Conn's Inc (CONN) 2009 Q4 法說會逐字稿

Good morning and thank you for holding. Welcome to the Conn's Inc. conference call to discuss earnings for the fourth quarter ended January 31st, 2010. My name is Allison and I will be your operator today. During the presentation, all participants will be in a listen-only mode. After the speakers' remarks, you will be invited to participate in a question-and-answer session. As a reminder, this conference is being recorded. Your speakers today are Tim Frank, the Company's President and CEO, and Mike Poppe, the Company's Chief Financial Officer.

I would now like to turn the conference over to Mr. Poppe. Please go ahead, sir.

Thank you, Allison. Good morning everyone and thank you for joining us. I'm speaking to you today from Conn's corporate offices in Beaumont, Texas.

You should have received a copy of our earnings release dated March 25th, 2010, distributed before the market opened this morning, which describes our earnings and other financial information for the quarter ended January 31st, 2010. If for some reason you did not receive a copy of the release you can download it from our website at conns.com. I must remind you that some of the statements made in this call are forward-looking statements within the meanings of the Securities and Exchange Act of 1934. These forward-looking statements represent the Company's present expectations or beliefs concerning future events. The Company cautions that such statements are necessarily based on certain assumptions, which are subject to risks and uncertainties which could cause actual results to differ materially from those indicated today.

I would now like to turn the call over to today's host, Tim Frank, Conn's President and CEO. Tim?

Thank you, Mike. Good morning and thank you for joining us today.

Mike and I are going to speak to our sales, financial performance, and the current status of our credit and financing operations. In the big picture, we believe we are seeing the economic conditions in our markets stabilize, and are pleased with the improvements we are seeing in sales, product margin and the credit portfolio performance. In store performance, net sales for the quarter were down 30.3% as same store sales declined 31.7%. This is compared to our 12.5% increase last year, a period during which many retailers in the US were experiencing double-digit declines. We saw decreases in all of our key categories during the quarter, with the sharpest impact being felt in consumer electronics.

Our consumer electronics revenues declined 38.5% after an increase of 43.8% last year, on a 19% drop in units and a 25% reduction in the average selling price of televisions. We have recently seen some stability in TV prices, and are excited about the introduction of 3D TVs. We have this new product in all of our stores and are seeing a high attachment rate for 3D Blu-ray players on these sales. Our appliance revenues declined 21.7%, after increasing 2.1% last year, driven by a decline in unit sales as average selling prices were up slightly. We expect to benefit from the $300 million federal Energy Star incentive program which will kick off in our markets in mid-April. And have our inventory and promotional plans in place to take advantage of this exciting opportunity. We saw our furniture and mattress revenues decline 25.9% against a 28.5% increase in the year-ago period. Our repair service agreement sales were down during the quarter, largely as a result of the decline in sales. As expected, as a result of the enhancements made after our review of this program and our training this past year, we are beginning to see improvements in sales of repair service agreements and expect to continue to trend towards our historical performance levels over time.

In addition to the above, the same store sales performance was adversely impacted by the comparison to the hurricane benefited sales of last year, and the slowdown in economic activity in our markets, evidenced by the unemployment rate in Texas increasing from 5.3% in October of 2008 to 8.2% in January 2010. We completed our store remodeling program and store opening plans for the year and have no new stores planned currently, as we continue to assess future capital availability. Our gross margin increased during the quarter, as compared to the prior year, primarily as a result of the 270 basis point benefit of the favorable change in the non-cash fair value adjustment this quarter as compared to the prior year quarter. The 200 basis point reduction in product gross margins were largely offset by change in the revenue mix. We have seen strong improvement in our product gross margins, starting in December, and are consistently experiencing product margins since that time period around 22%. If you include our repair service agreements, retail margin is running around 26%.

In expenses, SG&A expenses increased 680 basis points as a percent of revenues, excluding the non-cash fair value adjustments, primarily as a result of the deleveraging effect caused by the decline in same store sales. Additionally, increased occupancy and compensation costs of the four stores opened since the beginning of the fourth quarter in the prior fiscal year contributed to the increase. We were able to reduce advertising expense without reduced coverage but that benefit was partially offset by rising employee benefit costs and expense related to the increased use of third-party credit for our cash option financing programs in an effort to conserve financing capital. Our inventory was down 34% at the end of the year as compared to the prior year ending balance and relative to a 30.5% product sales decline. I would expect to begin to see increasing inventory levels as we see sales levels improve. I should note that while we are comfortable with our current inventory position and supply. Additionally, we feel that we are well positioned to take advantage of the Energy Star incentive program in our markets next month. While some appliance vendors have experienced tighter inventory availability, as a group, our vendors have stepped up to provide the products we need to be competitive.

