Euroseas Ltd. (ESEA) Earnings Call Transcript & Summary

Thank you for standing by, ladies and gentlemen, and welcome to the Euroseas Conference Call on the Second Quarter 2020 Financial Results. We have with us Mr. Aristides Pittas, Chairman and Chief Executive Officer; and Mr. Tasos Aslidis, Chief Financial Officer of the company. [Operator Instructions] I must also advise you the conference is being recorded today. Please be reminded that the company announced their results with a press release that has been publicly distributed. Before passing the floor to Mr. Pittas, I would like to remind everyone that in today's presentation and conference call, Euroseas will be making forward-looking statements. These statements are within the meaning of the federal securities laws. Matters discussed may be forward-looking statements, which are based on current management expectations that involve risks and uncertainties that may result in such expectations not being realized. I kindly draw your attention to Slide #2 of the webcast presentation, which has the full forward-looking statement, and the same statement was also included in the press release. Please take a moment to go through the whole statement and read it. And now I would like to pass the floor to Mr. Pittas. Please go ahead, sir.

Good morning, ladies and gentlemen, and thank you all for joining us today for our scheduled conference call. Together with me is Tasos Aslidis, our Chief Financial Officer. The purpose of today's call is to discuss our financial results for 6-month period and quarter ended June 30, 2020. Let's now turn to Slide 3 to see our income statement highlights. For the second quarter, we reported total revenue of $13.5 million. Net income was $1.3 million, and net income attributable to common shareholders after the $0.2 million dividend on the Series B preferred sales was $1.11 million or $0.20 gain per share basic and diluted. Adjusted net income attributable to common shareholders for the period was $1.4 million or $0.25 per share basic and diluted. Adjusted EBITDA was $4.4 million. Tasos will review our financial highlights in more detail later on in the presentation. Please turn to Slide 4 for details of some of our recent developments. During July 2020, the company completed the sale of 3 of its vessels, motor vessel Manolis P, motor vessel EM Oinousses and motor vessel Kuo Hsiung, for a total of approximately $7.6 million of net proceeds, of which $7 million was used to repay the outstanding loans on these ships. Motor vessel Manolis P was initially sold in March for $418 per lightweight or $2.72 million, but the deal did not materialize as the buyers failed to take delivery of the vessel due to the COVID-19 circumstances. Then later in July, it was sold anew for scrap for $318 per lightweight ton or $2.07 million net proceeds. The second ship, M/V Oinousses. Following the fire accident suffered in January 2020 and the settlement of $2.7 million from the ship underwriters, the vessel was eventually sold for scrap for the amount of $3.69 million net proceeds. Finally, the third vessel, the motor vessel Kuo Hsiung, was also sold for scrap for the amount of $1.85 million net proceeds. During the second quarter of 2020, the company agreed with certain of its lenders to defer a portion of its 2020 loan repayments to be repaid together with the respective balloon installments. A total of $4.7 million was scheduled to December '21 or within '22. We are also in the process of finalizing with the last bank in our book a deferral of $900,000 due Q3 and Q4 2020 to their respective balloons as well. Furthermore, the company agreed with the holders of the Series B preferred sales to have the option of paying the quarterly dividends in kind for the period from April 1, 2020 to January 29, 2021 by issuing additional Series B preferred sales and increasing the dividend rate to 9% from 8% if paid in kind. The company exercised this option for Q2. Please turn to Slide 5, where you can see our current fleet profile. Upon the completion of the sale of the 3 vessels, we will now have 16 vessels, which include 11 feeder container ships and 5 intermediate container carriers with approximately 590,000 deadweight tons and 46,000 TEU capacity and a weighted average age of 15.8 years. Please turn to Slide 6 for the chartering, operational and drydocking highlights. We have been able to renew most of the expired charters at rates a little bit lower than the last ones and without facing idle times, except for the ME -- EM Hydra and Ninos, which each faced about 14 days of idling time; and the EM Spetses, which faced 53 days of idling. I will not go through the complete list of the new charters achieved, but you can see them all on Slide 6. I just want to also note that the generally flexible periods that we -- the generally flexible periods that we have had to agree to date. Slide 7 shows our vessel employment in graphical form as well. As of June 30, we have about 58% coverage for the remainder of 2020 based on minimum charter durations. Please turn to Slide 8. Over the last 5 years, our operational fleet utilization has been in excess of 98.8%. Euroseas has an outstanding safety and environmental record, but at the same time, the company is managing to keep costs low despite running an older fleet of the other listed of companies. For the second quarter of 2020, operational fleet utilization was 99.7%, while the commercial fleet utilization rate in the second quarter of 2020 was 94.6%. The graph on the page compares daily costs, excluding drydocking, since 2011 with the average of our peers. Overall, our costs achieved are among the lowest of the public shipping companies. Let's go to Slide 10 to discuss the general containership market highlights of the second quarter. Time charter rates during the second quarter drew a negative picture across all container sizes as shown by the ConTex index. They started to recover towards the end of it, and most profoundly, in July. For feeder and intermediate-sized vessels, there was an average drop of close to 25% from 6 to 12 months' time charter rates observed within the first and second quarter. According to Clarksons, a 1,700 TEU geared vessel fell from an average