Good morning or good afternoon all, and welcome to the second quarter 2022 ACCO Brands Earnings Call. My name is Adam, and I'll be your operator today. If you'd like to ask a question during the Q&A portion of today's call, you may do so by pressing star followed by one on your telephone keypad. I will now hand over to Chris McGinnis to begin. Chris, please go ahead when you are ready.
Good morning, and welcome to ACCO Brands second quarter 2022 conference call. This is Chris McGinnis, Senior Director of Investor Relations. Speaking on the call today are Boris Elisman, Chairman and Chief Executive Officer at ACCO Brands Corporation, and Deb O'Connor, Executive Vice President and Chief Financial Officer. Slides that accompany this call have been posted to the investor relations section of accobrands.com. When speaking about our results, we may refer to adjusted results. Adjusted results exclude transaction, integration, amortization, and restructuring costs and other non-recurring items, including the change in fair value of the contingent consideration related to the PowerA earn-out and reflect an adjusted tax rate. Schedules of adjusted results and other non-GAAP financial measures and a reconciliation of these measures to the most directly comparable GAAP measures are in the earnings release and the slides that accompany this call.
Due to the inherent difficulty in forecasting and quantifying certain amounts, we do not reconcile our forward-looking non-GAAP measures. Forward-looking statements made during the call, including statements concerning the impacts of COVID-19 pandemic on the company, are based on the beliefs and assumptions of management based on information available to us at the time the statements are made. Our forward-looking statements are subject to risks and uncertainties, and our actual results could differ materially. Please refer to our earnings release and SEC filings for an explanation of certain of these risk factors and assumptions. Our forward-looking statements are made as of today, and we assume no obligation to update them going forward. Following our prepared remarks, we will hold a Q&A session. Now I'll turn the call over to Boris Elisman.
Good morning, everyone. Thank you for joining us. We delivered our fifth consecutive quarter of strong comparable sales growth driven by the strength of our brands, demand for our innovative products, and our channel and geographic diversity. However, our results were affected by a more difficult macroeconomic environment than previously anticipated, mainly reflecting slow economic growth, very high inflation, and a stronger U.S. dollar that led to greater than expected adverse currency translation effects. I will give a short overview of our successes and challenges in the quarter, and then Deb will comment on each of the segment results in greater detail. Let me begin with successes. Comparable sales increased 5%, driven by improved pricing, great back-to-school selling in North America, strong post-COVID recovery in Latin America, and return to office momentum in many of our markets.
I'm very pleased with the 5% comparable sales growth since it was achieved despite a slower overall rate of economic growth and continued supply chain challenges. Our sales performance speaks to the strength, breadth, and balance of our global product portfolio and its orientation towards sustainable organic growth. Excluding gaming, comparable sales were up 9% in the quarter, led by BTS shipments in the U.S. and a strong recovery in Brazil and Mexico. Not only did we grow sales, we also increased market share in many of our categories. Shares were up for Five Star, AT-A-GLANCE, Quartet, Swingline, and Kensington brands in the U.S., Leitz shredders in Germany, and PowerA products in the U.S. and U.K. With inflation pressuring gross margins, we did a good job managing expenses and capital investments in the quarter.
Both reported and comparable expenses were down compared to last year, even after investments in new product development and to drive go-to-market activities associated with higher sales. Now let's shift to challenges. The pace of inflation was higher in the second quarter than we anticipated. We took pricing actions globally in April to defend profitability, but they were not enough given the magnitude of commodity and especially energy cost increases. We passed through additional price increases on July first and expect that the cumulative effect of all price increases, combined with moderating inflationary pressures in the remainder of the year, will lead to gross margin expansion in the second half. Likewise, foreign currency impacts are proving to be a greater headwind than originally anticipated, given the strength of the U.S. dollar.
This was particularly true in EMEA, where currency translation reduced sales by 13% or $20 million in the second quarter. We expect unfavorable currency impacts to continue for the remainder of the year. Now I'd like to make some comments regarding video gaming accessories. PowerA has been a great addition to our company. Over the long term, we believe it will substantially increase our organic growth rate. This year, as for the rest of the gaming industry, PowerA's demand is resetting from the high levels of demand during the pandemic and supply continues to be challenged by the lack of semiconductor chips. We expect these temporary demand and supply chain issues to largely remain in place for the remainder of 2022, with gradual improvement throughout the rest of the year.
