Central Garden & Pet Co (CENT) 2011 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

Welcome to Central Garden and Pet second quarter 2011 financial results conference call.

My name is Keisha and I will be your conference operator for today.

At this time, all participants are in a listen-only mode.

Later, we will conduct the question-and-answer session.

Instructions will be given at that time.

(Operator Instructions) As a reminder, ladies and gentlemen, this conference call is being recorded.

I would now like to turn the conference over to Lori Varlas, Senior Vice President and Chief Financial Officer.

Please go ahead.

Thank you, Keisha.

Good afternoon, everyone.

I would like to welcome you to Central's second quarter 2011 earnings conference call.

Thanks for joining us.

It's my pleasure to welcome you to today's call and introduce our other speakers.

With me on the call today, are Bill Brown, Central's Chairman and Chief Executive Officer, Gus Halas, who was recently named President and Chief Executive Officer of the Central Operating Companies, and Steve Zenker, Vice President of Investor Relations, also a recent addition to the Central team.

It's my pleasure to welcome both Gus and Steve to the call.

I'll now turn the call over to Steve to review the Safe Harbor statement.

Thank you, Lori.

It's a pleasure to be here.

As a reminder to everyone on the call, we issued a press release this afternoon providing results for our second quarter and the six-month period ended March 26, 2011.

This release is available on our website at www.central.com.

Today's call will begin with remarks from our speakers and highlights from our second quarter.

Our agenda is as follows; Bill will begin with opening remarks.

Gus will provide his perspective on our operations and we will then move to an overview of the second quarter.

Lori will review the second quarter financial results and then we will finish with our Q&A session.

Before I turn the call over to Bill, I would like to remind you of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

The statements made during this conference call which are not historical facts are foward-looking statements.

Central undertakes no obligation to publicly update foward-looking statements to reflect new information, subsequent events, or otherwise.

These statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by foward-looking statements.

These risks are described in the company's Form 10-K for the fiscal year ended September 25th, 2010 and other Securities and Exchange Commission filings.

Now let me turn the call over to Bill Brown.

Bill?

Thank you, Steve.

I'd like to begin by welcoming Gus Halas as our President and Chief Executive Officer of the Central Operating Companies.

We are delighted that he has joined Central.

Gus is an extraordinarily able businessman with a long record of accomplishment and transformational change.

He's been a consultant to the Company since 2009 and is very familiar with our operations.

This has allowed him to hit the ground running.

Gus is responsible for the operations of the Company.

The leaders of our two segments report directly to Gus who oversees the operational execution of our business.

I'm focusing my efforts on the long-term vision and strategic plan for the Company.

I'll also be focusing on strategic acquisitions that are synergistic and accretive.

In addition to overseeing the operations, Gus is partnering with me on our strategy to drive long-term profitable growth.

I'm delighted to report that we have expanded and strengthened the leadership talent in the company.

Over the past six months, we have added Lori Varlas as Senior Vice President and Chief Financial Officer, Janet Brady as Senior Vice President of Human Resources, Frank Palantoni as Executive Vice President and President of the pet segment, George Yuhas as General Counsel, and now Gus as President and CEO of the Central Operating Companies.

This team is already tightly aligned and moving forward.

It's a dynamic group with great leadership abilities.

The business world in which we operate is changing rapidly.

There are both new opportunities and competitive challenges.

Successful companies adapt to changing environments.

We've carefully examined the landscape and we believe there are significant opportunities ahead.

Our team has been put together to pursue those opportunities and is laser-focused on delivering value.

In the last several years, we've strengthened our balance sheet, reduced our investment in working capital, and got the business back on profile.

Now, we believe we are operating from a position of strength.

Looking forward, we are intent on leveraging our strong product portfolio, our distribution network, and talented employee base.

We are committed to making transformational change within the business to deliver long-term value to our shareholders.

Before we discuss the second quarter results, let me turn the call over to Gus Halas who is back with our pet group in New Jersey, and Gus let me welcome you to Central and to the call.

Gus?

Thank you, Bill.

It's great to be here at Central in official capacity and now part of the management team and frankly I'm looking forward to our journey of success and excellence.

I joined Central Company for many reasons but primarily because I believe there's tremendous opportunity to grow the Company and drive significant operational improvements which will deliver strong bottom line results and increase shareholder value.