of $7,800 per day in Q1 to $6,300 per day in Q2 and currently stands at $6,600 per day. The 2,500 TEU geared vessels fell from an average of $9,400 in Q1 to $7,700 in Q2 and currently stands at around $8,100 per day. The 4,250 TEU gearless vessels fell from an average of just about $13,000 in Q1 to $8,500 in Q2 and currently stands at $11,500 approximately. Average secondhand prices for older than 20-year-old vessels remained around their scrap prices in Q2, which, however, were down around 20% versus Q1 due to the drop of the price of scrap items. For younger vessels of about 5 to 15 years old, there was a price drop of 10% to 15% for the 1,700 to 4,250 TEU range with the bigger reductions in the smaller sizes. At this time, the newbuilding prices with no scrubbers/China built were stable with downward pressures, but the absence of transactions indicate the lack of interest at current asking prices. The inactive containership fleet currently stands at about 5.1%, totaling 1.2 million TEU. This includes idle due to scrubbing retrofitting, which, of course, is mostly larger vessels and is about 280,000 TEU in total. It has to be noted that these numbers are down from the 2.7 million TEU or 11% of the fleet, which was idle as of mid-May. The number of vessels scrapped increased slightly in Q2 versus Q1 but was restricted by the lockdown in India, Pakistan and Bangladesh that did not allow more ships to be scrapped. Overall, the fleet has grown by 1% in 2020 so far without, of course, accounting for idle vessel reactivations or idling et cetera. Please turn to Slide 11. As a result of the pandemic, the economic and trade world environment has dramatically and negatively changed in 2020. The IMF in its most recent revision in June projected that world GDP growth in 2020 will end up at minus 4.9%, a steep deterioration to its minus 3% predicted in April. The reduction is stemming from the U.S.A., China, India and the ASEAN-5 economies mostly. For 2021, though, the IMF global GDP growth is now projected at a strong 5.4%. Major global economies are expected to rebound strongly in 2021, with the U.S. and the Eurozone rebounding by 4.5%, India by 6% and China by 8-plus percent. In terms of demand for containerized trade, which closely correlates global GDP growth, as we've said many times, the demand measured in TEU per mile is expected by Clarksons to have a significant drop to minus 7.7% in 2020. However, a high growth rate of 7% is expected to return in 2021, owing to the rise of the global economy. At this point, we should note that the trade and growth projections currently made will probably be revised as COVID-19 develops but also due to the uncertainty of the geopolitical situation and especially trade between U.S. and China. Therefore, market development projections are even harder than usually to make. Please turn to Slide 12 to review the containership age profile and order book delivery schedule. As you can see, the containership age profile chart on the left side of the slide, we have a young fleet with a mere 6% of ships being over 20 years old. This, however, is concentrated in the smaller size classes where we operate. The right side chart shows the delivery schedule of the current containership order book, which is expressed as a percentage of the fleet. The certain figures for the years 2017 to 2019 show the actual fleet growth after taking into account scrapping cancellations and slippages. The red circle figures for 2020 to 2022 show the order book before any scrapping and slippages. Currently, the total containership order book stands at 8.9% of the fleet, a figure which is the lowest observed in more than 20 years. This low level of order book provides a source of optimism for a quick recovery of the rate if trade demand recovers as supply side pressures will be at minimum levels. Please turn to Slide 13, where we discuss our outlook summary. The unknown duration of the pandemic and its financial consequences render any type of modeling very unreliable. Our base case supply/demand analysis, however, is based on the scenario where we experienced a deep recession in 2020 of minus 4.9% GDP growth tied with a strong recovery in 2021 or 5.4% GDP growth as per the IMF. The current estimates from Clarksons to quantify the effects of the pandemic on containerized trade indicate an exaggerated reaction of -- in 2020 of minus 7.7%, followed by a sharp recovery in 2021 of 7%. Therefore, we generally anticipate a very weak 2020 and a strongly strengthening 2021 and 2022. Meanwhile, chartering of vessels that were redelivered by their charterers during most part of the quarter proved difficult as indicated by the bottoming of the ConTex index in early June. However, over the past few weeks, firmer rates have been observed. While the newbuilding order book is at 20-year lows, a significant portion of its schedule to be -- of it is scheduled to be delivered in 2020, along with vessels returning from retrofitting scrubbers. Albeit this might potentially dampen the effect of the early market recovery we are currently witnessing, if the pandemic is controlled, we'll remain helpful. As I said, the order book for 2021 onwards is very low. And since owners do not yet know what the optimal fuel for the net -- not-too-distant future will be, they are reluctant to place any new orders. Therefore, the second half of 2021 and the whole of 2022 may prove to be boom periods if global demand picks up as generally expected. Let's turn to Slide 14. The left side of this slide shows the evolution of the 1-year time charter rates for containers of 2,500 TEU since 2000. Since the financial crisis of 2008, rates stayed rather depressed with 3 spikes within the $5,500 to $14,900 per day range. Currently, we see charter rates covering at about $8,000 per day. The right-hand side of the slide shows vessel values in relation to historical prices since 2011. As you can see, containership values are still significantly below the median and average historical values. This indicates that purchases of ships at today's current values could prove very good investments. And with that, I will now pass the floor to our CFO, Tasos, Aslidis, to go over our financial highlights in more detail.

