Masonite International Corp (DOOR) 2014 Q1 法說會逐字稿

Welcome to Masonite's 2014 First Quarter Earnings Conference Call. (Operator Instructions).

This conference is being recorded. The replay may be accessed until May 19th. To access the replay, please dial 877-660-6853 in the US, or 201-612-7415 outside of the US. Enter conference ID 13580392.

I will now introduce Joanne Freiberger, Masonite's Vice President and Treasurer. Please go ahead.

Thank you, Kevin, and good morning, everyone. I am joined in our Tampa office today by Fred Lynch, our President and Chief Executive Officer; and Mark Erceg, our Executive Vice President and Chief Financial Officer.

The information for the webcast presentation that will accompany today's call is available on our website at www.masonite.com under the heading, Investors. The earnings release and presentations made by our executives include forward-looking statements that are based on the beliefs of the management team regarding the results of the operations of the Company, as well as industry and macroeconomic conditions. These beliefs and the related forward-looking statements are subject to risks and uncertainties which are described in greater detail in Item 1A of our Annual Report on Form 10-K, which is available on the Investors tab of our website. Actual results may vary materially from those described in the forward-looking statements.

Our management uses adjusted EBITDA to measure our operating performance. Accordingly, we supplement our GAAP reporting with the non-GAAP financial measure of adjusted EBITDA. Our definition of adjusted EBITDA and our reconciliation to the GAAP measure of net income are provided in the appendix of today's presentation, which can also be found on our website.

On today's call, Fred will begin with a Company and industry update. Next, Mark will provide a financial review of first quarter results, and then Fred will summarize our prepared remarks before opening the call up to question-and-answers. With that, I'll turn the call over to Fred.

Thanks, Joanne. Good morning, and welcome, everyone. From 2011 to 2013, Masonite grew door volume in our North American business segment by almost 3 million units. This growth of nearly 14% was due in large part to our successful tuck-in acquisition strategy.

Organic growth during the same time period was also up in aggregate, but improvement in the wholesale channel was offset by lower volumes in the retail channel, following an unusually competitive product-line review at Lowe's in the fourth quarter of 2012.

As we entered into 2014 with much, but not all, of the Lowe's business overhang behind us, and with significant leadership positions in all seven of our targeted North American product categories, aided by our acquisition strategy, combined with an expectation for more robust levels of overall housing activity in North America, we started the New Year with high expectations.

Unfortunately, as the quarter unfolded, seemingly every week brought with it new stories of record snowfalls or record low temperatures throughout much of the Midwest, Northeast and particularly the Southeast region of the United States, which isn't as accustomed to dealing with cold and snow. The uncharacteristically harsh winter conditions negatively impacted many businesses, including ours and our customers'.

In the first quarter of 2014, Masonite experienced a decline in North American unit volume of 3%. In addition to the harsh winter conditions, Lowe's volume in the first quarter of 2014 was less than half of the prior year.

Despite this difficult start, we remain optimistic about the remainder of 2014, and the long-term prospects of the business. With new housing inventory and interest rates both low, we believe that the macroeconomic factors continue to point toward the sustained recovery in the US housing market, in spite of the short-term volatility experienced during the first quarter.

Turning to slide 5, while North American unit volume has consistently grown over the last several years, average unit prices have only recently begun to show signs of improvement. After dropping sharply during the second half of 2011, and being down throughout all of 2012 and the first quarter of 2013, average unit prices have now improved for four consecutive quarters.

The improvement in average unit prices resulted from a series of US wholesale price increases since the beginning of 2013, a 2014 first quarter mid-to-high single-digit retail price increase, a positive mix shift in the residential business, including the recently expanded exterior business at the Home Depot, and the Lowe's loss of interior business in the Northeast and Texas, growth in the stile and rail product category, and finally to a lesser extent, the acquisition of Door-Stop, which sells higher priced entry door sets.

Importantly, this positive price product mix comes with a both a higher AUP as well as a higher absolute cost, due to the more expensive material and labor content. Therefore, as one should expect, unlike price, which more or less translates one for one into higher adjusted EBITDA, mix benefits, while still welcome, are not fully accretive to margins.

While we're on the topic of mix and because we sometimes, actually often, get questions about what differentiates stile and rail wood doors from a molded interior door, we thought it might be helpful to spend a few minutes on the topic.

