Century Enka (NSE:CENTENKA) Q1 2027 Earnings Call

0:01 Ladies and gentlemen, good day, and welcome to Century Enka Limited Q1 and FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode and there will be opportunity for you to ask question after the presentation concludes. I now hand the conference over to Ms. Purwangi Jain from Valerum Advisors. Thank you and over to you. Ma'am? Thank you. Good afternoon, everyone, and a very warm welcome to you all. My name is Purwangi Jain from Valorum Advisors. We represent the Investor Relations of Century Enka Limited. On behalf of the company, would like to thank you all for participating in today's earnings call for the first quarter of the financial year twenty twenty seven.

0:49 Before we begin, let me mention a quick cautionary statement. Some of the statements made in today's earnings call may be forward looking in nature. Such forward looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's belief as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward looking statements in making any investment decision. The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental business and financial period under review. Now let me introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks. We have with us Mr. Suresh Sudhani, Managing Director and Mr. Yogesh Shah, Chief Financial Officer.

1:41 Without any further delay, I request Mr. Sudhish Sudhani to start with his opening remarks. Thank you and over to you, sir. Thank you, Purwangi. Good afternoon, everyone and welcome to our earnings conference call for first quarter of financial year twenty twenty seven. I would like to thank our host, Valorum Advisors, for hosting this call. Now let me first brief you on the operational highlights of the quarter under review. We are pleased to report an exceptional quarter with company delivering record revenue growth, profitability growth and margin performance. The strong performance was driven by healthy volume growth across all business verticals, supported by productivity improvements and higher operating rates, which contributed to a meaningful expansion in operating margins.

2:29 We were also able to effectively pass on increase in raw material costs through calibrated pricing actions. In addition, profitability during the quarter benefited from onetime inventory gains arising from low cost opening stock, while higher availability of renewable power helped partially offset increase in petro based energy cost. While we expect margins to normalize as higher cost inventory gets consumed, the underlying operational performance and demand environment remains encouraging. In our tire cord business, demand remained robust during the quarter following GST cuts on tires and automobiles with healthy growth across all automotive segments, driving strong demand for tires from OEMs.

3:16 While demand fundamentals remain healthy, evolving geopolitical developments, volatile crude oil prices and persistent inflation continue to remain areas to monitor and could impact demand growth in the coming quarters. Meanwhile, the PTCF approval process is moving in the desired direction with commercial sales expected to commence in H2 FY 'twenty seven. Turning to our filament business filament yarn business. We continue to witness healthy demand during the quarter with robust sales volumes and improving product mix led by higher share of value added and better margin products. Our new mother yarn and other value added products continue to support margin expansion and strengthen the overall profitability of the segment.

4:05 At the same time, import of commodity filament yarn from China continued at very low prices, while the finance ministry did not notify the antidumping duty despite favorable findings by DGTR. Looking ahead, we remain focused on enhancing our value added product portfolio with new VAP investments planned during the year to offer more customer specific products and further improve margins. I now request our CFO, Mr. Yogesh Shah to brief you on financial performance. Thank you, and good afternoon, everyone. Let me now brief you on the financial results for the first quarter of financial year twenty twenty seven. For the quarter under review, operating revenue stood at $5.54 crores, registering a strong growth of 38% year on year and 15% quarter on quarter.

4:58 EBITDA for the quarter come in at INR 86 crores, delivering an exceptional growth of 331% year on year and robust increase of 55% sequentially. Consequently, EBITDA margin improved significantly to 15.46%, representing an expansion of ten fifty basis points year on year and 400 basis points over the previous quarter. Profit after tax for the quarter stood at around 62 crores, reflecting a substantial growth of 301% year on year and 57% quarter on quarter. VAT margin strengthened to 11.13%, translating into an expansion of seven twenty nine basis points year on year and two ninety eight basis points sequentially.

5:49 Total volume for the quarter grew strongly by 12% year on year to 19,199 metric tonnes. Within this, tire cord fabric sales increased significantly by 69% to INR $30.06 crores, while Glamet Yarn sales reported a growth of 20% to INR $2.30 crores. With this, we open the floor for questions and answers. Thank you so much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Participants are requesting to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while question queue assembles.

