Welcome to the Bang & Olufsen A/S Interim Report Q2 2021-22. For the first part of this call, all participants will be in listen-only mode, so there's no need to mute your own individual lines. Afterwards, there'll be a question and answer session. I'll now hand the floor to speakers. Kristian Teär, CEO, please begin your meeting.
Hello, everyone, and thank you for joining the call. Today, we'll present our Q2 results and give an update on how we are progressing with our strategy execution. With me today is also our CFO, Nikolaj Wendelboe, and also our Head of Product Management, Christoffer Poulsen. Due to the increase in COVID cases in Denmark, we will do this as a webcast remotely. Once again, we are not sitting together as a team. If you look at the agenda and move to the next slide, I will begin by going through the financial highlights for the quarter. After that, I will share how we are progressing with our strategy execution. Nikolaj will then take us through the financials in more detail, and I will conclude the presentation part of the webcast by briefly going through our financial outlook.
We will, as usual, open up for a Q&A part where Christoffer, Nikolaj, and I will answer your questions. Let's move to the next slide. Overall, we are pleased with the results and the progress we have made in the Q2 . We delivered DKK 809 million in revenue, equivalent to 15% growth, a positive EBIT margin before special items of 3.5%, and DKK 11 million in free cash flow. We grew product sales by 22%, driven mainly by Staged and Flexible Living, and all key distribution channels contributed to this growth. In the quarter, we delivered double-digit like-for-like sell-out growth that exceeded our comparable sell-out, sell-in for quarter two. Continuous improvements of our sell-out insights are a key priority for us, and we continue to strengthen that in quarter two by adding data from more partners.
We are pleased also to report that we have added 16% more customers to our app in the first half of the year. Both revenue and margin were adversely impacted by the current scarcity of components and the increase in cost of components and raw materials. Based on our improved insights into partner inventory and sell-out data, we also detected slow-moving end-of-life products with a few multi-brand partners in Germany and Switzerland. We decided to take these products back and instead sell them through other channels. This has a negative impact on our performance in quarter two. With high uncertainty and low visibility related to component and logistics challenges for the remainder of the financial year, we maintain our outlook. Please turn to the next page.
We continue to execute diligently on our strategy, and I want to highlight some key milestones from quarter two on the following pages. If we move to the next page again, page number 6. The growth in our core 6 markets in Europe was 8% when adjusting for the product returns in Germany and Switzerland that I mentioned before. The Staged and Flexible Living categories drove the growth despite being negatively impacted by component scarcity. Like for like, we delivered double-digit sell-out growth in the 6 core European markets. This is encouraging and underlines the impact of our strong strategy execution. We saw positive results from our strategic efforts to grow customer demand in London, and I will explain a bit more on that in a minute. We need a more consistent brand experience across all customer touch points to realize our long-term growth potential.
Therefore, we completed a thorough assessment of our European monobrand network in the quarter. The assessment identified partners with further growth potential, and we will now work closer with these partners and invest in our joint relationship. We also identified partners where we don't see a long-term growth potential, and we have all, after thorough consideration and dialogue, decided to discontinue our partnerships with a few dealers. The two core Asian markets delivered 32% revenue growth. Our team in China is in full execution mode with our new growth plan, where we have strong emphasis on new go-to-market tactics, especially the Flexible Living category is in high demand, and this category is now the biggest product category in Asia. In quarter two, we established a customer service center in Shanghai, and this has contributed to a vastly improved customer experience score. Finally, we expanded.
We have expanded programmatic use of social media platforms through programs in TikTok and WeChat to reach and engage with our Chinese target audiences. The right-hand side of this page exemplifies what such programs look like. Please turn to the next page. A while ago, we decided to implement a plan to increase customer demand and driving revenue in a smaller geographical area. We chose London because it has a high density of our target audience customers represented, and we had a comparatively weak existing retail footprint. Our plans consist of three main pillars. Increasing and enhancing physical footprint, establishing blended retail with strategic partners, and creating events and experiences. We have made a lot of progress, and I want to highlight some of the activities we executed in quarter two.