As you can see from the diagram on slide 6, a stile and rail wood door consists of several pieces. The two pieces that give the door its name are the vertical and horizontal pieces of wood known as the stiles and rails. These pieces can either be solid wood or wood clad, depending on the specifications associated with a particular door.

The other major piece of a traditional stile and rail door are the panels, which are the wood or glass sections that sit within the surrounding stile and rail frame. A stile and rail door with glass may also have one or more muntins, which are the decorative vertical and horizontal wood bars used between the glass panels.

The residential stile and rail wood door category leadership position that we currently hold was solidified through our 2012 acquisition of Lemieux and the assets acquired in Chile last year. These two acquisitions were an important part of our strategy to bring to market a comprehensive good-better-best approach, specifically designed to facilitate product trade-up.

So back to our earlier average unit price discussion, when we sell a stile and rail door to fill an opening, we can command a price several times higher than a comparable molded product. While we still have work to do to further strengthen our North American stile and rail position, we are very pleased with volume trends, which are up 39% since the first quarter of 2012.

With established leadership positions in a broad range of product categories, we're focused on five strategic platforms in order to grow share and expand margins at a rate in excess of the broader macroeconomic recovery, and in doing so, continue to create shareholder value.

Our first strategic platform is centered around accelerating our automation efforts to continue to deliver industry-leading products with better quality, improved labor productivity and shorter lead times, because we believe speed wins in today's market environment, and will remain critical to our future success.

Second, driving product-line leadership; like stile and rail; as we continue to offer our customers a wide array of high-quality innovative products and services. In 2014, we are substantially increasing our investments in technology and innovation resources to accelerate new product introductions across our product portfolio as markets recover.

Third, facilitating electronic enablement through our automating ordering, quoting and customization processes; and with a full suite of e-commerce tools to get the right product to the right customer at exactly the right time, so we can proactively anticipate and address the new norms of the consumer.

Our fourth platform is investing in sales and marketing excellence, including customer service capabilities, to deepen and expand relationships with key channel partners, market influencers, and end customers.

And finally, continuing our strategic tuck-in acquisition strategy to strengthen our capabilities and reinforce our already strong customer relationships, while simultaneously optimizing our global business portfolio.

We believe that strong execution across these five strategic platforms will solidify our position as the best provider of building products in the eyes of our customers, employees, shareholders, suppliers, and communities. With that, I'll turn the call over to Mark to review our financial results. Mark?

Thank, Fred, and good morning, everyone. As Fred mentioned earlier, unusually harsh winter conditions and the lingering effect of the Lowe's business loss, negatively impacted first quarter unit volume. While total door volume decreased 3.7% versus a year ago, net sales were essentially flat, behind an increase in average unit price from approximately $50 per door to $52 per door.

The increase of almost $2 per door was driving by a combination of pricing and positive mix. Excluding the $4.5 million benefit from the business interruption insurance claim recorded in the first quarter of 2013, adjusted EBITDA decreased 9.2% from $21.7 million to $19.7 million.

As depicted on slide 10, several headwinds affected our overall performance during the first quarter of 2014. Volume was negatively impacted as both new construction and home improvement projects were delayed, due to extreme temperatures and large amounts of snow and ice across much of the continental United States.

In addition to lower volumes, Masonite lost 39 production shifts across 15 different plants throughout the United States, which drove higher overtime rates, and created overhead absorption issues. While it is difficult to accurately quantify the full impact from this year's harsh winter, incremental utility and overtime cost alone were up over $1 million versus a year ago.

During the first quarter we also had a number of business specific and macroeconomic factors to contend with, such as the Lowe's volume reduction, and a previously disclosed retail price concession we had to grant halfway through 2013.

Weakness in France and negative foreign exchange impacts across multiple business segments also impacted first quarter results, although to a lesser extent.

Finally, the first quarter of 2013 benefitted from a $4.5 million gain recorded in SG&A related to the business interruption insurance claim at Marshfield, which negatively impacted year-over-year comparisons.

Excluding the impact of business interruption insurance, SG&A was up $6.3 million year over year. However, it is important to note that $1.1 million of the increase was due to the acquisition of Door-Stop, and a significant portion of this increase was driven by other costs, such as a $1 million loss on the disposal of property, plant and equipment; and $600,000 of bad debt expense.

