Ladies and gentlemen, thank you for standing by. Welcome to Aptar's 2023 Second Quarter Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Introducing today's conference call is Ms. Mary Skafidas, Senior Vice President, Investor Relations and Communications. Please go ahead..

Thank you. Hello, everyone, and thanks for being with us today. Joining me on today's call are Stephan Tanda, President and CEO; and Bob Kuhn, Executive Vice President and CFO. Our press release and accompanying slide deck have been posted on our website.

If you are following along on our website, you can advance the slides by hovering over the presentation screen and clicking on the arrows on the right and left. As always, we will post a replay of this call on our website. Today, this call includes some forward-looking statements.

Please refer to our SEC filings to review factors that could cause actual results to differ materially from what we are discussing today. I would now like to turn the conference call over to Stephan..

Thank you, Mary, and good morning, everyone. We appreciate you joining us on the call today. I will begin my remarks by highlighting our results for the second quarter. Later in the call, Bob Kuhn, our CFO, will provide additional details.

Starting on Slide 3, for the second quarter, I'm pleased to report that Aptar achieved core sales growth of 4% and delivered double-digit adjusted EPS growth with Q2 landing at $1.23 per share due to the continued strong demand for our pharma proprietary dosing and dispensing systems, as well as our fragrance dispensing technologies.

We guided our adjusted earnings per share for the second quarter to be in the range of $1.11 to $1.19. Our adjusted EPS result includes a $0.04 impact from start-up costs related to our injectables expansion program and the rollout of a new enterprise resource planning or ERP system. Our Pharma segment had a very strong first half of the year.

In Q2, the robust demand for our proprietary drug delivery systems once again grew across the majority of end-use categories, including nasal decongestion, saline rinses, eye care and cold and cough as well as allergic rhinitis, emergency medicine, asthma and COPD therapies.

Our growth in these categories was largely in line with market demand, except for emergency medicine.

Revenue from our proprietary drug delivery systems represents about 26% of total company revenue for Aptar in 2022 and is our most profitable area due to our institutional know-how and experience navigating the stringent regulatory requirements in the industry.

Over the course of the first half of 2023, more than 85 products and medications using our proprietary drug delivery systems were launched globally. These launches will help us continue to deliver consistent growth well into the future. Today, more than half of all drugs being developed initiated by small to midsized pharma companies.

A drug product can take anywhere from 5 to 12 years to come to market. These early developers have limited experience with the long regulatory approval processes, relying on our decades of regulatory expertise to help support their efforts.

Over the last several years, we have also added a suite of services, ranging from clinical trial and regulatory filing support to patient onboarding and digital therapeutic capabilities, reinforcing the stickiness of our business and further positioning Aptar as a pharma partner of choice.

These upstream and downstream services also add additional revenue in the form of service fees, milestone payments and/or royalties.

As we mentioned last quarter, the one area where we currently anticipate inventory buildup in the chain is in emergency medicines such as Narcan and generic naloxone in preparation for this opioid overdose reversal medications going over the counter or OTC later this summer. We anticipate demand for the OTC channel to moderate over time.

However, this has historically been a very lumpy business for us and demand is hard to predict.

In addition to opioid overdose reversal medications, technologies for the dosing and dispensing of emergency medicine include allergic reaction therapies and medicines that help regulate glucose levels, representing less than 3% of total company revenue for Aptar in 2022.

While this is a growing area for us, the success of our Pharma segment is due to our robust pipeline across many application fields. For injectables, the impact of start-up costs and the implementation of a new ERP system was about $0.04. The main issues of the ERP implementation have been addressed.

However, we expect to continue to experience a drag of $0.03 to $0.04 per quarter due to startup costs for the new investment. This is a slight increase from the previous range of $0.02 to $0.03. Our Injectables division sales in quarter two were flat compared to the previous year's quarter.

But when compared to Q1 2023, sales increased by more than 50%. Recently, there has been a lot of news coverage on GLP-1 drugs and their projected growth. As we stated last quarter, we are supplying components to three of these drugs with customers starting to secure their future capacity requirements.

Sales from elastomeric components were approximately 9% of total company revenue for Aptar in 2022. Our new capacity expansions coming online through the end of 2024 will increase our ability to focus on premium solutions and higher value products which are ideal for biologics, such as GLP-1 drugs.

