Earnings Call: Q1 2020

Sep 10, 2019

Good morning. Welcome to the Astead Group results call. I'm joined by Michael Pratt, and together, we will cover the Q1 financial and operational performance of the business. Before we get into slides, I'd like to take this opportunity to thank our U. S, U. K. And Canadian teams for their dedication and engagement, particularly around our leading value and priority, which is the safety of our team members, customers and members of the public we serve. It's in the spirit I share a recent milestone achieved by 2 of our team members. Twin Brothers and Sunbelt drivers, Charlie and Ed Smith, out of our Tucson, Arizona branch have each accumulated 1,000,000 miles without a single incident or DOT violation over their 20 year Sunbelt careers. Given the complexity of this profession and operating such large rigs with hundreds of product types and catalyst delivery sites, we as a company are very proud and appreciative of Charlie and Ed. If any of you want to get a glimpse of the Tucson Twins, they were featured in our recent annual accounts on Page 46. Well done, Charlie and Ed. So let's jump right into things with the highlights on Slide 3. We've enjoyed another strong quarter of revenue and profit growth, delivering a nice start to the New Year. This growth is a result of our operational execution, further indication of continued strength end markets and the ongoing structural change very evident within our industry. Opportunities were presented for all of our capital allocation priorities as we invested in existing location CapEx, greenfield openings, key bolt on acquisitions and £125,000,000 in share buybacks, possible through our strong cash generation and balance sheet position, all while remaining comfortably within our stated leverage range. With another quarter behind us and now deep into calendar year 2019, we continue to look to the medium term with confidence. So before I get into some of the more detail and some added color, I'll hand it over to Michael to cover the financial results. Thanks, Brendan, and good morning. The group's Q1 results are shown on Slide 5. And as Brendan said, it's been another quarter of strong growth in revenue and profitability. As you're aware, we adopted IFRS 16 on the 1st May. I think it's worth reiterating that while its adoption impacts our financial statements, it does not affect the economics of lease transactions, our cash payments, our business plan or our capital allocation policy. As a result of the adoption of IFRS 16, our measures of profitability and margins are not directly comparable to comment on and draw comparisons from the I'm only going to comment on and draw comparisons from the pre IFRS 16 figures, given that it is these that are consistent with the prior year. The group's rental revenue for the quarter increased 16% on a constant currency basis. The EBITDA margin was strong at 40 7%, but it does reflect the drag effect from the significant number of locations added last year and the opening of 18 greenfields and the completion of 6 acquisitions this quarter. With an operating profit margin of 29%, underlying pretax profit increased 9% at constant currency to £326,000,000 while earnings per share increased 12%, reflecting the profit improvement and the impact of the share buyback program. Turning now to businesses. Slide 6 shows Sunbelt's 1st quarter results in the U. S. Rental and related revenue was up 18% as Sunbelt executed well on its organic and bolt on growth strategy and continued to benefit from strong end markets. The EBITDA margin was strong at 50%, although reflected the drag effect of the significant number of new locations added in the last year. Operating profit improved by 15% in the quarter to $443,000,000 at a 32% margin. It's worth highlighting that ROI remains strong at 24% despite the ongoing significant investment in the business. Turning now to Sunbelt in Canada on Slide 7. Rental and related revenue growth of 22% benefited from the full year effect of a number of acquisitions over the last year. This generated EBITDA of $35,000,000 and operating profit of $16,000,000 at margins of 37% 17%. The Canadian business is performing as we expected with year over year comparisons affected by M and A activity over last including the impact of the lower margin boiseans business. We continue to drive operational improvement from the acquired businesses and our follow on fleet expenditure 20% over time. Turning now to Slide 8. A Plant's rental and related revenue was broadly flat at £109,000,000 The 5% increase in total revenue reflects a higher level of used equipment sales than a year ago as we de fleet underutilized and lower returning assets, consistent with the plan we outlined in June. The market in the UK remains relatively flat and competitive. These factors have contributed to weaker margins in the quarter with an EBITDA margin of 32% and operating profit margin of 12%. Brendan will comment further on our progress on the operational plan for AFAM. Slide 9 updates our debt and leverage position at 31 July. As expected, net debt increased in the quarter as we continue to invest in fleet and bolt on acquisitions and continued our buyback program. In addition, the adoption of IFRS 16 added £883,000,000 to debt on the 1st May, in line with the guidance we provided in June. Leverage at 31 July was 1.8 times on a constant currency basis, excluding the impact of IFRS 16 and 2.1 times including it. Our debt facilities are committed for an average of 5 years at a weighted average cost of less than 5%. Thus, our leverage and well invested fleet will