台灣國際航電 (GRMN) 2015 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Garmin Ltd.

first-quarter 2015 earnings conference call.

At this time, all participants are in a listen-only mode.

Later, we will conduct a question-and-answer session and instructions will be given at that time.

(Operator Instructions).

As a reminder, this conference call is being recorded.

I'd like to introduce your host for today's conference, Kerri Thurston, Director of Investor Relations.

Please go ahead.

Thank you.

Good morning everyone.

We'd like to welcome you to Garmin Limited's first-quarter 2015 earnings call.

Please note that the earnings press release and the related slides are available at Garmin's Investor Relations site on the Internet at www.Garmin.com/stock.

An archive of the webcast and a related transcript will also be available on our website.

This earnings call includes projections and other forward-looking statements regarding Garmin Limited and its business.

Any statements regarding our future financial position, revenues, earnings, market shares, product introductions, future demand for our products and objectives are forward-looking statements.

The forward-looking events and circumstances discussed in this earnings call may not occur and actual results could differ materially as a result of risk factors affecting Garmin.

Information concerning these risk factors is contained in our Form 10-K which was filed with the SEC.

Presenting on behalf of Garmin Limited this morning are Cliff Pemble, President and CEO, and Doug Boessen, CFO and Treasurer.

At this time, I will turn the call over to Cliff.

Thank you, Kerri, and good morning everyone.

As announced earlier this morning, Garmin reported solid first-quarter revenue and margin performance.

Consolidated revenue was flat year-over-year in what is typically a seasonally weak quarter.

Revenue from aviation, fitness, marine and outdoor grew 9% on a combined basis.

These segments contributed 63% of total revenue and 80% of the operating profit in the first quarter.

Gross margin improved year-over-year to 59% while operating margin came in at 19%.

The slight reduction in the operating margin from the prior year reflects continued investments in advertising and R&D.

The stronger US dollar has created a headwind for most businesses, including ours.

We estimate that recent currency movements reduce our revenue by approximately $38 million, and operating income was reduced by approximately $11 million.

As everyone can appreciate, these are meaningful amounts that would have otherwise resulted in growth for our business.

Please note that our pro forma calculations do not account for these factors, but we wanted to mention it for clarity.

Strong margins combined with the lower effective tax rate resulted in $0.55 of pro forma EPS in the quarter, which is flat on a year-over-year basis.

We are maintaining the guidance we issued early in the year as our performance thus far is consistent with our expectations.

Doug will discuss our financial results in greater detail in a few minutes, but first I will walk through a few highlights for each business segment.

Beginning with the fitness segment, revenue grew 31% on a year-over-year basis with strong contributions from activity trackers, multisport and cycling products.

We delivered gross and operating margins of 63% and 26% respectively.

Operating margin was lower on a year-over-year basis, reflecting an increase in R&D and advertising investments during the quarter, as planned.

As you are aware, the fitness market is highly competitive, and thus requires additional R&D investments in order to bring innovations to market faster.

In addition, we are deliberately investing in our point-of-sale presence as we roll out new products and prepare the way for our spring advertising campaign.

In cycling, we announced the Vector 2 and 2S, our latest pedal-based power solutions.

These new vectors simplify the installation process and deliver advanced cycling metrics that are useful for improving cycling efficiency.

Fitness has been an exciting growth driver for our business in recent quarters and we believe there are more opportunities to capture.

We are well-positioned with our current product breadth and depth, and will continue to invest for future growth and expansion.

Looking at outdoor, revenues declined 10%, which fell short of our expectations as the currency situation disproportionately impacted both fitness and outdoor due to the geographic revenue profile of these segments.

Additionally, we experienced some supply constraints which affected our results.

Despite these headwinds, gross and operating margins remain strong in the segment at 66% and 31% respectively, allowing us to deliver operating income growth on lower revenue.

Finally in outdoor, we announced the VIRB X and XE, an all new family of action cameras.

These cameras deliver unique immersive experience through G-Metrix, which adds insightful context to any video.

In addition, our updated VIRB mobile application provides the ability to create, edit and publish videos on the go.

We are excited about the capabilities of these new cameras and believe they offer unique differentiators in which we can grow in the category.

Turning next to aviation, we posted revenue growth of 2% as we faced a more challenging comparable from Q1 2014 when the segment grew 19%.

