Basic-Fit N.V. (BFIT) Earnings Call Transcript & Summary

Hello, and welcome to the Basic-Fit 2024 Half Year Results Conference Call and Webcast. Please note that today's conference is being recorded. [Operator Instructions] I will now turn the call over to your host for today's conference, Richard Piekaar, Head of Investor Relations. Sir, you may begin.

Well, thank you, Francois, and good afternoon, and welcome to our conference call, everyone, during which we will discuss our results over the first half of 2024. With me today are Rene Moos, our CEO; and CFO, Hans van der Aar. This call is being broadcast live on our website, and a recording of the call will be available shortly afterwards. As usual, I would like to point out that safe harbor applies. We will start with Rene, who will discuss the highlights and the operational developments, followed by a more detailed look at the financial results from Hans. After these prepared remarks, we will open the call for questions. Also, the call will finish no later than 3 O'clock. And with that, Rene, I would like to hand over to you.

Thank you, Richard, and welcome, everyone, for joining today's call. We achieved a strong set of results in the first half of the year, a period in which there were still macroeconomic and geopolitical challenges. During the first 6 months, we expanded our club network to 1,537 clubs and a membership base to 4.1 million. Compared to a year ago, our revenue increased by 17% to EUR 584 million, and thanks to a larger base of mature clubs in our network in combination with an increased focus on overhead costs, we could increase our underlying EBITDA less rent at a faster pace of 26% to EUR 139 million. Let's go to the next slide on club openings. In the first half of the year, we grew our club network by a record of 135 clubs. Year-on-year, this represents a growth of 234 clubs or 18%. With the full year guidance of our network growth to around 1,575 clubs, we will open a more limited number of clubs in the second half of the year. In 2023, the growth of our network was more evenly spread across the first and the second half of the year. This year, the net growth of our network in the first 6 months is 78% based on the full year guidance. Our Spanish network recorded the highest net growth of 62 clubs or 45%, reaching 201 clubs. I will provide more details about Spain and the integration of the RSG Spain clubs on the next slide. In France, we added 53 clubs to our network reaching a total of 834 clubs. Compared to a year ago, our French network increased by 116 clubs, which is an increase of 16%. In our newest growth market, Germany, we opened 12 clubs, increasing our German presence to a total of 24 clubs. Compared to a year ago, our German network has grown by 18 clubs. What we observed is that the clubs in Germany that we have opened in 2024 are showing stronger growth trends after opening compared to the clubs we opened last year. Although it is still early days, and we still have limited brand equity in the region where we operate, I believe that the stronger trend is the result of applying our learnings and increased brand awareness. One does not make an impact in the local markets with just one club. But once people see that you are becoming a logical and affordable choice, thanks to our cluster strategy, trends will improve. In the first half of this year, we opened our first club in Berlin, Frankfurt and second club in Bremen and Cologne. Lastly, our Benelux club network increased by 8 clubs with 4 openings in the Netherlands and 4 in Belgium. Let's go to the next slide about the RSG Spain integration. Last December, we announced the exciting news that we reached an agreement with the RSG Group for the acquisition of RSG Spain. At the end of March, we announced the finalization of the acquisition and more recently, we finalized the sale of the 5 Holmes Place clubs that were part of the original 47 club deal. This means that on balance, we have acquired 42 McFIT Clubs. Nearly all of these clubs will be rebranded and refurbished as a Basic-Fit Club by the start of the important sales season in September. On this slide, you can see where the 42 clubs are located. We have a regional approach when it comes to conversion, and we are well underway in the Madrid and Barcelona clusters. At the moment, at the end of July, we have already successfully converted 19 clubs and 4 clubs are currently in the process of being converted. On the next slide, you can see some pictures of a few recently converted McFIT Clubs. Our team in Spain is doing a remarkable job with regard to the pace and efficiency of the conversion process. As you can see on this slide, these clubs look like brand-new Basic-Fit clubs and are a good and welcome addition to the Basic-Fit network in Spain. Let's move to the next slide on membership growth. In the first half of the year, we increased our membership base by almost 300,000 to 4.1 million. Compared to a year ago, our membership base increased by almost 0.5 million members or 13%. We recorded a membership growth in all our countries with the strongest performance in the Benelux countries and Spain. In Germany, as I explained in the previous slide, we see a gradually improving membership growth trend, notably with the newer clubs as we continue to build brand equity. Market conditions in France remained somewhat challenging during the first half of the year. The second quarter, however, showed some improving growth trends in France. In our Q1 trading update, we announced the implementation of new management structure in France, in which we separated the responsibilities for club expansion and club operations. We have also divided the country in separate regions with each region being overseen by its own dedicated business manager. To further improve the membership experience, we continue to invest in the quality of the clubs, including the offering of massage chairs and longer opening hours, which we are currently testing in different clubs and in different regions. The uptake of the premium membership by joiners remained around 50%. Premium membership accounted for 43% of our total membership base at the end of the first half. Note that our total membership base including the new RSG Spain members who do not have a premium membership. Excluding these new members, the penetration rate would have been 44%. Although we are only about halfway the conversion of [ all ] McFIT clubs in Spain, so far, membership trends post conversion are better than we expected. Let's go to my last slide before I hand it over to Hans. As we have explained at the time of our full year 2023 results, in our club rollout plans for 2024, we have taken into account the cash flow and macro developments. With year-to-date 143 net openings today, we now operate a network of 1,545 clubs. As I explained before, our club network growth is skewed towards the first half of this year. This automatically means that a more limited number of openings are planned for the second half of the year. With that in mind, we confirm our club growth target for 2024 to around 1,575 clubs compared to 1,402 clubs at the start of the year. For the full year, we expect the average CapEx for newly built club to increase slightly to around EUR 1.25 million from EUR 1.18 million in 2023. The small increase reflects a combination of modest cost inflation and fewer regional club openings in France than in 2023. This concludes my part of the presentation. I now hand it over to Hans for the financial review.

