America's CAR-MART Inc (CRMT) 2014 Q1 法說會逐字稿

Good morning, everyone. Thank you for holding, and welcome to America's Car-Mart first quarter 2014 conference call. The topic of this call will be the earnings and operating results for the Company's fiscal first quarter 2014. Before we begin, I would like to remind everyone that this call is being recorded and will be available for replay for the next 30 days. The dial-in number and access information are included in this morning's press release, which can be found on America's Car-Mart's website at www.Car-Mart.com.

As you all know, some of management's comments today may include forward-looking statements, which inherently involve risks and uncertainties that could cause actual results to differ materially from management's present view. These statements are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. The Company cannot guarantee the accuracy of any forecast or estimate, nor does it undertake any obligation to update such forward-looking statements. For more information regarding forward-looking information, please see item 1 of part 1 of the Company's annual report on Form 10-K for the fiscal year ended April 30, 2013 and its current and quarterly reports furnished through or filed with the Securities and Exchange Commission on Forms 8-K and 10-Q. Participating on the call this morning are Hank Henderson, the Company's Chief Executive Officer and President and Jeff Williams, Chief Financial Officer. And now, I would like to turn the call over to the Company's Chief Executive Officer, Hank Henderson.

Good morning, everyone. We appreciate you joining us today. We are very pleased, of course, to report solid top line growth for the quarter of 11%, unit sales were up about 9%, going from 9,753 last year to 10,643 this year. Definitely a great start to the year in sales. As some of you may recall, we began talking a while back about how we felt it important that we improve as a retailer of cars to better assure our continued growth. Many improvements and purchasing and inventory management have been made to provide the best possible quality and a more consistent mix at all times. And throughout the past few years, our marketing and sales training have developed significantly, providing very consistent advertising support and much more face-to-face sales training. And there's no question that our efforts to become a better retailer have made a difference as we've been able to continue to grow sales, even in these fiercely competitive times.

While we're proud of the improvements we've made in this area, we're most proud of the fact that we continue to remain focused on earning the repeat business of our customers. It is critical to our success, and that's the core of our culture, and very plainly worded, in our mission statement that we are daily mindful of the value of our customers and doing the right things to earn the repeat business. In our efforts to keep our good customers during these very competitive times, we have been more aggressive on down-payments and terms and this has had somewhat of a negative impact on collections and Jeff will explain that in detail in just a moment. Despite the negative impact that it does have, we feel very confident that giving a bit more in those areas to retain our good customers is absolutely the right thing to do and is consistent with what we're all about. We do hear occasionally some of the payment amounts and term lengths offered out there, and they are certainly beyond where we're willing to go. We've been at this for a very long time and are well aware that it's not in the best interest of the customer to put them in such a situation. And if it's not in their best interest, then it's not in ours either.

On the collection side of the business, our account losses as a percentage of accounts receivable for the quarter were at 6.2% compared with 5.9% for the same time last year. While we recognize that this is impacted somewhat by some changes with financial terms, we're not happy or satisfied with the direction. We are taking steps to assure this trend does not continue. We've long prided ourselves on being the absolute best in the business in collections through developing long-term relationships with our customers and working with them when they have challenges, but just because we're the best doesn't mean we don't have room to improve. We do, and we will. So, I'll turn it over to Jeff now to give you some more details on our results for the quarter.

Thank you, Hank. Revenues for the quarter were right at $123 million, up over 11% from last year. Same-store revenues increased 5.6%. Given the challenging environment for our customer and the increased funding to the used auto industry, we're pleased with our top line growth. Average retail sales price for the quarter was up 2.6% to $9,836, but down 1.3% sequentially due to normal seasonality. Our average sales price increased, even though overall wholesale market prices have decreased, as we were able to put our customers in a little newer car, but the mileage was basically flat, but the average age was down, which hopefully will translate into fewer mechanical issues into the future. As always, we will work hard to keep increases to a minimum for obvious affordability reasons and at the same time, ensure we're giving our customers a high quality, mechanically sound product.

Down-payments were 6.6%, down from 7.2%, around $39 for the quarter. Collections as a percentage of average finance receivables was 13.8% compared to 14.9%. The average initial contract term was up to 27.7 months compared to 26.7 at this time last year, but basically flat sequentially. The weighted average contract term for the entire portfolio including modifications was 29.5 months compared to 28.1 at this time last year and compared to 29.3 months sequentially. The increases in term are related to our efforts to keep our payments affordable for competitive reasons and to continue to work with our customers when they experience financial difficulties in these tough times.