I feel my core competence is in installation of processes and systems and Bill has asked me to lay the foundation for those processes and systems that will allow us, and to use his words, build a company and a culture where people do great things with excellence and build a vibrant, growing, long-term, sustainable, great company.

I have another way of making that same statement.

We will be a metrics-driven successful learning organization.

What does that mean?

It means as an organization, we will be judged purely on performance and we will never stop learning or improving.

There will always be another mountain to climb or a higher goal to achieve which is why I've called it a journey, instead of a goal because if we are successful, we will never reach a final goal.

We will be constantly improving and reaching new heights.

We owe it to our shareholders, our customers, and our employees to do so.

In any best-in-class organization, the foundation starts with the operational and enterprise excellence consisting of two components, one being growth, the other one is supply chain.

To drive growth, we must focus on the voice of the customer and consumer and by that, we mean innovation.

We must have the voice of the customer embedded in our processes in order to delight them in every possible way.

This will drive our processes and organization and eventually will lead us to success.

We are and will continue to invest in innovation and we will be focused on building a robust product pipeline to ensure that a substantial portion of our revenue comes from new products.

We will focus on brand building and driving increased customer awareness of the quality and benefits and position of our products.

By doing those along with many other customer initiatives, we hope to increase our revenue and earnings while delighting our customers.

With respect to supply chain, we will focus on leveraging our strengths and our size while driving efficiencies and reducing costs.

We are embarking on a journey of operational excellence that we are convinced will reduce cost, increase efficiencies, and reduce our footprint.

As I look at our business, I see ample opportunity within Central to grow and deliver increased shareholder value.

It will be up to us to unlock that value.

As I mentioned earlier, I am very pleased to be on the journey with the Central team which is composed of excellent long-term employees along with new professionals with capabilities for a continuing transformation.

I will now turn the call back over to Bill for an overview of our second quarter results.

Thank you, Gus.

We're pleased to deliver top line revenue growth in both the first and second quarters of 2011.

Our second quarter revenue reflects significant growth, primarily in our garden product segment as the garden season began and customers drove strong demand for our products.

The $41 million increase, or 19%, in our garden products is primarily due to increased sales of premium grass seed, garden and control products, and other garden supplies.

As many of you know, the spring garden season spans our second and third quarter.

The first half of the garden season was very strong and we experienced large volume increases in the quarter.

Our pet product segments revenues grew $3 million over the prior year.

Turning to our gross margin, we were impacted by continued grain cost increases which resulted in a decrease in our gross margin contribution.

Prices for key commodity bird seed ingredients such as milo, sunflower, and corn increased in excess of 40% in the quarter, compared to last year and we are up significantly when compared to the first quarter.

We took price increases throughout the quarter.

However, commodity prices continue to rise and increases did not fully cover the acceleration in our input costs.

The full quarter benefits of the prices taken in the second quarter will show up in the third quarter.

We continue to work with our retail customers to mitigate the impact on our results.

As we discussed last quarter, we increased our investment in marketing and brand building activities and these investments remain a focus for us.

Our investments include both short-term and long-term initiatives.

We have received ongoing positive feedback on our ad campaigns during the garden season and have experienced strong demand for our products.

In addition to investing in our brand building, we continue to focus and invest in innovation.

We view the expenditures and brand building and innovation as core to our growth.

On the acquisition front, in late February we acquired the assets of a privately-held maker of fertilizer for professional and retail markets for $23 million.

While the acquisition is not expected to have a material impact on the company's 2011 financial results, it will enhance our capability to service national retail and professional fertilizer markets.

In summary, we delivered strong revenue growth this quarter, a continuation of the growth we delivered in Q1.

We saw very strong demand for our garden products which drove double-digit sales increases.

Our gross margin and bottom line results were adversely impacted by a significant rise in raw material input cost.

We continued to take steps to mitigate the impact of the rising input costs on our earnings and our focus on driving efficiencies throughout our business.

We are continuing to step up investment in our brand building and to support our portfolio of strong products.

Innovation, brand building, and operating efficiencies remain our focus to deliver profitable growth.

I'll now turn the call over to Lori for a more detailed review of our financial results.

Lori?

Thanks, Bill.

Let's start with our income statement.

