Earnings Call: Q2 2021

Jul 22, 2021

Good morning, and welcome to Grupo Autoplast Conference Call. Please note that today's call is being recorded, and all participants are currently in listen only mode to prevent background noise. The host will open the floor for questions later. Today's discussion contains forward looking statements. These statements are based on the environment as we currently see it. And as such, there may be certain risks and uncertainty associated with such statements. Please refer to our press release for more information on the specific risk factors that could cause actual results to differ materially. The company disclaims any intention or obligation to update or revise any forward looking statements whether as a result of new information, further events or otherwise. Please allow me to remind you that the company issued its earnings press release yesterday after market close. It can be found in the Investors section of its website. Also, the presentation for the call and the webcast link are in the Investors section. Today's call will be hosted by Mr. Carlos Rojas Abumrad, Chief Executive Officer and Mr. Mario Romero, Chief Financial Officer. I will now turn the call over to Mr. Carlos Rojas. Good morning, everybody. Thank you for joining, for being here with us today. As always, I am pleased to have the chance to talk about our latest results with you. You. I'm really happy with the work we did this quarter and the results we achieved, and I would like to take the opportunity to thank our committed and talented team for that. We registered a historical record sales level during the Q2. Even when the same period last year in 2020 was the most affected by the pandemic last year, we managed to grow 1%. And if we were to adjust our calculations for this quarter to account for the effect of the pandemic on the results of the most affected countries like Argentina and Peru, we will still register double digit growth. We have, in other words, not only recovered the lost ground, but we have grown further, taking full advantage of the opportunities that exist in what is becoming a new normal across our markets. Our growth this quarter was driven by both natural events and water infrastructure issues in some of our markets, as well as by the changes in the consumer habits brought about by the pandemic that we have discussed before. In particular, there were droughts, heat waves and water supply disruptions in some of the countries we operate in, all of which are part of the water scarcity trends that impact our societies. We also continue to see a growing demand for domestic, industrial and agricultural decentralized water solutions as our customers continue to adjust to the new normal. These are all positive trends for a sector which continues to grow and in which we continue to expand our market share. In addition to these external factors, we have continued to rely on our internal growth drivers as well. As we continue to reach some goals of our transformation process flow, we are now generating and implementing even more initiatives that help us provide the best and most innovative solutions for our clients, allowing them to adjust to the changes in their circumstances in the best possible way. Be it a family that has moved out of a big city because of the pandemic and it's a reliable source of water or a farmer who needs to increase their production with the same or less amount of water. We're a company that wants to make better use of its resource. Rotoplast aims to have an innovative and top quality solution for each and every one of them. And to do so, not only do we continue to introduce new solutions at a higher speed than ever before, but we have also strengthened our sales force and opened new sales channels. This has led to significant growth group wide. And I would like to highlight the increased growth and profitability that we have achieved in the United States and Argentina, as well as continued good results in Mexico. Furthermore, in the framework of 2 of Flow's core enablers, digital and analytics and agile innovation, we have now introduced the agile methodology, which consists in creating a powered autonomous and multifunctional teams that are tasked with addressing the rising consumer needs with shortened, more efficient development cycles for products and services. In this first stage, Agile is being implemented in the septic tanks business in the U. S. And we have chosen WIDIA as a lighthouse for leveraging digital and analytics. In all this in all, this internal evolution will enable us to make the most of the growth trend of our sector, allowing us to reach even more consumers, increase our market share and cement our leadership position. As we have mentioned before, we will not only seek to continue a path of growth, but to achieve a sustainable growth story. The new culture created through flow through our transformation has also produced another very significant result that I would like to highlight and that Mario will discuss in further detail. We have now achieved a rate of return on invested capital greater than our cost of capital. This is a crucial