In credit, we believe that the credit portfolio performance has stabilized and that our credit portfolio performance continues to compare very favorably against other consumer credit operations, especially in light of recent economic conditions. The net charge-off rate was 4.8% during the fourth quarter, as compared to 3.4% last year. Our net charge-off rate for the fiscal year 2010 was 3.9%. We expect the dollar amount to be charged off during the first quarter of fiscal 2011 will be consistent with the level experienced in the recently completed fourth quarter, before it begins to improve in the second quarter. However, as a result of the declines in the balance of receivables outstanding, you will likely see the net charge-off rates increase. As a percentage, but not in absolute dollar terms.

Additionally, 60 day delinquency was 10% at January 31st 2010, versus 9.3% at October 31st, 2009, and 7.3% at the same time last year. We saw the 60 day delinquency rate drop 60 basis points at the end of February as compared to a 30 basis point drop in February last year, and are very encouraged by the trends we are seeing in March. Based on the current charge-off and delinquency trends, it appears that the underwriting changes we made this past year are paying off and are having the desired effect on portfolio performance. The percent of the portfolio re-age increased slightly to 19.6%, from 18.7% at the same time last year, with about 50 basis points of the increase being the result of the decline in the portfolio balance. Our re-age programs are an effective tool in achieving our goal of assisting these customers to stay on track with their scheduled monthly payments when they experience hardships. Our experience over the past three years indicates that on average, 89% of the re-aged balances successfully pay out.

Through the past year we have adjusted our underwriting standards to improve the credit quality of the receivables portfolio and to control the amount of capital used in the business. In addition to a tightening of the standards the lower end of the credit spectrum and requiring increased customer data verification, we've also increased our use of third-party credit providers to offer long-term cash option financing programs to our customers. We will continue to monitor our portfolio performance and capital requirements and we'll adjust our credit offerings including the use of third-party credit to support the long-term success of the Company.

Before I turn the call back over to Mike, I'd like to thank our vendor and lending partners for their continued support of our Company. We're glad to have the credit facility amendments completed and are focused on the opportunities that lay ahead of us. We are dedicated to giving customers the ability to purchase the products they need when they need them through our consumer credit at highly competitive prices when others cannot. This is consistent with our long history of providing outstanding customer service and being a leader in the communities that we serve.

Mike?

Thank you, Tim.

This quarter comparing to a quarter when we benefited from the effects of hurricanes and stronger economic conditions, we delivered diluted earnings per share of $0.29, including a $4.9 million favorable non-cash fair value adjustment, and a $1.6 million tax benefit related to the settlement of certain litigation. Excluding these adjustments, adjusted diluted earnings per share was $0.08. One indicator of the current economic conditions in our largest market, Texas, is the unemployment rate, which, while it is up 280 basis points versus the same time last year, roughly a 44% increase, it is down 10 basis points since October 2009. During the quarter, total revenues decreased 25% to $202.3 million, on a net sales decrease of 30.3%, and an 8.7% decrease in finance charges and other and was partially offset by a favorable change in the non-cash fair value adjustment that increased revenues in the current year, as compared to a decrease in the prior year period.

As Tim already provided color to you on the underlying changes in net sales, I will speak to the decline in finance charges and other for the quarter, which was driven by reduced interest income and fees as the credit portfolio balance declined during the quarter, higher net charge-offs on receivables held by the QSPE, reduced insurance commissions earned as a result of the reduced sales volume, and these items were partially offset by lower borrowing costs for our QSPE as its debt balance outstanding has been reduced since the fourth quarter of last year. As a result of our beginning to retain receivables on our balance sheet, beginning in the third quarter of fiscal 2009, as anticipated we have seen our provision for bad debts and interest expense increase. The increase in the provision for bad debts this quarter was driven largely by the expected increase in actual net charge-offs as the on-balance sheet portfolio grows and matures. While actual net charge-offs for the on-balance sheet portfolio grew $1.4 million during the quarter, from $200,000 in the prior year period, the amount of the adjustment to the allowance for bad debts declined approximately $900,000. Additionally, as a result of the increase in the balance of receivables retained on our balance sheet, we have had an increase in the balance of debt outstanding and thus, net interest expense was higher during the current fiscal year.

