FirstService Corporation (NASDAQ:FSV) Q1 2024 Earnings Call Transcript

FirstService Corporation (NASDAQ:FSV) Q1 2024 Earnings Call Transcript April 24, 2024

FirstService Corporation beats earnings expectations. Reported EPS is $0.67, expectations were $0.66. FSV isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Welcome to the First Quarter Investor’s Conference Call. Today’s call is being recorded. Legal counsel requires us to advise that the discussion scheduled to take place today may contain forward-looking statements that involve known and unknown risks and uncertainties. Actual results may be materially different from any future results, performance or achievements contemplated in the forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the company’s annual information form as filed with the Canadian Securities Administrator’s and in the company’s annual report on the Form 40-F as filed with the U.S. Securities and Exchange Commission. As a reminder, today’s call is being recorded. Today is April 24, 2024. I would like to turn the call over to Chief Executive Officer, Mr. Scott Patterson. Please go ahead.

Scott Patterson: Thank you, Justin. Good morning, everyone, and thank you for joining our Q1 conference call. Jeremy Rakusin is on with me, and together we’ll walk you through the results we released this morning that were generally right in line with our internal expectations. Total revenues were up 14% over the prior year, driven entirely by acquisitions, primarily our acquisition of Roofing Corp of America in December. Similar to our Q4, organic growth in the first quarter was nil, due to very strong revenues in last year’s Q1 from hurricanes Ian and Fiona. EBITDA of the quarter was up incrementally to $83 million from $82 million in the prior year. The results reflect trends and themes that we saw in our Q4 results and discussed in our year-end call.

Jeremy will take you through margin detail and the balance sheet in his comments. Looking at our division of results, First Service residential revenues were up 11%, 8% organically and generally consistent with what we’ve seen from this division over the last year. Organic revenue growth was driven from net new contract wins. During the quarter, we announced the acquisition of Florida-based Rizzetta & Company. Rizzetta provides consulting and management services to HOAs in Florida and also to community development districts, which are known as CDDs. A CDD is a special purpose local government that exists in Florida and also certain other states including Georgia, Texas, and California. The CDD structure provides the ability to finance new development with tax-free municipal bonds.

Rizzetta brings up particular expertise in CDD management and introduces a new service offering for us that we believe we can grow within Florida and also to other states. Looking forward at First Service residential for the balance of the year, we’re reiterating our expectation for high-single-digit level growth with organic growth easing back towards the mid-single-digit range. Moving on to First Service brands, revenues for the quarter were up 16%, driven primarily by the acquisition of Roofing Corp of America, but also several tuck-unders within our restoration and fire safety segments. Organically, revenues were down 6% versus the prior year with gains at Century Fire offset by declines at our restoration brands, very similar to our organic results in Q4.

Let me give you a high-level review of each segment. I’ll start with restoration, which includes our results from Paul Davis and FirstOnSite. Revenues for the quarter were down by almost 10% and organically were off 15% versus a very strong Q1 in the prior year that was up 30% versus 2022. Similar to Q4, we continued to experience mild weather patterns across North America during the quarter. Residential and commercial claim activity was well off what we would expect on average. Revenues generated during the quarter from our remaining Hurricane Ian backlog amounted to about $10 million, compared to over $80 million from Ian, Elliott, and Fiona in our prior Q1. During the quarter, we were pleased to report the acquisition of Atlanta-based All Restoration Solutions by FirstOnSite.

All Restoration has a strong position in the Georgia market with four branches and a blue-chip client base. The addition brings to us a strong leadership team and is very complimentary in terms of geographic footprint and customer serve. We’re excited about our opportunity in the Atlanta market and throughout Georgia. Looking forward to Q2 and Restoration, we expect revenues to continue at approximately the same level sequentially, which would again result in a 10% revenue decline from Q2 of last year. I will now touch on our new roofing segment, which delivered a Q1 in line with our expectation. Q1 will generally be a modestly weaker quarter for us in roofing, as it is in painting, due to winter weather in certain of our regions and the inability to consistently work on exteriors.