component of our 2021 2025 sustainable growth strategy to create value for our investors. And I am pleased to tell you that at the end of June, our ROIC was 4.50 basis points above our cost of capital, reaching 16%, the highest rate in more than 5 years. Our corporate culture has also allowed us to deal with some important challenges during the semester and at that point. As I already mentioned, we faced increases in prices of raw materials during the quarter as global supply chains have been affected by the pandemic and other factors. This is, however, a sector wide problem and also affects our competitors. And given our financial commercial strength, we decided to take it as an opportunity to continue growing and increase our market share by absorbing these price increases. As a matter of fact, we estimate that we have that we will eventually generate more than 4 times the value of the cost we absorb. Moreover, we increased our working capital, building inventories to ensure we meet the growing demand for our solutions in the months to come. We will adjust our approach as necessary, but we believe it will be it will have been significant benefits in the medium and long run, both in terms of growth and our profitability, as growing our market share will enable us to adjust our pricing strategies in the future and to exploit the synergies between our businesses. At the same time, this new approach entails changes in our guidance, which Maddy will discuss in further detail as well. Nevertheless, I can tell you that we will increase our sales target and margin and maintain our EBITDA in terms of volume or amount of money in absolute terms. And we expect to compensate some of the effect of the margins through growth and our internal execution discipline. We remain committed to the overarching objectives of our sustainable growth strategy for 2021 2025 and our triple focus on people, planet and profits. We remain committed to the best ESG practices, while providing the best leading solutions across our markets, ensuring that we create value for our investors, and we do so by leveraging and boosting our team's talents and capabilities with the ultimate objective of increasing the quality of life of our consumers, who we are passionate about. And last but not least, we aim to have a positive impact on the environment by reducing our own footprint across our operations and most importantly, by empowering our clients to use water efficiently and sustainably. This sort of focus is at the core of our sustainability strategy and ensures that our results are not only beneficial for our investors and our customers, but ultimately for our societies and the environments as well. All of our efforts must contribute in the end to our common well-being, that is our way of forward and our reason for being. I will now turn the call to Mario, so that he can discuss our quarterly results in further detail. I look forward to your questions and thank you very much for being with us. Thank you, Charlie. Thank you all for being us this morning with us today. We certainly had a strong quarter as Charlie said. We believe it highlights our ability to address the changes that were taking place and make the most of the opportunities they present, leveraging the trends across our markets and our internal growth drivers. Our quarterly sales registered a historical record growth for the company and perhaps just as importantly, this growth was driven by the demand for our solutions in the context of persisting trends, water stress, droughts and the new consumption habits brought by about by the pandemic. This means we have been successfully in addressing our customer needs in a changing landscape and growing sustainably. In fact, if we were to adjust for the operating restrictions that were put in place during the Q2 last year, we will still have grown 29%. This was our Q2 of the year with lower restrictions across our operations since the beginning of the pandemic. Nevertheless, we remain vigilant and we continue to comply with the strictest safety and hygiene protocols in our manufacturing operations and in the field. Furthermore, our administrative staff continues to work remotely. In terms of our financial, net sales increased 48% in the quarter, with double digit growth across our markets. Sales grew 37% during the 1st semester compared to the first half of twenty twenty. Sales of products grew 52% during the quarter and 41% during the 1st semester, The strong level of demand driven by the trends we have described and by the initiatives we have undertaken internally. Initiatives like bringing new solutions to the market, increasing the efficiency of our sales force and opening new sales channel. The continuous strength of product sales compensated for the effects of the pandemic on sales of services, which fell 4% during the quarter. This construction is mostly attributable to the ongoing school closures, which affect the water fountain business and to the slowly recovery of the water treatment and recycling plant business. However, our drinking water platform, Bevia, continues to grow at a rapid pace, reaching record sales and expanding