SAPPHIRE — earnings call

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Questions and answers

Moderator · Conference Operator

The first question is from the line of Percy Panthaki from IIFL.

Percy Panthaki

Hi, sir, just wanted to understand firstly for your India Business.

Typically, what would be the Q1 ADS as a percentage of the full year ADS in a normal year?

Vijay Jain

Q1 is typically is on annual average.

In terms of seasonality, I can just explain how the quarter wise seasonality plays out for Sapphire Foods.

Q1 is typically annual average at a restaurant EBITDA level and at a corporate EBITDA level.

A quarter 2 we see a slight dip on account of seasonality, especially on our KFC business because of the various festivities, the various religious activities, the Shravan's in the North, Shravan's in the West, the Navratri's, which impacts us the quarter 2 seasonality which gets more than compensated by our Q3 performance, which is a festive quarter where the fields actually goes up.

So, quarter 3 is higher than the annual average and quarter 4 is typically the annual average.

So Q1 and Q4 is annual average, Q2 drops a bit, which gets more than compensated by the Q3 performance.

Sanjay Purohit

And that Q2 drop is largely North and West.

And if I just looking at North and West and nonvegetarian that is the drop.

From a Pizza Hut perspective, I think it is reasonably stable right through the four quarters, perhaps quarter 3 is slightly higher because of the festival.

Does that answer your question, Percy?

Percy Panthaki

So, I was just saying so Q1 is in line with annual average both on ADS as well as EBITDA margins?

Sanjay Purohit

Yes, largely yes, Percy.

You were able to hear the answer Percy, because I thought you got dropped off, you were able to get our answer on the entire seasonality Q1, Q2, Q3?

Percy Panthaki

Yes, I was able to hear you, yes.

Second question is on Sri Lanka.

So, just wanted to understand in terms of the margin directory so Q1 has done 15.5%, but was it a sliding scale across the three months, I mean the exit margins for the quarter were they significantly lower and therefore Q2 margins on that trajectory, do you expect it to be below Q1 for Sri Lanka?

Vijay Jain

Again, we don't get into quarterly guidance but what I can tell you is we don't anticipate overall Q2 absolute EBITDA for Sri Lanka to be any worse off than quarter 1, largely should remain on the same trajectory as quarter 1 in terms of absolute EBITDA.

And why I'm calling out absolute EBITDA again and again, because this is the year where it's going to be very difficult to predict the percentage margin, the way there is a high inflation in the country, the price calls cannot be every week, price calls, right?

And again, at the same time you to hold on to the Sapphire Foods India Limited August 11, 2022 transactions so, heartening part is that we have been able to hold on to the transactions in quarter 1.

So, the way we are going to drive this year's P&R in Sri Lanka in LKR terms, can we hold on to the previous year's LKR EBITDA and drive upon that and grow up on that.

So, we anticipate a drop, when you translate that EBITDA into Indian currency last quarter had called out there would be a drop on translation.

We anticipate this drop could be anywhere between now INR 10 crore to INR 20 crore, this was overall INR 50 crore EBITDA last year, roughly I'm giving you in at a corporate level.

So, that could be a INR 10 crore to INR 20 crore at Indian Rupees level.

But again, as I said this has been more than compensated by our India performance and the overall mix of Sri Lanka business at EBITDA level has come down to 10%.

Percy Panthaki

Understood.

So, basically the absolute EBITDA that you have done in rupee terms in this quarter, that kind of average quarterly run rate is sort of sustainable for the full year?

Sanjay Purohit

Yes, Percy.

Moderator · Conference Operator

The next question is from the line of Jaikumar Doshi from Kotak.

Jaikumar Doshi

Just a follow up on what Percy asked on Sri Lanka.

Look, if I were to sort of -- from what I recall, your brand EBITDA for Sri Lanka was around INR 70 crore, INR 72 crore last year, and corporate EBITDA was INR 50 crore, INR 52 crore.

So, there is a corporate overhead of INR 4 crore to INR 5 crore per quarter.

Then I look at this quarter's INR 10 crore brand EBITDA, I would assume that corporate EBITDA would be INR 5 odd crore.

So, when you're indicating that corporate EBITDA for Sri Lanka will not be more than INR 10 crore, INR 20 crore lower than last year, you were indicating INR 30 crore for full year at least.