In order to remain competitive, our term lengths may continue to increase some into the future. We are aware of the downside that comes with lower down-payments and increased term lengths. We remain committed to not stretching terms or reducing downs any more than we think is absolutely necessary to attract and retain our target customers. We continue to believe that helping customers successfully complete their contracts by having equity throughout the term and then owning an asset at the end of the term is the only way to truly operate for the long-term, and that's the only way for us to earn the repeat business of our customers, which is our mission. Unfortunately, the ultra low interest rate environment has helped to attract competition to the funding side that may not share this view. We're working hard to ensure that the quality of our cars is high and our local community-based service levels are excellent, which will allow us to continue to attract and target customers and to manage the risk side of the portfolio in a profitable manner.

The current competitive and macroeconomic environment continues to present some headwinds for us. And we'll stay focused on customer success and earning repeat business and our future is bright. The overall average retail units sold per month per lot for the quarter was 28.4, up from 28.3. At quarter end, 36 or 29% of our dealerships were from zero to five years of age. 26 or 21% were from 5 to 10 years old and the remaining 64 were 10 years old or older.

Our 10-year plus lots produce 31.7 units sold per lot per month for the quarter compared to 32.3 for the prior year, a 2% decrease. Our lots in the 5 for 10-year category produced 27.5 compared to 25.8, a 6% increase. And the lots less than five years of age produced 23 compared to 20.6 for the first quarter of last year, a 12% increase. The productivity at our older dealerships continues to be negatively affected by macro and competitive factors. We will continue to focus on customer retention and earning repeat business, which is extremely important in our more mature dealership that have a deep pool of past and current customers. We will continue to highlight the benefits of our excellent service and the local face-to-face offering to the market.

Interest income was up $1.7 million, due to the $48 million increase in average finance receivables. The weighted average interest rate for all finance receivables at the end of July was approximately 14.9%, basically flat with this time last year. For the quarter, gross profit margin percentage was 42.5% of sales compared to 42.8% last year. Our goal is to balance affordability for our customers with appropriate gross margin percentages to enhance customer success. We expect gross margin percentages to remain generally in the current range over the near-term.

For the quarter, SG&A as a percentage of sales decreased to 18% compared to 18.2%. The $1.8 million increase in overall SG&A dollars related primarily to higher payroll costs and other incremental costs related to new lot openings, as well as higher marketing and advertising expenditures. We do expect some SG&A leveraging into the future as we grow our revenues, and we are committed to leveraging the infrastructure investments we've made over the last several years. The exact timing of leveraging, especially on a quarter-to-quarter basis, is a little harder to pinpoint, and we'll continue to invest in an infrastructure to support our growth.

Net charge-offs as a percentage of finance receivables was up to 6.2% from 5.9%, which was a 5% increase for the quarter. Most of the increase relates to severity of losses due in part to wholesale price decreases and longer terms, and frequency was up just a little bit. As a reminder, for the previous three quarters, net charge-offs as a percentage of finance receivables have been flat with the prior year periods. Principal collected as a percentage of average AR for quarter was 13.8%, down from 14.9%. The decrease in principle collected between periods can be attributed to the increase in the average term at 1.4 months, the fact that we did modify a higher number of accounts and we have more delinquent accounts during the quarter. Also, our managers continue to have some additional leeway on deal structures based on competitive factors. We should note that our expected cash-on-cash returns for the capital being allocated to finance receivables is attractive, even with the lower down-payments and the term extensions that we feel are necessary in the current competitive environment.

Credit losses on the income statement is higher for the quarter, due to lower collections and higher charge-offs. Each had about an equal effect and due to the effect of lower wholesale sales levels, which had about a 20-basis point effect. Overall, credit losses were about 30 basis points higher due to the shift in the relative age of the portfolio versus this time last year. The average age of the lots. We have several operational initiatives in place for collections, and we feel good about the performance of the portfolio into the future, but we do expect credit losses to continue to be elevated due to macroeconomic and competitive factors.