Well, thank you, Rene. In the next 2 slides, I will quickly walk you through the main elements of our income statement and our underlying performance. Total revenue increased by 17% to EUR 585 million, thanks to the growth in memberships in combination with an increase in the average monthly yield to EUR 23.80 from EUR 23.13 a year ago. Underlying club EBITDA, less rent, which is the IFRS-based club EBITDA minus the invoice rent cost of our open clubs and adjusted for exceptional items increased by 18% to EUR 214 million. Club operating costs related to rents and personnel, both increased by 20% compared to the first half of '23, due, of course, to a combination of higher costs related to our increasing network and low to mid-single-digit rent and wage cost inflation. Other club operating expenses increased by 10% to EUR 147 million. The lower increase of other club operating costs compared to personnel and club rent costs reflects the benefit from a lower energy bill compared to a year ago. Bad debt write-offs in monetary terms as well as a percentage of revenue increased compared to the first half of 2023. Compared to the second half of 2023, the debt write-off as a percentage of revenue was stable. In our largest market, France, the rate improved compared to the second half of 2023. Underlying EBITDA less rent increased by 26% to EUR 139 million compared with EUR 110 million last year. Operating leverage, as you see it our increased intention over the past year. At our CMD in November 2023, we communicated our aim to reduce overhead costs, excluding marketing, to be between 6% or 7% of revenue in the medium-term. In the first half of 2024, we made good progress towards achieving this goal by reducing overhead costs, excluding marketing, by 100 basis points to 7.2% of revenue compared to the first half of 2023. As a result, overhead expenses have increased by only 4% to EUR 42 million. Marketing expenses increased by 12% to EUR 32 million. Marketing expenses as a percentage of revenue came in at 5.5%, which is in line with our medium-term target range of 5.5% to 6% and lower than the 5.9% of revenue we spent in the first half of 2022. Let's go to the next slide. Operating profit increased by 72% to EUR 55 million compared with EUR 32 million in the first half of 2023. The reasons for this strong increase include the same factors that drove our higher EBITDA in the first half of the year, as explained in the previous slide. Operating profit also benefited from a lower increase in depreciation charges for our fitness equipment, thanks to our Smart Refurbishing initiative. We announced our Smart Refurbishing initiatives at our CMD last November. Under this initiative, instead of fully replacing all of our fitness equipment after 6 or 8 years, our fitness equipment partner pays regular visits to the club to maintain and refurbish the equipment. The maintenance and service activities extend the useful life of the fitness equipment to 12 years. This change has resulted in a EUR 5 million decrease in the depreciation of fitness equipment for the April to June 2024 period compared to the depreciation prior to the start of the Smart Refurbishing. After tax, this has a positive impact on net profit of around EUR 3.5 million. Our cash finance costs increased EUR 22.8 million in the first half of 2024, compared with EUR 13.5 million in the first half of 2023 and EUR 21.1 million in the second half of 2023. The strong year-on-year increase reflects higher average interest rates due to the expiration of favorable hedging contracts in May 2023 and a higher average level of bank debt than in the previous year. The higher average level of bank debt results from the decision to open 78% of the targeted club openings, including the RSG Spain acquisition in the first half of 2024. The net results for the first half of 2024 was a profit of EUR 4.2 million compared to a loss of EUR 6.1 million in the first half of 2023. On an underlying basis, we reported a year-on-year increase in net profit of 126% to EUR 30 million. You can find all the adjustment in the table. Well, let's go to the next slide on mature club development. As you know, we consider a club mature if it is at least 24 months old at the start of the year. This means that roughly speaking, clubs are accounted for as mature in our reporting after approximately 30 months. Our 993 mature clubs ended the first half of 2024, with an average of 3,175 memberships. That is slightly below the