Churchill Downs Inc (CHDN) 2011 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Churchill Downs, Inc. fourth-quarter financial results conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session with instructions following at that time. (Operator Instructions). As a reminder, this conference call is being recorded.

Now I will turn the conference over to John Asher, Vice President of Communications. Please begin.

Good morning and welcome to the Churchill Downs Inc. conference call to review the Company's results for the fourth quarter and full year ended December 31, 2011. The results were released yesterday afternoon in a news release that has been covered by the financial media. A copy of this release announcing results and any other financial and statistical information about the period to be presented in this conference call including any information required by Regulation G is available at the section of the Company's websites titled news located at ChurchillDownsInc.com as well as the website's investors section.

Let me also note that a news release was issued advising of the accessibility of this conference call on a listen-only basis via phone and over the Internet.

As we begin, let me express that some statements made during this call will be forward-looking statements as defined by the Private Securities Litigation 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. The actual performance of the Company may differ materially from what is projected in such forward-looking statements.

Investors should refer to statements included in reports filed by the Company with the Securities and Exchange Commission for a discussion of additional information concerning factors that could cause our actual results of operations to differ materially from the forward-looking statements made in this call.

The information being provided today is of this date only and Churchill Downs Inc. 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 our call over to our Chairman and CEO, Bob Evans.

Thanks, John. I hope when I die and get to heaven and standing there in front of St. Peter, you are there to read the Safe Harbor statements for me. I greatly appreciate that.

I think it's on my job description.

Fair enough. Thanks, everyone, for joining us this morning. If you've read the press release we issued yesterday you know that our fourth quarter and full year 2011 results were exceptionally strong. Our CFO, Bill Mudd, will take you through the details and then I'll be back with some comments. After that, we'll be happy to take your questions. Bill?

Thanks, Bob, and good morning, everyone. As usual, I will review the information set forth in the tables in the press release. Unless otherwise noted, my comments will focus on performance from continuing operations for both the fourth quarter and the full year.

Let's begin by reviewing the segment information which is contained in the schedules titled supplemental information by operating unit in the release.

Total revenues were up 19% for the year and 9% for the quarter when compared to the same periods of 2010. For the year, our racing operations revenues declined by 3% or $9.3 million. According to figures published by the Jockey Club, handle on US thoroughbred racing contracted 5.7% during 2011. Our tracks raced 14 fewer days and experienced similar results to the industry with a handle to client of 6%. These losses were partly offset by improvements in our Kentucky Derby week.

For the fourth quarter, racing operations revenues were down 13%. The decline was primarily driven by Calder racing operations which traditionally has live racing in December. We decided to shift those live race days to April.

Our online business revenues were up 36% for the year and 18% in the fourth quarter. While the total year growth was primarily due to the Youbet acquisition, which closed in June of 2010, the fourth-quarter results were the strongest for the year on a comparable basis.

According to numbers published by Equibase, the US industry handle was up 1.4% in the fourth quarter while TwinSpires handle was up 15%. We believe the integration distractions are now behind us and TwinSpires' growth is now outpacing industry by approximately 10%, which is what we experienced prior to the combination of the two businesses.

Our game business grew revenues 49% year-over-year. The growth in revenues was primarily due to Harlow's, which was acquired in December of 2010. Calder Casino revenues also grew 27% or $17.6 million due to a stronger South Florida economy, a new marketing strategy, and the effect of having a full year of operations in 2011.

For the fourth quarter, our game business grew revenue by 37%. Carryover from the Harlow's acquisition was a primary driver; however, our Calder Casino also posted its strongest quarter of the year, with organic growth of 24%. Our Louisiana game properties were stable, posting low single-digit declines in the period.

Now let's look at the EBITDA performance by segment at the bottom of the statements. Our total year racing operations EBITDA increased $27.8 million mostly driven by the release of the restrictions on the Illinois Horse Racing Equity Trust Fund proceeds of $19.3 million recognized during the third quarter. In addition, racing benefited from a $6.4 million improvement in Kentucky Derby Week profitability.

Finally, we recognized a $3.1 million reduction in operating expenses involving a tax increment financing agreement with the Commonwealth of Kentucky. Partially offsetting these improvements was a decline in our pari-mutuel handle of 6.4% due to continued industry weakness.