We have increased our physical footprint with a pop-up store in Shoreditch, established new wall bays in key London train stations, opening new stores in London airports, engaged with a lifestyle partner, and finally upgraded John Lewis stores where we have branded presence. We have also engaged with new strategic partners like interior designer Timothy Oulton. Lastly, we established a partnership and affiliate program with Smallbone of Devizes kitchens, which is a renowned luxury kitchen specialist. We participated in several events, targeted high-net-worth individuals with partners like Dalmore Whisky and Dolce & Gabbana. We also presented B&O experiences with VELUX at London Design Festival and Amazon Live at Victoria House. We managed to outgrow the market through a dedicated effort, which is initial proof of reliability of the concept and approach.
Our mono brand stores in London delivered a like-for-like sell-out growth of more than 170%. We want to take our learnings from London now into other key cities. Please move to the next page. Beolink Multiroom is our proprietary multiroom solution that builds on a long tradition of distributing music across rooms in our customer's home. In the previous strategy, when we started to build our new platform, it was decided to prioritize compatibility with third-party ecosystems first. As a part of the new strategy house, we decided to re-introduce Beolink, and we assigned resources to develop and test Beolink Multiroom on our new platform. The release of Beolink Multiroom in November was therefore an important milestone in our strategy, and it sits at the heart of our ambition to build a portfolio of products fit for the future.
With Beolink enabled on our new platform, customers can connect products from the past with products from the present and the future. It facilitates sharing of audio sources in one unified system, synchronizing sound across multiple speakers and rooms with total control and a simple user experience. It also enables us to create unique experiences for B&O customers as we're in control of the experience. Bridging previous and new platform extends the lifetime of products, and the intuitive user interface and seamless experience makes it easy and attractive for our customers to extend the system with more speakers. Our products still work with Chromecast and AirPlay, so customers have full control of their preferred solution. But we have created a proprietary B&O solution and system for our customers. Please turn to the next page.
With Beolink Multiroom, we have a solution which already now connects today's speakers with B&O products that are more than forty years old. Product longevity has always been at the heart of B&O, and in Q2, we announced that our Beosound Level speaker got a highly prestigious Cradle to Cradle certification. This certification underlines our commitment to design for increasing product life cycles and reducing the environmental impact of our product systems. Beosound Level was designed with a modular approach based on refinement of our design principles of the past. The speaker is easy to maintain, service, and repair with the purpose of expanding the lifetime substantially beyond industry standards. It features the company's new replaceable streaming module that has been front-loaded with enough processing power and connectivity technology to receive new performance updates and features for many years to come.
We're the first consumer electronics company to receive the Cradle to Cradle certification and among the first companies to receive certification under the new Cradle to Cradle Certified version four standard, which is the most ambitious and actionable standard for making products more sustainable. I'm proud about our strategic achievements in this quarter, and there are several that we have not mentioned here today. With that, I would like to turn over to you, Nikolaj, who will take you through the financial development in quarter two.
Thank you, Kristian. Please turn to page 11. Compared to Q2 last year, revenue increased by 15% in local currencies. The growth came from a 22% growth from our product sales, while brand partnering and other activities declined by 15%. Component scarcity impacted growth negatively, both within product sales and brand partnering. The decline in brand licensing was mainly related to PC sales. Last year, the global lockdowns resulted in demand for laptops and PCs surging. That created a peak in demand, which was not repeated this year. On the contrary, this year was adversely impacted by component scarcity. Additionally, component scarcity had a negative impact on car manufacturing. However, last year, factories were impacted by lockdowns, and the year-on-year impact was less severe. The 22% growth from product sales was driven in particular by Staged and Flexible Living product categories.
All regions grew, but especially Asia and Americas experienced strong growth rates, with Americas doubling compared to Q2 last year. EMEA's growth rate was particularly impacted by supply constraint. Across all regions, we experienced improved channel performance. As said, the growth rate was driven by Staged and Flexible Living, despite both categories being impacted by component scarcity. In Q2, we saw component scarcity increasingly impacting the Flexible Living category, which meant that we had to prioritize products between regions. The growth in the Staged category came from speaker sales, where we continued to see very good demand for our new Beolab 28. In the Flexible Living category, demand continues to be high for A9, especially in Asia, and Flexible Living is now the biggest category in Asia.