Excluding these items, SG&A was up approximately 7%, behind an increase in salaries and benefits and incremental investments in growth initiatives in the areas of sales and marketing, and new product development. We believe these investments will result in higher sales and profits in the future.

Turning to slide 11, the combined impact of these factors can be seen on our summary income statement. While net sales decreased 0.5%, and SG&A was up sharply for the reasons just mentioned, gross margin increased 60 basis points to 12.5% of net sales. The increase in gross margin was primarily the result of higher average unit prices across the North American residential business, France and the United Kingdom.

Excluding the benefit from the business interruption insurance claim, adjusted EBITDA decreased $2 million, to $19.7 million.

On slide 12 we examine the change in net sales for each of our three reportable business segments, and the primary drivers of the year-over-year changes. Net sales in our North America segment decreased by 1.5% or $4.9 million. This decrease was primarily driven by lower unit volumes and negative foreign exchange.

Higher average unit prices, as a result of US wholesale pricing actions, North American retail pricing actions, and favorable product mix increased net sales by $17.9 million during the quarter.

Net sales in our Europe, Asia and Latin America segment increased 6.7% or $5.9 million, compared to the first quarter of 2013. This was primarily due to positive foreign exchange and higher average unit prices, partially offset by lower unit volumes.

Net sales in our South Africa segment decreased 18.8% or $3.1 million, as a $4 million decline in unit volumes and a $2.9 million unfavorable impact of foreign exchange were only partially offset by a $3.8 million increase in average unit price.

Turning to liquidity, cash flow, and balance sheet metrics; available liquidity at March 30th, 2014, including unrestricted cash and undrawn ABL in an accounts receivable purchase agreement, totaled $286.6 or approximately 16.6% of Masonite's trailing 12-month net sales.

In January, we closed on a $125 million add-on to our senior unsecured 2021 notes, resulting in gross proceeds of $138.7 million. Approximately $50 million of these proceeds were used to fund the Door-Stop acquisition.

After accounting for both the notes offering and the acquisition of Door-Stop, total debt was $513.6 million, and net debt was $347.3 million. Our financial leverage target remains unchanged at 3 to 4 times of total debt to adjusted EBITDA. However, financing and acquisition activity may cause us to occasionally exceed our stated range, as was the case for the quarter ending March 30th, 2014.

As we accrue the benefits of the recent Door-Stop acquisition and continue to grow our business organically, we expect our leverage ratios to move back within our stated financial policy.

On April 3rd, after the bond add-on and the Door-Stop acquisition, S&P upgraded our bonds from B+ to BB-. S&P also improved our corporate outlook from neutral to positive. As such, we believe we have ample liquidity and balance sheet strength to continue supporting our business expansion.

And with that, I'll now turn the call back to Fred to summarize today's discussion.

Great. Thanks, Mark. So although the first quarter was challenging due to harsh winter conditions and the lingering effects of a highly competitive retail environment, we remain confident about the long-term prospects for the housing market and for Masonite for a number of reasons.

First, pricing trends are improving, with North American average unit price increasing for the past four consecutive quarters. Beginning with the first quarter of 2013, we have successfully executed a series of US wholesale price increases. And now that we have secured retail price increases across all of North America, both wholesale and retail prices are moving in tandem for the first time in years, although discrepancies between channels remain.

Going forward, as markets recover further, we plan to continue raising prices in order to capture fair value for the high quality of products and services we provide. As in the past, we plan to share the results of price increases after they have been effective.

Second, our strategic acquisition program continues to provide tangible benefit, as evidenced by the strong volume growth and positive mix benefits we are seeing from our stile and rail business. In addition, we continue to proactively capture manufacturing and cost synergies across the stile and rail network.

Finally, despite being somewhat volatile, overall market indicators remain positive, and the long-term demographically-driven demand characteristics in our largest market, the United States, remains strong.

Because of all these reasons, and the hard work and dedication of the entire Masonite team, we are confident that despite a slow start to the year, we will be able to continue to grow both revenues and adjusted EBITDA in 2014, as we seek to become the best provider of building products in the eyes of our customers, employees, shareholders, suppliers and communities.

So with that, I'll now turn the call back to the operator to open the line for questions. Operator?

Thank you, Mr. Lynch. (Operator Instructions). Seth Yeager, Jefferies.

