Good day and thank you for standing by. Welcome to the Rexel's Q1 2022 sales conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Laurent Delabarre. Please go ahead.
Thank you. Good morning, and welcome to this call to present Rexel's First Quarter 2022 sales. I'm together with Ludovic Debailleux. We know you are all busy today, and we also have our shareholder assembly later on this morning. I propose to briefly contextualize and present our first quarter numbers, conclude with a reiteration of our outlook, and then hand over the floor to you for the Q&A session. Overall, as you have seen, we had a very strong start to the year with same-day sales up 16% and growth in all our key regions. We are particularly satisfied with the volume component of our sales, which contributed 283 basis points to the growth and was positive both in Europe and North America in a context which continued to see product availability issues with our supplier.
One consequence of this is our level of backlog that increased once again compared to the end of last year, which was already a record high. We continue to juggle on a day-to-day basis to make best use of our inventory and our supplier relationships to deliver the best possible service to our customers. Second big highlight of this quarter is continued strong inflation. We experienced a high level of inflation during Q1 with both a carryover effect from last year and additional pricing activity by our suppliers in almost all categories. This overall environment made up of supply tension and inflation continues the trend seen in Q4, which had allowed us to deliver great results. Indeed, provided we do a good job managing supply chain constraints and passing through price, those are circumstances in which the value added of a professional distributor becomes very clear.
One new parameter in our landscape, which impacts mostly Europe, is a dramatic situation in Ukraine and Russia. Predicting precisely what the impact on Rexel will be is obviously difficult at this stage of the year, but let me give you a few qualitative indications. First of all, we have no business either in Ukraine or in Russia. We divested our Russian business, which represented less than 0.1% of our worldwide sales in the first days of the conflict through a management buyout. Secondly, it is clear that those events will add to the supply chain tensions, mostly on the inflation side. Energy and raw material cost increase have to be passed through, and this is already starting to happen. Thirdly, there is a positive impact on electrification trends.
The increase in energy costs makes all energy production and energy savings projects suddenly much more attractive. We see, for example, a surge in solar projects in many European countries. We expect to see the same acceleration on other green solutions like heat pump or EV charging station. Finally, there will be probably a macro effect that is difficult to assess at this stage. In a context where order books are full and supply chain is the main limitation to business, we have not seen at this stage any change of trend that could be associated with this situation. Moving to slide four, you see that in the quarter, we saw both volume acceleration and increased selling prices.
Indeed, the 16% organic same-day sales growth in Q1 2022 benefited from a favorable contribution of 2.8%, accelerating sharply from the +0.5% growth we posted in Q4 2021. Volumes were positive in both Europe and North America, where they showed acceleration. Moving to pricing, its contribution to same-day sales growth was 13.2%, of which 1.4% from cable products and 9.1% from non-cable products. The latter benefited from a carryover effect from last year's price increases and high selling price increase, priced through in the first quarter. As anticipated, those carryover effects are expected to reduce in the coming quarters on more difficult base effects from both cable and non-cable products. On slide six, we took a look at our overall Q1 2022 sales performance.
Our sales of EUR 4.4 billion were up 31.4% on a reported basis and 16% on a same-day basis. These reported sales were boosted by a favorable scope effect of 7.2%, mostly driven by the acquisition of Mayer in the U.S. and also by a positive impact from foreign exchange of 3.1%, mainly from the appreciation of the U.S. and Canadian dollars. The quarter also benefited from a + 3.1% calendar effect at group level, largely from specific U.S. accounting rules. This will reverse in the fourth quarter of 2022. We now anticipate the full year 2022 scope impact to be close to 6.3% and the full year currency impact to be above 3%, assuming spot rates remain unchanged.
On slide seven, you see our Q1 group sales and the geographical breakdown. At group level, same-day sales growth of +16% was driven by solid underlying activities in all geographies and by a favorable comparable base. Looking at the various geographies, they all accelerate versus Q4 2021, and notably North America with 21.6% year-on-year growth in Q1. We'll look at each geography in greater detail on the next slide. On slide eight, the slide focuses on the contribution of our three geographies to the group's +16% same-day sales growth. You have all the details in the press release on a country-by-country basis. It just highlights the key evolutions of the quarter.
