Asbury Automotive Group Inc (ABG) 2007 Q2 法說會逐字稿

Good day, everyone and welcome to the Asbury Automotive Group Second Quarter 2007 Earnings Release Conference Call. Today's call is being recorded. At this time, for opening remarks, and introductions, I'd like to turn the call over to the vice president of finance and investor relations, Mr. Keith Style. Please, go ahead, sir.

Thank you. Good morning, everyone and thanks for joining us today. As you know, this morning we reported our second quarter 2007 earnings. The Press Release is posted to our website at www.asburyauto.com. If you don't have access to the internet, or would like a copy of the release faxed or emailed to you, please contact Gail Falotico at our Corporate Office. Gail can be reached at 212-885-2520.

Before we start, I would like to remind everybody that the conference call today will include some forward-looking statements that are subject to certain risks and uncertainties, which are detailed in our 2006 10-K[A] report, as well as other filings we have with the SEC.

In addition, certain non-GAAP financial measures, as defined by the SEC, may be discussed in this call. To comply with SEC rules, reconciliations of non-GAAP financial measures have been attached to this morning's release and will also be posted to our website under the Investor Relations section. We also, from time to time, update the website with additional financial information, so any interested investors should check the site periodically.

The purpose of today's call is to discuss Asbury's second quarter results. Our agenda will be as follows: Charles Oglesby, our President and CEO will begin with a few introductory comments, then Gordon Smith, our CFO, will provide everyone with some additional financial highlights. After that, Charles will have a few concluding comments and as always, we'll be happy to take your questions -- Charles?

Thanks, Keith and good morning to everyone. Before we get into the details of our results for the quarter, I think it's important to understand what enabled us to deliver solid financial growth in a quarter that was challenging from a retail perspective.

Throughout my career as an automotive retailer, I've appreciated a challenging market because it provides the opportunity for the best operators to rise to the top. More specifically, general managers that focus on people and processes are able to deliver results in all economic environments. In the same fashion, Asbury's high-performance regional teams and focused initiatives have made it possible for us to consistently grow the business each quarter.

Following an unexpectedly low April, our regional teams worked diligently to drive sales in May and June. In fact, although the new car market dropped off as the quarter progressed, we gained momentum, proving, once again, that our organizational structure, which allows our regional management teams to monitor and quickly respond to changes in local market conditions is an effective way to manage our business.

Secondly, I'd like to touch on the flexibility and consistency of our business model. I believe this quarter was a good test for public automotive retailers and I'm very pleased to report that our model worked exactly as it should. With overall retail revenue, including new and used down from last year, our record levels in F&I and steady growth of our fixed business drove our same-store gross profit up 3%. And as you work your way through the remainder of our results, you will find that we are managing all aspects of our operations. We continue to make progress in our SG&A expense, as a percentage of gross profit, which is down 70 basis points on a comparable basis. We have reduced our interest expense through the debt refinancing. We've reduced our share base with our first quarter share repurchase and finally, we expanded the business through acquiring three new dealerships during the second quarter. All of these efforts, managing all aspects of our business in concert, enabled us to deliver a very respectable EPS growth of 22% on an adjusted basis.

Looking at the new retail market in more detail, SAR reached its lowest point in ten years, with unit volumes down 2% industry wide. Once again, the foreign manufacturers continued to gain share, with sales for the quarter comprising over 48% of the U.S. market, up over 2% points from a year ago. Our performance, assisted by a favorable brand mix with luxury and Midline imports making up 81% of our light vehicle sales was slightly better than the industry, down just 1%. When reviewing our performance at the local level, which is the way we measure our sales, how our stores are performing, we gained market share and out performed our local competition, again, by 1%.

As we've mentioned previously, our heavy truck business benefited in 2006 from a full head of sales in advance of changing emission regulations in January of this year. In the second quarter, new heavy truck unit sales were down more than 40% and gross profit was down 33%, in line with our expectations. Excluding heavy trucks, on a same-store basis, new light vehicle retail revenue was up 1% and gross profit was essentially flat with last year. The 30-basis point increase in the overall new vehicle margin was almost entirely attributable to the mix shift away from heavy trucks, which generate more gross margins than light vehicles. In fact, our margins on new light vehicles reflect with last year at 7.5%.