In addition to the GPS effort that Hank will talk about in a minute, we are reporting credit for our customers, something that we had not previously done. At the end of July, our total debt was $99.5 million. We had $42 million in additional availability under our revolving credit facilities. Our balance sheet is very healthy and we are committed to keeping it that way. We believe it's prudent to maintain a very conservative balance sheet at all times, but especially in the current operating environment. Our current debt to equity ratio is 47.3%, and our debt to finance receivables ratio is 26.2%.

We did repurchase $384,000 of common stock during the quarter, and since February of 2010, we've repurchased about 25% of the Company. We do plan to allocate capital to the repurchase program in the future, but our first priority will be to continue to grow the business in a healthy manner. For the quarter, in addition to the stock repurchases, finance receivables increased $16.5 million and we had $1.8 million in net capital expenditures, and we were able to keep our debt levels flat for the quarter. Now, I'll turn it back over to Hank.

Thanks, Jeff. I do think it's important and timely to share one particular initiative regarding collections, as it is something that many of you have asked about in the past. As of the end of this week, we will be installing GPS devices on every vehicle we finance. We've been rolling this out for several months now, and the final install and training is being wrapped up on the last lots just this week. We don't actually lose that many vehicles, so that's not our primary reason for making this move. As I said earlier, working with our customers is always our goal, and we know that our success rate helping our customers solve their challenges is much higher when they are able to make contact with them when they're one payment behind rather than two or three. So, we are very excited about the positive difference this can make in helping more customers through timely resolution of payment issues and ultimately reducing losses in the long run.

And one thing I would also like to mention before we go to your questions is our new store growth plan. We do remain committed to opening stores at a pace similar to our past couple of years. We ended April 30 with 124 stores. We've opened two new locations this first quarter, putting us at 126. That was Grove, Oklahoma and Rome, Georgia, Rome being now our second store in Georgia. And actually, we should be opening our third in that state in Covington within just the next week or two. We also have work already underway in locations -- for locations in Meridian, Mississippi, Richmond, Kentucky and Dothan, Alabama, all that should be opening fairly soon. So, that concludes our prepared remarks. We would now like to move on to your questions. Operator?

Thank you. At this time, the participants will now answer questions from the callers.

(Operator Instructions)

Our first question comes from the line of David Scharf from JMP Securities.

Good morning. Thanks for taking my questions.

Hank, just first, a general question on the competitive environment. I think two or three quarters ago, when you first noted the increased pressures from indirect lenders, I think you had articulated that perhaps your top 10% of customers were arguably the ones that were being targeted and increasingly in play. Just given how the competition has evolved now as we're in the end of August, is 10% still -- in that core repeat customer still the target, or are you sensing that actually the indirect competition is dipping down even further into your target market?

It's really hard to say exactly, is it 10% or is it 15%. We don't know the answer to that. I know what we really know are some of the -- it's anecdotal, things we hear back from our customers. Some of them, of course, people we've done business with for a while so they tell us, hey, here's what the guy down the street offered. So, I would say it's rather inconsistent, depending on some of the areas we're in. But there's no doubt there is some overlap there.

And maybe a different way of asking it, just directionally, has the level of competition been getting more severe over the last three, four months?

I wouldn't say specifically over the last three or four months. I think that really -- I think we started feeling it the most last fall, and I would say it's just still there, would be more the way I would answer that. I don't think it's really ramped up, so to speak.

Okay. Got it, got it.

And just wondering, obviously, there's no formal guidance, but just trying to get our arms around how to think about modeling collections going forward, it's about 100 basis points on the average portfolio lower than a year ago. Is -- on an annualized basis, is that probably a pretty rational expectation or way to think about forecasting collections, or do we think it might be rebound partially as you get the GPS product out there, or are there any seasonal factors maybe I haven't considered?

We certainly have high hopes that the GPS effort will increase collections. There is some seasonality involved. We're doing all we can to keep those term limits as low as possible and not lose business. We're also -- we've also always created -- creatively structured deals to try to get some special payments on the front end of the contracts or some special payments during tax time. So, we're pushing hard to increase collections. Can't give you an exact number on that, but we do feel like there's certainly room for improvement over what we've seen the last few quarters on the collections side.

Got it.

And is there much incremental cost associated with the GPS? Is there an ongoing subscription data charge that's meaningful or is it kind of rounding errors at this point?

It's a meaningful number once we get it completely rolled out for all of our accounts, but it's on a per-car, per-month basis. It's not a huge expense.