We had budgeted for this during our due diligence, and it rolled in as expected. Looking forward, we expect sequentially stronger results for the balance of the year. Now to our home improvement brands, which as a group were up modestly year-over-year, low-single-digit growth in total and flat organically. We’re pleased with our results given current market conditions with home improvement spending down across North America. By matching last year’s revenue levels, we are taking share across each of our brands. Lead activity remains sluggish, and we don’t expect it to improve for the balance of the year unless we see some rate cuts. We may see some modest fluctuation quarter-to-quarter, but otherwise we are confirming our expectation to end the year slightly up in home improvement.

And finally, a look at Century Fire, which had another strong quarter with low-double-digit organic growth, really a continuation sequentially of the strength we saw all last year with Century. Looking forward to the balance of 2024, we’re confirming the expectations we laid out in our year-end conference call. That is continued strength at Century with year-over-year growth trending to high-single-digit based on increasingly tough comp quarters upcoming. I will now hand over to Jeremy.

Jeremy Rakusin: Thank you, Scott. Good morning, everyone. I’ll start by summarizing our first quarter results on a consolidated basis, which track closely to the indicators we provided during our most recent 2023 year-end earnings call in early February. For the quarter, we reported revenues of $1.16 billion, a 14% increase over the $1.02 billion for Q1 ‘23. Adjusted EBITDA was $83.4 million, up a modest 2% year-over-year, with a 7.2% margin for the quarter, compared to a margin of 8.1% in the prior year quarter. And our adjusted EPS was $0.67, compared to $0.85 per share in the prior year. Our adjustments to operating earnings and GAAP EPS and arriving at adjusted EBITDA and adjusted EPS respectively are consistent with our approach in prior periods.

I’ll now summarize the segmented results for our two divisions. First Service residential generated revenues of $496 million, up 11% over last year’s first quarter, while EBITDA was $35.6 million and 11% increase, as well over the prior year. The EBITDA margin for the division came in at 7.2% matching the prior year. During the balance of the year, margins will increase sequentially as our seasonal amenity operations ramp up. And as previously indicated, the margins will remain roughly in line with prior levels. Now to First Service brands where we reported revenues of $662 million for the current quarter, up 16% over last year’s Q1. Our EBITDA for the division was $55.5 million, a 1% increase versus the prior year quarter, and the margin was 8.4% down 120 basis points versus last year’s 9.6% level.

As Scott noted, our restoration operations faced a headwind of $80 million in prior year storm-related revenues, and that was the principal driver behind the margin decline for the division. We also incurred some margin compression in our Home Services segment as the businesses implemented increased promotions and marketing spending to preserve their top line performance. Century Fire Protection continued to deliver strong margins, and our new Roofing Corp of America investment performed in line with our expectations. Wrapping up our P&L review with items below the operating divisions, our corporate costs were up significantly over prior year. Most of the $3 million increase was due to the negative non-cash effect of foreign exchange movements during the quarter.

Higher interest costs also reduced our earnings per share as in prior quarters. In this particular Q1, it was up almost double the level of the prior year with a negative impact of $0.13 per share. Finally, our consolidated tax rate increased from 26% last year to 29% in the current quarter, which is right in line with our tax rate expectations for full-year 2024. Turning to our consolidated cash flow, we generated $56 million of cash flow from operations before working capital changes. Q1 is our seasonal trough cash flow period when some of our businesses have lower revenues and higher operating expenses and working capital requirements as they invest for the balance of the year. We netted $10 million of cash flow after these operational working capital investments, excluding almost $20 million for recent acquisition-related earn-out payments.

Capital expenditures during the quarter were $25 million, up modestly over the prior year spending level, and tracking to our CapEx guidance for the full-year of roughly $115 million. During the quarter, we also deployed just over $30 million of capital towards the two tuck-under acquisitions, which Scott referenced. Our teams have an active tuck-under prospect pipeline across several of our brands, including property management, restoration, roofing and fire protection as we look to augment our organic growth with acquisitions in these business lines. Concluding the reported financials commentary is our balance sheet. We closed the quarter with net debt at a little under $1.1 billion, an increase of $80 million since year-end, reflective of the cash flow movements I just walked through.

