signify was placed on the CDP Climate A List for the seventh consecutive year. We were recognized on CDP's 2023 Supplier Engagement Leaderboard for our commitment to engagement in our supply chain to decrease carbon emissions. We are also recognized on the Clean200, a list of companies putting sustainable investment at the heart of their strategy. With this, I am now very pleased to introduce Željko, who has just been appointed as Signify's new CFO. Željko, take us through our financial performance in more details.
Thank you, Eric, and good morning to everyone on the call. It is my pleasure to present our first quarter 2024 results this morning. Let me dive straight into the financial highlights on slide 12, where we are showing the adjusted EBITA bridge for the total Signify. The adjusted EBITA margin decreased by 60 basis points from 8.9% in Q1 2023 to 8.3% in Q1 this year, as a strong 190 basis points gross margin improvement was more than offset by the negative impact from volume decline. Looking at the bridge in more detail, first, the negative volume effect was 270 basis points.
On the other hand, the combined effect of price and mix was a negative 120 basis points, as the price erosion in some parts of our business was offset by a positive sales mix. Cost of goods sold improvements contributed with 200 basis points. Adjusted the indirect cost savings had a positive effect of 80 basis points. However, we're not able to keep pace with the volume decline. Currency overall had a positive effect of 70 basis points, mainly helped by the evolution of the Chinese yuan currency. Finally, other effects contributed a negative 20 basis points. Now, moving on to slide 13, I would like to zoom in on our working capital performance during the quarter.
Compared to the end of March 2023, working capital reduced by EUR 144 million, or by 100 basis points from 8.3% to 7.3% of sales on a 12-month sales basis. The level of inventories decreased by EUR 273 million, mainly as a result of our improving supply chain lead times. Receivables reduced by EUR 95 million, due to both our efforts to further minimize overdues, and also due to the lower year-on-year sales level. Payables were EUR 224 million lower, which is a logical consequence of driving down our inventories, while structural payment terms remained largely unchanged.
As lead times continue to normalize, we see further potential to reduce our working capital back to the historical levels of low to mid-single-digit percentage of sales... With that, I would like to hand back to Eric to wrap up with the outlook and closing remarks.
Thanks, Zeljko. Let's conclude with the outlook on slide 15. So for the full year, we continue to expect an adjusted EBITA margin improvement of up to 50 basis points, including the first benefits from the announced restructuring program. Free cash flow of 6%-7% of sales, including an incremental and non-recurring negative impact of around EUR 150 million related to the restructuring program and the reduction of our U.S. pension liabilities. And as the year progresses, we anticipate a sequential comparable sales growth improvement, driven by improving dynamics in the Americas and the OEM and consumer businesses. The continuous effort to manage the gross margin , combined with the implementation of our cost reduction program, will deliver positive effect on our operating margin in the quarters ahead, in line with our guidance for the full year.
With all that, I will hand back to the operator for the Q&A.
Thank you. As a reminder, if you'd like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. To withdraw your question, please press star two. So we'll take the first question from Akash Gupta from J.P. Morgan. Your line is open now.
Yes. Hi, good morning, and thanks for your time. My first one is on organic sales decline, which came in a bit ahead of what people were expecting. The question I have is that, did this internal reorganization that you are currently undergoing through, has that played any role in terms of your ability to fulfill some, like, you know, commitments or orders? Wondering if you can comment about your growth versus the end market growth in this, in the first quarter.
Yes, good morning, Akash. Look, we looked at this subject precisely. We don't believe so. I mean, there could be, given the reorganization, you know, a little bit of or some adjustments needed. But what needs to be understood is, we are not, in that reorganization, fundamentally touching our front offices. Meaning that the teams that were in front of the customers yesterday are the same teams being in front of the customer today. In our previous organizations, every market had Mr. or Mrs. Professional, Mr. or Mrs. OEM, or Mr. or Mrs. Consumer. So that's one thing.
