Samsonite Group S.A. (1910) Earnings Call Transcript & Summary

Good morning, good afternoon, good evening, ladies and gentlemen. Welcome to the Samsonite International 2023 Third Quarter Results Earnings Call. Please note that this event is being recorded. I would now like to hand the conference over to Mr. William Yue, Senior Director of Investor Relations. Thank you. Please go ahead, sir.

Thank you very much, operator, and thank you, everyone, for taking the time to join the call. Today, we have our CEO, Karl Gendreau; and our CFO, Reza Taleghani, here to present the results. And to kick off, Kyle will make some opening comments. Thank you.

Okay. Thanks, everyone, for joining us for our Q3 results. I am on -- starting on Slide 5. And I think the way to sum up is we had an outstanding Q3 for Samsonite International. Our momentum from the first half carried very strongly into Q3, driving significant improvement in financial performance. I would label it record performance on many fronts. We achieved record Q3 results in net sales. Our gross margins, adjusted EBITDA, adjusted EBITDA margins and our adjusted net income were all tremendous, as I'll walk through in a second. The strong growth came across all of our leading brands, particular strength in our higher-margin brands, Tumi and Samsonite, but all brands delivering tremendous growth, we'll show you that. Our gross margin was at a record level, too, 59.6% and adjusted EBITDA margin at 20.3%, really both reaching record highs. We had strong cash flow in the quarter, $89 million of free cash flow in Q3, which importantly allowed us to continue to delever the business. Our net debt was $1.2 billion and was $159 million lower than Q3 of last year. And our total leverage ratio is now below 2x at 1.81x for September '23. This is the lowest level of our net debt position since the acquisition of Tumi, which is why we put that on the books in the first place. From a business update perspective, I'm on Slide 7, just in a page to give you a real sense for the record performance. Net sales, $958 million for the quarter, up 21.2% to Q2 of '22 and up 22.4% from the same quarter -- I mean, sorry, in Q3 of 2019. Adjusted EBITDA of $194 million. EBITDA margin, as I just said, 20.3%. That's up 330 basis points to last year and even more important, up almost 600 basis points to Q3 2019. So real transformation and profit profile of the business clearly carrying through from what you saw in Q2, even stronger in Q3. Adjusted net income of $126 million, almost double of what it was at Q3 of last year and meaningful growth from '19. Our gross margin, $571 million, 59.6%, up 460 basis points to last year and versus 2019, Q3, up 390 basis points. Our A&P spend was $59 million. As you know, we're leaning into A&P, we spent 6.2% of net sales in Q3. You'll see a slightly higher number in Q4, just timing of when we're spending these dollars. For a full year, that will be a little over 6.5%. And that's up 130 basis points to '19 and up from last year as well. So importantly, as you look at the EBITDA margins, this, with us, is continuing to increase the advertising spend. And then fixed SG&A. And as you know, we've transformed the cost structure of this business, fixed SG&A, $215 million, importantly, 22.4% of net sales, 490 basis points better than 2019 and continuing to deleverage off of Q3 of '22 as well, up 20 basis points. On Slide 8, just another look at the numbers. And again, I think the piece I would take away is we have underlying industry trends that are strong, but our initiatives and everything that we're driving are pushing the business further. So you can see our sales number from 791 up to 958. You can see the gross margin really transformative from last year and from 2019, 55% gross margin last year to 59.6%. And as our higher-margin brands, Tumi, Samsonite in Asia really comes back in line from a growth driver perspective, you can really see the margin benefits of that in the rates. Adjusted EBITDA was 17% last year, 20.3% this year, up 45% year-over-year. And adjusted net income, as I said, almost double what it was from Q3 of 2023. So again, record results. On Page 9, I think one of the things you need to think about in this business when you're looking at us and you're looking at what we're doing to set the pace for growth drivers in this business, this more efficient cost structure we've achieved coupled with the higher gross margins really allowing us to push this business. So you're seeing us lean in. Our year-to-date advertising spend up 140 basis points to prior year. You'll continue to see us push the advertising spend as we drive the business. And while we're doing that, we're still delivering growth in our adjusted EBITDA margin. And we're really set to continue to capitalize on the growth momentums and opportunities and our business across all of our brands, particularly higher-margin brands, Tumi and Samsonite, which are moving at tremendous paces. On Slide 10, this -- we've shown this slide before, but I think just to kind of level set the year-to-date numbers and the performance that we're seeing on the overall profit profile of the business. On an as-reported basis, our sales versus 2019 are up 57% -- I mean, $57 million. As you know, we took out things like our Speck business, Russia business and other small adjustments within the business, and so on a sales, that's up $57 million in that time period, our EBITDA is up $181 million. So real transformation and profit. And the year-to-date EBITDA margins, so year-to-date, Q3, we're already at 19.3%, and that's up from 13% in 2019 and good progress from last year, where we started to show and signal what we were able to achieve on the EBITDA, but still tremendous growth from last year, from a margin perspective, as well. By brand, I'm on Page 11. By brand, we see strong growth across the board. I might tell you stronger growth in our higher-end brands. So Tumi in the middle of the page, up 44% to last year. Samsonite, our biggest brand, up 37%, with really tremendous growth. And American Tourister at the entry-level branded space, still up meaningfully at 34.5%. So all of our 3 core brands are delivering tremendous growth and pushing the business forward. And some of our sub-brands are delivering in the same ZIP code, Gregory up 23%, Lipault 24%, all of our other brands up 15%. There's nothing in our portfolio that isn't moving in a positive way. But you can see the clear focus on driving our core brands in delivering overall growth for the business. On Slide 12, I thought I'd give you a deeper dive on brand Tumi. So this is year-to-date. You can see year-to-date, we added $186 million of sales for Tumi, up 44%; driven across every one of our regions, core North America, up 31.6%. Asia really turning on, off from last year to this year, up 70%, with real strong momentum into Q4. Our Europe business, up 44% as we start to lay some retail footprint for Tumi within the region and the business and the brand really establishing itself more and more within the European business. In Latin America, up 75% as we start to penetrate in the key cities within Latin America and tremendous growth opportunities going forward as well. So you can really see this dynamic shift in Tumi as a percent of sales from 2019, Tumi was roughly 20% of our business. In 2023, it's 24% of our business. And you can imagine the margin effects of that moving the overall margins of the business. So in that same time period, we moved Tumi's margins up 300 basis points from '19 to '23 as well. So really fueling a very strong growth story for us on both the top line and bottom line. On Slide 13, I'll give you a view on Samsonite, where we added $343 million in sales, up 37% from last year to this year. Every region delivering. More mature North American business delivering 16% growth. Asia, as it turns on, 84% growth, with tremendous momentum into Q4. Europe, up 24%; and Latin America, up 33% (sic) [ 23.7% ]. So this premium-position brand continues to deliver tremendous growth as the business continue to recover across all markets. And then on Slide 14. We talked a lot during pandemic and what we're doing to manage the business and navigate with our retail fleet, but we're back to opening selective store expansions across the globe, as you'd expect. We've added 24 Samsonite stores. We've added 12 Tumi stores, with more stores to come before we finish the year. Asia added 18 new Samsonite stores and 6 Tumi stores. This is where you should expect to see the bulk of our retail expansion. But Europe is adding stores as well, 4 stores with 4 company stores for Samsonite and 2 Tumi stores added in the period. And you should expect the pace of Tumi stores to continue to grow within Europe as well. Blended, we have 1,021 stores in the fleet. And if you remember, in pre-pandemic, we're close to 1,300 stores. So we're carefully adding, and it's delivering on the growth side as well. And I think importantly, comp growth, which isn't on the page, but our Tumi comp growth year-over-year, you'd expect it to be high, almost 35% and Samsonite comp growth 37%. So these stores in the existing store fleet are really delivering very strong growth. Just one -- a couple of snapshots on stores. I think it's a key growth area for Asia, for sure. You can see -- I'm on Page 15, you can see a new Kuala Lumpur, Malaysia store opened in September of this year, tremendous store with our latest manifest fit out. You can see a Shenzhen, China store opened in August '23, a great store in a great location. I'm on Page 16, you can see within Asia -- I mean within Europe, we have new Samsonite stores opening. A lot of stores we had closed during the pandemic, we're starting to very selectively open stores. This is a store in Nice, France, opened in June. And then we have a new Tumi store in Brussels, Belgium, opened in March of '23. So we're really excited about this capital expansion across Asia and Europe as well. I'm on Page 17. This is a tremendous store and a very high-traffic Harbour City mall in Hong Kong. I visited this store maybe 3 months back. Really, at this time, [ we were ] opening -- it opened in July of '23. And this is an open-concept store, and it was packed. And it's literally become the top-selling store within this Hong Kong marketand it's only been opened for a handful of months and continues to trend very, very positively. And then lastly, we're refreshing a lot of stores. And so this is a good example of New York City. I'm on Page 18. This is our Madison Ave store. And we relocated from 610 Madison Ave to 575 Madison Ave. This store just opened in the last couple of weeks. I was there last week to see the store. Tremendous store, tremendous traffic. It will be one of our highest-performing stores within the New York market. And it was super busy when I was there, which is exciting at 10:30 in the morning. So you can really see what we can do when we uplift and refresh stores with the newest concept. So I'm very excited about what we're doing on that front. And then this business, as we step into advertising and push to support the growth drivers of this business across all of our brands, particularly our key core brands, we're advertising strongly and consistently across the globe. Our year-to-date DTC e-commerce is up 44% to last year across all brands. And you can see Samsonite in the middle -- I mean on the side, you can American Tourister in the middle focused on color and fun and really this kind of terrific Tumi advertising we're doing both on core products and materials and collaborations, which are driving all of our brands. If I go to the next slide, just a quick look, just the tiny taste of what we're doing as we push the business in brands in a competitive space that people aren't able to do the same thing as we're doing. And so you can see Casper Ruud on the left side of the page with Samsonite. This is our Proxis bag. This has been tremendously successful. We just launched the BOSS-Samsonite collaboration. This product is amazing, and we'll start to kind of roll out around the world as we step into the start of next year. This has been tremendously well received and very exciting. You can see our long-standing Tumi-McLaren collaboration, which continues and been tremendously successful; and even American Tourister, and this is a local cricket star within India, really driving the needle with our India business that continues to move with tremendous momentum. So with that, and I went through that fairly quickly, Reza will walk through some financial highlights, and I'll come back right at the end with some overview and outlook. Off to you, Reza.