Our leverage, as measured by net debt to trend 12 months EBITDA, sits at 2.3 times, increasing modestly over the 2.1 times level at year-end, as is relatively typical after our seasonally lowest Q1. Liquidity, including our cash and undrawn bank revolver balance is approximately $360 million. The strength and flexibility of our balance sheet remains a cornerstone of our conservative approach to driving further growth. Looking forward, in the upcoming second quarter, we are forecasting consolidated revenue growth similar to Q1 in the low-teens percentage range. EBITDA is expected to increase at a mid-single-digit growth rate, with residential division margins relatively flat, while brands’ division margins will remain down year-over-year in the face of continued tough weather-driven restoration prior year comparisons.

With the reported first quarter and pending Q2 lining up with our expectations, our outlook for the 2024 full-year, which are provided with our 2023 year-end results in February, remains on track. That concludes our prepared comments. Operator, could you please open up the call to questions now? Thank you very much.

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Q&A Session

Operator: Thank you. [Operator Instructions] And our first question comes from Stephen MacLeod from BMO Capital Markets. Your line is now open.

Stephen MacLeod: Great. Thank you. Good morning, guys.

Scott Patterson: Hi, Steve.

Stephen MacLeod: Hi, good morning. Just a couple of questions that I wanted to ask here. Just firstly, with respect to the restoration business, could you just remind us how much weather you had in last year’s Q2 or how much weather related revenues? I seem to recall back from my notes that it was in the $30 million range, is that right?

Scott Patterson: Correct. It was, Stephen, $30 million from storms. The other thing that we benefited from in Q2 last year was just general weather, widespread weather that is certainly greater than what we’re seeing today. And we had a couple of particularly large losses at this time last year. We’re in the business of large loss at FirstOnSite. And we consistently have large losses in our backlog. But year-over-year, that level of activity is down just to because of the size of a couple of particular jobs last year.

Stephen MacLeod: Oh, okay. Okay, no, that’s helpful. And I guess just if I thought through the year-over-year impacts from weather in Q1 versus the year-over-year impacts from weather in Q2, would you expect margins to be down at a similar magnitude in Q2 on a year-over-year basis or a little bit less, because the large storm activity was a bit less robust than it was in Q1 last year?

Jeremy Rakusin: It could be a little less, Stephen, but I think the headline name storms, you’re right, is a little less of a headwind in Q2, but as Scott just mentioned, because of some other large losses, it’s not going to necessarily be particularly keyed right to that differential between the $80 million headwind in Q1 and $30 million in Q2. But we will be down and it’s reflective of my comments on margins in general for Q2 being down.

Stephen MacLeod: Right, okay. Okay, no, that’s helpful. And then just on the residential business, you had another nice quarter of strong organic growth. I know you’re guiding to that kind of trending back down to the mid-single-digit range? Can you just talk a little bit about sort of what other factors you’re seeing impacting organic growth beyond new contract wins? I mean you’re still seeing conversions to outsource management and I guess if you’ve seen that sort of new community activity beginning to tail off a little bit?

Scott Patterson: I mean we’re definitely seeing, continue to see new development and conversions to from self-management to professional management. The — there’s a couple of things that are causing us to see a normalization in our net new contract wins back to historical levels. You know, really for the last nine months, community budgets have been under considerable pressure from — primarily from accelerating insurance premiums. But also in Florida from legislation that requires cash reserves for maintenance and repairs to be funded. This is all post-surfside legislation, surfside being the condo collapse in June of ‘21. In the past, boards could choose to defer maintenance or reduce cash reserves and it’s no longer possible.

And the combination of insurance and some recently passed legislation is causing the boards to look very, very closely at cash flow and all expense items, and it’s putting pressure on management fees. Really nothing new for us. I mean, we’re always looking to find that balance between margin and organic growth. And if we’re not able to generate an appropriate margin on a particular community contract, we’re allocate our resources elsewhere. The other thing that’s happening, the trend for us is our pool maintenance and management business, which is part of our amenity service offering along with the management of fitness areas and spas, concierges, events and so on. We’ve offered pool services for years and years to our managed communities, but also to country clubs and multi-family.

The pool business is very seasonal, and we’re looking to maintain this business, but we’re not focused on growing it. It’s become very, very difficult to staff with lifeguards and maintenance pool tax. And so we’re being very careful and strategic about the business we take on and how we allocate our resources. And this will have the effect of diluting our growth in this division, particularly in the peak seasonal quarters, so Q2 and Q3. And so we expect to see some of that this year.

