Fiesta Restaurant Group Inc (FRGI) 2013 Q1 法說會逐字稿

Good day, everyone, and welcome to the Fiesta Restaurant Group's first-quarter 2013 earnings conference call. Today's call is being recorded. For opening remarks and introductions I would like to turn the call over to Lynn Schweinfurth, Chief Financial Officer. Please go ahead.

Thanks, Ann. Good afternoon, and thank you for joining our call.

Our first-quarter 2013 earnings release was issued after the market closed today. If you have not already seen it, it can be found on our website, www.frgi.com, under the Investor Relations section.

Before we begin our formal remarks I must remind everyone that our call today may include statements that are not based on historical information. These forward-looking statements include, without limitation, statements regarding our future financial position and results of operations, business strategy, budgets, projected costs and plans, and objectives of Management for future operations.

Actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements, and we can give no assurance that such forward-looking statements will prove to be correct. Important factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements can be found in our SEC filings.

Please note that during today's call we may discuss certain non-GAAP financial measures which we believe can be useful in evaluating our performance. Any discussion of such information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP, and a reconciliation to comparable GAAP measures is available in our earnings release.

And now I would like to turn the call over to Tim Taft, Chief Executive Officer, to begin with some opening comments and a brief update on the state of the business.

Thank you, Lynn, and good afternoon, everyone.

Remarkably, today is the first anniversary of our spinoff from Carrols. I'm extremely proud of the substantial progress we have made as an organization in a relatively short period of time, building a new team, culture, and restaurant support structure to achieve considerable growth objectives in the years to come.

Now turning to the quarter, despite some common headwinds the industry has been recording, Fiesta got off to a solid start in 2013 and we've moved closer towards achieving the outlook we have put forward for the full year. We generated positive comparable sales at both brands over the three-month period against the backdrop of a series of economic factors which limited consumer discretionary spending, tough comparisons from the first quarter year ago, and wet and cold Texas weather that negatively affected trends at Taco Cabana.

From a profitability standpoint we leveraged the higher sales base over fixed costs and benefited from the positive impact of proactive initiatives to either reduce or mitigate cost increases, all contributing to the growth of our four-wall operating profitability. We also continued to make some important investment at corporate that will enable us to complete our transition from Carrols ahead of schedule and prepare Fiesta for new expansion opportunities. Let me briefly expand upon what we accomplished during the quarter itself, and then turn your attention to our ongoing initiatives and future plans.

Pollo Tropical extended its track record of positive comparable restaurant sales to 14 consecutive quarters, with a 3.8% [comp] increase, which also included a 1.2% increase in transactions. What makes this even more striking was that the year-ago comparison was a rather onerous 9.4%, which is also the most formidable lap the brand will face this year.

Pollo also reached two other milestones during the first quarter. First, between late February and early March the brand posted 9 consecutive days of record sales volumes. Second, in March the brand experienced the highest weekly sales volume on record. We realize that none of these achievements would be possible without the dedication and enthusiasm of our team and our strong brand loyalty of our guests.

During the first quarter we promoted our new Spicy Beef Create Your Own TropiChop with a drink. And when we entered the Lenten period we focused on Shrimp Create Your Own TropiChop or Wrap with a drink. Currently in the second quarter we're featuring a new Tangy Pineapple Chicken offering that guests can offer as part of a wrap or solid entree.

Turning to Taco Cabana, Taco also generated positive comparables in growth in the first quarter, with a 2% increase, extending its track record of positive comps growth to 11 consecutive quarters. The brand's year-ago comparison was 6.1%, which was the second-best quarterly result of 2012. So it, too, exceeded its prior-year comparison despite the weather issues that I touched upon earlier.

Taco also reached some milestones in its first quarter. The brand exceeded record daily sales 5 times in March, and in February and March the brand exceeded record weekly sales 3 times. I'd also like to thank the Taco Cabana team and their loyal guests for helping us attain these milestone achievements.

In January Taco Cabana promoted Favorites Under $5 and our $3 Happy Hour, with half-price nachos and margaritas, while in February and March we featured Shrimp Tampico quesadillas and taco.

We attribute much of our success in sustaining comparable sales growth to our TV campaign, which has been refined to highlight the brand's fresh ingredients, the kitchen preparation process, and our key points of differentiation, such as elevated service and enhanced facilities.