While gross and operating margins remain strong, operating profit declined on a year-over-year basis due to R&D growth supporting future revenue opportunities.

During the quarter, we announced enhancements to our ADS-B product offerings.

Our current lineup offers the most comprehensive set of solutions across a range of price points and aircraft categories.

We believe we are well positioned to capitalize on modernization mandates around the globe which are rapidly approaching.

We continue to support numerous OEM partners in the development and certification of multiple aircraft and helicopter platforms, which will result in future growth opportunities when these platforms reach the market.

Looking next at marine, revenue grew 7% in the quarter, driven by the recent acquisition of Fusion.

Our organic business was relatively flat on a year-over-year basis as we started delivering our new products in the latter part of the quarter.

Profitability improved in the first quarter, which resulted in operating income growth of 20% for the segment.

While industry activity remains below historic levels, we recognize that innovation is essential to deliver long-term improvements in market share and profitability.

We will continue to invest in the category to deliver compelling innovation to the recreational marine market.

In our auto segment, revenues were down 11% in the quarter with PND industry volumes declining in line with expectations.

On a year-over-year basis, amortized revenue declined, creating a headwind that is not correlated to the underlying business.

As we've mentioned before, this segment delivered solid profitability as we continue to experience gains in global market share on the strength of our product portfolio.

As indicated in our February guidance, we expect the market to decline 10% to 15% on a global basis during the year.

We will focus on growth opportunities in OEM, trucks, RVs, dash cameras and other specialty automotive products to partially offset lower consumer PND volumes.

Finally, I want to highlight the recent introduction of nuviCam, which is the first PND to offer advanced alerts such as forward collision and Lane departure warnings.

nuviCam also includes an integrated dash camera that saves video images whenever a crash or user initiated event occurs.

We are excited to deliver these advanced features to the PND market and we anticipate offering similar products to OEM customers in the future.

So that concludes my remarks for the morning.

Doug will now walk us through our Q1 financials in more detail.

Doug?

Thanks cliff.

Good morning everyone.

I'd like to briefly review our financial results, then move to summary comments on the balance sheet and cash flow statement.

We posted revenue of $585 million for the quarter with pro forma net income of $106 million.

Pro forma EPS was $0.55 per share, excluding the FX loss.

Within the quarter, we faced significant exposure to foreign currency fluctuations, which resulted in a revenue headwind of $38 million, or 6.5% of revenue.

Taking into consideration the offsetting benefits, FX negatively impacted EPS for the quarter by approximately $0.05 or 9% of pro forma EPS.

In addition, amortization of deferred revenue is now a year-over-year headwind, negatively impacted revenue by $14 million, pro forma EPS by approximately $0.05.

Excluding these headwinds, revenue growth would've been 9%, pro forma EPS growth of 18%.

Gross margin was strong at 59%, a 210 basis point increase from prior year, driven by favorable segment and product mix.

Operating margin was 19%, a 150 basis point decrease from the prior year.

We look at operating expenses by category on a later slide.

Effective tax rate decreased to 12.3% in the current quarter compared to 16.6% in the prior year due to an improved income mix outlook for 2015 as compared to our outlook at the end of Q1 2014.

We still anticipate a full-year tax rate of 16% to 17%.

The first quarter tax rate was positively impacted by at least $5 million of tax reserves as a percentage of lower pretax income.

In the quarter, we shipped over 3 million units, a 22% increase.

Reduced average selling price in the quarter is due to product mix, FX, and reduced contribution from deferred revenue announcing any significant price reductions on like-for-like products.

Next we'll look at how our first-quarter revenue breaks down by segment.

The yellow segment represented 37% of our total Q1 2015 revenue compared to 42% in Q1 2014.

We continue to diversify our revenue base with growth in fitness, marine, and aviation.

I'd like to now briefly discuss gross margin, which increased to 59%, as segment and product mix was favorable during the quarter.

Looking at year-over-year changes by segment, outdoor marine posted significant improvement with reduced discounting and favorable product mix.

Fitness gross margin declined slightly to 63%, remains strong with a full portfolio of products that continue to perform well.

Total corporate operating margin was 19% as operating expense growth outpaced revenue growth.

Excluding the headwinds from FX, amortization of deferred revenue, operating margin would've been flat.

Next we'll look at operating expenses.

First-quarter operating expenses increased by $22 million or 10%.