its subscriber base. We have installed more than 52,000 equivalent units. Our gross margin decreased by 260 basis points during the quarter and 280 basis points in the semester due to increasing raw material prices. However, this is a sector wide problem and with a long term vision, we decided to leverage our financial and operational strength to temporarily absorb these cost increases in order to grow, increase our market share and strengthen our leadership across our market. The decision resulted in an impact of MXN130 1,000,000 for the quarter. Nonetheless, we estimate that this strategy increases the annual growth rate at the group level by 5.1% due to a better positioning of our brands. Moreover, we have also been able to leverage efficiencies and improve execution discipline brought about by Flow and reduced the operating expenses as a percentage of sales by 190 basis points. This lowered the impact of cost increase on the EBITDA margin, which decreased by 50 basis points during the quarter and 10 basis points in the semester. During the quarter and the semester, we recognized one time expenses associated with implementation of flow programs and donations. Our adjusted EBITDA after accounting for one time expenses grew 43% in the 2nd quarter and 36% in the 1st 6 months of the year. Net income for the period was MXN65 1,000,000 compared to a net loss of MXN59 1,000,000 in the Q2 of 2020, the period most affected by the pandemic. Net profit contracting during the first half, it is worth noting that this is attributed to the fact that in the Q1 of 2020, we recognized a one time gain when we closed our FX coverage position at a significant profit. Excluding this factor, net profit will have increased 150% for the first half. Now as we go to our geographic breakdown, sales in Mexico grew 35% during the quarter and 21% in the 1st 6 months of the year due to the strong demand for our storage, water flow and improving solutions, including the new products we have introduced in the previous months. This growth compensated for the contraction in sales of services, I mentioned earlier. Net sales in Argentina grew 85% quarterly and 81% in the first half, driven by strong growth across all the 3 categories, storage, water flow and heaters, as well as a pricing strategy that out places inflation. Sales in the Q2 of last year were affected by operating restrictions. Nonetheless, compared to the Q2 of 2019, Argentina still grew 46%. Increasing sales and prices combined with an improved cost absorption help offset increasing raw material prices and resulted in an adjusted EBITDA for the quarter and the semester of 14%. And while this situation in the country remains complex and there are still some challenges such as warranting the availability of supplies for our operations there, we believe that we have achieved the necessary stability to move forward. We want to emphasize the importance of having grown with profitability in the country. Sales in the United States grew 20% quarterly and 24% during the first 6 months of the year, representing 12% of group's total sales. This growth was driven by the reopening of the economy and the droughts and heat waves that occurred mostly in the Western States. We also strengthened our e commerce platform, increased the staffing at our call center and opened 2 new service centers, 1 in California and 1 in Texas. And as Charlie mentioned, we implemented the agile methodology to our septic tank business. These initiatives, combined with our pricing strategy and improved deliveries, increase our profitability as EBITDA margin reached 7%. Sales in Central America increased by double digits during the quarter and the semester, driven by the reopening of the economy, the reactivation of the housing industry and the growing demand for decentralized water solutions in the region. Sales in Peru tripled during the Q2 as a result of the change in consumer habits and the economic incentives provided by the Peruvian government to mitigate the economic effects of the pandemic. Q2 of 2020 was the most impactful for Peru, but even when compared to the Q2 of 2019, sales grew double digit. Finally, we continue to focus on strengthening our presence for water as a service platform in Brazil. As our pipeline grows, we now have our first treatment and recycling plants in operation. In terms of portfolio mix, sales of products during the quarter and the 1st 6 months of the year accounted for 95% of total sales, growing 52% and 41 respectively. Sales of services on the other hand decreased 4% and 11% in the quarter and the first half, due to the ongoing school closure and a slow pace in water treatment contracts recovery. As I mentioned before, however, Bevia continued to register record sales and continues to gain subscribers and Riego, our agricultural venture continues to grow. Our government sales as a percentage of total sales amounted to less than 4% in the quarter, which is well below our 10% goal. As for strength as for cash management, we optimized our conversion cycle by 42 days, and we continue reviewing our terms with related parties for the weekly cash control tower. Our net debt to