Aurora Cannabis Inc. Price & Performance (ACB)

Hello, and thank you for joining us. With me on the line are Mikael Martin, Executive Chairman and CEO Mona King, CFO Earlier this morning, we filed our financials for the fiscal third quarter twenty twenty five period ending December 31, 2024, and issued a news release containing our quarterly results. This news release along with our financial statements at MD and A are available on our IR website and also be accessed via SEDAR plus and A CAR. Our discussion today, this is a reminder that certain matters could cause you forward looking statements subject to risks and uncertainties related to our future financial or business performance Actual results could differ materially from those anticipated in those forward looking statements. Various factors that may affect actual results are detailed in annual information form and other periodic filings and registration statements. These documents may similar to the access via SEDAR plus All prepared remarks by Magellan Tsimoda will conduct a question and answer session [indiscernible] With that, I'll turn the call over to Miguel. Please go ahead. Thanks, Kevin. We're pleased to report a record third quarter for medical cannabis revenue net income, adjusted EBITDA, and free cash flow and sincerely thank our team for making these results possible.

Our three pronged strategy serves as our foundation and guides us us forward as we seek to further strengthen Aurora Cannabis over the coming years. First, as the world's largest medical cannabis company, we will continue to leverage our EU GMP and TGA GMP manufacturing facilities. Unparalleled scientific knowledge genetics and regulatory expertise on rapidly evolving global medical cannabis opportunities. Today, we proudly serve patients across multiple countries including Canada, Australia, Germany, Poland and The UK with an eye on future opportunities as they emerge. Second, we will work to sustain our medical cannabis margins through operational excellence our continued focus on the space. And third, we look to achieve a steady stream of revenue and adjusted EBITDA contributions and build a track record of positive free cash flow all while maintaining a strong balance sheet. Our successful execution of the points I just made has enabled us to differentiate Here are some highlights from the quarter. Overall net revenue grew 37% driven by 51% year over year growth in global medical cannabis. Within Global Medical Cannabis, international revenue increased 112% For the second consecutive quarter, international revenue surpassed Canadian medical cannabis comprising 60% of global cannabis net revenue, up 300 basis points sequentially from last quarter.

This intentional shift in our business validates how we have capitalized on opportunities across the globe, while still maintaining a stable foundation in Medical cannabis, our flagship business segment, generated 77% of total net revenue and 90% of adjusted gross while the majority of growth was sourced internationally, Canadian Medical increased 6% Aurora we held on to our significant leadership position. Briefly on Bebo, our plant propagation business segment, we generated a revenue increase of 22% year over year, through organic growth and enhanced facility utilization. In terms of profitability, net income and adjusted EBITDA, both reached all time highs and we generated $27,000,000 in positive free cash flow, another record Let's now discuss our cannabis business in greater detail. Our Canadian Medical business, which is known for its scientific knowledge and approach to innovation, provides our patients access to a broad selection of superior offerings.

Through Aurora Coast, our world class research and genetics facility we can harness solutions to provide patients the very best medical cannabis.

On that note, we recently announced a series of new cultivars developed at Aurora Coast in and grown across our EU GMP and TGA GMP certified facilities. We also partner with several other Canadian licensed producers who grow our cultivars enabling us to create more value. Internationally, our largest market after Canada is Australia, We currently have the number two share in this highly regulated market and we are optimistic about our expanded distribution and broadened product portfolio.

Turning to Europe, let's start with Germany, an country that we've been operating in since 2018 where we continue to maintain a leadership position. Germany has experienced rapid growth since the onset of cannabis descheduling last year as more patients register and pharmacies are in turn expanding to support higher prescription volumes. We are determined to maintain a consistent and reliable supply of our high quality EU GMP manufactured products to our pharmacy partners and we're doing that through our EU GMP facilities in Canada and in Germany. We also recently announced the launch of our first German cultivated medical cannabis product under the brand Indumad, manufactures locally, further cementing our commitment to growth in this dynamic market. We strongly believe that the changes in Germany will ultimately reverberate across Europe through expanded acceptance of medical cannabis. Our intention is therefore to gain a strong foothold in these emerging countries through our agility and unique capabilities, including regulatory and cultivation expertise. Let's now discuss two of these markets, Poland and The UK. Which both generated record revenue this quarter. Poland is our second largest European market, benefiting from patients seeking high quality medical cannabis.