But what happens in Q1, and it will happen also to a lesser extent in the upcoming quarters, is the big base of comparison challenge that we had on the conventional part of the business. If you remember last year, we had, the first time, the last time buy, you know, from our customer, which positioned our conventional business in a very strong growth compared, you know, to what it was doing normally. We got -4.6, if I remember well, in Q1 last year. So we experienced a very strong decline of the conventional in a on a comparable basis, which is basically close to 300 basis points of negative drag, you know, on the whole top line. So these are, you know, answers to your question.
Now, what we did not forecast in Q1 was a substantial stronger decline in the professional business in Europe than what we had originally expected. You know, and that takes place at two different levels. First, on the trade side, so we've seen that our sales to trade were really substantially lower than what we expected in Q1, and we need to study that a bit more. But we believe it's more structural, and it's not only the lighting industry, it's a bit more global. Germany being probably, you know, one of the countries which has, you know, a complicated economic situation at this point in time, and it has probably also spread to other countries in Europe.
We've seen also, but we believe it's a bit more a temporary thing, slowness on our public business in Europe, which was very strong in Q1 last year. So strong base of comparison, a bit weaker in Q1, but we have seen in Q2 that our order intake is going back quite strongly, so that should be a temporary effect. So that's what would explain, you know, the delta between what was expected and what we have seen. Our growth versus the end markets, you know, the end markets, you get always the information one quarter later.
But what we see if we go back to Q4, I think we performed very well at that point in time in U.S. and in Europe. And we compare ourselves to our peers that are listed companies, and we have performed better from a top-line perspective. So, we were pretty much well positioned, given, you know, the market dynamics in Q3. We don't think it has dramatically changed in Q1. It's just a surprise we had on the distributing market in Europe, but I believe it's something that would have surprised, you know, other companies. But we have to wait, you know, for people to publish their results in order to confirm that. But from an end market perspective, we think that...
We were well positioned in Q4, and there's no reason that this would have dramatically changed in Q1.
Thank you. My follow-up question is, in the backlog-driven professional businesses, can you tell us how does it compare, because against last couple of quarters? Is there any soft indication of Q2 organic growth where we might land? Thank you.
Yeah, our backlog is today a bit weaker than what we have experienced previously on the professional business. So your question is a good one. We effectively enter in the quarter with, you know, percentage of order backlog, which is lower than what we would normally experience for that business. On the contrary, it is very strong for OEM. It is very good for conventional and very well positioned for consumer. So yes, entering the quarter, we see a bit of softness on the order book on professional.
Thank you.
We'll take the next question from Martin Wilkie, from Citi. Your line is open now.
Yeah, thank you. Good morning, it's Martin from Citi. My first question was just around the stocking levels. You've highlighted in both OEM and in consumer, that distributor stocking levels have normalized, I think, completely or perhaps to some degree, during Q1. If you could just let us know, yeah, if the destocking now completely come to an end there. And also, just in terms of when we think about how big a drag that has been, obviously we'll get the restated numbers for those divisions, in June, but if we look last year, do you have some sort of sense as to what the difference was, between the sell-in and the sell outs in those divisions?
Just so we can get some understanding as to sort of how big a drag that destocking has been, both in consumer and in OEM. Thank you.
Yes, good morning, Martin. So let's take it by part. So on the OEM side, effectively, inventories have gone back to healthy levels, and we have seen that quite quickly, because we're experiencing now a clear increase of our order book with OEMs. So that's very positive. Look, if you take some distance and we take a specific geography, unlike the Americas, it went up to 21 weeks, you know, at the peak, and went down to 6 weeks.
So at the end of the day, you know, we didn't calculate exactly, you know, what was the resulting resulting impact on the on the selling in versus the selling out, but you can imagine that they had to bring the inventory to more decent levels. Understanding also that the market was not particularly having a good traction. So you get the two negative effect, you know, a market which is not extremely dynamic, while at the same time, an inventory that needs to be reduced. If we talk about Europe, it went from 15 to 5 weeks. So that had a material, you know, impact on on the OEM business that we believe we're gonna see rebounding in the coming the coming quarters.