Thank you so much, Kyle. And we're looking at the page at record Q3 results, as Kyle just mentioned. So record sales, record gross margin, record adjusted EBITDA, record adjusted net income. Net sales up $167 million, which is 21% constant currency to Q3 of last year. Q3 2022 gross margin percentage at 59.6%, also a record, nearly 400 basis points, plus better than the same figure for last year. Gross margin has been a great story for us this year, and we're able to maintain that discipline around pricing, and that's helped us in this quarter. Adjusted EBITDA margin, a record 20.3%, delivering on a tremendous adjusted EBITDA of $194 million, a $60 million improvement or 44% improvement in adjusted EBITDA year-over-year. And that basically has rolled into adjusted net income with $126 million of adjusted net income, nearly 93% -- 94% better than the same period last year. And moving to the next phase. You can really just see just quarter after quarter after quarter as this business has continued to deliver and the strength that we saw in Q2 of this year has continued to Q3 and then some. So you can see it both in terms of sales, gross margin trends. We're continuing to maintain that mid 59% level of gross margin percentage. The adjusted EBITDA margin trends just continue to tick upwards. And advertising, we invested [ $15 million ] more year-over-year as compared to last year. It was 6.2% this quarter. We wanted it to be a little bit higher, but you should just expect us to continue to invest in advertising as we enter Q4 as well. Moving to the financial highlights, let's start with fixed SG&A, which is a point that we've been raising for well over 1.5 years now. This business is completely re-rated in terms of the profit profile, and it's largely off the back of the fixed SG&A structure that we have, along with improved sales performance and gross margin as well. Fixed SG&A expenses for the quarter were 22.4% of net sales, almost a 5% improvement over Q3 of 2019, a very efficient operating structure in place. Advertising spend was $59 million in the quarter, 6.2% of sales, as I just mentioned, $15 million increase from Q3 of last year. Our net debt position. We are very proud of the overall leverage profile of the business, which has now ticked down to 1.81 turns. Net debt position, $1.2 billion, just over $1.2 billion as of September. And as the strong profitability continued, we had another voluntary debt repayment of $70 million. If you add that to the required amortization of $6.5 million that we had in the quarter, we paid down growth set by $76.5 million. And obviously, with the improved EBITDA as well, our net leverage is now down to 1.81x, the number that we haven't seen since that [ debt ] was put on for the acquisition of Tumi back in 2016. While doing that, we've maintained ample liquidity, over $1.4 billion of liquidity. Still, most of the debt repayments that we've had, we've paid down mostly under the revolver. Although as we move forward, the revolver is going to be fully [ paced ] off, and we'll start looking at other options for delevering as well. The good news is we have plenty of prepayable debt to continue to do that. We have a strong free cash flow generation, $89 million in the quarter, $152 million year-to-date, which is really enabling us to do this and to continue to invest in the business in select areas, which Kyle just outlined. Moving to Slide 25. Just really amazing sales across every single region. And here, you're seeing the growth versus 2022. If you're looking at our Asia business versus 2022, at almost 70% constant currency growth in Asia, almost 20% in North America. Europe, just a tad over 20%, so 20.9%, almost 21% constant currency growth year-to-date; and Latin America, 23.3%. If I were to give you versus '19 just for the quarter, we had it a little bit earlier, but just to recap. Asia Q3 was 24.4% above 2019 levels. North America, not -- if we were to exclude our ebags business, where we [ exited ] third-party brands, has been up [ 15.3% ] for North America. Europe, up 31% in the quarter versus 2019. And Latin America, an amazing 65.1% up in the quarter as well. So let's get to the regions in a little bit greater detail on the next few slides. First off, just looking at our Asia business, where the rebound has been really, really great as the markets continue to open up. Asia, as you may recall, last year was the laggard, with China still relatively close and some of the other markets close as well. Year-to-date sales up almost 70% from the prior year and 20.1% better than year-to-date 2019. We're continuing to invest in advertising. And obviously, our Asia business has a higher EBITDA margin profile and at almost 25% year-to-date, well ahead of where the business has been previously, not only in terms of last year at 18.6%, but nearly 4.1% better than 2019 as well. As you look at the quarter, some of the larger countries that were driving improvement, if I would give you the numbers versus 2019, India continues to perform, up 65% in the quarter compared to 2019; China is running almost 14% ahead of 2019 in the quarter. And Korea, Japan, Australia, all of them contributing as well. Australia, up 18%; Japan, up 10%; and Korea, almost up 4% as well, still waiting for the Chinese travelers for that market. So overall, all of Asia has really started to come back again. Although one of the good things is we didn't see a huge peak rebound, and it's been basically coming in, trickling in over the course of the year, and we expect that to continue over the coming quarters and into next year as well. North America on the next slide, North America was one of the first businesses to basically rebound out of the pandemic. And now we're approaching a much more normalized growth level, although still very, very healthy compared to what we estimated market growth to be. So if we're looking at the net sales overall, North America delivering $932 million of sales, up almost 20% over the prior year and 9.8% versus year-to-date September '19 after adjusting for ebags, as we discussed. Strong sales, especially on our higher-margin Tumi brand, which has really helped the overall margin profile of the business. Then Samsonite performing as well. And those higher gross margins and lower fixed SG&A has really enabled the EBITDA margin to completely transformed. This is one of the reasons where you really have seen that profit profile shift. Year-to-date September 2019, just shy of 12% EBITDA margin. We are now running at 20.2% for the same period in 2023. Moving on to the next slide. Looking at Europe. As you may recall, in Q2, we were talking about how we had implemented a new warehouse management system in Europe and how some of the sales had been depressed as a result, even though Q2 is still very, very strong in Europe with 24.1% growth versus 2019. In Q3, we actually saw some catch-up happen. So it actually accelerated even further than a normalized growth in Q3. So Q3, Europe was up 31% versus 2019, delivering almost $580 million of year-to-date sales. And year-to-date sales were up almost 20 -- almost 21%, 20.9% from the prior year and 28.2% versus year-to-date 2019 overall. Adjusted EBITDA, almost $104 million, $103.5 million versus $67.3 million in 2019, that's an EBITDA margin of approximately 18%, 17.9% total for the European business overall. And again, although we're looking at selective investments, especially in growing some of our Tumi footprint in the region, we're