In used vehicles, we also had a fairly challenging quarter -- our first in sometime. Unite sales were flat on a same-store basis and gross profit was down 4%. Our comparisons have gotten more difficult as we've benefited, over the past three years, from target initiatives, including the building of experienced used vehicle teams in each of our regions and investment technology to improve used vehicle inventory management. We found the comps particularly difficult in the Mississippi and Houston markets, which benefited last year from strong used vehicle sales and the aftermath of Hurricane Katrina, which occurred approximately 18 months ago.

Although we faced a difficult market in used vehicles during the quarter, I'm encouraged that after a weak April, we were able to gain momentum over the reminder of the quarter with positive used vehicle sales comps in both May and June. It's important to remember that all of the people that drove our past performance are still in place and our focused initiatives, including sub prime marketing and our own certified program, are still on track. And I'm confident used vehicles still represent a significant upside opportunity for Asbury.

During the quarter, the industry also experienced a very strong wholesale market where prices, according to the Manheim data, were at the highest second quarter level since 2001. Although we are somewhat protected from changes in wholesale pricing, as we trade for a substantial portion of our used inventory, the higher wholesale prices put pressure on our used vehicle margins, which declined 70 basis points to 11.5%.

On the flip side, with a strong wholesale market, we received higher prices for the vehicles we brought to auction and our wholesale loss was down $1 million from last year. When you look at the overall business, including wholesale losses, our margins declined 40 basis points and overall gross profit was down just 1% on a same-store basis.

In finance and insurance, we posted record PVR results of $1,000, a 14% improvement at the dealership level. Our reported F&I income, on a same-store basis, increased only 1%, as last year's numbers include a one-time gain on the sale of our remaining interest and certain service contracts. The improvement in our PVR for the quarter is equally attributable to three main areas: The benefit of our renegotiated contract with our service contract provider, which we've discussed in the past, an increase in penetration rates on sales of our warranty and insurance products and an increase in the average length of finance contracts. You've heard us speak in the past of the opportunity to improve the stores in the bottom one third on a PVR measure. We've continued to make progress with those dealerships in the second quarter, with this group contributing to the largest [rated pro] in our dealership portfolio. With the operational improvements we have made over the years, we believe that a $1,000 level of F&I PVR is sustainable and we will continue to look for our areas of [unintelligible].

Fixed operations continued its steady growth in the quarter, with revenue up 2% and gross profit up 5% on a same-store basis. Our gross margin in parts servicing collision repair improved 160 basis points. As you know, warranty business continues to fall off industry wide due to the higher quality of new vehicles in recent years. With that in mind, we have very consciously focused on increasing our customer pay business, ensuring that we have state-of-the-art facilities, high-quality customer service and the capacity to accommodate the growth of the Midline import and luxury brands.

As you've heard us discuss on past calls, we have developed programs designed to keep our customers coming back to our dealerships for all of their service needs. Simply put, these programs are working, as our customer pay business was up 8% on a same-store basis. Now, I'd like to turn it over to Gordon for some additional financial highlights.

Thanks, Charles and good morning, everyone. As Charles has already described, Asbury delivered solid earnings growth during the quarter of relatively weak retail sales. Income from continuing operations adjusted for non-operational items increased 20% for the quarter to a record 22 million or $0.66 per share from 18.3 million last year or $0.54 per share. Our results benefited from our share repurchase in the first quarter of 2007 and our debt refinancing, which we gained the first quarter and completed in mid June by calling the remaining 12 million of our outstanding 9% notes.

In combination, these two capital market events contributed $0.04 to our second quarter EPS. Therefore, operations delivered a very solid 15% growth in EPS. We had two charges that each cost us about $0.01 of EPS during the quarter. One associated with the completion of our debt refinancing and the other associated with a secondary stock offering. As a reminder, the debt refinancing decreased our annual debt service by 7.6 million or about $0.14 per share and expanded the maturity of 150 million of principal for five years. The secondary stock offering is significant as it represents the final sale of stock by our original founders. In less than one year, we successfully removed our substantial shareholder overhang to a sequence of four secondary offerings.

The business line improvements that Charles discussed, combined with a shift toward our higher-margin businesses, resulted in a 60-basis point improvement in overall gross margin to 15.4%. Used retail sales, F&I and fixed operations comprised 34.6% of total sales, up from 33.7% in the second quarter of 2006. The business continues to produce steady growth in cash flow with adjusted EBITDA up 8% to 49.3 million and EBITDA margin improved to 3.2% from 3.0% last year. And looking at our overall performance, return on sales improved 40 basis points to a record 2.3%.