EBITDA ratio is 1x, well below our 2x ratio policy and a level that we believe is more than adequate to maintain a sustainable accelerated growth rate as we continue to take advantage of opportunities that are arising. It is worth noting that our debt position considers the sustainable bond Aawa seventeentwoX, which as we have discussed in the previous quarter, net MXN4 1,000,000,000 has a maturity date for June 2027 and was issued at an 8.65 percent fixed rate. It also considers the bridge loan in Argentinean pesos for working capital, which strengthened our balance sheet due to favorable FX effect and the Peruvian government loan denominated in Soles that we have discussed in previous calls. As for capital allocation, CapEx was 3.4% of total sales during the first half amounting to MXN 178 1,000,000. It is worth noting that a significant percentage of our capital expenses are focused on the improvement of our production expenses, increasing efficiency and sustainability and most importantly, enabling us to meet increasing demand across our markets. We are investing in shaping the roto pass of the future in line with our sustainable growth strategy 2020 onetwenty 25. Our transformation has enabled us to make the most of opportunities created by the new normal in our societies, and we will continue to size these opportunities in the future. Now about the most important variable ROIC. As Charlie pointed out, it reached 16% during the first half, more than 4 percentage points above our cost of capital, which set us 11.5%. We achieved this result by pursuing a range of initiatives and actions within the flow framework, and we will continue to pursue new opportunities and efficiencies to ensure we create value for our investors. Now moving forward to ESG strategy. As you may remember, we have a triple bottom line focus, people, planet and profits at the same level of importance and from those pillars we have built our sustainable strategy 2020 onetwenty 25, which is included in our annual report 2020 and is available at our website. If you have not done so yet, I would like to invite you to take a look to learn more about the actions we are taking and the contributions to the United Nations Sustainable Development Goals. This sustainable strategy focuses on creating 360 degree value that is for all stakeholders and throughout the water cycle. The strategy includes 6 lines of action, 2 for people, 2 for planet and 2 for the economic benefit, and the direct and indirect contribution to 10 United Nations Sustainable Development Goals. Additional during the quarter, we undertook a number of actions and initiatives of which I would like to highlight the following. We applied and we were accepted to the United Nations Global Compact's Climate Vision Accelerator and the Target Gender Equality Accelerator for others, which help companies with their climate action and women representation and leadership goals. This is important as RotoPlas is fully committed to diversity as an integral issue and to the fight against climate change. Besides, as part of our water stewardship efforts, we can mention the launch of Aflouir, an open call to partner with NGOs to provide an installed right water collection system systems in underserved communities. We partner with Fundacion Unam to establish the Rotoplast Unam Prize to recognize and support research and innovation in water treatment. Likewise, we partnered with Inter American Development Bank, The Nature Conservancy and other companies to launch a call for water projects to be showcased during the water week in Stockholm. Finally, hand in hand with Un Quiro de Ayuda and Harpic, we were part of El Podres Desarjuntos program, which started by providing rainwater collection, storage and plumbing solutions to 50 Massagua families in Mexico State. I will also like the opportunity to encourage you to think about how each and every one of us can reduce our individual environmental footprint. There's a great and cool app online called climatehero. Me that allows you to calculate your carbon footprint in just 5 minutes and gives recommendations as to how to reduce it. And it is important to consider the small actions we can take as well in our everyday lives such as reusing water, avoiding bottled water, utilizing reusable containers, reducing our dependence on automobiles and others. This kind of change at the individual level can truly have an enormous impact. We are committed to achieving a sustainable growth story, creating value for our investors, while improving the life of our customers and communities and helping them to make the most efficient use of increasing scarce water resources. As I may have mentioned in other occasions, we create value for our investors while upholding the best ESG standards and crucially becoming an ally for those who work towards a common good. Sustainability is at the core of both our purpose and our DNA. Now, let's speak about our guidance. Taking into account the demand for our solutions and the success of internal initiatives to capture opportunities in the water industry as well as the strategy of serving cost to prioritize the position of our