still being very, very disciplined on the cost structure to deliver that profit profile. And finally, Latin America. Latin America was a business that 5 years ago when we were talking about it, was basically at a breakeven level. So if you look at the numbers year-to-date September 2019, down 2.5% -- you're looking at negative 2.4% EBITDA margin at that time on sales of about $123 million. This year, completely transformed business. You're looking at $20.5 million real contributions from Latin America in terms of adjusted EBITDA, and that's a margin of 13.3%. And we're continuing to invest in that business, so you're going to see continued investment in advertising. So year-to-date advertising spend was 5.6% this year compared to 3.7% in 2022 if you're looking at those 2 bars on the right-hand side of the page. But overall, net sales up 23.3% compared to the prior year, 68% versus year-to-date 2019. Moving on to the next slide. One of the focus areas for us has been just continuing to grow our DTC channels, specifically e-commerce, and then judiciously expanding our store footprint as well. But one of the things that we did in the pandemic was to transform and relaunch most of the back-end systems for our e-commerce platforms throughout the globe and revamping our digital websites in most regions. So as you're looking at the comparison of net sales by channel, DTC e-commerce growth year-over-year, year-to-date September 2022 versus year-to-date September 2023, year-to-date growth of 44.2% in DTC e-commerce. Retail growth of 42.5% year-over-year and with wholesale growing about 32.5%. So we're continuing to try to grow that side of the pie as it relates to our e-commerce channels as well as our DTC stores as well. And largely, that has been off the back of comp store growth, which Kyle alluded to on one of his slides, and we're seeing some selective store growth as well. Moving on to the next slide, just in terms of what is selling. Travel products have been -- continue to represent approximately 2/3 of the net sales, and that is both in the business travel segment as well as the leisure, both are extremely robust. Year-to-date September 2022, we had just over $2 billion at nontravel growth. And now we're looking at -- sorry, nontravel component of that was $708 million or roughly 34.4%, and that's from the year-to-date September 2023 to $915.5 million on a year-to-date sales number of $2.7 billion or 33.5%. So that split has remained relatively constant, but we expect basically the business travel segment is to continue to be robust as we go into 2024, but we're trying to continue to push through innovation on our nontravel segments to continue that portion of the pie as well. There's still a lot of TAM available for the nontravel segment. And so that's an area where we have a lot of focus, both in terms of backpacks, briefcases, nonstructured travel products such as duffels, et cetera, and trying to continue to grow that portion of the pie. Moving on to the next slide. Fixed SG&A is something we're extremely proud of. And what we have committed to, and you're continuing to see the trend here is that, that fixed SG&A as a percentage of sales will continue to improve, delivering operating leverage as we grow sales. And you saw that, if you're looking at the year-to-date September 2019 period, at 27.9% as a percentage of sales was the fixed SG&A component as we're looking at it. And this year-to-date period, we're down to 22.8%. That's almost a 200 basis point improvement from even last year, where we were at 24.8% as well. So a fixed SG&A expenses as a percentage of net sales continued to improve. Variable selling expenses did increase $91 million from the prior year, but that's -- largely, that's due to the growth in net sales, as you would expect. And the other area of SG&A, obviously, advertising expense increased $71 million from a relatively low spend last year, and that's an area that we -- that we're focused to and continuing to grow, and we plan to grow going into next year as well to invest in our brands. Looking at the balance sheet, we've highlighted a couple of items on this page. Obviously, you'll recall from our -- one of our earlier earnings calls this year, we did refinance all of our debt, pushing out the -- at least all of the pro rata facilities. We do have some euro bonds that are still on the books as well. So we've extended all of those maturities 5 years. But most importantly, that -- those maturities are prepayable, and we continue to delever, as I just finished mentioning a little bit earlier, calculated net leverage down to 1.8 turns of leverage, a very, very healthy number. You can see in the year-to-date period, we've circled it on the page. We -- total borrowings are down $365 million year-over-year compared to last year. And we did approximately 76.5 of it just in this quarter alone, with very healthy cash level and continued ample liquidity as well for the business, as Kyle touched on it a little bit earlier. In the next page, free cash flow generation, continued to improve. So as you're seeing, in Q1, we did have some inventory levels. As you may recall, we're very focused on making sure that we have ample inventory to deliver on the sales. And as you look at the subsequent quarters of Q2, Q3, we've generated good cash flow numbers, $125 million in Q2 and almost $89 million of cash flow generation in Q3 as well, and we continue to use that excess cash flow to delever the business after investing in our stores. And you'll note shortly that we've also improved in terms of the amount of CapEx that we're putting into store remodels as well. Moving on to the next slide, net working capital efficiency. Inventory this year, September 30, was $178 million higher than the low levels at the same time last year. Again, that is intentional. We have been building up healthy inventory levels to make sure that we're in a good position to take advantage of the recovery and demand that we're seeing on a global level. But as time goes on, you can continue to expect us to improve our net working capital efficiency. Right now, net working capital as a percentage of net sales is at 15.2%, and that's trending in our -- towards our targeted level of 14%. And you should expect us to do that through continuing to basically manage the supply chains and making sure that we continue to look at our product purchases to wind that down as we continue to [ deliver ] on sales. CapEx. Year-to-date, as this is on the next slide, CapEx at $49.1 million year-to-date. As you may recall, our normal run of CapEx historically has been around $100 million, $100 million to $110 million,, historically. We have been ramping up CapEx over the course of this year. Specifically, we're trying to make sure that we're in a good position to refresh stores that have not been touched for a while. Typically, when we [ refresh ] a store, we see an uplift in sales, demand as well. And so we felt that it was very important to refresh our stores. We're continuing to do that in terms of investments. We've also put in a significant amount of CapEx in terms of our own factories. As many of you know, we have 3 owned factories that we have, 2 that are in Europe and 1 in India, and we've invested in the capacity expansion there. And overall, we'll continue to invest in [ software ] in some other core areas as well. With that, Kyle, I'll turn it over to you to touch on the outlook, and then we can open it up for questions.

