Caleres Inc (CAL) 2012 Q1 法說會逐字稿

Good morning and welcome to the Brown Shoe Company first-quarter call.

I would like to introduce Peggy Reilly Tharp.

Please begin.

Thank you.

Good morning and thank you for participating in the Brown Shoe Company first-quarter 2012 earnings call, which is being made available to the public via webcast.

I am Peggy Reilly Tharp, Vice President, Investor Relations for Brown Shoe.

Earlier today we distributed a press release with detailed financial tables which is available on our website at BrownShoe.com.

In addition, slides are available today on our website for you to reference during today's call.

Please be aware that today's discussion contains forward-looking statements, which are not historical facts and are subject to a number of risks and uncertainties.

Actual results may differ materially due to various risk factors including, but not limited to, the factors disclosed in the Company's Form 10-K and other filings with the US Securities and Exchange Commission.

Please refer to today's press release and our SEC filings for more information on risk factors and other factors that could impact the forward-looking statements.

Copies of these reports are available online.

The Company undertakes no obligation to update any information discussed in this call.

Joining us on the call today are Diane Sullivan, President and Chief Executive Officer; Mark Hood, Chief Financial Officer; and Rick Ausick, President of Famous Footwear.

Today we will begin with a strategy review from Diane, followed by a financial summary from Mark before turning the call back over for Q&A.

I would now like to turn the call over to Diane Sullivan.

Thanks, Peggy, and good morning, everyone.

Thanks for joining us.

You know, I am very pleased to report that we have begun the year by delivering a good, solid quarter which nicely beat our internal plans.

For the first quarter sales were $626.4 million while adjusted earnings came in at $10 million, or $0.23 per diluted share, a 44% increase over last year.

This performance was helped by our commitment to executing the necessary [prep] work around our portfolio realignment and to eliminating the related corporate costs, as well as better-than-expected top-line sales growth and good expense management during the quarter.

There is also no doubt about the fact that good weather, an earlier Easter, and easier quarterly comps were all to our benefit.

However, we are beginning to see through to the desired positive results from our restructuring.

At the infrastructure level, we have closed a factory in China and two distribution centers in the US.

At retail we accelerated our Famous Footwear real estate actions.

Our new stores are performing above plan and our store closings are also on track.

At the brand level, we began exiting several wholesale brands late last year and we are already starting to see the benefits from these efforts.

As you can see on the slides we provided, while we do expect to see additional costs related to our overall realignment effort, we expect to see more EBIT savings as well.

And I believe that is on slide four.

Throughout the year we will continue to evaluate our portfolio progress and the performance targets that we have set for our brands and businesses to meet or beat, and, of course, we will keep you updated along the way.

Now, in addition to the success we have seen in this area, we are also seeing momentum and executing in other areas as well.

For example, at Famous Footwear this was the second-best first quarter in our history with revenue of $347.1 million, up 1.3%, even with fewer stores.

Same-store sales were also better, up 2.5% versus 3.9% decline last year.

We also saw a significant improvement in operating margin at Famous Footwear, up 35%, over the first quarter of 2011 thanks in part to those store actions.

Our contemporary fashion brands continued to improve as well, up more than 20% in the first quarter.

Fashion-oriented consumers continue to buy shoes at an accelerated rate and our contemporary brands are on trend and on target.

The work that we have done at Franco Sarto and Sam Edelman is paying off with both brands reporting great results.

Both of their retail performances this spring season-to-date is just compelling and we are applying the same kind of discipline that has brought us this kind of retail improvement and success to these brands to our other contemporary fashion and celebrity brands as well.

So we will expect to see similar results from investments we are making in our Via Spiga and our Vince brands as we move toward the back half of the year and into next year.

I think I would also like to mention that Sam Edelman and I really believe that we are really at that right opportunity now to take a much closer look at retail.

We have just opened our East Hampton store again for the summer season and we are working to get a new Spring Street store in SoHo open in early September.

And we are really looking forward to the consumer reaction to both of those stores.

Now with our Healthy Living brands we are developing a pipeline of terrific product and you are now starting to see some of the benefit and positive results of our repositioning with Dr. Scholl's Shoes, which was up 12.4% over the first quarter of 2011.

We are taking a similar approach at Avia and Ryka by sharpening our brand positioning and accelerating product development, and I am excited about the potential of these brands in 2013.