Turning to expenses, this marks the 11th consecutive quarter of year-over-year improvement in our expense ratio. SG&A expenses on a comparable basis improved 70 basis points to 74.6%, surpassing our 2007 full-year target of 50-basis point reduction. The SG&A improvement was largely the result of effectively managing our fixed overhead and organization structure with personnel expenses transfers down 70 basis points and insurance down 30 basis points.

As a background, we review our operational structure in two distinct categories: Dealership level operations and operation support. Over the last several quarters, we have made changes to our support structure, both at the corporate and regional levels to improve the efficiency and effectiveness of our support teams. From a financial perspective, these changes have resulted in a reduction of over 4 million in personnel expenses on an annual basis.

In addition, both the personnel and insurance expense lines have benefited from our strategic decision to move to large deductible worker's compensation, medical, property and casualty insurance plan. We have methodically evaluated our positions in each of these areas over the last three years and once all the pieces were in place, we systematically changed our insurance product by product. We have effectively managed our risk in each of these areas through training programs and securing [stock loads] of insurance to protect us against catastrophic loss and large claims. In short, these programs are operating as planned and they're helping to reduce our cost structure. I think the most important takeaway here is that our work -- we are working on all aspects of the business in order to improve our profitability.

I also wanted to mention that, in June, we made some minor changes to the legal structure of our Texas entity that allowed us a one-time tax benefit, which dropped our effective tax rate for 2007 from 37.7% to 37.3%, contributing about 1% of the EPS for the quarter. I would mention that we expect that the rate for 2008 will be back up to what we had previously planned at about 37.7%.

Turning to the balance sheet, cash and cash equivalents total 49 million at the end of the quarter. During the second quarter, we invested about 15.9 million in facility expansion and real estate, bringing our total investment for the year to 28.9 million. For the full year of 2007, we expect capital expenditures to total between 70 and 80 million, 15 million of which is reserved for maintenance CapEx. The remaining balance will be used for new facilities, including a real estate and capacity expansion. We intend to finance between 50 to 60% of these expenditures through sale leaseback transactions.

In addition, as Charles mentioned, we used our available cash to complete three acquisitions, investing a total of 25.5 million net of floor plan borrowings. [Invested] use of our available cash in the short term, we have invested approximately 30 million in our floor plan facility. This investment will be available to us upon future acquisitions or capital expenditure projects.

We have made substantial progress improving the debts of total capital ratio over the past few years, however, as we discussed in our first quarter call, the debt refinancing and share repurchase resulted in a 310-basis point increase in our expense ration to 46.9% from December of 2006 to March 2007. We have since reduced our debt to total capital ratio 130 basis points to 45.6%, due in equal part to our operational performance in the second quarter, net of our dividend payment and the purchase of the remaining 9% notes in June.

Taking into consideration the current balance, the net debt to total capital ratio is 43%. The capital structure remains solid with almost 95% of the long-term obligations fixed and nothing outstanding under our $125 million revolving credit facility. Through June, we repurchased approximately 21 million of our 8% notes with an additional 19 million available under our debt-repurchasing program. Our convertible note mature in 2012 and its subordinated debt facilities ultimately mature in 2014 or later, with a first call date of March 2009.

Looking at new light vehicle inventory, DSI, based on selling days, was at 57 days, flat with last June, with overall inventory up 1%. I want to highlight that our DSI calculations are based on selling dates, the same basis as the manufacture date they use in the industry. By category, luxury brands were down 22% to 45 days while luxury inventory, in total, was down 12%, in line with the industry wide decline of 14%. Midline import brands were most affected by the weak new vehicle market, as DSI rose 12 days to 56 days. Overall, Midline important inventory was up 31%, exceeding the industry wide increase of 15%, largely due to our inventory mix versus the industry. Honda, which is up industry wide over 25%, is the largest component of Midline imports for Asbury.

Lastly, Midline domestic brands were flat with last year at 80 days supply. Overall domestic inventory was down 18%, a greater improvement than the 14% reduction for the overall industry. Our used vehicle inventory DSI rose two days to 40 days on a 7% increase in overall used inventory.

Turning to guidance for the year, we will remain comfortable with our previous EPS guidance range of $2.20 to $2.28 from continuing operation. This range excludes the non-operation items that we have previously identified.

