Farmer Bros Co (FARM) 2017 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to Farmer Brothers' Second Quarter Fiscal 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a brief question-and-answer session, and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the call over to your host, Tom Mattei. Go ahead, sir.

Good afternoon, everyone. Thank you for joining Farmer Brothers' second quarter fiscal year 2017 earnings conference call. I'm the Company's General Counsel and Assistant Secretary. With me today, are Mike Keown, President and Chief Executive Officer, as well as Rene Peth, Vice President and Corporate Controller, who will be available during the Q&A portion of our call.

Earlier today, we issued a press release which is available on the Investor Relations section of our website at www.farmerbros.com. The press release is also included as an exhibit to our Form 8-K available on our website and on the Securities and Exchange Commission's website at www.sec.gov.

Please note that all of the financial information presented on this conference call today is unaudited. A replay of this audio-only webcast will be available approximately 24 hours after the conclusion of this call. The link to the audio replay will also be available on our website.

Before we begin the call, please note various remarks that we make during this call about our future expectations, plans and prospects, may constitute forward-looking statements for purposes of the Safe Harbor provisions under the Federal Securities laws and regulations. These forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date.

Results could differ materially from those forward-looking statements. Additional information on factors that could cause actual results and other events to differ materially from those forward-looking statements is available in the Company's press release and in our public filings, which are available on the Investor Relations section of our website.

On today's call, we use certain non-GAAP financial measures, including non-GAAP net income, non-GAAP net income per common share diluted, adjusted EBITDA and adjusted EBITDA margin in assessing our operating performance. Reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures is included in our earnings press release, which is available on the Investor Relations section of our website.

I will now turn the call over to Mike Keown, our President and Chief Executive Officer. Mike.

Thank you, Tom. Hello, everyone, and thank you for joining us this afternoon. On today's call, I will cover the highlights of the quarter, both operationally and financially, provide an update on our key initiatives, and then finish the call by going over our financial results in greater detail, before opening the call up for questions.

Overall, we are very pleased with the progress we made during the quarter to continue the positive momentum from 2016 and the first quarter of fiscal 2017. Although we faced certain distractions during the quarter, such as our corporate relocation and the proxy contest, I'm very proud of the way our team remained focused on our business and continued executing on our initiatives. I believe that with the business that is transforming and improving, as well as a strong balance sheet that provides us with greater financial flexibility, we are well-positioned to create long-term growth and value for our stockholders.

Turning to a few highlights from the quarter, first coffee pound volume. Coffee volume was up 5.7%, making this our fourth consecutive quarter that we have achieved volume growth rate of mid-single digits or greater. For the quarter, we processed and sold 24.5 million pounds of green coffee, compared to 23.2 million pounds during the prior-year period. We are pleased to see our volume growth being driven by both existing and new customers.

We also continue to see expansion in gross margin, where we saw year-over-year improvement. Gross profit for the quarter increased 4.1% to $55.1 million from $52.9 million in the prior-year period, while gross margin increased 240 basis points to 39.6% in the quarter, driven by lower conversion costs and the hedge cost of green coffee.

Second quarter net income was $20.1 million, significantly higher than the prior year due to several one-time items, most prominently being the gain on the sale of our Torrance facility, which we will discuss in greater detail later in the call.

Restructuring and transition expenses related to the corporate relocation plan in the second quarter were down $1.3 million compared to the second quarter of last fiscal year, as we near completion of our relocation activities as anticipated. We currently expect that third quarter will be the last remaining quarter of significant expenses related to this project.

Net income was also impacted by an increase in interest rates, which affected the value of our preferred portfolio and net unrealized losses associated with specific hedging devices for certain direct-ship customers. As a background, we hedge a significant amount of our portfolio based on direction from our customers and they pay the cost of the hedge through the price of their coffee. Our ability to use derivatives to assist our customers in buying coffee has been well received by our partners, and they look at this activity as value-added to our services. This quarter's negative impact to our P&L was a non-cash item and we expect to see this reverse over time.

Next a few comments on the overall business. I'd like to touch upon our key events in the quarter, including the initial results from the China Mist acquisition, our strategic acquisition of West Coast Coffee, our corporate relocation plan and share some thoughts on expectations for the future.

