CCL Industries (TSX:CCLb) Inc. (CCL), a leader in specialty label and packaging solutions, has reported a robust first quarter for the year 2024, with sales climbing to $1.74 billion, marking a 5.2% increase. This growth is attributed to organic sales, acquisitions, and a favorable currency translation impact. The company's operating income rose to $282 million, a notable 9.1% uptick when excluding foreign currency translation effects.
Net earnings also saw a significant rise, reaching $192.1 million, up by 15.4% from the previous year, again adjusted for currency impacts. The earnings per Class B share improved by 14.9% to $1.08. Although the free cash flow from operations indicated an outflow of $7 million, it was an improvement from last year's figures. The company's net debt stood at $1.61 billion as of March 31, 2024, with a leverage ratio of 1.18x, and it remained in a strong liquidity position with substantial cash and credit availability.
Key Takeaways
- CCL Industries reports a 5.2% increase in Q1 sales, reaching $1.74 billion.
- Operating income and net earnings up by 9.1% and 15.4%, respectively, excluding foreign currency translation.
- Basic and adjusted earnings per share increase to $1.08, a 14.9% improvement.
- Free cash flow from operations shows an outflow of $7 million, yet an improvement from the previous year.
- Net debt rises to $1.61 billion; leverage ratio at 1.18x.
- Strong liquidity with $748 million cash on hand and nearly $1 billion available in credit.
- Continued investment in emerging markets and optimism for the upcoming quarters.
Company Outlook
- CCL Industries anticipates acceleration in improvements, particularly post the closure of the Belgium plant.
- Expected annual profitability improvements from restructuring between $17 million to $20 million, with full benefits in the second half of the year.
- Optimism for the remainder of the year in the electronics and horticultural segments.
Bearish Highlights
- Free cash flow from operations was negative, despite an improvement from the previous year.
- Net debt increased by $101 million from the end of 2023.
- Legacy business of Avery experienced a decline in Q1 due to tough year-over-year comparisons.
- Currency business was slow, with hopes for a pickup in Q2.
Bullish Highlights
- Strong performance in the CCL Design electronics space with demand rebounding.
- Checkpoint segment showed strong margin growth, driven by favorable customer mix and sales.
- Passport business was strong in Q1.
- Low retail inventory in Checkpoint is expected to lead to a pickup in orders during the summer high season.
Misses
- Higher freight expenses were incurred in the Checkpoint segment due to the Suez Canal situation.
Q&A Highlights
- The company discussed its focus on bolt-on M&A and potential share repurchases depending on circumstances.
- It expects better earnings growth for the year and continued improvements in the Innovia segment.
- The company addressed the volatility in the electronics segment and slight inflationary pressures.
- Plans for higher activity on the NCIB to be discussed at a later Board meeting.
CCL Industries remains optimistic about its future prospects, with a strategic focus on growth through market recovery in its electronics segment, restructuring benefits, and potential mergers and acquisitions. The company's management has expressed confidence in the strength of its operations and its ability to navigate the challenges ahead. With a solid start to the year and strategic plans in place, CCL Industries is poised to build on its Q1 successes in the forthcoming quarters.
Full transcript - None (CCDBF) Q1 2024:
Operator: Good morning, and welcome to CCL Industries' First Quarter Investor Update. Please note that there will be a question-and-answer session after the call. The moderator for today is Mr. Geoff Martin, President and Chief Executive Officer; and joining him is Mr. Sean Washchuk, Senior Vice President and Chief Financial Officer. Please go ahead, gentlemen.