In the fourth quarter, our racing operations EBITDA loss worsened by $600,000 year over year, driven by the reduction of live racing at Calder. This loss was partly offset by a $1 million reduction in corporate overhead allocations.

Our online business increased total year EBITDA by $20.5 million as we benefited from a full year of Youbet.com operations coupled with synergy cost savings while the prior year contained nonrecurring reorganization charges of $3.4 million.

For the fourth quarter, our online business EBITDA more than tripled to $9.1 million. Revenue gains and cost-out efficiencies were the primary drivers but the improvement also includes prior-year severance charges of $0.8 million and a prior year non-cash compensation related to our long-term incentive plan of $0.6 million.

Our gaming business total year EBITDA more than doubled to $57 million during 2011 as we benefited from the acquisition of Harlow's during December of 2010 and added $16.3 million to the year. Calder Casino EBITDA increased $10 million due to an improved marketing campaign, lower gaming tax rate, and improved economic conditions in South Florida.

Our Louisiana and video poker EBITDA increased $2.2 million, reflecting better operating efficiencies primarily at our video poker locations.

For the fourth quarter, our gaming EBITDA increased 52% to $13.5 million. Our Harlow's property delivered $5.1 million before corporate allocations, an improvement of $3.9 million over the 15 days included in our 2010 results.

Our Calder Casino EBITDA improved $1.3 million, driven by revenue growth. Our corporate EBITDA improved by $3 million in the year due to lower development expenses of $3.2 million related to acquisitions, a gain of $2.7 million related to the conversion of a related party note and $1.4 million expense in 2010 related to the correction of an actuarial modeling error related to the stock performance based awards granted in 2006. Partly offsetting these improvement were higher equity and long-term incentive compensation expenses of $3.9 million.

Our $2 million fourth-quarter improvement was driven primarily by the $1.4 million compensation expense related to the actuarial correction in 2010 coupled with lower year-over-year expenses related to our long-term incentive plan.

Overall EBITDA improved by $78.3 million for the year and $11.6 million for the quarter.

Now please turn to consolidated statements of net earnings. For the full year, total revenues grew 19% over $2010 to $697 million. For the fourth quarter, net revenues increased 9% to $149 million. Interest expense increased by $2.7 million over the prior year on higher average outstanding debt balances related to the 2010 acquisitions. Additionally, $1.4 million of this increase is non-cash and associated with the conversion of the related party convertible note.

Miscellaneous income improved by $20.7 million for the year primarily as a result of $19.3 million in Illinois Horse Racing Equity Trust Fund proceeds recognized during the third quarter.

Our effective income tax rate increased to 36% during 2011 from 30% in 2010 as we recognized the one-time benefit of 8.4% in the prior year related to deductions for local lobbying expenses that were previously treated as nondeductible. For the year, net earnings from continuing operations were $60.8 million, up $41.2 million.

Now please turn your attention to the consolidated statement of cash flows. Net cash provided by operating activities improved to $173 million, an increase of $113 million over the prior year. The increase is primarily due to the expansion of our gaming and online businesses and the increased profitability of Kentucky Oaks and Derby week.

This improvement however, also includes a nonrecurring favorable items including a $12.4 million after-tax impact due to the recognition of proceeds from the Illinois Horse Racing Equity Trust Fund, the receipt of prior-year tax refunds in the amount of $10.3 million, and $8.5 million related to the Hoosier Park contingent consideration which we recognized in the fourth-quarter discontinued operations line.

We spent $22.7 million on additions to property and equipment in the year, $14.8 million was on maintenance-related expenditures while $3.4 million was on replacement capital funded by insurance claims related to natural disasters at our Harlow's and Churchill Downs race track properties. United Tote also spent $2.5 million converting customers to our platform. We expect maintenance-related capital to be $15 million to $20 million again in 2012.

With that, I will turn it back over to Bob for some final comments. Bob?

Thanks, Bill. I would like to take a couple of minutes and discuss two topics relevant to our shareholders.

First, how and why we have transformed the Company's business model. And second, how we intend to invest around this new business model going forward.

Moving to people worldwide, Churchill Downs means the Kentucky Derby, the Kentucky Oaks; Churchill Downs means thoroughbred racing. So while that is what our brands mean, it no longer is our business model, meaning how we will grow and earn an acceptable return on our shareholders' investment.