continue to provide a high degree of flexibility and security in support of our 2021 plans. And with that, I will hand back to Brendan. Thanks, Michael. We'll now move on to some of the operational detail. As you can see from the chart on Slide 11, Sunbelt U. S. Delivered rental revenue growth of 18% in the quarter, led by strong organic growth of 12% and 6% from bolt ons. The strength of our organic growth in particular demonstrates the continued outperformance of our mature and recently opened locations against the market as well as the ongoing demand environment. I would note that while this is a strong start to the year against our guidance, we do take on more difficult comps further in the year as we lap hurricane activity and acquisitions. Hence, our full year outlook remains positive, but unchanged from June. As we move to slide 12, you will see the utilization and rate environment remain strong. The business has delivered strength in both of these metrics with a fleet 20% larger than a year ago. As favorable as these metrics should be viewed as they are, I'll remind you the drag impact on them our investment in greenfields, bolt ons and specialty product mix have had, which we covered in quite a lot of detail as part of our full year results presentation. This should not take away from the underlying strength very present in our business and the market. Moving now to Slide 13. Consistent with our expansion update in June, we've continued within the framework of our 2021 plan, adding 22 locations in the quarter, spread between specialty and general tool and once again being led by our greenfield program and augmented by key strategic bolt ons. This balance is unique to our own growth strategy. And as you would expect, we have a very clear pipeline of greenfields in place for the remainder of our 2021 campaign. This pipeline is very much supported by customers signaling their desire for Sunbelt's expanded presence, both geographically and in specialty products. The largest bolt on in the quarter was the addition of King Equipment in Los Angeles, where we invested $160,000,000 Let's take a closer look at this as we move on to Slide 14. The addition of King joins what was in my view, the premier aerial work platform provider for the Los Angeles market with the power of Sunbelt, accelerating our growth and presence in the 2nd largest rental market in the U. S. The business brought with it a great team of people and incredible customer relationships. It is with these key attributes we will add this business to our Los Angeles area collection of locations to better service our existing and new customers to further develop this very key market. A good comparison as an example of what we set out to achieve with an acquisition like King is to take a look back at our Pride acquisition in 2017. Pride was a clear market leader in aerial work platform to the New York City market and again a business with a great reputation. And as you'll see on the right side of Slide 14, we've grown that business by 45% over just more than 2 years. This was very profitable growth as we leveraged the cross selling opportunities. And today, we not only have a larger business in New York City, but a far more diverse business. We expect very much the same in Los Angeles. Let's move on from a couple of specific markets to the market landscape at large. On Slide 15, you'll find a number of relevant U. S. Construction statistics and forecasts. Our view of the end markets remains very much unchanged from what we reported in June. The construction market forecasts have not changed and feedback from our customers continue to indicate broad strength in current activity and in their backlogs. In fact, many have just been awarded or have just begun projects that will go on for 2 plus years before completion. It's examples like these that add some clarity and perhaps confidence to the root of the put in place forecast you'll see on the bottom right of the slide. The Dodge forecasts were updated in July, however, remain largely unchanged from their April figures. Here we are another quarter and more of the same. In this latest version, you'll again see in 2020 2021, they have forecasted a slowing of 1% 2% respectively, followed by growth years in 20222023. The key in the context of the construction component of our business is to take a close look at the levels. If these Dodge forecasts are broadly accurate, 2021 will be the forecasted trough, which will be about the same size in absolute terms as 2018, which was one heck of a good year for us. So here we are, 3 months removed from our full year results and 9 months into the 2019 calendar year. And as it relates to the construction component of our business, look at where we are. There are forecasts on the horizon showing a slowing in the construction market. However, I will emphasize what I said in June. Attention is often too much on when the construction markets may take a turn rather than to what extent they may. So let's stay on end markets, but let's clearly shift from construction and take a look at Slide 16. As the slide is titled, our business services end markets far beyond construction, and in fact, we do increasingly so. Greater than 50% of our business revolves around everyday operations, maintenance, repair and events in the geographic markets we serve. These markets are showing no signs of dampening. Indeed, maintenance events like live entertainment and festivals and certainly, and I guess perhaps more top of mind natural disasters like Hurricane Dorian, just to name a few, pay no attention to economic cycles. This large