On the consumer side, it has been probably less extreme, because the stocking levels were adjusted, you know, while you know, the economy was performing. So we've seen regular and gradual adjustments. Now we are at very healthy levels. You know, I would say not everywhere, but I would say in the vast majority of our retailers, and we have seen it already. We see already the trend that is about you know, having a more direct connection between selling in and selling out. So these are good news.
We have seen that some of our consumer business and, especially the connected business, now taking another direction, you know, in terms of growth, which we believe is also a tradition of that. So, look, complicated, given that the market is also fluctuating to give a number on how much, you know, the selling in was impaired, but you get an understanding between 21-6 weeks, between 15-5 weeks. So that had important consequences on the top line, and we see that changing.
Thanks. That, that's helpful. And just a follow-up. Was all that impact just really through the volume, or does the industry, when you go through destocking, see some sort of price discounting or some price headwind as a result of that? Just when we think about, you know, the buckets in your earnings bridge between, you know, pricing and volume effects, would you say that destocking in terms of how it impacted you, it mainly seen through the volume side. You didn't have to discount or anything like that to clear those channels?
No, the destocking was mostly volume.
Great. Thank you very much.
We'll take now the next question from Tim Ehlers from Kepler. Your line is open now.
Yes, good morning, everyone. Thanks for taking my question. The first one is about conventional, so I guess a bit weaker than everybody has expected it to be. You always stated that you were overperforming, the market for conventional, and you were making some market share gains, in a declining market. Was that still the case, or did you now see your conventional sales decline below what the market has seen?
Hey, good morning, Tim. Look, in terms of market share gains, we'd only be able to talk about Q1 in Q2, because we have, you know, lag of about a quarter to be able to analyze the numbers. The sales decline on conventional is pretty much linked to the good performance of conventional last year. So when we had it was in, I think, June and September to have to go through, you know, ban of some technologies in conventional, our customers do the last buys. So you get on the year of the ban, increased sales on the side of conventional, because they know that we are not gonna be able to produce any more, so they buy the last inventory.
The consequence of this is that our numbers in 2023 in the conventional business, from a growth perspective, were increased by that phenomenon. That's the case for Q1 to a given extent in Q2, to a lesser extent in Q3, and much less in Q4. So we know that in the first quarters of the year, we have a high compare when it comes to the conventional business. And this is why we have a decline, which is about 34% in Q1 this year. As you can see also, we maintain a very healthy level in terms of a bottom line, you know, and we believe that given this peculiarity in 2023 last buys, we should be continuing to gain on our market share.
Just remember that, in that business, we produce not only for us, but we produce also for many other companies that are still structurally active in that business. But we're gonna be more precise on market share gains in Q2. But we believe that what we see in terms of market decline today is very circumstantial, given everything that I've explained.
Okay, clear. Thanks for that. Then maybe one follow-up question on that, a short one. You don't disclose the margins per division, but I think then it's probably fair to assume that in conventional, you're also seeing some margin deterioration due to the lower activity levels, right?
Not really. You know, we know how to adapt, you know, the structure to the volume in that business. So, no, we haven't really seen that. Now, the fact that we don't disclose, maybe just let me take the opportunity of the question to go a little bit broader. You know, we finally finished the proceedings with the people who represent our employees at the end of March. So basically, we had very little time to reaffect the cost, especially in the geographies to the right businesses, you know, in order and to be able to give a comprehensive set of information. This doesn't mean that we don't have preliminary results.
So we have preliminary results, but they are not final, and that's why we're not showing them. What they tell us is that there's no degradation on the side of the conventional business, and the three other business are more or less around, you know, the group average. But we will give more details and more precise details before the future results, in order for you to get a clear understanding of the performance of those business from a full P&L standpoint, and also being able to compare them to what has happened in the past.
Okay. That's very useful. Thank you. And then one last question before I pass on to the next colleague. You mentioned that you've seen consumer OEM in the U.S., showing some sequential improvements. Is that a trend you also see in Europe, or is it to somewhat lesser degree in Europe the case?