On the operations side we are in the process of retraining and recertifying all kitchen managers to ensure we are delivering great food quality with each and every order. We're also continuing to focus on basic execution steps to ensure a consistently excellent guest experience. One example of this is we recently updated our in-restaurant procedures and rolled out a new training program to improve order accuracy with successful results. In fact, Pollo is going to roll out a similar program, demonstrating our concerted effort to share best practices between our two brands.

We're currently remodeling many of our Taco Cabana restaurants in San Antonio and Houston and we look forward to substantially completing our multiyear remodeling program in 2014. Remodels that we've completed in the past two years are averaging a first-year incremental sales lift of approximately 2% to 5%, a solid improvement in volumes that more than justifies the expenditures.

Now that we've discussed Pollo Tropical and Taco Cabana in some detail, let's turn our attention to strategies and initiatives that transcend the individual brands and affect our entire business.

First, we're always working to strengthen the connection with our guests by serving food they can feel good about eating and that our teams are proud to serve. Our menus feature fresh, quality items that have broad appeal and are complemented by promotion and limited time offers that showcase premium and/or value-oriented items. Innovation is also important to our menu strategy and we have an active pipeline of products that can include expansion of long-time favorites or can make consuming our food more convenient, in the form of wraps, sandwiches, or salads, versus our traditional platter-based offerings.

Second, we take a methodical approach towards ensuring strict financial discipline so we can best manage our variable costs and realize the positive impact of sales increases on fixed costs. For example, our supply chain management efforts are positively affecting food costs, improving quality, consistency, and yield and are helping to offset commodity inflation.

We are also making good progress on our value engineering project, with the goal of reducing the investment costs of our building prototype while maximizing the brand impact and optimizing operational flow. This includes pursuing an ergonomic time/motion study to refine our labor model and reduce costs while managing menu mix to improve throughput. We're also reducing our packaging costs, establishing new equipment maintenance practices and processes, and renegotiating equipment procurement to achieve greater scale on multiple purchases.

The common theme across all these items is that operational optimization is an ongoing and perpetual process and we are always looking to do what we do better and smarter. I'm pleased to report that we've already taken in house several administrative functions that were previously provided by Carrols and are on track to substantially complete the transition by year end, a year and a half earlier than the end of the original term of the agreement. Our corporate presence in Addison, Texas continues to grow with the addition of talented individuals, as we build out these capabilities and is rapidly becoming a comprehensive support center to both brands.

Turning to development, we opened 2 Pollo Tropical restaurants during the first quarter, 1 in Smyrna, our first restaurant in Tennessee, and another in Fort Myers, Florida. Taco Cabana also opened 2 restaurants in the first quarter, in Arlington and Richland Hills, Texas. We have a total of 14 to 17 Company-owned and operated restaurants scheduled to open this year, of which 9 to 11 will be Pollo Tropical and the remaining 5 to 6 will be Taco Cabana.

To date, we have opened 6 restaurants -- 4 Taco, 2 Pollo -- with 8 Pollos and 1 Taco Cabana currently under construction. We continue to build our pipeline for 2014 and beyond, and we believe we're making very good progress.

Many of you are already familiar with our real estate strategy, which is predicated on opening locations in high profile areas with higher household incomes than we previously targeted in the past, as we position our concepts for mainstream audiences. In addition to enhanced site selection criteria, we also look to cluster 3 to 4 stores within 24 months of entering a new market. This can be seen in Atlanta, for example, where we already have 2 restaurants on the ground and are planning to open as many as 3 locations in the market during the year, including 1 in Kennesaw that should be open in 2 weeks. We'll also be opening our second location in Nashville DMA in the Cool Springs area of Franklin, Tennessee this summer.

System-wide, we have opened 8 new Pollo Tropical restaurants in the elevated format, with promising results. Of these 8 restaurants, 5 have been opened in the last 5 months. Our 3 restaurants in Jacksonville operate with an average unit volume of $2.5 million, and the 2 in Georgia with an average unit volume of $2.3 million. What is noteworthy is that we are achieving these impressive sales results prior to becoming media efficient, with limited marketing efforts. Once we can build out these markets and become media efficient, we believe we can substantially grow our top line.