We have made significant progress in our sell-out and partner inventory insights across distribution channels and are happy to report double-digit like-for-like sell-out growth in all distribution channels, regions, and product categories. In fact, the sell-out growth was higher than the sell-in growth in the quarter. Based on our improved sell-out and inventory insights, we identified some slow-moving end-of-life On-the-go products with a few multi-brand partners in Germany and Switzerland. We decided to take back these products and sell them to partners with a better sell-out performance. This had a negative impact on growth in the On-the-go category. In Asia, and especially Americas, we delivered strong growth in the On-the-go category. Please turn to the next page. Our product gross margin improved by 1.7 percentage points compared to Q2 last year and was at the same level as Q1.
If gross margin on product sales is adjusted for extraordinarily high component and logistics costs, we have improved the gross margin with approximately 6 percentage points since last year. The improvement has been driven by a changed product mix toward our higher margin product categories, lower impact from allocation of product-related costs, price increases completed since Q2 last year, and a better margin structure. Component and logistics costs had a negative impact of 7 percentage points, which is 4.5 percentage points more than Q2 last year. The increase was driven by spot buys of components, whereas the relative impact from logistics costs declined compared to Q2-Q2 last year. We have completed several initiatives to mitigate logistics costs. In Q1, we moved part of the production of A9 from Europe to China, and in Q2, we moved part of the production of Beosound Stage from China to Europe.
We have also increased our use of rail freight for bulkier Staged and Flexible Living products between Europe and China. In the U.S., we have established a new distribution center. This will enable us to use sea freight when we move products from Europe and Asia to the U.S. Furthermore, it will improve our last-mile logistics in the U.S. In January, we completed another adjustment to our recommended retail prices. We are impacted by price inflation on component and raw materials, and this is of course a key factor for implementing these price adjustments. However, we continuously assess our recommended retail prices based on a number of factors, which also includes demand, competitive landscape, and so on. We have on average increased prices by 8%. It doesn't impact already placed orders, and it would therefore take some months before it's fully implemented in our financials.
Please turn to the next page. We delivered our fifth consecutive quarter with positive EBIT margin despite the substantial impact from component prices and scarcity. Group gross margin declined by 0.2 percentage points due to lower revenue from brand partnering and other activities, whereas product gross margin increased by 1.7 percentage point, as I just explained. The gross margin from Staged and Flexible Living was negatively impacted by higher component costs, which partly was offset by previous price increases. The On-the-Go category improved in the quarter due to better product mix and less obsolescence.
Overall, the EBIT margin before special items was 3.5%, which was 0.6 percentage point lower than Q2 last year and in line with our expectations, given the lower contribution from brand partnering and other activities and increased spending on sales and marketing in combination with the impact on gross margin from higher supply chain costs. Please turn to the next page. We are investing more into the business, which explains the 17% growth in capacity costs compared to last year, and we maintained a stable capacity cost ratio. The cost increase was mainly related to distribution and marketing. Our development costs were up by 8% year on year, whereas the cost ratio declined by 0.6 percentage point to 8.3%. The absolute increase was related to higher incurred development costs, which grew by 7% to DKK 73 million.
The cost related to investments in platform upgrades and our product roadmap. We have also hired more competencies, especially within software and platform development. Distribution and marketing costs grew by 21% year-on-year, and the cost ratio increased by 1 percentage point to 28.6%. We have spent more in marketing to create demand, and we have been hiring more sales and marketing resources to fuel sales further. Finally, warranty provision increases following the revenue growth. Our administrative costs grew by 10%, which was related to HR and ESG-related initiatives. Due to the revenue growth, the cost ratio declined to 4.2%. Please turn to the next page. Free cash flow was positive with DKK 11 million in the quarter. The decline compared to last year is related to development in working capital.
Last year, we worked intensively with optimizing our working capital, which yielded a positive impact of DKK 108 million in the quarter. This year, working capital increased by DKK 26 million. The increase in net working capital was driven by higher receivables and inventory. The growth in receivables followed the revenue growth, whereas the increase in inventory was related to timing of supply and spot buyers of components. Trade payables increased by DKK 90 million, reflecting the higher production and deliveries of products. Lastly, other liabilities increased by DKK 42 million during the quarter due to higher provisions for employee bonuses, right of return liabilities, and derivatives. Compared to last year, the net working capital ratio to revenue declined by 3.3 percentage points to 7.4%. Capital expenditure was DKK 54 million, which was up by DKK 15 million. The increase was mainly related to tangible assets and retail investments.