In The U. K, revenue increased as a result of our latest product innovations and widened distribution channels. Similar to last quarter and across all international markets, we saw an increase in demand for EU and TGA GMP manufactured [indiscernible] This aligns well with 90% of our internal manufacturing capacity being EU and TGA GMP certified. The expansion of our latest genetics offer higher yields and a lower cost per gram to produce, which has given us the ability to significantly increase our output begin to establish themselves. Now in Canadian RAC, while we did see a decline in revenue, this is still an important segment for us as it is where we gain a lot of consumer insights about products, preferences pricing among other things by maintaining an active presence. We also see interactions between recreational sales and medical sales in our home market. Internationally, at some point, environments could evolve from Medical Direct and if so this would offer us another advantage. We recently announced our latest innovations from our Grey Beard Synrap AL71 and Tasties brands. With a continued focus on premium science driven offerings, this expanded lineup represents our commitment to delivering exceptional high quality cutting edge and diverse options to consumers So to sum up with only one quarter left to go in the fiscal year, we are pleased to be executing at a high level and intend to finish the year strong through profitable growth.

Would now like to turn the call over to Simona for a detailed financial overview. Thank you, Miguel.

We had an exceptionally strong quarter where we reached all time highs across First, net revenue of $88,200,000 represented 37% growth supported by record net revenue of $68,100,000 from our global Cannabis segment. Second, quarterly profitability consisted of record consolidated adjusted gross margin at 65%, 130 basis points higher than last year, resulted in record adjusted gross profit at 56,000,000 Third, adjusted EBITDA grew 316% to a record $23,100,000 and this was our ninth consecutive quarter of Fourth, net income was $31,200,000 another Aurora [indiscernible] Compared to a net loss of $18,100,000 in the year ago period. And finally, we ended the quarter with $180,200,000 in cash and cash equivalents and no cannabis business debt.

Now let's go into greater detail. In medical cannabis, our key strategic focus, net revenue rose by 61% to $68,100,000 dollars which consisted of 6% growth in Canada and 112% growth internationally.

Medical cannabis comprised 77% of net revenue and 90% of adjusted gross profit during the quarter.

This marked an increase from 70% of net revenue and 84% of adjusted gross profit from the year ago period, the result of higher medical revenue and higher medical margins in the current year quarter. The increase in Canadian medical revenue was due to our continued focus on the Canadian patient experience.

A commercial collaboration with vectora protein announced earlier in the the fiscal year also contributed to this growth.

The increase in international medical cannabis revenue was primarily due to the full recognition of revenue in Australia after the acquisition of MedRelief Australia in February 2024. And the rescheduling in Germany. We also experienced higher sales in other European countries. Adjusted gross margin for medical cannabis was 74%, up from 63% in the year ago period.

Both of which far exceeded our 60% target.

Several factors drove the year over year increase including larger revenue contributions from higher margin markets, sustainable cost reductions and improved efficiency in our manufacturing operations with our shift to supplying the European markets from Canada. Consumer cannabis net revenue was $9,900,000 dollars down from $11,600,000 in the year ago period, with adjusted gross margins of 26% compared to 29%, due to sales of higher margin products. The year over year decline was the expected result of our EVO's plant propagation net revenue increased to $8,900,000 up from $7,300,000 in the year ago period. With adjusted gross margins up 40% up from 28%. This year over year improvement is due to a combination of increased plant propagation capacity and product offerings. Recall that Vivo historically delivers lower revenue in the summer and fall months with about 25% to 35% of plant propagation revenue and up to 20% of EBITDA earned in the second half of the calendar year. Consolidated adjusted SG and A increased by 12.6% to $31,300,000 dollars compared to the year ago period and supported year over year net revenue growth of 37%. Adjusted EBITDA rose to $23,100,000 from $5,500,000 last year. The record improvement over the prior year period was due to a substantial increase in gross profit resulting from higher net revenue before fair value adjustments required under IFRS.

Net income increased to $31,200,000 compared to a net loss of $17,100,000 for the year ago period. The increase relates to higher gross profit partially offset with the decrease in other income. The increase in gross profit includes an increase in unrealized gain on changes in fair value of biological assets. Line item because of these inventory adjustments per IFRS. Our balance sheet remains one of the strongest in the global cannabis industry. We held $180,200,000 in cash and cash equivalents as of December 31, Our cannabis operations are completely debt However, our BEEBL business holds $57,900,000 in non recourse is secured by a significant fixed asset base held at People.