So, what? Okay, I should maybe rephrase what I've said. We've seen that the professional business in the U.S. was stronger than Europe. We believe that when we look at the number, you know, in the past quarters, that we have taken share in the U.S. What we said about the consumer and the OEM business, we see globally, worldwide, an improvement, so clearly on the OEM side, but also on the consumer business, even if there are some nuances, you know, depending on the regions, but we see positive upcoming traction on those two businesses.
Ah, okay. Got it. Thanks a lot. That's it from my side.
We'll take now the next question from Marc Hesselink from ING. Your line is open now.
Yes, thank you. First question is on the gross margin, pretty good at 41%. Looking at that, traditionally, you had more like 39%-40%, and you also said, like, if the gross margin moving up, but you can also use that a bit to lower prices a bit and get some extra growth. How are you thinking about that, and how it's gonna evolve in the coming quarters?
... Yes, good morning, Marc. What we have said when it comes to 2024, it's an expansion of the gross margin and a solid gross margin in H1, you know, as a consequence of, you know, the numerous price increases that we have done, but also the price decreases. Sorry, the cost decreases that we have been able to manage, specifically, you know, in 2023 when we increased our gross margin by about 210 basis points, if I remember well. So we're continuing on that trend, which is, you know, price, which is well positioned, but the continuation of extraction of cost.
Now, what we see in Q1, it varies across the businesses, but we see some price deflation, which is also pretty much linked to two things: the previous inflation, but also the fact that we can extract additional cost from the bill of material, which is translating to a solid gross margin and still an expanding gross margin. So if I look at it, you know, from a business perspective, we see still a positive effect of price on the conventional business. This is the business also where we have increased the price the most. We are at this point stable on the consumer business, and we are experiencing some, you know, negative price pressure on the OEM business and also on the professional business.
But all this is happening with still a gross margin, which is expanding and at 41.2%, you know, for the quarter. What we think is, as much as the first semester will be gross margin-led, you know, when it comes to delivery of operating margin, it's gonna be different in the second semester of the year, where it will not be so much gross margin expansion, but it will be the realization of our cost program that should help us to reduce cost and strengthen the operating margin. So, you know, that's what we said, you know, at the time, and it is also what we see happening these days. Are we reducing price to grow?
I know this is a very interesting approach that we have to the subject to, in a market which is declining, bring the price down doesn't help to make more volume. So it's really when the market is expanding quickly that by reducing price, we can increase our top line. So look, but we're very dedicated with an approach by market, with feet on the ground, you know, adapting the markets to the reality of the economic dynamic. So that's what we're doing in all the geographies where we operate.
Very clear. Thanks. The second question is on consumer connected. I think you just said that it is clearly improving. As I recall from previous calls, that maybe it's a bit more competition also in the U.S. Can we maybe talk about those dynamics better, how do you see the market recovering, and you're growing with the market, or are you recouping some of that competitive pressure?
Well, I think, you know, that business has been improving a lot in the two first years, you know, after the COVID started, which is basically 2020 and 2021. Then there was a correction in 2022, 2023, also with competition coming. But the fact that competition comes, it's normal because that market expands, it expands quickly, and when you have a market expanding and you have a very high market share, it's normal that there are new entrants. If I look at it, I look at it more from a macro perspective, two great years, two years of stability, and we see now that it seems that we have reached the bottom, and we are in a position to start to grow again on the connected part of the business.
Okay, great. Thanks.
We'll take now the next question from Mei han Yang from Goldman Sachs. Your line is open now.
Hi, good morning. It's actually Daniela here. Thank you for taking our questions. Just some two quick follow-ups last. On your commentary, the early regarding the US professional market, having some signs of improvement, can you perhaps give us a little bit more color by segments? Is this offices or retail or something else, or is it just maybe that the inventories got so low that the wholesalers are seeing some destocking, some restocking, sorry. And then second point on your fixed costs on the self-help actions, so is it fair to assume that, like, all the action implementation has now taken place and the agreements were reached, and we will start to see from next quarters onwards the cadence of the savings that... How does it take us to get to full run rate, basically? Thank you.