Our available liquidity declined by DKK 74 million in Q2 to DKK 534 million. This was mainly related to purchase of treasury shares to cover our LTI program and settlement of the Danish Vacation Fund. Combined, these amounted to DKK 71 million. With that, I would like to hand the word back to Kristian.
Thank you, Nikolaj. Please turn to the next page. As I said in the beginning, we maintain our outlook for the year with the same overall assumptions as we have previously communicated, so I won't go through the details here. As we have communicated since the summer, growth in the second half of the year will be lower than what we have delivered in the first half as we have tougher comparable numbers to beat in the second half of the year. Components and logistics costs continue to be the biggest uncertainties at the moment, and we expect that it will impact performance throughout this financial year. Please turn to the next page. In short, we have continued to execute on our strategy with strong results. Product sales grew by 22% across regions, product categories, and distribution channels.
We delivered double-digit sell-out growth across all distribution channels and product categories, and we delivered like-for-like sell-out growth above sell-in. Revenue and margin are still impacted negatively by component and logistics challenges. The ability to foresee the implication of this in the coming quarters has become more difficult. We maintain our outlook for the full year. With that, I would like to open up for questions for Nikolaj, Christoffer, and myself.
Thank you. If you wish to ask a question, please dial zero one on your telephone keypads now to enter the queue. Once your name has been announced, you can ask your question. If you find your question is answered before it's your turn to speak, you can dial zero two to cancel. Our first question comes from the line of Poul Jessen of Danske Bank. Please go ahead. Your line is open.
Yes. Hello, guys. I have a few questions. First of all, about the price increases you announced. As I heard you said it had an average impact of 8% when fully implemented. Can you give an assessment of when that is and what the impact will be for the current financial year as the first part of it? The second is more structured. Shall it be seen that the company is making a move towards more focus on as a luxury brand than on a also seen earlier as a premium brand? The final one is, what have your franchisees commented when you announced price increases in the Staged segment of up to nearly 30%?
Thank you, Poul Jessen. I'll let Nikolaj take the first question, and then I'll try to answer the two second ones. Nikolaj.
Yeah. On the price increases, the average price increase is 8%. That is sort of the unweighted price increase across the products. It's not a revenue-weighted price increase. That would be a different number, of course, depending on how the products will be selling in the future. Eight percent is sort of face value price increase across all products. That probably answers the first question. The second question is, it takes up to 6 months before you have fully implemented the price increases as we do, and some markets have quite a big order backlog, and we are honoring older orders at the older prices at this point in time. I would expect that the second half impact or the impact from January and onwards in this financial year will only be in the range of 1%-2%.
Thank you, Nikolaj. The second two questions, Poul, we continue to see strong demand for our products and we did, as you know already, some price increases. We're of course monitoring what elasticity we have on pricing and now with the market dynamics, we see the opportunity to do increased prices on some of the products. We of course do that because we have higher costs to some extent, but we also expect demand to continue to be strong. From a strategy point of view, we haven't really changed anything from what we have said before. We want to do better products with higher performance and of course have a higher price, but also have three different price points in terms of a good, better, best type of proposition.
The partners that we have shared the price increases with already, it has been predominantly positively received, by all. I don't think anybody has seen any issues, at this point in time. Again, we will of course follow this closely and see how demand develops.
On the response from the franchisees?
No, they're all positive, so no negative comments. In general, I think that everybody knows what the demand is so far and are seeing strong demand on all the products. We think we are doing the right thing here.
I don't know if you can answer a more conceptual question. If we move back 13 years to the financial crisis, up to that one you did very well with very strong growth, because people had huge increases in savings and house prices went up. We've seen house prices coming up this time as well, and you have a lot of people making a lot of money on equities, at least until a few weeks ago. But what are you seeing as driving the demand? Is it the B&O product proposition improving and being more attractive to people, or is it also COVID and savings and real estate moving up?
Yeah.
I'm just wondering if you hike the prices and fear that if things levels a little off, then you could feel a huge pain.
Yeah. Thanks for the question, Poul. When we look at the target audiences, we haven't changed those, as you know, and we still have the same four target audiences. They have all over the globe a very strong purchasing power and, from that perspective, they keep on buying the products. We don't see that is going to slow down based on their purchasing power, based on their desirability to have unique offerings and differentiated offerings. On a global scale, I think there is a lot of total addressable market for us that we can continue to address with these prices and potentially even higher prices, as we move forward over the long-term period.
