Big 5 Sporting Goods Corp (BGFV) 2006 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Big 5 Sporting Goods fourth-quarter 2006 earnings conference call. Today's call is being recorded. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. (Operator Instructions).

I would now like to turn the conference over to Mr. Steve Miller, President and Chief Executive Officer. Please go ahead, sir.

Good afternoon, everyone, and welcome to our fiscal 2006 fourth-quarter conference call. Today we will review our financial results for the fourth quarter and full year of 2006 and provide general updates on our business, as well as provide guidance. At the end of our remarks, we will, of course, open it up for questions.

I will now turn the call over to Barry Emerson, our CFO, to read our Safe Harbor Statement.

Thanks, Steve. Except for statements of historical fact, any remarks that we may make about our future expectations, plans and prospects constitute forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results in current and future periods to differ materially from forecasted results. These risks and uncertainties include those more fully described in our annual report on Form 10-K for fiscal 2005, our quarterly reports on Form 10-Q for the first, second and third quarters of fiscal 2006, and other filings with the Securities and Exchange Commission. We disclaim any obligation to update these factors or to publicly announce results of any revisions to any of the forward-looking statements made during this call that reflect future events or developments.

Thank you, Barry. We are pleased to report a strong fourth quarter, capping off an outstanding year for our business. In the fourth quarter, we drove topline sales gains, improved both product margins and gross margins, and continued to leverage store-related expenses. We delivered meaningful earnings growth for both the 2006 fourth quarter and full year, and our business generated significant free cash flow, which we used to reduce our debt. During the year, we also completed the transition to our new distribution center, which performed exceptionally well for us over the busy holiday season.

Now I will touch on some of the highlights of our fourth quarter. For the quarter, we rang the register to the tune of $234.5 million, up 7.1% from sales of $218.9 million in the fourth quarter of 2005. Our same-store sales increased 4.2% for the fourth quarter. This was our 44th consecutive quarter, now 11 full years, of realizing positive quarterly comp store growth.

Our sales were solid and consistent throughout the quarter. We enjoyed a particularly strong finish to the quarter, driven by what now seems to be traditional late holiday shopping and the benefit of very favorable winter weather comparisons in our markets, especially between Christmas and New Year's. Our sales gains were driven by a combination of increased customer traffic and a higher average transaction size.

Each of our three major merchandise categories -- footwear, hard goods and apparel -- comped positively during the quarter. Apparel was by far our strongest performing category, comping in the double-digits and benefiting from a number of factors, including favorable winter weather comparisons in many of our markets. Apparel was followed by footwear, which comped in the mid single digit range, and hard goods, which comped in the low single digit range.

Our product margins performance for the fourth quarter was very positive, with point-of-sale margins improving 60 basis points over the prior year. We enjoyed positive margin enhancement across a broad array of product areas, with an additional benefit from the strength of higher margin winter apparel sales.

The strength of our sales allowed us to leverage store related expenses for the fourth quarter. Barry will talk to that, along with gross margins, in a moment. Before he does that, I will provide you with a brief update on our new distribution center and store openings.

As mentioned, our new distribution center, located in Riverside, California, performed exceptionally well for us over the busy holiday season. With our strong sales, we had a tremendous amount of product flow through the distribution center during the fourth quarter and our team did a phenomenal job of managing this product.

We are extremely pleased with the accuracy and efficiency we have achieved in product fulfillment and distribution, and our productivity continues to surpass all historic levels. We believe we will successfully leverage the higher cost of our distribution center from where we are today for a number of years.

Now commenting on our store openings. We opened nine new stores during the fourth quarter, bringing our store count to 343 as of year end. Our fourth quarter store openings were in Oroville, Temecula, Reseda and Lake Elsinore, California; Aurora, Colorado; Avondale, Arizona; Redmond, Washington; Portland, Oregon; and Henderson, Nevada. During the first quarter to date we have opened new stores in The Dalles, Oregon, and Denver, Colorado, and we relocated our West Covina, California, store. We also closed our Monterey, California, store in preparation for its relocation during the second quarter. We expect to open approximately 20 net new stores during 2007.

At this time, I will turn the call over to Barry, who will provide more information about the quarter and full year, as well as speak to our balance sheet, our capital expenditures, our cash flows and provide guidance.