Thank you very much, Aristides. Good morning from me as well, ladies and gentlemen. I will now take you through the next 4 slides to give you an overview of our financial results for the 3- and 6-month periods ended June 30, 2020. For that, let's look first at Slide 16. For the second quarter of 2020, reported total net revenues of $13.5 million representing a 67.2% increase over total net revenues of $8.1 million during the second quarter of 2019, which was the result of increased average number and size of vessels we owned in the second quarter of this year compared to the second quarter of 2019. The company reported net income for the period of $1.3 million and net income attributable to common share quarters of $1.1 million as compared to a net loss of $0.7 million and a net loss attributable to common shareholders of $1.7 million, respectively, for the same period of 2019. The results for the second quarter of 2020 also include $0.3 million of amortization of below market time charters acquired. Interest and other financing costs for the second quarter of 2020 amounted to $1.1 million compared to $0.8 million for the same period of 2019, a period which also included additional finance charges of about $0.7 million. Interest during the second quarter of 2020 was higher during the prior average outstanding debt during the period as compared to last year, partly offset by the lower LIBOR rate our bank loans yet to endure during the period as compared to the same period of last year. Depreciation expenses for the second quarter of 2020 amount to $1.7 million compared to $0.8 million for the same period of last year, again reflecting the increased number of vessels we owned during this period. Adjusted EBITDA for the second quarter of 2020 was $4.4 million compared to $1.6 million achieved during the same period of last year. Basic and diluted earnings per share attributable to common shareholders for the second quarter of 2020 were $0.20, calculated on 5.6 million basic and diluted weighted average number of shares outstanding compared to basic and diluted loss per share of $1.12 for the second quarter of last year calculated on approximately 1.5 million basic and diluted weighted average number of shares outstanding. Excluding the effect on the income attributable to common shareholders for the quarter of the unrealized loss on derivatives, the amortization of below market time charters acquired and the loss on sale and vessel held for sale, the adjusted earnings per share attributable to common shareholders for the quarter ended June 30, 2020 were $0.25 compared to adjusted loss of $1.14 per share for the same period of last year. Usually, security analysts do not include the above items in their published estimates of earnings per share. For the first half of 2020 now, the company reported total net revenues of $28.9 million, representing a 76.3% increase over total net revenues of $16.4 million during the first half of last year, again as a result of the increased average number of vessels and the size of vessels we own. The company reported net income for the period of $3.2 million and net income attributable to common shareholders of $2.9 million as compared to a net loss of $0.8 million and a net loss attributable to common shareholders of $2.2 million, respectively, for the first half of 2019. The results for the first half of 2020 also include $1.2 million of amortization of below market time charters acquired. During the period, interest and other financing costs amounted to $2.4 million as compared to $1.5 million for the same period of last year, a period which again included some additional finance charges of about $0.7 million. This increase in our interest charges are -- is due to the increased amount of debt in the current period, first half of this year, as compared to the same period of 2019 and is partly offset by the decreased LIBOR rates that our bank loans set to paid during the period, again as compared to the same period of last year. Depreciation expenses for the first half of 2020 were $3.4 million compared to $1.6 million for the same period of 2019, reflecting the higher number of vessels we own. Adjusted EBITDA for the first half 2020 was $8.4 million compared to $3 million achieved during the first half of last year. Basic and diluted earnings per share attributable to common shareholders for the first half of 2020 was $0.52, calculated again on price on approximately 5.6 million basic and diluted weighted average number of shares outstanding compared to $1.44 loss for the first half of 2019 calculated on average of 1.5 million basic and diluted sales outstanding. Excluding the effect on the income attributable to the common shareholders for the first half of this year of the unrealized loss of derivatives, the amortization of below market time charter supply and the loss on the sale of vessel held for sale, the adjusted earnings per share attributable to common shareholders for the 6-month period ended June 30, 2020 would have been $0.42 compared to adjusted loss of $1.47 per share, basic and diluted, for the same period of last year. Let's now turn to Slide 17 to review our fleet performance. Let's first look at our fleet utilization rates, and let's start with our second quarter numbers on the left part of the slide. As usual, we have broken down our fleet utilization rate in commercial and operations. As you can see in this slide, for the second quarter of 2020, we reported 94.6% commercial utilization rate and 99.7% operational utilization rate compared to 96.7% commercial and 100% operational utilization rate for the second quarter of last year. I would like to remind you here that our utilization rate calculation does not include vessels in scheduled repairs or drydocks if any of those happen during the