6:54 First question comes from the line of Vipul Kumar Anupchan Shah with Sumangal Investment. Please go ahead. Hi. Thanks for the opportunity, sir, and congratulations for very good set of numbers. So can you quantify the inventory gain in this quarter? Quantify means you are asking in terms of volume? No, no. Means how much it added to the bottom line? I think it's already mentioned in the results which have been published, which has inventory impact is INR46.24 crores, which is already mentioned in our quarterly results submission to the stock exchanges.

7:45 INR46.2 crores, okay. At EBITDA level, right, No, no. It has to be given in terms of the way it will be reported in the financial statements to the stock exchange. So that's the only information we can share. We cannot give anything further on that. Okay. So is it safe to assume that due to increased caprolactam prices performance may be impacted in coming quarters or? We have already mentioned in our highlights that it may get normalized with changes in the raw material prices. One of the change that had happened post the Iran war was a very significant and substantial rise in a very short period in the particularly in the caprolactam and the chips prices.

8:44 And they have a bit tapered down in this quarter and are volatile because of the geopolitical situations. So it will have some impact, but we do not give any forward looking statements on what the impact would be. So it is expected to normalize based on how the pricing situation prevails during the forthcoming quarters. And you have mentioned that profitability has also increased due to higher share of renewable power. So what was the share of renewable power in our overall power consumption? And what was its impact at the EBITDA level or PAT level, sir?

9:32 Overall, our renewable power is over 40% for the quarter. We'll not be able to give any value terms of the impact. And we expect that since we have already announced that our expansion of renewable power at Bharat is expected to commission in H2 or most likely in Q3 of FY 'twenty seven, that percentage should also go up and the value addition in terms of bottom line should also help. So it will move from 40% to what? Around 50% expected by once the plant commissions and starts generating at normal levels.

10:20 So that improvement will be structural, no, sustainable? So once it commissions, I mean, it is definitely weather dependent. It's not constant as we know. But on an yearly basis, we have seen that it normally operates in a range which is forecasted at the time of the project is implemented. So it should definitely add to the overall reduction in power rates. Okay, sir. Thanks. I'll rejoin the queue. Thank you. Thank you. Our next question comes from the line of Rohan Shah from Eternal Capital. Please go ahead. Yes, hi. Thank you so much for the opportunity, sir. So just wanted to ask you about the so you've noted the GST cuts on tires and autos.

11:14 So this has driven a robust NT demand this quarter. So how much of this 38% year on year revenue growth is led via the GST cut led price buying versus the genuine underlying demand growth as such? And do you see any risk of demand air pocketing in the Q2 or Q3 or when this GST effect fails? I don't think we'll be able to quantify the increase in volumes of auto sales or tires per se due to the GST cut because that had happened in around September last year, and that has been a continuing phenomenon. I think the numbers of auto sales across various segments, whether it is two wheelers, three wheelers, tractors, personal vehicles, heavy commercial vehicles, all have been going quarter on quarter at a good pace. So how much is to be, I mean, attributed to the GST cuts is a guess of anybody.

12:20 But it definitely had an impact on the demand and the buying of I mean, more importantly, that it made the automobiles affordable to the customers. And how much would it continue is, again, guesswork because it depends on so many situations, financing, general economic environment. But it didn't definitely have an impact because we could see a stark improvement from Q3 onwards, both in terms of performances of auto companies, of the tire companies and all value chain partners related to the tire companies. Sure, sir. That is actually really helpful. And I understand that the quantification might be difficult.

13:13 And one more thing, I think you flagged the evolving geopolitical developments, if I'm not wrong, and the volatile crude prices and inflation as a risk to demand in the coming quarters. So could you elaborate on which specific end markets you're most watching for a slowdown? So just to tell you two wheelers or the vehicles, what exports, what are you looking that the demand will slow down, yes? Actually, it's a combination of multiple factors. Most important is the price increases in raw material due to the underlying crude variability and most likely, say, increase. So that could lead to either deferment of purchases or other kinds of economic challenges, which could relate to either reduction in demand for the new vehicles, new automobiles or also the demand cuts in terms of various value chain partners related to the automobiles.