averages we reported for June and December 2023. In 2024, the 2021 club cohort was added in a mature club base. These clubs were impacted during their important in-growth period by COVID-19 closures and restrictions and have an average membership count below the average of the group. The continued high uptake of the premium membership, although supportive to our average yield per member is also having a negative impact on the average membership per club. Still, in the medium term, we expect the average mature club to have 3,250 membership as communicated our CMD in November last year. As you can see on the slide, we are now also [ resuming ] full mature club underlying EBITDA, less rent disclosure on a half yearly basis. Compared to a year ago, our mature clubs generated a 16% higher underlying EBITDA less rent of EUR 188 million. On an average club basis, this resulted in an underlying EBITDA of EUR 189,000 compared to EUR 182,000 a year ago. Like last year, we expect mature club profitability to improve in the second half of the year as a result of the further gradual increase in average yield per member and growth in memberships. Let's go to the next slide on CapEx. The average CapEx for newly built club was EUR 1.25 million, which is in line with our guidance. As Rene already mentioned, the small increase compared to last year reflects a combination of modest cost inflation, the opening of more clubs in Germany, where we are starting in the more expensive city centers and fewer regional club openings in France than in 2023. As a reminder, regardless of the initial CapEx for a club, we only signed a lease contract for a new club when we expect to achieve a ROIC of at least 30% when a clump becomes mature. Maintenance CapEx was EUR 15,000 per club, and we expect, as communicated with our full year results in March, a full year amount of around EUR 55,000 per club. The relatively low maintenance spending in the first half of the year should be viewed in relation to the relatively high number of club openings and RSG Spain acquisition during the same period. For the period to 2030, we expect maintenance CapEx to remain about EUR 55,000 per club per year, and this is also possible, thanks to our Smart Refurbishing initiative. Other CapEx amounted to EUR 9.4 million. Other CapEx consists of investments in innovations and software development and sustainability-related investments. The sustainability-related investments amounted to EUR 2.5 million and are mainly related to the energy transition and include a conversion from gas systems to electric systems and the installation of solar panels. Let's go to the next slide on financing. Net debt, excluding lease liabilities, was EUR 944 million at the end of June 2024 compared with EUR 804 million at year-end 2023. The higher net debt reflects the decision to open 78% of the targeted club openings, including, again, the RSG Spain acquisition in the first half of the year compared to 51% for the first half of 2023. With a lower level of club openings in the second half of the year, we anticipate a lower net debt level at year-end 2024. Including committed but undrawn facilities, we had available liquidity of EUR 104 million at the end of June 2024. In May of this year, we have exercised the first of 2 extension options as a result of which we have extended our existing term and revolving facilities agreement by one year to June 2028. Our remaining option allows us in 2025 to extend these facilities by another year to June 2029. In 2024, debt repayments are limited to the repayment of EUR 18 million of the German Schuldschein loan, bringing to zero. The net-debt-to-adjusted EBITDA ratio was 2.8x at the end of June 2024 compared to 2.6x at the end of December 2023. Our midterm leverage ratio target remains below 2x. Well, let's go to the final slide of our presentation, the outlook for 2024. We are comfortable with our full year guidance for 2024 and accept further strong growth of our membership base. We reiterate our 2024 full year guidance for Club network to increase to 1,575 clubs, revenue between EUR 1.2 billion and EUR 1.25 billion, average revenue per member per month to increase to at least EUR 24.50, underlying EBITDA less rent between EUR 305 million and EUR 330 million, free cash flow before new club expansion per share between EUR 2.6 and EUR 2.95 and finally, ROIC of mature clubs of well over 30%. This concludes our presentation. And operator, please open the lines for questions.

