U.S. markets close in 5 hours 18 minutes
  • S&P 500

    -32.68 (-0.74%)
  • Dow 30

    -94.17 (-0.27%)
  • Nasdaq

    -114.79 (-0.85%)
  • Russell 2000

    -18.76 (-1.04%)
  • Crude Oil

    +1.00 (+1.12%)
  • Gold

    -24.30 (-1.24%)
  • Silver

    -0.23 (-0.97%)

    +0.0009 (+0.09%)
  • 10-Yr Bond

    +0.1190 (+2.74%)

    -0.0049 (-0.40%)

    -0.7370 (-0.50%)
  • Bitcoin USD

    -600.48 (-2.21%)
  • CMC Crypto 200

    -10.31 (-1.79%)
  • FTSE 100

    -13.26 (-0.17%)
  • Nikkei 225

    -452.75 (-1.37%)

Edited Transcript of ARCE.OQ earnings conference call or presentation 1-Dec-22 10:00pm GMT

Q3 2022 Arco Platform Ltd Earnings Call Dec 2, 2022 (Thomson StreetEvents) -- Edited Transcript of Arco Platform Ltd earnings conference call or presentation Thursday, December 1, 2022 at 10:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Ari de Sa Cavalcante Neto Arco Platform Limited - Founder, CEO & Director * Carina Carreira Arco Platform Limited - IR Director * Roberto Rabello Otero Arco Platform Limited - CFO ================================================================================ Conference Call Participants ================================================================================ * Frederico P. Mendes BofA Securities, Research Division - Director and Head of the LatAm TMT & Healthcare Sectors * Javier Martinez de Olcoz Cerdan Morgan Stanley, Research Division - MD * Lucca Generali Marquezini Itaú Corretora de Valores S.A., Research Division - Analyst * Vitor Tomita Goldman Sachs Group, Inc., Research Division - Associate ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good afternoon, everyone. Thank you for standing by, and welcome to Arco Platform's Third Quarter 2022 Earnings Call. This event is being recorded. (Operator Instructions) This event is also being broadcast live via webcast and maybe accessed through Arco's website at https://investor.patform.com/ where the presentation is also available. Now, I will turn the conference over to Carina Carreira, Arco's IR Director. Carina, you may begin your presentation. -------------------------------------------------------------------------------- Carina Carreira, Arco Platform Limited - IR Director [2] -------------------------------------------------------------------------------- Thank you. I'm pleased to welcome you to Arco's third quarter 2022 conference call. With me on the call today, we have Arco's CEO, Ari de Sa Cavalcante Neto; and Arco's CFO, Roberto Otero. During today's presentation, our executives will make forward-looking statements. Forward-looking statements generally relate to future events or future financial or operating performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those contemplated by these forward-looking statements. Forward-looking statements in this presentation include, but are not limited to, statements related to our business and financial performance, our expectations and guidance for future periods, our expectation regarding strategic product initiatives and their related benefits and our expectations regarding the market. These risks include those set forth in the documents that we issued earlier today as well as those more fully described in our filings with the Securities and Exchange Commission. The forward-looking statements in this presentation are based on the information available to us as of the date hereof. You should not rely on them as predictions of future events, and we disclaim any obligation to update any forward-looking statements, except as required by law. In addition, management may reference non-IFRS financial measures on this call. The non-IFRS financial measures are not intended to be considered in isolation or as a substitute for results prepared in according to IFRS. We have provided a reconciliation of these non-IFRS financial measures to the most directly comparable IFRS financial measure in our press release. Please note that except for revenues, gross margin, selling expense, G&A and cash flow from operations, all other financial measures we disclose here are non-IFRS, and growth rates are compared to the prior year comparable period, unless otherwise stated. We also note that year-over-year comparisons are affected by acquisitions that were not included in our 2001 financials. Let me now turn the call over to Ari, Arco's CEO. -------------------------------------------------------------------------------- Ari de Sa Cavalcante Neto, Arco Platform Limited - Founder, CEO & Director [3] -------------------------------------------------------------------------------- Thank you, Carina. Otero and I would like to present 3 main topics today. First, the conclusion of the 2022 cycle with 100% of ACV recognition to a top line of BRL 1.561 billion, representing a 48% year-over-year growth. Profitability improved in 2022 cycle with a 2.3 percentage point increase in adjusted EBITDA margin. Second, the significant improvement in the free cash flow to firm in the first 9 months of 2022, mainly driven by a more efficient operation, healthier working capital dynamic, lower effective tax rate and lower CapEx as a percentage of revenues. We are reaffirming the adjusted EBITDA margin guidance for 2022 and expect to be closer to the bottom of the range. And third, the outlook for 2023 with commercial cycle for our pedagogical solutions, indicating a strong 24% organic growth for the 2023 cycle and integration and efficiency initiatives leading to a better cash generation