Overall in Healthy Living, I believe our progress is going to accelerate in this area now that we have appointed John Mazurk Division President and he is now formally leading this effort, which I believe we announced a week or two ago.

So very, very pleased with that and looking for terrific things from John and the team.

Now with all of that said and despite a solid quarter with much stronger earnings, we, like many others, have experienced some margin pressure.

Rising input costs, price elasticity challenges with some of our brands, and the drive to keep our inventory fresh has dampened our gross margin somewhat.

So while the teams beat our gross margin dollar target, we need to work smarter to get our margin rate back to a more competitive level.

So after finding ourselves one quarter through the year and really moving well towards becoming that somewhat smaller, but leaner and more profitable, Brown Shoe Company, we are still operating with a healthy dose of realism as we know the majority of the benefit from our portfolio realignment is weighted towards the back half of 2012 and into 2013.

But we know that with great product, healthy inventory, and a good first quarter behind us I am confident that we can earn our way throughout the rest of the year.

Needless to say, we are also all looking forward to seeing you and telling you a little bit more about our progress at our investor conference on June 27.

So with that I would now like to turn the call over to Mark for a more detailed review of our financials.

Thank you, Diane, and good morning, everyone.

As Diane has already reviewed our consolidated sales, I would like to turn directly to our individual businesses.

Beginning with Famous Footwear, which is part of our targeted Family platform.

As Diane mentioned, the first quarter was the second biggest in our history.

What makes this milestone even more significant is the fact that we reached it while operating 68 fewer stores than in the first quarter of 2010, our best quarter, and 46 fewer stores than in this time last year.

For the quarter traffic and average unit retails were up, while conversion and pairs per transaction were down.

In the quarter, sandals were up 15% and running was up 18% as warmer weather across the country and an earlier Easter helped drive sales.

We believe this bodes well for continued improvement in sandals as we head into the height of the summer selling season.

We have adjusted our sandal allocation plan for this year to ensure we are getting fresh stock in the right doors at the right times.

Additionally, we saw good growth in other styles during the quarter, including kid's athletics, boat shoes, and women's and girl's wedges.

Turning to our wholesale operations, which include our Healthy Living and Contemporary Fashion brands, net sales were up 2.8% as sales of our ongoing brands exceeded the decline of sales at our exited brands.

Fr our Healthy Living brands, all-in Naturalizer sales, which include wholesale and retail results, were down 6.6% year over year.

Thanks to the warmer weather casual sandals and shoes did well during the quarter, but this growth was not enough to offset lagging sales in Canada during an unseasonably mild winter and early spring.

We did, however, see a significant increase in drop shipments to fulfill Naturalizer orders from our retail partners' online websites.

As Diane mentioned, Dr. Scholl's Shoes sales were up in the quarter with sport casuals our strongest sellers followed by sandals.

We are seeing good acceptance for our new product styles at retail and our alternate channel sales have almost doubled year over year as the turnaround efforts at this brand are beginning to bear fruit.

Avia and Ryka both had better-than-expected first quarters as the mild winter weather and a strong athletic season drove sales.

While we are pleased with this activity, as Diane discussed, we are still in the redevelopment phase at Avia and Ryka and are looking forward to bringing new product to market for 2013.

Turning to the other side of our wholesale portfolio, Contemporary Fashion, our ongoing brand investments continue to deliver results.

First-quarter sales were up more than 20% year over year as key growth categories, such as ballet flats, wedge sandals, and flat sandals, were all well represented in our spring and summer styles.

Shifting to our direct-to-consumer business, we saw sales growth of 6.7% in the first quarter with FamousFootwear.com up 18% and growth of 31.4% at Naturalizer.com.

As you would expect, we are paying close attention to expenses in this ever-changing business while simultaneously working to gain marketing efficiencies.

I would like to review our financial metrics in a little more detail now.

Overall, gross margin in the first quarter was 38.2%.

This was down approximately 180 basis points.

Of this amount 70 basis points were attributed to our retail operations and 110 basis points were attributed to wholesale, with 20 basis points of that related to exited wholesale brands.

The reduction in gross margin when compared to the first quarter of 2011 was primarily due to higher markdowns at both wholesale and retail as we aggressively manage the freshness of our inventory.

The decline in gross margin was more than offset by lower SG&A spend.

