Exponent, Inc. Price & Performance (EXPO)

Thank you. Good afternoon, ladies and gentlemen. Thank you for joining us on Exponent's First Quarter twenty twenty five financial results conference call. Please note that this call will be simultaneously webcast on the Investor Relations section the company's corporate website at investors.exponent.com. Conference call is the property of Exponent and any taping or other reproduction is expressly prohibited without prior written consent. Joining me on the call today are Doctor. Catherine Corrigan, President and Chief Executive Officer and Rich Schlenker, Executive Vice President and Chief Financial Officer. Before we start, I would like to remind you that the following discussion contains forward looking statements, including, but not limited to, ponent's market opportunities, and future financial results that involve risks and uncertainties that may cause actual results to differ materially from those discussed here. Additional information that could cause actual results to differ from forward looking statements can be found in Exponent periodic SEC filings including those factors discussed under the caption Risk Factor in Exponent's most recent Form 10 Q. The forward looking statements and risks in this conference call are based on current expectations as of today. And Exponent assumes no obligation to update or revise them, whether as a result of new developments or otherwise.

And now I will turn the call over to Doctor. Catherine Corrigan, Chief Executive officer.

Katherine?

Thank you, Joni, and thank you everyone for joining us today. I will start off by reviewing our first quarter twenty twenty five business performance and strategic positioning. Rich will then provide a more detailed review of our financial results and outlook. And we will then open the call for questions. Exponent's first quarter results exceeded expectations. Reinforcing both the resilience of our diversified business model and the value we deliver. Despite starting the year with a 5% to 6% headwind in technical full equivalent employees due to our focus on aligning resources with demand over the prior eighteen months we achieved approximately flat revenues due to strong activity from a few key In reactive services, the demand for our failure analysis expertise drove dispute related activities in the chemicals, transportation and utilities industries. Our proactive engagements were led by risk management and regulatory support activities. As expected, we were impacted by easing in the consumer electronics industry due to the timing of clients' product development life cycles. We are pleased to report sequential headcount growth of 2% due in part to lower turnover than previously expected, while at the same time achieving mid-70s utilization. While we are very mindful of the current macroeconomic uncertainty, and have seen some instances of clients delaying proactive work for this reason, we continue to hire in areas where demand remains strong.

Over the last three decades, Exponent has demonstrated an ability to effectively navigate challenging economic cycles. A key contributor to this resilience is our reactive work, which is driven by disputes and failure analysis investigations across the globe which have historically been less impacted than other professional services during challenging economic cycles. Lawsuits, accidents, illnesses, and environmental impacts are constants that necessitate our specialized expertise. Clients are required to address these issues regardless of the broader economy. Our business is approximately 60% reactive and 40% proactive. The vast majority of our reactive work is litigation support. The remainder of our reactive work is accident and failure investigation, product recalls, regulatory actions, and insurance investigations. Our proactive work involves product and process improvement, research and development, risk management and regulatory consulting. During 2024, we worked on over 10,000 engagements for over 2,000 clients across a range of industries. The consumer products industry represents a approximately one quarter of our revenue of which approximately two thirds is proactive work for consumer electronics clients. Product development cycles influence the timing of our work in this industry. However, the complexity of these products and the pace of innovation required by these clients to stay competitive remain long term growth drivers.

Furthermore, shifts in global supply chains as clients navigate the tariff environment create manufacturing challenges over time for which we are well positioned to assist. The energy industry represents approximately one fifth of our revenue. Our work in this industry is split about evenly between and proactive services. Growing energy demand driven by artificial intelligence and data [indiscernible] Investments. Along with the related infrastructure development inevitably leads to disputes that fuel our reactive business. On the proactive side, our risk management work in the utility sector continues to grow independent of macroeconomic volatility, as the industry experiences increasing energy demand while its infrastructure ages past its optimal use, and with the consequences of failure ever increasing. The transportation industry's percentage of our revenue is in the mid teens of which approximately 90% is reactive. Disputes regarding the design and performance of advanced vehicle technologies are becoming more prevalent and increasingly complex driving increased demand for our specialized expertise. The chemical industry's percentage of our revenues is in the low teens. Approximately 60% of our revenue in this industry is proactive and remaining 40% is reactive. The vast majority of our proactive work in this industry is regulatory consulting. Our data driven insights are critical for projects related to environmental health, process engineering, and chemical safety, such as the growing concerns about the impact of PFAS on communities and ecosystems.