Kyle here, I'm going to do a quick update, outlook. Okay. Everybody with me? So as we close out the year and look into '24, a couple of things to think about. One, outbound travel for China, which is in, I would say, early stages of recovery, is expected to continue, I think, at a more steady level in the coming quarters. And so as we roll into the end of this year and into next year, I think you'll see a continuing China story. And travel growth in the markets that reopened earlier, particularly North America and Europe, we're starting to see them normalize, but still with tremendous momentum as we think about end of '23 into '24. Q4 is still very, very strong. Everybody is going to ask when we get to questions, but Q4, I would say we're still in upper teens growth to 2022, very strong and strong growth versus 2019 as well, again, in upper teens level versus 2019. So really strong momentum into Q4. We believe we're well positioned to outpace the market. We have -- supported by these leading brands that were really unrivaled leader from a sourcing and distribution perspective, our ability, as we said on many calls, to invest in real product innovation and importantly, invest in marketing, and you'll see us continue to push the needle there to drive the business. We're spending more on advertising. We're planning to spend a little over 6.5% for the year. You should expect us next year to bump this up. From an advertising spend perspective, in '23, we're going to be really close to $250 million of advertising spend, really dramatic, and that number will grow next year. That all fuels and allows us to push our stories across the globe with these 3 core brands at a tremendous level. We're delivering, as you've seen in the numbers and these record numbers, fundamentally higher profit profile as we benefit from this more efficient cost structure and importantly, stronger gross margin levels. Our overall brand mix is transforming. We can see higher-margin brands and regions moving at faster clips. So as Tumi is moving at a faster clip, as Asia really comes back and is recovering, that's moving the overall profit profile of the business up, importantly, our gross margin up. And our ability to manage our fixed costs of what we achieved during the pandemic has been tremendous, allowing us to push the business at a faster pace. We're generating cash flow. We have this asset-light model, as you all know, if you've been looking at us for a while. We're well positioned to manage this business with a balanced capital allocation on deleveraging the business, as you're seeing. Investing in real organic growth in the business, and you can see us pushing this business really well. And as we step into next year, starting to return cash to shareholders. So this free cash flow generation, now the working capital is at the levels, you'll see -- start to see that deliver even more on the cash flow side, and it's allowing us to have this tremendous balance sheet strength and business model that really we can manage quite well. And then let's not end without talking about sustainability. We are really leading the transformation on sustainability within our industry, and you should expect more from us. You'll see more and more as we get into next year on us messaging and communicating that both to our consumers and just in general. And our responsible journey, it continues to be a huge piece of our pillar for growth in the coming years as we transform this industry. So with that, we will happily open it up to questions.