Stephen MacLeod: Okay, thanks Scott, that’s helpful color. I guess as I think about those factors specifically and maybe turning the page to 2025, do you expect to continue to be able to drive that historical mid-single-digit organic growth rate in the residential business, notwithstanding those items you just talked about?

Scott Patterson: Yes, yes…

Stephen MacLeod: Or including those items you just talked about?

Scott Patterson: Yes, we just think at the eight, nine, 10 level, we see that, as we’ve said for a few quarters now, we see that organic growth start to temper and settling closer to our historical average.

Stephen MacLeod: Okay, that makes sense. Great. Thanks, guys. Appreciate it.

Operator: And thank you. And one moment for our next question. And our next question comes from Stephen Sheldon from William Blair. Your line is now open.

Stephen Sheldon: Hey, good morning. Thanks for taking my questions. I wanted to start in residential and Scott you kind of talked about this a little bit in your prepared remarks. How are you thinking about the opportunity to gain market share with some of these larger CDDs now that you own Rizzetta? Are you expecting this to be an outsized area of growth in residential and potentially become a larger chunk of the portfolio as you think about the coming years?

Scott Patterson: I wouldn’t say it’s an outsized opportunity, but it is a new service offering for us and CDDs are created really around large multi-phase communities with expensive lifestyle amenities. So if a developer is looking at that type of community, he may choose to finance it with a CDD, which enables the building of infrastructure and the building of clubhouse and amenities early on in the development. And it certainly helps sell lots and accelerate development. That size of community is right in our strike zone in terms of our capability and expertise. And so we do — we are excited about adding the CDD consulting and management expertise. And Rizzetta has been at it for years and they’re experts at this.

Stephen Sheldon: Got it, you know it’s helpful. Maybe then it’d be great to get an update on the restoration technology platform that you guys have been developing. How is that progressing? And as you think about the next few years, what could it mean to restoration operating efficiency?

Jeremy Rakusin: So, hey Stephen, it’s Jeremy. Yes, I touched on it last quarter. We’ve completed a lot of the heavy lifting, essentially what we call Phase 1, the complete rollout of the operating platform in the U.S. We’re always going to have kind of enhancements and other modules that we’re working on, tweaking at least for the next couple of years. And then we’re also in the planning phase of migrating this into the Canadian operations. We’re already seeing tangible benefits, dealing with better transparency with our clients, field reports that we’re able to provide to them, internal clarity and visibility around our job costings. So there’s a lot of tangible benefits. And again, some of the efficiencies, again, I touched on it I think on my last quote and have said it for several quarters, this is going to be a multi-year effort that we will see over time and it won’t be in a straight line.

The lack of predictability around weather is one of the factors around that and job mix for different types of events. So all of that is not going to make it clear straight line realization, but we will see it over a multi-year period. But good efforts, well executed, and again, seeing tangible benefits both internally and with the clients.

Stephen Sheldon: Great to hear. Thank you.

Operator: And thank you. And one moment for our next question. And our next question comes from Himanshu Gupta from Scotiabank. Your line is now open.

Himanshu Gupta: Thank you and good morning and thanks for taking my question here. So on Century Fire, it’s been very, very strong. Again, double-digits organic growth. The question is what’s driving these kind of gains? And I mean, are you getting market share? Are you benefiting from a strong construction cycle?

Scott Patterson: Yes. You know, I would say that really this has been the case for the last year that almost all our 30 plus branches continue to perform and grow year-over-year. I think that’s the key for us at Century that really all the engines are firing. We’ve focused over the years really since we partnered on adding services and ensuring that all our branches are full service. So we’ve added sprinkler to alarm, historically alarm branches, added alarm capability to historically sprinkler branches. And it has been a real growth driver as we’ve layered in additional services to existing customers effectively. Separately, our national accounts program has certainly been helping drive growth. And frankly, commercial construction has been fairly robust and Century is well known in its markets for being a quality provider.

Their backlog has been solid the last couple of years. So a lot of things at play. You know, going forward in ‘24, we expect organic growth to ease back to high-single-digit, and that’s really only a based on the tough comps that they have and the strength that they had, particularly the last nine months of 2023. I hope that answered your question.

Himanshu Gupta: Yes. Thank you for that. And then shifting to home improvement business, specifically California Closets, how should we think about the growth here? I mean, how did that segment perform in Q1? And how should we think about Q2? And I guess, I think you were mentioning about higher marketing costs and maybe sluggish demand as well. So maybe something on that.