Our business model has changed dramatically. Just seven years ago we owned seven racetracks, the four we currently own plus Hollywood Parks, Ellis Park, and Hoosier Park. Our business model in the 2000 to 2004 period consisted of conducting on average over 650 days of live racing annually, operating year-round simulcasting, and of course, the Kentucky Oaks and Derby.

While the returns on invested capital weren't all that great, at least those businesses operated profitably and they were cash flow positive in the sense of cash flow minus maintenance capital expenditures.

In 2005, 2006, and 2007, we sold Hollywood, Ellis, and Hoosier. Combined with racing day reductions at our four remaining tracks, this year we plan to conduct 384 days of live racing, down about 41% from the 650 days in the early 2000s.

In addition to this significant reduction in supply, the demand for racing measured in terms of US thoroughbred handle has fallen far faster than expected, down 29% from its peak in 2003 according to Equibase.

What the changes of the last decade have left us with is an unprofitable business of conducting live racing excluding the Oaks and Derby, and an unprofitable business of conducting simulcasting when we are not racing live. More significantly, excluding one-time transactions like last year's receipt of the $19.3 million in Illinois Horse Racing Equity Trust Fund money, live and simulcast racing in 2011, again excluding the Oaks and Derby, became cash flow negative. That means that in order to keep operating live racing and operating simulcasting when we aren't racing live, we have to invest new cash on which we get negative returns.

Not only is that a really bad business model, it is an unsustainable business model. Fortunately about four years ago, we set about changing the business model. Now we have our gaming business that generated $57 million in EBITDA last year, our online business that generated $38 million in EBITDA last year, and our now refreshed and expanded weeklong Oaks and Derby business that generated $6 million of increased EBITDA last year and $11 million more than in 2009.

Nothing demonstrates the extent of change in our business model more than one simple fact. For what we believe is the first time in the 137-year history of Churchill Downs, we produced positive EBITDA in each of the 12 months of 2011.

So where do we go from here? In gaming, we will continue to pursue both acquisitions and greenfield opportunities. On the expanded gaming front in Illinois, there is considerable behind-the-scenes work going on trying to get a gaming bill that either the Governor will sign or one that will allow the Illinois legislature to override his veto.

Let me be clear about one point. We are not supportive of the subsidy concept that has been discussed extensively in the media. The subsidy approach has been tried over the last six years and despite spending hundreds of thousands of dollars in legal fees, we still have not received all of the subsidy money.

We continue to be amazed that any political leaders in a state that so desperately needs additional tax revenues would prefer new subsidies to the racing industry rather than Senate Bill 1849, which provides for additional tax revenues from the racing industry and creates thousands of new jobs for the people of Illinois as well.

In Kentucky, those of us in favor of expanded gaming lost a pivotal vote in the Kentucky Senate on February 23. Senate Bill 151 would have put gaming on the ballot this November in the form of a constitutional amendment and would thereby have let the people of Kentucky decide this issue once and for all.

But as documented in the media, we got procedurally outmaneuvered by Senate President David Williams, who seems to prefer his opinion to that of the 87% of Kentuckians who are in favor of letting the people decide.

I would like to extend the thanks of everyone at Churchill Downs and the thanks of everyone in Kentucky's thoroughbred industry to Governor Beshear, to Senator Thayer for sponsoring the Bill, to Agricultural Commissioner Comer for supporting it, to those senators who courageously voted for letting the people decide.

While the issue may not be dead in 2012, it looks as though we will have to continue to fight in 2013 and if necessary beyond that.

There are of course many other states where we can invest our capital in gaming and from a purely rational perspective, I suppose we should just pursue those and abandon hope of getting it done in Illinois and Kentucky. But frankly, we just can't do that. Thoroughbred racing is such a part of Kentucky's heritage and Churchill Downs history that we can't just walk away.

This year is Churchill Downs' 138th year in business in Kentucky and we plan on being here at least another 138.

So we lost this round but we are not defeated. We not only plan to keep coming back but to actually increase the resources and attention that we devote to this issue until we get it done.

The reason we're willing to make that commitment is that every time we poll the people of Kentucky, they support expanded gaming by a margin of two to one. Eventually those in Frankfurt are going to have to listen to and act on the will of the people.