And while this is not specifically included in the 2013 guidance, we are pursuing the direction of brand coexistence and the synergies that it could provide our Fiesta business when Pollo Tropical were to move West and Taco Cabana were to head East. We believe that the inherent benefits of situating both brands in the same market include shared infrastructure, managerial oversight, a trained labor source, supply chain optimization. Clustering Pollo Tropical in places like Dallas, Houston, or Austin where Taco Cabana already has a meaningful presence would also be extremely efficient from a marketing standpoint as it relates to TV, radio and local store couponing drops.

We're actively looking for potential sites that could test out the strategy and bring Pollo to Texas by early 2014. Likewise, Taco stands to benefit from co-developing markets with Pollo, and we are pursuing an early 2014 opening for the first Taco site in Georgia.

We are expecting at least 10 international franchise locations to open in 2013 and view this business as still in its early stages of development. There were no international franchise openings in the first quarter, but we already have had 1 open in the second quarter in Panama and we currently have 7 other international restaurants under construction in various countries. Our first restaurant in India is scheduled to open any day now.

Within the US we've generally been passive in developing Pollo Tropical and Taco Cabana in what we call nontraditional venues, such as airports, transportation facilities, universities and sports arenas. This year we've been stepping up our efforts to proactively market both brands food service operators who run these facilities and may be in a position to add to our modest presence. During the first quarter we opened a Pollo Tropical franchise location at the University of South Florida in Tampa and are in discussion with other nontraditional venues.

Before I turn the call over to Lynn, I also want to relay our long-term earnings model, which we believe provides our shareholders with a deeper understanding and added layer of transparency as to how we view our business. Our objective is to grow EPS in excess of 20% annually by expanding our revenue base through development, sustainable comparable restaurant sales growth, and ensuring the strides we make on the top line are captured on the bottom line through leverage and economies of scale. We look forward to providing regular updates on our performance as it relates to this objective, and are pleased to be able to frame our conversation through a more complete understanding about how we view our bright future.

With that, let me turn the call back over to Lynn Schweinfurth.

Thanks, Tim. Like Tim, I'm pleased with our first-quarter results.

In particular, our sales improved for the quarter despite a challenging start to the year for our industry. We continued to see the benefit of our focus on growing profitable sales and expanding restaurant operating margins, and we are thoughtfully building our infrastructure and capabilities to meet our outlook for 2013 and beyond.

During our first quarter, which ended on March 31, 2013, total revenue grew 5.9% to $133.6 million from $126.1 million, driven by new restaurant development and comparable restaurant sales increases. In addition to what Tim already covered regarding comparable sales and traffic drivers, average check increased year over year, driven by menu price increases of 2.3% at Pollo and 2.5% at Taco in the first quarter.

We also rolled off a net 80 basis points in pricing taken at Taco during the first quarter in 2013, which will take pricing down by approximately 80 basis points in the second quarter for Taco. To offset cost increases, we will continue to balance pricing actions with other cost-savings initiatives to retain the strong value proposition we enjoy at both brands, which we believe gives us a competitive advantage.

Cost of sales as a percent of restaurant sales was 60 basis points better than the prior year as the result of modest year-over-year pricing and aforementioned supply chain initiatives that have taken hold more than offset higher commodity costs. While cost of sales as a percent of restaurant sales were lower in the first quarter versus the prior-year period, we currently anticipate the benefit to be offset during the balance of the year due to a combination of our promotional calendar, seasonal and variable impacts in new contracts being negotiated, resulting in higher commodity cost increases in the latter part of the year. Overall we currently expect cost of sales as a percent of restaurant sales for full year 2013 to be similar to that of 2012.

Restaurant wages and related costs improved 50 basis points year over year, primarily due to sales leverage and lower medical claims and other benefit costs. These benefits were partially offset by increases in workers' compensation claims that developed from claims from previous years.

Other operating expenses improved as a percent of restaurant sales, primarily due to lower repair and maintenance costs. This improvement was driven by efficiencies gained through the implementation of a centrally controlled and supervised prepare process, preferred vendors, and a preventative maintenance program that was rolled out last year. We also saw a benefit associated with the timing of work being performed year over year.