In Europe, our Q1 2022 is up +13.6% versus Q1 2021 as a result of the combination of further price increases on non-cable products and positive volume momentum. More specifically, in France, we outperformed the market, while in the U.K. and Germany, sales growth accelerated significantly. We also largely benefited from faster growth from green-related products such as EV, PV, or HVAC. In North America, we posted same-day sales growth of 21.6% in the quarter, with sales growth in both the U.S. and Canada. As said, the region benefited from both volume acceleration and price, and high price increases. Finally, backlogs have improved significantly in both countries. More specifically, the U.S. benefited from continuing positive momentum in the residential and commercial markets, combined with an acceleration of industrial activity on the back of a favorable base effect.
Let me also confirm that Mayer is delivering well, and we are on track to achieve our updated synergy ambitions. In Canada, the growth acceleration was also boosted by the recovery of the in the industrial end markets, notably in oil and gas and mining. In Asia Pac, sales were up 5.5% in Q1 2022, largely boosted by positive pricing trends. More specifically, sales acceleration in China was driven by price increases, while volume remains impacted by shortage of electrical components. Of course, we anticipate the recent lockdown to impact our Q2 second quarter. Australia benefited from an acceleration in price increases, offsetting a slow start of the year in volume due to the floods in Sydney and Brisbane, as well as COVID-related staff shortage.
On slide nine, we see that we continue to have a record level of backlog, which bodes well for coming quarters. It is due to several factors, strong underlying demands, delays in projects because of labor or product scarcity that disrupted activity, and possible pre-ordering by customers to ensure product availability. Let me illustrate this with our backlogs in U.S., Canada, France, and China that you see on the graph. As you know, while backlogs represent a material part of the North American business, they are much smaller in France, that's around 5% of the business, but this illustrates a positive trend in those countries and give us some visibility for part of our business in the coming quarters. On slide 10, we focus on the progress we have made in digital and specifically on digital penetration, which is moving in the right direction.
In Q1 2022, Digital represents almost EUR 1 billion of sales on nearly one quarter of our sales. This quarter marks a transition as we are integrating Mayer for the first time for a full quarter. As you know, Mayer has virtually no digital business at this stage, so it brings down our group's digital penetration rate by almost 200 basis points. Of course, we expect to close the gap, and indeed, one of the great attractions of the acquisition of Mayer is the upside offered by the opportunity to digitalize the company. Digital sales, excluding Mayer, grew by 26.1% in the quarter and represent 25.5% of total sales, up 201 basis points. Some countries showed strong progression, such as France, where sales penetration increased by 328 basis points to 28.4% of sales.
By geography, Europe is significantly above that level, with now 35% of sales coming from digital, and we are above 40% in seven countries overall. In the U.S., we are also making headway, and we are at 15.1% in North America, where we see substantial upside. It is also worth noting that in North America, the lower rate of digitalization is also related to the fact that we have a far higher share of project activity in that market, representing more than 1/3 of the sales. If we looked only at the warehouse driven sales, to be comparable to, other markets, we would be closer to 19%. To be complete on these key topics, let me share with you the digital penetration, including Mayer. We stand at 23.6% at group level and at 12.4% in North America.
As we said last February, digital transformation, which means much more than simply switching sales to digital channels. It also means a complete revamp of our organization to make it data driven. The slide provides several examples of this. Digital transformation starts with a thorough analysis of our customer and product segmentations. This allows us to deploy our tools gradually across the group and to implement our key digital initiatives such as customer churn, branch assortment, next best offer, track and trace, or email to EDI, most of which we are rolling out in multiple countries. 2021 also saw the go live of our supplier portal, which reinforces our partnership with our key suppliers and strengthens our role in the value chain. Let me now talk about the rest of the year and our outlook on slide 12.
Q1 is a relatively small quarter for us, but it usually allows us to assess whether the year is starting in the right direction compared to our initial expectation, and this is clearly the case. We had a strong start of the year, and you can probably tell by the tone that we are happy with that. The market is supportive, and our action plans are delivering, allowing us to gain share in many important countries. It is true that at the same time, the level of uncertainty about the future has increased, but overall, we feel confident that we will deliver the guidance we provided in February. Namely, same-day sales growth of between 4%-6% and adjusted EBITDA margin above 6% and free cash flow conversion above 60%.