Thanks, Steve. Our gross profit margin for the fourth quarter improved to 35.4% of sales from 34.0% of sales for the fourth quarter of 2005. This improvement was given primarily by the increase in product selling margins that Steve discussed, a favorable reduction in inventory reserve provisions, and a $1.9 million decrease in distribution center costs due to additional costs incurred in the prior year related to our transition to a new facility. These favorable impacts were partially offset by a $1.5 million decrease of distribution center costs capitalized into inventory compared to the same period last year.

Our selling and administrative expenses as a percentage of net sales were 25.8% in the fourth quarter of 2006 versus 25.1% in the fourth quarter of the prior year. Our higher sales levels and efficiencies created by our new distribution center operations allowed us to leverage store related expenses for the quarter. The overall SG&A rate increase over the prior year resulted primarily from lower co-op, advertising cost reimbursements from vendors due to recording these reimbursements earlier in the year, and stock option expense that we did not have in 2005. Excluding the effect of these items, our SG&A expenses as a percentage of sales declined year over year during the fourth quarter.

Depreciation expense decreased $0.2 million for the fourth quarter of 2006 compared to the prior year, primarily due to recording a charge related to our former distribution center in 2005. Interest expense for the fourth quarter increased $0.1 million over the prior year, due to the impact of rising interest rates, partially offset by lower average debt levels compared to the prior year.

Looking at our bottom-line, net income for the fourth quarter increased to $9.6 million or $0.42 per diluted share, including a $0.02 charge for the expensing of stock options from net income in the fourth quarter of 2005 of $7.7 million or $0.34 per diluted share.

Briefly reviewing our full year results, sales rose 7.7% during fiscal 2006 to $876.8 million from $814.0 million in fiscal 2005. Same-store sales increased 4.0% in fiscal 2006 versus the prior year. Net income for fiscal 2006 increased to $30.8 million or $1.35 per diluted share from net income of $27.5 million or $1.21 per diluted share in fiscal 2005. Results for fiscal 2006 include a $0.06 charge for the expensing of stock options.

Now turning to our balance sheet, total chain inventories amounted to $228.7 million at the end of fiscal 2006, up $5.5 million from $223.2 million at the end of fiscal 2005. Inventories for fiscal 2006 include an additional $3.2 million of distribution center costs capitalized into inventory over the prior year. Excluding capitalized costs, our inventories on a per store basis were down approximately 3% from last year. We believe our inventory is well positioned to support our sales growth.

Looking at our capital spending, CapEx, excluding non-cash acquisitions, totaled $16.5 million for fiscal 2006. CapEx for 2006 was used for new store openings, store related remodeling, distribution center enhancements and computer hardware and software purchases. We expect capital expenditures for 2007, excluding non-cash acquisitions, of approximately $17 million to $18 million, primarily to fund the opening of approximately 20 net new stores, store related remodeling and computer hardware and software purchases.

We generated cash from operations of $42.5 million for fiscal 2006 compared to $27.2 million for fiscal 2005. The Company has normally generated healthy free cash flow and we look for that to continue. We evaluate the best use of our free cash flow on an ongoing basis, including, for example, paying shareholder dividends, reducing our debt or repurchasing the Company's common stock.

During the fourth quarter, we used cash from operations to prepay the remaining $8.3 million of the Company's higher interest term loan debt and reduced borrowings under the Company's revolving credit facility. Our total short and long-term debt at the end of fiscal 2006 was $77.1 million, down $18.3 million from $95.4 million as of the end of fiscal 2005. We were able to meaningfully reduce our overall debt levels despite opening 19 new stores and funding $7.7 million in shareholder dividends and $1.3 million in share repurchases during fiscal 2006.

Now I will spend a moment on guidance. We expect to realize same-store sales growth in the low single digit range for the first quarter of fiscal 2007. Topline sales comparisons for the first quarter have been positive, but challenging, as we are comping against a very strong quarterly performance in 2006. However, we have carried strength in our product margins into the first quarter and those margins together with our sales levels should allow us to deliver earnings per diluted share in the range of $0.30 to $0.33 for the first quarter.

Compared to the prior year, first quarter guidance reflects lower distribution center expenses due to facility transition costs incurred in the prior year, offset by a reduced benefit from inventory cost capitalization. For the full year, we expect same-store sales growth in the low single digit range and earnings per diluted share in the range of $1.47 to $1.57.