In certain cases I'm absolutely sure that as well, because people have maybe more available money that they haven't been able to spend on other things, so you spend it on a TV or on a speaker. I think that's marginal in our case. I think that the target audiences have enough purchasing power to continue to buy our products over time, even if the stock market or house pricing will go down.
Okay, thank you. Final question from me in this round. Brand partnering. In the autumn, you have made a large number of new partnerships. Can you give any assessment that when both Verizon and SK and so on are being implemented, what kind of revenue contribution you expect from all the new agreements combined, on a full year basis?
I think you start to see already in this quarter of course that we get traction from our initiatives. The doubling of the revenue in the Americas is certainly a sign of that we work closely with Verizon and the other partners. They have announced, as I'm sure you have seen as well, the partnership that we're doing in the soundbar category. The product has been well received by the market. I will not be able to give you any numbers for the future but obviously the scale of the business that they have is. We wouldn't be doing it otherwise if we didn't see a huge potential in their installed base. The same goes for our partnership with Sagemcom, where they have announced more operators coming on board.
The same thing here, all of these partnerships are addressing a large scale installed bases of, I mean, in the Verizon case, they have 115 million customers and in the Vodafone case of course as well, with multiple of tens of millions of customers where we will bring the brand licensing in the sound bar and set-top partnerships with Sagemcom. I think there is a good potential and a huge potential in those as well. As we also have expanded partnership with HP, there's opportunity in that one as well.
Even though there were high comparable numbers from last year where PC sales peaked during the pandemic, we have, as you know, extended that partnership and we see other opportunity together with HP as we do see together with Harman as well in the automotive industry and more to come there as well. The intent for us to do these partnerships is to engage with partners where we can see scale, of course, and see substantial uplift in numbers. Otherwise we wouldn't be entering into those partnerships. SK has the same type of logic, is also a huge opportunity. They do take time before they scale. They don't go kind of from one day to the next one in a digital type of fashion, nor did the HP partnership when we started that one. They all have, I think, a really good potential for us.
It's fair to assume that the contribution in the Q2 was very limited from the new partnerships?
Yes.
Okay. Okay, I'll step back and come back later.
Thank you. Our next question comes from the line of Niels Granholm-Leth of Carnegie. Please go ahead, your line is open.
Thank you. My first question would be about the component situation. Are you seeing any improvement in the component supply flows? Continuing along those lines, how would you expect your freight costs to develop in the second half of this fiscal year?
Yeah. Maybe I'll start, and then I'll pass on to Nikolaj. We are doing activities to prepare ourselves to have more agility in terms of facing potential shortages of components. It's also a moving target. We have been working with this, as you know, for a while and I think we have a good mechanism in place. We have good teams in place. The task force is in place. We're trying to increase our agility to adapt to the different changes that could occur. So far, I think we have been managing it well, but there is still, I would say, quite a bit of uncertainty on what is going to happen for the remainder of this year. It's little bit.
Yeah, it's news day by day basically as well. We have managed so far and I think we will be able to continue to do that going forwards. Let Nikolaj take the other part on freight cost.
Yes. On the freight cost, the expectation is that for the remainder of this financial year, freight cost is staying at the elevated level that we are experiencing at this point in time and we had in Q2 here. What we saw in Q2 was that freight cost was increasing, but it was increasing relatively less than revenue. Sort of the relative impact for freight cost was actually declining a bit compared to previous quarters. From that perspective, relatively, there's some kind of stabilization you can say. The main reasons for that is not because we are seeing lower rates, it's because we have taken a number of initiatives to mitigate freight costs.
We've been moving production between Europe and China for a number of our products, as I said in the presentation. We've been using rail freight to a large extent, specifically between Europe and China. Instead of flying, we've been using rail. We have opened a distribution center in the U.S. here late in Q2, allowing us to use sea freight more when we are sending products into the U.S. from Asia and Europe. By these initiatives, we've been able to sort of maintain freight cost at a stable level, even though at a sort of still a very much higher than normal level. That's what we expect also in the rest of the year.
Great. Thanks. Could you just talk about your sales and marketing spending went up quite a bit in quarter two. Is the number you recorded in quarter two the run rate that we should expect from here? A last question from my side. Could you talk about the effect of extra sales going through Amazon in this quarter, and how we should think about Amazon sales in the next few quarters? How much is Amazon of your sales? Thank you.