And which means that you are assuming, significantly higher or rather in absolute terms versus INR 5 crore or INR 6 crore this quarter, you're expecting improvement.

So, are you seeing any improvement of the ground or you think that the political stability will gradually sort of translate into recovery or allow you to take more price increases to offset inflationary pressure?

Vijay Jain

So, bit of correction in those numbers, Jay.

So, when you look at INR 5 crore corporate overhead last year, when you translate into Indian currency even that translation would drop, right?

INR 5 crore to INR 3 crore and that's why the math if you're estimating INR 10 crore restaurant EBITDA, the math says that it has to be in the range of INR 7 odd crore.

That's why I said it should surpass INR 30 odd crore for the current year.

I think that might.

Sanjay Purohit

Restaurant EBITDA, yes, you understood it, yes.

Jaikumar Doshi

Perfect.

Second question is, this quarter we have seen very strong recovery or sequential performance, or more or less full recovery in dine-in for all dine-in centric QSR, be it Mc D be it sort of KFC, we witnessed some weakness in UBs results versus expectation.

Today and your channel makes it clearly indicates that dine-in is still 85% recovery versus FY20 level.

You're seeing similar sort of trends for Pizza Hut of Devyani as well.

So, do you think Pizza as a category, this is a new normal where more or less, all stores will settle at a lower post pandemic will settle at a lower dine-in absolute sales than where it was earlier.

And if that is the case, so are you sort of -- are you getting that feeling first, could you give us some thoughts or insights there?

Sanjay Purohit

Not so at all, Jay.

I mean, if I just look at some of our strong malls, I mean, if I just look at Bombay, Mumbai, and if I say, Infiniti, Inorbit Vashi, Seawoods -- sorry Seawoods we are not there, some of these malls our dine-in is back, in high street dine-in also is back.

I think it's just a matter of time, that we'll see full recovery on Pizza Hut also.

It is pockets where it has not recovered fully so, Karnataka still today it -- or in quarter 1, I have still not recovered fully.

And I think when we speak to other people, Bangalore from a retail perspective was still not you know, back to pre-COVID levels.

So, I think pizza as a category, we know we can't extrapolate it at least for Pizza Hut run by Sapphire not at all.

Sapphire Foods India Limited August 11, 2022

Jaikumar Doshi

Understood.

Now you mentioned that there are specific pockets in Karnataka, Bangalore some malls where you are seeing recovery.

When you talk to other brands and at least I'm sure we would, you don't manage KFC there, operate KFC in Bangalore, but is KFC recovery or let's say Mc D recovery in those malls, those pockets also lower than pre pandemic.

Have you had a chance to …

Sanjay Purohit

No, I don't know that, Jay.

Because we don't run KFC in Karnataka.

So, I'm not able to comment on that.

Jaikumar Doshi

Understood.

Now, my final question is for Vijay.

So, Vijay you did mention that first quarter, EBITDA is typically average of full year.

So, it means that INR 72 crore is, everything being normal should ideally mean you would do INR 288 crore of EBITDA full year.

Does that factor in the store addition that you've also planned or this is the bare minimum and store addition could add a bit more?

Vijay Jain

So, Jay, again, I would not get drawn into annual number over here, annual number guidance, I just tried to give an indication on trend, how quarter 1 is and how quarter 2, quarter 3, quarter 4.

At Sapphire we would always avoid giving a quarterly or annual number-based guidance so, that's for you to

Jaikumar Doshi

That trend takes into consideration store addition, is that right?

Vijay Jain

So, Jay, what I actually meant was percentage margins, right?

So, percentage margins of 13% is what we said we were, is typically an annual average.

So, you are drawing me into a conversation where how much is the absolute EBITDA considering the store additions, I'll not get drawn into that conversation, Jay.

Sanjay Purohit

Jay, and plus in any case, your model is so detailed that we might have to come to you to say what will happen to us in two years down the line.

Jaikumar Doshi

Sir, I was tempted to ask this question because I know you don't guide but Percy was asking that question on ADS trends, and you yourself indicated EBITDA trends, so I thought I might as well push my luck?

Moderator · Conference Operator

The next question is from the line of Kapil Jagasia from Edelweiss Financial Services.

Kapil Jagasia

First of all, congratulations for a great set of numbers specially because of disruption in Sri Lanka.