14:20 And then there is also an import threat, which because of multiple countries having different geopolitical situations in their domestic markets, which could lead to surge in imports to the domestic market. So when we our markets are primarily domestic markets, our exposure is very little. So our these comments are more in relation to the impact in the demand in the domestic market and impact on supplies to that demand, which could also get impacted by very cheap imports in certain segments that we operate in. No, that's perfect. That answers my questions. Thank you so much. Thank you.

15:07 Thank you. Our next question comes from the line of Madhu Rathi with Counter Cyclical Investments. Please go ahead. Sir, thank you for the opportunity. So if I look at our gross margin, they have been similar for the past three quarters. So is it fair to assume that whenever there is a raw material increase, we capture the upside in terms of what because the gross margin base is similar, but whatever the realization improvement that should flow and that is the reason for the margin increase this quarter? It does impact the gross margin because we always have inventories in hand, which are both in terms of in transit as well as inventory that we have to purchase since a lot of our materials are also imported.

15:58 So that does impact because the consumption against the current prices get in terms of profit and loss are charged at different rates, and it works other ways also. But I think the more important part is that it happens only when there is a very sharp increase either way because volatility is normal phenomenon in this business, which is linked to crude price variability and other value chain related volatility. So any small or more gradual volatility, whether going upwards or downwards does not have a significant impact on margins. But a sharp increase or a sharp decrease in a very short period of a month or two months, that definitely has an impact on the gross margins.

16:52 Right. Sir, but the gross margin were 58%, 59% range for the past three quarters. So I'm not able to understand if there was a sharp price increase towards the wall. Was it that due to some time lag because of the time lag between the price increase and we passing on the pricing to our consumer? Because of that, it might look like there is no meaningful improvement in our gross margins? Actually, there is another factor which has been instrumental in the last three quarters is also volume growth. And as I said, the GST cuts had a positive impact on the volume growth on the demand side, which translated into better volumes in the last three quarters. And if you see the volumes compared to Q1 and Q2, this from Q3 onwards, the volumes have gone up. So that also has an impact on gross margin. As I said, it's a combination of multiple factors, but the volume part also plays a very important part in the overall gross margin.

17:57 It. Sir, so going forward, do we expect to maintain these levels of margins going forward? Or do we because we are the prices of our raw materials have reduced, so how should we look at it going forward? We do not give any forward looking statement, but I think we already mentioned in our presentation that we do expect margins to normalize over the next few quarters and not because these kind of sharp increases are not a regular phenomenon. I mean this was more a market reaction on the entire commodities on the Iran war. So any kind of that kind of event could have impacts on either way. But as mentioned, we do expect normalized margins going forward.

18:50 And so normalized would be 10 to 12% EBITDA margins, is that a fair assumption? We have been mentioning that because of the volatility, we operating margins of between 7% to 10% is more normalized. Anything above that is more a factor which could be not necessarily a permanent feature as of now. I mean it doesn't mean that margins would not change in going forward because a lot of initiatives on cost reduction and on enhancing our value added products and improving our basic model to improve the margins would be there. But as of now, we do maintain our last conversation on margins, which is that it would be between 7% to 10% on a normalized basis.

19:40 Got it. And sir, just a final question from my side, how is the PTCF plan scaling up, if you would like give a color on that? So as mentioned, that approval process has moved forward and it is going on well with a few customers. We do expect commercial sales to start in second half. So we'll make some more progress in this quarter. And hopefully some commercial sales would start from Q3 or Q4. But H2, we definitely expect commercial sales to start. Got it. And sir, for the volume, considering all these factors, what kind of volume improvement can you expect for FY 'twenty seven? As mentioned, we cannot give a...

20:27 No, no, I'm just asking I'm not asking you the magnitude, but do we expect the margin? Because in the last four years, based on our investor presentation, volumes have been kind of iffy, they've been on a flattish trend. So can we expect it to improve going forward? That's what I'm asking. We are our focus has been more on improving the margins on the products that we are selling. So there we are not adding any significant volumes in the current financial year in terms of capacity additions. So volume will be a function of definitely market conditions and the overall competition intensity, including imports. But the as mentioned, the focus is more on the value addition and improving margins on the volumes that we sell in the market.