This is a 360 basis point increase as a percent of sales.

Research and development increased $10 million year-over-year and 160 basis points to 18.1% of sales.

We continue to invest in innovation, growing our engineering workforce, and increasing resources focused primarily on aviation, fitness and outdoor.

Our advertising expense increased $3 million over the prior-year quarter, represented 4.7% of sales, a 50 basis point increase.

Additional spending was focused on fitness investments in point-of-sale presence with key retailers to produce long-term revenue results and preparation for the launch of spring wearables advertising campaign.

SG&A was up $9 million compared to prior quarter, increasing 150 basis points as a percent of sales to 16.9%.

Increased spending was driven primarily by legal costs, IT expenses, and product support costs as our customer base continues to grow rapidly.

Just a few quick highlights from the balance sheet and cash flow statement.

We ended the quarter with cash and marketable securities of $2.7 billion.

Accounts Receivable decreased sequentially to $426 million following the holiday quarter.

Our inventory balance increased to $470 million as we have built inventory levels to support the launch of new product categories in preparation for a seasonally stronger second quarter.

We continue to generate strong free cash flow across our business with $64 million generated during the first quarter of 2015.

During the quarter, we paid dividends of $92 million, repurchased $16 million of Company stock with $284 million remaining for purchase through December 2016.

This concludes our formal remarks.

Ashley, if you'd open the line for Q&A.

(Operator Instructions).

Simona Jankowski, Goldman Sachs.

Yes, hi.

Thank you very much.

I wanted to ask you first on any thoughts you might have on plans for sourcing your maps in the event that the HERE business from Nokia is sold to a vertically integrated vendor.

I think we have always operated with HERE under long-term contracts, and so while the process that Nokia has been going through has been rather public, we don't have any concern right now in terms of what our mass supply situation will be.

Because the contracts would go with the Company?

Yes.

Okay.

And then on the fitness business, you commented about an FX impact.

Even with that, it seems like it came a little weaker than I think we had expected.

Can you just comment on the competitive environment there and then specifically to some of the consumer feedback it had on syncing issues with the mobile app?

What actions do you think you can take to address that and in what timeline?

The market is definitely getting more competitive as some of the major players have or are introducing now their new products for the year.

So we recognize that definitely the competition is getting more intense.

In terms of our product feedback, of course we are very sensitive to that and have been working hard to improve our mobile app and product software in order to be able to be the most robust as possible.

I think, though, that this is part of the reality of mobile phones and Bluetooth connections, which are somewhat unreliable, and software has to try to be as robust as possible but there are still side effects.

Do you have any visibility on the timeline to when you might be able to address those concerns?

We've already introduced basic Garmin Connect Mobile, and I believe it's working much better.

And we also have a roadmap to release updates throughout the year as well.

And then just last quick question from me on the legal expense, which I think was the biggest reason for the increase in SG&A of 10%.

What was that related to?

This relates to some losses that we had previously described in the 10-K, but some of those hopefully would come to a trial the next few quarters.

Thank you.

(Operator Instructions).

Mark Sue, RBC Capital Markets.

Thank you and good morning.

I'd like to focus on Garmin's ability to grow operating income, considering that EPS will be mostly flat year-on-year this year, particularly as we look at the two segments of outdoor and fitness where competition is increasing and you do have more entrants.

Are we at a point where Garmin needs to spend more in advertising and spend more in point-of-sale to drive the incremental unit growth?

How should we think about the balance between operating margin improvement and your ability to grow earnings?

Yes, it's absolutely true that particularly fitness and somewhat in outdoors is more competitive.

There is a need to invest more in advertising.

That's something you've been seeing us doing over the past few quarters.

We increased our investment in Q1, mostly around point-of-sale material, preparing the way for our new products and also a spring advertising campaign the is coming up.

Any thoughts on when that might actually start winding down, or is this more of a full-throttle push to drive that for the balance of the year?

Right now, the market is growing rapidly and we are in a mode of gaining market share, so we are focused on that at the moment and taking advantage of the growth opportunity that's there.

Okay, that's helpful.

Doug, maybe on FX, the volatility is quite high.

Any inclination to look at forwards or options or even collars at this point because of the big currency moves?

I know the cost of hedging is quite high at the moment, but maybe your thoughts longer-term on hedging.

Yes.