In aggregate, is there an annualized figure we could think about?

It's going to average around -- somewhere a little -- around $4 per account per month.

Got you, that's helpful.

And then lastly, on the provisioning front, obviously the quarterly provision's been tracking upward as losses are -- Doesn't sound like you're moving off that 21.5% allowance. Can you give a little sense for how that -- what factors might lead us to take that up?

Well, of course we go through an extensive static pool analysis every quarter at least, and we look at the timing of charge-offs, what's happened to the pools, what's left out there, the quality of what's left, and the 21.5% still looks like a good range for us. We don't have any expectations of having to raise that at this point, but we're very aware that the charge-off numbers, while they did go up this last quarter, had been flat the previous three quarters. So, even though our income statement is showing a higher expense, charge-offs had not been significantly higher.

Again, we're not pleased with where we were on charge-offs, but the reserve itself is -- appears to be adequate at the 21.5. Some of our more recent pools, the charge-off rates so far have actually been a little bit less than at this time last year. We feel pretty good about that reserve percentage and we'll keep an eye on it, and best thing we can do for the reserve percentage is to collect on our accounts and reduce those charge-off amounts into the future. But at this point, we feel like the 21.5% is a good estimate for us and if we perform on out into the future, which we plan to, we don't feel like we're going to need to adjust that any time soon.

Got it.

And just last question, just wanted to confirm, Jeff, on the 30-basis point increase in losses year-over-year, did you say about two-thirds of that was related to wholesale prices, basically recovery values?

Yes, about 20 basis points was related --

20 of the 30 was -- got it. Okay. Thank you very much.

Okay.

Thank you. And our next question comes from the line of Kyle Joseph from Stephens.

Good morning, guys. Thanks for taking my questions.

Good morning, Kyle.

I wanted to talk a little bit about -- so the car prices dropped sequentially. I think you touched on that being related to seasonality. Are you -- is that kind of a strategic goal for you guys, to keep -- to lower car prices, or what do you think we can expect going forward there?

Well, as we -- I think there's a couple things going on with car prices right now. Yes, with seasonality, we come out of the tax time where there's more of a demand for the price range of car we deal in. Those typically go up. Of course we're past that time. We obviously know that there's a lot of sales taking place above us, putting a lot of trade-ins in the market, which has brought some of those process down. And so, our goal is, I think we said on our last call, and our goal is to be focused on affordability and hold these close to flat. Our intention would be to, certainly for the remainder of the year, to continue to hold prices as close to flat as we can.

Okay, got it. Thank you.

And you guys gave some good statistics on store performance by vintage. Would you say you're seeing more competition in the older stores, or is competition having a greater effect there?

Right. And it's not entirely just related to the age. It so happens that a few of our older stores happen to be also in some of what are for us our larger markets. And obviously in larger markets, you tend to have a little more competition. So, I think they tend to feel the pressure. Obviously, too, we also have with our older stores, expectations of higher average sales and just simply when you're trying to sell more and keep your volumes higher, you can feel it a little more there.

Okay, thanks. That makes sense.

And then in terms of the new stores you guys are rolling out, has there been any effect on the time it takes for these stores to break even as a result of competitive dynamics?

Yes. With the terms going out a little bit, certainly the timing of cash profits has been pushed out a little bit. But the gap profits have not been hugely affected as far as the timing. They are pretty accretive right out of the gate. But the cash profits have been pushed out a little bit because of the lower down payments and the term extensions.

Okay, great. Thanks for answering my questions, guys.

Thank you.

Thank you. And our next question comes from the line of John Rowen from Sidoti & Company.

Good morning, guys.

Good morning.

In your prepared remarks, you guys said that the cars that you're retailing are a little bit newer. And obviously, a lot of your commentary suggests that you're managing the customer payments around the same level. Just out of curiosity, why not leave the car age the same, if you're getting some alleviation of your wholesale costs and start pulling back on duration?

Just the quality. If you have a chance to put your customers in a better car that's a little more mechanically sound possibly because it's newer, then we have found over time, that's a good thing for us to do, as long as we don't get carried away with the sales price increases, which we're very conscious of that side of it, too. But really, it's about an opportunity to put our customers in a little better car.

Okay, fair enough. That's all I had. Thank you.

Thanks.

Thank you. And our next question comes from the line of Bill Armstrong from CL King.