In summary, we are very pleased with the second quarter results and the performance of the overall business, especially, in light of the weak retail environment and are comfortable the positioning of the Company, as it relates to our financial targets for the remainder of 2007.

With that, I'll turn the call back over to Charles for some closing remarks -- Charles?

Thanks, Gordon. I have a few more topics that I'd like to discuss and then we'll be happy to take questions. First, to briefly address regional performance, five out of six of our regions reported solid increases in bottom line growth. The strongest performance was in our west region, which includes our dealerships in Texas and California, with net income up 10%. The remaining four regions all reported solid single-digit increases.

On the acquisition front, we purchased three dealerships during the second quarter. An Acura dealership in Florida, which we discussed on our last call, and an Infinity and Nissan dealership in the Atlanta area. These three dealerships have annualized revenues of approximately $140 million, putting us well on the way to achieving our annual target of adding at least 200 million through acquisitions.

In fact, based on our current pipeline of transactions, we expect that we will well exceed this goal in 2007. I would like to conclude today's call by evaluating our performance in the context of our total shareholder return target of 12 to 15%. Our operational performance, once again, exceeded our growth target, delivering adjusted EPS growth of 22%. Our newest acquisitions are performing as planned but have not yet added significantly to our performance, as they were rolled into the portfolio until midway through the second quarter. Finally, with respect to the dividend, as I'm sure you saw in our additional release this morning, we have increased our quarterly payment 12.5% to $0.22 per share. This moves the current dividend yield to the top end of our target range of 3 to 4%.

In summary, I'm very pleased with this quarter's results. Our balanced business model, supported by our high-performance employees and focused initiatives continue to deliver the growth we have committed to as a management team. And with that, we would now like to turn the call over to the operator and take your questions.

Thank you. [OPERATOR INSTRUCTIONS] One second, while we assemble the roster. We'll take our first question from JP Morgan's Edward Yruma. Please, go ahead, sir.

Hi, thanks for taking my question. Can you provide a little bit more insight into your commentary that you'll well exceed your acquisition target? Is this a byproduct of, you know, seeing some improvement in the acquisition multiples or are you getting kind of more confident on specific regions?

How are you doing this morning, Ed? We actually -- we're pretty comfortable with valuations in the market right now and the reason that we're comfortable that we'll exceed our goal -- we felt that we've been a little behind the last couple of years and we're actually finding some good opportunities that fit within our model of the future.

Great and one more question, if I may. I think at your analyst meeting, you had highlighted some of your initiatives around credit challenge customers and some of the successes you've seen in some of your stores. Has that demographic shifted significantly, as we've seen gas prices move and seen continued weakness in housing? Thank you.

I wouldn't say there's a shift in that demographic, in that area. We still see the opportunity. What the uniqueness is there -- and it showed a little bit last month -- is the ability to get the right inventory that's acceptable to the lender and is the right price for the customer. We still see great upside in the sub prime market.

Kind of as an example, as I mentioned about the inventory piece, a car that we could have bought that would book for 9,500 three months ago and we could have bought it for $8,000, this last quarter, we had to buy it for 11,000. And so that's over the book value that the lender would look for and so that is one of the reasons that the margin pressure a little bit on that model. But we still see growth opportunity in the sub prime market.

Great, thank you very much.

Thank you and now, we'll take our next question from Matt Nemer with Thomas Weisel Partners.

Good morning, everyone.

Good morning.

My first question is on the sales performance, by geography, would you be willing to give any more detail on your Florida region? It sounds like it was up and if it was, how did you do that, relative to an overall market that was down significantly?

As in the past, Matt, our Florida market adjusted with the full model that we have by all four business lines. And even though they were down in new units by about 6%, they actually improved the profit by 3% in that region. And it's just adjusting the model by being stronger in the used F&I and the fixed piece and adjusting them on the new side.

So we feel very comfortable with our Florida region and the results that they've continually been able to produce, here on a challenging quarter or period [informally].

But just to give you a little detail, Matt, the units, the [mean] units were down about 4% and the used was very strong, up 9% on a unit basis and F&I was extremely strong. They were up on a PVR basis, about 17% and that drove results, overall results up about 3% year over year.

What's driving the F&I increases? Is it new products or is it tied to used or --

It's a balance, Matt. With our menu process, we're driving high product penetration. The financing periods are a little bit longer and then we also are still reaping the benefits of our pricing or renegotiation with our contract supplier. But as well as we're continuing to work on the bottom third lower-performers. So the improvement in that area, as well as a combination of the other events is why we've been able to do that. And we believe that that is sustainable.