[Operator Instructions] Our first question come from Dustin Wei with Morgan Stanley.

My first question relates to sort of near term. Thank you, Kyle, for mentioning that your fourth quarter, you are seeing upper teens growth versus the fourth quarter '19 and the fourth quarter '22. But just wondering, if you can provide some more colors by region? And if I look at the historically that fourth quarter is supposed to be delivering higher EBITDA margin in fourth quarter versus third quarter, so just -- is there like -- are we going to see the same trend like -- to finish this year? And I think that would be great if you have some thoughts to share for the 2024. Second question related to Tumi. I think last earnings briefing, you mentioned that $2 billion revenue target is for Tumi like some time down the road. Just wondering if you can provide some more details in terms of like which market that you are really focusing on? It's really good to see the North America that Tumi is supposed to be sort of mature brand, but still growing very nicely year-to-date, so some more color by market. Are you going to like double the stores in order to achieve that number? Will you leverage more wholesale or e-commerce and some thoughts on products, ASP, et cetera? And third question related to promotion, I think also related to A&P. So wondering if you can describe like what kind of supply and demand dynamics that you are looking at now sort of by region? Are you seeing some of the competitors increasing the discount more desperately? Or generally speaking, the industry pricing is still very healthy across the region? I think the third quarter margin is really good, partly because of A&P. You mentioned there's a timing shift, but it seems like you don't really need to spend that more money to sort of drive the kind of marketing effect that you wanted to see. So some of the colors on A&P, I think, that would be helpful.

Reza, do you want to take the Q4 numbers, and I can maybe jump in on the others?

Sure. Why don't I start off, Dustin? So as Kyle mentioned, just upper teens growth, as you can imagine, Asia is continuing to outpace the other regions as we enter into Q4. If I had to go in order, the normalizing that we're alluding to is really if you're looking at North America and to a certain extent in Europe, when we say normalizing, it's not even going back to its historical level of growth. As you've heard us say in the past, we expect the industry as a whole to be growing around the upper single digits, and we usually do a couple of points better than that as we take market share, we're still well ahead of those levels. So if you're looking at that upper teens level, you should expect that to be higher towards the Asia numbers. Latin America will be in the same sort of ZIP code that it is right now as it relates to kind of year-over-year growth. So they're running around in that kind of 60%, 70%. There's a range that happens, and there is some seasonality in Latin America. Bear in mind that it's just very much skewed towards the first quarter business. So that will be at a lower level, in line with what it's been kind of historically. The North America business, both Tumi and Samsonite, the main difference between the two, obviously, is that our Samsonite business is largely wholesale-driven in North America. Tumi is much more DTC. The one thing is just in terms of timing of orders that happen as it relates to the North America Samsonite business. But even that is in Q3, was running kind of in that lower double-digit ZIP code for the North America Samsonite business. So -- and we do know that the channel, there's still room in the channel and the sell-through is pretty strong for our category overall. The other thing that I'll just touch on, Dustin, is the discounting point. And then Kyle, please feel free to chime in. Discounting overall, we've been very disciplined around it. We believe in the products that we have. We've been very disciplined across the region in terms of maintaining the profit profile. That's why you're seeing that gross margin level continue to improve. And there will be a benefit from mix shift as Asia comes back online because there will be a higher gross margin with Asia and with Tumi as compared to some of the other regions. Where we are seeing some promotional activity is in the U.S. business, it was the first market to open up. So some of the competitors are -- there is some discounting that's happening there. But again, if you're looking at it from our perspective, we're being fairly disciplined in it and we're trying to continue to make sure that overall redesign for that wholesale channel to hit the gross margin targets that we have even in that channel despite we might be a more promotional environment there. And the other thing that I'll just say is as far as the brands are concerned, with Tumi, we're incredibly disciplined around making sure that we don't discount. There's only a couple of windows that we have sales for Tumi. It used to be that we got sales for 3 to 4 weeks for those two sales areas, we've narrowed that down to about a week for each of those. So there will be promotion -- optically, there will be promotion, but we're still making sure that whatever promotions are there built into our model to ensure the gross margin business [ dilute ]. But Kyle, let me turn it over to you, and then I can chime in from there.

Okay. Great. I think one thing on the promotion that we're seeing, Dustin, is that this very entry-level positioning, so I think these kind of entry level, maybe even kind of unbranded level, there's much more promotional activity, which is a space that we're carefully kind of avoiding, so that we drive our core brands the right way. On the A&P spend, the shift from Q3 to Q4, I wouldn't call it a shift, it's just timing, really. So we spent 6.3% or 6.2% in Q3. You'll see a number closer to 7% in Q4. And that's just the timing of when we're spending, particularly the digital ads when consumers are moving for holiday and buying and driving our digital and retail store sales. That shift kind of typically happens. And as you know, our Q3, with the end of summer travel, is actually a very tremendous strong quarter for us. Often that margin profile is even better than Q4 for us as a business, and you clearly saw that. But if I adjusted that for a normalized advertising, we're going to end this year around 6.6%, I think, on advertising. It's not tremendously different, kind of 20, 30 basis points off where we're going to end for the full year. And again, Q4 advertising will be closer to 7%, just as we line up the timing of that spend. As far as Tumi revenue growth going to $2 billion, I think that is clearly in our sights. As you know, Asia is going to deliver a huge piece of that story, and that continues to grow at a tremendous pace. So let's call it 25%-plus, and I think that will continue. There's real opportunities for Tumi within Europe, as we talked about kind of the expansion within Europe and that brand becoming recognized. That will be a meaningful piece. But as you rightly say, our North America business continues to deliver tremendous growth for the brand. This is around category expansion, this is around product offering expansion. As we push -- there's more to come here. You'll see us launching new initiatives as we step into next year. I'll wait for you to see that when we get there. You'll see us expanding our women's category, which we've been doing now. You'll see that even accelerate into '24 and '25. And just the sheer volume we take through our retail footprint, the footprint we have today, so we'll open stores in the U.S., but it's really going to come from the existing footprint that's going to drive much of the growth in the U.S. business. And I'm talking to growth that will be low double digits for North America, very mature. Our digital space is continuing to grow tremendously, as we've told you earlier. That will be a big piece of the story as well. And even Latin America is a market that has real tremendous opportunities for Tumi. So the blend of those all delivering, but in the order of Asia, Europe, U.S. will be kind of the growth rates that you'll see for Tumi. And I have zero doubt that this business is heading there. We can pick the year, but it's definitely heading there, and the teams are highly energized. And I think we answered all your questions, Dustin, I had four written down, and we can move to the next unless we missed anything, Dustin.

Yes. No. I think it's so clear.