piece of our business is very much in the early phases of structural change in its most basic form. The products and services related to these end markets and applications are in their early days of rental penetration. This is a very large space that is growing as we over time create a reliable alternative to ownership through our larger than ever platform, clustered market model and specialty business development. Moving on now to our Canadian business on Slide 17, where our team are very focused on delivering great service to our growing customer base and already differentiating Sunbelt from the pack as we begin the process of accelerating our specialty offerings, defining a clustered market unlike any other in Canada. I'll remind you this is still a young business, having grown from its origins in late 2014 as a $15,000,000 business to its current plus $350,000,000 And as Michael will have covered, as a result, be susceptible to quarterly noise as impacts from growth and investment are not necessarily absorbed as they are, particularly when we compare them to their larger peer just to their south in the U. S. However, the important thing is that Canada is a vibrant and attractive rental market with a very long runway for growth. I'll move on and highlight our A Plant business on Slide 18. As I covered in our full year results, we initiated an exercise to dispose of targeted underutilized and underperforming fleet, which is now well underway and we expect to complete by the end of Q2. This is as expected has had some effect on the results in the quarter, which we will soon get through. Importantly, however, the A Plant team are incredibly focused on what is generally outlined on the slide. With our broad network of general equipment and specialty locations, we will deliver market leading customer coverage and service, while executing on the operational leverage and the subsequent financial results that one should do with such a platform. Given the current market conditions here in the UK, this will of course come over time, not overnight. It's worth noting the business is well on its way to eclipse £100,000,000 in free cash flow from which we established as a deliverable at the onset of the year. As you will see, we've more than doubled the cash generation in the quarter when we compare it to last year. I want to take this time to make mention that you will hear from you'll hear our longer term strategic plan from the A Plant team as part of the Capital Markets Day we will be hosting in April 2020 while in Washington DC. So turning to capital allocation on Slide 20. Our priorities remain exactly as they were. We've invested 5 £21,000,000 in existing location fleet and greenfield openings and a further 196,000,000 in bolt ons, largely from the King business I've just covered. We've spent $125,000,000 in buybacks for the quarter and are on track to spend a minimum of $500,000,000 for the full year. So moving on to our final slide, I hope the takeaways from our Q1 update is very much more of the same. We've had a strong start to the year. We are operating in end markets that remain strong and have a long runway for continued growth in market share, diversity and structural change. This growth and the significance of our cash generation capabilities put the Board in a position to continue to look to the medium term with confidence. And with that, we'll open the call to questions. Thank you. And our first question is from Andy Wilson from JPMorgan. Please go ahead. Your line is open. Hi, good morning. I'd just like to ask about the bolt ons. It seems obviously you made good progress in terms of the Q1 and the level you manage to do in U. S. And clearly King is a big component to that. But the guidance for the full year is kind of is being retained as sort of 2% to 3%. And if I just annualize what you've already acquired, it feels like that's a fairly conservative comment. I'm just trying to sort of square that with your comment, Brendan, on just the pipeline continuing to very good. I mean, that feels to me that it's probably a fairly conservative expectation for the full year on bolt ons. Is that a fair We are we have, in essence We are we have in essence kind of canceled out the King acquisition we've just done with what would have been the Interstate acquisition, which was the same size a year ago. And remember, we did have some notable acquisitions as we moved on through the year last year with Mabee and Temp Air, most notably. So we just simply aren't in a position right now where we think that we will fully make up for what those acquisitions were. So could it be just a bit on the conservative side? I guess it's hard to argue against that. But if we were to do no more for the year, that's exactly where we would stand. That's great. If I can just follow-up with a couple of other quick ones. Just on the rates environment, just interested as to sort of any commentary on what you've seen through the quarter and kind of, I guess, what you're seeing in Q2 already just in terms of following up obviously on some competitors' comments, just interested to hear your thoughts. Yes. I mean, look, rate environment is strong. You have heard from our listed peers talking about rates and the strength in the overall market. Of course, you'll see on our Slide 12 that we have the right movement in rates. So rest assured the market is strong. And I do think as much we spent a lot of time at the full year, going through the detail, the progress, the great results of our recently opened or added location. We've added that slide again in the appendix in Slide 24. I think