brands in the market to create long term value, we have decided to update our guidance. We are increasing our sales growth speed to 17% or above. We also now expect our EBITDA margin to be between 17% 18%. We still expect to keep the net debt of our adjusted EBITDA ratio below 2 times. And finally, we also expect to continue creating value with the return on invested capital at least 200 basis points above our cost capital, which is 100 basis points higher than our previous guidance. This is a great importance for Rotoplast management team to reach the absolute amount of EBITDA in pesos that was said at the beginning of the year. We are updating sales growth and EBITDA margin, but the EBITDA in pesos remains the same as in the previous guidance. About our stock, it might be of interest to you as well to review GBM's Deep Dive, which was published recently at classifies Agua as a market outperformer and sets a target price of MXN 47 for 2021. Likewise, Punto Casa Evolza released a report in May stating a target price of MXN42 and a wide recommendation. Finally, Miranda Global Research and Miranda ESG initiated coverage this week with a target price of MXN45 and also a buy recommendation. As far as I know, Rotalaplas is the 1st issuer of Mexican Bolsa that has an ESG analyst coverage. Miranda ESG published an ESG scorecard in which compares ROBLAS to other public companies involved in the water industry from a sustainable practice perspective. With these recommendations and a consensus price of MXN44.7 that represents an upside of more than 30% for the expected year. So that's all from my side. Thank you very much for your time. Now we can move forward to your questions. Let's start with the first question. It's from anonymous attendee. What are the strategies to mitigate higher raw material prices? When do you expect that raw material starts to normalize? Thank you for your question. Mario, would you like to transfer us? You can give a little bit more detail on the matter. Sure. Now the strategy as indicated in the previous call is to now that we have increased our market share is to start moving prices up that will happen through during the Q3. And our last estimates from raw material cost normalization, we believe it's going to happen anywhere between September October from the last forecast that we have from the energy sector. Thank you, Mario. We have another question from Rodrigo Salazar from AM Advisors. I have three questions, a bit long, but I will start with the first one. Could you expand in the U. S, why are margins lower than in the Q1, given that seasonality should benefit? What's the pricing strategy in the region? And the U. S. Is still relatively small. How do you expect to reach the 2025 guidance in the U. S? Where does the growth comes from? Thank you for your question, Rodrigo. Prices from suppliers in the U. S. Have increased continuously. I think we have been very successful in reflecting those prices to our customers. We do it with high speed. Still, we're investing heavily in developing our platform. And as we develop our platform, a lot of it goes into expenses. I don't know, Mario, if you'd like to share any more details into the margins about the margins of the U. S. Sure, Rodrigo. Good morning. Thanks for joining us this morning. Yes, as mentioned during my presentation, we are hiring staff to meet demand. We opened 2 new stores to combine with the e commerce platform. And we're doing a great push on the Quanti e commerce platform and the Lighthouse for the septics. So all that created expenses, but perspectives for the future is brighter. So right now, the move in the U. S. Is drive growth, get the best talent and invest heavily in technology. 2nd, we expect for the U. S. In the coming years a good growth base And we are targeting to represent 25% of our business by 2025. Thank you, Mario. The second question from Rodrigo. Given you are giving priority to market share growth over profitability, when do you expect to resume pricing strategy? And do you expect to retain all the market share gains? How has the competition reacted to this? Or how do you expect them to react? Thank you again for your question, Rodrigo. First of all, I think that the market share gained, we will retain part of it, necessarily all of it, as we will continue to raise prices if needed. We do have a strategy for raising prices as raw material prices change, but we look to make decisions as agile as possible based on our financial analysis. And so we try to optimize for value generation in the long term. In terms of how the competition has reacted, the competition has tried to be as aggressive as possible. The competition was not necessarily as capable as we were in obtaining raw materials to supply demand. It was very challenging to address the increase in demand in a successful way. And since we invested way more than the competition during the last year, actually, I would dare say that we did a very high level of investment as compared to our historical investments, and the competition didn't invest much in developing their capabilities. We, during that investment, increased our capabilities to address an