Sean Washchuk: Good morning, everyone, and welcome to our first quarter call for 2024. I'll draw everyone's attention to Slide 2, our disclaimer regarding forward-looking information. I'll remind everyone that our business faces known and unknown risks and opportunities. For further information on these key risks, please take a look at our 2023 annual report, particularly in the section of risks and uncertainties. Our annual and quarterly reports can be found on the company's website, cclind.com or on sedarplus.ca. Moving to Slide 3, our summary of financial information. For the first quarter of 2024, sales increased 5.2% with 2% organic growth, 3% acquisition growth and 0.2% positive impact from currency translation, resulting in sales of $1.74 billion compared to $1.65 billion in the first quarter of 2023. Operating income was $282 million for the 2024 first quarter compared to $257.7 million for the first quarter of 2023. A 9.1% increase excluding the impact of foreign currency translation. Geoff will expand on the segmented operating results of our CCL, Avery, Checkpoint and Innovia segments momentarily. Corporate expenses were down slightly $0.1 million for the quarter versus the prior year quarter. Consolidated EBITDA for the 2024 first quarter, excluding the impact of foreign currency translation, increased 9.8% compared to the same period in 2023. Net finance expense was $18 million for the first quarter of 2024 compared to $19.4 million in the 2023 first quarter due to a decrease in total debt outstanding and increased finance income on the company's deposits. The overall effective tax rate was 24.7% for the 2024 first quarter compared to an effective tax rate of 24.9% recorded in the first quarter of 2023. The effective tax rate may change in future periods depending on the proportion of taxable income earned in different tax jurisdictions at different rates. Net earnings for the 2024 first quarter was $192.1 million, up 15.4% excluding foreign currency translation compared to the 2023 first quarter. Next slide. Basic and adjusted basic earnings per Class B share were a record $1.08 for the 2024 first quarter, an improvement of 14.9% compared to $0.94 for the first quarter of 2023. The change in adjusted basic earnings of $0.14 is principally attributable to an improvement in operating income, accounting for $0.09, higher contribution from the label joint ventures of $0.04 and a $0.01 reduction in net interest expense compared to the 2023 first quarter. Moving to Slide 5. For the first quarter of 2024, free cash flow from operations was an outflow of $7 million, an improvement compared to the $6.5 million outflow recorded in the first quarter of 2023. For the trailing 12 months ended March 31, 2024, free cash flow from operations was $569.1 million compared to $518.8 million for the last 12 months ended March 31, 2023. The improvement is primarily attributable to an improved adjusted earnings and working capital, partially offset by cash taxes paid and an increase in net capital expenditures. Moving to our cash and debt summary slide. Net debt as of March 31, 2024, was $1.61 billion, an increase of $101 million compared to December 31, 2023. This increase is principally a result of lower cash balance at Q1 2024 versus December 2023, an increase in debt drawn on the company's syndicated credit facility as well. The company's net debt increased yet the balance sheet closed the quarter in a strong position. Our balance sheet leverage ratio was 1.18x, slightly higher than the 1.13x reported at the end of December 2023. Liquidity was robust for $748 million of cash on hand and almost $1 billion of available capacity in the company's revolving credit facility. The company's overall average finance rate was 2.8% at March 31, 2024, unchanged from December 31, 2023. The company's balance sheet continues to be well positioned for the balance of 2024 and beyond. Geoff, over to you.
Geoffrey Martin: Thank you, Sean. Good morning, everybody. I'm on Slide 7, highlights of capital spending. So far for the year, $178 million in Q1 and we're trying to spend $455 million for the year ahead. Slide 8. A few highlights about where we're putting some of that money and I thought it would be interesting this quarter to highlight we're still investing in emerging markets. So in 2023, we acquired land to build a large new campus for Checkpoint and CCL label outside of Istanbul. We'll be doing the planning for that in 2024, most of the CapEx will occur in 2025. In Vietnam, we're completing construction of a new Checkpoint ALS plant in Vietnam, including RFID, encoding and insertion, and we should complete that factory this year in 2024. In Singapore, a few maybe 18 months or so ago, we acquired the label business in Singapore. We moved all the business that was being conducted at that site to our plant in Thailand and we renovated the site as a pharmaceutical grade operation and we now have labeling insert equipment in there, making products for a couple of very important strategic global customers and trading commenced in the first quarter of 2024. Slide 9. The CCL for the quarter, organic growth return continues to make progress, high single digit in Asia Pacific, a lot about the recovery in CCL Design, mid-single digits in Latin America, low single digit in North America and pretty much flat in Europe. We had strong results in Home & Personal Care and Food & Beverages. Consumer products industry continues to make progress towards retrieving volume growth, modestly down in Health care & Specialty and slower CCL Secure. CCL Design posted strong gains in electronic markets, partly offset by a decline in automotive. Slide 10 highlights for