Sir, my question pertains to Sri Lanka operations only.

So, if you could let us know, what would be the inflation for a raw material basket in Sri Lanka and like what would be the cumulative prices hikes taken by us so far in this?

Sir, if I'm not wrong, you had mentioned something like 15% price hike taken in the last quarter so, any more price hikes taken this quarter, the ballpark number would be fine for both?

Sanjay Purohit

Yes, so, roughly another 15% to 16% price hike in quarter 1 FY23 whereas the inflation would be anywhere between 30% to 40% for the quarter.

Kapil Jagasia

So, the cumulative inflation would then that would be like if we look from the large 12-month perspective?

Vijay Jain

It would be upwards of 60 odd percent.

Kapil Jagasia

So, are we envisaging like further price hikes or like are we like done for now, if the situation remains the same?

Vijay Jain

Too volatile, the initial indications of July, August says that the things are improving but too early to take a call either way, so it's volatile, we'll just keep a watch how quarter 2 passes by, I think from quarter 3 onwards, we should be a bit more confident about how this situation goes in which direction.

Kapil Jagasia

My next question is if I look at the Pizza Hut India Ads numbers for this quarter is at 61,000 and, you know, that's like FY19 level, so we have kind of, you know, reached those levels.

But Sapphire Foods India Limited August 11, 2022 if I look at the Domino's number at around 84,000, 85,000.

So, we are a good 30% away from reaching that.

So, I'm sure we plan to aspire to reach those levels or even surpass it.

So, what would be the two, three key initiatives that we would be taking over than near to medium term to improve this number?

Sanjay Purohit

So, I think one is so plugging this gap in our product price portfolio.

This is a large, this forms a large portion of the overall pizza market, pizza under INR 100 and that has been one of our lacunae.

Now it was important for us to when we launch something here, to do it in a manner that is quite Pizza Hut then therefore from a product perspective also, we are known for superior product so, it has to deliver that kind of Pizza Hut product superiority.

So, I think this one is, this launch is one important factor in us improving ADS.

I think apart from that, as we continue to get our execution right, improve our accessibility on the brand so our product innovation at the top end so, both the San Francisco dough as well as Momo Mia Pizza, all of them have done well.

We've done a couple of pasta launches.

So, I think the story on Pizza Hut continues to be strengthen the areas where we win, which is product and innovation and our dine-in omni channel experience on value, on our regular range we have, we are now competitive versus the principal competitor.

And we have plugged one big gap in the portfolio.

And on delivery, we continue to hold and improve and improve accessibility.

So, this is continuing to execute what we have called out on the brand, Kapil.

Vijay Jain

And sir, just to add to that Kapil, while you're seeing bridging gap versus the number 1 competitor, I don't think we're in that particular race, because again the model allows us, our omni channel allows us to deliver a higher profitability at lower ADS as well.

So, we've been -- I've been talking about our new compact omni channel model which we have been opening since April 18, which is already now moving from mid-teens to high teens.

And in this model if the ADS goes to a 70,000 as well, we can deliver a 20% kind of a profitability.

So that's the power of that model.

I'm not saying that we can deliver 70,000 tomorrow, but we don't have to reach the level of 80,000 odd to deliver that kind of profitability.

This is because of our dine-in mix, which gives us higher profitability.

Kapil Jagasia

And I'm sure like you would be spending a lot on AMP also, to improve this number like going forward, like just a ballpark number, just like a bookkeeping number, what the AMP spend would be for us this quarter, as percentage of sales?

Vijay Jain

6% of our revenue is towards marketing.

Kapil Jagasia

And this is like significantly higher than the 4% earlier, right?

Vijay Jain

It was always percent 6%, so, 5% goes to National Kitty which Devyani would spend nationally on the brand and one person happens to local sales marketing.

Kapil Jagasia

So, we are kind of looking to settle at the number, 6% can be like,..?

Vijay Jain

It was always 6% and we are happy with that particular percentage, it's not either going down or going up at this level.

Moderator · Conference Operator

The next question is from the line of Krishnan Sambamoorthy from Motilal Oswal Institutional Equities.

Krishnan

Are you surprised by the resilience of the takeaway channel particularly for Pizza Hut, sustaining at 16% despite the recovery that's happening on dine-in?

And what do you expect this proportion to be, going forward?