increase in demand and we also got much more closer to our customers. We did loyalty programs that benefited both distributors and plumbers, and we're seeing tremendous benefits from those loyalty programs. So today, we're really harvesting on what we planted last year. Mario, anything else that you'd like to add? Yes. I think it's probably worth to comment as well because Rodrigo was asking how to preserve that gaining market share. We have a full office that do price management and they're very sophisticated trying to calibrate prices with a price elasticity demand model. So we do and run a lot of analysis and the goal now is to preserve much of that market share gained. Now we can say that we are almost leaders in every single segment where the company participates. We are number 1. The distance between us and the competition is good. So we think they will follow us on pricing increases. Thank you both. The third question from Rodrigo. Can you give us an update for the service segment? How are the new water treatment contracts developing? And when do you expect to reach breakeven point for Bevya? So thanks again, Rodrigo. Finally, we started to see the reactivation of projects for this kind of solutions, what we're doing with that. And we're very excited to see how our pipeline is building, both in Mexico and Brazil. We're very enthusiastic of what we might achieve for booking in the next 12 months. And I think we will be able to share some news on our next quarterly report as we see good opportunities for the next 3 months. In terms of the BBR breakeven, it really depends on our growth rate. And maybe Mario can explain this a little bit better, but by the end of the year, we slowed our growth rate, where we didn't spend as much in growing, then we would most likely be able to achieve a breakeven point. Mario, anything that you'd like to complement on that explanation? Yes. I think it's worth Charlie to bring out the discussions that we have yesterday with the Board. Exactly the same question. And we have this conversation between short term profitability and the economic value for the future. Because of the type of business we have to record, the equipment, the installation and everything that goes into activating one client, we send it directly to the P and L. So it doesn't go to the assets base. So if you plug that back into the model, It's on a unit economic base, they are creating value and money on profits for the company. So as long as the customer lifetime value divided by CAC or customer acquisition cost creates value, we still be pushing the fast growth for that business. As for the breakeven point, we believe that that might probably be reaching next year at some point between the Q1 and Q2 on a complete basis. But I think it's worth to take a deeper look at this business from this economic perspective. And finally on the Citesa, just to complement Charlie's, we see an inflection point in the Q2, small growth, but not expected growth. And we believe that's all tied to the reactivation of the economy. Commercial hotels were adversely affected during the pandemic. Now they're starting to come back and contracts are starting as well to come back. Thank you. Now keeping up with services. About Bevia, do you plan on growing Bevia up in the Northern States of Mexico? This question comes from David Gomez from GBM. Thank you, David. The focus initially on Veolia has been to develop the offer and then develop the platform. In terms of developing the platform and the offer, I think we're in a place where we're very happy with what we're delivering to customers. And now we're going to focus very much in developing this platform in a more automated digitalized way so that we can really service a accelerated growing demand. Thirdly, I think we'll be focusing on new markets. So we have chosen, which are the top biggest cities in the country and focused on those, which allow us to gain access to a very important part of the market. But that also allows us to focus on developing these capabilities that I just explained. So we will move to the rest of the country, and this should probably start happening in a more accelerated way towards the end of this year and beginning of next year. No, nothing to complement on that, Ochari. Moving to the next question. Can you quantify what the percentage revenue contribution was from the new product launches? Secondly, are new product launches at higher gross margin than the average? Thank you. Mariano, would you like to? Hi, David, and good afternoon in England. Thanks for joining us today. Well, as for the quarter, 2.8% of revenues came from new products. And we define new products as the last launches in the previous 6 months. So that's what it represents and we believe that will accelerate to 5%, 6% for the Q4 this year. And in terms of margins for these solutions? What was the second question, Mariana? If we are considering for these new products, a higher gross margin? Yes, I will the way I will probably calculate that is on a contribution level, because all fixed costs for the company and the platform are already there. And you might probably want to look at a 