Hey, good morning. On the weather side, can you help further quantify the actual revenue associated with the downtime? If you were down 39 production shifts, what about the ability to actual move product to your customers? Was that disrupted as well? Were you able to work down some of your [WIB] in finished goods? It looks like your days of inventory was up pretty sharply. Any comments around the revenue side would be helpful.

Let me just jump on the inventory piece, and then I'll have Fred talk about the revenue aspects. Yes, in fact, our inventory at the March 30th position was higher than we would have otherwise liked to have seen it. I think the reality for us and a lot of folks in the building products industry was that everyone kept expecting the weather to kind of abate. And then we expected a large surge in shipments and we didn't want to have too little product on hand to be able to then service those orders.

So because the winter did continue to linger, our March 30th inventory position was higher than we otherwise would have preferred to have seen. And as far as the revenues go, I'll let Fred comment on that.

Yes. I think on the revenue side, we clearly saw the impact of revenues from the winter, just because of the fact that our customers many times were unavailable to even accept products. So it's hard to quantify exactly how much of that will recover over time. I know that's an obvious question.

We don't think we're in a position right now to determine that. We do believe that the market has thawed. We're seeing increased activity, although we're not providing guidance at this point. We have seen increased activity in April. And we're hearing from our customers that their operations are back on track. But clearly the markets were affected pretty heavily by the winter weather.

Is there any way you could maybe share, at least in April, what your trends were in North America on the volume side?

Yes, again, we're not providing guidance at the point, but I can tell you the activity has improved significantly with the weather improving.

OK. Fair enough. On the pricing side, it looks as if your customers are absorbing the increase. Can you talk about plans for any additional increases, maybe later on this year, as well as on the cost side? I don't believe you disclosed EBITDA by region yet. How much did fixed costs impact you versus some, if any, inflationary pressure you're seeing on raw materials?

All right. Well I'll start with the discussion around pricing and then Mark can talk a little bit about what we saw in costs in the first quarter. With regard to the pricing, we still believe that there's room for us to continue to improve pricing in our products to capture fair value. But we have historically, and will continue, to discuss price increases after they're effectuated. We don't like to say we plan to do this specific price increase. As they are effectuated, we will share those price increases with our investors.

And as far as the commodity inputs are concerned, speaking just about North America at this moment, we have seen a little bit more inflation on the wood side. At this point we expect to see on a net basis, after our global sourcing group and our lean sigma efforts, net wood inflation of probably in the 3% to 4% range on the full year.

We are seeing metal continue to trend down. So there's a couple of percentages there that we're getting some favorable effects from. And then glass and chemicals, which are the other two big areas for us, those are up slightly as well on the year.

Overall though, I think it's fair to say that the pricing actions we've taken will be largely accretive to margins.

OK, great. And then just last one from me; it's a smaller part of your business, but you guys realized the first year-over-year increase in revenue in your European and Asian business since I think late 2011, starting to see some pricing there as well. Can you just give us an update on what you're seeing on the demand side in Europe? Thanks.

Yes. So let's talk a little bit about the different markets we participate in, because it's again, a tale of two cities. We're seeing strong performance in the market in the UK. On the opposite side, we're seeing continued dreary outlooks in France, which those are similar sized business for us today as a result of the acquisition of Door-Stop. So we are encouraged by the economic conditions and the economic outlook for the UK housing market. And we think because of our significant position and broad product offering in the UK that we'll be able to benefit that.

At the same time, we remain concerned about the outlook for the French market, because of the government and regulatory pressures that we're seeing that are not helping the housing industry in those markets.

Now in both of those markets we have been able to effect pricing. We did talk in the past about our intentions to take prices up in France. In early calendar 2014 we did in fact do that with low single-digit price increases. And the last price in the UK was in the third quarter of 2013. That was also a low single-digit price increase.

OK, great. Good luck, guys. Thank you.

Robert Wetenhall, RBC Capital Markets

Hey, good morning. I was wanting to see if you could provide any color on impending line reviews in the big box channel and how you see volume demand unfolding during the balance of the year?

Yes. So when we look at the line reviews, I mean the way I like to think about line reviews are they are a normal part of our business process, and they will continue to be a normal part of our business process as we move forward, providing both opportunities to grow the business as well as opportunities to defend the business.