As a result, we now expect PowerA sales to be down approximately 10%-15% for the full year. Our long-term expectation is for the supply chain to return to pre-pandemic growth trends of the industry, which historically were low double-digit growth rates. In summary, we continue to be confident in our strategy to transform our company to be more consumer-centric and to leverage the strength of our brands to accelerate organic growth. The breadth of our product categories and our geographically diverse footprint help to mitigate a difficult operating environment. I'm pleased with the execution of our team in such challenging circumstances. We're controlling what we can control, and while we will be prudent with spending, we will continue to appropriately invest in our brands and marketing programs to innovate with our new products and be the best partner to our customers.
I will now hand it over to Deb, and we'll come back to answer your questions. Deb?
Thank you, Boris, and good morning, everyone. Our second quarter 2022 reported sales increased almost 1%. Comparable sales were up 5% as 8% higher pricing was partially offset by a 3% volume decrease. Sales reflect a return to in-person education in Latin America and strong back-to-school sell-in in North America. We saw increased volume in note-taking products, computer accessories, and business products. Adjusted operating income was $58 million compared to $67 million last year. Adjusted net income was $36 million compared to $42 million in 2021, and adjusted EPS was $0.37 versus $0.43 in 2021. Now I'd like to provide more context about the inflationary environment pressuring margins. We began to see the impact of inflation in the third quarter of 2021, with the pace of inflation accelerating over the last six months.
Our margin rate has been impacted by the cumulative price cost gap despite numerous price increases. We expect stronger margins in the second half of the year, reflecting the full effect of our price increases, including our most recent July 1 price increase and moderating inflationary cost pressures. Second quarter adjusted SG&A expenses were $92 million compared with $97 million in 2021, primarily as a result of cost savings and lower incentive compensation accruals, as well as the positive benefit of FX, partially offset by continued investment in our go-to-market programs. SG&A expense as a percent of sales was 18%, below last year's 19% due to higher sales and overall lower expenses. As we have spoken in the past, there is a 2-year contingent earn-out related to the PowerA acquisition that is based on achieving established sales and profit targets.
Based on 2021 results, $27 million was earned last year, and we paid that out in the second quarter. Based on the latest PowerA forecast, we have reduced the earn-out liability reflected on the balance sheet by $9 million, leaving approximately $3 million on the balance sheet. Now let's turn to some details of our segment results for the year. Comparable net sales in North America increased 4% to $308 million. The increase was due to higher pricing and volume on the majority of products, partially offset by volume declines in gaming accessories. Excluding gaming accessories, North America performed well and grew volume as demand increased in school and business products and computer accessories. Back-to-school sell-in was strong in the quarter and year to date.
Retailers did pull forward some orders to ensure they were set for the important back-to-school season, given the supply chain concerns. We are monitoring the expected replenishment activity as retailers are closely managing their inventory. North America adjusted operating income margin decreased due to higher prices of commodity materials, including paper, and increased inbound and outbound freight costs. However, margins for the six months were flat compared to the prior year. In addition, our back-to-school sell-in did not fully reflect the impact of our increased pricing, given the early placement of orders for the season. Now let's turn to EMEA . Net sales were down 12% to $138 million, reflecting unfavorable currency impacts. Comparable sales were relatively flat at $158 million, mainly due to price increases, which were offset by volume declines.
Volume in this segment was negatively impacted by high inflation in the region and an associated reduction in demand. In addition, we faced difficult comparisons against a strong prior year when sales grew 78%. EMEA posted lower operating income and margin as our previous price increases were not large enough to offset the accelerated inflation generally, but also more specifically related to cost increases on locally sourced raw materials and energy costs. Our pricing has lagged as many of our customer contracts require a notification period prior to the increases taking effect. As mentioned earlier, we expect our July price increases to meaningfully mitigate the overall impact of these inflationary cost increases. Moving to the international segment, net sales increased 16% and comparable sales rose 20%, equally split between higher pricing and improved volume.