Turning to our liquidity and cash flow, there was $452 million outstanding under the Company's and its QSPE's borrowing commitments at January 31st, 2010, before considering $23.7 million of letters of credit. As a result of the reduction in the total credit portfolio balance since January 31st, 2009, our QSPE was able to reduce its total debt outstanding by $96.1 million, while we increased the total debt outstanding on our balance sheet by only $42.6 million, for a net decrease in debt balances of $53.5 million. Through today, we have reduced debt balances an additional $35 million, and at this time we are in compliance with all of our bank facility covenants. As many of you are already aware, we and our QSPE recently entered into agreements to amend our various credit facilities. The following are the key changes as a result of these agreements. The financial ratios were modified to include the QSPE as if it were consolidated with our operations. The fixed charge coverage ratio requirement was reduced to 1.1 to 1 for the calculation as of January 31st and April 30th, 2010, before returning to 1.3 to 1 at July 31st, 2010, and thereafter. The leverage ratio was replaced with a total liabilities to tangible net worth ratio which begins at 2.0 to 1 before declining at 1.75 to 1 at January 31st, 2010 and then to 1.5 to 1 at April 30th, 2011 and thereafter.

The pricing grid for borrowings under our ABL facility was increased by 100 basis points. Commitment fees will be due each quarter on the QSPE's revolving credit facility, beginning at 50 basis points of the total commitment available on May 1st, 2010, and then ranging between 100 basis points and 123 basis points of the total commitment available on the first day of each fiscal quarter thereafter, until August 1st, 2011. The available commitment on the QSPE's revolving credit facility will be reduced to $170 million in April 2010. There is currently $179 million outstanding. And then the commitment will reduce further to $130 million in April 2011, before the available commitment is reduced to zero in August 2011, at which time any remaining balance will be paid out of collections from the receivables owned by the QSPE. Additional commitment reductions will be required under the QSPE's revolving credit facility to the extent the Company completes any capital raising activities, and additional definition has been added to the backup servicing agreement already in place, including specifying requirements related to the following servicing tasks which could be required over time -- including sending monthly statements to all installment credit borrowers, implementing a plan to reduce or eliminate in-store payments and preparation for the transition to a backup servicer if necessary. We are reviewing alternatives and developing a plan to implement these service requirements should they become required.

These agreements continue the process that we began in 2008 with the completion of the ABL facility, by reducing our dependence on the securitization market to fund our credit portfolio and, unless conditions change or other opportunities in that market arise, ultimately eliminating our reliance on financing from that source. We will continue to work with our banking partners to explore the debt and equity capital markets to opportunistically raise capital to continue to fund the Company. Until that time, our ABL facility will continue to fund an increasing portion of the total managed credit portfolio. Given the current facts and circumstances, we believe the QSPE and the Company have sufficient combined capital to fund our operations for at least 15 months, before considering renewals or expansions of existing facilities or other debt or equity capital raising opportunities, independent upon continued compliance with debt covenants under the various credit facilities. The sources of this capital as of March 24th include approximately $100 million of unused capacity under the Company's ABL facility.

At February 28th, $38.9 million was available to be drawn, and the remainder will become available based on growth in the receivables portfolio held on our balance sheet and growth in eligible inventory, $10 million available under an unsecured line of credit with the total of those being reduced by the $9 million remaining to be paid on the QSPE's revolving credit facility, to reduce the outstanding balance to the $170 million commitment level discussed previously. This will be accomplished by retaining more receivables under the Company's ABL facility to increase immediately available borrowing capacity under that facility while the proceeds from the collections of the QSPE's receivables are used to make the $9 million reduction. And, among other sources, we have future cash flow from earnings, third-party consumer financing programs, flexible inventory payment terms, the ability to sell or finance owned real estate, the ability to adjust capital investment programs and other operating and financing alternatives, including changing the amount of credit granted to our customers under our credit programs. I would note here that we utilize third-party financing programs to provide approximately $15.3 million in cash option financing this past fiscal year, and we plan to continue to use these programs.