Meanwhile, we will look for great gaming investment opportunities outside of Kentucky and Illinois.

As we announced on March 1, we have formed a joint venture with Delaware North Companies to build a new video lottery terminal facility and harness racetrack in Ohio, north of Cincinnati. It's a 50-50 joint venture that will be located at a to be determined site along Interstate 75 corridor between Cincinnati and Dayton, Ohio. We can operate up to 2500 video lottery terminals or VLTs. We will not operate table games.

The JV has signed an agreement to acquire the harness racing licenses and related assets of Lebanon Raceway. We will not acquire the track and grandstand that are located at the County Fairgrounds. We signed that agreement for $10 million to be paid at closing, $50 million to be paid over the five years following commencement of operations, and a potential additional $10 million to be paid if the VLT facility hits certain levels of performance.

In addition, a $50 million license fee will be paid to the state. $10 million of the license fee will be paid when we submit our gaming license application, $15 million will be paid when operations begin, and $25 million will be paid on the first anniversary of opening.

We expect the land, track, buildings, VLTs, and related development to cost approximately $175 million. Total project cost is then estimated at $285 million to $295 billion. Our share is 50%. Delaware North and CDI will contribute a combined $90 million in equity. The balance of the project will be funded with debt. The actual source of that debt will be determined later in the process.

As many of you know, litigation is pending that seeks to stop the installation of VLTs at Ohio's racetracks. The Ohio Attorney General is attempting to have that matter dismissed.

We do not currently contemplate closing on the purchase of the Lebanon Raceway licenses until this litigation has been resolved. It is impossible to know just how the litigation might proceed, however in our planning, we are assuming that the litigation will be favorably resolved this year, that construction of the VLT facility and racetrack will take about a year and that the property will open in late 2013.

Our market research suggests that our JV facility is in a good market. Competitive threats are known and we believe we can be competitive. Ohio's gaming tax rate of 33% is reasonable, as is their gaming license fee and the associated payment schedule. We are happy to partner with Delaware North on this opportunity and we hope to generate an attractive return for our shareholders on this investment.

Another greenfield like opportunity where we expect a solid return on our investment is the rebuilding of Harlow's, now fully underway. We completely refurbished the hotel last spring following the wind and rain storms that destroyed the hotel roof, damaged 53 of the 105 rooms, and closed the hotel from February 24 to June 30. We currently have construction underway that will replace the buffet, the steakhouse, and the entertainment arena that were heavily damaged or destroyed by last May's Mississippi River flood and we will add new amenities including a spa, fitness center, business center, and an outdoor pool.

We expect most of the approximately $[16] million we're spending on Harlow's to be covered by insurance claim proceeds.

While the financial comparisons for Harlow's are tough in the current quarter since Harlow's hit its full complement of amenities in Q1 last year, the year-to-year comparisons get easier as we go through 2012. By year-end when the construction work is done, our plan is for the property to exceed its 2010 pre-windstorm and pre-flood performance.

Meanwhile we will continue to look for other regional gaming acquisitions or greenfield opportunities. We have plenty of properties to consider. We have the balance sheet and we also have the discipline to wait for quality properties at the right valuation.

In racing, we will continue to expand Oaks and Derby week both within the week and starting next year over the weeks preceding the Oaks and Derby. Last year some 360,000 people, 360,000 attended our Oaks and Derby week events. That was up over 8% from Oaks and Derby week 2010.

One of the reasons for the increase was a new event in 2011, opening night on the Saturday a week before the Derby, which drew over 38,000 people.

We also believe we can continue to grow the Kentucky Oaks. Four years ago we rebuilt the event around our theme of ladies first, which paid off with record attendance in 2010 and the second-highest attendance last year. The Kentucky Oaks is now the third most attended race day in America, behind only the Kentucky Derby and the Preakness Stakes.

We are 53 days out from this year's Derby with the caveat that our total admissions revenues depend on sales on the day of the event, which are very much driven by weather, and that our pari-mutuel revenues are driven by the still to be determined competitiveness of the Oaks and Derby races and the field sizes of the other races on the Oaks and Derby Day cards.