We delivered a second consecutive quarter of revenue growth with an overall increase in sales of 10% in the second quarter of 2011, compared with second quarter of prior year.

Second quarter sales for both our garden and pet segments increased over the prior year.

Revenues for our garden segment grew 19% and revenues for our pet segment grew 1%.

Net sales for the second quarter of fiscal 2011 increased $44 million, to $486 million compared to $442 million a year ago.

Branded product sales increased 13% to $417 million, a $49 million increase.

Sales of other manufactured products decreased $6 million, or 8%, to $68 million.

Our garden product segment delivered significant gain in revenues as the spring garden season got underway.

The spring garden season generally runs from March through mid-June.

Our drive in product segments sales increased by $41 million to $260 million.

Garden branded product sales were $231 million, an increase of 25% from [$46] million.

Sales of other manufacturers' garden products were $29 million, a $5 million decrease over the same period last year.

Our Pennington Smart Seed, which as you may recall is a premium product which uses up to 30% less water than ordinary seed, and our 1 Step Complete product, with a combination of seed, mulch, and fertilizer, making starting and repairing the lawn a simple task can be done in one step, were well received by consumers.

Increased sales for these products were propelled by promotions and new packaging which highlights the high performance and benefit of these products.

Grass seed sales increased $16 million over the prior year.

We also experienced strong demand for our garden chemical and control products which grew by $14 million and our other garden products which grew by $9 million over the comparable prior year period.

The sales increases are due primarily to volume.

While much of the garden season's ahead of us, we are pleased with the early results in the significant sales growth we delivered in the second quarter.

Second quarter pet products segment sales were $225 million, in line with Q2 of last year.

Pet branded product sales increased $3 million to $186 million and sales of other manufactured products were $39 million in the second quarter of both the current and the prior-year period.

Moving to our gross profit, rise in grain and other raw material costs impacted our gross margin.

For products which have a high percentage of commodity input such as bird feed were adversely impacted by rise in commodity prices which are not fully offset by price increases taken throughout the quarter.

Our bird seed products include grains such as milo, millet, sunflower, and corn which have been increasing in price.

We also saw rising costs for our garden chemical inputs and for our pet food materials which contain grains or animal products.

Input costs increase both year-over-year and quarter-over-quarter.

Although many of our key raw materials are not traded on the open market, we buy forward where we can to mitigate rise in costs and have been working with our retail customers to increase prices to offset the rising raw material input costs.

We implemented price increases that took effect at different times throughout the quarter.

We continued to monitor input costs and engage in discussions with our customers.

The company's gross profit for the second quarter increased to $162 million from $161 million in the second quarter of 2010.

Gross margin decreased to 33.6% from 36.5% of sales in the comparable year ago period.

The gross margin decline was driven largely by increasing raw material costs.

Turning to SG&A, selling, general, and administrative expenses as a percentage of sales declined to 21.3% of sales, reduced from 22.8% in the comparable prior period.

SG&A expenses for the second quarter were approximately $104 million, up $3 million over the prior year.

We continue to drive operational efficiencies, carefully manage our cost in overhead, and support strategic business investment.

Operating income for the three-month period ended March 26, 2011, was $59.6 million compared to operating income at $60.5 million in the comparable quarter last year.

The garden segment delivered operating income of $46.9 million compared to operating income of $36.8 million in Q2 2010.

This was a $10 million or 27.5% increase in operating income, driven by increased sales and partially offset by higher raw material input costs and our investment in marketing and brand building activities.

The pet segment's operating income declined to $23.4 million, from $34.8 million in the second quarter of last year.

Rise in commodity costs and our investment in brand building activities contributed to the decrease of the pet segment's operating income.

Net interest expense for the quarter was $9.3 million, compared to $9.8 million for the second quarter of 2010.

The Q2 2010 interest expense reflects cost incurred in connection with our March 2010 refinancing.

The 2011 interest expense reflects a higher average interest rate and outstanding balance.

Our average borrowing rate for the quarter was approximately 8.1% compared to 5.8% a year ago.

Our Q2 2011 effective tax rate was 36% compared to our second quarter 2010 effective tax rate of 36.8%.

Our Q2 tax rate benefited primarily from additional tax credits in fiscal 2011.

We expect our expected income tax rate for fiscal year 2011 to be similar to the prior year.

