Churchill Downs Inc (CHDN) 2002 Q1 法說會逐字稿

Please stand by, we are about to begin. Good day and welcome to the Churchill Downs call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Mr. Mike Ogburn[phonetic].

Good morning and welcome to the conference call to review the company's results. The result [inaudible] in a press conference covered by the financial media. Let me also note a release has been issued advising of the accessability of this conference call on a listen-only basis over the Internet. Let me express some statements will be forward-looking statements as defined in the Private Securities Reform act of 1995. Forward-looking statements are statements that include projections, expectations or beliefs about future events or results or otherwise are not statements of historical fact. Actual performance of the company may differ materially from that projected in such statements. Investors should refer to statements filed by the company with the Securities and Exchange Commission for discussion of the factors that could affect Churchill Downs operations and the forward-looking statements in this call. The information being provided today is of this date, only. Churchill Downs Incorporations expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any changes in expectations. I will now turn the call to Tom Meeker, President and Chief Executive Officer.

Welcome, everyone, and thank you for joining us to discuss the results of our first quarter. In forward-looking statements, we were party to a number of forward-looking statements over the last week or so. Unfortunately, none of them came true. Waremblem[phonetic] was successful in winning the Kentucky Derby. It was certainly a surprise here as the result of the derby came in.

During this call, I will give you a few general comments about our performance during the first quarter and offer guidance for the second quarter and year-end. Thereafter, John Long, our COO will outline the progress of the Winning Colors program. This is our best practices program that is a vital aspect of integrating our operations. He will have a few comments about the progress we are making in the area of in-home wagering. Finally, Bob Decker our CFO will give you an overview of the financials and provide specific second quarter and year-end guidance. While we had virtually no racing in the first quarter, the company performed better than expected and better than the street's expectation. This was primarily due to expense control, which in part was driven by the Winning Colors program.

In February, we had not found our insurance coverages. At that time, I indicated to you in our conference call we expected increases in premiums and reserves to be in the range of 30-50 percent above 2001. We have now found all elements of our insurance program at coverage levels substantially the same as we had in the past. The increased cost associated with this year's program is approximately 50 percent higher than last year. This is just one of the legacies of 9-11 and will provide another change for our company and all of American business in the year to come. Now, I remain confident we will be able to absorb these additional costs and remain within the year-end earnings guidance we gave you in February. In February, I also indicated that alternative gaming legislation was being considered in Indiana and Kentucky. Indeed, alternative gaming legislation was a matter of much discussion during both sessions, however, no bills were passed. The Kentucky and Indiana legislators have adjourned, but both will return in the next few weeks to address various budget questions. The purpose of this special session in Indiana will be to pass legislation to shore up significant revenue shortfalls they are experiencing under their current budget. The Kentucky legislature is faced with the challenge of passing a bill, which it failed to do in regular session, as well as an additional special session following just upon the close of the regular session. Given the budget problems in both states, and the potential to mitigate revenue shortfall with alternative gaming, I remain cautiously optimistic alternative gaming legislation will be considered in both states at some point. We recently announced the reorganization of Sediasan[phonetic] our content simulcasting operation. This operation has been managed at the corporate level for the past four years, but various aspects of the operation, such our Internet platform and our marketing effort were managed within different departments. Now, they are under one roof. This change provides two clear benefits to the company. First, the change provides us with a management focus and efficiencies to have the entire operation under one roof. Second, it affords us the opportunity to report the results of this operation as a separate reporting segment in our financials. I believe this will assist the investor community in measuring the performance of this critical operation. The Kentucky Derby and the Kentucky Oaks were run last week. While we do not final revenue and expense numbers, the early indications are it was a great success. We set wagering records on both on-track business, as well as off-track. For both days, wagering was up, on track and in the simulcast market. Total Oaks was up 15.4 percent and Derby wagering was up 14.5 percent. The overnight television ratings were equal to that of last year when NBC first started telecasting the Kentucky derby. Attendance for both days was 246,000, some four percent down from last year. The decline in attendance appears to be related to the increased security measures that we implemented due to 9-11. While we are just beginning our racing seasons across the entire company, the early results that I see are encouraging. Clearly, the increase in insurance costs will provide us a challenge this year. However, I remain confident the year-end guidance we gave to you in February will be met. Bob Decker will give you more details on that when he takes the mic.