In our Beauty segment, we saw solid volume growth of our dispensing solutions for prestige and mass fragrance as well as color cosmetics. Two exciting milestones for our Beauty business also took place recently.

Some two weeks ago, we were joined by key customers, local and national government officials at the grand opening of our new state-of-the-art beauty site in Oyonnax, France, focused on providing our fragrance, color cosmetics and facial skin care customers with unique customized packaging solutions that help differentiate their branded products and enhance the consumer experience.

Currently, only very few companies around the world can produce these types of highly technical solutions with the same level of quality. We are excited about the opportunities that this new site will afford us and customer feedback continues to be very positive.

Early in the month, our beauty plant in Louveciennes, France, which produces many of our fragrance pumps and is the site where our pharma business originally started out celebrated 60 years of manufacturing excellence. Moving to Slide 4.

We are pleased to share our ESG milestones and achievements from the past year with the release of our annual Corporate Sustainability Report which is prepared in accordance with the Global Reporting Initiative, or GRI standards and shows our alignment to the UN sustainable development goals.

We continue to view our leading position in the sustainability space as a competitive advantage. Doing right by the planet, designing products that foster circularity and attracting and retaining top talent aligned with our mission is simply good business.

Aptar continues to be recognized for our achievements in this space, most recently being named one of America's Climate Leaders 2023 and by USA TODAY on its inaugural list of 400 U.S. companies. We are first in our industry sector and 24th among companies who achieved the greatest reduction in their core emissions intensity between 2019 and 2021.

That is Scope 1 and Scope 2 greenhouse gas emissions in relation to revenue. We were also named a 2023 Diversity Champion by Capital, a leading economic magazine in France in collaboration with Statista. Out of 6,000 participating companies, Aptar ranked 96 overall and within the pharma industry was ranked #4 out of 162 companies assessed.

During the quarter, we also launched a number of new products as outlined on Slide 5. In Pharma, in new pain management medication in Europe has selected our proprietary spray pump with an electronic counter and lockout device.

Bayer's anti-inflammatory and pain relieving throat spray is using our proprietary dispensing technology and our proprietary metering valve technology is featured on an asthma and COPD inhaler in China. Our active material moisture protection solution Activ-Vial will be featured on a probiotic in France.

In Beauty, our fully recyclable mono material pump is the dispensing solution for J&J's Neutrogena hydration body lotion in Europe, and Guerlain uses our pump on the hair care and skin care foundation line. In Closures, our snap top closure with flow control valve is used in Hellmann's new inverted Garlic Aioli product.

In Personal Care, Bath & Body Works is featuring our disc top dispensing closure on a new line of hair care products. Looking to Slide 6. In the first half of 2023, we returned approximately $79 million to shareholders through dividends and share repurchases.

Additionally, on July 13, we announced an almost 8% increase in our quarterly dividend, underscoring our Board of Directors' confidence in our strong performance and financial position. We are on track for our 30th consecutive year of paying an increased total annual dividend, and we'll continue to focus on creating value for our shareholders.

Now I would like to turn the call over to Bob.

Bob?.

Thank you, Stephan, and good morning, everyone. Starting on Slide 7, I would like to summarize the quarter. Our reported sales increased 6%.

When we neutralize for currencies and acquisitions, our core sales grew 4%, primarily due to strong demand for proprietary drug delivery systems across the majority of the application fields, including allergic rhinitis, emergency medicine, asthma, COPD, nasal decongestants, saline rinses, cough and cold as well as eye care.

Additionally, we saw continued strong demand for our dispensing technologies for both prestige and mass fragrance. As shown on Slide 8, we reported second quarter adjusted earnings per share of $1.23. This represents a 26% increase over prior year adjusted EPS.

We achieved adjusted EBITDA of $181 million, which was an increase of 13% from the prior year second quarter. Turning to some of the details by segment for the quarter. Our Pharma segment's core sales increased 13%. Approximately 11% of the continued growth came from increased volumes, especially for our proprietary drug delivery systems.

Looking at sales in the Pharma segment by market, prescription core sales increased 23%, primarily due to continued strong demand for dosing and dispensing technologies for allergic rhinitis, emergency medicine, asthma and COPD therapies.

Consumer Healthcare core sales increased 19% on healthy demand for nasal decongestants, saline rinses, eye care and cough and cold applications. Core sales for our elastomer solutions for the injectables market increased 1%. While demand for our elastomeric components was strong, shipping days were impacted by an ongoing ERP system migration.