Cash provided by operating activities was $28,800,000 dollars compared to cash used of $5,300,000 in the year ago period. Excluding changes in non cash working capital in discontinued operations, cash provided by operating activities improved by $25,200,000 dollars to deliver $13,800,000 in operating cash, compared to cash used of $11,400,000 in the prior year period. This improvement reflects a combination of increased net revenue and improved profit margins. Free cash flow was positive 27,400,000.0 compared to a negative free cash flow of $4,700,000 in the year ago period. The $32,100,000 increase is due to higher net revenue and of 8,200,000.0 Let me now provide some thoughts on what we expect for next quarter. Continued revenue growth across our cannabis business supported by year over year growth in Europe and Australia Seasonally higher revenues for Beebel in our plant propagation segment in line with historical seasonal trends. Margins to hold strong and positive adjusted EBITDA to continue while continued to spend discipline on CapEx and expected revenue growth will support improved operating cash used. Positive free cash flow based upon the following: First, continued increases in global medical cannabis driven in part by the full recognition of revenue in Australia and growth in our key European markets.

Second, operating expenditure and adjusted gross margins in line with previous results. And third, disciplined working capital management. Thank you for your time. I'll now turn the call back to Miguel.

Thanks, Simona. By any measure, it was a record breaking quarter. And we think Aurora's future is incredibly bright.

I say that based on a few important points. First, several years ago, we made an intentional pivot to align our resources behind a medical cannabis first growth strategy and concentrate on high margin opportunities outside of North America. Our viewpoint is that the regulatory environments in Europe and Australia are better fit for us given our core strengths in regulatory affairs, and that these countries will be more accepting of medical cannabis in the near term. Especially as U. S. Federal legalization is taking longer to materialize. Second, patient access to medical cannabis where Aurora is a key beneficiary. In our view, the market could easily exceed $5,000,000,000 in the next few years and we have an important role to play in that opportunity. Third, we are well positioned versus many of our peers through our first mover advantage and key capabilities, which gives us a material advantage in existing and new markets. And finally, our focus on profitable business segments and opportunities is maxed by our financial flexibility and balance sheet strength. This combination gives us an advantage and allows us to be opportunistic and generate returns that position us to drive long term shareholder value.

And with that, we'd be happy to take your questions. Operator, please open the lines. Our first question comes from the line of Bill Kirk with Aurora Capital Partners.

Please proceed with your question.

Good morning, everybody. Miguel, I had a question, given the inflection in sales here, Are you running into any supply constraints in any way? Or do you still have some room to Yes, Bill, good morning and thanks for the thoughtful question. I think you raised sort of two points. And first is we feel good about where we are from a supply standpoint. Now, supplying these international markets is a bit complicated because of the variety of different regulatory challenges in there. It's not just the certifications EU GMP and TGA GMP, TGA is the Australian designation, that causes some complexities. The other part is the registration process and the testing process. So all of that has to work together enabled to consistently supply those four key markets, which are Poland, Germany, Australia and The U. K. But we feel really good about where we're at in terms of being able to meet that needs. And we think it's a real core competitive advantage for Aurora.

And then if I can follow-up, were there any like unique or opportunistic items maybe load in in particular country that benefited 3Q that just aren't as repeatable for going forward? Is there any way maybe you could quantify if things like that impacted for 3Q in a positive way?

Yes. No, Bill, we didn't see anything that was sort of out of the norm. Now I will say, the international market is because of permitting they do go a little hot and cold. And I think over a fiscal year, you'll see that smooth out. But there was nothing specific in the quarter that we're reporting that was sort of a one time or that was sort of out of the norm in terms of what we would see over a broader time period.

Wonderful. I'll pass it along. Thank you.

Thank you, Bill. Appreciate the questions. Thank you. Our next question comes from the line of Federico Gomez with ATB Capital Markets.

Hi, good morning. Thanks for taking my questions. Congrats on the great [indiscernible] First question, just on competition. In these international medical cannabis markets. We've seen a lot of other LPs trying to enter those markets and export from Canada How do you see that competition impacting those markets this year, could it impact prices and margins? Or not? These markets are really, really fast. So So how do you look at competition at this point?