Good morning, Hank and Jeff.

First question actually is a follow-up to that last one. So, if we're seeing your average selling price up about 3% year-over-year, is that more a function of mix, where maybe you're getting some newer or lower mileage cars rather than a broader price trend?

Yes, for us, we have talked about -- it's always been for where we could be on that cost versus quality curve. And when we do have an opportunity to step up and can pick up a few more lower mileage cars and such, we're going to do that. And just in the current market where we are, we've had some of that opportunity, so.

Okay.

You also mentioned that your competitors -- there are competitors out there that are not focused on earning repeat business. I was wondering if you could kind of elaborate on that a little bit? How -- what's the basis of that observation and -- give us a little more detail on that?

Well, obviously we hear about some of the offerings that customers tell us that they have been offered and we see the deals, that sort of thing. And we know the year, make, model, price of the vehicle they are looking at, and obviously for us, we know what are realistic term lengths for those sort of things. And if you've got another party that's out there offering some term lengths well beyond what we know work, it doesn't work for us, we know that's not a good situation for the customer. They may enjoy it on the front end with the lower payments, but it's really not putting in a situation that they are likely to succeed.

Do you see any possible shakeout in this -- in the sub prime financing side of coming anytime soon, Hank? I know you've been in this business a long time. You've probably seen cycles like this before. At what point do lenders maybe start pulling back on this easy availability of credit for sub prime borrowers?

It's difficult to say exactly what that timing is for them because I know they each structure the deal somewhat differently. But at some point, when the losses start rolling in beyond their expectations or the value -- the residual value of the vehicles is not what they expected it to be, that that's when the pullback continues. Car sales, financing cars has been around forever, and I feel like if these sort of things were viable, they would have already existed. But what we're seeing right now are just some offerings that weren't there before, and as Jeff mentioned, it's due in large part to this ultra low interest rate that enables them to do that.

We're moving forward with or without the competition, is our attitude. Certainly we're continuing to put new stores out there, and with the thought that if there is pullback from some of this competition, well, that's just that much more opportunity and certainly will be a step-up for us. And even if it doesn't go away and is more -- a little more sustainable, then certainly we know that particularly in the smaller markets where we are, there's -- we have our niche and our need for those folks that want and need the face-to-face service, which certainly represents the vast majority of the market for folks at this level. Anything -- it's strictly just our own speculation as to how sustainable or how long they will be out there.

Got it. Okay, thanks very much.

Thank you.

Thank you. And our next question comes from the line of Quinton Matthews from QKM.

Good morning.

All my questions have really been answered. I just have one on this GPS implementation. Is this something that has been tested elsewhere that other people implement, and just any customer feedback? I would think that if all things were being equal, if I were buying a car, I would choose the guy who wasn't going to put a GPS monitor on my car, so.

That's a good question. And actually, we're about the last ones to enter this market. Virtually everyone who sells vehicles at our level, they have already offered it. When these things first came out, we stayed out of it. We're very relationship-driven, much due in part to the comment you just made, the perception. But I can tell you that we have been rolling this out for several months. We now actually have already sold a lot of vehicles with it on there and we've had -- we really had virtually no negative comments from our customers. It's very commonplace.

Okay. Again, I appreciate it very much. Thank you.

You bet.

Thank you. And our next question comes from the line of Daniel Furtado from Jefferies & Company.

Good morning, guys. Thank you for the opportunity.

Good morning, Daniel.

Good morning.

Just a quick question. When you -- looking at this, I know it's a very rough number, but this 10% to 15% of customers that are at risk of being poached or swayed by the competition, is your gut that this is a case of these customers, quote, unquote, graduating up to the next credit spectrum, or is it more that the competition is coming down into this spectrum?

A little of both. The customers graduating has always been a piece of business. That means that they are proving the sales, develop their credit score, whatever, that they can move up somewhat. That's always been with us. I think that right now it's a little different, and it's not just in the qualified piece of it, but to hear some of the offerings, and I think that the extremely long-term lengths that some of the folks are being offered and the payment levels are more attractive to them. And obviously, with all this said, obviously, there's -- it's going deeper than it was a year ago and certainly quite a bit more than two years ago, on how deep they are willing to go. Obviously, more customers do qualify.

Understood.