the Joint Ventures. Story here is all about what happened in Egypt. So those of you who are on the Q4 call, might recall, we booked some foreign exchange losses in Egypt in Q4, which we reversed in 2024. So that's the reason for the strong improvement in the joint ventures, although the underlying progress was also very good indeed. Moving to Slide 11 highlights for Avery. Direct-to-consumer growth in the U.S. and Europe offset slower performance in the distribution-based product lines, [indiscernible] compared to a strong prior year. Latin America and Australia were both a little bit soft, but we had strong recovery in horticultural markets in both the United States and Europe. Slide 12, to Checkpoint. Certainly the best performing business we had in the company in terms of sales growth. The MAS business had a solid quarter on strong results in Asia Pacific, but actually offset slower results in Europe and North America. So the games this quarter all came our apparel label business and substantially improved more than 25% organic growth driven by RFID, but there were some signs of European retail forward ordering to avoid Red Sea (NYSE:SE) supply disruption with all the supply chain issues to the Suez canal. Page 13, highlights to Innovia. Sales declined on the lower Belgian shipments post-closure. So we're moving the operations for that plant to our site in the U.K. And there was also some associated mix impact. So overall volume increased only slightly, but label industry volume improved very significantly. It's a long period of destocking came to an end in both North America and Europe. Those benefits from the transition out of Belgium drove the increase in profitability. So outlook for the coming quarter. Consumer products industry, as I said, showing early signs of return to volume growth. It's not stunning, but it's certainly better than it was for most of the last five or six quarters and back end of 2022 and all of 2023. But healthcare is a little bit slower, some destocking elements there, vaccines coming to an end, GLP will side, the industry is a bit slower than it was. CCL Design recovery should accelerate this quarter in electronics with automotive repeating what happened in Q1. CCL Secure comps are much easier this quarter than the past for component business is still very strong. Avery has tough Q2 comps and the usual timing uncertainty went back to school start so that's in June or July, horticultural should be a significant offset. Checkpoint growth continues, driven by RFID. Apparel inventories remain low, but there's still some signs, as I mentioned earlier, about the forward ordering from particularly European retailers. Innovia will see the Belgian transition complete. This corporate has gone extremely smoothly and label industry volume continues to strengthen. So we're continuing to expect good things at Innovia. And overall, in the quarter so far, closed the month of April, which is extremely strong. So we're quite optimistic about the quarter ahead. FX is still a modest tailwind at current exchange rates. So with that, operator, we'd like to open up the call for questions.
Operator: Certainly. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Your first question for today is from Hamir Patel with CIBC (TSX:CM) Capital Markets.
Hamir Patel: Hi, good morning. Geoff, in your outlook, when you talked about momentum continuing into Q2, does that suggest you would expect a sequential improvement in profitability in the second quarter?
Geoffrey Martin: Yes, for sure. It's sequential year-over-year.
Hamir Patel: I guess, asking on both. Yes.
Geoffrey Martin: Well, we had a very strong April.
Hamir Patel: Strong April. And sorry, when you said that, you mean on both a year-over-year and sequential basis?
Geoffrey Martin: Correct.
Hamir Patel: Okay. That's helpful. And Geoff, at Checkpoint, how much of the 25% ALS organic growth you think reflected that call forward of orders by European retailers?
Geoffrey Martin: Very hard to say. It's a factor. We've got a number of things at play there. Apparel inventories are still low. So we definitely know there's been some forward ordering. So as you might imagine, if your European retail and you're sourcing from places like Bangladesh and Vietnam and those good coming through the Suez Canal, there's some concern about disruption there. So we see some signs of forward ordering that but we also see very low apparel inventory. So it's very hard to say what it will mean in the coming quarter. In April, it was still very strong. So I can't say more than I already commented.
Hamir Patel: Okay. Great. And just the last question I had, Geoff, is that your outlook also referenced new business wins in China driving significant gains for CCL Design in the quarter. Are you able to quantify sort of how significant those gains were and would you expect that to continue to build in Q2?
Geoffrey Martin: Well, we're very optimistic about the CCL Design electronics space. So a number of things are going on there. So the market's definitely bounced back from its inventory correction issue. So we're seeing in all sectors of the electronics space improved demand for production. And then you've got the AI factor, so the number of new PCs that will need upgraded chips, so that's another factor. And then we've got some new business wins in some other sectors. But I can't talk about customer by customer, but they're very good. So that's a business we have -- we see considerable upside for the remainder of the year.
Hamir Patel: Fair enough. Thanks Geoff. That is all I had. I will get back in queue.
Operator: Your next question is from Ahmed Abdullah with National Bank of Canada (OTC:NTIOF).