Operator, I think we are now ready to turn the call back to you for Q&A.

(Operator Instructions). Jason West, Deutsche Bank.

Congratulations on a good quarter. Can you talk a little bit more about the product margin, exactly what caused the change in trend there? Was it purely the mix shift to winter apparel, or were there other things going on on the cost side or any of the changes you made there that drove the margins up, and so how we should think about that for the full year of 2006?

I think we certainly got a strong kick from the strength of apparel sales and some mix changes that benefited margin enhancement. That has continued, as Barry mentioned, into the first quarter with the strength of the winter apparel sales, and we are certainly always trying to achieve higher margins and really in our quest for improving gross margin dollars.

That was of course the product margins increased the 60 basis points. We also had lower distribution center expenses of about $1.9 million, and some favorable trends on our inventory reserve provisions. The lower DC expenses were offset by about $1.5 million worth of a reduction in the benefit of inventory cost capitalization compared to the prior year.

Can you quantify the reserve benefit in the quarter?

Yes, why don't you go ahead, Jason, let me -- the numbers are -- do you have another question, Jason?

Yes, I guess just thinking about the full year outlook, any help you guys can provide in terms of where you see the margins shaking out. Do you expect gross margin up for the year or you expect more of the margin growth coming on the SG&A side? Just any help you can offer there?

Yes. On the gross margin side -- on the product margin side, certainly we carried forward the product margins into Q1, as we mentioned. Looking forward, we are expecting improved -- or to continue to be able to eke up project margin benefit during 2007.

In terms of the gross margins, of course, it will make all the difference in the world what we do on the product margin side. Gross margins are going to continue to be impacted by the higher overall DC expenses because of operating the larger facility here. The impact of the lower DC costs for Q1, because of the facility transition costs in the prior year, will be offset by lower inventory cost capitalization benefit versus last year in the first quarter as we cycle through the distribution center transition. But we really do think that we are going to be able to significantly leverage the DC costs over time, which will certainly help margins.

Rick Nelson, Stephens.

Can you remind me of the DC transition costs that you incurred in first quarter 2006, how big those were?

About $2 million.

And the inventory cost capitalization, I guess that will be a negative here in the first quarter?

That's true.

And what sort of swing do you anticipate there?

The inventory costs, the lower expenses in the first quarter are expected to be in the range of about $1.8 million. And those should be offset almost virtually by the reduction in the benefit for inventory cost cap in the first quarter.

And then are we now on an apples to apples basis with co-op advertising?

We will be on an apples to apples basis with co-op advertising, yes.

And any comment on inventory levels, especially in winter related product?

Yes, we are very pleased with our inventory levels in all products, and that's certainly including winter. We've had overall a good winter season and generally pleased with the selldown. There's several more weeks of the season to go, but we're feeling very good about our situation.

And Rick, I need to clarify. Of course, we are on an apples to apples basis now on the co-op advertising beginning in the first quarter of 2007.

Right. That was a negative swing in the fourth quarter.

That's right.

How about free cash flow? If you achieve your earnings targets absent stock buybacks or any changes in the dividend, what would you expect there for 2007?

Well, our free cash flow for the current year, for 2006, is going to be in the neighborhood of $26 million or so, and the Company is growing and we would expect that to be able to increase next year.

Jeff Sonnek, Friedman, Billings, Ramsey Group, Inc.

Congratulations again, guys, for a great quarter. More of a housekeeping item, but are buybacks kind of baked into your guidance to a degree?

I can't comment on that. We really have -- are looking at our buybacks, as well as our dividend, as well as our pay down of debt, on a real-time basis depending on market conditions. And so at this point, we haven't -- I can't comment on whether we factored in any buyback into next year.

And then kind of just getting back to this gross margin discussion, I know there's lots of opportunities there as you guys kind of ramp that facility up. Can you just give us a sense of where are we in the process kind of as you look at your long-term goals or opportunities there, and are there any kind of incremental things you can talk about over the course of the last quarter, gains you guys saw? Any color there, please?

You're speaking to our distribution center?

Yes, exactly.