profile. We are maintaining the adjusted EBITDA margin guidance for fiscal year 2023 at 36.5% to 38.5% and reducing the CapEx guidance to 8% to 10% of net revenue. This implies an EBITDA minus CapEx margin above pre-IPO levels. Finally, the conclusion of ISAAC acquisition is progressing well. The Brazilian antitrust agency approved the acquisition of November 16, and we expect the closing to take place on January 2, 2023. In the meantime, we have a multifunctional team working in the backstage to make sure we're ready to integrate ISAAC and start extracting synergies gained from day 1. Moving to Slide 5. After 2 years delivering net revenue below the ACV as COVID-19 led to students dropping out of the school due to the healthy and economic reasons, we delivered 100% of the 2022 cycle ACV for both core and supplemental segments. This outcome translates into a 48% year-over-year top line growth or a 34% organic growth when excluding solutions acquired in the cycle. On Slide 6, we show that the strong year-over-year top line growth was followed by an increase in profitability as we integrate our operations and start to benefit from the scale we created over time. As a result, cash gross margin increased 70 basis points to 80% and adjusted EBITDA margin increased 230 basis points to 33.7% for the 2022 cycle. I will now turn the call to Otero, who will continue the presentation. Otero, please go ahead. -------------------------------------------------------------------------------- Roberto Rabello Otero, Arco Platform Limited - CFO [4] -------------------------------------------------------------------------------- Thank you, Ari, and good evening, everyone. Thank you for your time. As we concluded our M&A agenda this year resulting in a complete and high-quality portfolio of pedagogical solutions, the focus turned 100% to integration and efficiency so we can benefit from our scale and generate more value to our stakeholders. Several initiatives were put in place since 2021, and the results for the first 9 months of 2022 reflect our strong commitment to delivering higher cash generation with important improvement in 4 main areas; adjusted EBITDA, working capital, taxes and CapEx. Moving to Slide 9, we managed to deliver flat cash gross margin and flat adjusted EBITDA margin in the first 9 months of 2022, despite the nonrecurring impact in the second quarter from stronger-than-usual additional orders. That was only possible as we already generated over BRL 90 million in savings among costs and G&A initiatives in the period or 14% above the BRL 80 million in savings expected for the full year as we disclosed in our 2021 Arco Day last December. Those initiatives include integrated printing and unified supply chain and tech teams on the cost side and reassessment of corporate processes on the G&A side, leading to reduction in third-party services, optimization of IT tools and resizing of corporate personnel. On Slide 10, working capital became an important driver of cash generation as payment terms returned to normality once schools resumed in-person classes as we revisited our collection process, implementing better practices that aligned commercial and collection efforts as we added collection metrics to the salesforce scorecards. As a result, we saw days of sales outstanding reducing to 98 days, 6% below third quarter 2021 level and much closer to pre-pandemic levels. And we also saw delinquency down to 4% this quarter from 6% in third quarter 2021 and 10% in the worst period of the COVID-19 pandemic. Moving to Slide 11, Arco has been incorporated in acquiring businesses since 2019, unlocking tax benefits and significantly reducing its effective tax rate over time. Our most recent incorporation was Geekie concluded in October with expected future annual tax savings of at least BRL 16 million. As a result, the 9 months 2022 effective tax rate was 8.7%. And we expect to end 2022 fiscal year with effective tax rate around 10% versus almost 18% in 2021. Finally, on Slide 12, we ended the first 9 months of the year with CapEx amounting to BRL 121 million or 11% of net revenues versus 15% in the 9 months of 2021. This almost 400 basis point reduction reflects a higher level of cooperation across business units and higher discipline in the content development process as well as IT projects focused on a centralized backbone. Slide 13 showcases the result of all initiatives combined, 130% increase year-over-year in the free cash flow to firm in the first 9 months of this year. To conclude this section of the presentation on Slide 14, we present our cash position and financial investment position and obligation schedule as of September 30. We ended the period with BRL 1.015 billion in cash and BRL 1.2 billion in loans and financing and BRL 1.5 billion in accounts payable to selling shareholders, translating into 3.4x net debt to adjusted EBITDA multiple, down 50 basis points from the third quarter of 2021. We are confident our cash position, combined with future cash generation from operations is enough to cover for our short-term obligations. I'll now turn the call back to Ari. Ari, please go ahead. -------------------------------------------------------------------------------- Ari de Sa Cavalcante Neto, Arco Platform Limited - Founder, CEO & Director [5] -------------------------------------------------------------------------------- Thank you, Otero. As I mentioned in our second quarter in 2022 earnings call, we have