period. On average, 19 vessels were owned and operated during the second quarter of 2020, earning another time charter equivalent rate of $9,458 per day compared to $8,307 per vessel per day that we earned during the second quarter of 2019, a quarter during which we operated 11 vessels. Our total daily vessel operating expenses, including management fees, general and administrative expenses but excluding drydocking costs, averaged $6,120 per vessel per day during the second quarter as compared to $6,423 per vessel per day during the same period of last year. Let's now look at the bottom of the table to our daily cash flow breakeven levels presented here on a per vessel per day basis. For the second quarter of 2020, our cash flow breakeven level was $8,512 per vessel per day compared to $9,093 per vessel per day for the same period of last year. Let's now look at our first half figures in the right part of the table. So for the first half of 2020, we reported 96.9% commercial utilization rate and 97.9% operational utilization rate compared to 98% commercial and 100% operational for the first half of last year. In average, we operated 19 vessels during the first half of 2020, earning $9,541 per vessel per day compared to $8,693 per vessel per day that our vessels earned during the first half of last year, a period during which we operated 11 vessels. Our total daily vessel operating expenses, again, including management fees, general and administrative expenses but without drydocking costs, averaged $6,003 per vessel per day during the first half of this year compared to $6,324 per vessel per day for the first -- for the same period of 2019. Looking again at the bottom of the table, we can see that our cash flow breakeven level for the first half presented on a per vessel per day basis, and we can see that, that was $8,608 for 2020 compared to $9,144 per vessel per day for the first half of 2019. Let's now move to Slide 18 to review our debt profile. This slide shows on the right-hand side our cash flow breakeven level expectations for the next 12 months. And on the left side, we can see our scheduled debt repayments over the next several years. As you can see, in 2020, a little less of our -- a little less than half of our loan repayments, $7 million, are due to the sale of the 3 vessels that Aristides mentioned earlier. Of the remaining, about $4.4 million is a loan due to a related party, and the company can repay that loan in shares under certain condition. That leaves about $7 million in loan repayments during 2020, most of which though were made in the first half, about $5.3 million. And as Aristides mentioned, another $0.9 million will likely be deferred. Our loan repayments, as we can see again in the chart, over the next 3 years keep declining. In terms of our balloon payments, in 2021, we have to repay $16.1 million of a volume payment that is covered by 6 of our vessels. In 2020, there is a smaller balloon payment of $1.9 million, again, covered by one of our vessels. And finally, in 2023, we have balloon payments of about $30 million, representing loans collateralized by the remaining 9 of our vessels. We believe that as we did in the past, we'll be able to refinance our balloon volume payments as they come due. A quick note on the cost of our funding before we move to reviewing our cash flow breakevens. We have an average margin on our bank debt of about 3.6%. And assuming a LIBOR rate of 0.3%, our senior debt costs on average is about 3.9%. If we take into account the cost of the related party loan and the preferred equity dividend, our average cost of our non-equity funding as of June 30, 2020 is about 4.5%. Looking now on the table to the right, you can see that if we express our loan repayments over the next 12 months in dollars per vessel per day, we get a $1,050 contribution to our daily cash flow breakeven level. If we furthermore make assumptions for the remaining components of our cash flow breakeven level, that is our operating expenses, G&A expenses, interest, drydock costs and any cash payment of our preferred stock dividend, we come up with a cash flow breakeven level for the next 12 months of about $8,450 per vessel per day. As previously mentioned, the company has agreed with the holders of its Series B preferred shares to have the option of paying the quarterly dividend in kind for the period starting from April 1, 2020 to January 29, 2021 by issuing additional Series B preferred shares and increasing the dividend rate to 9% from 8% if the dividend is paid in kind. We have assumed in making this cash flow breakeven projection that our preferred shares will collect a dividend in kind until January 2021. Let's now turn to Slide 19. This slide provides some highlights on our balance sheet. As of June 30, 2020, we had cash and other assets -- other current assets of about $10 million. The book value of our vessels was about $113 million, giving us a total value of -- total book value of assets of about $123 million. On the liability side, we had an outstanding bank debt -- bank another debt of $84.3 million, preferred equity of about $8.2 million and other liabilities of about $8 million, thus leaving us with a net book value of $22.4 million or approximately $4 per share. If we adjusted the book value of our vessels with their market value based on our own estimates of their value, we can calculate the net asset value for our fleet to be in the range of $19 million to $20 million or about $3.5 per share. We believe that our shares recently trading around $2.5 to $3 per share as discount to our book and net asset value present a good appreciation potential for our shareholders and investment opportunity for other investors. And with that, I would like to turn the floor back to Aristides to manage the remaining of the call.