Now, let me turn the conference over to John Long, who will update the Winning Colors program and in-home wagers. John.

let me bring you up to date on Hollywood Park, Churchill Downs and [inaudible]. They opened late last night. Hoosier Park opened about two weeks prior to that. It is really too early to tell how the business is going to go for the balance of the racing, but so far, so good. Handle at each location is at or above planned. There is relation to TGB, we are encouraged about the deployment of TGB. TGB currently has, as of the beginning of May, about 25,000 subscribers nationally. 7,000 of those reside in California. It appears they are signing up 150 to 200 people per day. TGB believes half of their business will be coming out of California, as Hollywood Park gets into their racing season. The Derby was a tremendous event here at Churchill and the rest of our facilities. Derby and Oaks were up about 5 and a half percent from prior year. Derby was up about 19 percent, from prior year. As it relates to TGB, the Oaks client significantly from 2001, to $625,000 this year. The Derby had a more significant increase. With a $2.2 million handle from TGB on the Derby, compared to roughly 825,000 the prior year. We are encouraged about the deployment of TGB. You may have seen last week TGB announced a license agreement with American Tab. TBG has licensed their product with American Tab, who in turn sublicensed the agreement to Bristnet[phonetic] and one other account wagering provider. We believe that that will increase the amount of coverage that our products are going to have across the United States.

As it relates to bringing you up to speed from the program we announced last year. Winning Colors program is a best practices program, which is the same as margin improvement program. The program is very exciting in that we are not adding any new staff to implement these programs throughout the course of the country. These Winning Color teams are made up of the current workforce. The teams come into play and identify the best practices across the country and design programs for their implementation and the teams disappear with their work concluded. The benefits of this best practices program is clearly the impact on profitability. But, second to allow our mid-level managers in the company to influence the profitability of the company as a whole. It is also a great way for us to start spotting stars of the future. Let me give you a couple of examples of the successes we have had with Winning Colors over the last 9 to 12 months. We focused exclusively in this last year on the number of runners per race, the number of horses that run each race. And I am pleased to say we were able to show improvements in every one of our meets last year, with the exception of the Hollywood Park spring meet. There is more and better betting opportunities. The Winning Colors program was further supported by a coordinated stakes program, which was written, directed and implemented out of Churchill Downs corporate. We are better able to manage the horse inventory, especially in places like the Midwest, where we were able to ban horses from Churchill to Ellis and Arlington Park and back again. We are able to write stakes programs and we are not competing amongst our own tracks for the same horses. The second example of one of the Winning Colors initiative and one which will continue this year is the amount of handle pushed to the self serve machines. We were able to show increases significant increases in the self-serve usage in every location last year. So much so that we were able to offset any increases that came from wage rates and betted in union contracts. Actually in almost every location, the amount of labor and the wages we paid as a percentage of total handle declined in 2001, versus the prior year. We are also focusing on the amount of CBSN or Churchill product simulcast at racetracks and OTB. We saw growth in that market share last year and targeted higher growth for OTB management this year, which will be tied to a management bonus. Another example is the twin spires club, which is our player program. The basis of our cusTomer relationship management strategy.

In 2000, we had 6 -- excuse me, that is correct. In 2000, we had 6,000 members signed up in the Louisville area. By the end of this year, we are projecting we will have 50,000 members signed up into the Twins Fire[phonetic] club. It is based on tiers, level of play. We contract the play and know Twins Fires[phonetic] club members play on our product, which is another way for us to drive share. This year we are looking for 15 percent increase in group sales across the country. One of the Winning Colors initiatives for 2002 is the best marketing tool for attracting new fans. It is a new relationship of the concession area with Leavey[phonetic] restaurants. Leavey[phonetic] is recognized as the high-end racing and sports concession across the country. We are leveraging our relationship and our community relations initiatives so they can become a profit center, as well, utilizing this group sales program across the country, finding community partners, which support us as we support them.