already seen the results from our initiatives on several fronts. In addition to the achievements mentioned by Otero, the work we're conducting with the consulting firm is progressing well, and we have already made real progress to make Arco a leaner and more agile company. Metrics such as operating cash flow generation and collection from delinquent schools, were added to our leadership KPIs. And all of that with growth. We had a successful commercial cycle for 2023 school year as schools had their operations normalized. We resumed our in-person interactions visiting the schools and hosting in-person events, key elements to create and sustain a trust working relationship with our clients. Moving to Slide 16, we present our ACV guidance for the 2023 cycle of approximately BRL 1.930 billion, representing a 24% organic growth versus 2022 cycle. We were able to achieve historical levels of retention of partner schools, while increasing prices on average 2 percentage points to 3 percentage points above expected inflation. New student intake and upsell for both core and supplemental solutions showed strong organic growth year-over-year and successful cross-sell initiatives led to an increase in the number of schools in our core base that uses at least 1 supplemental solutions to a 17% penetration. I would like to highlight the performance of COC, a solution we acquired at the end of last year and already delivered results after its first commercial [cycle] called Inside Arco with relevant improvement on all fronts. NPS scores improved 17 points to 66 and retention rate increased 15 percentage points to 95%. Additionally, the average price increase was approximately 4 percentage points above expected inflation and total year-over-year ACV growth of COC was over 30%. Moving to Slide 17, we expect Arco to continue to improve profitability, as we maintain the adjusted EBITDA margin flat at 36.5% and 38.5%, but we reduced the range for CapEx as a percentage of revenue to 8% to 10%. We will potentially take our adjusted EBITDA minus CapEx metric to the highest historical level. With that, we conclude our presentations. We will turn over now to Otero for final remarks. Thank you. -------------------------------------------------------------------------------- Roberto Rabello Otero, Arco Platform Limited - CFO [6] -------------------------------------------------------------------------------- Thank you, Ari. I would like to conclude this call presenting recent developments as set forth in last night's press release and SEC filing. Arco's Board of Directors received last night, a preliminary non-binding proposal from General Atlantic and Dragoneer to acquire all of the outstanding Class A common shares of the company that are not held by them or the founding shareholders. The proposal states that the Founders support the transaction and will roll over 100% of their Class A and Class B common shares in the proposed transaction. In the event, a transaction is consummated they will maintain the same economic and voting interest in the company as they currently have. The purchase price for each Class A common share in the proposal is $11 in cash. The purchase price was proposed by General Atlantic and Dragoneer with no involvement from the Founders in the decision related to the purchase price being offered. This price represents an approximately 22% premium over yesterday's closing price of $9.04 per Class A common share. Please note that there can be no assurance that any definitive offer will be made that any agreement will be executed or that this or any other transaction will be approved or consummated. At this point, we have no additional information other than that was disclosed in the filings and cannot comment on the transaction. Therefore, we dedicate today's Q&A session to comments related to Q3 earnings. The company will keep investors and the market informed as new information is available. Operator, we can now open for questions. Thank you. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Our first question comes from Vitor Tomita with Goldman Sachs. -------------------------------------------------------------------------------- Vitor Tomita, Goldman Sachs Group, Inc., Research Division - Associate [2] -------------------------------------------------------------------------------- Two questions from our side. The first one is that we -- it's on provisions. We had another quarter of bad debt provision reversals due to good collections. Thinking about working capital dynamics going forward, how much longer may we expect to see that effect? And could we still see provision reversals in the fourth quarter or even into 2023? That would be our first question. And our second question would be on ISAAC. Could you give us some color on how ISAAC has performed since the acquisition announcement in early October? And on whether you reiterate the guidance for ISAAC that was provided at the acquisition announcement in October. -------------------------------------------------------------------------------- Roberto Rabello Otero, Arco Platform Limited - CFO [3] -------------------------------------------------------------------------------- Vitor, Otero here. Thank you so much for the questions. So, looking at our working capital dynamics, I mean if we decompose working capital, I would say that on accounts receivable, we are pretty much back to what we consider to be a more normalized level. Even if you compare to pre-pandemic