Thank you, Tasos. I would now like to open up the floor for any questions you may have.

[Operator Instructions] We'll now take our first question from Tate Sullivan from Maxim Group.

Tate Sullivan from Maxim Group. Just can we review the change in cash and balance sheet for this current quarter given the sales after the end of 2Q '20? I think you had vessels held for sale of $7.1 million at the end 2Q '20 and then $7.6 million of sales. And so just will you write that up? And is that -- I mean can you just clarify some of the changes in the balance sheet this current quarter, please?

The -- I mean the balance sheet shows the book value of the vessels held for sale. As Aristides mentioned, the vessels were sold for a net $7.6 million, of which $7 million were used to repay the debt. So there was a net contribution from the sale of the vessels to our cash balance.

Okay. Okay. And then for the insurance proceeds received in the quarter, did you receive cash with those insurance proceeds? Or maybe do you have a cash inflow related to that accrual in the upcoming -- in the current and upcoming quarters?

We have received about 40% already, and there is about -- the remaining about $1.6 million, $1.7 million as receivables, which we expect to receive in Q3.

In Q3. Can you give -- after the sales and that cash collection, can you give any updated total cash balance, and I apologize if I missed it, for the current quarter?

We received the remaining proceeds from the insurance claim plus the remaining from the sale. I think we would look to something close to $2.3 million incremental cash contribution.

$2.3 million incremental cash this quarter. Okay. And then also on the current makeup and after those sales in July, are you comfortable with your current fleet mix? Are you always evaluating maybe selling some of the older vessels for scrap going forward? Or can you comment on that, please?

We might scrap 1 or 2 more vessels within the year depending a little bit on how the market develops over the next few months because we will need to pass some drydockings and we will have to evaluate if it makes sense to drydock the vessel and spend the amounts needed or it's best to scrap them, and this will be determined based on the time charter rates that we see in the next couple of months.