35% contribution margin before working capital needs and taxes. Perfect. The next question is from Martin Lara from Miranda Global Research. Good morning, Carlos and Mario. Congratulations for the very strong results. I have two questions. The first one, with respect to the guidance, you said that you expect sales to increase 17 one, how do you see the EBITDA margin in Mexico during the rest of the year? I would like to take that one, Mario. Well, I guess, yes, it is a little bit conservative, but we are quite vigilant of the YAKUVIT and the Delta variant, which I guess, other companies are trying to understand how is that if that is going to affect or not countries and the economy. So that's why we are on the conservative side. As for the margins in Mexico, you'll see some pickup going to Q3 because of the price increases that we mentioned. And then you'll see, let's say, a more normalized EBITDA in Mexico for the Q4. And Martin, maybe just to complement Mario's answer. I think we also want to say that we have given guidance for a long term period, which is 2025, which is doubling sales by 2025 starting on compared to the results of 2020. And this sets us this guidance of the 17% sets us on a very good path to achieving that. We have seen around the world strong volatility in everything. So we think that regardless this volatility, we will achieve this doubling of the company in sales by 2025. And so in the long term, I think this guidance is very while it might be conservative on the short term, it's very aggressive terms and all. The next question is anonymous, but good afternoon from London. I have a couple of questions. The first one, could you give us more color about the growth expectations for the U. S. Operations in the following 5 years? I will read the 2 other questions after. Mario? Well, I think we just mentioned that and it was connected to Rodrigo's question. We are targeting to have the U. S. Represent 25% of the total company's revenue by 2025. That's a speed of more than 30% CAGR taking into account 2020 as the base. The second question, we continue to see significant growth in the product business in Mexico. But how long do you expect sales can continue to grow at double digits in the product business? So go ahead, Mario. As you know, we're really starting to reap out some of the benefits that the transformation bring about when we started 18 months ago. Just to give you an idea, roughly, we have now going 400 initiatives company wide. Only a quarter of them have reached the money step. And there are more than 300 initiatives, 304 to be precise that are moving from the business plan to the money step. So that is really bringing a lot of growth around products and services. And when we speak about products maturity, what now we're you will start to see is a lot of new products coming in and using that platform. So with the new products and a better sales force performance, we believe that good rates of growth can be achieved in the product business. The third question. The business of water treatment plants continues with a negative impact due to the pandemic environment. Would it be correct to assume a lower growth rate during this environment? No, I don't think so. I think that the investments needed from our customers for this kind of solutions were postponed, and I think they can only be postponed for so long. The underlying reason for needing water treatment is hasn't changed with scarcity of water and demand of water is not changing as a consequence of that. In terms of that being reduced, it's even on the opposite side, people are continuing to increase the amount of water that they use. So the need for this kind of solutions continues to build. And I think that we will see strong growth rates as we move into the future. Okay. We have another question. There has been a decrease in the percentage of women in your workforce. So now that you've joined the Target Gender Quality initiative, are you expecting to see an increase in female participation in the following quarters? Yes, we would like to see that. We do look at these numbers very currently and we do look for diversity. We are strong believers that this diversity in talent brings very strong performance and an increase in the quality of the work that we do in terms of the evolution that we look for in the company. So we would like to see an increase in the amount of female talent working at Rocket. Thank you, Anar. Did you have a comment, Maria? I'll probably just add up that we are really from design pushing to increase that KPI. As part of the transformation every Friday we meet to review new hireees and initiatives that they're going to be taking charge of. And in that meeting, we are pushing the human capital people to bring more women candidates to be considered with the idea of bringing a result of more participation into Otoplasm ecosystem. David Simon is asking another follow-up on Bevia. How has cohort behavior evolved? Specifically, what trend are you seeing in churn? In general, churn has been quite low. We expect customers to be with us for more than 10 years. And what we have seen is more of a validation than a