One of the initiatives we are taking this year is a real focus on workman's comp. Last year, we implemented a pilot program at Hollywood Park. Hollywood Park saw a 38 percent reduction in workman's comp, versus an 18 percent across the country. We want to fine tune that program and roll it out across the rest of the racetracks this year. We focused a lot of time on training over the last year and a half, specifically with programs out of Churchill Downs University. Last year we trained 2,000 full and part-time employees. I would expect we will train nearly 3,000 over the course of this year. Other Winning Colors programs, which are all about the way Churchill Downs operates in its communities is integrated, organized volunteer program, which we have entitled Helping Hands and joined forces with the retirement foundation in a program called Green Pastures that places horses into second careers after racing. We are the industry leader in these initiatives. I will turn the call over to Bob Decker our Chief Financial Officer.

Good morning, ladies and gentlemen, although the first year loss of 92 cents is greater than last year's per share loss of 84 cents, it is better than the guidance we previously provided to you of a loss of 94-97 cents for the quarter. The net loss for the quarter was $12 million, which compares to a net loss of $11 million in 2001. As we reported in the press release and Tom described, the increased loss was driven by increased insurance expense and lobbying costs related to the legislative effort. There are a few other specific items I would like to point out in the financials for the first quarter. Net revenues of 31 million decreased by $700,000 or 2.3 percent compared to last year. A significant portion of the decrease is a result of the decrease of 19 live racing days at Hoosier Park, which were eliminated as part of a decision we made to eliminate 33 days of unprofitable racing at Hoosier Park. We experienced a change in revenue at Hollywood Park, based upon the outsourcing of food and beverage operations to Leavey Restaurants. Operating expenses increased by a total of $1 million or 2.2 percent. Most of this increase is again the increase in insurance and lobbying expenses. However, Calder Race Course incurred $600,000 in the first quarter because it is 2002 live racing meet started one month earlier than it did in 2001, which brought the start-up costs from April into March or the first quarter. The good news is insurance expense decreased by 800,000 or 25 percent as a result of a combination of lower interest rates and our continued reduction in long-term debt levels. The supplemental schedule that is attached to the earnings release reflects EBITDA decrease of $2.1 million to a loss of $12 and a half million in 2002, which, again, is due to the increased expenses I just mentioned. As a result of these increased expenses, each racetrack, with the exception of Hoosier Park, which had a reduction in days, actually had an increased EBITDA loss, compared to 2001. Please note that Churchill Downs simulcast network CBSN is, as Tom mentioned, a separate segment. In 2001, was restated in all categories to reflect the reclassification of revenues and expenses from the individual racetracks to CBSN on a consistent basis with the way it is being reported in the first quarter and will be reported in all future quarters. As Tom mentioned, the outlook for the second quarter and 2002 remains difficult to forecast for a number of reasons. First of all, we have only raced for a few weeks at each racetrack. Therefore, it is still difficult to predict future performance. Especially in light of the continued uncertainty in the general economy. Although we are pleased, very pleased with the handle levels of the Kentucky Derby and the Kentucky Oaks, we have not yet finalized a complete financial analysis to reflect the impact of the reduced attendance and, as you can imagine, some increase in security costs. Finally, our increased insurance costs will require reserves for higher retained risks that will ultimately reflect actual claims experience for the year. And therefore, they will increase further if our claims experience is higher than our estimates. We think we have conservative, well-founded estimates based upon historical claimings, but, of course, that is no prediction of what it will be in the future. There is some possibility at least that those claims and our insurance expense could be even higher than we are estimated. However, that having been said, we remain optimistic and believe a reasonable estimate is a range of $1.66 to $1.71, compared to the $1.66 for the second quarter of last year. With the information we currently have, we are going to hold to our previous forecast for earnings for the full year of $1.77 to $1.87 per share. Our comfort level is definitely toward the lower end of this range, based upon the known increases and expenses and the continued uncertainty on the revenue side. Our balance sheet is comparable to the 2001 year end and the first quarter balance sheets. A couple of items to point out. Long-term debt of $143 million, as of 3/31/02, increased by $10 million from year end. It is $18 million less than the end of the first quarter of last year. We have also adopted statement of financial accounting standards or SFAS-142 on January 1, as required. As reported last quarter, the accounting change will add nine cents to earnings per share this year.