Yes. Thank you.

And our next question is come from Anne with Jefferies.

Just some follow-up question here. Regarding the product category, just want to check like if I take a look at 9 months number by product category, travel continue to grow faster than that of nontravel. But in third quarter, we noticed that nontravel is actually doing better. Is there some deliberate like strategy to grow your nontravel side? Initially, I thought that [ third ] quarter normally is a high season for the travel product, so maybe you can share with us why we are seeing nontravel also like doing so well? That's my first question. And the second one is regarding the -- by brands, I'm sure that Samsonite and Tumi has been like very strong. And in terms of like any entry-level brand or promotions, it's not going to impact them. But let's say, for example, American Tourister. If we have more competition at the white brands or private labels, what if the American Tourister will start to see some impact in terms of slower sales growth, what will be our strategy, moving forward? Will we have some other brands to try to compete with the mass brand? Or how should we view this kind of promotion at the American Tourister level?

Okay. On the nontravel side, I think some of the things we're seeing in Q3, and generally, our nontravel is a mix of casual bags, backpacks and duffels and unstructured luggage, but it's also business products; and what we're clearly seeing is business travel starting to move back in the mix. So you can see brands like Tumi moving. And if you look at the growth that we're achieving there and think about the mix of that business, which would be 60% nontravel, that feeds into the story. But across all of our brands, we're pushing both travel and nontravel. We have a very successful line called Ecodiver, developed in Europe, now selling everywhere around the world. I'm sure you've seen this product. I think I showed it in the last earnings call. This continues to move really well. And when we think about how consumers and younger consumers are moving today, a lot of travel is happening with these types of products. So I'm not so fundamentally worried if one is moving faster than the other because they're both moving in a direction tied to what we're pushing on the business. But I think that business traveler returning and really returning in a big way, I think you'll see it in Q4. I'm sure you're all attending more investor conferences and you see trade shows, really starting to boom across the globe. And the outlook for those for Q4 and into next year is very high. All of that fuels a different type of consumer that's traveling. So as we see more normalization in maybe leisure travel in these -- in markets like North America and Europe, we're seeing this very steady pickup in business travel, which bodes well for us. So I think that's why you're seeing some of the mix effects maybe in the quarter. But for the year, you can clearly see the return of travel driving a big piece of our business year-to-date. As far as [ AT ] and promotion, we're very careful. Now one piece we do in all these brands is we manage for promotion, right? So if we're -- if we know we're going into a promotion period, we often have collections that are lined up to be able to do that. And that's our scale advantage that we can do that as a brand in place. But what you won't see us do, and I want to be very clear, is we -- and I'm sure I said this on calls over the last few years, we don't need every dollar sales. We want the right dollars of sales. And as we get into this kind of unbranded space, really entry-level product positioning with heavy promotion, we're going to stay out of the fray of that. That doesn't add anything to us. I don't need to add sales to play in that fray and pull down the margin profile of the business. So with real discipline, we're managing. We will be on promotion during holiday, as you'd expect, but in a much more disciplined way. And the whole industry is acting that way, particularly in the branded space. And that's really the way you should expect us to run and operate the business. So -- and it's part of the reason why maybe you see AT growing at a slightly -- still tremendous growth, 35% year-to-date, but slightly lower than what you're seeing for Samsonite and Tumi as we're careful about what we enter into there and maintain a good margin profile for that business as well. So we're really disciplined there, and you should expect us to stay there while still delivering a great growth story.

And our next question is come from Perry Yeung with UBS.

Actually, I got a few follow-up questions. Firstly, related to the margins. I wonder on a Q-on-Q basis, we do see a gross margin expansion, but if we look at the sales mix by brand, it seems that Samsonite and American Tourister are actually gaining high sales mix on a Q-on-Q basis. And I assume there is also a pickup in terms of the wholesale channel. So on that basis, I assume sales mix movement might not be an answer to the gross margin expansion on a Q-on-Q basis. So I wonder what drives the margin expansion on a sequential basis? Is it because of RMB depreciation to benefit your cost base, given that 40% to 50% of production is based in China? And secondly, I'm not sure if you can provide more color in terms [ consumption ] trend quarter-to-date, especially in October. Do we see some consumption weakness in China start to weigh off on travel demand or alternatively, we see a very strong demand still on the ground for the China and also probably for others?

Thank you. Kyle, do you want me to take...

Reza, do you want to take gross margin?

Yes. So gross margin expansion, there's a couple of things. First of all, keep in mind, the short answer is it's not RMB. The reason for that is if you look at when we purchase a lot of this inventory, this inventory has been on our books for quite some time that we're selling through. But what's really driving gross margin, the biggest component of it is really mix and controlling promotion. So those are the two biggest components of it. The mix shift to Asia and the mix shift as Tumi outpaces growth of, say, American Tourister, there's a higher gross margin profile for Tumi then Samsonite and then American Tourister, and then the Asia business has a higher gross margin profile as well. So those two components are what will really drive gross margin and help us to defend that level. Again, it is running ahead of what our initial plans were for this year. And the good thing is the team has been very disciplined on limiting promotions to be able to keep it at those levels. Consumption in China, I can take it or you can Kyle, whichever you prefer.

Yes, go ahead.

Yes. So in China for us -- yes. It remained strong. So we just came out of 11/11. I know there's some others that have been reporting on it. For us, it's looking at the same level as 2019, and it's nearly double what we did last year. the Chinese business, as I mentioned a little bit earlier, is running kind of mid-teens-level growth compared to 2019. And for us, the advantage is that it's basically spreading out the runway for growth over a longer period of time. So we didn't see this huge spike of rebound and then people are traveling and then it's coming back down again. As we've said on prior earnings calls, we expect that resilience in China to continue over the course of the next year. So you should continue to expect China to continue to grow at a slower clip for us as compared to some of the other Asia countries like, for instance, India that all of a sudden was showing double-digit almost 100% growth, up 90% growth, 70% growth in various months as compared to 2019. China is going to be running at that mid-teens level over the course of the remainder of this year and into next year as well. And I think that's actually a good thing for our business because it basically spreads it out over a longer period of time as opposed to having a balance and then back down again. And the reason for that is if you look at Chinese travel, it's been largely based off of domestic travel. So we've talked about previously around how international flights to China are still fairly limited. There's a backlog in terms of visas. And most importantly, there's a backlog in terms of international capacity of flights. And that's driven not because of demand, but largely because it takes a while to basically retrain pilots and to get them recertified on aircraft to be able to put on a lot of the long-haul flights. I will just tell you anecdotally, having been -- Kyle and I travel all the time, and we see it in some of the credit card data we have as well. So if you're spending time in Europe, you're starting to see the beginnings of Chinese tourists showing up now. So we expect that to be much more growth in the back of next year. But the China story for us is going to be one of kind of that mid-teens growth over the course of the next year, in our view.