If we look at 2014, we think this is going to be a relatively benign year from the effect on our revenues, again either positive or negative. We have been told by at least one of our large retailers that they do plan to conduct line reviews through the summer of this year. The outcome of those line reviews will not be known until probably the fourth quarter. And the impact of any line review, again positive or negative, would not be known until sometime next year.

Got it. Prices were up by 5.7% year over year, which was ahead of what we were expecting. Can you guys parse that a little bit between what was driven by a richer mix and what was a true price increase? And if you could also give a little color; how much volume growth did you get on stile and rail doors, too, last year?

Yes. Let me take the first part of that. As it relates to average unit price, we principally talk about the North American business, because that's the bulk of our sales and our EBITDA. We did have average unit prices increasing about $18 million quarter over quarter. I'll tell you that approximately two thirds of that was driven by price and about a third of that was driven by mix.

The other thing I think is important to note, if you look at it on a sequential basis, we actually had $12 million of positive AUP in the fourth quarter of last year in North America as well. So really, you're talking about a delta of roughly $6 million. Some of that was certainly driven by mix, the Lowe's business loss that Fred spoke to where we had half the rate of unit volume in Q1 versus the prior year. Most of the business that we lost was on the interior side. So we're actually then shifting more towards an exterior business, which tends to have a higher unit price. In fact, you'll see in our filings later that total Company mix has increased by several percentage points towards exterior, just relatively recently as a result of that. So mix was a positive effect there clearly, as was the stile and rail element within it.

Got it. Thank you, and just one final question. What are your thoughts on the M&A environment, and your large competitor recently had a new CEO come into play. And we were curious if your other large store competitor in North America has started behaving in a more rational way with respect to achieving its financial targets through pricing?

You know, I think you have to ask the second question to our competitor of what their plans are. We do know there's been a management change, and it's relatively recent. So at this point in time we haven't seen any impact on the business one way or the other.

With respect to the M&A environment, we continue to be active in looking at opportunities for the Company. We have a balance sheet that we believe will allow us to do so. But we're also very thoughtful on making sure that when we look for acquisitions that they fit our business and they fit it well. I think the recent acquisition of Door-Stop is a great example of that. It really fits our business well.

On top of that, we want to make that we're paying fair value for our acquisitions. I think we've been very disciplined in making sure that we pay a fair value for our acquisition and extract synergies from those, and that will continue to be our modus operandi going forward.

Got it. Good luck next quarter. Thank you.

Scott Levine, Imperial Capital.

Hi, good morning, guys. So I'm going to try for a little bit more color. I know you're not providing guidance here today, and you saw a pickup in activity levels in—as the weather improved toward the end of the quarter, and have seen that follow through in April. But could you comment with regard to whether that improvement has kind of been in line with your expectations, and then maybe a little bit of an update on your outlook or thoughts regarding each of the key end markets in North America- resi, the remodel business and then also on non-res.

Sure. I think we feel comfortable talking to what we're seeing in the markets at this point in time. I'll start with the commercial market, and commercial market-architectural market. That is a market that has been relatively slow as of late. When you think about our business in supplying doors into commercial and architectural space, whether it be government buildings, hospitals, hotels, school, et cetera; from the time that construction begins to the time that our doors are actually installed, can be anywhere from 12—but more likely on the further end closer to 2 years.

That market, while it's starting to see an uptick in activity with regards to architectural [billings], and we're starting to see a higher level of confidence that that market will recover. We anticipate for 2014 that that market, at least from a door perspective, will be relatively flat.

On the triple-R market, it did have a tough first quarter. I think the triple-R market has more of an opportunity for the market to recover through 2014. People that were looking at doing a project in their home decided not to do it during the tough winter, but that doesn't stop them from doing it during the rest of the year.

So we're expecting still to see kind of mid-single-digit growth in the triple-R market in 2014, and that's what most of the prognosticators are saying will happen.

I think the real question is what happens with new housing. We went into this year with a lot of forecasts from others that were pretty robust, numbers that we saw for total housing starts in excess of $1.1 million. We think that what we've seen so far through the first three months of the year which were down well below 1 million starts, will be hard to recover through the remainder of the year.

And so I think when we look at the market, that's still for us a big question mark, whether we will see that full recovery. A lot of questions about the availability of labor, of availability of materials for the supply chain. And we're going to continue to watch that closely, but those are the questions that I think everyone in the industry is asking at this point in time.