So with that, we currently do not have intentions to hedge.

We have not hedged historically.

The foreign currencies will move up and down, so at this point in time, we do not have current plans to hedge.

Okay, thank you.

James Faucette, Morgan Stanley.

Thank you very much.

I wanted to ask a couple of questions.

First, from a high-level perspective, I recognize that the first quarter is a seasonally weak quarter.

But I'm wondering if you can talk a little bit more broadly about where you are seeing strength versus potential headwinds as we go through the rest of this year as you reiterate guidance, kind of the things that you're feeling confident about versus what worries you.

And then I also wanted to touch on specifically the aviation business.

I know that you're up against a tough compare versus last year, but how should we think about the growth prospects, particularly as new platforms continue to grow, for the rest of this year and into 2016.

Thank you.

I think, right now, in terms of strengths and weaknesses, each of our segments is performing pretty much in line with where we would expect at this moment.

It's still very early in the year, only one quarter behind us.

So right now, we are not changing any of our outlook in terms of the growth across each of our segments.

In terms of aviation, it definitely was weaker this first quarter, but we were up against a 19% growth in Q1 of 2014 when several new platforms hit the market at once.

I would expect that the growth should increase as the year goes forward as new platforms hit the market, particularly the new Cessna Latitude as well as Cirrus SF50 and the HondaJet.

Charlie Anderson, Doherty and Company.

Good morning and thanks for taking my questions.

I know it's only been a few weeks, but I wonder if you have gotten any feedback yet from the retailers in terms of sell-through of your fitness products since the Apple Watch's debut, both on a preorder basis and then now launching.

I would say, just in terms of availability of the Apple Watch, it's only been a few days in limited quantities.

But at this moment, we don't hear of any or expect any significant change.

Our products are positioned differently than the Apple Watch, and we appeal to strong, active lifestyles.

The second question for me is a number of your competitors in fitness have embraced the optical kind of on-wrist heart rate monitor.

You guys have always favored chest-worn.

I wonder.

As you think about product roadmap, do you evolve to that feature?

And how much more expensive would it be to add it to the device versus this $50 premium that you're adding now for the chest-worn?

Wrist-based heart rate is definitely a functionality that customers are embracing, and it's a differentiator for our competitors.

We anticipate we will close this gap in our product line in the near future.

Thanks so much.

Jeremy David, Citigroup.

Hi, good morning.

Thank you for taking my question.

Two questions on the next-gen VIRB action camera.

First, on timing, your press release today said that shipments will start in Q2, but if I recall correctly, the product announcement referred to a summer launch.

So should we think of the VIRB as ramping in Q2 or more in Q3?

And then my second question is going back to the launch of the initial VIRB a year and half ago.

I think one of the issues you had was that not many retailers were interested in carrying the product in their stores.

Do you believe that distribution for the next-gen product will be broader than for the initial product?

And if so, why would that be the case?

Thank you.

I think, in terms of the timing of the product, probably we will be ramping in the back half of Q2.

So that's the timing we are working with right now.

In terms of retailer interest in this product, we do see much more interest in this product than our first VIRB.

I think the form factor appeals to people.

The ability to use the product without a Protective case is a differentiator and people are excited about the new enhancements we've made to our PC software and our mobile applications to be able to edit and publish videos easily.

So we are getting good feedback and we would anticipate that we will be able to have better distribution based on the strength of the product features.

Ben Bollin, Cleveland Research.

Good morning everyone.

Thanks for taking the call.

My first question, when you look at the outdoor and the fitness business, you talked to the increased R&D and advertising emphasis you are placing.

How sustainable are you anticipating that investment to be?

Is that a 2015 event?

Is this a more perpetual event?

Do you have any thoughts on the associated margin profiles of these businesses in a more normal environment when you're not pushing these expense line items as aggressively?

And then I have a follow-up.

In terms of the R&D investment and the sustainability of that, the markets right now are very competitive, and so of course we have to innovate and bring features to market in order to be competitive and superior in our offerings.

Right now, you know, we see the growth opportunities in terms of the long-term look at that.

I think these markets can move up and down very quickly, so we would adjust our business and our investment based on the opportunity that's out there.

In terms of the margin profile, particularly in fitness, it's definitely true that the ASP of this particular segment is coming down because of the contribution of the activity trackers.