The main issues for this implementation have been resolved and we don't expect this impact to repeat in the second half of the year. Turning to our Active Materials Science Solutions, core sales decreased 13% due to softening in demand for probiotics after a period of rapid growth and a decrease in active vials used in diabetes care products.

Pharma's adjusted EBITDA margin was 32%, which included start-up costs for the Injectables division capacity expansion and ERP system implementation of approximately $4 million. We expect an impact of $3 million to $4 million per quarter for the remainder of the year.

Our Beauty segment's core sales increased 3% due to a mix of pricing and volume growth. We continue to see double-digit growth in both our prestige and mass fragrance solutions. Regionally, Europe continues to perform well with sales and adjusted EBITDA margins well within our long-term target range.

While volumes in China are low, we are currently seeing progressive improvements. Latin America had good sales growth, especially in masstige fragrance. North America, where we produce more personal care and home care dispensing solutions continues to be affected by lower customer demand due to excess inventories.

Lastly, our full packaging solution, which primarily serves indie beauty brands for the North American market is starting to rebound after being negatively affected by COVID. Looking at the Beauty segment by market, beauty core sales increased 11%, driven by higher sales in both prestige and mass fragrance as well as color cosmetic solutions.

Beauty represents about 2/3 of our overall sales in the segment. Personal Care core sales decreased 6% with lower demand in several end-use categories in North America, while Europe showed stable growth in the quarter.

Home Care core sales which represents 4% of the Beauty segment sales decreased 29% due to lower sales in North America, Asia and Europe across several categories, including air care and surface disinfectants. Home care sales grew in Latin America but off a small base. This segment's adjusted EBITDA margin for the quarter was 13%.

The Closure segment's core sales decreased 8% compared with the prior year's quarter, about half the impact for the quarter is due to the pass-through of lower resin prices. Additionally, sales were impacted by lower volumes in personal care and home care as customers continue to work through their inventory levels, primarily in North America.

Europe and Asia had modest sales growth. Looking at the Closure segment by market, food core sales decreased 7%, primarily due to lower demand in North America. From an application field perspective, sauces and condiments were down, while food service trades were up. Beverage core sales decreased 2% due to the pass-through of lower resin prices.

However, sales in Europe increased, which is our largest beverage market. Personal Care core sales decreased 17% due primarily to lower demand and continued destocking in North America.

In our fourth category, which includes beauty, home care and health care, core sales decreased 6% primarily due to lower demand globally, although there was good growth for beauty dispensing closures in Europe and home care closures in Latin America and Asia.

From an application field perspective, laundry care and surface cleaner solutions were down while dish care sales continued to increase. The segment's adjusted EBITDA margin was 16%.

This signifies a five-point improvement over the same period last year due to our continued focus on operational leverage as well as the effects of passing on lower resin prices.

For our three large capital projects, our injectables capacity expansion projects, our state-of-the-art beauty site in France and our new site in China that will service all three of our segments, we spent about $21 million in the quarter. As we have mentioned, two of our three large capital projects have come online in the first half of 2023.

Reported depreciation and amortization expense increased 6% over the prior year quarter to approximately $62 million or 7% of sales. Slides 9 and 10 cover our year-to-date performance and show the 4% core sales growth and our adjusted earnings per share, which were $2.18, up 14% compared to the $1.91 a year ago, including comparable exchange rates.

Year-to-date cash flow from operations was $182 million, up from the $177 million due to improvements in earnings.

Moving to Slide 11, which summarizes our outlook for the third quarter, we anticipate our strong momentum to continue and expect third quarter adjusted earnings per share, excluding any restructuring expenses, acquisition costs and changes in the unrealized fair value of equity investments to be in the range of $1.23 to $1.31 per share.

The estimated tax rate range for the third quarter is 25% to 27%. In the third quarter, we expect to have a $0.03 to $0.04 impact in start-up costs from our injectables expansion program which we expect to repeat again in Q4. Additionally, we are expecting some currency tailwinds compared to the prior year.

For example, the euro rate for the prior year Q3 was 1.01 and our guidance for the coming third quarter is assuming a 1.09 euro rate. We have said that roughly for every 1 point move in the euro rate that equates to roughly $0.02 per share for the full year.