The life sciences industry's percentage of our revenue is in the high single digits. Our work in this industry is split about evenly between reactive and proactive services.

Our experts are advising clients on the root causes of safety concerns related to medical devices and diagnostics, leveraging multidisciplinary approaches that include expertise in material science, manufacturing, human factors, and health sciences. We also assist our clients with regulatory clearance and approval. The construction industry represents five to 10% of our revenue, a which approximately 90% is reactive. Our multidisciplinary teams provide domestic and international clients support for complex construction challenges and disputes.

It is the critical nature of our work and the unrelenting expectations around safety, health, and the environment that continue to drive reactive engagements regardless of economic cycles. While clients certainly may tighten their belts to manage costs, they still need independent expert advice to navigate the path forward. Even when an industry is applying cost pressures, this reactive work often comes back which is what we saw in the chemical sector this quarter. Although uncertainty is pervasive in our current environment, Exponent has historically proven resilient through economic cycles. When combined with accelerating innovation and increasing expectations for safety, health and the environment, this strategically positions us to weather economic volatility while seizing long term sustainable growth opportunities. Rich?

Thank you, Catherine, and good afternoon, everyone. Let me start by saying all comparisons will be on a year over year basis unless otherwise noted. For the first quarter of twenty twenty five, total revenues were approximately flat $145,500,000 and revenues before reimbursements net revenues, as I will refer to them from here on, were also approximately flat at $137,400,000 as compared to the same period in 2024. Net income for the first quarter decreased to 26,700,000.0 or $0.52 per diluted share as compared to $30,100,000 or $0.59 per diluted share in the prior year period. During the quarter, we realized a negative tax impact associated with accounting for share based awards of $500,000 or $01 per share. As compared to a tax benefit of $900,000 or $02 per share in the first quarter of twenty twenty four. The change in the tax impact associated with share based awards was due to the difference in the value of the common stock between the grant date and the release date for the restricted stock units. Inclusive of the tax impact for share based awards, Exponent's consolidated tax rate was 29.4% in the first quarter of twenty twenty five, as compared to 25.4% for the same period in 2024.

EBITDA for the quarter decreased 6% to $37,500,000 producing a margin of 27.3% of net revenues as compared to $40,100,000 or 29.2% of net revenues in the first quarter of twenty twenty four. This year over year decrease in margins was driven by an increase in stock based compensation and increase in the other operating expenses, primarily associated with the Phoenix land lease renewal, during the second quarter of twenty twenty four and the loss of a tenant in our Menlo Park facility. Billable hours in the first quarter were approximately 376,000, a decrease of 4% year over year. Average technical full time equivalent employees in the first quarter were nine sixty six. Which is a decrease of 4% as compared to one year ago. Headcount is down year over year as we have aligned our resources with demand. Sequentially, full time equivalent employees increased 2% as compared to the fourth quarter of twenty twenty four, due to our recruiting and retention efforts. Utilization in the first quarter was 75%, approximately flat compared to the same period in 2024. The realized rate increase was approximately 4% for the first quarter of twenty twenty five as compared to the same period a year ago.

In the first quarter, compensation expense after adjusting for gains and losses deferred compensation increased 1%. Included in total compensation expense is a loss in deferred compensation of $9,300,000 as compared to a gain of $6,300,000 in the same period of 2024. As a reminder, gains and losses in deferred compensation are offset in miscellaneous income and have no impact on the bottom line. Stock based compensation expense in the first quarter was $8,200,000 as compared to 7,300,000.0 in the prior year period. Other operating expenses in the first quarter were up 15% to $12,100,000 driven primarily by the increase non cash expense associated with our Phoenix lease renewal and investments in our infrastructure. Included in other operating expenses is depreciation and amortization expense of $2,500,000 for the first quarter. G and A expenses declined 11% to $5,000,000 for the first quarter. The decrease in G and A expenses was primarily due to lower expenses professional development bad debt, and legal. Interest income increased to $2,700,000 for the first quarter. Higher interest income was driven by an increase in cash and cash equivalents. Miscellaneous expenses, excluding the deferred compensation loss, were approximately 50,000 for the first quarter. Which included a $250,000 foreign exchange loss and rental income of $190,000 During the quarter, capital expenditures were $1,800,000 We distributed $16,400,000 to shareholders through dividend payments, and repurchased $5,000,000 of common stock at an average price of $77.31.