And our next question will come from Kai Sheng with Haitong Securities.

Okay. We have three questions. The first one is actually about fixed cost because we've seen huge improvements of the savings for the fixed costs. Just wondering, how should we expect the percentage of the fixed SG&A expenses in terms of the revenue for next year? And the second question is about the store expansion. Just wondering if we can have more color about the pace of store expansion, especially in terms of the key regions? And the third question is actually about India. We've seen really strong momentum in India. Just wondering, may we have some details about the product and also marketing strategy in India? And also, we know we are trying to strengthen the business of Samsonite, not only American Tourister, in India. That would be great if we can have more color about that.

Why don't I start on the fixed costs in stores and then Kyle [indiscernible] if you want to add to that. Yes. So fixed costs, so what we said, as we think about 2024 in terms of fixed cost, expect fixed cost as a percentage of sales to continue to improve. So not only we're we trying to maintain the new cost structure that we have, but we're trying to make sure that we deliver operating leverage sequentially year-over-year. So where -- if you're looking at the different line items of SG&A overall, the variable will obviously increase in line with sales, which is what we've seen this year as well. You have more sales, you have higher variable SG&A as well. The fixed cost as a percentage of sales should continue to tick down. And then the other component of SG&A is advertising. So as Kyle mentioned a little bit earlier, we want to make sure that we increase our investment in advertising, and we're trying to improve that to get that to almost closer to 7% for next year as well. And that's something that we're starting already in Q4 of this year as well. And going back to an earlier question, which I think it was Dustin that asked, the reason for that is it's not just the [ row ] assets, it's not just performance marketing that we're doing, but we want to make sure that we're investing behind these brands, continue to maintain that premium brand positioning that both Samsonite and Tumi enjoy. As it relates to the stores, yes, we are absolutely opening up selected stores. But that also is in line with maintaining our fixed cost as a percentage of sales numbers. So while we're investing in those stores, we're only doing it to a limit to make sure they're at the right locations, that they're delivering good revenue growth and that they're laying the foundation to be able to continue to build all of these brands. So as we build the story to $2 billion for Tumi, for instance, we're going to need some incremental stores. The primary focus for those is Asia first, and then, I would say, Europe second. There's some selective store growth in Latin America as well, although a lot of that is franchise, especially in Brazil. But there will be a handful of stores in various regions. So you have a handful that are in Latin America and North America, but the bulk of the store growth that you'll see will be in Asia as we continue to penetrate countries such as Indonesia, which has remarkable growth potential for us. Kyle, I'll turn it over to you, if you wanted to touch on India and product positioning.

Yes. Sounds good. I might say, in the stores, you should expect us to open around 50 to 60 stores in a year, with Asia being more than 60% of that as we think about geographies that we're expanding, brand Tumi expanding. Next would be Europe, where we'll be carefully opening stores, probably in the kind of 8 to 10 level, if I remember our -- my outlook for next year. And then more discipline in U.S., but you'll see us open the select stores in the U.S. Both the mix of Samsonite, I think you'll see us open a few stores next year for Samsonite and the same for Tumi. So -- and I think that's the right pace. If you've been following us for a while, there was a period that we accelerated very aggressively, and we corrected a lot of that. But at that pace in the geography we're covering, I think that's the right expectation. I might also say in stores, the refreshing of stores, just updating our store fleet. For many, we had taken a pause over the last 3 years as we navigated pandemic, and that refresh gives these stores a boost as well. So it's a good bit of work doing on that both this year, and that will carry into next year as well. As far as India sales momentum, it's been tremendous. You're exactly right, at the start of this year, we really leaned into Samsonite. Samsonite is approaching almost 20% of our business in India, really surprising us at the pace that it's moving, and you'll see us continue to push that brand as well. And American Tourister has been tremendous. And really the driver of that market and continues to be very, very successful, and you'll see us support both those brands within the region as I think an Indian consumer continues to progress up, I think, more and more, can reach Samsonite. We actually have tremendous -- we use a distributor for Tumi in India, but even Tumi is moving at a really interesting pace within India as well. So -- the combination of all 3 brands there will deliver, I think, a good sustainable growth story, where historically, it's been largely American Tourister that's been driving that market. So we're quite excited for what we're seeing in India, as you know, a highly competitive market, but we continue to win and do really well in India across all 3 brands now. Any other questions, operator?

Yes. And the next question is come from Carlton Lai with Daiwa.

Congrats on the strong results. So a couple of follow-up questions. I think first of all, for Europe. When we're looking at your EBITDA margins for the European business, I think for 3Q, it did jump quite a bit to 20%, I think, from around the 16.5% in the first half. Is there any particular reason why? I just want to check there. Is there a good timing shift from some orders? Or I guess the Tumi uplift also a bit helped. I just want to see if there's anything in particular there? Second question is on inventory. You did mention before and this time also that you're intentionally building out the inventory. But when we look at the absolute basis on inventories we're at [indiscernible], I think largely flat quarter-on-quarter. So hove we kind of hit an inflection now? And particularly as we head into 2024 when North America could be normalizing, is -- are we going to see this level start to decline? And then just lastly on margins. I think we're all very impressed with your growth in EBITDA margins now, record highs. And then we're still seeing the two main drivers, Asia and Tumi, I think still driving a lot of the growth in upside there. So I think -- I was wondering if we can hear your thoughts on what you think a realistic target for the mid- to long term, in terms of margins, would be for the business? So these three.