Net income was relatively unchanged from the prior year, while the weighted number of shares on a fully diluted basis declined from 64.9 million shares to 58.4 million shares.

Net income for the quarter was $31.8 million or $0.$0.54 per fully diluted share, compared to net income for the second quarter of 2010 of $31.6 million, or $0.49 per fully diluted share.

Let's turn to the balance sheet.

Our current cash and short-term investments balance at March 26, 2011, was $26.5 million in line with the prior year.

Accounts receivable were $327.1 million, an increase of $49.7 million or 18% compared to last year.

The increase resulted primarily from increased billings for the higher Q2 revenues.

Inventories were $381.8 million, an increase of $51.2 million or 16%, which includes the effects of our buildup in inventories in advance of expected continued sales growth and increasing raw material costs.

Accounts payable were $163.6 million, an increase of $16 million compared to last year.

Total debt at March 26, 2011, was $517 million compared to $415 million last year, and included $117 million drawn on our revolver.

We used $111 million in operating cash flow during the quarter, largely due to the increase in receivables associated with strong sales and the build with inventory in anticipation of seasonal demands in the third quarter.

This is partially offset by an increase in accounts payable balances.

We used $32 million in investing activities including $23 million related to the acquisitions and $9 million related to capital expenditures in support of our operational improvements and the conversion of our legacy system to an enterprise-wide information technology platform.

During the quarter, we repurchased approximately 900,000 shares of our voting common stock and 3.2 million shares of our non-voting Class A stock at a combined cost of $39 million under the share buyback program, approved by the Board of Directors in July of last year.

Approximately $27 million of the share buyback program remained available for repurchases at the end of the second quarter.

In summary, we were pleased with the sales growth, are working diligently on managing commodity costs, and remain committed to driving operational excellence and profitable growth.

I'll now turn the call back to Bill.

Bill?

Thank you, Lori.

So in conclusion, our revenues grew for a second quarter with our primary growth coming from the garden products segment which grew 19%.

While sales grew significantly, our earnings were impacted by the continued rise in input costs and by our strategic investment in brand building.

We are investing to enhance consumer awareness in the quality and benefits of our products.

We are focused on innovation and growth as drivers for the long term.

Before we move to Q&A, I want to recognize and thank all of our dedicated employees for their commitments and efforts in driving these results.

They, along with the new members of our team, are building something special.

I'd like to open the call for Q&A.

Operator?

Thank you.

(Operator Instructions) Please standby while we compile a list of your questions.

Our first question comes from the line of Bill Chappell representing SunTrust.

Please proceed.

Good afternoon.

Hi, Bill.

Just diving into the top line first, certainly the garden revenue was impressive, but just trying to understand how much of that was easy comps with a pretty tough garden season last year and the strength of the overall grassy category versus how much was brand building or market share gains?

I wish I had the magic wand that could split it into the pieces and know exactly what that is.

These kinds of things are a collage that you've got to put together and I wouldn't want to hazard a guess.

We know that the brand building and the things that we did were significant and our general sense is that this season, at this point this quarter, was strong.

Looking grass seed, is grass seed largely the March quarter?

Or does it really carry over into June as well?

We'll have been the April, May, June period, we will have meaningful sales.

Okay.

And then maybe switching to pet, can you give us a little bit more color?

I think if I'm right, a year ago the pet business was hit by some supply disruptions and it was actually down 3% year-over-year.

It seemed like it didn't grow as fast as the category for this quarter and didn't know if that's just timing of some of your brand building initiatives, and maybe it should accelerate in the back half of the year?

Or if there's something else going on?

Well, I think on the parts of pet that are the bird-related products, because of the change in the prices and the dynamics going on there, there is some impact on consumer takeaway.

Similar kinds of things are happening in a few other areas.

Overall, we feel very good about the business and we think our prospects are quite good.

So you think you can accelerate as we move towards the rest of the year?

Well, that would be our desire and intent.

And then just switching to two final questions.

One, Lori, if you could give us what the share count was at the end of the quarter.

And then, Gus, I apologize, I'm still not sure I understand what CEO of the Central Operating Companies means so maybe you can talk a little bit about your role, what it was before, and what changes you see happening over the horizon.

Thanks.

Lori, you want to go ahead?

Yes.