21:20 Got it. Sir, that was from my end. Thank you so much and all the best. Thank you. Thank you. Our next question comes from the line of Amruta Saneh, an individual investor. Please go ahead. Thank you for this opportunity. Am I audible? Yes. Yes. Yes. Thank you for this opportunity, and congratulations on the performance of this quarter. So I would just like to... You know, if you could help me understand the overall capacity of the company. So we have overall capacity of 92,000 MPPA.

22:05 Right? So if you could, you know, give us some color on what is the kind of breakup for reinforcement fabric and filament yarn and, you know, with the new capacity coming up, PTCS capacity, so, like, what are the utilization level, like, at present? So, since we report our results in single segment, we'll not be able to give the breakup of various products as part of the capacity. And as also the volume has been mentioned in our presentation. So expected our operating capacity utilization normally varies between 85% to 90%.

22:51 And it is across there is some variations across various products, which depends on the market conditions. And as I said, since the PTCF part is under approval, we continue to sell some yarns, but that has an impact on our capacity. But overall, that's the range that we normally operate on. So that would be a good ballpark number to communicate that this is the range. And depending on, again, as I said, various factors, it could change between the product segments. But in the overall basis, we expect that this should be the range that we'll be able to operate in.

23:43 One more question. It's like about the healthy cash balance, which is there on the balance sheet. So my question is regarding, you know, if you could talk about the CapEx plan for the company. Is anything big CapEx coming up for the company? Or, you know, as you said, the utilization levels are around 85, 90% around that level. So what are the future plans, say, for the next three years? What is the kind of CapEx additions or the company looking at? So we will be adding some capacities which would add to the total capacity in our mother yarn, but that would get commissioned in FY 'twenty eight. That would be and then there are some value added products that would be added to our NFI, which will go in CapEx but will not add to the capacity but add to the margins.

24:35 Already stated and as a consistent process that we have been doing is that we are enriching our offerings in the filament yarn segment, basically to counter the commodity imports that are coming at very cheap prices from China and also make differentiated products to the customer. So these will be the major ones. Others are related to our investments and CapEx on one is reducing the power rate by our investments in group captive schemes for renewable power. And then a lot of it will also be going on in reducing the power consumptions because particularly where the equipments have become old and inefficient. So we have been continuously improving our productivity through investments, which enhance our overall efficiencies.

25:31 And also some amounts will be spent on improving our safety post our detailed assessments at Baruch incident in February 25. So we have significantly announced to ensure that do not have any major incidents or incidents at all on the safety side, particularly on the fire risks. Right. So any ballpark number that we are looking at for the kind of CapEx that we are planning? We expect to spend over INR100 crores in CapEx in the current year, current financial year. Okay. Thank you. Thank you so much. Thank you. Thank you. Our next question comes from the line of Amit Kumar with Data Mining Investment.

26:21 Please go ahead. Yes. Thank you so much for the opportunity, sir. Can you hear me? Yes, yes. Yes. Okay. So my first question was with respect to the availability of raw material. So pricing aside, mean pricing volatility aside, do you sort of foresee a challenge on that side at this point in time? No. Availability of raw materials is we do not see it as a challenge as of now. One is because we are already sourcing some from our domestic sources and multiple countries, including China. While China still has a very large share, but by to reduce the risk of having only dependence on China, we are already having other countries that we are sourcing from.

27:15 But one I mean, China is not known to these are very commodity markets, so are not known to create some kind of restrictions on their sale. So that's the reason we do not foresee that kind of risk. But I mean, if something happens in geopolitical related situations, that could have an impact. But at least in whatever we can see in medium term, we do not see any challenges, material availability from China and other countries as well as from the domestic sources. Okay. And at this point of time, roughly how much how many days of specifically raw material inventory would you be holding presently?

28:08 So between twenty five to thirty days is our inventory, which also includes some inventory in transit because we have we continually buy and we keep on arriving and then also gets consumed. But that is the range that we normally keep for particularly for the imported material. For the domestic sources, it is normally between around ten fifteen days, most likely around fifteen days. Understood, sir. Now just a small follow-up on margin already, fair bit of discussion on that. But see, so I remember that you have sort of given this 7% to 10% sustainable margin guidance in the past also.