change. Maybe part of the change that we did see with the pandemic was that consumers were drinking more water to promote health. Really, it was just a behavior that we saw people thought that increasing their consumption of water would improve their health and that being important because of COVID. And they also wanted to drink better quality of water. But these are the 2 biggest reasons for people adopting VIVEA. And so we're very satisfied that people think of us as a solution that provides more and better water, which is even our mission. In terms of churn, I think that as we continue to evolve our offer down the line in the next 10 years, we might be able to extend that lifetime significantly. Hopefully, that will be the case, but 10 years already offers tremendous profitability. Mario, anything else that you'd like to add? No. I think you just nailed it out. Okay. We have another question. Do you think that customers have the right perception of how eco friendly some of your products are? I hope they do. We work very hard on communicating this. Definitely, there's going to be opportunities in how we continue to communicate this because it's not easy to understand how a plastic product might be friendly with the environment. But when you do when you produce a plastic product that is meant to last for a lifetime, that's when you're really making the most out of plastic. It's so different to make use of once and use plastic products than to make use of plastic products that really leverage those material characteristics that allow for you to enjoy a solution for a very long period of time. We continuously make strong efforts in using recycled materials to be more eco friendly. And that is just on the plastic side. In the side of how we use how our products will just be via water treatment, our piping that conserve temperature in a better way. All of our products, how what is the level of contribution that they have to improving the environment. Again, we communicate this all the time. It's one of our sales arguments, but there's probably opportunity to communicate this better. The last thing that we communicate that not less relevant, but very importantly, that we make an effort to communicate is that the decentralized approach, it's very novel. It's so small as compared to the traditional solutions in terms of centralized infrastructure, but it is the most environmentally friendly way to use water. It's very obvious when you think that water vapor is in a decentralized way and then it rains in a decentralized way. And that's how it's meant to be used, how it's supposed to be used. You need to collect water when it falls on the rooftop. You need to treat that water and use it once, twice, 3 times, as many times as possible. And then hopefully, it gets infiltrated through irrigation. And it's this approach is completely decentralized, which is the rotoplasm approach. And since humanity has been using centralized infrastructure for so long, so many centuries, it's difficult for people to kind of already change that perception, but hopefully, we're making progress on that. Mario, anything else? Yes. I will just probably add a couple of things to that excellent point that you bring and to your conversation, Charlie, which is, I think now climate change is becoming more evident to people. And I think that's bringing up natural awareness. There are multiple examples. You know the great Salt Lake, which is drying up, Palle de Bravo, which is a beautiful place in Mexico City, the lake is also drying up. And we're starting to experience things that we have never experienced in the past. And I think people become more aware that this is for real. 2nd, new generations are much more aware of that. The millennials and millennials are really trying to reduce our carbon footprint. And we are really promoting ways to calculate the carbon footprint as the climate hero. Me app that I mentioned to you. And I think that that initially will understand better how rotoplast can help them to reduce the carbon footprint. And finally, we are bringing in some new very new products, which it's water digitization. It's about helping the consumer. We are now doing some pilots with our water to metal recycling, the volume and the leakages in their systems. And we are connecting that directly to a carbon footprint reduction. And now we're starting to see some positive feedback from these commercial clients, which now they can connect that or KPI of volume water volume consumption or a leakage reduction, which translates not only in the economic profit, but also in some great ESG indicators for their current footprint and sustainable desired behavior. So that's more or less what we think around how is connecting rotoplast products and services to people's awareness. Thank you, both. It's already we're on time. So thank you for joining us. Any comment or suggestion, please feel free to reach out. We will be more than happy to hear from you. And we hope you have a nice day and see you next quarter. Thank you, Charlie. Thank you, Mario. Thank you. Thank you, everyone. You might be presenting now. Thanks for joining us today. Have a great