So on the share count, were you asking at the end of Q2 '11 versus Q1 '11?

Yes.

I assume you bought 4 million shares through the quarter, it showed $58 million was the average, so I'm assuming the share count is around $56-ish now?

Yes.

So the share count at the end of the quarter was for Class A common stock, 39,955,882, and for our common stock it was 14,856,703.

Okay.

And no change to our Class B stock.

Okay.

Perfect.

Well, let me talk to the title.

Gus has been the CEO and done some terrific work with several different companies.

He's the CEO caliber guy.

We have a big operating company that needs that kind of leadership.

Gus and I are partnering up side by side to drive this business forward and the title reflects the scope of the responsibilities and the stature of him.

Is that helpful?

Yes, that's great.

I mean, I would love to hear, Gus, if you have any kind of prospective coming in as a full-time employee versus a consultant.

What changes in your role?

The changes it --

You want to speak to that?

I'll be happy to.

The changes come -- as a consultant I was conferring, cajoling, encouraging in terms of what we needed to do and now I'm going to have direct responsibility and I'm going to be engaged at a level that the organization has not seen me as engaged before, even though I'm pretty intense under normal circumstances.

I think as I mentioned earlier that there's a lot of opportunity on really all facets of the company from supply chain innovation, growth, brand management, the whole nine yards.

This is not a stretch from where I was before and it's just going to be more focused and we're hopefully going to another level of speed, if you will, because we need to do things yesterday.

So a lot more is integrating and turning us into a company that we can extract all the synergies out of all of our products and our brands and what we're going to be doing going forward.

I don't know if that gives you enough.

If not, ask me a more direct question.

That's great.

That helps for color for now.

Okay.

Next question please.

Our next question comes from the line of Joe Altobello representing Oppenheimer.

Please proceed.

Thanks.

Good afternoon, guys.

Hi, Joe.

Hi.

Just first question, if you could quantify, the amount you spent this quarter on brand building and advertising and maybe compare it to what you spent last year?

You know, I've always avoided those kind of discussions, Joe.

I don't think I really want to start today.

It's up meaningfully.

Okay.

But if we look at the entire advertising budget last year, it was, call it $35 million.

So is it up 20%?

Is it up 30%?

How significant was the increase?

I think I already answered that, Joe.

Okay.

What else do you want to know?

Let me see here.

I've got a bit of a list.

I guess in terms of the garden season, it sounded like the sell-in was very good.

Could you give us some insight into how the season progressed through April, how the weather was through April, and where you stand in terms of retail inventories.

As it relates to the garden season, if you look at weather patterns, it breaks differently across the country.

If you look at early in the season, obviously, the South's garden season hits early.

And then the Northeast, Midwest, and Pacific Northwest are in the process of [breaking] now, so we'll just see how that spans the next several months.

So it breaks unevenly across the country.

You know, last April, a year ago, as I recall, very, very strong and then May and June just really slowed up.

This April looks to be solid and typical for what we've seen of it and we'll have to see how May and June shape up, which will tell us about the quarter.

Okay.

That's helpful.

And then I guess one for Gus.

You're clearly not a newcomer to Central.

What do you think are the most significant opportunities that you see over the next six to 12 months?

The areas of focus is really what we've been talking about.

There really is, I hate to oversimplify things but there's two areas, one is the supply chain side because we have to get much better.

We started on that journey and now we are just accelerating it on the supply chain side to make sure we get optimum results from that side.

So there's a lot of work being done on the supply chain organization and how we are going to go to excellence.

We are going to start operational excellence very soon.

And then on the growth, we have to focus on innovation.

And the voice of the customer and the voice of the consumer, the first thing that it would tell us is innovation is key.

So we're expanding a lot of our energy, money in terms of innovation and the branding and how the presentation of the company.

Our customers and our goals are very much aligned so when you put those side by side, the innovation, the branding, the product management, and how we go to market are extremely critical, not only to us but to the customer at the same time.

So the whole idea is how do we get aligned and how do we move forward along that line?

Did I answer your question directly?

Yes, you did.

That's helpful.

Thank you.

Thanks, guys.

(Operator Instructions)

And our next question comes from the line of Carla Casella representing JP Morgan.

On the pricing increases that you've taken, you've mentioned that will continue to benefit as we go forward.