it's important that we continue to keep that in context. So our new locations that we have come on at a slightly lower rate. So not only are we progressing rate as you can clearly see on Slide 12, we're progressing rate now having 207 new locations in the last 9 quarters. So again, your headline is correct. The rate environment is very strong out there. And maybe I can ask it's a slightly broader question, but I think the point around the free cash flow air plant I think is interesting in the sense of how much of that is a useful indicator in terms of if we were to see a slowing in the Sunbelt business of how you'd expect the cash flow to develop? Because clearly, we're seeing quite an interesting sort of countercyclical development in the free cash flow. I'm just interested as whether anything you particularly point out which is different to Sunbelt versus Air Plant and just how the cash might develop in a similar circumstance? Yes. Well, I mean, look, I think we have to be careful to compare it too, too much. But from a cash standpoint, there's no doubt about it. Look, it's as simple as this. If you ease back on the spigot and or you tighten the spigot, I should say, a bit when it comes to your investment in fleet and any other capital priorities you might have. Our businesses are underlying incredibly cash generative. All you have to do is look back at the cash generative natures of our business. When we went through our last recession, it would just be stronger and demonstrably different this time around. So look, we can, just from a scaling back on the growth CapEx and the M and A alone generate loads of cash in the Sunbelt business. That's great. Thanks, Ben. Thank you. And our next question is from Arnaud Lehmann from Bank of America. Please go ahead. Your line is open. Thank you very much. Good morning, gentlemen. My first question is regarding your outlook. And I guess you gave some color already about generally positive outlook. But could you please split it up between, let's say, construction and non construction? I guess, in particular, there are kind of early sign of slowdown in U. S. Industrial activity. I appreciate that's probably not a huge part of your business, but could we get a feel if there are any sub segments where maybe the outlook comments are not as strong? No. I mean, look, we literally, over the last week, dug into every aspect of our business to look closer to say as late as this morning, Michael and I said, well, what about oil and gas? Well, oil and gas is up year over year and producing $2,000,000 extra profits than it did last year, notwithstanding the fall in oil prices that have been experienced. So there really are areas that we can pick on. Look, I want to be careful too when I say, construction as we sit here today has not slowed. All we're saying is that there is a rather logical forecast that the construction component of our business could dampen a bit in 2020 2021. But I'm glad you asked that. Think about this. Here we are in September, virtually 9 months through the calendar 2019 year. We're getting pretty close to solidifying what the construction year will look like in 2020, certainly the first half of what old construction will look like in 2020. The last 3 months, we've seen starts go up, but be careful. Let's not overreact when we see starts go down. If you look closely at Slide 15, particularly on that construction starts line graph, we're actually in that forecasted period of that growth there that you'll see in 2019. So we're about 2 or so months away from what is the forecasted peak in starts. But keep in mind, that forecasted level of starts, which will, if the forecasts are correct, begin to slow, will lead to the put in place construction environment of minus 1 and minus 2. And let me just make it absolutely clear. If we have a construction market, if Dodge is correct in their forecast, that is minus 1 and minus 2 in 2020 2021, we will grow right through that. So from a construction standpoint, that's how we see the end market. Time will tell whether or not they're right. If anything now, you could argue it probably gets nudged back. Frankly, I'd almost rather we just go through it so we could demonstrate all the cash generative principles that were asked about there by Andy. And as I said, from a non construction standpoint, there's nothing out there impacting our business as it continues to grow in these areas that have significant long runway and structural change ahead of us. And I think that is a very important point for people to get their minds around. Okay. Thank you. That's very clear. Maybe just a second one, if I may. We've seen some companies in the UK with large U. S. Exposure going for a UK demerger rather than a UK disposal because I assume these days it could be probably challenging to sell a large U. K. Business. Is it something that you could consider for A Plant going forward? Look, obviously, we know exactly who you're referring to, but I appreciate you leaving them unnamed. Look, of course, we follow the activities there. Plain and simply, has no bearings on our strategy or on our listing, and that's all we really have to say about that. All right. Fair enough. Thank you very much. Thank you. And our next question is from Steve Wolf from Numis Securities. Please go ahead. Your line is open. Good morning, guys. Just a couple from me. First of all, could you comment on the CapEx you have spent growth wise, specialty versus general tool? Secondly, just your thoughts on duration over the past quarter. And thirdly, just for my benefit, just to sort of outline what the hurricane benefit