The margin profile will also certainly come down, although we do believe that our mix of products across the range from low end to high end will tend to balance and we will still have strong margin profiles and fitness going forward.

And then looking at the automobile business, how do you feel about the progress in traction you're realizing on the auto OEM front, and how well do you feel you are positioned for autonomous vehicles into the future?

Thank you.

We have demonstrated consistent progress in our auto OEM business with some high-profile customers like Daimler and Honda, and we continue to work closely with multiple target customers on several opportunities that are out there.

Of course, giving more color on those opportunities, we are unable to do that at this time because of confidentiality.

But we view this as a marathon effort and not a sprint, so we continue to be patient and invest.

In terms of our positioning around autonomous vehicles, we certainly offer technologies much like we've introduced recently in our nuviCam that could serve in those kinds of vehicles.

But at is point, we don't see ourselves as a driver of vehicles themselves or as the main integrator of that technology.

Tavis McCourt, Raymond James.

Thanks for taking my questions.

Two of them.

First, on the inventory build, Doug, I think you mentioned that was in preparation for -- I think your wording was new product category launches.

And I'm trying to get a sense of are these products that you've announced already, or an entire new category?

Maybe it's just a definitional issue.

But obviously the inventory trend in Q1 is a little different than the historical average, so maybe a little more clarity around that.

And Cliff, I have a question on the new nuvi with the integrated forward collision warning and dash cam.

Some of the smartphone-based solutions like that have been pretty kludgy to be honest.

So, are you comfortable that you are able to provide a good quality of service, especially on the forward collision warning and lane departure without professional installation?

I think that's where the smartphone-based systems run into a bit of an issue.

Thanks.

I'll take the inventory question.

As it relates to the inventory, that relates to already announced products, so basically we have a lot of the fitness product as well as some of the VIRB we talked about in there that we are building to make sure that we meet demand in the retailers.

With regards to the nuviCam and the collision warning and lane warning type of features, in terms of what I've seen, and I've use the product quite a bit, I feel pretty good about the capability and the performance of the product.

We've tested the product versus integrated solutions in vehicles that are offered on the market today and we feel like it compares very favorably, so we feel good about our technology.

We've invested in optics technology for a while now, and it's starting to show up now across our product lines, including products like nuviCam.

Will Power, Robert Baird.

Great, thanks.

A couple of questions.

Maybe just to come back to the fitness operating margin outlook, I think you referenced spring marketing campaign, and obviously you've got more competition in the marketplace.

Should we expect, just to be clear, for operating margins to defer sequentially in Q2 due to the competitive dynamics, or was a lot of that marketing already spent and reflected in the Q1 margin level?

I think, in terms of sequential movement, we would not expect it to dip.

We would expect that our revenue profile will be increasing because of (technical difficulty) seasons that are coming up.

But in terms of year-over-year performance, we do believe it will be lower.

Okay.

And a separate question, looking at the buyback in the quarter somewhat limited.

What's the thought process or I guess just the process generally to consider accelerating the current buyback authorization or even upsizing it from there?

So we previously announced a $300 million authorization in February, so our current plans are to complete that $300 million within that two-year period of time, December 2016.

So the amount that we purchased in Q1 was just from the time of authorization, so it obviously is less than the amount we had last year when we had a full quarter.

But we can anticipate probably a similar pace as what we've seen in Q1 but making sure that we do complete that authorization within our two-year period of time.

Okay.

And then just I want to make sure I was clear on the tax rate which came in lower in the quarter so there's one-time impacts there.

What was the right tax rate now to use for the full year?

Full-year, similar guidance we gave, 16% to 17% full-year rate.

We saw there was in the first quarter, since it's a low income quarter, the $5 million of tax reserve we had there at a larger percentage on that.

Okay, all right.

Thank you.

Brad Erickson, Pacific Crest Securities.

Hi.

Thanks for taking my questions.

Just a few follow-ups from some that have already been asked.

First, just around these fitness margins and that incremental or I guess the spending around R&D and advertising you talked about, just to be clear, is that incremental relative to previous expectations that were set on the fitness business?

No.

In terms of the expectations, we said we are operating according to plans, so we feel like our current spending is in line with what we had planned for in our budget.

Got it.

That's great.

And then just in terms of the return of capital, I think, historically, you've kind of committed to returning basically all of free cash flow.