Can you talk a little bit about on the industry side what you're seeing in terms of the competitive set?

And is everyone taking pricing?

How much of the price increases this year will offset cost increases?

Well, the goal for every manufacturer is to get price increases to offset the cost increase.

The retailer and the consumer is certainly not interested in seeing that happen.

And so there's a good healthy tension about how do you work your way through it.

And there's always the issue of who goes first, and who follows, and how big.

One of our businesses is in the Avoderm, our premium dog food line, and there's been quite a movement.

We waited for a while and very quickly now, the price increases are coming through across each of the manufacturers.

So there's a case where you could see holding back and then boom, boom, boom.

Same thing happens in each of the areas.

You mentioned that the consumer does start to trade down or get effected when you see huge price increases.

Are you seeing yet a trade-down from branded to private label?

Or from these premium type products to more middle market products, I guess?

Well, we have a very diverse business and to answer that question, we'd have to look at each of the different areas of the business.

I don't have a sense that we saw that in the grass seed markets at all.

There is some of it in bird feed but I think the thing that we've seen in bird feed is perhaps people not buying as much, and so not so much a tradedown -- it's some of that -- but some is also a reduction in demand.

Just as I was listening to the news coming in today and they were talking about how much gasoline consumption has dropped as the prices have gone up, there's a certain elasticity in a lot these.

Right.

What percentage of your pet business is bird feed now?

That's not a number that we disclose.

It's one of a number of pieces of that business.

Okay.

Great.

Thank you.

(Operator Instructions)

And our next question comes from the line of Jack [Ripsteen] representing [Potrero] Capital Research.

Please proceed.

Hi.

Good afternoon.

Thanks for taking my call.

I wanted to ask about the garden business, in particular how close do you think your customers are buying in terms of inventory management?

So is there a big buy-in as they're cognizance that there will be price increases, and commodity increases, et cetera, and how lean or fat are their inventories?

Great question.

You know, I've been doing this a number of years and over the years, many years ago people would buy in the fall in these big incentive programs for November, early December shipment.

Then it got delayed into January and now it's February and things are much, much tighter at retail, much more just in time and I don't see any fatness in the inventories at retail.

I see a continuing leaning down and on our part a need to be very agile and very quick about responding to demand.

So there wasn't overperformance or outperformance in the garden for this period?

It had do with just the normal buying?

There wasn't any sort of scramble on their part to get ahead of you guys in terms of the cost pressures?

Gosh, no.

No, not at all.

Okay.

Great.

Thank you.

And our next question is a follow-up from the line of Bill Chappell representing SunTrust.

Please proceed.

Thanks.

Just want to follow up and you may have missed this, but on the bird seed or the commodity inflation, have you caught up?

Does the March quarter reflect the worst of the pressure we'll see this year?

Or are we still playing catch up through the remainder of the year?

Well, if the commodity prices hold where they are, you could probably say that we saw the worst of it, in terms of the impact on the business.

But we compared this back to, I think it was 2008, when we had the last commodity spike and this one went as high, maybe a little higher, and it seemed to go up about twice as fast, Bill.

So it's been very striking.

And we'll just have to see.

Is it going to level out at these levels or it's going to come back down?

An awful lot of people would think there would be a period where it comes back down and then a number of other folks would say, eh, it's always different.

So we will be adjusting our business accordingly.

And if I go back to the fun 2008 timeframe, I think it took like six quarters to catch up to the pricing.

It seems like you've caught up a lot faster this time.

Yes.

I think we learned some things and we have put in processes.

When you have that [route] that arrives you just can't get it all.

And just on the acquisition, can you maybe quantify what your total fertilizer business is?

I think I'm right in saying you picked up maybe some Wal-Mart or Lowe's private label business this year on the fertilizer that you didn't have a year ago?

We've had some successes in the fertilizer market.

That's not a number that we disclose.

But is that the prime reason for this acquisition in terms of enhancing that part of the business?

It's complimentary.

They did some processing of product on our behalf as well as the business there, so it compliments and strengthens our capabilities.

Great.

Thank you.

(Operator Instructions)

Well, thank you for your questions and thank you for joining us on the call today.

And we'll look forward to seeing you next quarter.

Thank you.

Ladies and gentlemen, that concludes today's conference.

Thank you for your participation.

You may now disconnect and have a great day.