To conclude on the last slide, let me remind you that we will have the opportunity with Guillaume Texier and key executive to detail our strategic roadmap at the coming capital markets day that we will hold on June 16 in Zurich at our Swiss headquarters. During that event, we will also be pleased to take you on a visit in the same building of the biggest branch in our network. Sales of close to EUR 100 million. It features state-of-the-art technology with a new automated storage solution, so you will be able to see firsthand how our activity has evolved. We very much look forward to seeing you there, and I'm now happy to take your questions.
Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound hash key. Once again, star and one if you would like to ask a question. Your first question today comes from the line of Andreas Willi from J.P. Morgan. Please go ahead. Your line is open.
Yeah. Good morning, Laurent. Good morning, Ludovic. I have two questions, please. The first one on the non-copper pricing, the 9% contribution year-on-year. Could you provide maybe some indication what share that represents, just the normal listed price increases that you're passing through from your suppliers? And what is a more kind of discretionary benefit from shortages in that sense where you can exploit market opportunities? The second question I have on potential demand destruction from higher prices everywhere. Are you seeing some early signs that, for example, larger non-residential projects or so on are getting delayed as budgets need to be reevaluated? Thank you very much.
Good morning, Andreas. Thank you for the question. The first is a quite tricky one. I'm not able to answer it with the share of the increase that is coming from the disruptions. What we can see that there are clearly some inflation trend a bit higher than expected, and that our supplier pass through price increase in 2022 that are significant in all category of product. Difficult to assess what is the part coming from the disruption, what is the part coming from higher cost of energy. What we see globally as the environment of inflation continue and not even accelerate in Q1.
On your second question, as I have said during the presentation, at this stage, we don't see a slowdown of the demand because of the pricing issue. We are more or less able to pass through price increase. We see high backlog increasing also because of shortage of products. It's more the shortage of product and even the shortage of some manpower that is slowing down the growth than a slowdown of the demand because of pricing.
Thank you very much.
Thank you. Your next question comes from the line of Martin Wilkie from Citi. Please go ahead. Your line is open.
Yeah, thanks. Good morning. It's Martin from Citi. Just a question about how you see the rest of the year progressing. You've obviously retained your guidance after a very, very strong start to the year. I know there are obviously lots of geopolitical uncertainties and so forth, and there are some tougher base comparisons. It does look like given where we are at Q1 and the commentary for Q2 that, you know, beyond or above the top end of the range is very possible for the year. Just to sort of understand what you're expecting for the remainder of the year to retain the guidance level. Thank you.
Yeah. Thank you, Martin. We had a very good start in Q1, but that was anticipated in the way we work with our country. We were quite front loaded because we know that comps were easing in Q1 and will start to be stronger in the next quarter, especially the carryover impact on the inflation. Second, the macro environment is quite uncertain and every month is delivering its level of news. For example, the current issue we have today is the lockdown in China that was really strong over the couple of weeks.
I discussed not later than yesterday with our CEO, and he said that he don't see that easing before beginning of May. It will impact quite strongly our April topline. So that could have an impact in Q2. Lastly again, the first month of the year, they are low months for us. It is a good start of the year, but we feel it's still a bit early to evaluate the full year guidance.
Great. Thank you very much.
Thank you. Your next question comes from the line of Daniela Costa from Goldman Sachs. Please go ahead. Your line is open.
Hi. Good morning, everyone. Thanks for taking my questions. I have two things. First I wanted to ask you regarding these strong backlogs in terms of like, what's the stickiness or visibility you have from them? Can customers now have to put cash up front when they ask you something? Or could these orders be canceled if we see a deterioration in the macro environment? Just interested in that. The second point, I guess, should we read from your comments about sort of like the difficulty in getting supply from your suppliers that you've been destocking when we think about Q1 in the first half, or how have your inventory been evolving? Thank you.
Thank you, Daniella. On the backlog side, as you know, I mean, we have regions that are more influenced by backlog than others. North America is a backlog region where the large projects representing a bit more than a third of our business. Here, we have seen backlog increasing. Most of the time it is a firm order. Usually the customer don't give advance payment to it, but they are committed to those products. Usually, we are pre-ordering also those products. In specific case, they can go away from that, but that is not the general rule.