Yes, Fred, good morning and thanks for the question. I think if you compare and contrast North America where you're competing against hundreds of companies particularly in Canada in the rec business. We don't see that internationally. That doesn't mean they're not some very strong and decent number of competitors. It is a more consolidated business. And let me sort of take them sort of in order. Obviously, Germany has garnered a lot of attention, but because of the requirements of the EU GMP plus the testing, plus the registration process, you do see more consolidation So as an example, as you well know in Canada, the top five rec companies don't even represent 50% of the business.

And what we see is in most of the big European markets, the top five companies will represent two thirds or three quarters of the total business. So it's a more consolidated piece of business.

It advantages those companies like Aurora that have made significant investments, both in product innovation and registration and on the ground infrastructure and it is portable. In many cases, what you have to do in Germany Well, it'll be a little bit different in Poland is the same thing. And so I would say the competition is no less competitive, but it is from a smaller group of competitors because it is a different skill set than maybe what you would find say in Canada?

Perfect. Thanks for that. Second question is on capital allocation. Now that you've reached the free cash flow positive, obviously, and generating substantial amount of free cash flow How are you looking at the balance sheet here, your capital allocation options in terms of growth internationally? Or maybe in Canada, capacity expansion, etcetera, just Just how do you look at the different options that you have in terms of allocating that capital?

Great. I mean, listen, it's a great question. We've worked incredibly hard to have no debt on our cannabis business. And as Simona detailed having what we think is one of the strongest balance sheets out there, As you well know, it's a very fluid environment and valuations continue I think to get more reasonable. We expect to be able to use that to be opportunistic as the right things come to bear. Now we've also been very cautious and patient, which I think is incredibly benefited us. In this environment. And so anything that we would do, we would look to be accretive. From a profitability standpoint. And the additive to our core competency roots is really medical cannabis. And so I think if you look at our overall path, of the way we've leveraged the balance sheet and what we've done, over the last couple of years, I think you'd see more of the same and we're proud that that's resulted in the results that we're reporting today.

Thank you. Pass it along. Thank you. Thank you, Fred.

Thank you. Our next question comes from the line of Derek with TD Cowen. Please proceed with your question.

Hey, good morning everybody and congrats on a great quarter. I just wanted to hit on your on the margin side of the business and maybe two parts.

Starting with the medical, maybe just add some color around that 74% gross margin performance? And then then kind of get a sense of what your thoughts are on the sustainability of that margin? And then secondly, on the plant propagation side, again, strong results there. So I just wanted to get some additional color on the growth. Derek, let me talk a little just broadly about margin and then I'll turn it over to Simona who can give you some more details on both of your questions.

I think unlike, say, Canadian Rack what you see in Europe, which was obviously a huge part of the revenue increase that we had plus the impact of the margin is you don't see as much compression in the medical cannabis space. The wholesale list price or the price in which we sell to our wholesalers dictates the margin downstream, both from them from a tax standpoint and for our pharmacies, which some would describe as our retailers. So you don't see a lot of sort of intrinsic compression in baseline pricing. And because it's in a pharmaceutical system, while these margins are high for cannabis, they're not particularly high Aurora pharmaceutical. So I don't think you have that structural piece. Secondly, when you have both an insured NSL patient parts also have a little more consistency in that. And since we operate mostly in the premium and core sections, you're going to see higher margin than you might see, say, in the value segment. But I don't know, Simon, if you want to pick up on that and Yes. So we generally do see higher margins in our medical and especially the international [indiscernible] grown in those sectors that overall contributes to the increase increased margins we're seeing not only through the medical cannabis channel, but then implications total company as well.

And we're also seeing operational efficiencies, which has an impact on our cost of goods sold. So that combination of favorable prices as well as managed costs is contributing to our margin here. And we to one of your second part of your question, we do expect these margins to continue to stay favorable in the coming quarters. And then in terms of BBO, what we've seen with BBO, keeping in mind that Bebo is a seasonal business, we've seen growth in BIVO from the prior year quarter. And we've also seen improved margins in the Beevo business due to increased [indiscernible] So that's helped our overall total company margins go up as well.