With those caveats, at this point, 53 days out, our premium admission revenues -- that is boxes, suites and tables in our premium areas, continue to be strong compared to last year. Sales of personal seat licenses are ahead of last year. Sponsorship sales are running ahead of last year with new brands and sponsors such as Stella Artois, Hendrick's Gin, BlueO4 water, SandRidge Energy, Moet & Chandon Champagne, and handle in the first two of three Oaks and Derby future wager pools was up 7% over 2011.

If those trends hold, and there's really no way to know if that will be the case or not, then this year's Oaks and Derby week's financial performance should be strong.

Finally a bit of a tease. We will be making some exciting changes to the Churchill Downs property later this year that we hope will favorably affect our Oaks and Derby week financials, starting in 2013. We will announce those changes after this year's Derby but for now just a tease. Coming for Oaks and Derby 2013, the mansion at Churchill Downs.

Even our core racing business is off to a stronger start this year than we planned. Rather than our expected 5% decline, 2012 year-to-date US thoroughbred handle is up 3.4% through February according to Equibase. What this means we hope is that our losses and cash consumption in conducting non-Oaks and Derby week racing and simulcasting will be less than our plan.

Our online business, as Bill said, had a terrific fourth quarter with TwinSpires.com handle up 15%, revenue up 18%, and EBITDA up 229% over Q4 of 2010. This favorable handle trend has continued for TwinSpires.com so far in 2012.

We believe there are three reasons for these favorable results. First as mentioned earlier, total US thoroughbred handle seems to have flattened out. Secondly, as they are in nearly every industry, customers continue to switch wagering channels, increasingly preferring the online channel to the bricks and mortar channel. Third, we may be gaining share in the online channel versus our major advance deposit wagering competitors.

One last point. Not only has our business model changed dramatically over the last few years but so as well have our capabilities. We are stronger in every part of our organization than ever before.

One illustration of that are our technology capabilities, which were ominous nonexistent prior to 2007. We now have 500 people in our technology-based organizations, the largest being our TwinSpires.com, United Tote, and corporate IT groups. We have over 80 software developers and over 35 IT operations staff. We have six data centers and we spend over $145 million a year including compensation and benefits on these technology-based units.

New capabilities mean you can do new things. We may be doing more than you think with these resources. TwinSpires.com and United Tote you know, but we are also building the technology and marketing capabilities to enter the Internet poker business as it gets legalized at the state and possibly the federal level. We are making those technology-driven investments now to be ready for what we believe could be a multi-billion-dollar revenue market if legalized across a sufficient number of states.

Our February 10 acquisition of the assets of Bluff Media is part of our plan to capture a share of the online market in the US if we get licensed or even if we don't. More on that in the months ahead.

We also have other technology-based businesses in the works. They combine games, gaming, and online technology. We will be announcing developments in this area over the balance of the year. And that is just what is on our known horizon.

One of our key areas of senior management attention in 2012 will be on improving how we go about innovation. Specifically increasing the speed, efficiency, and effectiveness with which we conceive, develop, launch, and operate new businesses. We are as excited about what Churchill Downs is becoming as we are about what it has been.

We will now be happy to take your questions. Tyrone, if you could forward any questions, please.

(Operator Instructions). Steve Altebrando, Sidoti & Company.

There was a meaningful acceleration in the ADW segment and I know you touched it a little bit on the script. But can you talk a little bit about what factors accounted for this, whether it be share or timing of events or just overall market growth?

Three things. One is the decline in thoroughbred handle seems to have bottomed out. It has actually been up a couple of percent over the last five months or so, so I think that has been one significant reason.

Second reason is that customers just keep switching channels. More and more people want to bet online rather than bet in bricks and mortar outlets. Not a surprise. It's going on pretty much in every other industry. And then third, it's hard for us to know this for sure yet but we think we are probably gaining share at the expense of the other guys in the Advance Deposit Wagering space. So I would say those are the three primary reasons.

Okay, and then on the poker side and the Bluff Media acquisition, can you kind of give some specifics how that fits into the strategy?

I can, but I'm not going to do it today so let us put that off for a few months until we have developed a few more of our ideas and I also don't want to give away anything that might give somebody else a leg up on us. So good question, fair question, just not ready to answer it yet.