As we mentioned on our last call, we successfully completed our acquisition of China Mist in October and began the process of bringing the China Mist business under our umbrella. We are very pleased with progress thus far and we are currently running ahead of expectations. Their strong distribution network provided a new capability and hybrid model that works in tandem with our DSD and direct-ship capabilities. We very much appreciate China Mist culture with respect to areas such as their sustainable practices, which we feel is cut from the same cloth as our own.

In addition, their portfolio of products created a strong push into the premium tea category for Farmer Brothers, building upon in a different, but important way, our existing award-winning tea products. We continue to be enthusiastic about the opportunity to expand our business and better serve our customers through this transaction and believe that our positive experience with this transaction will service well as we explore additional M&A opportunities, including our latest acquisition, that being West Coast Coffee.

We are excited to announce that earlier today, we closed the acquisition of substantially all of the assets of West Coast Coffee for up to $14.5 million. West Coast is a Portland-based, coffee manufacturer and distributor that offers a broad array of specialty coffees throughout the Northwest, that we believe will be synergistic to our current portfolio. Local convenience stores [cater] heavily among the customers of their strong local DSD business. We have found that their experienced management team has developed strong brand loyalty in the region that we believe will enhance our penetration in the area. We are thrilled to welcome West Coast Coffee to Farmer Brothers, and expect they would be a great addition to our business.

Turning to our corporate relocation plan, we have completed our move from Torrance, California to Northlake, Texas, and are now up and running in our new corporate headquarters. During the quarter, we successfully completed the decommissioning and exit from the Torrance facility and the exit and expiration out of the leaseback [lease net] that we could record the gain of $37.4 million from the sale of the property.

Distribution commenced out of the Northlake, Texas distribution center in November of 2016. We exited our temporary headquarters and have effectively transitioned all corporate administrative functions into the new facility. In addition, progress continues in readying our new state-of-the-art production facility and with our roasters being installed, we continue to expect to commence production by the end of our third fiscal quarter. Finally, we remain on track to achieve the expected $18 million to $20 million in annualized cost savings from our corporate relocation.

As to customer wins, we continue to sign up new customers and have recently secured several new accounts in our DSD business such as Comcast in the telecommunications industry, which has approximately 58 properties; Skyline Healthcare with approximately 70, which is a healthcare group purchasing organization; and Stop 'n Save convenience stores. Nearly all of these customer locations have been installed and are up and running smoothly.

As we mentioned, one of our newest wins with SSP, an operator for branded products and food kiosks in retail locations and airports around the US. SSP has now been buying from Farmer Brothers for approximately a month, ahead of our original expectations. We plan to be servicing 24 airports and 98 individual outlets once the rollout is complete, but we couldn't be happier with the progress.

We are continuing to see growth in our existing customer base, which combined with additional prospects in our active pipeline, should position us for strong activity through the remainder of the fiscal year. Before I discuss our quarterly results in greater detail, I want to update you on our CFO search. Our Board Search Committee has engaged an independent search firm to conduct a nationwide search and is currently evaluating several promising candidates.

Generally speaking, we feel that the search process is proceeding well, and we've been very encouraged by the candidates that have been reviewed thus far. And while the Board is taking the appropriate time to find a candidate that will be a good fit with the Company and the rest of the team, we continue to have an experienced and resilient financial team that is doing a fantastic job as evidenced by our smooth reporting process this quarter.

Now, back to the quarter. On the income statement, net sales in the second quarter of fiscal 2017 were $139 million representing a 2.3% decrease, as compared to the prior year, primarily as a result of the decrease in net sales of spice products and coffee products, partially offset by increases in the net sales of tea. Spice sales were down $2.4 million or approximately 2% of total sales from the sale of our institutional spice business to Harris in December 2015.

As I mentioned, we had a 5.7% increase in coffee pounds sold in the second quarter, which was offset by $2.3 million in price decreases from sales to customers utilizing commodity-based pricing arrangements. Gross margin in the second quarter was 39.6% compared to 37.2% in the second quarter of fiscal 2016 or 240 basis point improvement. The improvement in gross margin was primarily driven by lower conversion costs and lower hedge cost of green coffee, partially offset by the decrease in net sales.