[Operator Instructions] Our first question comes from the line of Chandni Hirani from Barclays.

The first question is your EBITDA per mature club was obviously up 16% to EUR 189,000 per club. Full year results, I think you said you expect EBITDA for mature club to improve to EUR 460,000 in 2 to 3 years with a good step made in 2024. Is that still the aspiration for the medium term? And if so, what gives you that confidence of growth coming in, in H2? The second question is, can I just check on why there's a bigger discrepancy this quarter between cash rental expense costs, which is that principal and interest on the cash flow and the rental expense of open clubs on your income statement, I think it's EUR 132 million versus EUR 157 million? And then the final question is Planet Fitness obviously opened at first club in Spain earlier this week, which is quicker than, I guess, what most people expected. And it seems that they might be going full throttle from here. What are your latest thoughts on this? And how are you feeling about the competitive environment in Spain?

Well, thanks, Chandni, for your very good questions. First, EBITDA on the mature clubs. We're still confident that we can reach EUR 460,000 on our mature clubs on average on the midterm. And that means, of course, as we said at the Capital Market Day in 2 to 3 years. What we see, of course, that average EBITDA in the mature club is now slightly diluted by the addition of the 2021 clubs, but we still see improvement on those vintages. And we're still very confident that we can reach the EUR 460,000 due to the fact that we will see a gradually increase of the yield and still a growth of membership. Of course, every time the second half of the year is much better than in the first half of the year by the increase of memberships and increase of the yield. To come to your second question about the difference in the cash rent cost in the cash flow statement and in the P&L. Well, there's a difference, what we put in the cash flow statement is the rent that we actually paid. And of course, there's always a timing issue in that. So when we didn't pay the rent in the month in June and still on our balance sheet. So we include only the cash payments on rent in our cash flow statement, but the invoice rent is part of our P&L. So there will always be a small difference in those numbers.

And the last question about Planet Fitness, the thought about that. I think in Spain, there's still a lot of room for growth if you look at the fitness penetration currently in Spain and what it could be. So I would say that having new players enter the market is not bad for the growth of the market. Yes, I'm not sure if it's a bit earlier than we expected, but it is -- the first club is open, and I think they're going to open a few more in the coming weeks. So overall, again, it's a big country. It's still a very immature country. So I think it's a good thing that more change will join to increase the fitness penetration.

The next question comes from the line of Marc Zwartsenburg from ING.

First, I think for Hans. The -- you mentioned the net debt and the working capital, that there is a sort of different policy in place. Can you remind me perhaps what you have changed? And is there a bit of a knock-over effect also from the gyms that you opened at the end of last year that were [ paid in ] Q1 and that you don't have that effect this year, that advantage, so to speak, that it moves over to next year because of the phasing-in of the gyms more now geared to the first 3 quarters of this year. So can you give an indication of what the impact has been from that on your working capital and this on your net debt?

As you explained, these are the elements that will -- that impacted our working capital. First, the policy, where we come from COVID period so we paid a bit later to keep the money in and to be able to fund our growth. And now we're back to normal again. So we now pay our suppliers on time and like we want to do because we want to be a good partner and a healthy company. So now we're paying them on time. And the other reason is exactly what you explained. We'll have opened more clubs in the first period of this half year, meaning that we'll not open a lot of clubs in the end of this quarter. So the trade payables on that account is less than in the year before than where we opened the openings were more evenly spread over the year. What we saw next year that we also had already the invoices in the clubs that we opened in August and in July of 2023 and September. So we only get 90% of the invoices of our builders, which, of course, were part of the trade payables. Of course, we pay them when the club was opened. So those elements had an impact on the working capital. Be aware that for the second half of the year, we'll also not open a lot of clubs at the end of the year. So the impact on the working capital will remain and don't expect a higher working capital -- negative working capital at the end of the year.

Yes. And working capital as a percentage of revenues came down by 6 percentage points. Should we then take 6% of your total revenue base that is the impact roughly of EUR 50 million, EUR 60 million negative. Is that a bit how we should look at the ballpark?