We're just very, very pleased with the productivity improvements in our distribution center. Everything continues to move very well. We've just recently changed the base of workday from a six-day weekly operation to a five-day weekly operation in the DC. We anticipate that this will result in labor utility, equipments, maintenance, less wear and tear on the equipment at the DC as the year progresses. This is the way we operated our prior DC for many years until we were getting maxed out of capacity, went from a five to a six-day week, and we see the benefits of now being able to move back to a five-day week. There is additional, hopefully, just productivity enhancements that we'll realize as the time goes on. All going well.

How about from the -- just your employee base there? I know that was kind of an initial problem, getting guys to make the drive out to Riverside and back. Are you guys pretty happy with the workforce you have there now?

We're very happy, and things are moving terrific in every regard out of the distribution center.

Bill Dezellem, Tieton Capital Management.

We had a group of questions. First of all, relative to share repurchases, how many shares, if any, were repurchased in 2006?

In 2006, there was 64,000 shares repurchased at a cost of -- a total cost of $1.3 million. There were no shares repurchased in the fourth quarter.

That is helpful. And then relative to the inventory cost capitalization, I believe, Barry, you had mentioned that there was a little over $3 million of remaining cost capitalized. What is your anticipated timeframe on when that cost will be fully amortized out?

The way this cost capitalization really works is if you have a -- in a normal situation where you have your -- you know, your business is growing, your inventory is growing a little bit, your costs are growing a little bit in a normal fashion; really, your inventory cost cap just continues to grow. And so that -- we have -- the other impacts of that are how quickly you can turn your inventory.

And now, for 2007, we expect to be able to turn our inventory higher than we did in 2006. Now, the funny thing about inventory cost cap is when you do the right thing, unfortunately it impacts you unfavorably. So if you increase your inventory turns, that means you have lower number of days in inventory, lower number of cost days in inventory, which actually works against you from an impact on your cost of goods sold.

So, to put it in perspective, we have, looking at 2007, the inventory cost cap, there is a fairly significant swing. The vast majority of that is going to impact us in the first quarter, which I mentioned, by about $1.9 million or $2 million or so in that range, and then -- but there will be an effect through the balance of the year, just because of an increase in our inventory turns; not dramatic, nothing like it's been in the past, but I just want to kind of give you a flavor for how the inventory cost cap works.

And to make sure that we are fully appreciating it, that effect would be a negative effect to earnings per share in 2007, but it does sound like once we get through the first half of 2007, this will really no longer be a topic of materiality.

That is true.

Really, the first quarter.

Yes, I would -- when we lapped the DC transition in the first quarter of 2007, although there is a slight negative effect, it is not going to be significant enough, hopefully, to warrant further discussion.

And then I would like to circle back to a year or maybe even a little bit more ago, that there was some reference, I believe in a prior call, to the distribution center systems that you were implementing, that they had a lot of capabilities above and beyond what you had historically used. And I believe that at that time you were not prepared to really discuss the potential benefits from those. But given that we're now at the point where the DC is operating far more efficiently than -- it's actually I'd say more normally from what we understand here, would you be able to walk us through what you see as incremental opportunities that the systems can provide you that you just did not have the opportunity to take advantage of before?

Yes. I think I can sort of try and give you an example. I mean, certainly, it all revolves around better management of the flow of products and flow of our team in the DC. An example might be what we call batch picking, where right now, our orders pick, as they walk up and down the aisles, they pick product for one store at a time. So if they are reaching into a box picking jump ropes, they're filling one store at a time. This system has the capability and we're pretty close to pursuing this batch picking, where we can have an order filler, when he's at a particular spot, pick for multiple stores at a time, and go from one to two and two to three. If that all works, we'll certainly have certain productivity benefits there.

And Steve, is that the primary example? Or are there several others that in aggregate could ultimately end up being very material?

That's a very good example. Certainly a lot of the benefit that we're getting from the distribution center is received at the store level through easier check-in of their products and as we've improved the -- tremendously improved the accuracy of the order filling at the distribution center, the stores are able to accept the product without going through a detailed check-in process that has historically occurred. And that's a huge benefit for us.

We've got the -- we're going to be adding some additional conveyor lines in the distribution center this year, which will enable us to move certain types of products more efficiently. So we think there's a number of opportunities, and collectively they're all good and going to result in very positive savings as we go forward.

Nancy Hoch, JPMorgan.

It's actually [Aaron]. In recent quarters, you've seen about [50] basis points of store labor savings related to the new DC. Is that consistent in Q4? And do you guys think that you expect to see it again going forward in Q1?