I am pleased to point out we have performed a preliminary test of goodwill in accordance with the requirements of SFAS-142, although they don't have to be implemented until the second quarter. Based upon that preliminary test, we believe impairment is not an issue for us. This confirms what we have been saying concerning the value of our acquisitions and the disciplined acquisition approach that we use. Capital expenditures total 5.1 million this the fourth quarter - I am sorry, the first quarter. We continue to forecast capital expenditures of $20 million for the full year as we outlined for you last quarter. That includes approximately $10 million in expenditures for phase one of the Churchill Downs master plan, that was in fact initiated in the first quarter. We are continuing to forecast free cash flow of $18 million for the year, which of course, we will use to pay down debt on revolving line of credit. We are also continuing to work with state and local officials here in Kentucky to obtain the financial support for phase 2 of the master plan. Mike Miller is leading that charge for us. He and we remain optimistic that the support will be forthcoming to allow the board of directors to approve the project at the June meeting so construction can begin this summer after the conclusion of the Churchill Downs spring meet.

So in conclusion, we are slightly uphand of where we expected to be for the first quarter and in spite of the increased insurance costs, we believe we are well positioned for the remainder of the year. With that, I will turn the call back to the operator and Tom, John and I will be happy to answer questions you may have.

Thank you. Question and answer will be conducted electricically. You may do so by pressing the * key followed by 1 on the touchtone telephone. Ladies and gentlemen that is * 1 on your telephone. We will pause for a moment to assemble a roster.

We will take our first question from Ryan Worth.

Can you talk about the new competition particularly in the area of television distribution and what your competitors are doing and whether that may lead to a more aggressive role out by TGB in the near future?

Television distribution is a problem for the entire industry. I think currently TGB leads in distribution in terms of their dish component, as well as their cable distribution and backed up by Internet distribution. By and large, the racing industry has experienced problems in getting cable distribution in various markets, although as we have seen in California, TGB, with its relationship with Adelfia[phonetic] and most recently with their relationship with Fox Sports West, they have achieved remarkable increases in distribution in that market. On balance, most of the wagering platforms remain either the small dish distribution system that express that has or Internet distribution system with video.

Okay. Thanks. Also, can you talk about the outsourcing of food and beverage service at Hollywood Park and what the impact on the financial statements was besides the revenue decrease?

Well, the impact on the financials was negligable. It was a reclassification of revenue since the revenue guess through Leavey's[phonetic] and they give us a cut of the profits. Those profits were essentially flat with last year.

How about going forward? What is the impact?

Essentially flat. We hired them to provide the quality they are providing at Churchill Downs and Arlington Park. We see that as not a financial decision, but a quality decision. Again, you will see a drop in the revenue side, but the profitable being the same. There is a correlation between attendance. As attendance goes up per capita spending will go up. In terms of like kind, it is flat, right?

Thank you.

Our next question is from Mark Freedman.

Can you comment on the issue you and your competitor are raising your fee somewhat [inaudible] park as far as the simulcast export that was standard [inaudible]?

We have got our products priced fairly in the market place. The unique thing that exists in the racing industry is the fact the primary distribution system for hard assets generally speaking, we don't control the hard assets. The bulk of the distribution is into other racetracks, off-site betting locations and casinos. To the extent that we increase the price of the product, the host fee, it has an effect in terms of getting our signals into these distribution operations. Right now, the freestanding simulcast distribution points are generally operating on small margins and it is clear, based upon some occurrences recently that by raising the price, you actually hurt yourself. We believe our products are competitively priced and what we are interested in is increasing market share and volume, rather than increasing the price of our product.

We read they are thinking about raising the simulcast fee. What Tom says is right. The market will bear what the market is going to bear. There were some attempts to increase rates by the competition earlier this year going into sites and there was difficulty in being able to get the contract done. In fact, there were days that were lost. The issue for us, though, as we see it, is really capturing share. We have some very interesting programs we will be unveiling over the next couple of weeks, which are retail in their orientation. We can capture more eyeballs on the television screens at the OTB throughout the country.

Did you actually try to raise the rates?

Those adjustments were done shortly after we acquired various properties, properties that we felt with the addition of CBSN and the branding opportunities that we provided at the corporate level were underpriced. Those adjustments were made in most instances they were minor adjustments. We were able to lift a few prices as much as maybe 25 base points. That is about it.

Mark, make no mistake about it, we believe we have the best product in the market place and will price that product fairly. There is a opportunity for a minor price increase to equate to the quality of that product, then we will look for that and as Tom is saying, we have increases, including the Churchill Downs product that we think are very justified. QUESTION: One other question. You touched about better scheduling of premium races in the regional area, maybe between Churchill Downs and Arlington. Can you give us [inaudible] what the results were, a small snapshot in that case?