The Company has concluded that it will be required to begin consolidating in its financial statements the operations of its QSPE effective February 1st, 2010. We believe this will simplify the presentation of our financial position and results of operations for our investors and lenders by accounting for and presenting the retained and securitized credit portfolio results on a consistent basis including the elimination of the fair value adjustment related to the securitized credit portfolio. Our 10-K to be filed later today will include pro forma information regarding how this change will affect our balance sheet and income statement. Much of this analysis and more is available in our Form 10-K for the year ended January 31st, 2010, to be filed with the Securities and Exchange Commission later today.

Tim that concludes our prepared remarks. If you are ready, let's open up the lines for questions.

Let's open up the lines.

(Operator Instructions) Our first question comes from Dan Binder of Jefferies. Please go ahead.

Hi. Good morning. Just a couple of questions. First, on the stabilizing economic and sales comment you made earlier in the call, if we look at the two-year comp trend, minus mid-teen type comp in Q1 would indicate some stability. Just curious if you can comment at all on whether or not you're roughly at that level of comp store sales thus far in Q1?

I'm sorry, Dan. I may not be understanding exactly.

So in other words, if we average out the -- taking into consideration comparisons to a year ago, if we look at the two-year comp store sales trend in Q4, and then we look at what it should look like in Q1 in a stable environment, it would imply that comps should be down about mid-teens in Q1. I'm just curious if you're running more or less in that neighborhood?

Okay. Thank you, Dan. I appreciate you restating that for me. Yes, what we've seen is that in February we saw a 13% improvement between January and February, so we were down 24% in February. In March, we are seeing that we're trending in the upper teens, but again, without being too granular here, every day we see improvements in reference to that and certainly would hope and like to think that we are on firm footing to get to the mid-teens by the end of the quarter.

Okay. Then the second question was based on the programs you have in place and your market share in appliances in the markets you operate in, what would be your best guess in terms of the comp benefit from this tax stimulus program -- or I should say appliance stimulus program?

I would just say that from what we've heard from other power regionals in the United States, it's been very favorable. The ones who have been able to do this -- that are on a different timetable and have already done this -- has been very favorable for them. We expect it to be favorable for us. It's very difficult to translate that. It would just be a wild guess. But we're very excited about it and we're very optimistic that we're going to see some significant numbers. And have planned for that and have purchased to that.

And then the third question, if I may. On credit. Your delinquencies have moved higher and the re-age is up. Just so I can understand the path to improvement in the charge-offs, would you expect that the charge-offs actually get a little bit worse here near-term and move above 5%, given the delinquencies have moved higher and arguably are tomorrow's charge-offs or do you think you can keep it at 5% or below through each of the four quarters this year?

Well, I think that as opposed to a percent, the percent might fluctuate a little bit. Really talking about in absolute dollar terms -- we're definitely seeing a stabilization and expect future months to be down in absolute dollars. It just matters to what degree we utilize our own credit versus third-party credit and depending on the balance growth, being conservative there to preserve capital, we're doing what we think is right to manage the business in the most profitable state. We are seeing what I consider to be the peak of the negative credit trends and expect to see positive trends both in delinquency first and then in write-offs about that part of our business.

As primarily as Tim stated, primary positive trends in absolute charge-off dollars to your point, Dan, the percentages could rise some as we have been shrinking the balance of the credit portfolio.

The credit portfolio's been shrinking because the sales have been softer. I guess can you just address the challenges. Let's say that the business comes back over the course of the next four quarters. What are the limitations around executing credit extension to those lower FICO score customers as the business comes back, given the credit extension that you can provide from your balance sheet?

Well, I'm going to add some color to it then I know Mike can be a little bit more specific. But when you look at the OFC part of our credit portfolio it's been declining as a percentage for some time and again we're rising up on that. How does that impact when we come out of this and really get into back more of a growth mode again, we need to get additional capital so that we can help those customers afford nice things which is a core part of our business model.

But again, it's less than 20% of the business in our credit, which -- so it's a relatively smaller part of our business. I would say that the tightening of credit has certainly had an impact on our sales velocity but more I think as an impact has been the economy and the very high comps that we were going up against. Again, when the rest of the world was having significant negative trends, we were up 12.5%. So that's really what we're battling. Mike, you want to add some more?

I would just add to your point on that secondary portfolio, we have been shrinking it and some of that is strategic, just in that -- not only from a capital preservation, but making sure we're offering credit to customers where it will be profitable business for us and finding ways to lend to them that allows us to maintain credit -- high credit quality -- and profitability out of that customer.