Ahmed Abdullah: Yes, good morning. Thanks for taking my question. In the CCL segment, it seems that most of the trends across your subsectors are going in your favor, which is translating into better EBITDA margins. Can you give us some color around how much of these margin improvements are purely driven by better market conditions? And are there any levers you're pulling to further boost margins?
Geoffrey Martin: I think it's just a function of a better mix and recovering sales. I don't think it's more complicated than that.
Ahmed Abdullah: Okay. So there's no like cost cutting or cost adjusting on your side?
Geoffrey Martin: [Indiscernible] function of better mix and improving revenue. There's probably some benefits in the CCL Design, space we did quite a bit of restructuring in China last year. There's a little bit of margin benefit in the electronics industry and CCL Design win for the company, it's immaterial.
Ahmed Abdullah: Okay. Perfect. And on Checkpoint, another solid quarter for the segment with RFID continuing the trend higher and margins also moving higher? Is there a new EBITDA margin goal as RFID picks up for this segment?
Geoffrey Martin: None.
Ahmed Abdullah: Okay. And then finally, just versus your comments from the last quarter of earnings growth, has that changed in any way given the current outlook?
Geoffrey Martin: I think we see the outlook the same way we saw Q4, the same way we saw Q1 we see in Q2. It's -- I think that's how we're doing relative to the prior year. So that's how we see. When we get into the back half of the year, we've got to worry more about the back-to-school season of Avery and how that will be this year. And then when we get into Q4, obviously, the comps situation changes pretty dramatically.
Ahmed Abdullah: Okay. And -- but the expectation is still for better earnings growth for the year?
Geoffrey Martin: Sure.
Ahmed Abdullah: Okay, perfect. Thank you. That is it for me.
Operator: Your next question for today is from Walter Spracklin with RBC (TSX:RY) Capital.
Unidentified Analyst: It's Louis Sterlis [ph] on for Walter. So just continuing on Checkpoint and driven by RFID growth. Just given what we saw in ALS and the Mexico plant coming online midyear, how should we think about revenue growth this year? Is high single-digit organic growth rate we saw in Q1? Is that a good run rate going forward?
Geoffrey Martin: Well, time will tell. The plants in Mexico will come on stream in the second half of the year. So that will have a positive impact. It also has some benefits in some of the products we import today into the U.S. directly from China have tariffs on them. So they'll start to go away. So there's some P&L benefits as well as sales benefits. So time will tell how it affects Checkpoint. We're very pleased with the performance, and we're expecting things to continue in good shape. I mean you get into the second half of the year, perhaps the busiest season for the Checkpoint business just in general.
Unidentified Analyst: Okay. And these plants in Vietnam and Turkey. Do you have any idea of the current revenue contribution they can be expected to provide?
Geoffrey Martin: Our Turkey business in total is about $50 million. So we'll have a lot of capacity to grow that pretty significantly beyond that. So it's a long-term investment based on how the Turkey is going to continue to be a very important sourcing country for fast fashion industry in Europe, and we want to be the leader in that space.
Unidentified Analyst: Okay. And one more, if I could. Can you remind us what percentage of Checkpoint's revenue is driven by RFID currently versus RF?
Geoffrey Martin: Well, I think at our investor conference, we said our RFID business company-wide, including Checkpoint, our business, which is about far the majority of it is about $200 million last year.
Operator: Your next question is from Stephen MacLeod with BMO (TSX:BMO).
Stephen MacLeod: Great. Just a couple of follow-up questions. Just on the Checkpoint business. You had some very strong margin growth in the quarter. And I'm just curious if you can give a little bit of color around sort of what the key drivers are around that margin growth. And if that's kind of the new run rate that you expect in that business going forward?
Geoffrey Martin: Well, the mix was good. So the customer mix was very good. RFID was strong, which is good. And the consumable business in MAS was stronger than the hardware business. So that's another mix thing running in our favor. So that's the main underlying reasons behind by Checkpoint, good and then, of course, strong sales. So add all that together, a lot of levers going in that direction. The only slight offset the return of some higher freight expense due to the Suez situation coming around the South Africa. So that increased freight rates for some of our intermodal shipments coming out of China to our sales companies around the world strictly to Europe.