Okay. That's super helpful guys. And maybe just one more for me before I queue. On in Germany now that guess we're about nine months into the descheduling. What are you seeing I guess, in terms of patient and sales growth there? And maybe as a follow-up as well, you recently launched your first cultivar. Just wondering if you could speak to any of the potential cost savings in terms of transportation or anything else Yes. I think, so you're right, we're nine months into the descheduling. The biggest impact has been patient growth and so their ability to get into the system and we've seen that continue to grow One of the problems we have in Germany is there's not strong syndicated data. IRI Nielsen or maybe even some other stuff we see in some other markets. So it's hard to give you an exact percentage of what we're seeing in overall growth. I think it's double digit. We see it still growing. I think one of the questions connected to that we get is given where the elections may go in Germany, do we see a real change? We don't. Most of what they've talked about has been on the rec side or the descheduling there.

So we see Germany without giving you precision on the growth, continuing to grow and we see a small subset of companies being able to take advantage of it. Now as it pertains to the growing in country, we're one of only three manufacturers that have facilities in the country of Germany and our facilities in Loyne And we are launching our first cultivar there and we'll be launching many more that will be some of the best in the world from there. I think people are excited about a German grown cultivar being available in that market in other areas. In terms of overall efficiencies, while you do pick up some because of where it's at and from shipping, it is off that we have there. So it's early days for that facility. It's a very small and what I would say sort of emerging facility as it pertains to our global production footprint. And so more to follow on LOINA. But we're really excited about having something in Europe that is GMP that can service both Germany and the rest of the GMP markets. For that, Miguel. Thanks, everybody. You're very welcome, Derek. Thank you. Our next question comes from the line of Matt Bottomley with Canaccord Genuity.

Good morning, everyone. I wanted to stick on the sort of the international contribution Obviously, it's done very well for you guys. And it's something that more LPs and even some of the MSOs are starting to talk about with respect to those opportunities. So I guess first, and I know you've touched on this a little bit, but maybe sort of two ways to look at it. One is, what's kind of the breakdown on average of sort of innovative products there versus maybe more bulk or flower? I know you guys are more in the higher quality. So of the market, but just trying to get an understanding of the types of products on average that make up your revenues And then if you could also give any color as to what percentage of your customer patient base there Aurora maybe just your revenues are attributable to patients that have coverage?

Matt, well good morning and thanks for the question. So let me try to break it down a little bit. In Germany, it's all flower and oil with exception of a couple of other small products. Similar situation in Poland, The UK and Australia allow for a broader portfolio. You do see edibles, you do see vape products and a variety of others. But regardless of the ability to sell those products in Australia, and in The U. K, the vast majority of the sales in all the international markets is flower. And from that, it's again the ability to get compliant products into those markets that can meet the registration, the stability, the testing and all of it. And so I think as we look at that you are starting to see some distinction between the value segment and more of where we operate on the top side. Which is people willing to pay for that, for it is. Now in terms of segmentation, we lack syndicated data in a lot of those markets. The biggest market in Europe is the German market. We are seeing that the fastest growth is happening in the self payer market. And probably today is the majority of sales.

Now whether that's 51% or 89%, we don't have that type of precision. But we are seeing expansion in all of that. That being said, the insurance coverage continues to be there and is actually expanding. As more and more insurers are getting comfortable with a broadened list of what we call indications, And so I think to be successful, you have to do both. Now the good news is that a patient, whether they're a self payer or in the insured segment, want the same things. And the experience that a company like Aurora has with almost a decade of experience in Canada that really resonates because unlike other markets, this is a patient going to a doctor getting a specific prescription for a specific item being serviced by a pharmacy. And so it really is a much more conservative medical framework than most people are accustomed to. And so a company like Aurora, our history, our approach our medical first and everything that goes along with it resonates And that's why you see why we're doing so well in many of these markets, and why a smaller subset of companies we believe will be successful long term in those markets.

To add to that, these are finished goods products, not both. And we do believe we have a strong brand reputation in these international markets.

Okay, got it. And then just a quick one on consumer cannabis, obviously, core to the strategy. So not a lot of color on it, but I'm just curious on how you look at that segment going forward in the more medium term. So we're seeing more decreases in that segment as you put more supply into the GMP menu manufactured products as you put in your prepared statements. The 26% gross margin, does that flow down to like breakeven on a cash flow if you look at kind of at a four wall?