Vijay Jain

So again, while mix are good to look at, we don't really predict mix because what happens if there is a one channel performing far superior to the channel, the mix can go up and down.

What we look at is at what levels we are compared to the previous quarters or the previous years and takeaway at 110% I think we're comfortable at this level and from here as the overall business grows with our flavor fun addition, I think the growth should come across all the three channels and not just one channel versus the other, but difficult to comment on our mix.

Sapphire Foods India Limited August 11, 2022

Sanjay Purohit

So, I think we have to look at absolute ADS here, Krishnan and 110% we have recovered perhaps slightly above FY20. That's the way to look at it.

Krishnan

My question was more from the perspective that I would have thought that once dine-in comes back, COVID restrictions ease, there was an expectation at takeaway as the channel may decline and it has still sustained at higher levels?

Sanjay Purohit

So, I think someone else also asked this question and we have been consistently saying that dine-in will come back, when dine-in comes back it will overall add to the sales, we don't expect either takeaway or delivery which is really off premise consumption, though takeaway someone is coming to our premises and ordering, they're still taking away and consuming it at home, and that component of our business continues to hold.

So, it's just contributions here are less meaningful than how we have recovered from an absolute basis.

Moderator · Conference Operator

The next question is from the line of the Devanshu Bansal from Emkay Global Financial Services.

Devanshu Bansal

Congratulations on a great set of numbers.

I wanted to check with this. plugging of a key gap through flavor fun in Pizza Hut.

Are we also revisiting our 7%, 8% SSSG guidance that we have provided for this brand?

Sanjay Purohit

No, we are not revising our guidance at this moment.

Let it play out Devanshu, and then we will see.

But we are very excited about this launch.

Devanshu Bansal

And a successful traction here can actually bump up our SSSG, is this a right way to look at it?

Sanjay Purohit

Yes, potentially, yes.

Devanshu Bansal

And you indicated that Q2 typically for KFC sees a decline in ADS due to festive season.

And can you sort of ballpark quantify what is the level of decline in Q2 ADS versus Q1 ADS?

Sanjay Purohit

So, first of all, I just want to explain this, this happens because our KFC is largely North and West.

So, we've got Tamil Nadu also.

When you look at us, we are perhaps impacted slightly more, we recover also equally fast as soon as for example right now Shravan ends in North today, from tomorrow onwards, people will do revenge KFC eating.

But for the short term, there is this norm that we see.

Devanshu Bansal

Can you quantify this ballpark based on historical trends?

Vijay Jain

So again, we don't want to get into a specific quarterly numbers, what I can tell you is again at a restaurant EBITDA level, typically quarter 2, we see 100, 250 basis points kind of a drop at a KFC level, due to seasonality factor.

Again, depends upon where the Navratri are, and which quarter it is falling, sometime it falls in quarter 2 versus quarter 3, partially it falls in quarter 2 versus quarter 3 and the same recovery happens in quarter 3.

So internally, the way we look at is quarter 2, quarter 3 combined, that quarter 2, quarter 3 combined gives us the annual average for us.

Again, this year, the Navratri's starts from last week of September.

So again, we'll have that last week of September Navratri impact.

So, difficult to predict quarter on quarter but that's the range we see an impact at a restaurant EBITDA margins level.

Devanshu Bansal

Got it.

And we took a certain impairment charge for Sri Lanka operations in this quarter, though it was a non-cash charge, but just wanted to check, do you also foresee any such impairment for Sri Lanka operations?

Vijay Jain

So again, at least not at this point in time, because we continue to deliver our Lanka numbers in LKR terms so the business continues to grow over there, even in the current quarter, the LKR terms we have actually grown our profitability.

And again, for the full year if you're able to deliver the same number as last year or marginally grow our EBITDA in absolute terms, I don't think it will require to take an impairment charge.

But again, the situation needs to be monitored quarter on quarter.

Sapphire Foods India Limited August 11, 2022

Devanshu Bansal

Sue.

And lastly, what is the CapEx inflation that you're seeing, both for India and Sri Lanka operations?

Vijay Jain

Sorry, come again?

Devanshu Bansal

What is the CapEx inflation that you're seeing, both for India and Sri Lanka businesses?

Vijay Jain

So, for India business we’ve seen inflation in the range of anywhere 7% to 8% on both the brands, Sri Lanka this is in the range of 15% to 20% CapEx inflation.