Yes, we did in the fourth quarter experience -- leveraged our store-related expenses and it was in the neighborhood of 40 basis points or so. It's going to be tough for us at the comp levels that we'd indicated, certainly in the first quarter at 1% comp level, to leverage expenses. Certainly don't expect that in the first quarter, and really for 2007, at low single digit comps, it's going to be a challenge to make meaningful improvement in the leverage of our expenses.

Thinking about [Castapoint] for a sec, you guys did a great job paying down debt in the quarter and in bringing your leverage ratio down. Going forward, are you looking to get a little bit more aggressive in returning cash to shareholders through buybacks, or have you considered boosting the dividend?

Certainly we look at our cash and the best use of cash very, very routinely with our Board of Directors, and really it's a function of looking at market conditions at the time; our prices, the price of our common stock, interest rates at the time. And then so really we make a call kind of as we see the market conditions change. Now, having said that, we certainly would expect to pay down additional debt, a significant amount of additional debt, in 2007.

And then just to follow up with that, how should we be thinking about modeling interest for next year?

Interest will certainly be lower next year. Our average -- we were able to, again, our free cash flow for this year was about $26 million. We reduced our debt by about $18 million year over year. I would take that into consideration. And I guess that's about the best guidance I can give you right now, because we will look at market conditions for the dividend as well as for the buyback of the stock and make decisions that make sense for the Company.

I appreciate it. Thanks, guys. Congratulations on the quarter.

Chris Svezia, Susquehanna Financial Group.

Congratulations as well. I guess just a follow-up question to the one that was just noted earlier. What comp, I guess, at this point in time would you guys need in order to, I guess, leverage -- you talked about low single digit positive for 2007. It would be a little bit hard for you guys to leverage the business. What are we looking at right now in order to leverage with the new DC center?

We've typically been able to leverage -- I say typically, but we expect to be able to leverage at a 3% plus comp level.

That's helpful. And then I guess if you could comment at all -- just refresh my memory again, when you talked about the trends you are seeing early in the first quarter, can you just remind me again where incrementally some of the softness that you might be seeing in the business again is and where that's coming from?

I don't know that we're seeing softness in the business. We are looking to post positive comps in the quarter. The first quarters can be a little bit goofy, given the fact of weather patterns never repeat themselves year over year. And that is going to factor into how the categories roll out as the quarter concludes. So really, we're not in really a position, I think, mid-quarter to be more specific.

No, I was just curious.

Last year, if you recall, we had remarkable winter conditions that hit in March. They dynamically affected the category performances last year and I just think it's premature to speak until we comp against those numbers for this quarter.

Fair enough. And just lastly, in terms of real estate opportunities, you're talking about 20 stores for 2007. I guess talk about any reaction you are getting from the real estate market in terms of opportunities in the marketplace in California itself or in some of the new markets that you are going into in terms of what is available. Is there likelihood that that accelerates or an opportunity for that to accelerate in 2007?

We're pretty comfortable with our growth strategy and we think approximately 20 net new stores is what we are targeting for this year. We continue to see good opportunities really within all our markets. That's not to say that at the end of the year that 20 wouldn't be 21 or 22 if the right conditions occur.

Fair enough. And just lastly, any color at all on the promotional environment that you are seeing in some of your major markets? Has it changed that dramatically or is it still pretty consistent?

You say the promotional environment?

Yes.

I would say it is reasonably consistent, nothing out of the ordinary that we are observing.

(Operator Instructions). Anthony Lebiedzinski, Sidoti & Co.

A couple of questions. What kind of stock options expense are you assuming in your guidance for 2007?

We would expect it to be roughly consistent with the $2.3 million that we had for 2006.

And also, I was wondering if you can say as to at what point do you anticipate achieving operating margins similar to 2004?

Sure. Let me first kind of shed some light on this. As you recall, we've historically achieved operating margins in the 7% to 8% range. Operating margins for 2006 and what we are expecting for 2007 are lower than in the past due primarily to the higher cost of our new distribution center and administrative compensation expense and the higher audit SOX costs following the restatement of our financial statements. The costs were also being impacted, as we just mentioned, by the higher cost of the stock option expensing. So those are really the elements that we're having to comp against, and we believe that we can leverage these expenses in a meaningful way as our revenues grow. We do expect to be able to return to our historical operating margin levels and we would at this point think that that would be two to three years out.