Starting this first quarter of 2013 we have isolated preopening expense on our income statement, given the increasingly important impact of new restaurant development on our results. Preopening expense includes costs incurred prior to opening a restaurant, such as wages and related expenses, travel, training, rent and promotional costs. Preopening costs begin to be incurred 4 to 6 months prior to the restaurant opening. Please refer to our Investor Relations section of our website where we have disclosed 2012 quarterly preopening expenses.

Our P&L year-over-year comparisons continue to be impacted by the qualification of certain leasing transactions for sale-leaseback accounting treatment upon the date of the spinoff. The good news is that the year-over-year impact of this accounting treatment change triggered by the spinoff will conclude in the second quarter of this year as we lap today's anniversary of the spinoff.

In summary, rent expense was negatively impacted by $1.9 million, while depreciation and amortization expense and interest expense were positively impacted by $0.5 million and $2.7 million, respectively.

General and administrative expense was $1.2 million higher than the prior year at $12.2 million because of Company management and team additions, as well as infrastructure implementation costs associated with transitioning administrative functions from Carrols and costs associated with our acceleration of new restaurant development. As Tim mentioned, we are making steady progress building our corporate infrastructure and the transition services agreement allows us to establish an orderly transition of both people and systems to a fully functioning back office, thereby minimizing disruption to the business.

Also affecting general and administrative expenses were costs incurred of approximately $0.4 million in expenses associated with a successful secondary equity offering that we completed during the quarter. As you are likely aware, the Company did not receive any proceeds associated with the sale of shares from this offering.

We recognized a gain of $0.5 million during the quarter from the sale of an excess property.

Our annual estimated effective tax rate of 35.8% in 2013 compared to a rate of 42.6% in 2012, excluding discrete items. In the first quarter we recognized a discrete item related to the retroactive reinstatement of the 2012 Work Opportunity Tax Credit of $0.6 million, which reduced our provision for income taxes in the first quarter of 2013.

Net income increased $6.7 million to $4.8 million in the first quarter of 2013, or $0.20 per diluted share, from the net loss of $1.9 million, or a diluted share decline of $0.08, in the first quarter of 2012.

We generated $1.7 million from the sale of an excess property in the first quarter of 2013 and also completed the sale-leaseback transaction that generated proceeds of $2.5 million. We also purchased a property for $1.3 million in the first quarter of 2013 with the intention of selling it in a future sale-leaseback transaction.

We continue to proactively pursue opportunities to monetize our owned properties, either through selling excess properties or through completing sale-leaseback transactions for operating company restaurants with attractive pricing and term.

At the quarter end we had a cash balance of $6.5 million. There were no outstanding borrowings under the senior credit facility and we were in compliance with all covenants related to our indenture and senior credit facility. After reserving $8.4 million for letters of credit guaranteed by the senior credit facility, $16.6 million remained available for borrowing at the end of the quarter.

We continue to believe cash generated from our operations, availability under our senior credit facility, and proceeds from any sale-leaseback transactions we may choose to do will provide sufficient cash to cover our anticipated working capital needs, capital expenditures, and debt service requirements in 2013.

Finally, we are excited about our prospects for financial growth and believe we can achieve EPS growth in excess of 20% in 2013 and beyond. Our basis for comparison in 2012 is the adjusted EPS we disclosed in our fourth-quarter earnings release of $0.60.

To confirm the key components that make up our long-term business model, we plan to build [to] revenue growth of 10% to 12%, which is made up of net restaurant growth of 8% to 10%, comparable restaurant sales growth of at least 2% to 3%, and franchise development. We believe financial discipline will allow us to invest in the growth platforms of our business while achieving operating and fixed leverage to deliver annual EPS growth in excess of 20%.

So with that, let's open up the lines for questions.

Thank you very much. (Operator Instructions) Will Slabaugh; Stephens.

Congrats on the quarter. Wanted to ask you to talk a little bit more about the sales trends that you saw. It sounds like March was a fantastic month. So wonder if you could talk just a little bit more about what you were seeing in the restaurants around that time, if you think there was a lot of internal initiatives contributing to that that should carry over, of if you would attribute a lot of those gains to a snap back from a softer February. And then also any commentary on April would be great.

First I'd say that the -- March was better. We saw in both brands a general softness in January and early February and then a more normalization in March. It wasn't really anything that we were doing. It was more of just a snap back. If you remember, we had very strong momentum coming out of the fourth quarter in 2012. Taco was up 6.8% and Pollo was up 8.3%.