And we've seen this a couple times in the past, I remember precrisis, there was a big duration extension that was going on through the space, maybe a spectrum or two higher than where you guys were at the time, and I believe you held your line relatively well then. And I'm just wondering, if you look at your pool data, are you seeing any differences in the vintage performance from, say, like the past 12 or 18 months or so compared to other post crisis vintages, or is there really anything you can glean off that -- the different vintages there?

Yes, we don't really have good data from the past 5, 10 years ago. But I can tell you that the default rates for our pools that have been placed in the last 10 months or so are actually defaulting at a little lower rate than at this time last year. We're quite pleased that out of the gate, those newer pools are actually performing quite nicely.

Great. Thanks for the color, everybody.

Thank you.

(Operator Instructions)

Our next question comes from the line of Jordan Hymowitz from Philadelphia.

Thanks, guys.

First of all, what was the actual net charge-off dollar amount in the quarter?

It was $23.067 million.

$23.067 million. And what was the actual APR in the quarter?

The APR was 14 -- 15%.

Just under.

14.9%.

And what was the recovery rate in the quarter on repossessed vehicles?

It was a little less than 30.

And that historically was like 35, right? So, you said that was about 30 basis points in the difference.

Not quite 35. It was in the low 30s. We're down a few points there.

Okay.

And my second question is, you guys don't securitize, but have you noticed any change in the auto securitization market? In other words, because more and more people are securitizing sub prime papers so successfully, the OC requirements, the cost of funds keeps coming down. The past month, there's been a little bit of disruption in the debt capital markets. Has that affected the auto ABS market at all, which would indirectly benefit you? See what I'm getting at?

Yes, we haven't really seen any of that yet. We would like to think if rates do click up, that there would be some benefit down the road for us. But I don't think we've seen that yet.

But would it be a fair statement to say that is if the auto ABS market, which is where most people, your competitors, are funding, has issues you as a portfolio lender would benefit?

Can you say that again, Jordan.

Sure. Almost everybody, or a lot of people who compete against you, are securitizing the -- funding the capital markets versus on balance sheet, correct?

We think there's a fair amount of that, yes.

So, to the extent that the auto ABS market has issues and they have to pull back a little bit, that would benefit you as a portfolio lender, correct? That's not happening, you're saying, but that would clearly be a positive?

That would be a positive, yes.

Okay.

And final question, and I'm sorry about that, is I think it was the JMP guy asking about the allowance of 21.5%, which has been flat now, despite the provisions going up. How many quarters of provisions at the 24% level until you take that allowance off the match the provision level, because they have usually gone close to in tandem.

Well, the, the charge-off amount during any quarter is the total charge-off. There could be accounts charged off that are 42 months old, so the static pool losses are running around a 25% net charge-off amount. So, if you're eight or nine months into a contract term and you still have 21.5% reserved on something, on a static basis might end up around 25%, then that's one way to look at the fact that the 21.5% just makes sense, and then we've got all the detailed calculations to support that also.

So, the other way of saying it, if the number's 25% now, how high would the static full losses have to be until you increase the reserve level?

Don't have an exact number there. I hope that's not part of our conversation in the next few quarters. We're working hard to keep charge-offs down and we look at it every quarter. Can't give you an exact amount there.

Okay. Thank you.

Thank you.

Thank you, Jordan.

Thank you.

(Operator Instructions)

And we do have another question now from the line of Dan Mazur from Harvest Capital.

Hi, thanks for taking my question.

Do you plan to install GPS devices in all the existing portfolio or just on newly financed sales?

It will be rolled out on newly financed sales. We won't go back and install on any existing accounts.

Okay.

So, the common on just using GPS to help collections, that's obviously just for kind of future, just on the current vintages that are rolling out with that on it?

Exactly.

Okay, great. That's all I have.

Thank you. And we he now have a follow-up from the line of Bill Armstrong from CL King.

Hi, just one quick follow-up on the GPS. So, when the loan gets paid off, do you remove the device from the car?

Yes, we do.

Yes, and that's part of how we keep the costs down.

We're hoping we can keep that cost down even lower than the amount that I mentioned earlier by reusing and really maximizing the minutes that we have.

Got it. Okay, thanks.

Thank you, Bill.

Thank you. And I see no additional questions in the queue at this time.

All right. Well, thank you to everyone for joining us this morning, and we look forward to talking with you again in the future. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may now disconnect. Everyone have a good day.