Also the liquidation of LIFO inventory, primarily from a reduction in spice product inventories, added about $800,000 to gross profit during the quarter. Overall, we experienced another quarter of gross margin expansion. Operating expenses in the second quarter were $19.2 million, as compared to $47.5 million recorded in the prior-year period. The decrease was primarily due to recognition of the gain on the sale of the Torrance facility and lower restructuring and other transition expenses in connection with our corporate relocation plan, offset by an increase in SG&A.

Selling expenses increased $1.2 million during the quarter, as compared to the same period in the prior fiscal year, primarily due to the consolidation of China Mist operation and consulting expenses related to operations. General and administrative expenses increased $4.3 million, primarily due to non-reoccurring proxy contest related expenses. Acquisition-related consulting expenses also contributed to the increase in G&A expenses. We expect to be actively evaluating additional business development opportunities going forward, and so a portion of these types of expenses will likely continue.

During the second quarter of fiscal 2017, we incurred $3.7 million in legal and professional service expenses from the 2016 proxy contest that we do not expect to reoccur. Income from operations in the second quarter was $35.9 million compared to [$5.4 million] in the prior-year period, an improvement of $30.5 million primarily related to factors I just mentioned such as the gain on the Torrance facility.

Total other expense was $2.4 million in the second quarter of fiscal 2017 as compared to total other income of $563,000 in the second quarter of fiscal 2016. The increase was primarily due to book losses on derivative instruments and on our investment portfolio, totaling $2.5 million as well as higher interest rate expense -- higher interest expense resulting from one-time, non-cash interest expense related to the sale leaseback of the Torrance facility. This compares to the net gains on derivative instruments and investments of $300,000 reported in the second quarter in the prior year.

As I mentioned earlier, we periodically enter into particular derivative instruments on behalf of certain customers. Accounting rules dictate that we mark-to-market the non-designated instruments and that caused the fluctuations in value this quarter. Unfortunately, these market changes are not within our control and can cause short-term gains and losses. The book loss we recorded in the second fiscal quarter in 2017 is expected to reverse over time in the cost of goods sold.

We had an effective tax rate of 40.1% in the second quarter as compared to a tax rate of 6.1% in the second quarter of the prior fiscal year. We recorded an income tax expense of $13.4 million as compared to $363,000 in the second quarter of fiscal 2016. The Company's effective tax rate for the second quarter of 2017 was higher than the US statutory rate of 35%, primarily due to state income tax expense and higher as compared to the second quarter of fiscal 2016, because in the second quarter of fiscal 2016, we had recorded a valuation allowance against our tax deferred assets.

As a reminder, we released the majority of our valuation allowance against our prior deferred tax asset in the fourth quarter of fiscal 2016. As a result of all the factors I mentioned, net income was $20.1 million in the second quarter of fiscal 2017 as compared to $5.6 million in the second quarter of the prior fiscal year. Net income per diluted common share in the second quarter was $1.20 versus a net income per diluted common share of $0.34 in the prior-year quarter.

Moving on to non-GAAP, our non-GAAP net income was $2 million in the second quarter of fiscal 2017 versus $5.7 million in the prior-year period. Our non-GAAP net income per diluted common share was $0.12 in the second quarter of fiscal 2017 versus $0.35 in the second quarter of the prior year. Non-GAAP net income in the quarter excluded the impact of $37.4 million on net gains from the sale of the Torrance facility or $2.24 per diluted common share, non-cash income tax expense on non-GAAP adjustments of $11.5 million or $0.69 per diluted common share, restructuring and other transition expenses of $4 million or $0.24 per diluted common share, and non-recurring proxy contest-related expenses of $3.7 million or $0.22 per diluted common share. Our adjusted EBITDA margin was 7.4% during the quarter versus 9.0% in the second quarter of 2016.

Now let's turn to the balance sheet. As of December 31 2016, we had $8.4 million in cash and cash equivalents. Additionally, we had $26.2 million in short-term investments. As of December 31, 2016, we had $18.5 million borrowed and outstanding on our revolving credit facility. As of December 31 2016, we utilized $4.5 million in letters of credit and had $39.4 million of excess availability on the credit facility, based on our borrowing base capacity.