Okay. Last one and then I will pop back in. The balance sheet, it continues to be even with the JV highly over capitalized versus peers. I guess the question would be why not have a share repurchase authorized to -- even if there's not a purpose to be meaningfully buying back stock but at least to be opportunistic?

This is Bill. That is something that the Board discusses every time we meet. We look at what opportunities we have to spend the cash, whether it be acquisitions, stock buybacks, or even dividends. So good question and one that we certainly discuss every time we meet with the Board.

Okay. Thank you.

Ryan Worst, Brean Murray.

Thanks. Good morning, guys. Good quarter. Just where does the revenue from the 10th Illinois casino license stand? Will you be correcting that throughout 2012 and how are you going to account for that if at all?

Ryan, it's Bill Carstanjen. Those funds have to be allocated by the legislature, so the fact that they have been collected or the fact that there's been previous legislation creating those funds or allocating those funds, they still have to be so subsequently allocated by the Legislature and they haven't been.

Okay, so we are not going to see them on your income statement until that happens?

Correct.

Okay, Bob, I just missed it. What do you guys plan on spending for the refurbishment of Harlow's?

About $16 million.

$16 million, okay, and when do you expect that to be completed?

This year.

The end of this year.

The end, okay, and then could you guys provide the overall wagering number through TwinSpires in the fourth quarter?

Yes, let me grab it here. Fourth quarter only about $192 million.

Okay, great. Thanks. That's all my questions.

Anil Gupta, Imperial Capital.

Thanks, good morning. Thanks for taking my questions. So two questions for you. One is just looking at the online segment. This year you have trended kind of in the low to mid 20% range in terms of online margins. On a go forward basis, is that a pretty reasonable run rate for this business? Are there any additional costs you think you can realize here?

And then if we were to move towards an online poker business, do you think we would probably see it embedded in this segment?

Let me answer the first one first. I think the margin rate you are seeing now as long as we keep the level of volume we have today, it's very reasonable and it differs by state and by product that you sell, so obviously they can shift around.

The other thing I would say is that if volume continues to grow you should have better margin rates because you have a significant part of that cost structure that is pretty fixed so your margin rate should expand as your volume grows, assuming you get it in the right locations and on the right product. What was the other question he had?

If we add poker, where (inaudible)?

If we add poker, it would definitely be in the online segment. But it will probably be separated from the horseracing component of online.

Okay, thank you. And then as far as the gaming segment is concerned can you just remind us about any seasonality in this business as we look to 2012?

Yes, the gaming business definitely has seasonality in it. If I remember correctly, it seems like -- it depends on the location you are in but on average about 30% of your total year revenues and earnings happen in the first quarter and then it kind of drops in the second and third, and then back up to kind of an average quarter in the fourth. So there is definitely seasonality in the gaming business.

Okay, thanks very much.

Steve Altebrando, Sidoti & Company.

Back to the subsidy in Illinois, what is your legal recourse to collecting? I assume these funds are not in escrow, it's just something that comes out of the general fund. Is that correct?

Yes, that is correct. And there is no really -- my understanding is there is no legal recourse, Steve. It's a matter of the legislature appropriating those funds, so there's nothing in the law that says they have to be appropriated.

Unlike the original horseracing equity trust fund money, that money was automatically appropriated to the horseracing interest at the time that it was paid by the riverboats. It was put into escrow only because the court decided that it should go to escrow until the lawsuit was adjudicated, so it's different on this one because it does explicitly have to be appropriated by the legislature.

Okay and then just lastly, if you can give any background on the decision to JV with Lebanon Downs versus going at it alone. Was it a matter of the return potential or just a matter of two parties that were competing for the same property?

It's Bill Carstanjen again. The Lebanon transaction really was something that was developed by Delaware North, so they invited us in and they asked to develop the relationship with us.

Okay, that's helpful. Thank you.

I show no further questions at this time, sir.

Well. Thanks, everybody, for joining us today. Hope to see you during Oaks and Derby week. Until then, if you don't have anything better to do you can become part of Derby Nation on Facebook. There is about 180,000 people out there who are friends and followers of the Kentucky Derby. That has grown about 15% since the end of last year's Derby and we still have the best two months ahead of us for attracting new members so join Derby Nation today and see you at the Oaks and Derby. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Have a wonderful day.