was last year, just as we look at unfortunately with Dorian this year? Yes. Well, first of all, from a CapEx standpoint, Steve, we can get back to you on the exact breakdown between Specialty and General Tool from a growth standpoint. But it's going to be biased to Specialty, particularly from an overall weighting. I mean, look no further than the greenfields and the bolt ons we've added, the 207 that we have in the slide deck. If I remember right, 61 percent of the 207 are specialty. So that CapEx is going to kind of fall in line with that. It won't necessarily be 61% of the growth CapEx because it's only about 24%, 25% of our overall business. But CapEx is does take a bias, if you will, to the specialty business. As far as hurricanes go, look, it's important to understand, Doreen, first of all, I think it's worth pointing out that we're happy to report that all of our people are okay. It looked like this could be a real significant event, particularly in Florida. And as you would have all seen on the news, it obviously wasn't the case. Very sad what we've seen happen to the Bahamas. As you can imagine, our teams are kind of on the standby and ready to respond. Frankly, at this stage, it's been more of a people sort of response up until now to help evacuate some of those poor people who are going through what they are in the Bahamas. Look, of course, we responded with our first responders to prepare for a landfall and the subsequent power outage and damage that a storm would do. But in reality, what's happened is Dorian has just kind of skirted all the way up the coast. And it's a coin toss at this point whether it's taken more away from our everyday business versus what we responded to. So we had a great, great team in terms of responding and we put a lot of gear out there, but it was a give and take with that which we closed. And Mike, do you know offhand the last year's impact? Well, remember, last year Q1, there was no impact. Q2 was $15,000,000 to 20,000,000 dollars of revenue in Q2. And so that's and so it's really where we're looking forward to. But as Brendan said, I think it's too early to tell, but it may well just be a wash or something close to breakeven on the impact certainly from Dorian. Yes. And then finally, you touched on duration mix, which you can you may have noticed that it was left out. It was left out. It's exactly the same as it was. So mix is having no influence. Perfect. That's great. Glad everyone's safe. Thank you. Great. Thank you. See you tomorrow. And our next question is from Will Curtis from Jefferies. Please go ahead. Your line is open. Thanks. Good morning. I had a couple, please. The first one was just if you could give any color around the rates of growth you're seeing in specialty versus general tool? I think you talked about it fully numbers, so that would be useful. And secondly, just thinking about deals and multiples. If some of your smaller peers are looking at the Dodge forecast and maybe thinking pretty flattish for them in the next couple of years and now is maybe a good time to sell the business. Are you seeing a more active pipeline? And just wondering whether there are any implications on multiples? Thank you. Yes, Stuart. I'll start with the latter. I mean, I think keep in mind, so much of our pipeline is a very organic ground game, if you will, I like to call it, based strategy. So it is a perpetual shoulder tapping where we're building relationships with business owners that we progress at various stages at various times. So I wouldn't say there's any real difference. There was about a couple there was about 2 years ago. We saw some activity where some businesses said, hey, what's the horizon really look like? I've had a good run here and maybe now is the time. I wouldn't characterize that as to where we are today. There's just a reasonably healthy pipeline like we've had. And as always, we're engaged in conversation. And it is affecting multiples, 0. If anything, given the multiple we're trading at, which I think any good management team would think that we should be trading the whole hell of a lot higher. We will use that from time to time. So they're trading very consistent with what they were. In terms of our specialty growth rate, that's a good question. And it is very much the same. It's just a bit it's about 2x what our general tool business is growing. So our business our specialty business is growing at a rate of 2x. And of course, that's important when you think about what the makeup of our business is over time. If you take our roughly 55% nonconstruction business And if your specialty, which is roughly 90% non construction, is growing at 2x your general equipment business, then you're going to get pretty quickly to a lot less construction. So yes, that continues to trade at 2x. Okay. Thanks so much. Thanks, Will. Our next question is from Edward Stanley from Morgan Stanley. I've I've only got one. The others have been asked. But in terms of the staff cost, it's rising as a portion of sales slightly. Is there anything else going on there, any inflation that you're seeing in the market that we should be wary about for the rest of the year? No, no, no. I mean, there's no anomalies in the whole thing. I mean, keep in mind that the staff costs that are rising are very much tied to that slide where we showed 2 0 7 new businesses. So obviously, that's the reason why they will be a bit less margin on the outset. It's the reason why there'll be a bit less time utilization on the outset. And remember, when we do these acquisitions, just like in King, we are very specific about the market, very