Last year, you may remember we entitled it the big picture program. It was a series of week weeks over the course of the summer of 2001. The rational or the methods of the madness was this. We looked at each track that had been acquired over the last couple of years or the one in the case of Arlington, where we merged, the state schedule over the course of the week was very similar from track to track. Maybe there would be one or two races on the weekend on Saturday and maybe one on Sunday. That was fine for the old days, when the focus of the business was just developing on-track fans and trying to generate on-track handles. We sat back and looked at it and looked at the power of television and the CBSN product, in particular, we came to a simple conclusion, which was a rearrangement of the way that we schedule those programs so that we were able to pack, not just one or two states on one racetrack on one day, but maybe we could do three or four or five great stake races on one day at Calder and simulcast that throughout the rest of the country. The following weekend, we did the same at Arlington and the following weekend, we would do it with Churchill Downs. Now, we had really, really good success with that last year. I don't remember what the increases were off the top of my head. We were very optimistic about taking that thing further for next year. As a result of that and being able to mass stake racing at one track over one given weekend, we have been able to acquire some sponsorship opportunities that didn't exist in the past. We just signed up Calfed[phonetic] in Hollywood Park. Calfed[phonetic] will take a big role in sponsoring two major week weeks at Hollywood Park over the course of the spring and summer meets. That will happen at each location, we think. It is really kind of the transformation of writing a racing book that just exists for the locals, as opposed to writing a coordinated national condition book which appeals more toward television.

Thank you.

Our next question is from [inaudible].

My question relates to TGB. I know that your commitment is to being a content provider, but I have heard that because of the problems at can be Gemstar, it is conceivable they may be look tog exit TGB. I was wondering whether you might have any interest in being part of an entity that might acquire it?

I have no comment on that. Our acquisitions, we don't discuss potential acquisitions.

Well, can I ask it a different way? Are you philosophically opposed to being a content provider?

We continue to look at that. I will tell you four years ago we started framing our acquisition strategy. We made a clear-cut determination we were not going to be in the production business or the wagering platform business. We felt that our attention was better spent in looking at evaluating and growing our content base and let other individuals be they within the industry or without, such as TGB, who are better experienced and have the skill sets to know what the wagering platforms, as well as production and distribution platforms. Our position is that remains generally the same today, not withstanding, we continue to look at that and obviously, as time goes on, there may be opportunities. Right now our position is we are content provider. We are spending our time, money and focus on acquiring content.

And -- no, please go ahead, Bob.

Tim, one thing we should clarify. We remain committed to TGB. We have received no indication at all that Gemstar is dissatisfied with TGB. We can't speak for Gemstar, but we can for TGB and our weapon with them. We have heard nothing to lead us to that conclusion. Quite the contrary, as John mentioned, TGB and Churchill Downs are very, very excited about the prospects of what is happening in California and the continued growth that will be coming from California and other states. QUESTION: If I could have one follow-up question, too. Just a general question about your acquisition policy or potential. Both you and TGB are obviously in the very fat part of your season right now and the signal is wonderful. As you know, the winter time is a bit on the dismal side. Is that a high priority to you from your acquisition standpoint to plug in something at that time of year or are you just looking for acquisitions as acquisitions, I guess might be a way of asking? ANSWER: California clearly, it is a high priority. It is something we would like to achieve. We are not able to talk about obviously specific acquisition work that we are doing. I can tell you and we have told you before that there is limited content available in the first quarter, but all things being equal, we would very, very much like to have content during that.

Thanks very much.

If you would like to ask a question, it is * 1. We will go to Jeffrey Thomason with Hilliard.

I want to ask about cash flow margins. John touched on that on EBITDA. Specifically, future EBITDA margins at your four largest tracks, I think is interesting in 2001, I believe the Churchill Downs track saw an increase in EBITDA margin. Hollywood and Calder each slipped a bit. Arlington had no suitable year-ago comparison. What I was going to ask how did you get there, John touched on it. If you want to add, that would be great.