From a capital availability standpoint, as we -- as I communicated a little earlier -- we've got about $100 million in capacity under the ABL facility today. We certainly have another $9 million to reduce the debt balance on the securitization facility which leaves us in the ballpark of $90 million in capacity to fund the business for the rest of the year. So there will be another reduction in that ABS facility, 13 months from now. But ample capital available to manage the business and the portfolio this year.

Great. Thank you.

Yes, sir.

Thank you.

Our next question comes from David Magee of SunTrust. Please go ahead.

Yes. Hi, good morning.

Good morning, David.

Can you talk a little about what your market share might look like right now on a year to year basis?

We've had a slight decrease. It's 0.4 across our markets and that's really coming off of a high point for us. So we've had a slight erosion of market share and, again, we've made a conscious decision to hold our margins as you've seen that our margins have -- they're on an upward trend. They're improving. I'd mentioned that if you included the service maintenance agreement sales as a part of it, we're up to 26%, almost 27%. So we're getting into the -- where the rest of the industry plays there and continue to see improvement.

So I don't think that -- I think the thing that we need to do right now and the focus that we have right now is making money each and every month. We're not going to give up a lot of market share to do that. We're going to be very price competitive as we always have. We still shop our competition three days a week. And we're out there matching our competition or beating our competition on a daily basis. We've never really said okay we're going to use credit and we're going to be priced above everybody else. We've never done that. And don't expect that that is a winning strategy. We feel that being price competitive is very important.

So slight market erosion and we're watching it very closely. But again, we want to maintain that profitability.

Have you adjusted the underwriting standards in the last couple of months?

Yes. We actually go through that process on a fairly regular basis, very minor adjustments. But we've made some adjustments in the very lowest end. Again, we look at our profitability zone and we look at four or five different things.

We look at FICO score of course, we look at income, we look at down payment. We look at the product risk. We look at terms. We look at a lot of different items to determine where our profitability zone is. It's based on all those items.

So we have tightened it up at the very bottom and we have given up some sales by doing that. But again, the credit portfolio maintaining its health is paramount and when you look at the performance of that portfolio against any industry metric out there, we're best-in-class. And we're going to continue to be that way and we're going to continue to protect that because we understand the risk that it represents. But it represents a huge opportunity for us as well when we come out of this and so we've got to have it geared up and ready to go.

Okay. I knew you all had tightened things but you haven't loosened them back up in the last month or so?

No.

How satisfactory is third-party credit longer term, just assuming that you guys want to start growing again and the markets out there remain very tight. Can you satisfactorily use third-party credit and grow your store base?

Well, I'm very pleased with the relationship we've had with the third-party credit provider and it's worked out very well for us. It's a good way to conserve capital. And as long as we can maintain the proper mix of credit -- just like the proper mix of product in our stores, we create a certain gross margin -- you have to have a certain FICO score mix in your credit portfolio.

So as long as we're very cautious with it, I would rather we focus our credit dollars on more profitable business anyway and, long-term, I think it's something -- now, is it going to be as deep as it is now? We have to readjust the strategy based on how much capital -- how flush we are with capital and the cost of capital as it comes into us. I'm going to let Mike give a little more color on it though.

I think you covered it well, Tim. It's a very effective tool for us David. It can be very helpful in helping us fund future growth. It allows us, as Tim said, to focus the use of our capital on funding those credit programs that others can't provide and that we can do very profitably. And use somebody else for that business that doesn't contribute as much to the bottom line and preserve our capital for growth of the business.

Thank you. One last question. When you mentioned that the product margins have gotten better here sequentially, is that in due part to the environment getting better as well, a little less promotional or -- ?

No, I think that I've come to believe that the competitive market is always going to be extremely aggressive and I think that that's okay. That drives excitement. That drives purchase behavior. So I don't really look at a very aggressive promotional environment as a negative thing. I look at it as a positive thing. More about the floor discipline, more about product mix, those types of things, and driving better margin. I was very pleased to see that we only lost, again, 0.4 in market share by doing this strategy and certainly had a big boon to making us, again, profitable each and every month which is what we're going to do.

Thanks a lot.

Thank you.

We have a follow-up from Dan Binder of Jefferies. Please go ahead.