So for the coming quarter, we are looking at approximately a $0.06 currency benefit on earnings compared to the prior year due to the euro rate as well as other currency movements. We currently estimate depreciation and amortization for 2023 to be between $230 million to $240 million.

Our capital expenditures in 2023 net of any government grants is estimated to be around $300 million including a capacity expansion investment for our pharma proprietary drug delivery systems.

In closing, we continue to have a strong balance sheet with a leverage ratio of 1.8, which allows us to continue to invest in the business, pursue strategic opportunities and continue to return value to shareholders in the form of dividends and repurchases.

In addition to our cash dividend payment to shareholders, which totaled $24.9 million in the quarter, we repurchased approximately 81,000 shares for approximately $9.3 million. At this time, Stephan will provide a few closing comments before we move to Q&A..

Thanks Bob. In closing, we are energized for the future as many of the measures we have taken over the past years progressively come to fruition. The first half of the year is off to a strong start with solid demand continuing into Q3. The pipeline for our pharma proprietary drug delivery systems continues to build.

We are excited about the new opportunities that our expanded injectable capabilities will bring as they come online through the end of 2024. Demand for our last America components is increasing, keeping pace with the fast-growing biologics markets we serve.

The Beauty segment continues to perform well in Europe, which represents more than half of our revenue driven by global beauty companies based in Europe, with Latin America also improving very nicely and China recovering, albeit more gradually.

We are one of the global leaders in fragrance dispensing and have introduced new technologies that our customers are excited about. And as a result, fragrance has grown double digits in the first six months of the year, and our order book looks strong heading into the third quarter.

Equally important, the team has done an excellent job in focusing increasingly on reducing costs while growing the top line. This determined effort to increase our operating leverage and drive productivity is very much continuing.

Before opening up the call, I wanted to be sure to recognize and thank two long-serving directors who have decided in recent months to retire from their service on our Board, Andreas Kramvis and Maritza Gomez Montiel. Both have made tremendous contributions to Aptar over their many years of service.

Maritza joined our Board in 2015 and served as the Head of our Audit Committee for most of her tenure. Andreas was a member of the Board since 2014, and we benefited from his extensive global industrial operating experience.

Also on behalf of my fellow directors, I want to express our thanks to both Maritza and Andreas for the guidance, support and wisdom over the years. With that, I now would like to open the call up for your questions..

[Operator Instructions] We have the first question from Ghansham Panjabi from Baird..

I guess first off, Stephan, maybe you could just touch on what drove the acceleration in pharma core sales in 2Q. I think it was up 7% in the first quarter, up 13% in the second. You mentioned Narcan, et cetera, and lumpiness associated with that but just help us bridge the acceleration between the two quarters..

Sure. I guess, primarily, Ghansham, the -- it is that the Injectable business was delivering at a much higher rate being up more than 50% versus the first quarter, while the sales level for the proprietary dispensing device business maintains at a strong level.

And of course, the comparison to prior year also plays a role, but the main acceleration is the injectable business..

Got it. And then as it relates to the strength that you're calling out in fragrance and prestige et cetera, where is the business relative to the pre-COVID baseline? There's just so much noise between 2019 and now. Just curious as to where we are relative to the previous baseline from 2019..

Sure. Ghansham, I can take that. We're above 2019 levels in terms of both units and dollars. So we're back above the pre-COVID levels..

Thank you. We now have George Staphos of Bank of America. Please go ahead..

My two questions are on pharma. I guess, first of all, can you touch on why you needed to raise the headwind guidance, if you will, by $0.01 or so the next couple of quarters for the ERP implementation. And relatedly, what gives you confidence that it's behind you by 2024.

And then on the pipeline and volume standpoint for pharma, what do you want us to take away in terms of how GLP-1 drugs and for that matter, emergency medicine pipeline filling will mean for your volumes and how we should model for that over coming quarters?.

Sure.

So -- what's the first question?.

The first question, I can handle the $0.01 headwind. It actually is not the ERP, George. It's really more the ongoing validation of the new capacity expansion. We've added an additional $0.01, primarily due to the additional labor that we've got as the business stabilizes through the ERP. We have every intention of reducing that as the year goes on.

But it's mostly an increase in the labor side, but primarily making sure that the validation goes as expected..

Let me just add. I know that this pharma capacity addition world is frustrating if you live in the industrial world. But basically, you build the plant, then you staff it, you make products and then you wait because the products go to the customer, they need to be validated.