The economic model of a race track is fairly straight forward in that there are probably fewer variable costs than most people realize than there are fixed costs. We have a unionized workforce. When we negotiate a union contract, we know the wage increase for the next three years and there is not a lot we can do to offset that unless we gain control and we have been able to over the last couple of years in terms of scheduling the union for the workforce. We think that one of the two primary determiners of being able to impact operating margins are the ability to control the workforce and scheduling and that is primarily the result of mutual labor and being able to steer the people to the self-serve machines. We have had tremendous success in some locations and we have had not so tremendous success in other locations. That is driven by the machines we are using. We think there is a lot of wiggle room in each location and in being able to move the self-service number. The single biggest determinant is the revenue line. The revenue line is primarily driven by pari-mutuel wagering. We have done lots of modeling to see what happens if you have a horse race with seven runners and what happens if you have seven and a half runners and what happens at eight and eight and a half? It is a huge increase in terms of the amount of pari-mutuel respect on a race that has eight and a half runners versus seven runners. From that comes the ability to be able to manage the horse inventory to be able to rate races that the betting public really is driven to bet on. And so, when you are sitting at an off-track betting facility or watching it, you have choices of three different racetracks to bet on. The guys who play the game every single day will look at the race where they have the best potential for winning. Where the betting opportunity is better, there is more potential for betting on exotics. That happens on the races that have larger numbers of runners per race. Those are the bigger determinants of being able to control operating margins. You know, management-wise, we haven't added staff and don't need to. We have a flat organization at each one of the racetracks. So, it is not about cost reduction in terms of head count. It is just managing the business that we have got in a complete and totally different way.

Jeff, this is Tom. As a result of project discipline, which we implemented in the early part of the year, first quarter, we took a long and hard look at our cost structure across the entire company. I think we have demonstrated we can increase the margins through adjustments in our cost structure. I think by and large, we have done that with one exception. I think there is some margin improvement that could be directly tied to the operation at Arlington Park. On balance, the rest of the operation we can achieve through the Winning Colors program and other things we are looking at. Nominal increases in margin. The big thing is the company now has a cost structure that will allow us to return greater margins on incremental revenues as we move down the road. While there continues to be a focus on our cost structure, I think the time has come clearly coming out of this recessionary period, that we have to concentrate all of our efforts on the top line. Now, consistent with that, you have seen some new things happening, new relationships with, sponsorship relationships and things with the big ticket, where we want to reorient our racing program on a systemized basis, not just in a local basis. Things designed are targeting toward revenue growth as opposed to going in and just whacking our cost structure. So, the short answer would be we have some nominal growth in our margin improvement from cost reduction, specifically at Arlington.

This is a very good question. I want to point out, this that the reorganization that has CBSN reflected as a separate segment will have some impact on our margins on a facility-by-facility basis. We have been saying for a long time, our margin on our simulcast sales and all forms of distribution of our signal are higher than they are for other products because there is no incremental cost to that. And in reorganizing CBSN, they will have a higher margin than our racetracks and the racetrack margins will come down slightly, not significantly, but slighty. Of course, through the reclassification of prior years, you will be able to see it on a like-for-like basis. It is important to note that into the future, those margins at each individual facility will be slightly lower. One other thing that I would like to point out, we have seen where Magna Entertainment has publicly held out our margins as goals for themselves. I think that says a lot to how we are operating our business and the margins we are able to achieve.

Thanks for that answer. I had forgotten about the reclassification impact. Thanks for that head's up.

There appears to be no further questions. I would turn the conference back over to closing comments.

Thank you for joining us. Let me give you a review. The Kentucky Derby was a great success. Operating results at our units have just opened and are very encouraging. Whether or not that trend will continue, we don't know, but we certainly hope that they would. Account wagering in our relationship with TGB continues to grow, distribution from a wagering standpoint and video standpoint is growing, which is positive. Alternative gaming remains on the scope. Obviously, tempered by the obvious political environment. But, we are still alive and well in both Kentucky and Indiana. Then, finally, I think one encouraging note and that is that the industry and this is done from somewhat of a [inaudible] level. The industry seems to be doing quite well over the last three or four months. Race meets have concluded in New York. Very good Kenalin[phonetic] meet was strong. The Oaklawn meet set records. The racing industry seems to be alive and well. Obviously, it is reflected in the handle numbers for the Kentucky Derby and the Kentucky Oaks. There is something positive going on within the industry. And thus, we remain encouraged about the future and we look forward to speaking with you in about three months. With that, I thank you again for joining us this morning. This concludes today's conference. We thank you for your participation. You may now disconnect.