We can say that it is really firm. Well, the customer, they are committed on their project, so it's important for them to have visibility and to place orders. This backlog are increasing quite significantly in North America and Canada and also in France. France is not a backlog country, but even that, it shows that, because of some shortage, either of product on our side, either from other products on the project, either because of labor shortage, this backlog is increasing. On the supply shortage, it is more the opposite. I mean, the level of service from our supplier is getting more and more difficult.
In order to make sure that our level of service with our customer stay as good as possible, even if it has worsened, we have take the decision and because of the disruption in the supply chain to increase our inventory. We increase it by three days compared to the end of December. This is on purpose. We focus on what we call the LC inventory to make sure we can keep a high level of service for our customer.
Clear. Thank you very much.
Thank you. Your next question comes from the line of Alexander Virgo from Bank of America. Please go ahead. Your line is open.
Yeah, thanks very much. Good morning, Laurent. I wondered if you could just talk a little bit around the dynamics in China. I appreciate it's a small piece of the pie for you guys, but I was curious around your comments there on pricing and volumes, I suppose ultimately. Volumes, I'm guessing are down, and you talked a little bit about the impact of lockdown. Any indication you can give us in terms of timing, what sort of color you can give us around the actual dynamics on the ground would be really helpful. Thank you.
Yeah, I mean, overall, I mean, there have been huge lockdowns in the big metropolitan areas such as Beijing, Shanghai, and Shenzhen. Big ports like Shanghai exporting and from the team on the ground, they expect to see that easing after Labor Day, beginning of May. I mean, also the lockdowns will ease in and the production will restart after that.
I think there will be a kind of big month so far of delays and disruptions in the production side, plus because of the congestion of the port, and that probably will have an impact over the next Q2, at least, and maybe Q3. That's what we see. It seems that there is light at the end of the tunnel and it will reopen early May, gradually.
Okay. That's helpful. Thank you. I mean, I guess in comparison to Q1 2020, I think you called out China as being down 24% in that quarter. Is that a number we can use as a comparable situation, do you think, or are we looking at or how would you describe the differences?
No, China, we had the impact of a large project last year that made the comparable a bit more difficult. They are up in price slightly, down in volume, but also because of the selectivity we are making on the customer side to grasp value-added project. Yes, we expect, I mean, the months of April will be quite tough and quite negative because of the lockdowns.
Okay. That's great. Thank you.
Thank you. Your next question comes from the line of Alasdair Leslie from Société Générale. Please go ahead. Your line is open.
Oh, yeah. Hi. Good morning. Thank you. There's a real emphasis, it seems on the sort of strong growth in green related products in Europe. I was just wondering if you could maybe elaborate a little bit on how much you think that's kind of sort of driven by the higher energy prices that you're calling out versus specific policy support in your view, I suppose, across some of the countries in Europe, and maybe on, you know, could you talk a little bit more about the dynamics across some of the areas within Europe, and maybe particularly touching upon France? Thank you.
Yeah, I mean, there are a growing category of products, EV charging station, solar, HVAC. All those family are growing double digit. They are not representing the biggest part of our top line, but they are the biggest part of the growth. It is a structural trend that we have in Europe, depending on the policy of the government in most of the country in Europe, also in North America. There is this underlying trend, and because of the rise in energy cost, it is clear that this trend can only accelerate in the coming quarters.
We don't see exactly under which form the different governments will subsidize it, but we have already a number of mechanisms that are in place, either by direct funding of the end user, either by reimbursement of VAT. We see a lot of subsidies. I think the biggest country where we see that is Italy. There are also a lot of subsidies in the Netherlands, in Belgium. In France, there is MaPrimeRénov', which is a first start on more global renovation, not only the electrical part. We are following that, and we consider that in the current environment, all these measures will continue and will accelerate.
I just mention also there are some incentive around solar in many countries, including Germany, and solar is growing something like 70% compared to one year ago. Clear acceleration, again, not very huge amount at group level, but huge part of the growth.
Great. Thank you. Thank you, Laurent.
Thank you. As a reminder, if you would like to ask a question, please press star and one on your telephone keypad. Star and one to ask a question. Your next question comes from the line of Andrei Kukhnin from Credit Suisse. Please go ahead. Your line is open.