Okay, my second question is on SG&A expense. You provided some detail on personnel and insurance and I was just wondering if you were willing to provide the change in basis points on marketing, rent and the other lines that may have moved significantly.

On the -- you want advertising?

Yes.

Sure. Looking at it on a -- for the quarter, rent is actually up, as a percentage of gross about 30 basis points. The advertising, as a percentage of gross profit, it's flat with last year. Total compensation, F&I and sales, I have it individually. Sales is flat with last year and S&I and comp is actually down slightly, about 70 basis points.

And total comp was down --

Total comp was down 70, the 70 basis points.

Oh, okay. I thought I had personnel down 30 for --

That is personnel.

Okay, okay.

I have you the pieces that F&I comp, sales comp and personnel.

Got it, okay. And then lastly, on inventory, in the Midline imports, it's been up significantly more than sales industry wide over the last few quarters. I'm just wondering if you can comment on sort of, you know, why that's happening or if there's something else in the numbers, maybe sales to fleet, that really paints a different picture.

Well, last year, the inventory levels for the Midline area was really low, with the gas spike, it drove a lot of the share gains. And I believe that there are some adjustments going on within Midline import production levels to that. It's kind of unique as we look at it. What's going on is that they are -- there is a share fight within a share fight going on, even within the Midline imports now because as inventories build and you see the increase and incentives, to help offset some of those inventory gains but they're still using the inventory. I think, as the domestics decrease their inventory, they see that as an opportunity for continued market share gains.

What's happened during the quarter with margins in the Midline important brands? In other words, some discussion a few quarters ago about some changes in the margin structure at Honda and some of the other brands. Can you give any commentary?

Honda has some pretty strong incentives going on right now, particularly, with the Accord because of the model change this year, versus last year, the change in the -- they want to clean out the '07s to the '08s. So far, we've been able to remain flat with margins. I believe that there will -- there always has been and I think there always will be, as long as there's a supply and demand situation, pressure on margins. And I think that incentives right now, depending on how they are allocated or used, can have an impact on what the margins are.

Okay, that's very helpful. Thanks and congrats on a great performance.

Thank you.

Thank you and we'll move on to Rick Nelson with Stephens.

Thank you and good morning.

Hey, Rick.

Just to follow up on the sub prime, as it relates to used cars, what percent of your sales were derived in this category and are you seeing any changes, you know, with your finance providers or customer demand there?

In the first quarter, Rick, we've mentioned that sub primes about 30 to 35% of our used vehicle volume. That's seasonally high. It is typically -- we'll have more sub prime customers because of the [packs] timing and the cash availability to the consumer. We have noticed a -- which is normal -- it's about 25 to 30% of our sales at this time. We have not seen any pullback from the lenders at all. Again, as I've mentioned just a little bit earlier is that the challenge right now with the wholesale market being up in that particular vehicle line is making it challenging, a little bit, from the margin side and finding the vehicle that matches the lender, as well as the consumer.

By the way, we believe we have an advantage that because that would be a disadvantage for all retailers but with our model and with our team approach, as well as having the ability to trade for some of those vehicles, it will be impacted less for us than others.

And I know you spoke in some detail about Florida. I'm wondering if you could do the same with California.

In California, we have four dealerships in California. And three of our four stores gained market share and basically, we were up 3% on a new unit sales rate.

Margins in that market?

There is some pressure. In Northern California, we're seeing more margin pressure there.

Any comments, Charles, on what you're seeing in July to date?

You know, the year is a little -- running behind in just SAR as a directional moving. The year is down slightly and actually, we're seeing July similar to June. You know it's -- and that's kind of what we're expecting.

If you look at it, you know, between new, as Charles said, it's tracking just about at June levels, in terms of number of units and then on the used side, we're seeing a little bit more strength in the first part of July, than we saw in June but I'm talking 2 to 3%, versus what we saw in June.

[All right, guys, have any] signs of softness in the luxury segment, relative, I guess, to the overall industry environment?

I don't believe we're experiencing what I would term it softness. There are some inventory restrictions in the luxury side, so I don't know if it's because we don't have the inventory right now that some are -- that the market is looking for but in other areas, I mean, the 3-series with BMW, very strong. We've got some very strong Lexus numbers and same as Mercedes but you know, the luxury inventory levels are down and I think that that is a part of it.