This growth was driven by improved demand in Latin America, especially in note-taking products, as schools and business are now open for in-person education and work. The international segment posted higher adjusted operating income and adjusted operating margin as a result of the higher sales, stronger product mix, and strong cost control. These improvements were driven by the rebound in Mexico and Brazil. Let's now move to the balance sheet and cash flow. Year-to-date, we had a $96 million use of free cash flow, which was a higher use than in the prior year. We seasonally grow our inventory in the first half. However, we also started at 2022 with a higher level of inventory in order to mitigate supply chain issues. Inventory has remained high as we continue to have more in-transit and safety stock inventory than anticipated due to the ongoing supply chain disruptions.
Given these factors, there's a greater proportion of paid inventory. As we bring inventory down, we should shift into a more normal payment pattern. Since supply chain issues have not improved as quickly as everyone expected, we will continue to hold some incremental safety stock and in-transit inventory at the end of the year. Due to business seasonality, we use cash in the first half of the year. We ended the quarter with a bank net leverage ratio of 3.97 times, compared to 4.2 times a year ago. As we generate cash flow in the second half, we expect that ratio to be approximately 3 times at year-end versus 3.3 times at the end of 2021. CapEx year-to-date was $7 million.
We also paid dividends of $14 million year-to-date, while also repurchasing 2.7 million shares of stock for $19 million. At quarter end, we had used $240 million of our $600 million revolving credit facility. Turning to our outlook, we are updating our guidance to reflect a more conservative view for the remainder of the year, including a moderating demand environment, continuing cost inflation, and more adverse foreign exchange. We remain committed to returning our longer-term adjusted gross margin to the 33% level, but this is an ongoing challenge due to higher costs and the magnitude and persistence of inflation. While we now expect adjusted gross margin improvement in the second half, given the first half performance, full-year adjusted gross margins are expected to be flat to slightly down in 2022.
We anticipate adjusted SG&A to be under 19% for the year. We also expect foreign currency impact to be more of a headwind than we had anticipated earlier this year with a 4.5% negative impact on sales and a $0.06 negative impact on adjusted EPS. For the full year, our outlook for reported sales growth is in the range of being down 0.5% to up 1.5%, with comparable sales growth of 4%-6%. Full-year adjusted EPS is expected to be in the range of $1.39-$1.44. The adjusted effective tax rate is expected to be approximately 29%. Intangibles amortization for the year is estimated to be $42 million, which equates to approximately $0.31 of adjusted EPS.
We expect our free cash flow to be within a range of $135 million-$150 million after CapEx of $20 million. Looking at cash uses for the remainder of 2022, we expect to prioritize dividends and debt reduction. Now let's move on to Q&A, where Boris and I will be happy to take your questions. Operator?
As a reminder, if you'd like to ask a question today, that's star followed by one on your telephone keypad now. When preparing to ask your question, please ensure your headset is fully plugged in and unmuted locally. That's star one on your telephone keypad to ask a question. The first question today comes from Joe Gomes from Noble Capital. Joe, please go ahead.
Good morning, Boris and Deb.
Good morning, Joe.
I just first wanna start off on EMEA, you know, with the volume declines there, you know, which is a reversal from the first quarter when you saw volume increases. You had the price increases in April, and you just said, you know, another in July. Is there any concern that maybe the, you know, price elasticity is gaining steam here, as prices have been increased, that there maybe there's starting to be people being a little more cautious in buying product due to the increased pricing?
Yeah, Joe, we're somewhat concerned about that. We're very watchful of that fact. Q2 was really the first quarter with the full effect of the war in Ukraine being felt on energy prices in Europe specifically. I think the macro situation in Europe is difficult as a result. Inflation is very high there. The consumer sentiment is fairly negative as a result. You know, we think
Rather than just pricing and price elasticity, it's more of a macroeconomic issue in EMEA that's affecting demand. You know, as Deb mentioned in her prepared remarks, the inflation is very high, and we need to take price in order to, you know, maintain a semblance of positive margins there. I think that, you know, that needs to overcome the elasticity concerns just because of the level of inflation that we're seeing there, which is significantly higher than in any other parts of the world, primarily due to energy costs.
Okay, thank you for that. And two, on the gross margin, you know, if I'm looking at it, you know, on a sequential basis, obviously improved Q1 to Q2, but if I look at the decline, year-over-year in the second quarter, it was down 290 basis points. In the first quarter it was only down 100 basis points year-over-year. Even though you have been putting in those price increases, you know, just maybe give us a little more color as to how you think just, you know, the gross margin should be improving here in the second half of the year.