Everything needs to be checked out and the year later then you actually have ongoing business. So, those of you who remember when we first started up Congress, it took 18 months for the validation. Now this $180 million program for injectables is in phases, so we can validate the phases as we go along.

But all of this add cost next to the labor, you have a product that you essentially throw away. And that's just the nature of the pharma business. So it's not like in industrial side, you built the plant, you put the machines in and you're off to the races. It just takes an extra time.

And given the rough ERP starting in the first quarter, we just want to be sure that we have the right support as we ramp up those plans. Now on your second question, look, we're not updating our ranges. Our guidance range is the long-term target. If we do that, that would be at the Capital Markets Day.

But clearly, what we want to signal is, we feel good about the pipeline, we feel increasingly good about the pipeline. We are in some capacity on all the three major brands that are out there, both the semaglutide and the tirzepatide. And if we had weak volumes in injectables, it's due to the ERP system, not to market demand.

And so whatever we lost, if you want, in terms of vaccine -- less vaccine business was easily replaced with additional GLP volume. And as we mentioned, the customers are securing future demand. I mean massive investments go in the ground from our customers as a company in [Guyana] that’s built capacity in the billions of dollars.

So, they want to make sure that all the components are there. So, clearly, barring any unforeseen discovery of negative side effects, these are two -- these are blockbuster drugs that will need a robust supply chain. With respect to the emerging medications, there's really two things to take away.

One is more and more people find that the best access to the brain is via the node as opposed to sending drugs through the digestive system and hope they make it to the bloodstream and help to make it to the brain. So -- and for emerging medicines that are rapidly acting this increasingly important or we just see the pipeline growing there.

That's point one. Point two, we have to believe that there is inventory buildup in the chain for Narcan as everybody is getting ready to launch it over the counter. It has been approved but how much that is exactly and when that will normalize, we really can't tell you. I mean it's hard enough to forecast these days.

But given that this stuff next to going into the pharmacy chain goes to schools and firefighters and airlines and what have you, it's very hard to predict. Having said that, please remember last year, all of emergency medicines were about 3% of overall company revenue.

And with that, while we're excited about many of these projects, in our business, there's no single project that is a big needle mover. It is a numbers game, but the numbers game looks good. The pipeline is continuing to strengthen because of the conversion I mentioned and obviously, also we're excited about GLP-1.

Also there, I want to caution you that the injected business is not our largest business. So it's exciting growth. It's about 9% of total company revenue. It's exciting growth in the context of the overall size of that injectable business..

Thank you. We now have Daniel Rizzo of Jefferies. Please go ahead..

Just one question. So you mentioned it takes 5 to 12 years sometimes to get a drug to market for the small and midsized companies.

I was wondering, when you guys get involved in the process? Is it from the beginning that you have to be there? Is the pipeline that long? Or is it later, I mean, closer towards launch?.

No, we are in there for the duration. That's the strength we bring to this industry. To give you two examples, in Narcan, there was an existing device, we had a Unidose device. Naloxone was the existing molecule.

We worked with a small company at the time, that took five years to take an existing molecule, an existing device and get this new indication or administration approved. Another example is Spravato, J&J, that's a 12-year program. Existing molecule, esketamine has been well known and documented, was a new device by dose. It took 12 years.

Now in that context, it's important why we have these service businesses and why we strengthened the service businesses. Because we, one, have the expertise that we can provide, but we can also derive revenues. So we bill fee for service. We bill for milestone payments, sometimes renegotiate royalties.

So in that pipeline period, we make also descent money. Of course, we make much more money than when the devices are selling. But it is important because once the development is concluded and approved, our device is in the drug master file and that sets it up for a very, very long runway..

And then is -- seasonally speaking, with cough and cold, I assume the third quarter will be -- historically speaking, is the strongest and that there's some lumpiness there as well so that we'll see a surge and then there could be a cooling after that..

Yes. I mean, in our outlook, we basically say we look -- the third quarter looks strong, pretty much copy paste from the second quarter. And there's different product mix, but I wouldn't see a particular surge in quarter three here..

Thank you. Your next question comes from Gabe Hadje of Wells Fargo Securities..

Stephan, Bob, good morning. I wanted to ask it very much short term. I apologize in advance short-term nearsighted question, but one of your customers on the injectable side had a weather event.