days of receivables, we're very close to that level. And we have to also factor in that core versus supplemental has a different profile, okay, in terms of days of receivables, supplemental a bit longer than core and as supplemental grow in terms of size versus where it was in the past, it also changes a little bit of the, let's say, steady-state level of days of receivables. So, there is still some room to improve and to normalize, okay, especially with this 2023 sales cycle, where we saw, let's say, the duration of the new contract is pretty much in line with normal levels. So, say that in 2023, we fully normalize, but the size or the room for improvement is more limited. Where we will focus and where we expect to extract a further improvement in cash cycle is in suppliers and inventory in case. So, those inventories suffered, especially during the pandemic where we saw demand below what we have been producing and expecting to deliver to our clients and we delayed orders. In the beginning of this year we also saw an increase in inventory days, so this is a line that we expect a more important contribution to cash cycle normalization over the next 2 years and suppliers as well. And in the case of suppliers, it's mostly because of the centralization in our supply chain area and the negotiation with the trading companies as Arco consolidated, right? So those will be, I would say, if we think from a contribution to cash cycle, say the suppliers and inventory from now on will be more important than receivables. In terms of ISAAC, it's limited what we can comment, but what we can say is that performance so far has been quite strong. They have actually exceeded their internal goals for new school addition for this year, okay? So, they have surpassed what they expected to achieve. They seem super excited. I think the more we know, the more we learn about their operations, the more -- the higher our conviction that value creation [announced] with this combination, right? So again, performance has been very strong. They have hit their goals for this year already, and we expect the closing to occur in the first week of January, okay. So, we'll have a full year of consolidated results with ISAAC in 2023 and no impact to Arco's result in 2022. -------------------------------------------------------------------------------- Operator [4] -------------------------------------------------------------------------------- Our next question comes from Lucca Marquezini with Itau BBA. -------------------------------------------------------------------------------- Lucca Generali Marquezini, Itaú Corretora de Valores S.A., Research Division - Analyst [5] -------------------------------------------------------------------------------- Ari, Otero, we've got 2 questions from our side. The first one will be regarding the ACV guidance. So, considering the price increase above inflation, can you please provide more detail on what has enabled such increase? Was there an improvement in the sales mix or the company was able to increase prices above inflation on a same-school basis? And then the second one would be regarding the guidance for margin. So, the company expect the margin to be flattish next year, even though there was the capture of cost and SG&A savings was faster than expected. So, could you please comment on what would be the detractor for the margin in this scenario? -------------------------------------------------------------------------------- Roberto Rabello Otero, Arco Platform Limited - CFO [6] -------------------------------------------------------------------------------- Lucca, Otero here. Thanks for the question. So, on the ACV guidance, yes, that's correct. So, this was a cycle where we were back to the real price increase to our base of clients, back to a more normalized profile of cohort and net dollar retention rate in our base of clients. So, it was an important contribution. But also -- but when we look at the number of new schools being added to our base, it was also quite relevant. I would say that even though we're not breaking down the number, core grew above 20% and supplemental pedagogical solutions grew above 30%, which was, I would say, a profile of growth in terms of the difference between core and supplemental that you were used to seeing before the pandemic, all right? So more or less, this was the profile of growth when we break down between core and supplemental. I would say the key highlight of this cycle was COC, which is a brand that belongs to Pearson. It's our first sales cycle with this brand and the ACV grew over 30%, and it's pretty much a core solution, right? So, it's a core solution growing over 30%. So, it's remarkable. I mean when we see -- when we decompose this growth, I would say that we consider to be a very high-quality way of growing the brand because we saw NPS improving, we saw retention increasing substantially to 95%, price increase around 12%, 13%, ended up generating this 30% ACV growth for a brand that had been shrinking in size for the past 2 years. So, I think it shows the rationale -- it confirms the rationale of the acquisition, the strength of the brand and how fast we can turn around an operation like that. So, we are super proud of COC's performance this year. In terms of the margin guidance, you're right. I mean the range remains the same, but the expected margin for the year of 2023 imply an expansion versus 2022, okay? So, we don't expect 2023 margin to be at