Why don't I take inventory? Reza, if you can just look at the Europe Q3. I think it's a function of summer travel season, tremendously strong in Europe. And I think some timing of advertising has really helped EBITDA -- I mean, the overall margin profile for Europe and the strength of Tumi. So I'm sure those are the drivers there. But on the inventory piece, I do think we're at an inflection point. If you look at our inventory and inventory days, they're all very, very strong and healthy, but we're very carefully managing that valve now. So when I think about inventory levels and if I think about the levels we're at today and where we might be at the end of the year, let's say, that stays about the same. But on a growing business, which means that the -- it's going to be more efficient. That's the way to think about inventory. We're a little heavier than what would be normal for us. And so we're just starting to adjust that valve now to normalize our inventory as we move into next year. [ I don't think ] it will take us right through the middle of next year to get kind of our inventory days back in line with where we want to be. And it's been tremendously successful what we -- the decision we made to lean into inventory and capitalize on sales, has been a huge success for us. But you're exactly right, we are at an inflection point, which will be helpful for overall cash flows, too, as we move forward into next year as well. On the margin side, I think the margin story really is a function of discipline within the business. Its margin expansion across all regions, as Reza went through. Each of the regions, you can see the transformation. But you're exactly right, as Asia moves at a faster clip, and you should expect Asia to be comfortable double-digit growth for several years and for Tumi to continue to grow at a pace as we move from this $1 billion kind of run rate to $2 billion, the natural tendency is going to be for this EBITDA margin to grow. And so we're going to lean into advertising a bit more and deliver still some EBITDA margin expansion from where I think we'll end this year, with advertising adding maybe 40 or 50 basis points to what we spend in this year. So the margin profile of this business is really in this kind of transformed level. I'd say, it would be in the 19s next year, mid-19s comfortably with very strong advertising. And if you really just model it forward, there's no reason why this business, in the medium to long term, isn't north of 20% if we're managing it the right way in those pieces of business that are driving the business move at a different pace.

Kyle, just to add. So for Europe, overall, the margin profile, you should be aware, in Q3, we continue to invest in advertising as well. So if you're looking at kind of year-to-date versus year-to-date, it was 1.5 higher advertising year-to-date this year versus last year. That's intentional because we're obviously trying to maintain momentum, going in into 2024 and beyond. Overall, in terms of -- there's very, very limited discounting and promotion that's happening Europe. So the European team is very, very focused on that. The comment that was made a little bit earlier in terms of what was happened in Q3 versus Q2, the warehouse management issues were resolved over the course of the back half of Q2, going into Q3. So we were able to get some of the additional shipments out, but the margin profile of those wouldn't have been any different. So the margin would be very similar as you're looking at that. So the main difference would be advertising that would have been happening year-over-year.

And our last question is come from Brian with [ Swiss Asia ].

Congratulations for the great results. A couple of quick questions. The first one is on your wholesale side. I mean, sales has been pretty good and strong this year for this quarter. But I did notice you discussed some slightly more challenging situations in Samsonite in the U.S. and American Tourister of the Europe for the wholesale side. So do you mind giving us some color there on what's happening with inventory and pooling going into this quarter? The second question is I'm trying to square your qualitative guidance with your comments that you can do high-teens in Q4, but it does seem like on the sort of [ quarterly ] comments you're making, you could probably get to the [ 2 ] handles. So is there any weakness that we should be a bit more cautious about, going into Q4? And the third question is on the fixed expense. It's been going down very strongly in the last couple of quarters, and it's really good to see that. I don't understand how that comes from distribution expense, and that regardless is stable at about 27.5% of sales for the last few quarters. So I just wanted to get a bit more color on the sort of [ like ] you can get in the distribution expense side to further improve margins.

Okay. Reza, if you take distribution expense, I'll hit the others. Wholesale side, we're definitely seeing, and we've guided this in the past, we're seeing -- I describe it as lumpiness in buying, where they're buying and they're managing their overall inventory. So you might have a month that's up 25% and a month that's down 5% because of the way they're buying in. What I would tell you is the sell-through is very strong. The reality is, is they're buying in a lumpy way, we're probably even missing some sales. So I think there's upside if that was more normalized. And I think that will continue in Q4 that they're buying in a cautious way to manage inventory level. So we see that in our wholesale. I think Reza talked about year-to-date also. It's running up 30% or 32%, which is still very good. But our -- the rest of our business is up 45%, and you can get a sense for what's happening in this wholesale because of that. Clearly, seeing in the U.S., we can see it in Europe, some of our markets like the U.K. and Germany, which have bigger wholesale customers, the same kind of lumpiness in buying. Fundamentally, the travel demand for our products is still very strong. And I think it's just that buying. So you should expect those lumps, and I think that will just carry through. Our North American business, for example, full-year North America business, excluding Tumi, this is core North America business, will be up around 8.5% to last year. That's a very strong number. And it could have been more if not for the wholesale balancing. My personal view is that wholesale piece will settle out next year. And I think that will actually be a benefit to our North America business as that normalizes. What is totally clear is demand for travel products is still tremendously strong. And so -- and again, we can see that in the sell-through. As far as Q4 goes, I think we'll be kind of mid- to upper teens growth. I think that's probably the right place. Asia will be plus 40%. And in Europe and U.S., where we -- or North America where we've seen this more normalizing trend, I think that will keep us below this kind of 20% mark that you're talking about. So still a good strong story. We indicated what we're seeing as we're in kind of the Q4 range. But I do think that, that normalization is happening. And really, when you get to next year, we -- our view is we're kind of a low double-digit growth story next year and -- with Asia delivering good growth. And U.S. and Europe starting to be in a more normalized trend, which still delivers a great overall growth for us. But it's the first quarter that you'll start to see that as we get into Q4. I think a lot of people are wondering what the holiday sales are going to look like. We can see demand for travel is still strong. And so everybody is watching on the holiday demand. And I think the early indications are, I think it will be okay. But that factors into overall kind of Q4 number as well. And again, I think these more -- these markets that recovered quicker are now entering into that phase, which I still think is a great number, but it's why we maybe hold Q4 down a bit from 20%. And I think that's the right place as we step into next year.

And just to add on distribution expense, obviously, if you're comparing it to 2019, it's completely transformed. Generally speaking, we're running around 27% as a percentage of sales this year. Obviously, there's a little bit of seasonality for the different quarters, but just roughly speaking, we're about 27%. The fixed component of that, so fixed selling as a percentage of sales, has been completely transformed compared to 2019. So that number is running in the 16s, generally speaking, kind of mid-16 levels, depending on the quarter. And the portion of that's variable selling, obviously, that does flex up with sales. So as we continue to improve the sales environment, you see that [ mix ] of that variable component picking up a little bit as well.

Okay. We all done?

Yes, sir.

Okay. Everybody, thanks for joining the call. I appreciate all the questions. And everybody, have a great week. Thank you very much.

Thank you.

Thank you. Thank you, everyone. Thank you for your participation, and this concludes the conference. Thank you.