I think if you look at the percentage of working capital, that's now for revenue, you can stick to that number.

Thanks for that. Then the other question on France. At Q1, you indicated that you were -- that you made some changes there to the operations and also trying to fix the quality of the gyms. In Q2, I think, as far as I've learned, those tickets have been fixed. Do you see -- can you see already or is it too early to see some traction in those [ chains ] that the in-growth is improving or the churn coming down or a combination of both? Do you see any change of revenues already that in France the trend is going back more to normal again?

Well, what we see in France in the second quarter is that going a bit better than the first quarter. So it is improving. So we see in new clubs but also in mature clubs that we have made to turn in the second quarter. Of course, September-October should prove some more. But at least we made a turn. So it is definitely going better than Q1. We're also completely back to the standards that we like to be. And I think that the fact that we have been growing really fast, and as you can see, more than 100 clubs in the last 12 months, putting that in the hands of one team was maybe a bit much. So taking the operations separate from the new builds, I think, is the right way to go. So yes, we are comfortable, and we're seeing improvement in the second quarter.

Thank you for that. And then on the Netherlands, the discussion around an increase in the VAT potentially. Can you share us where we stand as a sector or a gym sector in terms of lobbying to prevent that from happening? Are you confident that it will happen or not happen? But let's say, if it happens, have you already decided what you're going to do in terms of pricing or something else?

Yes. Well, the sector lobbying is, I think, is full speed ahead. We are not sure how that will end up, of course. But we're on top of it. We're supporting those groups, and yes, we have still time, of course, because they're talking about January 2026. So it's not something that's going to happen next year. But -- so we still have time to do some more and more lobbying. We, of course, think it's the wrong decision. But yes, [ any ] money, I guess. But it's 2026, and we're working on it. Not sure where that will end. But on the other hand, it's also good to mention that Spain has announced that it is probably changing their VAT on fitness as of the 1st of January 2025. So 5 months from now, from 21% to 10%. So that is a flip side on the other side. So for instance, if the Netherlands is going the wrong way, it would be good if Spain is going the right way that balances it out.

How certain is that?

Well, what we read and what we understood it is fairly certain. But again, it's -- maybe there's lobby groups working the other way around in Spain. So let's see if it's really going to happen in January coming year. But what they wrote down and what are in the papers is that it's going to happen. But let's see.

Yes. The question was also what -- have you already decided what to do if it happens in the Netherlands, would you then change pricing or would you opt for a general price increase across the board if the price is similar?

No, we would not change pricing because of the VAT, but we are currently working with a pricing agency to optimize our top line and look at what to do. It's always the combination of yield and membership of course, having a higher yield means less membership and the other way around. So we're working on our top line, and we could see some changes, some small changes maybe in September and some bigger changes in the January period next year.

So you already decided in the next month or so, what to do for September and then maybe further changes in January. Okay. All right. Are you willing already to share a bit or is that -- will there be a press release later on?

Yes. There will be a press release later on, but we have had a lot of discussions already with all of you about the high usage of the premium membership. So the high use of premium members is not only that they bring every month a few friends, but also they're coming like 20%, 25% more times than the comfort members. So we will look at optimizing that membership.

In terms of -- that you cannot take a friend that many times or you have to pay more combination?

Yes, a combination of different things. But that is why we have the pricing agencies. So I don't know yet exactly where that is going. But for sure, we will look at that.

The next question comes from the line of Lynn Hautekeete from KBC Securities.

I have 2. First of all, I was wondering if you could give a small update on the franchise maybe, the timeline and how the discussions are going?

Yes. Well, we look at franchise, what we said during the CMD, that in the last quarter this year, we will communicate our plans. Nothing changed to that. So we will continue -- we are spending a lot of time on. We're very optimistic and positive. We see a lot of opportunities, but we will communicate it later this year.

All right. That's clear. And then maybe secondly, if I look at the mature members per club, it stands at 3,175. In the medium term, the guidance is 3,250. How confident are you that you will reach that? And also wondering if you could give maybe some more details on the mature members per club in the Benelux versus France?

Yes. So we are very comfortable that we will reach this 3,250.

So we're very comfortable that in the midterm, we will reach this number, and we're not sharing exact number dates per country of member dates and numbers per country.