With spend at $218.9 million, SG&A decreased by 6.5%.

As a share of revenue it was 35%, down 280 basis points year over year.

These results were due to better expense control across the Company which is consistent with our cost reduction initiatives.

We also saw quarterly shipped and some marketing spend and we operated fewer retail locations on a year-over-year basis.

Net interest expense of $6.1 million was down more than $0.5 million from the first quarter of last year.

Our corporate tax rate was 37.9% in the first quarter, while depreciation and amortization was $13.3 million.

Capital expenditures for the quarter were $7 million and we ended the quarter with $124 million of borrowings under our revolving credit agreement, which has approximately $354 million of additional availability.

Cash and cash equivalents at the end of the first quarter were $39.8 million.

Inventory at quarter end was $512.8 million, down 4.1% year over year, and we are pleased with our current inventory management.

At the end of the second quarter we expect consolidated inventory to be up by about 3% as we prepare for the back-to-school selling season.

Before wrapping up the call, I would like to review our fiscal 2012 guidance.

While we are encouraged by our performance in the first quarter and are optimistic about our consumer platform strategies and the benefits we are reaping from our portfolio realignments, we are also cautiously monitoring the overall macroeconomic environment and the pace of the consumer recovery here in the US.

In total for 2012, which is a 53-week year, we expect earnings per diluted share of $0.53 to $0.65 and adjusted earnings per diluted share of $0.83 to $0.95.

Consolidated net sales of $2.57 billion to $2.59 billion.

Same-store sales at Famous Footwear flat to up low single digits and net sales at wholesale operation down low single digits, reflecting business exits.

Gross profit margin up 20 to 40 basis points.

SG&A of $920 million to $925 million.

Nonrecurring costs of approximately $20 million.

Net interest expense of $23 million to $25 million.

An effective tax rate of 38% to 40%.

Depreciation and amortization of $57 million to $58 million and capital expenditures of $58 million to $60 million.

Of note, some of our first-quarter marketing budget was shifted to the second quarter.

In addition, as we roll out our new back-to-school campaign, some marketing dollars that have traditionally been spent in the second quarter will now be shifted to the third quarter.

In total, marketing spend in the back half of the year is expected to be up $8 million year over year.

With that I would like to turn the call back over to the operator for Q&A.

(Operator Instructions) Scott Krasik, BB&T Capital Markets.

Good morning, everyone.

So just a couple questions about the comps in the quarter.

Can you talk about the [cadence] on a monthly basis and help us understand -- I am sure April was a lot lower than the other two months and how is that relative to expectations?

So obviously we don't talk about the quarterly comps on a specific basis.

February was bigger than March/April combined and March/April is pretty much indicative of the trend that we expect to have for the second quarter.

Okay.

Then one of your regional competitors last night called out that there was still a three-point comp headwind from toning.

Can you comment on that impact?

In the historical or future, Scott?

No, in Q1.

In Q1, ours was bigger than that.

Yours was bigger than three points?

Yes.

We weren't the market leader; we are number two so it's having a longer lasting effect on us.

So then maybe give us an idea for the next few quarters, how you see that impacting you.

Well, it gets less.

It basically drops a third for second quarter and another third in the third quarter and then by the fourth quarter it becomes almost a non-conversation.

Okay, that is helpful.

Then if you could just help us, because athletic is in such a strong cycle right now; it usually does dip a little bit before we get back into school and fall.

Are you expecting that trend?

Expecting it to dip?

To dip like just on a seasonal basis.

I don't think it will change.

I don't think the pattern will change, necessarily, then from history.

We have, again, a lot of news receipts, probably a bigger receipt plan in our athletic business for second quarter getting ready for back-to-school than we have ever had.

So I think the inventory will change dramatically between today and July 1.

We already have some new product in our stores.

We are already getting some good selling off of that product in the first week or 10 days on the floor, so I don't know that it will change dramatically.

This is kind of typical to how the season runs, but we think there might actually be a little opportunity in May and June because of how the new receipts are selling today.

Okay, that is interesting.

Then, Mark, I know you don't give quarterly guidance, but do you expect EPS on an adjusted basis to be positive in Q2?

You are right, we don't give quarterly guidance, Scott, but we would expect to be positive in the second quarter.

Okay, excellent.

Thanks very much, guys.

Good luck.

Thanks, Scott.

Jeff Stein, Northcoast Research.