So we're really not sensing or feeling a softness in that market that I would say so yet.

Thank you.

Thank you very much. [OPERATOR INSTRUCTIONS] We'll now move on to Goldman Sachs' Darren Kennedy.

Yes, hi, there. I guess that a lot of my questions have been answered. I have questions on some brands. I'm pretty sure that Mercedes was down for the quarter, on a unit basis. I think it's the first time in a while. For you guys, how did you fare in Mercedes?

Yeah, we were slightly down as well.

Okay.

I think some of that has been inventory restrictions.

Inventory restrictions? Okay and then also, Honda, it's such a big part of your mix, you know, they had a terrible April and it rebounded a bit but where do you guys track for that one?

I think we're on target with Honda. That's an important brand to us, as you know. And it's a great brand and right now, we're on track with Honda.

When you think of California and Florida and just the housing crisis, in general, or at least how it's been pressuring the consumer, where do you think you are, in terms of how it's affecting your sales and where the light is, at the end of the tunnel? I mean, it sounds like you guys are marriaging it pretty well but just in terms of the market itself. Any traffic trends you've seen?

Those are definitely impacting those markets. We feel very fortunate that where our critical mass of dealerships are is not quite in the areas that are as greatly impacted as others. As an example, we've got three dealerships in Northern California that are performing as we expected -- one in Southern California that's doing well and in the Florida region. Again, we look at our mix shift. We know that's going to be part of the weakness and we build that into our model and so we focus on the other areas so that we don't get as impacted as others. But I'm not sure exactly when the light at the end of the tunnel is going to come out. I think there's still more things that need to be flushed out and the consumers' got to adjust more. But that's, you know, to me, I think that those are the challenges that any retailer has is you must navigate your way through these kind of challenges because they're going to be there. It may be something else; today, it's those things and that's our responsibility, you know, to the shareholders.

One final question. It's a small part of your business but it's still 7% of sales, lease of your new sales. Your heavy truck business is down, you know, with the industry, it's down significantly.

Right.

I think it comp'd down 40-something. What is the -- is that something about, I mean, is there a light at the end of that tunnel? Absolutely, we believe there is. I can't tell you when it's going to be. Right now is the most impactful time from the emissions change, there was a lot of trucks that were bought and so, you know, full head effect from last year. Right.

And the market has not adjusted that yet. There are still issues on the freight side right now, if you follow that. But that's a very good model for us. It's a very good company and with the fixed business that we have built there, it will have less impact, as we move forward, emission adjustments, [on our end], of course.

So you're committed to that business, in other words?

Yes.

Okay and it's all in one market, right?

Yes.

Okay, where is that?

It's in Atlanta.

Okay, thanks, very much.

Yeah.

Thank you very much and we will take our next question from David [Lim] with Wachovia.

Hi, good morning. Just a quick question related to wholesale used vehicle prices. Doing some channel checks and talking with dealers, they're saying that it's beginning to soften where the dealers are able to get -- replenish their inventories at better prices. Now, is that something that you're experiencing as well?

When you say that --

Wholesale prices are decreasing.

Prices are softening?

Yeah. Right.

Yes because there was a supply of cars in the market. Ultimately, what we did find, last quarter, was that there was supply and stronger pricing. And that impacted us some but that condition, those two conditions, won't stay together. So as the supply is there, then the pricing will come down. Again, all of those conditions, we believe, with our model because of the teams that we have in the marketplace, we're able to adjust quickly whichever way the market goes, as well as we have trade-ins, it helps us know what the market is on those vehicles, so that we're always on the market and in the market, from a pricing standpoint.

Now, if you can refresh my memory, are you guys using American Auto Exchange or what system do you use?

Yes, we are.

Great, that's all I have. Thank you very much.

[OPERATOR INSTRUCTIONS] And gentlemen, it appears that we have no further questions. Mr. Oglesby, I'll turn the conference back over to you for any closing or additional remarks.

Just before we conclude the call, just want to give you a forewarning and a notice that for our third quarter call, we are going to be announcing the following Tuesday, as opposed to usually the last Thursday of the month. It's just for logistical reasons, so we have a weekly offsite with our board strategic session and so we're going to do it in the following week. So don't read anything until when we announce our earnings will be a few days later than normal.

And with that, I'd like to thank everyone for joining us today and I look forward to our next call.

And that concludes today's conference call. Thank you for your participation. Have a great day.