the bottom of the range. We are playing safe here in terms of the range we're bringing. We still, I would say that EBITDA margin expansion could be stronger than that, okay? We are seeing -- actually, we saw in the industry, pulp and paper prices increasing in the market. So, this partially offsets the expected cost efficiency gains that we initially expected to collect next year. Still next year, we will see another round of G&A dilution and for the first time, a more efficient, a go-to-market strategy in case. So, this is something that we expect to show in our P&L next year is a got-to-market or the CAC becoming more efficient. And as we showed on the guidance presentation, we are reducing the CapEx range for next year to between 8% to 10%, which, I mean, is getting really closer to the levels before COVID. And when we look at the EBITDA minus CapEx metric, which we consider to be a very fair metric to analyze the basis given the profile of the investments that we make in content and technology, we see a very important expansion getting above -- actually getting to our expected highest level historically, okay? -------------------------------------------------------------------------------- Operator [7] -------------------------------------------------------------------------------- Our next question comes from Fred Mendes with Bank of America. -------------------------------------------------------------------------------- Frederico P. Mendes, BofA Securities, Research Division - Director and Head of the LatAm TMT & Healthcare Sectors [8] -------------------------------------------------------------------------------- I have 2 questions. I know there is a lot of limitation from what you can say. But it's just more towards the process itself about the buying offer. The first question is, I mean, you are incorporating in the Cayman Islands. So, just wondering if there is some kind of specifics that you should know that will be different from when a company is incorporated in the U.S. or Brazil from this process from the bidding office? That will be my first one. And then my second one, just to make sure the controlling group will not be participating, either GA on the special committee. So, we have 8 people on your Board. So, we talk about 4 people that will be composing this [company] if I'm correct. And do you need a consensus decision among the Board? How that work in order to close the deal? -------------------------------------------------------------------------------- Roberto Rabello Otero, Arco Platform Limited - CFO [9] -------------------------------------------------------------------------------- Fred, Otero here. Thanks for the questions. So, with regards to specifics about being a Cayman domiciled company, unfortunately, I cannot comment, I cannot provide any more details than those that were disclosed in the letter and in the Joint Bidding Agreement. So, both documents were disclosed and they describe a little bit of the mechanics here. So unfortunately, I cannot comment on anything that is not there, unfortunately. With regards to the committee, so as you said, an independent committee will be formed by the independent board members with the exclusion of the those representing the General Atlantic, so basically, the independent committee will be composed by independent board members, except Martin Escobari, okay? So, that's pretty much it. -------------------------------------------------------------------------------- Operator [10] -------------------------------------------------------------------------------- Our next question comes from Javier Martinez with Morgan Stanley. -------------------------------------------------------------------------------- Javier Martinez de Olcoz Cerdan, Morgan Stanley, Research Division - MD [11] -------------------------------------------------------------------------------- Otero, I know that you said that you don't want to comment about the offer. So, let me ask it in a different question, not about the offer but about the controlling family. Ari, what are the strategic reasons for the family to support the offer? Is there any transaction in the pipeline that justify going that way? That would be my first question, please. -------------------------------------------------------------------------------- Roberto Rabello Otero, Arco Platform Limited - CFO [12] -------------------------------------------------------------------------------- Javier, Otero here. I'm really sorry. I mean it's really limited what we can comment or provide in terms of opinion or disclosure here. So, we have to be really limited to what has been disclosed yesterday in the letter sent to -- and the contents that was in the letter sent to the Board is pretty much what we can discuss and comment. And the strategic rationale was not disclosed in the letter, and that's reason why I cannot comment or discuss here, I'm sorry. -------------------------------------------------------------------------------- Javier Martinez de Olcoz Cerdan, Morgan Stanley, Research Division - MD [13] -------------------------------------------------------------------------------- And my second question will be on bookings. I wonder if you can give us some color -- quantitative or qualitative color on the evolution of supplemental versus core? -------------------------------------------------------------------------------- Roberto Rabello Otero, Arco Platform Limited - CFO [14] -------------------------------------------------------------------------------- Yes. Absolutely, Javier, thanks for the question. So supplemental, as I said, when you look at the pedagogical solutions, and I say pedagogical solutions because we have technology features that are also booked under supplemental, right? So, just not to mess things up here. So, when you look at the pedagogical subscription supplemental products, we saw above 30%, a mid-30s percent growth for 2023. And when we exclude international school from this number, the number was above 40% for 2023 in case. So, we saw a very important growth. I would say that in the beginning of the year, we have been calling attention that this year would be a year where social-emotional learning would see an important growth. We saw that. So, it was confirmed and also in the other 2 bilingual products as well, right? So, I would say that from a quality perspective, this to be -- to have been a very good quality cycle with supplemental again, mid-30s. And when we exclude a brand that we don't have fully control, right, it was above 40% for next year. Cross-sell continued to be a very important source of growth. We expanded a few basis points -- percentage points, sorry, in terms of supplemental penetration in the core base, so it continued. But the addition of schools in what we consider -- in what remain blue ocean right, which are the schools that do not use core solutions yet was also quite strong. So, I think we saw probably a more normalized profile of new school addition with both non-core schools and core schools contributing to the overall growth. In Q4 earnings, we plan to disclose those in more detail. But from a more broad perspective, this is what we can share at this point, Javier. -------------------------------------------------------------------------------- Javier Martinez de Olcoz Cerdan, Morgan Stanley, Research Division - MD [15] -------------------------------------------------------------------------------- And my final question will be on margins. Just to go a little bit deeper on the question that we had before. So, I was wondering if you can give us some reference, once we have normalized pulp and paper and full integration of all the platforms and acquisitions, how far are we from maturity? So, how -- what level of margins do you see as reasonable once we are in that situation? -------------------------------------------------------------------------------- Roberto Rabello Otero, Arco Platform Limited - CFO [16] -------------------------------------------------------------------------------- Yes, I would say that we have -- we still have a few brands which we consider to be sub-scale. And this is a business of scale. Of course, it depends on how you operate the business. And I think that this is something that we are changing that we can better collect the gains of scale. But we still have some brands which are sub-scale. So as they grow, they contribute to the overall margins of the company. I mean it's easy to see the business in the medium term, with margins above 40%. I mean we have -- as you know, we have several brands with margins above 40%. And it's less about the average ticket. It's much more about the scale and the way you operate the business. I mean, as we've been centralizing what we consider to be centralizable without punishing the quality without adding risk to grow, we can accelerate the collection of that scale, right? So, we accelerate the curve of scalability of the brands and this is the idea. As we mentioned in the Q2 in previous earnings call, we have now pretty much 2 consulting firms working with us in those projects, which we consider to be extremely important. I think over the last years with the several M&As that we did, it becomes really important to accelerate this integration agenda, right? It is something that lagged and now becomes a very important focus for us, right? So, this will accelerate the absorption of this profitability coming from scale. Okay, Javier? So, it's pretty realistic to imagine the business crossing 40% EBITDA margin in a few years. -------------------------------------------------------------------------------- Javier Martinez de Olcoz Cerdan, Morgan Stanley, Research Division - MD [17] -------------------------------------------------------------------------------- Roberto, if I may ask a final question, I was wondering, ISAAC shareholders. So once the deal gets approved, obviously, because they will be as part of the minority shareholders getting $11 or they will roll over like the family, the controlling family? How -- I don't think you have mentioned that? -------------------------------------------------------------------------------- Roberto Rabello Otero, Arco Platform Limited - CFO [18] -------------------------------------------------------------------------------- Javier, I mean, I cannot speak for them. If at that point in a theoretical transaction, they are part of the shareholder base, they will be treated as other minority shareholders, right? So -- but I mean, I cannot comment on that. It's all theoretical at this point. -------------------------------------------------------------------------------- Operator [19] -------------------------------------------------------------------------------- (Operator Instructions) At this time, we have no further questions in the queue. That concludes Arco's third quarter 2022 earnings call. Thank you very much for your participation and have a nice day.