So when we ran into some of those macroeconomic issues, it did soften things. Again, March was more normalized. April is -- Taco is still flat because Taco is -- in Texas we are really unprecedented cold weather that is affecting our patio business. But Pollo is up 6.7% versus the April the year before.

Great. Thank you. And then just also wondered if you could talk just a little bit more about your new unit openings. I appreciate the color that you gave us around Jacksonville and Georgia, but just in general how you think the more recent unit openings are trending relative to expectations around both transactions and check.

Well, I think that, as we mentioned in our comments, that we're very pleased with all of the results of the new elevated restaurants that have been opened. Again, the thing that is really noteworthy, as we mentioned, is the fact that these restaurants are operating on their own in DMAs without any kind of media coverage. And really it's local store marketing and occasional coupon drop. So the kind of volumes that they're achieving without any kind of media is really encouraging. We're happy with the performance of those restaurants.

Great. Thank you.

Alex Slagle; Jefferies.

Question on Pollo Tropical. Just kind of looked like the menu mix started turning more positive relative to prior quarters. Wonder if there was anything with that in terms of the promotional calendar or whatnot?

You know, Alex, the message that we've been delivering really has been around the TropiChop and the freshness message and value. What our media -- really our creative is just around different toppings that you can put on the TropiChop. We've got a new campaign that is with new food photography and really reinforces the atmosphere and the kind of decor and the flavor and feel, identity of the restaurant, which we think is really resonating with our customers.

It's not that we're discounting. We have an ongoing strategy of talking about value for both brands. And I think it's just an indication of a little bit of a snap back from January and February. And Pollo is -- the product mix is essentially the same. It's just more of it.

Thanks. And a question on the Easter calendar shift -- was there any kind of drag in the first quarter results on that? (Multiple speakers) kind of impact?

Yes. We did have a little bit of a drag in the first quarter. We quantified it in the area of 10 to 20 basis points at Taco and 20 to 30 basis points at Pollo.

Thank you.

Bryan Hunt; Wells Fargo Securities.

I was wondering if you could make some comments about what type of food inflation you anticipate for the year on the cost side. And then, with regards to growth opportunities, I know you've got some domestic franchisees. You spoke a lot about international franchise growth and opportunities. Are you all considering opening up domestically to accelerate growth with domestic franchisees over and above what you've done so far?

Very briefly, I think, and then I'll let Lynn finish it out, but our inflation or our food costs, we believe it's going to be the same as it was in 2012. Our supply chain management has done a really good job of not only making better buys, but also very efficient buys. And that's improving not only the quality but also the yield, which is having a positive impact on our cost of goods sold.

We have, as we mentioned, the international franchising, but we have nondomestic franchises that -- we opened up one, as we mentioned, in Tampa and we're in discussions with a couple more nontraditional locations. But domestically, our position is that we've got a lot of work to do with our own economic model. As good as it is, it can be better. And before we consider bringing on any franchising, we want to make sure that that model is as sharp as it possibly can be.

And I would just add, specific to our inflationary expectations for the year, as I reiterated in my opening comments, we do expect cost of sales as a percent of sales to be about the same as last year. Now, obviously pricing and initiatives are offsetting cost increases. And we're expecting cost increases at Taco between 1% and 2% and at Pollo 2% to 3%.

Very good. I'll get back in the queue. Thank you.

Nicole Miller Reagan; Piper Jaffray.

This is Josh on for Nicole. My question was on Taco Cabana and the remodel schedule there. I wanted to see if you could provide more of an expected timeline over the course of the year as you go back and retouch your San Antonio and Houston markets. And then I wanted to also confirm that that 2% to 5% lift that you're talking about, is that specif- -- is that an opportunity for upside to that, given that San Antonio and Houston are some of your older markets?

Well, what I will tell you is I think we have on our docket about 30 stores to complete this year. We'll complete the balance of San Antonio and we've worked on a few of our Houston stores. And we'll conclude the Houston stores in 2014. Certainly we're expecting on the high end of that range for these older markets and that's what we can see today. And I think that, Josh, that that answered the questions you posed.

Great. And had one more for you. As you bring Pollo Tropical into Texas, how would you expect to use or utilize media to raise brand awareness for that, given that Pollo would be new to the state and/or how would you think about taking Taco to other markets where Pollo Tropicals are currently?