Okay. And you mentioned -- my last for me, pardon is you mentioned rates around $8,000 per day. Would you say the volatility in the rates has decreased in the last couple of weeks? Or I mean I know your comments on -- I mean it's hard to predict the near term versus the China-U.S. dynamic. But I mean has volatility decreased in the rates at least a little bit in the last couple of weeks?

Yes. The rates have improved a little bit in the last month or so, especially for the larger vessels, less so for the smaller vessels, but it is always a matter of positioning where you are at that time. There is not a huge inquiry by charters jumping to take your ship. This was never the situation, and of course, it's not still there again.

And your next question comes from Poe Fratt from NOBLE Capital Markets.

Poe Fratt from NOBLE Capital Markets. Can you highlight your off-hire dates in the third quarter and fourth quarter that you planned right now?

The off-hire dates?

Yes, please.

We have assume -- typically, we assume our historical average of about 8 or 5 days per year per vessel. So we assume 4 or 5 days per vessel for the remaining of the year.

And we have scheduled off-hire dates for the dry vessels to be drydocked, and the Athens is the one that is scheduled to be drydocked.

We have one vessel, as Aristides mentioned, that we are evaluating whether to drydock it or not, pass it to survey. If we keep the vessel and pass to a survey, then we probably have another 20, 25 days of drydock for that vessel, EM Athens.

Okay. And would that be in the third quarter or the fourth quarter? Sorry.

Fourth.

I think it's the fourth.

Yes, fourth.

Okay. And Tasos, can you just -- I wasn't following exactly your amortization schedule that you have. Can you just highlight how much amortization you have currently right now for the third and fourth quarter? And then you talked about potentially deferring $900,000 of amortization into -- thrown it onto the maturity date of the balloon. Can you just give me a little clarity -- a little more clarity on that, please?

You're talking about our debt amortization, correct?

Yes.

So we have paid about -- as I mentioned, $5.3 million in the first half. But in the second half, there is $1.7 million -- roughly $1.7 million that we would expect, of which half, $0.9 million very likely will be deferred. We have received the terms from the bank, and we're about to document -- go through the documentation of it. So we probably have to pay something like $800,000 amortization in the remaining of this year.

Okay. Great. And then can you talk about OpEx and your other costs looking forward? It seems like they might be a little bit higher than what your run rate has been. Can you just talk about costs a little bit?

You mean...

The operating.

The operating costs?

Yes, operating costs. And then it looks like maybe with a smaller fleet, your G&A per day is going to go up a little bit. But if you could just clarify that.

Yes. I think our estimate that we show on Slide 18 includes the reduction of our fleet and the capacity levels of our G&A. So that is what we expect to see, and it's based on our budget, and the same is true for the operating expenses.

Okay. Great. And then just to make sure that the insurance collectible or insurance proceeds was booked in the third -- in the second quarter, and it was $2.7 million, and that had a positive impact on your EBITDA that you reported of $4.4 million, correct?

Correct. The vessel was -- the vessel -- this is really an amount claimed and built over the last 6 months after the vessels -- after the related claim. So it truly reflects the earnings of the vessel, which we have said during the first half of the year. It was collected -- it was finalized early in the second quarter. That's why we had it in the second quarter and half -- and the first half and the second. And we have collected about 40% of the claim. And the remaining is to be collected, as I explained earlier, in the third quarter.

Okay. And then you highlighted the $4.4 million of related party debt. And I have -- maybe I've seen this, maybe I missed it before, but you're highlighting now that it could be paid in shares. Is this something that is a high probability or likelihood looking forward? Or do you -- will you just continually push that out not as repayable shares?

Our Board will decide when it comes to pay. It is due on December 31 this year. It is not -- I mean under certain conditions, the company can pay in shares. Probably, we will not pay it in shares, but that is to be decided by our Board just before the payment is to be made.

Okay. And then would you talk about -- you have 58% of the remaining 2020 days booked or committed. Do you have an average rate that's associated with those days?

I mean I don't have this with me. I can get back to you on that.

Thank you, and we now have no further questions. I'd like to hand the floor back to Mr. Aristides Pittas. Please go ahead.

Thank you. Thank you, everybody, for participating in the call, and we hope to be able to come back to you in Q3 with good results again and with the COVID having come a little bit behind us, not totally behind us, but are not deteriorated. Thank you very much.

Thank you. That does conclude our webcast. Thank you all for joining. You may now disconnect.