Scott Patterson: Yes. Cal Closets and really all our home improvement brands, CertaPro, floor coverings, about flat year-over-year, up a couple of points, organically flat. We continue to face headwinds. The macro environment is tough. Home sales down, interest rates elevated, global instability. All of this creates uncertainty and tempers consumer confidence and home improvement spending. And all the indicators we’re looking at all of our internal metrics point to a continuation of these headwinds. We have — we made a decision in ‘23 and in the Q1 to invest in marketing to help drive leads into cautiously use promotions to help facilitate and close sales with a view to take market share in this environment. And by holding sales to last year’s level, we’ve done that.

It’s a balance between growth and margin. We’ve got our hand on the dial, and we’re tweaking it and we’ll continue to tweak it. I expect that we’ll temper some of our investment, the balance of this year, but we do expect that our margins will continue to be impacted. And Jeremy, do you want to add to that on the margin side?

Jeremy Rakusin: No, Scott, I think it’s — I think you walked through it well. All to say that the margin compression at least for the next couple of quarters are reflective in this year are baked into the outlook I’ve previously provided.

Himanshu Gupta: Got it. Thank you guys. It was very helpful and I’ll turn it back. Thank you.

Operator: And thank you. And one moment for our next question. And our next question comes from Daryl Young from Stifel. Your line is now open.

Daryl Young: Hey, good morning, everyone. Just focusing on the M&A pipeline and specifically, I guess, valuations. Just curious if you’ve seen any sort of change in the dynamics there with a higher for longer rate outlook? And are you seeing any potential targets coming in the line of sight that maybe wouldn’t have been available six months or a year ago?

Scott Patterson: Yes, Daryl, it’s — I would say it’s even the opposite of what you might expect. It’s very, very competitive for acquisitions across the board right now, and maybe I would say even more so than it was six months ago. All our markets are very attractive to PE firms. And in general, I would say they’re active right now. Certainly, Roofing is consolidating quickly and very competitive. We’ll be participating in that consolidation and differentiating ourselves from private equity. And restoration continues to be a consolidating space and also very competitive. So the multiples, if they did dip, it was for a short period of time. And any solid businesses are very attracting double-digit multiples right now for sure.

Daryl Young: Got it. Okay, and then flipping to the residential side and just sticking on the commercial construction team and multifamily, I think new construction starts are multi-decade lows at this point. So just curious, can you refresh on what percentage of your organic growth has been coming from new developments and the outlook there?

Scott Patterson: Yes. we do — these developments, obviously, are in the queue in terms of permitting and approvals for years and years and years and construction, depending on the type of development you have. It’s always been a stable component of our growth. And I would say our backlog of pending developments is pretty solid relative to history. And — but as you suggest, I think there’s going to be an air pocket here in terms of ground level planning around new developments, which will impact us maybe three, four, five years out. And — but it’s hard to say. We don’t see it yet. Let me say that.

Daryl Young: Got it. Okay, that’s great. That’s all from me. Thanks very much, guys.

Operator: And thank you. And one moment for our next question. And our next question comes from Tom Callaghan from RBC Capital Markets. Your line is now open.

Tom Callaghan: Thanks. Good morning, guys. Maybe just following up on Daryl’s line of question there. Just in terms of the M&A pipeline, Jeremy, I know you mentioned earlier in your remarks there that the outlook for ‘24 is basically consistent with what you mentioned in Q4. Does that include — would that encompass kind of the comment around that low-teens revenue growth guidance potentially looking a little more similar to ’23? Should the M&A tuck-in pipeline continue to present themselves and you execute on it?

Jeremy Rakusin: Correct. Yes, I said at the end of — at our year-end call in February that we would have low teens revenue growth with the Roofing Corp acquisition and any acquisitions we had already completed but not any other unidentified or closed — non-closed transactions in our pipeline, that would be additive and could get us back to a similar all-in growth level that we had in ’23 versus ‘22, correct.

Tom Callaghan: Understood. Thanks and then maybe just switching gears on the Roofing Corp of America. I know it’s still very early days there. But just curious, from your perspective, any insights in or things that you’re seeing in terms of the competitive environment thus far in that line of service?