specific about the quality of the business, and we buy these businesses to drive revenue synergies. We don't make our math work because we can drive out cost synergies. So for a short period of time, as you're absorbing these and then you begin to get that cross selling going, it weighs a bit, but I think it's just more of what you've been seeing. So there's nothing of note to point out, Edward. Thank you. And our next question is from jadeep Kumar from HSBC. Please go ahead. Your line is open. Hi, good morning. Rajesh Kumar from HSBC. Just looking at the Dodge forecast, obviously, the forecast for the whole of the U. S. And your business is not evenly spread across the U. S. So just from business mix, specialty versus construction, just from the geographic differences, how different would you expect your performance to be compared to the broader non resi market forecast? And then on the cost of time yes, go ahead, please. No, please go ahead. Yes. The other thing is going into, say, an 'nine downturn, you were significantly overweight Florida and you had more non residential construction in the mix. Also, you did cut rates. So what are the differences from that time compared to now that might drive a slightly different performance, which I talked about earlier. Yes. Interesting you say that because I was going to answer your question using the example Florida in 2,009. So anyway, look, so the question in general, talk about mix of construction and what that forecast. Yes, of course, there are geographies within the U. S. That have a more favorable forecast and there are those that have a bit less favorable forecast. You'd be surprised that when you look at it, it's remarkably the same from a moving standpoint. But here's what happens. Let's take King for instance or Los Angeles. In Los Angeles, we are relatively or I should say this, we are incredibly underpenetrated to where we ultimately would like to be in Southern California. So is our business as developed there, as it is elsewhere? Well, no, of course not. If you look at the construction environment there, you'll see strong construction forecast. As a matter of fact, some really, really big projects that have just started. I'll reference one, for instance, because one of the guys was talking about it the other day, a big, big win we just had at LAX. That's a $5,000,000,000 3 year project. So the point is, there's enough construction in LA just today for us to sustain really, really good results with the business size that we have. If you look at some of the other markets and let's just say there is a material slowing in the Southeast states, the Carolinas, Georgia and Florida. The big, big difference between our business today and what our business was last time around is that we have significantly diversified and spent any time whatsoever in Orlando, Miami, Tampa, Jacksonville or Atlanta. And I would challenge you to be in any sort of event, whether it be a weekend festival or it be a volleyball tournament or it be an F1 race through the streets of Miami and you will see Sunbelt Green everywhere. Events, which don't have anything to do with these cycles, continue to go on and our business is far, far more event driven and general MRO driven than it was before. In terms of rates, look, we've covered this a lot. We've given live detail on this in Capital Markets Day and certainly we will do again in April in Washington, D. C. We simply have the real time tools that we put in all of our sales reps and all of our counter customer service representatives' hands that understand who the customer is, the duration of the rental, the type of rental, our time utilization. We fully understand what that customer is looking for and we will have we do have much, much better controls today that allow us to lever rate in a far more precise manner than an across the board manner like we did last time. Our next question is from Nicole Mannon from UBS. Please go ahead. Your line is open. Hi, thanks. I just wanted to ask about the specialties. Obviously, you see that as attractive. Is the rate there higher because penetration is lower, because competition is less intense? Or how else should we think about that? Yes. That's I mean, look, that's certainly the starting point. These are on the niche year end of things in terms of products themselves and it's very early. So if we take I think it's fairly well understood, so we'll talk about it as it relates to flooring. Up until now really where we have built out a platform across the U. S, where we are offering customers who traditionally would have just bought. We're offering them a reliable alternative to ownership in the form of rental. And it's very early in that maturation. We're kind of 3% rental penetrated today. It's a matter of CapEx v OpEx. And the amount of savings we are bringing to them by way of not requiring them to spend that CapEx and use that OpEx as a top ex rental, if you will, is precisely why. So yes, we definitely get higher rates as it relates to what ultimately becomes dollar utilization. But I'll remind you, there's a bit lower time utilization in that scenario. But in a nutshell, your question had the answer in it. Okay, great. Very helpful. Thanks. Thank you. And as there are no further questions, I will hand the word back to the speakers for any final comments. Great. No, thank you so much for your time today. I know we'll be seeing some of you over the next day or so. I'll just remind everyone that we have an incredibly positive outlook and we're very pleased with the results for the quarter and we'll see you at the half year. Thank you.