Okay, Joe. The margin cadence, as we kind of think about the year, we did talk about the back half expansion. Sequentially, third quarter's much more similar to the current quarter. Volumes are kind of typically equivalent, and as you know, fourth quarter is historically a stronger quarter for us, seasonally. As we think about the back half, the pricing efforts are gonna take a little while to take hold, so again, kind of pushing that to later in the year to mitigate the inflation. Then we're also anticipating, as I said in my comments, you know, more moderation in inflation, which kind of goes as the year progresses.
You know, it's gonna take some time to get there, and that's why I think as you think about third and fourth quarter, you'll see that kind of ever-increasing margin.
Yeah, Joe, then the other thing is last year, in the second half of last year is when we started to feel incremental inflation. From a comp standpoint, that's when the margins started to go down last year.
Okay.
As Deb said, they'll be sequentially improving this year.
Okay. Then one last one, if I may. You know, Boris, you know, last quarter you raised, you know, your comp sales growth projections, and some of the things you talked about then was, you know, the Q1 performance was baked in, your belief in a stronger back to school season and, you know, return to, you know, the hybrid mode. You know, here we sit here today, you know, and, you know, all three of those things you said on the call, you know, obviously Q1's baked in. You know, you talked about a stronger back to school season, you know, a continuing return to in-office. So just, you know, trying to get a little more color or detail, you know, on the pretty significant, change in the sales growth guidance today from the first quarter.
Just a little more color there, if you could, I'd appreciate it. Thank you.
Sure. If you look at a quarter ago, we guided to comparable sales growth of 3.5%-8.5%, and then we took it down this quarter to 4%-6%. All of the things that you mentioned in terms of our expectations for a good back to school, the return to office and obviously Q1 being baked into the numbers, that's still the case. Those are still our expectations. The difference between the quarters is gaming accessories. As we mentioned in prepared remarks, we took that down to minus 10%-15% growth for this year, just given where the market is and what the expectations for the demand are in gaming accessories for the remainder of the year.
That is really the primary reason for narrowing of the growth. The secondary is we're a little bit more concerned about the macro situation, just given what the Fed has done over the last quarter, what the channel partners have reported in terms of their inventory and, you know, what they're seeing with the consumer. Them being a little bit more conservative on replenishment. They're cautious in watching their inventory, and they're cautious in bringing in more inventory. That would be the secondary reason, and the primary would be the gaming accessories. You know, but still, you know, going back to 4%-6% comparable sales growth, you know, any year, we would take that and smile about it.
It's still a very good growth and we're happy with that level of comparable sales growth.
Thanks for that, Boris. Much appreciated. I'll get back in queue.
Thank you, Joe.
The next question comes from Hamed Khorsand from BWS Financial. Hamed, your line is open.
Hey, good morning. I just wanted to ask, you were taking, you know, pricing adjustments in April, and you were giving guidance in, you know, end of April, early May. What was your assumption as to what you thought was going to happen now that you're reversing and lowering sales guidance?
Be more specific, Hamed. Our assumptions about what?
Your assumptions for the sales numbers for the full year when you issued guidance. What didn't-
Yeah
Happen to plan? Because it sounds like you were already taking price adjustments in April.
Yeah. As I just mentioned in my answer to Joe's question, the major difference is gaming accessories. We're still expecting a low single-digit growth in gaming accessories for the year, and now we're guiding to -10% to -15%. What happened during the quarter is really fundamental change in the assumptions of demand for gaming accessories in 2022. Our expectation was that the demand will recover in Q2 and especially in the second half. Now, given what the industry is reporting, what other companies in the gaming space have reported and expectations based on that, and what we're seeing from industry analysts, our expectation is that the gaming market will be down for the year.
Hence that's the major change between, call it, +5% growth to -10%-15% growth in gaming accessories. The rest of it is fairly minor, and as I mentioned, you know, the secondary effect is just more concerned about the macro conditions, given additional quarter. You know, all of the things that we previously assumed in terms of strong back-to-school, strong first quarter, some tailwinds from return to office, those are still our assumptions.
Yeah. I would just say we tightened up the range on our sales guidance, to be clear. We had a much larger range, and we've kinda tightened that down now that we're midway through the year. I just don't want people to lose sight of that either. Our pricing is, as expected, and we continue to do the pricing as we had talked at the first quarter. Pricing assumptions haven't changed.