For the second quarter of fiscal 2017, our capital expenditures were $24.1 million as compared to $14.2 million in the second quarter of fiscal 2016. $14.7 million is related to our new facility and $9.4 million for our routine capital expenditures primarily consisting of coffee brewing equipment, as well as vehicles, machinery and other equipment. Following the lines of the balance sheet, the Texas facility is now included and property plant and equipment, depreciation and amortization expense in the second quarter of fiscal 2017 was $5.1 million versus $5.2 million in the prior-year period.

As of December 31 2016, we helped coffee-related derivative instruments, covering 19 million notional pounds of green coffee, as compared to 34 million pounds covered as of June 30, 2016. In addition, we had green coffee fixed price contract commitments of $69 million, which is $30.1 million higher than December 31, 2015. As of December 31, 2016, we had $31.7 million in coffee inventory processed and unprocessed and $21 million in tea and culinary inventory processed and unprocessed. The combination of increased coffee-related derivative instruments and the increase in fixed price green coffee contract commitments, has helped to increase the price certainty of our green coffee cost.

I would now like to discuss some of the details regarding -- relating to our corporate relocation plan. Since the project started in 2015, the Company has recognized a total of $30.3 million in cash costs, including employee retention and separation benefits of $17 million, facility-related cost of $5.9 million related to temporary office space and $7.4 million associated with the move of our headquarters and other related costs. We have estimated we will incur approximately $31 million in aggregate cash costs in connection with these restructuring and other transition expenses associated with the relocation plan.

As that I mentioned earlier, we expect that this will be the last remaining quarter of significant expenses related to the relocation plan with the remainder to be recognized in the third quarter. We also recognized approximately $700,000 in non-cash interest expense and $1.4 million in non-cash rent for the Torrance facility as part of the sale leaseback. In addition, we may incur certain pension-related costs. With the relocation essentially complete, we continue to estimate that the total construction cost, including cost of land, will still total approximately $55 million to $60 million and the cost of equipment, IT, furniture and fixtures and other in the $35 million to $39 million range.

As of December 31 2016, the Company had spent $49.9 million on the construction of the building, including land cost. Final completion of relocation of the new facility are expected to conclude in the third quarter. As I mentioned above, our corporate relocation plan remains on track to produce cost savings of approximately $18 million to $20 million annually.

In closing, we are successfully executing on our turnaround strategy and key initiatives as we continue to focus our efforts on delivering both operational and financial improvements. This past quarter's performance is a testament to the team's ability to perform even in the face of challenges and distractions, and I'm excited about what we can accomplish next with these issues behind us. Furthermore, as we continue to build a solid foundation for future growth, we are also actively seeking and finding new and exciting sources of growth with our latest acquisitions of China Mist and West Coast Coffee. These are two recent examples of our success.

While we felt that as recently as three years ago, the Company was not in a strong enough position to appropriately manage a healthy business development program, the combination of our improving performance coupled with progress with recent acquisitions, has helped to refine our perspective on our ability to capitalize on future market opportunities. Additionally, we remain focused on strengthening our DSD Group, winning new customers, increasing volume with existing customers, and improving efficiencies to drive profitability higher.

Finally, I want to emphasize that the Board and management team is fully committed to working with all of our stockholders to ensure we are doing all that we can to deliver long-term sustainable growth and value creation for all stakeholders. We receive strong support from stockholders during the proxy contest, including both the investment community, as well as our employee participants.

We are also dedicated to doing more and have recently hired an IR firm to assist us in increasing our transparency and communication efforts and ensure we are employing industry best practices. Coffee remains an exciting area, and we believe we are well positioned to be a preferred partner of choice. We look forward to continuing to share our progress with you in coming quarters.

And with that, I'd like to open up the call to a few questions. Operator?

Ladies and gentlemen, the question-and-answer period is now on. (Operator Instructions) Francesco Pellegrino, Sidoti.

Good afternoon, Mike.

Hi, how are you?

Pretty good. So, a second straight quarter where you throw an acquisition at us. So you did your first acquisition after the hiatus from the 2008 period, small acquisition, then you did China Mist last quarter. You did West Coast Coffee today. China Mist was at $11 million, West Coast Coffee was at $14 million. When we think of acquisitions, are we thinking the sweet spot is somewhere between $10 million to $20 million is the focus on small brands -- on acquiring a lot of small brands, or acquiring a couple of small brands than investing in their growth?