Scott Patterson: No, nothing that — nothing new that we didn’t see or understand through our due diligence exercise the — as I said a few minutes ago, certainly, it’s competitive. It’s a very fragmented market. And there are a number of different platforms, private equity-sponsored platforms that are out looking to add to their platforms to talk under acquisition. And so certainly, it’s active on the acquisition front and very competitive. The team that we partnered with, we’re very positive about. Everything we’ve seen to-date is exactly as we had hoped and expected it would be in terms of the branches and businesses we have, the partners we have, the operating capability. So nothing on the day-to-day competitive environment in terms of your specific question, it’s more around the acquisition activity.

Tom Callaghan: Thanks, Scott. I’ll pass it back.

Operator: And thank you. And one moment for our next question. And our next question comes from Tim James from TD Securities. Your line is now open.

Tim James: Thanks, and good morning. My first question, just returning to Century Fire for a minute and your expectation for growth to slow, to what are still actually relatively strong levels, but slowing from what you’ve seen in recent quarters. Can you talk about how much of that, if any, is pricing related? Is kind of inflation that’s still keeping coming through and you’re able to pass that through? And how much of it is actual volume growth, if there’s even a way to kind of characterize it that way?

Scott Patterson: Our pricing at Century, I think, has been — for the most part, it’s been stable the last — certainly the last year. There was a run-up leading into ‘23. Steel pricing was increasing and certain other inputs, labor, of course. And that helped — that certainly helped drive organic growth in ‘23. It’s the pricing year-over-year change that we’re seeing currently is minimal, if that was your question.

Tim James: Yes, that’s helpful. So the slowing growth that you’re anticipating is really just a function of sort of macro conditions and sort of normalization from what we’re just incredibly strong results last year and early this year.

Scott Patterson: Yes, I think that’s right. There was a run-up last year. And again, as I said, earlier, really firing on all fronts continue to. But their organic growth, it’s not possible to sustain that. And in Q1, it was just north of 10%, which was — will take all day long, but starting to settle back and normalize.

Tim James: Okay. You mentioned earlier the pool maintenance was an area in residential that you’re not looking to grow. I think you mentioned just some — due to some of the staffing issues. Are there any sort of verticals or parts of that business that do look particularly attractive for putting capital to work for whatever reason, whether it’s maybe more appealing staffing opportunities or other factors that make sort of better opportunities for growth in that business?

Scott Patterson: Yes. No, I appreciate that question because these large lifestyle communities that we manage and marquee high-rise buildings where we have a particular expertise, they increasingly have expensive and complex amenities. And that’s certainly a focus area for us and event planning around communities and concierge certainly, spas and fitness areas we’re very focused on. It’s the commercial pool side that we’re just tempering, I would say. And there are a number of states that require Lifeguard. And so we’ve been — again, we’ve been in that business for years. But it’s becoming increasingly difficult to staff those pools. And so we’re pivoting towards these other areas, I would say, focusing more.

Tim James: Okay. Thank you. And then just my final question, just a clarification. I just want to make sure I’m understanding the kind of the go-forward cadence, the increased promotional activity that you’ve called out in home services. And correct me if I’m wrong, it sounds like that mostly applies to California Closets. You mentioned that, that could be tempered as we go through the balance of this year. At what point does it sort of reach a steady cadence or just a steady growth rate or not become a headwind on a year-over-year basis? Is it possible to sort of suggest that’s a second-half…

Scott Patterson: Yes, you know what [Multiple Speakers] sort of use the visual hand on the dial. And it is a hand on the dial around different markets strategically driving share and making that decision. And that operating team is very, I would say, strong in this area just in terms of what is in the best interest of the brand long term and making that decision. So there’s nothing — no decisions have been made, I would say, as to the level of spend or promotion, no dates are in the calendar around when to dial it up or down. It’s an evolution or day-to-day decision-making, I would say.

Tim James: Okay. That’s very helpful. Thank you.

Operator: And thank you. And I am showing no further questions. I would now like to turn the call back over to Scott Patterson for closing remarks.

Scott Patterson: Thank you, Justin, and thank you all for joining us today. We look forward to talking again at the end of July. Thank you. Have a great day.

Operator: Ladies and gentlemen, this concludes the first quarter investors conference call. Thank you for your participation, and have a nice day.