Good morning. Thanks so much for taking my questions. Can I come back to the non-cable pricing, please? Could you give us an idea whether in that 9.1%, there was any pricing effect from maybe lower rebates on your side or kind of your own pricing as opposed to what your suppliers have done with pricing decisions?
Well, in the 9%, this is mostly what we are passing through from the supplier increase coming either from raw material increase and also from a higher cost of energy. I would say that probably it's easier to pass through this inflation to our customer because of the shortage of products, where they need the product and they prefer to pay a bit higher price than waiting too long for it. We have also ongoing and structural action around the pricing tools, pricing mechanism, where we have a quite granular segmentation of customers that help us to fine-tune the margin and the pricing with them. It's a combination of both that link to this, quite performance.
Okay. There was some of your own in there due to those kind of pricing tools implementation, but mainly it's the suppliers.
Yes. Yeah.
Great. Thank you. Sorry to labor it. It's just the biggest surprise, I guess, in the quarter. Are you seeing any indications of further price increases from suppliers in Q2?
It's a bit early. We have quite some in March, so we will have the full year impact of that. At this stage, no. No, but-
Great.
I mean, it's a bit early. The global macro environment, the cost of energy, could lead to further price increase.
Great. Thank you. Very final one, just on inventory levels, to follow up on that, thank you for the answer on your own decisions, but how would you assess the inventory levels now across, the distributor network?
Well, I think to protect the service level vis-à-vis the customer and the strategy we have followed is probably followed by other. What is noticeable is that we were able to finance that because of the good performance on other part of our cash flow and especially on the receivable, where we had good performance, reducing the number of days. For the one having the financial capacity, I think the good strategy to build some bit higher inventory to make sure on fast runners and on new product they can serve well their customer.
As you know, I mean, on the small and mid-sized customer, our customer, I mean, those people have limited inventory. We said that they have no more inventory than what they can put in their van, to make it simple. Our customer are using our inventory also. That's why also they like to order, and we have also that kind of backlog, even in country like France, where backlog is not a great part of the business.
Great. Thank you very much, Laurent.
Thank you. Your next question comes from the line of Philip Buller from Berenberg. Please go ahead. Your line is open.
Hi. Good morning. Thanks for taking my questions. I have two. The first one is on margin. Obviously, the guide for the full year was unchanged for the margin to be above 6%. Looks like consensus is down 10 basis points year-on-year. I know that last year had some one-off effects that supported a margin at 6.2%. If I take a step back and think about the good volume growth that we've seen in Q1, but also this supply and demand imbalance that we've got, the good work you've done on pricing, digital penetration going up, is there any chance we may see margins actually expand this year rather than contract? My second question is on the M&A pipeline. You mentioned Mayer is going well.
I know your leverage is a little bit lower versus history at the moment. I was wondering if you could comment on whether or not we might see some more M&A as we look to Q2, or is the macro environment not really supportive of that? Thanks.
Thank you. I mean, it's only the first quarter and it's a sales call. As you have seen in the tone, we are quite satisfied with the evolution of the top line. We make sure that the first rule is still there. It's obvious that with inflation, we'll have also probably also a kind of one-off effect because of the inventory impact, having inventory both at a lower price and the current selling price. We state that we are confident in our EBITDA guidance for the moment. Again, it's still early.
Let's see how the macro environment is evolving and we will update you in the coming quarter in our H1 call. No later than that. On the M&A pipeline, I mean, first integration of Mayer is doing well as described in the presentation. We were able to get the first level of synergy as expected on the back office. We are working to know each other. It's a very well-recognized organization in the southeast of the U.S., so we are not going to break the machine. It's a gradual thing, but the teaming is working very well, and we have a first level of results that are very encouraging. I would say so far so good.
On the M&A side, I mean, obviously you need to be two to tango. We have a pipeline. We are actively working on different sides. Too early to say what will happen. I hope that we'll be able to close additional acquisition this year. To your point, now, I mean, the leverage ratio give us a maneuver to reopen the topic of external growth. We are looking for acquisition clearly at the moment.
Okay, thanks.
Thank you. Your next question comes from the line of Eric Lemarié from CIC Market Solutions. Please go ahead. Your line is open.