Moderator · Conference Operator

The next question is from the line of Tejas Shah from Spark Capital.

Tejas Shah

Couple of questions from my side.

First, on ADS recovery, it has been heartening in both the brand, but inflation has also decent role to play in ADS numbers for the industry at large also.

So, just wanted to know in terms of volume, where are we tracking versus pre-COVID number, build transaction if you tracked.

I'm sure you must be tracking it if you're comfortable, giving any qualitative comment also on that?

Sanjay Purohit

So, I don't know the immediate numbers from an ADT perspective but I can explain to you ADT versus quarter 1 of last year, ADT and ADS are in the same trajectory.

Vijay Jain

In fact, our ADT has grown faster than our ADS.

So, both the brands in India we have grown transactions higher than the SSSG growth,

Sanjay Purohit

As compared to last year.

Vijay Jain

So that's heartening for us.

Tejas Shah

Any indication versus pre-COVID 1Q FY20?

Vijay Jain

From a transaction point of view, see if the recovery in case of KFC is just about 100% and we have taken a price increase so in terms of transaction, we would be trending below pre-COVID levels.

Same thing would be for Pizza Hut because we have taken a 5% price increase even in case of Pizza Hut as well.

Tejas Shah

Second question is, you spoke about how we have actually filled the gap in our portfolio.

Just wanted to understand when you go about menu innovation, it's always difficult to manage the conflicting objective of managing gross margin at that particular offering level and also obviously filling the gap in whitespace in the portfolio.

So how do you go about it?

Is it that each product, each launch matches certain gross margin thresholds or you play it at a very portfolio level and perhaps not at gross level but at EBITDA level it kind of compensates the margins?

Vijay Jain

So again, it's a combination of both.

So, each launch you have to individually measure the gross margin for each launch as well and then you have to predict what kind of mix it would turn out and that's why we do pilots in various states, before we actually do a national launch.

So that's at the individual level.

But again, at the overall level, not just the new product launches, if you see the event inflation has impacted us in quarter 1.

The idea is to keep our eye on ADS and the throughput with the dine-in recovery happening, it has added to the overall revenue of a particular store which gives us a huge operating leverage in terms of the cost management, it allows us to deliver an expanded restaurant EBITDA margin in spite of drop in gross margins.

So, this particular category which we have launched, flavor fun, we don't expect a material impact on our gross margin level.

It would definitely have some marginal impact, but not a material impact.

Whatever impact it will have, we expect it to get more than compensated by the throughput it will add to the store and thereby give us actually an expansion in the restaurant EBITDA margin.

Sapphire Foods India Limited August 11, 2022

Tejas Shah

Sure.

And Vijay, you made an interesting comment that the new format allows us to play this portfolio game, does it mean that some of those offerings are more profitable in delivery versus dine-in?

And hence now with the very omni value proposition that we have, we can experiment much with mastering the offerings?

Sanjay Purohit

No, that's not what Vijay meant.

What Vijay said was because of our strong dine-in contribution in an omni channel format, versus if you're dependent purely on deliveries or largely on delivery omni channel restaurant at slightly lower levels of ADS also potentially can deliver similar profitability at a restaurant level to the market leader.

I think that's the point that Vijay was making.

Moderator · Conference Operator

We'll take the last question from the line of Amnish Agarwal from Prabhudas Lilladher.

Amnish Agarwal

I have a question mainly on your new launch, which is the flavor fun pizza.

So, the question I have is that how is our product or what is the difference between our product viz-a-vis the Pizza Mania which a Domino's is selling from past so many years, that is one?

The second part is in terms of quality, like Pizza Mania usually it's said that it is not having mozzarella cheese, but cheese sauce.

So, is our product different from that?

And the third is what percentage of the total pizza market is in the less than INR 100 or you can say these kinds of products?

So, this is my question.

Sanjay Purohit

So, I don't know about the competitor's product.

I'll just tell you what flavor fun is all about.

And so, we didn't look at competition specifically and try to match their product, nothing.

What we did was if we had to have a pizza under INR 100, what is the kind of offering that a consumer would love from Pizza Hut.

And therefore, we've got five different sauces, we've got a cheesy dressing, so you're right, it's not mozzarella cheese, it's a cheesy dressing.