And if it does, is there any sort of indication from a strategic standpoint if there's any more investment into that segment? Or is this just business as usual focusing on the higher margin international? And focusing on Canada when maybe the regulations change Aurora an adult use standpoint?

Yes, let me take the first part and I'll let Samara talk about modeling on on the cash flow piece. I think listen, I get a lot of credit to the Canadian government. A lot of people are banging on them about advancements in the five year plan and all these different things. Canada has done more on RAC than anybody else. The problem right now is it is a real challenge to extract value for high quality products in Canada. And while that would be a significant issue for any company, since we have the opportunities to take those same finite high quality inputs and sell them at a significant profit around the world, it makes the decision very easy Now Canada is getting better. We are encouraged by some of the some of the provincial folks have taken and it's going in the right direction. We've even seen some price increases, including some that we've taken. On some of our products. But again, when you've got these incredibly high value articulated finished goods as Simona mentioned products that you can sell around the world, you don't do there. Now, it's important for us to stay in that market though because you learn a lot there's a lot of innovation and there's a lot of connectivity between the Canadian medical and Canadian rec market.

That will exist at some point in other parts of the world And so that's why we stay there. I mean, Simone, any comments on the modeling of Yes. So I mean, as we mentioned, we're supporting our growing global medical cannabis business and in prioritizing supply towards that, which are the higher margins. But we're still active in the consumer segment and we continue to focus on profitable growth opportunities. And I would say the change in margins is from the prior year ago period is primarily driven by the change in the sales mix and not related to pricing. Pricing compression has been slowing in the Canadian market as we've seen. But again, that's that's irrational behavior, so sometimes it's hard to predict.

Okay, got it. Thanks for all the details guys.

Thank you.

Thank you. Our next question comes from the line of Doug Neeam with RBC Capital Markets. [indiscernible] Thank you. Good morning.

Miguel, you did talk about the potential for M and A given better pricing. You're knitting with respect to the medical side of the business. Is there Part of your existing portfolio where Do you see a need for a specific type of company or are you talking more about incremental supply Aurora the growth of the market in various countries as they come on.

Yes. I mean, Doug, it's a great question. I think first and foremost, we look to invest internally, which we've done. As Simona mentioned, our cost of production per gram continues to go down significantly. So we make a significant investment in what we consider to be one of the best genetics facilities in cannabis in the West Coast. We've made significant investments in our production facilities not only align with the UGMP, but also the expansion of production. And we also invest in markets. Now it's not not it's just almost a year that we made a significant acquisition to the rest of MedRelief Australia, one of the fastest growing markets in the world. And that I think is sort of indicative of what we like. We've been with that business in Australia since 2017. We knew a lot about it. We knew a lot about the team down there. And we did that. I think we've worked incredibly hard to have no debt on our cannabis business and have worked incredibly hard to be profitable. So as things come up, and yes, we see things from a value standpoint getting more reasonable as time goes along. We have the ability to be opportunistic and we will be I think what I would say is what you've seen us do in the past is probably indicative of what we're going to do going forward.

Which is continue to be patient but opportunistic when it makes sense and continue to grow a profitable global medical cannabis business which is really what we're best at. And I think that's been our playbook and it's worked extremely well and I think we'll continue with it.

Okay, perfect. And then as a follow-up, it's more housekeeping on that. Taking over of all. MedRelief. But would you be able to delineate exactly what the contribution was from full consolidation in terms of absolute this latest quarter versus last year.

Simone, you want to take that one?

Yes. I guess one way to think about that is as we have in the prior quarter, so our fiscal year Q2 of twenty twenty five and this quarter, we were able to record the full revenue recognition for the business. And as we work through the existing [indiscernible] probably a good way to think about it when compared to the prior quarters period. So in twenty twenty December of twenty twenty three, where that contribution comes in because of the full revenue rec Okay. But you can't be more specific than that in terms of a number?

Yes, we don't break out the markets like that.

Yes.

Okay.

That's great. Thank you.

Thank you for your question.

Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Martin for any final comments.

Well, operator, thank you very much. And listen, we want to thank everybody was on the call today. We are incredibly proud of this quarter, but more importantly, We thank everyone, best of all, and we really appreciate your interest and attention to Aurora. All the best.

Thank you. This concludes today's conference.