Yes, hello, good morning. Thanks for taking my question. I got two actually. The first one regarding market share. Do you think you might have gained some market shares in 2022 so far? What do you observe in terms of pricing behavior from your competitors? My second question related to these green related products you mentioned. It looks like, but maybe I'm wrong, but it looks like these green related products drives growth mostly in Europe, but maybe less in North America. Could you confirm that and maybe explain that if it's right? Thank you.
First, on the market share, as you know, we have not organized federation in all our countries. So first time in some country we know that we gain market share, for example, it is a case in France, there is a federation, there is a monthly figure. And there we saw market share gain clearly in Q1. In Germany, we have a very strong growth. As you know, we reorganize. We'll amplify our presence in the south part of Germany. And we were on the downside and since more than three years ago and are gradually rebuilding. We are catching up market share there.
In U.K., I mean, we were quite low on digital improvement. We are quite selective on customer. In the quarter, we are getting a better momentum. We have country with a big market share, Austria, Switzerland, Belgium. On those one, we don't have a firm penetration, but I think we are at least at the level of the market so far. On the green product, I mean, in North America, you know, and we discussed it in the previous call that on the last quarter on industry, the rebound was very low and volume compared to 2019 were still negative at the end of last year.
It is in this part and resi is doing well, but it's only 10% of our business there. We have a clear rebound in North America in the last quarter and in the industry, for example, oil and gas is up 70% in the U.S. in Q1, and mining is up 30% in Canada. This segment are driving most of the growth. In Europe, it is more balanced around, I mean, building renovation, all kind of product. But that's the one I mentioned around HVAC, PV, and EV charging station that are growing well. Again, it's still a low percentage as a total of our sales.
It's a great part of increase in rate, but in volume it is also all the rest of the business that is continuing to progress well, both driven by volume and price.
Okay, fair enough. Thank you.
Thank you. We will now take our final question from the line of Miguel Borrega from BNP Paribas. Please go ahead. Your line is open.
Hi. Good morning, Luca. I've got two questions, if I may. The first one just around cable pricing. I would have imagined that cable prices usually follow spot price movement from copper. I see that in Q1, spot prices are up, for example, 25%-26%, and the contribution to your sales was 4%. Last year, copper prices were up 40% and the contribution to your sales was 3%. I'm just wondering, have you raised your prices also on cable products ahead of spot prices? Maybe anticipating some further price increases as well. My second question related to that is around the contribution to margins from cable products. Can you give us some flavor on how similar price increases between cable and non-cable products would have on your margins?
I suppose cable products are traditionally dilutive to your margins, but can you also maybe shed some color on volume growth between cable and non-cable products, please? Thank you.
Okay. Thank you. On your first one, I mean, we are not buying copper. We are buying cable. Between copper and cable, there is the sourcing of our supplier on their production cost, especially in a context where their OpEx increase energy, salary, and benefits. That is impacting their input costs. They have also their inventory. There is clearly a lag and a distortion between what you can see direct on the LME and what is the impact on our top line.
Cable is very sensitive product group with all kind of cable from ground cable which are very large cable full of copper to data cable with aluminum, for example. At the end, the margin on those cable may vary depending on if it's residential construction or a large data center project. It can range from 33.0% for the best subgroup of cable. So fully contributive to the margin to let's say 12% when it's a large project with a very competitive environment.
It depends on the mix of business to assess exactly what is the impact on the contribution to the EBITDA on those. I don't know if that answer all of your question.
On volumes between cable and non-cable? Thank you.
We don't give the full detail of that because of the product group and the new generation of product, we have a bit more volume on non-cable than on cable.
Thank you.
Thank you. I will now hand the call back to you, sir, for any closing remarks.
Well, thank you very much for the quality of your question and your interest in Rexel. We will hold our AGM in a bit more than one hour from now if you want to join. Otherwise, for those who register, we'll be happy to share a bit more of our strategy. Again, with Guillaume and key executive in Zurich. Zurich is the largest branch of all Rexel network with a turnover bigger than some of our smallest countries.
We have quite invested into the automated storage facility, so it will be very interesting for you to see how all of that is working and what we can do also elsewhere within the group with that kind of automation and logistics solutions. Thank you again for your time this morning, and I know it's a busy day for you as well, and wishing you a good day. Thank you very much.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.