Can you comment just on yours and your board's appetite to return potentially more than 100% of free cash flow at some point?

I think, at this moment, we are comfortable with the level that's being returned.

We do have unique limitations around the shareholder structure and control of foreign corporations, as well as our capital structure in Switzerland, so we feel like the current approach is adequate.

That's great.

Thanks.

Andrew Spinola, Wells Fargo.

Thank you.

You had a nice improvement year-over-year in the auto gross margin, about 120 BPS.

But I think, if you were to account for the FX and the deferred revenue impact, I estimate maybe over 400 BPS improvement.

And your referenced in the press release that there was less discounting and more improvement in cost materials, but it seems like a very large improvement.

I'm just wondering if you could help us understand.

Is this something that is sustainable going forward?

Is it maybe more of a Q1 trend because there's less discounting post the holiday with less seasonality?

How much of this is sustainable and how much is just a Q1 impact going forward?

I think there's some element of that that's Q1 impact because we are comparing the discounting that took place in Q1 of 2014 versus 2015, which is probably more a seasonal spike.

But in terms of the cost structure and those other factors, we would see that going forward.

And we are managing the business for marketshare and profitability, so this is our approach.

Okay, thank you.

Ron Epstein, Bank of America Merrill Lynch.

Hi.

This is actually Kristine Liwag calling in for Ron this morning.

In your press release, you mentioned that you are now offering an ADS-B piece that provides the most comprehensive line of solutions.

Can you provide more details on how your product compares to the competition?

And then also can you please quantify the size of the market that you could address?

Yes, in terms of the breadth of products that we offer, we offer products that can work with portable solutions.

We have a product that can work with tablets.

We have a product that's fully installed and integrates with our panel mount equipment.

We have products that operate through our transponders as opposed to through separate 978 megahertz UAT transceivers.

So, we just have a broad set of offerings and it appeals to almost any aircraft, whether they have Mode S capability or if they're on the lower end in the piston side.

And your second question please?

Can you quantify the size of the market?

The size of the market is in the hundreds of millions of dollars.

Great.

And then a separate question.

What metrics do you look at internally to measure the brand awareness of Garmin products and also the effectiveness of your advertising dollars?

I think these are very challenging things to specifically measure because each kind of approach that you use might yield a different result.

But we look at search trends and web trends.

We look at trends on our websites.

We look at trends on major retailers, online retailers, and we get a sense out of those types of investigations.

And can you provide us or give us an idea of where you are tracking right now?

No, we don't have details we can share right now.

Great.

Thank you.

Tavis McCourt, Raymond James.

Thanks.

Doug, I wonder if you could give us an updated view on what to expect the deferred revenue decline to be on the balance sheet this year.

Pardon me?

The decline in deferred revenues or the (multiple speakers)

Sure.

Yes, sorry about that.

So from that perspective, we anticipate a headwind consistent to what we had probably in the first quarter there.

For the full year?

Yes.

So all of the headwind would be recognized in the first quarter or --?

No, no, no, no, consistent type of a headwind, a consistent type of headwind.

And then Cliff, I want to follow up on kind of the auto mobile question.

If I look at revenues and I back out the deferral impact, it looks like revenues were probably down more like 7% and, if I assume some FX exposure, get pretty close to flat.

And I'm wondering.

If you look at it on that basis, is that something that is sustainable, or was there some puts and takes in terms of the year-over-year comp that would make that get a bit worse (technical difficulty)?

Thanks.

I mentioned in my comments we were pleased with the underlying business, and those other factors didn't really tell the whole story in terms of the strength that we saw.

But keep in mind that, on a year-over-year basis, last year we probably had a higher level of inventory in the channel and thus shift more into the channel or less into the channel at that time as we discounted and tried to help out retailers clear it.

This year, the channel was cleaner and we had the ability to shift pretty much what retailers wanted.

So there is some puts and takes along that regard, and we do anticipate that the overall market will decline in the 10% to 15% range for this year.

I'm not showing any further questions in queue.

I would like to turn the call over back over to Kerri Thurston for any further remarks.

Thanks Ashley.

Thanks, everyone, for joining us this morning.

And Doug and I will be available throughout the day for follow-up calls as well as on the road over the next three weeks.

Thanks.

Ladies and gentlemen, thank you for participating in today's conference.

This concludes today's program.

You may all disconnect.

Everyone have a wonderful day.