Yes, good morning, Daniela. Yeah, the U.S. has been much stronger in terms of performance for us than Europe. So where do we see that? Substantially in indoor, you know, especially Cooper has been performing extremely well. And, Cooper is pretty much, you know, indoor focused. We have also outdoor activity, but it's very indoor focused. So we've seen project very small size, medium size, and some projects of a bigger size being effectively pushed forward, we're successful also positioning ourselves, you know, from a price standpoint, expanding also the gross margin and the profit margin there quite substantially. So yeah, it has been a good story, and I would say pretty much indoor for us.
On the outdoor part of the market, this is more, you know, bigger projects, street lighting. These projects have been, you know, somehow delayed, sometimes also depending on the money being made available, you know, by the incentive program, which is not, you know, as fluid, as we thought, you know, it would be in, in the U.S. So it's both, from a segment standpoint, to answer more precisely to your question then, it's gonna be industry segment, office segment, then, education, healthcare, and probably last, the retail that has been, you know, the least, the least dynamic segment over the past year, and it still continues.
The actions are on the cost, we will see them quite a bit in Q2, more in Q3, and we should be at the run rate in Q4.
Clear. Thank you.
We'll take now the next question from Adam Barr, from Redburn Atlantic. Your line is open now.
Hi, everyone. Good morning, and thanks for taking my question. It's actually just a question on horticultural. As a key growth driver, what are you seeing in horticultural orders in the first quarter, and perhaps so far in April? And how quickly do you think this could recover and contribute to growth?
Yes, good morning, Adam. Q1 is a very small quarter, you know, for horticulture. It's a very seasonal business. So our order intake has been really growing substantially. And we see the recuperation of what we have lost last year, and we've lost substantially, you know, because of the price of energy, you know, at the back end of 2022 and beginning of 2023. So basically, horticulture market works in such a way that you have the commitments in Q1, and you deliver a big part of it in Q3, and we see that happening. So Q3 will be a big quarter for us on the horticulture business and also participating to the overall growth of the company.
That's why we see, you know, an improvement on the upcoming quarters, which is gonna be horticulture on one side, but also the consumer business, also the OEM business, and the continuation of a relatively good performance in U.S. professional. But yes, horticulture, we see it happening, and it's gonna be taking place mostly in Q3.
Great, thanks very much. Just the one for me. Thank you.
Thank you. As a reminder, if you would like to ask a question or make a contribution on today's call, please press star one now. We've got one more question from Akash Gupta from J.P. Morgan. Your line is open now.
Yes. Hi, good morning. Thanks for the follow-up. The question I have is that when we look at your professional segment, can you give us some indication that how big is European indoor, roughly, which is contracting, and how big are other businesses where you are more upbeat when it comes to the growth profile in the coming quarters? Thank you.
Look, Akash, we are giving quite a bit of information. We don't go at that level of detail, but probably, you know, just to give you a hint. Yeah, US is gonna be and America is gonna be, you know, the biggest sub-segment we have in professional, and then it will be Europe. So, Europe and Europe indoor is quite substantial in the overall number. You know, if Europe, as we experienced in Q1, you know, has a, an impact on its top line, it does impact that business quite substantially.
And it impacts that business at two level, at the level of the top line, but also at the level of the bottom line, because we enjoy also on these segments, you know, a good level of profit. So, sorry, but at this point in time, you know, we're not disclosing the sub-segments, but I've given you a bit of a hierarchy on how they are and how they look like.
Thank you.
We've got no further questions, so I will hand back to you, Thelke Gerdes, to conclude today's conference. Thank you.
Ladies and gentlemen, thank you very much for joining our earnings call today. If you have any additional questions, please do not hesitate to contact us. Again, thank you very much, and enjoy the rest of your day.
Thank you for joining today's call. You may now disconnect.