Okay. Could you provide some insight as to what you're seeing from retailers with fall orders and what the conversation is for, you know, the next 12 months, given the retail environment?
Yeah. 12 months is too far to look at. If we look at, you know, what's happening right now is, channel management is just being conservative with replenishment. Given what we heard out of Walmart and Target in the last couple of months, they are being cautious about how much inventory they carry, especially for their everyday sets. That's partially reflected in our forecast. As I mentioned, that was kind of a secondary factor.
Okay. Does the level of free cash flow change your outlook as to what you would do on the M&A front?
You know, I don't think that's related to M&A. I think, you know, right now, we're happy with our organic portfolio. We think we're capable of low- to mid-single-digit organic sales growth with the portfolio as is. We know we're entering more difficult economic times. Our priority is on delivering and paying down debt. So, you know, whether we deliver $160 million in free cash flow, $145 million in free cash flow, the priority doesn't change.
Yeah, I agree. I totally agree, Boris. In this environment, with interest rates rising and the macro uncertainty, you know, we're gonna prioritize debt pay down.
Great. Thank you.
Thanks, Hamed Khorsand.
Next question is from Greg Burns from Sidoti. Greg, please go ahead.
Morning. With the revision on PowerA, I know semiconductor shortages have been an issue for demand in the space. Was it more than that? Was it, you know, still that, or is it more of a downshift in demand overall?
Hi, Greg. It's both. You know, semiconductor shortages have been plaguing the consoles for a while, and that's continuing. You still can't get a PlayStation 5 or a Switch or an Xbox in most places when you want it. Also, there's a demand impact as well with opening up of the economy post-COVID, you know, with revenge travel going on, people being out and doing, you know, other things. Certainly we've seen the demand for gaming has gone down. That's been well reported by multiple players. You know, just recently you saw from NVIDIA, earnings release from NVIDIA, from Corsair, from Turtle Beach, they're all reporting the same thing. The demand is down as people are doing other things. The long-term prospect of gaming is still very, very positive.
You still have billions of people, that's with a B, gaming all over the world. The long-term prospects are positive, but you have this huge buildup of demand during COVID years, where the demand for gaming and gaming accessories way exceeded anyone's expectations. Now it's being normalized and resetting to kind of a normal trend. We're coming down from highs to, you know, normal levels of demand.
Okay. If it comes off 10%-15% this year, is that the base to grow off of? Or is there still more like to get back to pre-COVID trend, is there more downside to that?
No, we think with the 10%-15% it will get to what it was to get to a pre-COVID trend, and we think we can grow off of that in 2023.
With that in mind, in terms of expanding beyond North America to Europe and maybe Asia, what are the plans there and the timing of that?
Yeah. Great question. You know, PowerA is going really well. Most of the demand reduction that we've seen is in the U.S. specifically. The business is doing fairly well in Asia and EMEA. It was kind of flattish in Europe, and It's actually growing Q2 in Asia. We are accelerating our plans to use our on the ground sales force in EMEA and Asia to sell more gaming products. So hopefully we can make incremental progress there and drive additional sales. That's certainly our expectation is for growth in the second half in those two regions. That's small for us. It's still about 25% of PowerA sales for us. But we're certainly accelerating the efforts in those regions.
Okay. Lastly, I know you said you were prioritizing debt reduction and dividends, but you did buy back a little bit of stock this quarter. Is that something that's on the
Right
radar screen now?
We took, as we've talked about, the opportunistic approach and given where the stock price was, and where it was trading, we took that opportunity to buy our shares. As you saw, 3 million shares. Going forward, we've always said we'll have a balanced capital allocation. You know, the opportunistic approach, but prioritizing dividends and debt.
Okay, thank you.
Thanks, Greg.
The next question is from William Reuter from Bank of America. William, please go ahead.
Hi. Good morning. My first question.
Good morning, William.
Hi. Hey, Boris. In the 4%-6% comparable sales growth, how much of that is pricing and what's implied for units?
Price is higher than that and units are down.
Okay.
Beck said that in the quarter we raised prices were up 8%. Since we're raising prices, you'd assume that for the year it would be even higher than that.
That's right.
The volume will be negative. That's our assumption.
Got it. Okay. Yeah. The most recent July first price increase, that one was 8%?
It varies.
It varies. Yeah.
It varies. It really depends on the country. I don't think it was 8% on average. It was lower than that.