Turning to our segments, Exponent's Engineering and Scientific segment, represented 84% of revenues before reimbursement in the first quarter. Revenues before reimbursements in this segment were approximately flat in the first quarter. Activity during the quarter was driven by Exponent Services across transportation and utilities industries. Exponent's Environmental and Health segment represented 16% of revenues before reimbursement in the first quarter. Revenues before reimbursements in this segment increased 2% for the first quarter. Growth in this segment was driven primarily by the increase in engagements in the chemicals industry. Turning to our outlook, For the second quarter, as compared to one year prior, we expect revenue before reimbursements to be down in the low single digits, and EBITDA to be 26% to 27% of revenues before reimbursements. For fiscal twenty twenty five, the year we are maintaining our revenue and margin guidance. We expect revenues before reimbursements to grow in the low single digits, and EBITDA to be 26.25% to 27% of revenues before reimbursement. As a reminder, we are returning to a fifty two week fiscal year in 2025. The extra week in 2024 posts a 1.25% headwind for the full year net revenue comparison. We started the year with a 5% to 6% headwind in technical full time equivalent employees, due to the gains made during the first quarter we expect year over year technical full time equivalent employees to be down approximately 1% in the second quarter.

At year end, we expect headcount to be approximately 4% greater than we started the year with. We expect utilization in the second quarter to be 71% to 73% as compared to 75% in the same quarter last year. Approximately 150 basis points of the decline in utilization is because the second quarter of fiscal twenty twenty five includes the July 4 holiday which was part of the third quarter in twenty twenty four. We continue to expect the full year utilization to be 72% to 73% as compared to 73% in 2024. We expect the year over year realized rate increase to be 3% to 3.5% for the second quarter and full year. For the second quarter of twenty twenty five, we expect stock based compensation to be 5,100,000.0 to 5,400,000.0 For the full year 2025, we expect stock based compensation to be 23.7% to $2,024,200,000.0 We continue to believe that our stock based compensation program effectively attracts motivates and retains our top talent. For the second quarter, we expect the other other operating expenses to be 12,100,000.0 to $12,600,000 For the full year, we expect other operating expenses to be $49.5 to 50,500,000.0 As a reminder, the increase in other operating expenses is primarily due to the extension of our Phoenix lease.

We are very excited to have secured this facility as we believe it will continue to be an integral part of our growth especially with the advancement of automated vehicles. For the second quarter, we expect G and A expenses to be 5,800,000.0 to 6,300,000.0 For the full year, we expect G and A expenses to be $24,800,000 to 25,800,000.0 The increase in G and A expenses for the full year is primarily due to an expense of approximately $2,000,000 for the firm wide managers meeting in the third quarter of twenty twenty five. This meeting is an important investment in people development that will bring together our multidisciplinary teams develop our key talent and foster the next generation of leaders and business generators. We expect interest income to be $2,000,000 to $2,200,000 per quarter during 2025. In addition, we anticipate miscellaneous income to be approximately $200,000 per quarter for the remainder of 2025. We continue to work to replace the rental income that we lost in our Menlo Park facility. For the remainder of 2025, we do not expect any additional tax benefit or loss associated with share based awards. For the second quarter of twenty twenty five, we expect our tax rate to be approximately 28%, as compared to 26% in the same quarter one year ago.

For the full year 2025, the tax rate is expected to be 28.5% as compared to 26% in 2024. The increase in the tax rate is due to the decrease in tax benefit from share based awards. Capital expenditures for the full year 2025 are expected to be 10,000,000 to $12,000,000 Our team continues to closely monitor the activities of the new administration in Washington. So that we can position ourselves to respond to the opportunities and challenges faced by our clients. Our work directly for the federal government which comprises approximately 3% of our business, consists largely of advanced technology evaluations and integrations for the Department of Defense and Department of State. To date, this work has not been impacted. With regard to our regulatory consulting work, we have experienced some slower responses from federal regulators regarding our clients' products. Our regulatory consulting and compliance work represents approximately 11% of business. This includes our regulatory consulting and compliance work for the chemicals industry which represents 6% of our business of which approximately two thirds is performed outside The United States. For clients who need to navigate a myriad of complex global and regulatory frameworks. The remainder of our regulatory consulting and compliance work which represents 5% of our business, is split between consumer products, food and beverage, life sciences, energy, and transportation industries.