Stephen MacLeod: Okay. Okay, that's great. And then maybe just turning to the CCL segment. In the outlook, it sounds like things are continuing to trend positively. Last year, you had a bit of margin pressure in Q2. And would you expect that to sort of fully reverse this year?
Geoffrey Martin: Yes. See, Steve, because of the situation of CCL Design. And I think we also had a difficult -- we had a very slow Q2 in CCL Secure last year. We don't expect that to be the case this year.
Stephen MacLeod: Okay. Okay. Great. And then you gave lots of interesting color about those plant investments you're making in emerging markets. I know that's been a market -- important market for you over the years. Just curious if you can give a little bit of color on like in aggregate, what does emerging markets represent in terms of your overall revenues now?
Geoffrey Martin: Well, I think we disclosed that on the slide, Steve. You've got the percentages there on all the slides for each of the segments, it's already fully disclosed.
Stephen MacLeod: Great, okay. That is great. Okay, thanks Geoff. Thanks Sean. I appreciate it.
Operator: Your next question is from Michael Glen with Raymond James.
Michael Glen: Hey, good morning. Geoff, maybe to start, it's, I guess, a little bit surprising, like the last transaction, the last M&A transaction you guys have made was in July of '23 was that healthcare deal. Can you give some thoughts surrounding M&A? I guess I would have given where the balance sheet is, I guess I would have thought you guys would have been more acquisitive on the tuck-in side?
Geoffrey Martin: I mean I think we said [indiscernible] what the situation is. I mean it's -- the focus is on bolt-on M&A and what's the space.
Michael Glen: Okay. And then can you also speak to, I guess, capital allocation and maybe give some thoughts on the internal view or the board level if you want on share repurchases?
Geoffrey Martin: No change. I mean M&A is the priority, if leverage gets the below 1x and then we get very nervous about the situation on the balance sheet if leverage gets below 1x. And buybacks might be on the table, might not be it just depends on the circumstance. We're certainly planning to renew the normal course issuer bid. So we'll wait and see what happens.
Michael Glen: Okay. And just on back-to-school. Is this a timing situation. If we think about the business in aggregate over Q2, in Q3? Is it stable? Is it down this year versus last year?
Geoffrey Martin: I think back-to-school is a secular decline business. It's declined consistently year after year. So it has sometimes has positive bumps in the road driven by retailer confidence is sorting from China. And that was obviously a big problem last year, so much less of a problem this year. So it's partly driven in the next quarter about how much will get shipped in June versus how much goes in July. That's all the fact. But the long-term situation, that's a business that's in long-term secular decline. It's profitable while we have it. And so we're still very much focused on it. But as I said in the outlook comments, we'll probably see that offset this year by stronger results in the horticultural space. So it's -- I wouldn't say that these comments are particularly material for Avery, it's just the fact that it's certainly not material for the company overall.
Q: :
Geoffrey Martin: No problem.
Operator: Your next question is from Daryl Young with Stifel.
Daryl Young: Hey, good morning everyone. Just one for me with regards to a lot of -- we got a lot of businesses that are recovering off the bottom and a bit of a restocking trade that seems to be happening in several segments. Is there a way to just at a very high level, speak to demand in some of the products that are maybe a little more stable? And just, I guess, just trying to get a picture of how much of this is sort of the whipsaw from pandemic versus just really strong end market demands?
Geoffrey Martin: Well, I think the most volatile business we've had in that regard over the last recent time is CCL Design Electronics business. I think you have a lot going on there. So you've got -- we definitely had a boom in the pandemic and the bus that followed it. So that's for sure what happened and then that's bottomed out and then we're recovering from that. You've got the impact of new technology on devices, which is for sure a factor. And then we've got some new business wins. So CCL Design has been the most volatile in electronics element of it. But it's -- to give that context, it's $300 million or $400 million out of the $4 billion segment. So it's 10% of the segment. When you get into the Consumer Products business, if you look at the results of most of our consumer packaged goods customers, they are beginning to turn the corner. So most companies this year began to report albeit low, but leave some return to low volume growth and that's reliance on price and mix. So that would be a good thing for us in the longer run.
Daryl Young: Got it. Okay. And then maybe just one more on just some of the commodities and input deflation that is popping up in some other industries. Are you seeing anything there? Is there any benefits in your margins today from deflationary conditions that might normalize in the next couple of quarters?