Good morning, guys.

Good morning, Diane.

Couple questions for you here.

Diane, you talked about some of the successes you have had in the fashion brands Franco Sarto and Sam Edelman and perhaps applying some best practices to the other brands.

I am wondering if you could give us some specific examples of what is going right with Franco Sarto and Sam Edelman and how you can apply those learnings to the other brands.

Good question, Jeff.

Couple things.

First of all, both Sam and Franco business, just to give you a little frame of reference, our Franco business is up 20% season-to-date relative to last year and our Sam business is up 36%.

And I think the work that has been done over the last 12 to 24 months on both of those businesses is really about how do we really focus on who that core target customer is?

How do we narrow the assortments to what is really important, and then consistently flow great-looking product into retail stores and really be true kind of to the brand's DNA?

So I think they have found an interesting formula, and their sourcing strategy and their margin strategy is also going to be helpful for us as we look at things going forward.

So I think the other key thing, aside from Sam, we have a terrific leader in Jay Schmidt who is now responsible for all of our contemporary businesses with the exception of Sam.

So he now is responsible for our Carlos and Fergie business.

He has just done a great job with the repositioning of our brands with Via Spiga and Franco Sarto, and we are looking forward to him doing additional great work on the rest of the portfolio.

Got it.

So the learnings from Franco Sarto and Sam Edelman, again would we expect to see your other brands, Via Spiga as an example -- some of the takeaways that you are getting from the successes in Sam and Franco Sarto, will we be able to see that or should we expect to see that in Via Spiga's results later this year?

Sure.

And Spiga had a very good first half, too; first quarter as well.

I think I have mentioned in the past we have hired a new designer there about six or nine months ago, almost a year ago now maybe it is; Edmundo Castillo.

So we are going to see some of his first work this fall.

Actually, our business out there with Via Spiga right now is very good as well.

So all of them are moving in a really nice direction, Jeff.

The Sam and Franco piece of it is sort of the leading indicator of it all.

Okay.

Diane, can you talk a little bit more about Naturalizer and what is going on in Canada?

I am not quite sure I understand.

Was there a flow issue in terms of getting early spring product delivered on time or was it something else?

No, it wasn't about spring product.

It was actually -- it was boot -- frankly, it sounds crazy but it was a boot issue in Canada.

There was a much milder winter, it came late; historically it's a significant proportion of their business.

So it disproportionately affected our Canadian business and our retail business in the first quarter.

So it was one of those -- while we benefited in some of our businesses with warmer weather, as we have talked about, that was the one place where actually it was more challenging for us.

So if you were to back out Canada, Canada wholesale -- let's just look at Naturalizer wholesale only, not retail.

If we were to back out Canada's negative performance, would the US business have been up in the quarter?

Jeff, it's Mark.

I think we would have still been down slightly as, again, you might recall we had some SAP-driven issues in the fourth quarter of 2010 where we had about $6 million or $7 million of business flowed into the first quarter last year, which was also a little bit of a headwind for the Naturalizer brand format.

Got it.

Thank you for that, Mark.

While we are on SAP, any SAP issues lingering here in the first quarter?

Happy to report, no.

No.

Okay, that is good.

And, Dr. Scholl's, you discussed alternate channel sales are good.

I am wondering what that is in reference to.

That is in reference to the strategy that we have been working against for a while now Jeff.

We had a significant portion of the Dr. Scholl's business at Walmart for a long period of time.

We are still there and working well with them and growing our business there, but it was also important to expand distribution beyond that.

So that 12.4% is a nice, again, positive and early indicator about the growth in other mid-tier channels for Dr. Scholl's in our department stores.

Can you talk about any specific accounts, Diane, that you are selling that in now or channels?

For example, are you in the off-price channel?

Are you selling to TJX and Ross Stores?

I would tell you the ones -- right now the retailers that are performing well with it is our own Famous Footwear, course.

DSW is doing extremely well with it.

Belk is doing very, very nicely with it as well, and I know their online performance has been good as well.

So it's starting to be a little more broad-based.

Okay, great.

One real quick one for Mark and then I will let someone else ask.

Mark, can you break out for us what the $11.5 million of restructuring charges included during the quarter?

Sure.

Again there is a slide that talks about the costs in the aggregate.