Hi. Thanks. Just a couple questions on inventory. End of the quarter I believe down about 34% on inventory. Given that the comp trend is getting less negative, would it be fair to assume that we won't continue to see that kind of inventory decline?

And then secondly, there's been a lot of press about the tightness on TV inventory out there. Just curious how you're positioned, particularly in the newer technologies?

Sure. Glad you brought those up. On the inventory, you're right, we're not going to see the same level of decline. We are managing it better, though, and so you will see some decline. I think that we've taken the appropriate steps in reference to our finance team, working closer with our merchandising team and we're seeing some of the benefits of that. But again, we will ramp up inventory more and are in that process, especially with improved results in areas like furniture, which, again, help improve the margin mix.

On the tightness on TV, that was a slight impact. Moving forward, we see that there's going to be some challenges there but our merchandising team is working very closely with our vendors. I see those guys in here every day, working very closely together. And in my discussions with our vendors, I feel comfortable that we're going to ride out through this.

The 3D technology we've had for about four days on our floor. In those four days that technology is really taking off. What's most exciting about it is of course the attachment rate of the 3D DVD player that comes with it is extremely high. It's almost three times what audio/video cable attachment rates are. We're very pleased with that as well. So those things are picking up nicely. Thank you for asking.

That leads me to my next question, which is on -- given what's going on in the cycle, we're at the very beginning of what potentially could be a favorable TV cycle in 3D and I guess I'm just trying to understand from a margin perspective, I would imagine those newer technologies have higher margins and as you pointed out, higher attachment rates. So given -- I think you said earlier that your product margins were running around 22%. Given what's happening in the cycle, do you anticipate that moving higher from here? And if so, what do you think would be a reasonable assumption on that?

22%, and if you include, again, the service agreement sales, it's up to 26%, 27%. And certainly we're optimistic. From previous cycles, I'll take the DVD player -- itself -- as an example. It did not take long for our industry as a whole to really bring the price point down very quickly on it and compress the margins.

Now, that being said, that process is a good process for us because, again, it drives more excitement and higher sales so you make it up maybe not in the percentage, in absolute gross margin dollars. It's a shot in the dark. I think what will have a much more positive impact on our margin is improved product mix and I think we're taking the necessary steps to achieve that, and again, our trend looks good not just on a weekly or monthly basis, but even on a daily basis, toward that goal.

And the furniture -- I know the furniture industry overall is not doing well -- but for the furniture industry, excuse me for furniture for us is really still a relatively new category and, again, we're very positive about that. So 3D technology, for term, yes, should have a positive impact. I can't tell you how much. Just a shot in the dark. But the furniture I feel very optimistic about.

On ASPs in TV and average screen size, can you give us an idea of what happened during the fourth quarter and then given this tightness in the supply chain, what your expectation is around ASPs for the coming quarter?

I think what we saw in the fourth quarter is really trying to battle against these sales decreases and we got aggressive in certainly November we did -- and trying to combat these sales decreases. Typically, between our credit product and between the fact that in the markets we operate in Texas, homes are normally a little bit larger and so we're able to use the credit vehicle to mix up. So when price compression occurs, typically we've been able to sell a customer a larger screen size. And so we are seeing that settle down a little bit and this new technology, again, allows us to step into something even more exciting for the customer and hopefully we'll see that average selling price continue to stabilize.

Okay. And then average screen size, is that -- did that continue to see some shrinkage in the quarter? Do you expect that could reverse with this new cycle?

Absolutely. People are looking for bargains. And, we were pushing them because we were trying to create better sales velocity but as things change in trends and improve, what we will see is we'll be able to go back to that leverage point with the credit and be able to get people into larger screen sizes.

Great. Thank you.

Thanks, Dan.

And I'm showing no further questions at this time, sir.

Okay. That's great. Thank you very much.

Well -- and Mike, I'll just -- in closing, again, I want to thank each of our over 3,000 loyal employees for their dedication to executing at the highest level every day. Thank you to all of our customers. To all of our vendors. We know that many of you represent the second and third generations of families that have been loyal Conn's customers for decades.

I want to say and reiterate, I believe we're on the right path. I see many initial indicators of improving trends across every area of our Company and I want to thank you for your interest in our Company and thank you for your participation in the call today. Thank you.

Ladies and gentlemen, that does conclude today's conference. You may all disconnect and have a wonderful day.