At the FDA, we anticipate the possibility of heightened scrutiny particularly in the area of chemicals and processed foods. With regard to our emerging chemicals, such as PFAS, much of this is driven by litigation at the state and municipal levels, which has not been impacted. We are well positioned to support our clients as they navigate the complexities of a dynamic global regulatory environment and at the same time pursue their long term product strategies. In closing, we remain confident in our ability to generate long term profitable growth. I will now turn the call back to Catherine for closing remarks.

Thank you, Rich. Exponent thrives in the face of change, whether it's driven by innovation or disruption. Transformation of industries continues unabated driven by powerful forces including the accelerating use of artificial intelligence in critical decision making, increased energy demands, and extreme weather. Technological advancements are revolutionizing safety critical products and human health risk is of an ever increasing concern. As our clients navigate increasing complexity, we remain focused on advancing our capabilities investing in top talent and delivering trusted insights that help our clients adapt lead and grow in dynamic environments. Operator, we are now ready for questions.

Certainly. We will now begin the question and answer session. You are using a speakerphone, please pick up your handset before pressing the keys. At any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Tobey Sommer with Truist. Please go ahead.

Hey. Good afternoon. This is Jasper Vibbon for Toby. Was just hoping maybe to contrast for us the growth rates in proactive and reactive work this quarter, as well as maybe what share of reactive work is in the portfolio today? Yes, so we ended up seeing that we had [indiscernible] growth in the reactive business was in the in the low single digits, which was then offset by a slight decline in the proactive services overall.

Okay. And in terms of your question, just about the proportion, Jeff, we run now about 60% is reactive 40% is proactive, and of that 60% reactive most of that probably 80% to 90% of that is going to be litigation or dispute driven.

Okay, thanks. That's helpful. And then, I guess, just curious if you've seen any changes in the pace of productivity across maybe certain end markets in the past few months. I mean, think in the past, we've talked about supply chain changes potentially driving demand. So I'm curious if there's been just any change in what you're seeing with the reassuring agenda out of the new administration.

Yeah, yeah, so thanks for that. I mean, we do in general over time, when our clients are, facing change. So supply chain disruption, decisions about using different materials because of that supply chain disruption, These are the kinds of changes that can impact the reliability and the quality and the performance and safety of their products. And so as our clients across industries, including consumer products, including electronics, including medical devices, look to diversify their supply chains, we do see opportunity in Now that does take some time to manifest itself. They don't change their supply chains on a dime. And so certainly are seeing scenarios where clients are exploring those opportunities. And they are looking toward a diversification strategy And so we are making sure that we are in close relationships with them regarding that and are engaged in positioning ourselves to assist them if and when they do decide to make those changes.

I would just add to that that where we've seen it specifically again it's still at the edges today because we're early in this. But what we're seeing is for our clients that have over time here over the last several years begun to move activities to other parts Asia from China. That work as you move into those new manufacturing environments, and new supplier relationships? You do see an increase in demand from those clients around doing additional evaluations and testing and run into more defects during that early manufacturing phase. And so we are seeing some increases of that right now. And that has led to some increased activity on that front. On the life sciences side, particularly in the medical device area, Again, as clients, depending on what phase they're in, we've had a few clients who are still in the last month or two at a point where they could consider a different supplier and material for their device. And we have been engaged by a couple of clients in helping them evaluate those different materials and suppliers in that sense and that gain. So those are current real time examples. Again, not moving the needle one way or another as you can tell from our results here in the first quarter, but they those real and are happening.

Thanks for taking the questions.

The next question comes from Andrew Nicholas with William Blair. Please go ahead.

Hi, good afternoon. Thanks for taking my questions. I'm curious if you could unpack the second quarter outlook a little bit further. It looks like I think Richie said that there is a headwind to utilization from the July 4 holiday, but it's still even excluding that, a little bit softer compared to what you you saw in Q1 and in the first half of last year. So just wondering understanding that there are some areas here where you're seeing an uptick in interest. If there are kind of obvious examples that you've seen over the last month where the softness is is maybe more pronounced or if there's anything else kind of baked in there that I'm not contemplating.