That's helpful. Also, I noticed that your CapEx for 2006 was somewhat higher than your original guidance, which I believe was somewhere around $13 million to $14 million. Was that because you did more software upgrades that caused the CapEx to actually trend up higher? Or maybe you could just discuss that, if you can.

The CapEx for -- we made some additional investment in our distribution center. We have been investing further in our IT -- our MIS group. We are expecting our CapEx to be even higher for 2007, in the $17 million to $18 million range. We don't see a significant change in the cost when we open up a new store.

Those are really investments in each of our categories -- the new stores, the remodeling, a little bit in the distribution center, but also in our IS, and we are -- we've got a number of different exciting enhancements to our overall systems capability that we are looking at, including a new customer relationship management software. We are going to upgrade our loss prevention system. Also, an upgrade to our store wireless systems, an upgrade to our workforce management, and also an additional -- or enhancement to our financial reporting system, as well.

Sean McGowan, Wedbush Morgan Securities.

I have a couple of questions, if I can. First, transportation cost. What kinds of trends are you seeing there very recently?

Unfortunately, we in California here see an uptick in gas prices. So we'd seen those ebb over the last six months, and we are feeling the pinch a little bit here on the gas prices. And if they continue to edge up, that will impact us from a store distribution standpoint.

Steve, any products in this that drove the fourth quarter or the full year of last year that you might put on a list of things that you might not be able to anniversary against in 2007, any particular things that you think might not sustain?

As a matter of practice, we are not going to be specific in terms of talking about individual product areas or items.

Two other questions, then. In terms of stores, could you give us some sense beyond the first quarter of how the timing of openings might go?

Yes. As we said, beyond the first quarter, we would think that our opening schedule not be too dissimilar from last year. We may get a little more going, one or two more going by the second or third quarter. But it's still going to be a back end loaded --

Okay, so no big change from last year?

No.

Last question. Do you anticipate any significant impact on the first quarter from Easter shifting into April?

Easter didn't shift into April. Easter was April last year and it's April this year.

Jason West, Deutsche Bank.

Just a couple follow-ups. One, I was wondering if you were seeing anything new out of any of your competitors out there? Sports Authority being private, anything new out of those guys? Or I heard that Dick's is going to open a store up in the Northwest in the next year or so.

That's what we hear, too. I mean, I guess in terms of Sports Authority, I guess the fact is, as we recall, Copeland's closed a number of stores when [chaptering out]. I think they closed roughly 30 stores. Our understanding is that Sports Authority is reopening, has reopened some and will reopen in, I think, 11 or 12 of those locations, though it's sort of premature to comment specifically as any impact from that. The net result, though, is that a number of stores that previously were Copeland's will not be sporting goods stores.

But it's just, I think, part of the normal evolution of the competitive environment. I mean, we certainly faced a changing competitive landscape for a number of years, posted 11 years of positive quarterly sales gains. So we don't think that anything is way out of the ordinary at this time.

And who do you guys typically compete with for real estate? Is there anyone in the sporting goods category that you usually compete with, or would it be some other retail format?

I think for the most part I would say it's other retail formats. Our size box, there's really no one in the sporting goods field in our marketplace that has -- looking at those boxes at this time.

Jason, let me get back to you here. I think you asked the question of what was the favorable benefit in the fourth quarter related to the inventory reserve items. That was about $1.5 million, just so you know.

Okay, and we should think about that as being sort of flat going forward? Or was this a onetime catch-up type thing? Or how should we think about?

These things -- we have been experiencing, I think we've mentioned in periods before that we were experiencing favorable inventory reserve trends, lower shrink rates and things like that coming out of our distribution center. So I wouldn't say that that was -- this is a onetime thing. I'd like to think that we're going to continue to be able to -- well, I'd say, I wouldn't forecast continued significant reductions, but we look to be able to continue to improve on that going forward.

And ladies and gentlemen, that does conclude the question-and-answer session today. At this time, Mr. Miller, I would like to turn the call back to you for any additional or closing remarks.

Thank you, and we look forward to speaking with you again soon and certainly appreciate you joining us on today's call.

And ladies and gentlemen, that does conclude today's call. Thank you for your participation. You may now disconnect.