It works the same way both ways, with the exception of when Pollo comes to Texas, specifically Dallas. Dallas is already media efficient with Taco Cabana. So the opportunity to use split 30, split 60s on broadcast, for coupon drops, even directional outdoor billboards. Likewise, when Taco goes to Atlanta, now we don't have just one brand developing the DMA for some kind of market penetration, Taco Cabana will develop alongside a Pollo Tropical and so their media efficiency -- we can get to a media-efficient position quicker.

That's helpful. And then, last one for me, I think you mentioned, Tim, the Cabana Cares program at Taco Cabana and kind of reengaging the guest and really focusing on that execution side. Is that a new program or is that something more of a Renaissance or revisit to that and a refocus alongside the remodel program?

Josh, it's one of many, many initiative that are really brand new to the Company, really focusing on eliminating the accuracy problems. The great thing about having a 35-year-old company is that in each kitchen you have a lot of folks that have been there a long time, that take a great deal of pride in making their own version of what the beans or rice should taste like. But going out and recertifying all the kitchens and all the cooks and making sure that we have a consistent initiative or presentation from restaurant to restaurant is critical.

As far as Cabana Cares, one of the things that both brands are now 100% on is a 1-800 number. It's a [Sertech] line that allows a customer to get in touch with a human. And we look at that not only as a reporting opportunity for a view inside of operations, but to really begin -- if there was an issue -- to begin the guest retention immediately.

Great. Thank you so much.

Nick Setyan; Wedbush Securities.

Congratulations on a great quarter. In terms of some of the newer Taco openings, how are they performing relative to the rest of the Taco system? In terms of any color around the unit economics, would be particularly helpful.

And then, I may have not heard, but I think you said 6.7% for April for Pollo. Could you say a number for Taco as well for April?

I'd say right now Taco's flat given all the cold, wet weather we're having.

The answer to your question about how are the new Tacos opening, they're not all built in exactly the same kind of locations. For instance, one is built in kind of a mature area in Waxahachie that opened up 10 days ago to really record sales. I'll say the timing of your question is perfect for us. In other areas we're looking at areas where the city is growing out to it, so we may be a little bit green in that area. But we've opened in advance because we know that a year from now we want to be there. And so I would say they're all operating to an expectation that we had.

Got it. And then, I think you mentioned that there's going to be about an 80 basis point drop off in pricing for Taco in Q2.

Yes.

Can you maybe talk about the timing of some more menu pricing throughout the year and whether we should expect that sort of 2% to 2.5% for both brands to kind of be the range we should think about for the year?

Well, I think you'll see the Pollo pricing remain fairly steady since the last pricing increase is essentially what we're seeing today and it was taken in the middle part of December. So we'll see that through the balance of the year.

With Taco we will be lapping over a price increase I believe we took in October of last year in the arena of 1.2%. So that would be the other event that you'll want to think about as we go out further in the year.

Perfect. Thank you very much.

(Operator Instructions) Hale Holden; Barclays.

I've got two quick ones. More broadly, when you think about international markets, if you could kind of walk us through what you're looking for as an ideal market -- geographic density, household income, where we should start to think about longer term where you want to be.

And as a follow-up, I saw your May 6th promotion on breakfasts. And I was just wondering if you could break out the percentage of breakfast as a percent of sales and talk about what opportunity there was on that.

First, on international franchising, primarily what we've done is map the entire globe and said -- where on this planet do our potential customers exist? And that is, where is there a desire for non-fried-chicken. So we map out and say -- okay, certainly India is that opportunity. The United -- Britain. We're looking currently to fill out the in-fill strategy with the Caribbean markets, southern South America. We're opening up restaurants in Guatemala. But the quick answer to your question is we look for where is non-fried-chicken popular.

As breakfast as a percentage of sales, Taco is about 18%. So it's a significant part of the menu mix. And a lot of that business is done through the drive-through, people on the way to work picking up a bunch of tacos. And the promotion recently was just to reinforce the fact that we had breakfast tacos and to have a little bit of fun with why people might be ordering --

No, no. No, that was cute. I liked it. Thank you. Appreciate it.

And with no further questions in the phone queue, this does conclude today's conference. We thank you for your participation.