28:56 But the reason why we are a little bit surprised that this number or rather this range is not moving up is, one, because of the fact that, as you mentioned, volumes definitely in the post GST environment have moved up. And at least, I mean, auto is also a little bit cyclical business, we can't say for next year, but at least as far as this year is concerned, pretty much the entire industry seems to be pretty well set on a double digit growth trajectory this year as well. Your mix is improving, given the CapExes that you are also doing on value added products. And then finally, I think you mentioned renewable power, captive renewable power share will move up from 40% to 50% in the second half. So at least can we sort of take an assumption that with all of these drivers principally positive for margins, sustainable margin excluding these kind of inventory gains and losses that may well be in the second half, should we would be closer to 10% than 7%?

30:13 As I said, we cannot give any forward looking statements. I think... No, no. Sir, I'm not talking for a forward looking guidance, but I'm basically saying that with all these sort of efforts that you have made and the latter two principally, so mix is obviously improved mix, improved value added products are obviously positive for margins and then obviously higher renewable power. I mean those investments, the renewable power investments you're principally making to reduce your cost of electricity, right, at the end of the day, that's the payoff there. So how should we sort of look at the longer term trajectory on margins? I mean, when at what point given all these investments on value added and then on renewal part that we are making, can we basically comfortably go to say that, now the margin trajectory has moved towards a step higher, I mean, either 10% or maybe even double digit on a sustainable basis is what I'm asking.

31:20 Not looking for a guidance per se, but making all of these CapExes If you look at our yes, sorry, have you completed? Yes, yes, yes. So actually, if you look at compared to past, we normally used to say or rather give that our margin ranges will be between 6% to 8%. We already upgraded it between to 7% to 10% based on what you were saying earlier. In future, if you were I mean, I cannot give it now, but once we are very sure that the range and our has improved, we'll definitely revise and give that, but that would be only when we are very comfortable that this has started working and we can give a range, which is kind of most likely not be breached, at least in normal circumstances, definitely not on the lower side. So we would, I think, change that once we get that in the later quarters. But I would leave it to you to make a good guess on whatever available information on what is the likely margins in the H2 of the financial year.

32:31 No, no. We very much appreciate the efforts. I mean, it's a difficult business. We very much appreciate the efforts that you have made to basically improve the broader dynamics of the business and of the company. And I very much appreciate your point of view as well. Thank you so much. Thank you. Thank you so much. Thank you. Our next question comes from the line of Dia Jain with Sapphire Capital. Please go ahead. Thank you for the opportunity. So can you please share the volume numbers for this quarter and also the breakup between the products?

33:17 And do you expect the realizations to be stable going forward in this year at least? So one sales volume was already mentioned in our presentation. I'll repeat it for you. It's INR 19,199 crores. This compares to Q1 of corresponding quarter, I mean year on year at from ZAR 17,072 to versus ZAR 19,199 for the current this Q1 FY 'twenty seven. And in Q4, it was ZAR 20,711. We cannot give any forward looking numbers on the realization, both as policy, but also because of highly volatile pricing situations, which prevail.

34:04 And these are actually changing on month on month basis. So very difficult to even give a number which is closer to what may actually come out. Okay. I understand. No problem. Thank you. Thank you. Thank you. Our next question comes from the line of Samirai Jain, an individual investor. Please go ahead. Hello. Thank you, sir, for the opportunity. I have a question regarding the raw materials. Did the management face any raw material shortage in the current environment? And how the management is planning to tackle such issues in the future? And what is the adequate domestic suppliers we have currently?

34:51 So basically, in our business, there is a main problem with Caplytum and nylon chips. And our long term relationship with our suppliers and our equal share like we also take from the domestic supplier and we also import. So we are keeping balancing and that's helping us in the critical situation, uncertain situation. Okay. And my last second question was regarding CapEx, which we have done now. So what is the payback in the IR which we are expecting for the CapEx? Normally, we looking forward for 12% to 15% minimum IR when we initiate the project and that is the IR we normally expect from projects.

35:40 Thank you. Thank you, sir, for the opportunity. Thank you. Thank you. Ladies and gentlemen, anyone who wishes to ask a question, you may press star and 1. Next question comes from the line of Madhu Rathi with Counter Cyclical Investments. Sir, with the debottlenecking that we are planning, sir, how much can our capacity increase from the current 92,000 metric ton per annum? In the current financial year, it is not likely to increase. As I said, the new project is going to commission only in FY 'twenty eight.