Geoffrey Martin: I wouldn't say so. We saw a little uptick in driven by the price of oil and resin. So we've seen a little uptick. It's still pretty fall and we're still seeing year-over-year gains. So -- well, I would describe inflation is still reasonably benign but the dramatic drops we saw at the back end of last year and even into Q1, that's -- I wouldn't say it's stop, but it certainly paused a bit. And we'll see what happens for the balance of the year. We still expect it to continue to head down rather than return to going up. That's a thesis on looking at the business going forward.
Daryl Young: Congrats on the good results, guys.
Geoffrey Martin: Thank you.
Operator: Your next question for today is from Sean Steuart with TD (TSX:TD) Cowen.
Sean Steuart: Thanks, good morning everyone. A couple of questions on Innovia, pronounced deceleration in organic sales decline this quarter, which, I guess, reflects an easier comp. I suppose we're at a position where we're going to start to see strong year-over-year growth in that business as you continue to lap easier comps. With the restructurings at Belgium, et cetera, can you give us a sense of the cadence of sales growth expectations organically for Innovia the next few quarters?
Geoffrey Martin: Well, we had low volume growth this quarter. So the problem with Innovia is the pass-through industry. So the dollar signs at the top of other's importance is tracking operating income and EBITDA because revenue moves up and down driven by resin pass-throughs. So looking at the absolute dollar numbers at the top line isn't terribly important. It's more important to focus on operating income and EBITDA. And we're certainly expecting to see the kinds of improvements that we saw in Q1 continue and even accelerate as the year progresses as we get the full benefit of the closure of Belgium.
Sean Steuart: And I guess that's a follow-on question, Geoff. The $17 million to $20 million of annual profitability improvements tied to that restructuring, how should we think about the cadence there? I was under the impression it was the back half?
Geoffrey Martin: We start to get the full benefit from the second half of the year.
Sean Steuart: And that should happen...
Geoffrey Martin: We have some benefit, but we are still operating the plant Q2. We've got the transition to the U.K., but by the summer of this year, we'll be -- Belgium will be long gone, and we'll be operating out of the U.K. So we should see the benefits kick in from the summer.
Operator: Your next question for today is from David McFadgen with Cormark Securities.
David McFadgen: Okay. Great. Yes, a couple of questions. First of all, on Avery. It seems like the legacy business, legacy products decline sort of accelerated in Q1. And I'm just wondering, is this a new trend? Or is this just a bit of an anomaly for Q1?
Geoffrey Martin: No, I think it's really driven by the prior year comp, David. So if you go back to Q1 last year, I commented that we had destocking in the back end in 2022 and then some restocking in Q1 of 2023. So the comps are difficult in the legacy business in Q1. That's really well, the issue was in Q1.
David McFadgen: Okay. And then on...
Geoffrey Martin: [indiscernible] the top line, it didn't have much impact on the bottom line.
David McFadgen: Okay. Okay. Then just moving on to CCL Secure. So you noted that the Passport business was a bit soft in Q1, but it seems like it's going to be back to normal in Q2...
Geoffrey Martin: Passport business was strong in Q1. This was the currency business that was slow in Q1.
David McFadgen: Okay. So is that expected to pick up again in Q2?
Geoffrey Martin: Right.
David McFadgen: Yes. Okay. And then just on Checkpoint. You talked about how retail inventory is low. So would not be a good thing because eventually people will restock to a more normal level, right?
Geoffrey Martin: Right. Yes, that's why we said we've got two dynamics going on there. You've got some forward ordering. We've also got no inventory. So when we get into the summer high season. This forward ordering may not even get noticed if orders come in strong as of low inventory.
David McFadgen: Okay, all right. Okay, that is it. Thank you.
Geoffrey Martin: No problem.
Operator: You have a follow-up question coming from Ahmed Abdullah. Ahmed, your line is live.
Ahmed Abdullah: Yes. Given where leverage is and if absent M&A that could be happening, is there a consideration for higher activity on the NCIB regardless of where the stock price is?
Geoffrey Martin: That's a question we'll be discussing at the Board meeting later today.
Operator: [Operator Instructions] There are no further questions in queue. I would now like to hand the call over to management for closing remarks.
Geoffrey Martin: Okay, everybody. Thank you for joining us on the call today. Wish you a good summer. And we'll talk to you again in August. Thanks a lot. Bye-bye.
Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
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