But I think the big costs in the quarter would have been driven by Famous Footwear store closings and the closing of the Sun Prairie distribution center, which probably those two combined, as you will see in the segment reconciliation table, is about two-thirds of the $11 million.

Then the balance would have been additional costs associated with the factory closings and the wind down in the wholesale business exit, severance costs, etc.

Okay, thank you very much.

Thanks, Jeff.

Stephen Marotta, C.L. King.

Good morning, everybody.

Quick question.

First of all, congrats on a great quarter.

The marketing spend that was shifted from 1Q to 2Q, can you quantify that and can you also quantify what it is being shifted from 2Q to 3Q?

I know that there is going to be $8 million more in the back half of this year versus last year.

And, lastly, on marketing spend, what is the aggregate this year versus last year?

Just give me a second to look at my sheet, but I think the quick answer would be it's probably $1 million or $2 million that shifted.

I think about $2 million shifted out of Q1 into Q2 and I think a similar shift out of Q2 into Q3.

And of the $8 million we talk about I think about $5 million of that lands in the third quarter and three of it lands in the fourth quarter.

In the aggregate basis we are projecting to spend approximately the same dollar amount in 2012 as we spent in 2011.

Okay.

Can you talk a little bit about what the organic growth was in the wholesale division, so excluding what was the divested brands as well as the new licensed brands, the divesting of the new licensed brands as well post-strategic realignment?

We said that was up a little over 2%.

2.8% was the increase in our ongoing brands.

Okay, I didn't get that earlier.

As it relates to the gross margin cadence for the balance of the year, you are guiding to up 20 to 40 bps; you were down in the first quarter.

So can you talk a little bit about -- and I assume second quarter is a little seasonally one of the softer quarters.

Between the third and fourth quarter which quarter do you expect to have the most gross margin benefit and why?

Jill Caruthers, Johnson Rice.

Hold on, let me go ahead and answer that question.

Again, I think we would expect the largest improvement in the fourth quarter.

And, again, just a result of the ongoing, I will call it, anniversary of prior-year gross margin --

Difficulties.

-- difficulties.

Thank you very much.

Jill Caruthers, Johnson Rice.

Good morning.

Good morning, Jill.

To follow-up on the gross margin question, I believe last quarter you had expected an increase of 70 to 90 basis points gross margin for the year and now it looks like it has been tweaked down to 20 to 40.

Could you talk about that variance where you are seeing a lower outlook versus is it at the Famous side or the wholesale side and what is driving that variance?

I would say probably the decline relatively reflects our actual performance in the first quarter where our markdowns, as we talked about earlier, were a little more significant than we had planned or expected.

But having said that, we had expected Famous Footwear to have lower margins in the first quarter and improve as we moved forward in the year when we spoke last.

I think we would again expect the wholesale margins to incrementally improve as we look forward from the first quarter.

And into the first quarter miss on gross margin, I know you had higher markdowns, but what division really missed your plan I guess?

Again, I think Famous would have been probably about on target for where we thought it was going to be for the first quarter, if not a few basis points better, and we were worse on the wholesale side as we attacked our inventories aggressively in terms of providing for markdowns.

Okay.

And then if you could talk about the Famous side.

I know you talked about very strong double-digit gains in sandals and athletics.

Could you talk about maybe where some weaker categories are that you feel like you can improve on throughout the rest of the year?

Jill, again, it seems strange because the weather is so nice.

We obviously didn't have -- we had a boot hit for the first six weeks of the season in the sense of there is a relatively considerable business in our stores when we clear and get rid of boots, but when the weather was as good as it was that just doesn't happen.

So first part of the quarter it was around boots.

Other than that probably the only other categories that I would say were weaker than we expected, I think some of the dress categories weren't quite as good as we had hoped.

And our business there it's smaller in proportion than other people, so it wasn't as big a factor.

Then, frankly, the last piece of it is the bigger hit on the toning side.

So those were probably the three places where we got negatives in our business.

Appreciate it.

Just last question.

I think it's a follow-up from a question asked previously, but just trying to get a better understanding of the timing of the ex of the wholesale brands.

I believe it's going to be roughly $80 million revenue drag for the year.

If you could talk about how much of that flowed out of first quarter and maybe your expectations for the rest of the year.

Again, we will finish our shipping for that in the second quarter so the biggest drag comes in the fall where we are really not in business at all in those brands.