Maybe I start just generally speaking about e-tail and then pass on for the detailed question to Nicolai. We have had good growth in e-tail and Amazon is part of that group, of course, of companies. We have strengthened our competencies and capabilities in the local markets to work closer in partnership with the different e-tailers and making sure that our products are well represented and found easily, and that there is sellout activation campaigns going on. That has worked well, and it's something that we still haven't seen the full potential from. Expect that channel to continue to grow as our own e-com, of course, as well. Not for a full assortment, but for parts of the assortment. Maybe Nicolai, you can take the rest.
Yeah, on the number side, Amazon is definitely a growing channel for us. E-tailing as a total channel, which is of course covering more than Amazon, is also JD, Tmall, and other e-tailers, has also been a growing share of our revenue. I think Amazon, I'm not going to give you sort of a precise number, but Amazon is roughly 4-5 percentage points of revenue in the quarter. That would be in that area.
Great. On your sales and marketing spending?
Yeah. On sales and marketing spending, we, there's of course a quarterly distribution of sales and marketing, but it's also related to the activities. You spend more on sales and marketing in Q2 than you do in Q1 because you have a high season, especially on the marketing part. It's also impacted, of course, on when we do launches and have other activities in the markets. It's not easy to say that we have been investing more in sales and marketing because it also depends on timing of product launches in the future years to come and when they will hit.
What we have said earlier is that when you look at marketing cost, and I know we are not sort of breaking marketing distribution cost into the different subcategories, when we look at marketing specifically, the share of marketing cost that we have will at least be stable when revenue grows. We'll grow marketing costs as revenue grow. Of course, on the sales part, we will also keep investing in more resources in our regions.
But to a lesser extent, of course, than revenue is growing in the future. Whereas on distribution, you will see, you will of course see more scale effects. That combined will of course influence the total development in the line sales and distribution costs in a quarterly report like this. It's hard to give you a precise answer, depending on these different factors. I can say for certain our investment level in sales and marketing will not go down in the future. That's for sure.
Okay. Thank you.
Thank you. We have a follow-up from Poul Jessen of Danske Bank. Please go ahead, your line is open.
Yes, thank you. I was just wondering about the components also, if you could say a little about where in China you're sourcing from. I was just thinking about now the Omicron has also come to Shenzhen area down there, which is the big manufacturing for consumer electronics. Where are you actually sourcing from in China?
Yeah. I'll try to start and then pass on to Nikolaj. From the affected areas that we see right now that we have visibility for, we don't see that we are affected where there are outbreaks of corona currently. Of course, we have Taiwan and we have a lot of sub-suppliers, but we are not aware of any of the current outbreaks affecting the near term future. I can't be more specific than that. I don't know if you have or Martin has more detailed information.
We are sourcing from all over China because in reality, the sourcing chain in China is quite deep. You have many subcontractors to subcontractors, and they are placed in many different parts of China. There's not one specific area that we are exposed to in our China sourcing.
Okay. Another question about the multi-room building that you upgraded. You mentioned the word proprietary technology on the wireless. I was just wondering, there was a ruling between Google and Sonos last week on the Chromecast. Will that in any way impact your multi-room solution?
We have seen that, Paul, as well, and we're following that. I don't think so at this point in time.
Okay. On the personnel, I think you have about 20% on people last year, and it's quite obvious that you hire more people. Can you give an indication of where you're hiring? What functions are these people being added to?
Yeah. Maybe Nikolaj will give more specific numbers, but we added to sales and marketing, like we already said, so we're strengthening that. We strengthened engineering and design. That has been the two white collar areas where we have increased the workforce. Quite substantial increase on blue collars as well because the factory has been going 24/7 basically for quite some time, and we have added more capacity in there as well. Those are the three big buckets, sales and marketing, engineering and design, and blue collar.
Okay. Thank you. That's all for me for now.
Thank you. Once again, if there are any further questions, please dial zero one on your telephone keypads now. Okay, there seems to be no further questions, coming through, so I'll hand back to our speakers for the closing comments.
Yeah. Thank you, everybody, for joining for today. If you have any additional questions or information you need, feel free to reach out to our IR department with Martin. Otherwise, I wish you all a fantastic day. Thank you very much.