And I was just curious if you guys have any perspective point of view about how that could impact your own operations, but I don't necessarily know how to think about that..

Look, we cannot talk about any particular customers, but not from my Aptar experience, but previous experience, look, if you get a letter, it's all in how you react and how quickly we react. And I mean, all the participants here are highly experienced and you can only rely on them taking the series and reacting with the vengeance.

It doesn't happen all the time, but it's all in how you react to it..

Okay. And then I guess, the two facilities that you were consolidating here in North America, I think there are some labor disruptions and things like that, that were sort of hindering profitability.

Can you remind us what savings you are expecting to kind of get out of that? Is it sort of in the rearview mirror? And then I guess on the new reporting structure, where would we expect to kind of see that show up? I suspect the Closures.

You talked about the 500 basis points of improvement on the margin year-over-year, but just a clarification there..

Yes. I mean it's been now some time, as a reminder for everyone, just as COVID began, we shut down two facilities in Connecticut and absorbed -- we're planning to absorb those activities into our facilities in the Midwest and the East Coast and in Mexico. That was not as well executed as we would like. We've said that before.

We lost some share in the process. And part of that challenge was as we then recovery started, we couldn't get the labor and customers were not pleased. That all is behind us. We did close another facility in the Midwest in Q1. Benefit of that, you do indeed see in Closures. So that's part of the margin improvement.

And given that our service levels are back to normal and in fact, very competitive and the regionalization of supply chain, we are back on the front in North America. And the third point is, of course, we suffer like everyone else from the almost mysterious destocking in some markets.

We see that pretty much having run its course on the food side, but it's still continued in the personal care and home care side..

[Operator Instructions] As we have had no questions registered, I'd like to hand it back to Mr. Tanda for some final remarks..

Thank you. So let's take a step back for a moment. As I mentioned, the management team here is very energized about the future.

And that is because a lot of the hard work, many of the measures that we have taken over the past years are now progressively coming to fruition to a point where you can actually see them in our results, whether it is a much stronger and deeper talent bench or teams that we have on the field that is also leading to disciplined execution, whether it is the much more capable, modern and efficient asset base that we have put in place as well as renovated or updated.

Whether it is renewed innovation delivery, our innovation centers in Asia, in the U.S. and in Europe, leading to enthusiastic customer engagement and excitement that I mentioned. And last not least, a much more rigorous and systematic cost focus. All of these improvements starting to show and are behind the double-digit EPS growth.

If we look back at the first half, of course, we have risk growth in Rx and CHC in our proprietary dispensing devices and injectables is not recovering nicely with good demand picture looking forward. Beauty is growing nicely in Europe and Latin America and recovery in China in both Europe and China are in the profitability target range.

SG&A as a percentage of revenue is coming down. And I also want to make the point that the absolute EBITDA growth, if you combine Beauty and Closures is actually more than the EBITDA growth in Pharma for the first half.

Of course, Pharma has been held back with the injectable ERP deployment, but a 14% EBITDA growth for Beauty and Closures combined in Q2, also see that these businesses are starting to deliver, as I said earlier. Now when we look at Q3, it's pretty much a copy of Q2.

We will see, of course, growth in injectables year-over-year, Rx and CHC continued to perform strongly, same for Beauty, with Europe pulling. And of course, when we say Europe, it's our customers in Europe who supply the world. So, it's not so much related to the European consumer as opposed to the overall global beauty industry.

Latin America is doing well, and China is growing, albeit at a much slower pace than initially thought. North America, the food destocking has hopefully run its course but Personal Care and Home Care is still a drag.

And for those of you who follow the exchange rate, this is now becoming a tailwind rather than having been a headwind for the last few years. So, we look forward to provide more updates and insights at our Capital Markets Day in September.

But suffice to say that the team here is laser focused on executing on our growth plans, leveraging the investments that are coming on stream. We are deep into multiyear cost actions that start already to contribute and we are, by far, not out of ideas to drive productivity from there. The dividend increase that you've seen should be a clear signal.

And of course, we continue to maintain a healthy balance sheet that provides us the opportunity to take advantage of any opportunities that arise. With that, I wish you all a good rest of the summer, and we will see you in September..

Thank you all for joining. Our time on that does conclude today's call. Please have a lovely rest of your day, and you may now disconnect your lines..