It's a good question. I think there is two ways we evaluate acquisition opportunities. One would be where we can get distribution efficiencies, and I think West Coast is a terrific example of that, a very strong DSD system with a good brand that will work very synergistically in that regard. Another way we view it is through the lens of the brand, and China Mist actually brings us a wonderful brand with good equity and a different distribution network, which I think is a wonderful benefit.

To answer your question in terms of size, we really try to work off what's available in the market and what those opportunities are. It could be larger, I think as we grow muscles and show what we can do. It could be more significant, if that opportunity presents itself. And I think that's what will like guide us, what's the right fit, what's the right model for us and what's the right future, and not necessarily be driven by a certain size.

When I look at these acquisitions, in the past obviously, the Company is exposed to a commodity. Are we investing in acquiring brands or more so the distribution efficiencies that you were talking about? Because I've seen this being done with some other companies that are like industrial grade commodity manufacturers and they almost build like a branded economic moat around the commodity business and at the end of the day, you are acquiring a lot of these attractive, small brands and you just look at where the commodity cost environment is for you, for your customers, it's rather favorable. And I'm just wondering if it makes more sense in the short term to acquire a lot of brands or just over the long term to have this long-term strategy? How aggressive are you going to be over the short term?

Again, it's difficult to say. What I would tell you is, we conducted a pretty thorough landscape assessment. I think we might have mentioned it a quarter or two ago to give us a very good view of the US coffee industry. And from that there were some targets that popped up either from a distribution size or branded perspective, and in some cases, there could be both. That coupled with what's happening in the market is what's driving us. It's a little bit difficult to answer your question in a challenging environment.

The increase in the coffee bean volume growth was 5.7%. Was the increase in more so the DSD business, the DTC business? I know you said, it was like amongst a lot of small accounts, so --

Well, those were the ones that we -- what I would say is, if you look at the last four quarters, I think we've averaged about 8% volume growth, and in our business, when I see basically 6%, it's in the same range and things can move up and down a couple of points. So, I'm pleased with what we've accomplished over the last year.

I'm very pleased with our string of wins in the DSD business over the last two quarters and I think it's a real testament to the team that's executing there, but we don't break it out, as you probably remember, by segment.

Okay. So if you don't break it out by segment, I'm just trying to think about the acquisition policy and sort of implementing brands into your portfolio, is there maybe a different way to talk about the quality of this growth? Was the majority of the quality of the growth in a branded category or was it in an unbranded category?

In our most recent customer wins, they were unbranded or we developed a brand for them, and they were a notable string of wins that happened to be in our DSD Group.

Okay. I know you haven't completed the transition fully into the new Northlake facility, but at what point -- because only -- because you brought it up, (inaudible) your commentary about looking into additional business development opportunities for the Company, do you start looking at a conversation about maybe additional supply chain consolidation with manufacturing at Houston, as well as some of the distribution at Oklahoma City? When does that conversation makes sense, once you've fully moved into Northlake, a year after you've moved into Northlake, what milestones are we looking to achieve before we start revisiting maybe some of the other dominos that could fall for your story?

I give you a lot of credit for being consistent in asking that question every call and I am going to be consistent in not answering it. But I can tell you that we don't have anything to announce at that time. We've just come through our second quarter, which you know is our busiest quarter due to seasonality and we're pleased with the performance. We're always studying additional supply chain optimization. In fact, I reference the consulting expense in the quarter and a portion of that was for a whole host of efficiency opportunities that we see, but I don't have anything to announce to the hypothetical questions you are asking now.

And my last question for you and I've been asking this with all my companies. Under a Trump presidency, I just look at, I guess, the employee base of a lot of the companies that I cover and some of them really rely on the H2B Visa Program. Does Farmer Brothers have any reliance on this program historically, whether it's seasonal or whether it's throughout the year?

What we -- I don't have anything really to comment on that. It's a human resource issue. It would be inappropriate to comment.

Okay, that's it from me. Thanks again.

Thank you.

Kara Anderson, B. Riley and Company.

Hi, Mike, how are you?

Doing well Kara, how are you?

I am good, thank you. Just wondering if you can provide more details on the West Coast Coffee acquisition with regard to maybe revenue numbers or categories, products sold, how margin are when compared to Farmer Brothers products and any greater contacts would be [helpful].