36:34 So there, it can it may increase by between to 3,000 to 4,000 tonnes per annum. Okay, got it. And sir, when we say value added products, sir, so what kind of realization improvement or realization multiple on the normal yarn do we get on normal yarn or NTCF do we get on the premium value added product? And what kind of gross margin or like how much is the gross margin or EBITDA margin higher for those products? I may not be able to give any exact numbers on the value addition. I can only say, as mentioned earlier, that all our new investments are accretive on bottom line and they have to have a minimum hurdle rate that they get it gets approved by the Board. And these are much higher than the hurdle rates, which were already mentioned.

37:32 So all these actually support us in getting better margins. But more importantly, these allow us to maintain a healthy volume because most of our value added products are more customer specific, and we reduce the import intensity or the competition by making products which are specific to the customer requirements. The products which come from China are more in bulk and are commodity products. So if there are any value additions to be done to that, that has to be done by any competitor in the domestic market. And we maintain a better edge in terms of quality, service, new product development with respect to other domestic competition. So the purpose of value addition is both, one is to get better realization margins, but also secondly, more assured sales volume by targeting products to specific customers, which get aligned with us and we get regular businesses from them over every quarter.

38:36 Got it. And sir, currently, what percent of our volume goes to these value added or customized solution, if you could help us understand? And what they were maybe one year back? We will not be able to give any breakup because since it's a single segment reporting. But I can assure you that it is increasing year on year, and it will continue to increase with our support from the Board and our focus on improving. So it will continue to improve and that will start reflecting, as I mentioned, it's already reflecting in margin guidance that we have given and it will start reflecting in future as well. Got it. Sir, just a final question from my end, sir. The renewables, sir, how much are we adding in terms of megawatt at the Baruch plant currently?

39:25 So another 10.5 megawatt will be added in addition to the current capacity on a renewal basis. I mean, not that 10.5 would be the generation, but on the capacity basis. Got it. And sir, what is the CapEx towards that? Sorry? What was the CapEx incurred towards that 10.5 megawatt? No, that see, that's a group captive scheme. So we just contribute to 26% of the equity. So we'll be we have spent about INR 8.5 crores on as a part of our equity investment in the that JV for which is dedicated to Century Enka. Got it. Sir, our power cost was close to INR 190 crores in FY 'twenty six, so that shouldn't decline by closer to 10% in FY 'twenty seven or H2 of FY 'twenty whenever this plant this commercializes?

40:28 That's a gross number dependent on multiple things, volume, productivity, consumption per unit, product mix. So we can't give that number. Anyway, it's a I mean, forward looking, but it can't be given as because that's an overall number depending on number of volume. But yes, the rate impact will definitely have a positive impact on the power cost per tonne of the products going forward. Got it. Sir, that was all my time. Thank you so much and all the best. Thank you. Thank you. Next question comes from the line of Samayak Chen, an individual investor. Please go ahead. Samayak, may I please proceed with your question?

41:17 Hello? Am I audible? Yes. Yes. Just have a one follow-up question. As a group company of Aditya Birla Group, do we have any intercompany transaction with Birla Cellulose? No. We do not have because anyway, we report any related party transaction, but we do not have any transactions with them. Being in the same value chain, which is, I mean, in terms of not value chain, in the same industry, which is textile, we do work on products or which can be beneficial to both the segments or both verticals rather. So they are into cellulose, we are into nylon and polyester. So wherever we can work together, we do work and try to grow the market or try to develop products which are beneficial to both businesses.

42:08 Okay, sir. That's all my side. Thank you. Thank you. As there are no further questions from the participant, I would like to hand the conference over to the management for the closing remarks. Thank you and over to you, team.

42:54 Thank you, everyone, for joining our Azim call. I hope we were able to give the answer to your queries, and I hope those were to your satisfaction. If you have any further questions or would like to know more about the company, please reach out to our Investor Relations Manager at Valorum Advisors. Thank you. Thank you so much, sir. Ladies and gentlemen, on behalf of Century Enka Limited, that concludes today's conference call. Thank you for joining us and you may now disconnect your lines.