And we've got 12 different pizzas with different toppings.

So, I think, I mean, if you have the product like I said, you will understand as to -- so each pizza also has two toppings at a bare minimum.

So, this is the product that we have launched.

Roughly, I would think that -- so don't hold me to these numbers, Amnish, because we are looking at unorganized sector also in many of the markets that we operate.

There is an unorganized pizza market also, I would think in a value perspective, value sense, this would be anywhere between 20% and 25% and 35% of the market.

So, I'm talking of -- and like I said, there are markets where there are small local players even there, there is an opportunity for Pizza Hut to play.

And I'm inviting you again, Amnish, to go and try out the product.

It's sensational.

Moderator · Conference Operator

The next question is from the line of Percy Panthaki from IIFL.

Percy Panthaki

Can you give some idea on Sri Lanka, given the macro disruption, how many stores are we planning to add this year on a net basis?

Vijay Jain

So, again, we are not giving Percy annual guidance.

We said when we have 550 restaurants across the three verticals, we said we'll double it over three to four years.

We are holding on to that guidance.

So, this year we don't have a specific number but hopefully double-digit number even this year.

Sanjay Purohit

And for KFC and Pizza Hut, you're not giving annual guidance for the India addition?

Vijay Jain

No, none of the business.

Sanjay Purohit

None of the businesses we give an annual guidance.

Vijay Jain

So, again, three to four years will double the count and I think we're on track for that.

Sanjay Purohit

And I just wanted to ask your store openings this quarter, they should not be treated as run rate for the annual number, right?

Sapphire Foods India Limited August 11, 2022

Vijay Jain

No, Percy, you're asking the same question three different ways, but I'm not giving you annual number, 550 restaurants as of 31st December, across the three verticals will double it over three to four years.

Moderator · Conference Operator

The next question is from the line of Srinivas Iyer from Rock Fort Consultancy.

Srinivas Iyer

Congratulations for excellent numbers.

My question you have already to Percy Panthaki, but again I'll ask you.

In Q3 last year we opened 68 stores.

And why have we slowed down and we opened only 37 in this quarter?

Sanjay Purohit

So, Srinivas, we said this that it's not a quarter-by-quarter number that we are putting out there.

We are saying that 550 restaurants at the end of December, we will double that in three to four years' time.

I think we have spoken enough now about quarter-to-quarter performance, the 68 to 37 again is comparison that is really not what I want -- what we want to get into.

We're still holding on exactly what Vijay talked about.

And I think you can make your inferences from that is my submission.

Vijay Jain

Again, just to add to that, Srinivasan, you cannot really deliver exact number of numbers divide by four in each quarters, so you will have a quarter which will have a lower number a quarter which will have higher number.

Largely we should be able to hold on to the number annually and over a three, four-year period.

Srinivas Iyer

Understood.

Second question, compared to other QSR store, QSR company we are at a significant discount.

What is your plan to address this issue?

Sanjay Purohit

So, that you have to -- you are the person who'll tell us why we are at a discount.

All that we can do is stay focused on our business.

We will -- we are focused on our business.

I've said this earlier also, I don't look at the share price from a day-to-day basis.

I think people will understand our story and the way that we execute.

So, that's it, Srinivas, I'm saying, once you put out a buy order on the stock perhaps it will, I'm just joking, Srinivas.

But I think we are just focused on the business and to do well here, that's it, that's only thing that we can do.

So, I'm just saying from an interest of time perspective, perhaps we will try and close this conference call.

Anyone wishing to understand more, you know our channels, Rahul is our Head of Investor Relations and he will help any of you all understand any specific things.

Again, I want to reiterate we've had a really strong quarter in Sri Lanka, while we've grown well, from a Lankan rupee prospective, translated into Indian currency.

We have dropped, we believe that we should be able to hold on to this absolute level as we move forward.

But both KFC and Pizza Hut have had a very strong quarter.

And overall, from our sales, from a revenue, from a restaurant EBITDA perspective, from the outlook on the brands, we are very, very positive and confident about the future going ahead.

So, thank you all for joining in on the call.

I appreciate your patience and your efforts in understanding our business.

Thank you.

Moderator · Conference Operator

Thank you.

Ladies and gentlemen on behalf of Sapphire Foods India Limited, that concludes this conference call.

Thank you for joining us and you may now disconnect your lines.