Yeah. So, Andrew, we definitely have the other the utilization is a point or two below being on an apples to apples basis even with where it was last year. So first of all, for everybody to repeat a comment that I made in my prepared remarks, which is the first 150 to 200 basis points of a difference there is really related to the July 4, which includes holiday and extra vacation taken. That fit into that timeframe and bring us there. So that's part of it. That would take you to 75% to 73% The other being slightly below that is it is based on the inputs from the organization. Relative to what's going on in the market. I will say that the adjusted at when we're talking about it for going from the first quarter to the second quarter is would put us right in that 72% range. So from when you're adjusting for holidays and vacation and timing on that, the adjusted UT at 72% is right on with where it was. But I think that our people as we go out to them beach, individual and business unit are seeing a few of these instances on the edges where the work for life sciences clients who are going through a regulatory process and approval are seeing that it takes a few weeks longer to and it's unpredictable when the meeting to confer with the FDA might occur.

Not that it's going to go away, The clients are clearly and we've addressed this, still committed to it. It's just a little bit of uncertainty there. We have seen in some areas on some proactive testing on a battery technology for a client in the consumer products area. Where the client again uncertain about where they're going to importing and from where they're going to be doing that. So they were going through a battery assessment of a new supplier, they put that on hold because they wanted to wait until they figured out where they were going to be moving that production to. So again, not we're talking about maybe that's impacted people's forecast by 100 basis points, maybe most 200 basis points, where they're seeing those things around the edges. So I do think you're seeing some guidance here that reflects that that little bit of negative activity and uncertainty coming through.

Got it. Thank you. That's helpful. And then I guess sorry to belabor the point. With the numbers here, but just in terms of of guidance, are you assuming that those edge cases remain edge cases for the back half of the year, or do those delays kind of work themselves out? Just kind of wondering from like a visibility perspective, how much maybe it would need to change or improve or even get worse at the bottom end of your guidance just so we kind of have the guidance and the conservatism of the Yeah, no, Completely understood and appreciate it. Look, I think that our guidance as it was back in February and where we're maintaining it now. Includes what we see as the current sort of environment. Being the thing where these are edge cases where we expect the clients on the reactive side are tightening their belts a little bit, but are going to continue forward with all the work and do it that clients on our utility risk work in there that's part of the proactive We'll continue forward full steam that our clients in the consumer electronics area where we've seen a little bit of slide, but that work will get done here in 2025, that it's not pushed out and we don't have any indication right now from those clients that it will.

It's just always a matter of when do they have hardware ready to be able to evaluate and do that. And then the last part of our in the regulatory segment that it stays at this sort of level where you're seeing some short or moderate pauses in some work but it's not having a major impact on the overall business. So those are the things that we're considering to as we give both the quarter and full year guidance. But if things obviously turn a lot worse, and such, then obviously anybody would have to reconsider that. But we have taken into account the current sort of environment and what we're seeing as the impact.

Perfect. And And maybe if I could just squeeze one more in. And maybe talk on the other side of the coin. You highlighted a few areas where an uptick in interest or I guess demand could come I think, Kathryn, you said it does take some time. Is that something that could positively impact you as soon as the second half? Or is that more of a 2026 item? And I ask just to kind of get a sense for maybe what the lag is on some of that cross border changes or supply chain reconfigurations. Thanks again.

Yeah, yeah, no, I do think, Andrew, that there is [indiscernible] potential in that in 2025. When you think about the implications of the supply chain shifts, I mean, there are there are aspects of this as well. If you think about the Department of Health and Human Services, the increasing scrutiny around chemicals and food, a lot of our work in pesticides, if you think about PFAS as another example, I mean these are all areas of significant concern that are wrapped around human health risk. And these are areas that we aren't seeing necessarily those concerns abating at all. They tend to be following the trends of the bar being raised and so there is definitely opportunity for us in 2025 to realize that.

Thanks again. We have our next question from the line of Josh Chan with UBS. Please go ahead.

Hi. Good afternoon, Catherine and Rich.

I guess so far you've talked about the impacts from some of the government policies, but I think in the prepared remarks you also mentioned some macro related impacts.

I was wondering if you could talk about what you're seeing there and how impactful do you think the macro environment is for your customer decision making? Thank you.