The next question comes from the line of Robert Vos from ABN AMRO.

First question is a bit general. Can you maybe spend a few words on the competitive landscape in general and competitive behavior? For example, do you see a lot of promotions? Do you see changes in membership fees and what about apart from the already discussed Planet Fitness initiative in Spain? Do you see club openings by competitors? That's my first question.

Yes. If you look at the competitive landscape, not a lot has changed. So if you look at the openings we have done in the first 6 months, I think it is more than the number 2 [indiscernible] together. So we are still growing a lot faster than our competitors. What we see in the very aggressive competition in Germany with EUR 1 for 6 months is not being offered anymore. Of course, the more clubs you open, it's pretty impossible for them to keep that up because there's no income because we will continue opening clubs. So it is -- per country, it's a bit different, but overall, no big changes. We're by far the fastest-growing company in fitness in the countries where we are. And you see about pricing -- pricing, maybe [ something ] to add, we have seen increasing in prices, pretty much all over the -- with most of our competitors, if not all.

Okay. My second one is a clarification question. Apologies for not listening well to Hans. But what did you exactly say on your expectations for net debt at the end of 2024? Did you say that it will be lower than half year or lower than last year?

No, I said lower than the end of this half year. So we are now on EUR 944 million, and we expect it on a lower level than that number. You have to take into account that we will repay the Schuldschein in October, EUR 18 million.

[Operator Instructions] The next question comes from the line of Natasha Brilliant from UBS.

I have 3 as well. The first is on club openings. And maybe it's too early, but whether you have any view on 2025 yet? Do you think it will be closer to this year or back to the 200-plus number that you've previously targeted? And second question is on Germany. You mentioned some learnings. Is there anything you can share with us about what you might have learned? Is there anything that surprised you or anything to think your medium-term goals might be a bit ambitious? And then finally, just on the bad debt write-downs. You said it was similar to the second half of last year. Is there any color you can share as the quarter has progressed and particularly in recent weeks in France? Anything you can talk about there?

Okay. Let me start with the club open for 2025. So that is something that we will communicate in March next year with the expectation on turnover, club opening, etcetera. So we will do that same as this year. The learnings of Germany, it is definitely marketing-wise, we've been trying different things. And there, we have stepped up some and did some different ways of marketing. And we see definitely a big improvement in the new club openings. So overall, what we have learned from the German market is, of course, if you are in a city with one club, you're not really a competitor, if your competitors have 10 or 15 clubs open. So we definitely need to -- it takes time for -- as it has taken time in every country. In Spain, it also took a few years before you are cash flow breakeven same as in France. So going to a new country, it costs money and costs time. But once you have a bit mature base, so once we have this, say, 7,500 clubs open, and we expect that to happen in the near future, then we will have better brand recognition than we are a more logical choice. We have signed for Germany over 40 locations. We're actually building right now as we speak. So -- and we are in negotiation with a lot of clubs. So our focus for the coming years will be Germany and Spain. And yes, and we are happy with what we have seen in the openings of the new clubs this year so far.

Regarding the bad debt, well, it's -- if you look at the valuation of the debt write-offs, I'm very happy that we can get it on a stable level. I'm especially happy that we see a lower rate of bad debt write-offs in France because, as I explained before, in France, it's more difficult to get back the money for people who didn't pay. So I'm happy that we took the measures to improve that number. If you compare it to the first half year of 2023, of course, the percentage is much higher. We have to take into account that we started '23 and already in 2022 with a more clean sheet because we already wrote off all the debt that we had during the COVID period. So we started with a lower debt number resulting in a low debt write-off. But I'd like to compare it with the second half year, and then we are more or less on the same level. So if you then take into account, we already have more members in Spain and France, but it's more difficult to get that money back from not paying members. In Spain, it's even allowed to cancel your membership in contract. So if you take that into account, I'm very happy with the percentage that we can show now on that bad debt level.

There are no further questions. We are now reaching the end of today's conference call. I'd like to hand over to Richard Piekaar for any closing remarks. Please go ahead, sir.

Thank you, Francois, and thank you, everyone, for joining this call this today. If there are any follow-up questions or further questions at any point, please contact John David or me, and we're happy to continue the discussion. Have a nice day. Bye-bye.

Thank you all.

Thank you.

Thank you for joining today's call. You may now disconnect your lines.