Another thing I would just add that's unique to Masonite of course, is we've gotten now to the point where we've largely annualized the effects of the Lowe's business loss. If you looked at our volumes within North America, what I can tell you on the first quarter is that our wholesale volume was up, albeit very, very slightly, despite the fact that housing starts were down on the year-over-year basis, and we obviously had the inclement conditions as it related to the harsh winter.

On the retail side, we were actually down about 12% on unit volume. So that story was continuing to unfold, and despite that, we've more or less held volume roughly flat, down about 3%. So if you simply take that headwind away and you adjust for the weather conditions, we do have reason to be optimistic for the balance of the year.

Makes sense, thank you. One follow up as well from me. You talked about your continued interest on acquisitions. Your leverage is a little bit above the high end, I guess, of your comfort zone. You got the nice upgrade out of the credit agency after the quarter closed. Is leverage—help me just maybe think about your willingness to do acquisitions, willingness to lever up; where's the upper bound, and should we see acquisition activity slow as a result of the balance sheet or are you still opportunistic there? Additional color would be helpful.

Yes. What I would say right now is obviously if you look at our financial ratios, they're affected a little bit by the simple fact that we brought on a fair bit of cash onto the balance sheet. We were able to step out in January and get very, very favorable terms. And so we wanted to access that. Of the money that was raised, $137 million, we only put $50 million to work as of yet. That's not yet in our trailing 12-month adjusted numbers.

So I think we have a short-term item here, whereby our measures and our ratios as calculated, are a little bit inflated. But I don't think there's any systemic in that. And we certainly have enough financial wherewithal at this point to continue to effect our tuck-in strategy going forward.

But our financial policy remains intact with what we've talked about before.

Correct.

Got it. And is there anything in particular you're looking or you're generally open-minded with respect to your targets there?

I think the way to think about it is that you've seen the acquisitions we've conducted, over 12 acquisitions in the last several years. They have all been—followed the criteria that we put in place with regards to being essentially in our space. And those are the types of companies that we continue to look at and target.

Got it. Thank you.

(Operator Instructions). Philip Volpicelli, Deutsche Bank.

Good morning. On the M&A front, I think we've touched on that quite a bit, but what's the amount of excess cash that you believe that you have on the balance sheet currently that you'd be willing to invest?

What I would tell you is that in any given point in time, given the intercompany financing structure we have in place, we're comfortable operating with $75 million to $80 million of cash. Obviously for any given purpose, we could potentially go lower than that. But as a normalized basis, $75 million to $80 million; that's about the level at which we need to keep everything functioning smoothly.

Great, and then Mark, you mentioned that you've largely annualized the Lowe's loss. Is there any way to quantify that? How much of that 12% loss in retail was Lowe's and I'm assuming that that number is going to be much smaller next quarter. Can you give us just some help on that?

Certainly. I said that North American retail volume was down 12% year over year. All of that ascribes to the Lowe's business loss.

OK. And so you're—if I can put words in your mouth—your guidance is that in this next quarter that that decline will be much smaller because you'll have annualized most of Lowe's?

We're obviously not providing guidance, but yes, that would be a clean read through.

OK. Great, thanks. And then just one clean-up; the insurance reserve that you booked last year in the first quarter of 2013, where did that fall in the income statement?

That went into SG&A.

Great, thank you very much.

And if you'll recall, there was also $3.3 million related to that same item that was in the fourth quarter of 2012. So hopefully at some point we can stop talking about those items. But they were both obviously sizeable, the $3.3 million and the $4.5 million.

Yes. Now that we've annualized them, I think we will stop talking about them. Thank you very much. Good luck.

Thank you. There are no further questions at this time. I'd like to turn the floor back over to Mr. Lynch.

OK. Well we want to thank everyone for their questions today, and for participating in the call today. We look forward to speaking to you soon. And Operator, Kevin, if you can please provide replay instructions, that would be great.

Certainly. Thank you for joining the Masonite International's First Quarter Earnings Call. This conference call has been recorded. The replay may be accessed until May 19th. To access the replay, please dial 877-660-6853 in the US, or 201-612-7415 outside the US. Enter conference ID 13580392.

That does conclude today's teleconference. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.