So, a couple areas that I could provide. They service about 2,500 largely convenient stores through a DSD model that we think will be very synergistic with our own -- we generally think this is going to be accretive, we're optimistic about what this organization could hold for us in the long term, and that's probably as far as I can go right now.

Okay. And then, I'm not sure if I missed it. On the CapEx for the equipment and machineries related to the new facility, the $35 million to $39 million, could you say what has been thus far and what's remaining in timing for that?

No, I did not. So, just to give you a summary that the total are very consistent with. What we did is, in fact entirely in line with what we had disclosed previously. Rene, do you have the spend? She's looking at up right now. We will see if we can get that by the end of the call Kara, otherwise we'll follow-up.

Sure. And then also, I guess sort of related. Could you talk about the balance of the $18 million to $20 million in annualized savings from the relocation, what's left and sort of expectations on timing for that?

Sure. We're probably about 60%, 65% through at this point. Some of it's in process, maybe even a little bit ahead of that. So as the remainder of the project continues, you'll see it come through. I just reiterate from where we've come, since we announced this in early 2015, we're pleased that we're still well within the range, we've accomplished quite a bit and I think you'll see the rest of the initiatives come in line over the next quarter or so.

As I look back on it, we had a little bit of slowness due to some rain in the facility start-up. We may have been distracted a little bit through some of the start-up of the new facility and some other issues, but overall, we're very pleased with how far we've come in approximately two years.

Okay. And then last question from me. I know you talked about sort of having greater certainty on green coffee pricing given fixed contracts and derivatives that you have in place. But with rising green coffee prices, and what we've seen in some other big players in the market. Do you have any plans to implement any pricing actions for those not on commodity plus pricing contracts?

It's a really good question. So there is -- you'll see a couple of things that what we've done in this regard, if you were -- if you heard what we talked about in terms of the length and the amount of some of our contracts, I think we responded well to the market. We have taken pricing in the market that is implemented even in the non-cost plus world with certain lead times for various customers and so forth. But we have been and you've seen a number of the larger players in the category have and we've taken that opportunity to as it presents itself.

Chris Krueger, Lake Street Capital.

You're giving up, providing figures on your new DSD wins, you said Comcast at 58 properties, Skyline 70. What was the number for that last one, the Stop 'n Save?

No, I don't have it. It was smaller. I'll see if we can get it up, but I'm going to guess 15, 10 to 15, somewhere in that range.

Okay.

It was a little smaller than the other.

And -- let see, here's my other question. Just in general, with the new President in place, what are your thoughts on just importing and potential tariffs and all that kind of kind of overview there, at least at first glance for you guys?

Well, I'm not familiar with anything that's coffee specific at this point. So I guess, we'll let the political leaders work that out. I tend to look at it a bit simplistic. Coffee continues to grow as you and I have spoken, a key driver of that growth is millennials now. We are on millennials now and then to some extent driven by carbonated soft drink avoidance.

So I think the future of coffee is bright and I hope that there's nothing that pops up in any type of political or agricultural way or anything that would limit that. It's a very dynamic industry as you know with -- in fact, some of the factors you mentioned could come into play, but also drought, and rust and other coffee diseases. It could be more of a concern for me in the short term.

Is there specific concerns on that, on those areas right now or is that just something that's all --

If you look back over the last few years, occasionally these things popped up and I think the Company has responded well and the Board's been very supportive of providing us additional flexibility in our hedging program to adjust as we see that. And if you look over the last five years in particular, I think we've managed it pretty well.

Carter Dunlap, Dunlap Equity.

Hi, gentlemen, I have a quick one. At your Annual Meeting, I think you cited that you had 1% dedicated to M&A, has that grown?

Yes, it's 1%, its fully dedicated. We've brought some other external resources on to help through some of these processes in a number of different areas, and that would be -- the additional source of help has been more external than internal.

So, you mean like a banker?

Let's just say quick consultants to help.

I'm seeing no other questioners in the queue at this time. So I'd like to turn the call back over to management for closing comments.

Well, thanks again. We really appreciate your continued interest in Farmer Brothers and we are very excited about the future and look forward to sharing our plans for that future in the near term, mid-term and long term. Thank you very much.

Ladies and gentlemen, thank you again for your participation in today's conference. This now concludes the program and you may now disconnect at this time. Everyone have a great day.