You have to bear with me for a second while I look for the first-quarter impact of that, but I want to tell you it was down.

So, again, in total we were roughly flattish so the balance of offsetting the 3% we would have been, call it, maybe we were down kind of low double digits in terms of the exited brands.

But the strongest carry-over sales would be in the first quarter.

Thank you.

Scott Krasik, BB&T Capital Markets.

Rick, let me just ask you a question.

In terms of your approach now with your BOGO week, I think you have done all the work there.

Maybe talk about your ability to drive comps without the excess of promotions, if you still feel as you did for the last year or two about that.

And then what impact you saw in the first quarter because you did have more markdowns than you thought.

You were more sales done in Q1 on a bigger promotion than you expected.

Yes, the markdowns are really relative to inventory reserves and things like that on our -- some lag on the inventory, which is primarily, again, toning as it gets into the age buckets that we have traditionally accounted for, Scott.

And some boots.

So those two are the biggest issues of why that is bigger and, frankly, we see that equalizing out over the course of the year and probably not necessarily being a drag on the future months as we look forward.

As far as the promotion, I mean we were 2.5% up store for store.

If I think about toning we would have probably -- without toning, we look at that without that number in there, that number would have been a high single-digit store-for-store increase.

So back to the conversation around why don't you do BOGO, that is one of the reasons.

We think we can drive the customer in.

We think we told them much better product stories.

We think we were able to have relevant merchandising ideas in our stores that the customer reacted to.

It's easier for us to build bigger stories and make sure we have value involved and we are doing that more frequently.

We are changing our look of our store probably every three weeks now as opposed to once every month or six weeks, and that is just keeping it fresher for the customer.

We think that is going to -- we are showing that the fact -- the stuff that we do put in the windows and the items that we actually talk about on our website, in our mobile site, in all of our digital media, social media, and in our windows are actually performing much better than we expected.

So we are learning the power of that and I think that is one of the lessons we thought was out there for us.

Now we are just figuring out how we turn that into a consistent message and use that to our benefit.

But that was part of what we were trying to get to and we think we are starting to see some results from that.

Okay, thanks.

Thanks, Scott.

Carla Casella, JPMorgan.

Can you just update on the store closures for Famous Footwear?

Is it still on track for 90 for the year?

Yes, it's Mark, Carla.

We are on track, actually a little ahead of schedule.

I think we closed 34 in the first quarter and we project 27 closings, I think, in the second quarter.

So the pace of closings is certainly on schedule, if not a little ahead.

Okay, great.

Then on the markdown environment, was that mostly the boot on the winter product or did you see markdown pretty promotional environment even in the sandals and spring wear?

No, our margins in our seasonal businesses were actually very good.

Based on where we would have been historically and where we are at in the season it's actually fine.

It was really around making sure that the boot inventory was clean and trying to take those reserves to account for that and for the toning shoes we still had lingering in our inventory.

So those were the two primary reasons.

It really wasn't on the current season and/or ongoing businesses.

Okay.

Then is it possible to quantify how much of the strength in 1Q might have been from the Easter shift, or do you typically get an Easter shift?

The Easter shift is really between March and April all the time, so when we talk about Easter shift it's not really anything that does in the second quarter.

It really has to do with March/April.

So, again, we have talked about our March/April being somewhat slower than February, but more consistent with where we ended in total for the quarter and where we would project the second quarter to be.

Okay.

Maybe just one final one.

On the wholesale environment and dealing with the retailers have you seen any change in view as it comes to -- relates to markdown money or sharing in margin compression given the change in strategy at JCPenney or any of the shift in some of your wholesale customers?

Not really, Carla.

We -- this is Diane.

At JCPenney we have a fairly limited business there and so we really look at that as actually more of a -- as much an opportunity as a risk for us at JCPenney, so we think that looks good.

As it relates to the rest of our business, pretty much the way it has always been.

Always the push to make sure that we are delivering terrific product at the right time.

If you do that you mitigate that risk on the margin downside.

Okay, great.

Thanks a lot.

Operator At this time [we have no] further questions.

I would like to turn the call back over to Diane Sullivan for closing remarks.

Just thank you for joining us this morning.

Appreciate it.

We are looking forward to speaking with you on June 27 at our analysts day along with second quarter in August.

So, anyway, thanks again.

Thank you, ladies and gentlemen, for participating in today's call.

You may now disconnect.