Correct.
Q2 pricing.
That was the pricing.
versus Q2 of last year is +8%.
The cumulative effect of pricing.
Yeah.
Okay. When talking about the longer term outlook for PowerA, you continue to expect, I think, low double digit growth. What gives you the c onfidence that that will be the long-term outlook? What are the data points or things in the industry that you're hearing that would suggest this is the right amount? I don't know enough about video games.
Yeah. If you look at PowerA's track record, historically, they've grown faster than the industry. If you look at the industry historically has grown about 13%, and PowerA certainly has exceeded that. If you remember last year, it grew, for example, 23%. We've seen estimates of growth from industry analysts, and they're forecasting as an industry, roughly mid-single-digit growth, going forward. But with the incremental efforts for us to expand our share, which we think is underrepresented in EMEA, in Asia, we think we should be growing faster than that, and we think we should be growing in at the low double-digit growth rates.
Okay. Just lastly for me. I'm not sure if we're at a point now where you would call it normalization of office work, but when you look at the office components of your office supply business, where are we relative to pre-pandemic levels? How much of that business may have been permanently reduced, or do you think that's more or less being offset by, you know, those products being purchased for home and hybrid work environments?
Yeah. Overall, if you look at it from a comparable basis, we are slightly below where we were in 2019 overall. Kind of the degree depends on the region and where they are vis-à-vis their recovery from COVID-19 pandemic. Specific to office, that's still a positive for us. If you look at our commercial sales, they were up 7% or so in the quarter compared to last year. We still are seeing people returning to work. In fact, you know, if you look at the Kastle office occupancy tracker as a proxy for that. They recently hit a high of office occupancy. It's still significantly below where it was in 2019, but it's moving in the right direction, and it is a tailwind for sales.
We, you know, we expect that to continue. We don't think we'll never be at 100% office occupancy. We think the hybrid is the future model, but certainly that hybrid includes people being at work 2-3 days a week. That's a good thing for us because there'll be demand of office supplies, business supplies in the office, and whether they use them in the office or home from a kind of a sales perspective and a channel fill perspective, that's a positive thing for us.
Great. That's all for me. Thank you.
Excellent.
Just a reminder, if you'd like to ask a question, that's star followed by one on your telephone keypad. The next question comes from Karru Martinson from Jefferies. Karru, please go ahead.
Good morning. When you look at the retailers being conservative with replenishment, how was the back to school ordering to begin with? Where are we at on inventories at retail today?
Yeah, back to school was good. You know, as Deb mentioned in her remarks, retailers took product early. They wanted assurance of supply. We had a little bit earlier loading that historically loaded in Q1 and a lot in Q2. They know they need to have inventory for this, for the season. You know, we didn't see any delays in back to school. The challenge is folks being a little more conservative on the everyday set and the replenishment of the everyday set.
When do replenishment orders for back to school normally happen? Like when would you have insights into that figure?
You know, normally we see it second or third week of August. They should be happening as we speak. You know, we're still early in back to school. This is still, you know, roughly a quarter of the season through. You know, next week or so, this week or next week is when the orders normally come in.
All right. When we look at the office orders, certainly commercial sales up 7%. You know, what's the outlook when you look at your overall growth guidance for commercial for the rest of the year?
I'm not sure we broke it down that way, Karru. I mean, overall, we're looking at 4%-6% growth. My expectation is with a 4%-6% comparable growth, there's positive growth for office for the year, but I don't have the exact magnitude. I don't know, Deb, if you have the-
I don't have it. We didn't look at it that way.
We didn't look at it that way for the year.
Okay. No worries at all. Then with the free cash flow, the debt pay down priorities, I'm assuming here we pay down the revolver, correct?
Yes, that's right. Yes.
Thank you very much. Appreciate it.
Thank you.
As we have no further questions, I'll hand back to the management team for any closing remarks.
Thank you, Adam. Thank you, everybody, for your interest in ACCO Brands. Our company has a proven track record of managing well and increasing our competitive advantage in periods of economic uncertainty. We're confident we have the right strategy and believe we're well positioned to continue to deliver organic sales growth, compelling market performance, and improved financial results in the second half of this year and beyond. We look forward to talking to you in a couple of months to report on our third quarter results. Thank you.
This concludes today's call. Thank you very much for your attendance. You may now disconnect your line.