Yeah. Maybe I'll just start off with highest level and then let Catherine sort of give a little dive back into some of the comments that she provided earlier. I think, look, we wanted to make sure that on this call, since the environment, the tariffs or other economic things could be very broad based. Outside of sort of the energy area and utilities, most of our clients produce a product they manufacture and and get supplies from around the world. And we wanted to make sure that investors had the benefit of understanding the size of those industries, how much of them is really where the concentration in proactive versus reactive is, and where that impact might lie.

As we've stated, 60% of our work is reactive in nature, clients in those areas don't they need to proceed and find third party experts to help them with that work and do it. Can you tighten the belt? Yes. What we've seen over decades is that clients tighten their belt, but they still proceed with all those matters. The they have to in those circumstances and do it. And when you turn over to our proactive side, we've got utilities clients that are responding to risks in wildfires and other natural events. And doing it. And we've got in the chemicals industry and life sciences and others, while there is disruption to the regulatory environment right now, these are heavily regulated industries and will remain heavily regulated industries that will be there and can again, they'll have some impact, but they will continue to go. So we're trying to premise whatever the impact in a broader basis be you at least have the information to understand our exposure. [indiscernible] that is going on across so many of the industries that we serve whether that's in electronics with human health and wearable technology, whether that's utilities needing to improve the integrity of their assets to withstand extreme weather, whether that's the pharma industry trying to demonstrate demonstrate the value of their medicines or have better real world evidence vehicle automation and electrification like these complex transformations are going, I have a lot of confidence that these will continue And what's happening now from the stand of the economy and tariffs, I mean, this is introducing even more complexity.

But that race to innovate the safety critical nature of the innovations that are coming through that societal expectation around safety and health and the environment those are still there. Global regulatory frameworks continue to rise and we see the work we do over in the EU and globally that is something that continues to happen. And so as yes, in the short term, we have uncertainty in our clients, but they do turn to us as they are transforming their products to help them ensure the safety and health of their ultimate users.

And look, what we saw happen all the way back in the financial crisis was yes, clients tighten their belt. We went from mid to high single digit growth to being flat in 02/09, but back to growth in 2010. We definitely saw the tightening of the belts and resetting of things in the consumer electronics industry. Back in late twenty twenty two and early twenty twenty three. And we've seen that come back around already. In 2024. We saw that really stabilize for us and come back. We've been through a little bit of belt tightening in the chemicals industry and late twenty twenty three and early twenty twenty four. And again, I've seen the clients need to come back and still address their litigation and regulatory issues. So we think the resiliency is there. You can never predict every little bit, every quarter. But we've got a very diverse portfolio here that's really helped us through some of these more challenging times.

That's really helpful color and really appreciate the percentages at the beginning of the call too. That's really helpful. Maybe my last question is on the growth. Guess in the midst of this environment, how do you think about the pace of FTE growth going into a potentially choppier or less visible type of environment? Is is there anything that would cause you to kinda look at that again? [indiscernible] the rest of the year, we are continuing our plan which is around hiring, making sure we are hiring in those areas of the business where we see increasing demand. What are some of these areas? The automated vehicle space, this is a place particularly on the litigation side with advanced driver assistance technologies but also some of the safety case related work as this industry transitions from nominally level two automation to level three automation, that is a big, big technological step with a lot of risk You know there's a lot of movement in that industry and we are seeing a lot of ability to acquire talent there. We are acquiring talent on the on the asset risk side, people who understand how to use these sophisticated engineering models to understand the risks associated with all kinds of hazards.

Whether that's extreme weather or induction issues in transmission or what have you. We're hiring in the digital health side. And wearables, because that is a transformative technology when it comes to our understanding of human health, right? So we're very focused on strategically hiring We do believe, Rich indicated, as we get to the end of the year, that we estimate we'd be about 4% ahead by in headcount of where we were when the year started. So we've been closing that gap. We started the year 5% to 6% behind. We anticipate in Q3 the year over year FTE difference will be minus 1%. So as we progress through the year, we do believe that we've got the market drivers and a great employee value proposition that's going to allow us to to grow that headcount.

Excellent. Thank you for the color and thanks for the time.

Thanks, Josh. Thank you.

We have no further questions, ladies and gentlemen. Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.