Hooker Furnishings Corp (HOFT) 2011 Q3 法說會逐字稿

Greetings ladies and gentlemen and welcome to the Hooker Furniture's fiscal year 2011 third quarter conference call. Reporting its operating results for August 2, 2010 through October 31, 2010. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Mr. Larry Ryder, Executive Vice President of Finance and Administration and CFO. Mr. Ryder you may begin.

Thank you, Trumisia. Good morning and welcome to our quarterly conference call to review our sales and earnings for the fiscal 2011 third quarter, which began August 2 and our first nine months which began February 1, both ending on October 31, 2010. We appreciate your participation this morning. Joining me today is Paul Toms, our Chairman, President and CEO, and Alan Cole, President and CEO of Hooker Furniture Upholstery Operations. During our call today we may make forward-looking statements which are subject to risks and uncertainties. A discussion of factors that could cause our actual results to differ materially from management's expectations is contained in our SEC filings, and the press release announcing our 2011 third quarter and first nine months results. Any forward-looking statement speaks only as of today, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after today's call.

Yesterday we reported increased sales and earnings for our third quarter. Net sales were up 6% as compared to the same period a year ago. Net income for the third quarter increased $213,000 to $1.2 million or $0.11 per share, compared to a net income of $957,000 or $0.09 a share for the comparable period a year ago. For the first nine months of our fiscal year, net sales increased nearly 7% to $160 million compared to $151 million for the same period of fiscal 2010. We reported net income for the 2011 nine-month period of $3.4 million or $0.32 per share, compared with a net income of $38,000 or less than $0.01 per share in the first nine months of fiscal 2010. Now Paul will comment on our third quarter results.

Thanks Larry, and good morning everyone. Business remained very challenging in the third quarter, as one of the weakest summer selling season's in recent memory was followed by a disappointing fall. The exception for strong business around the major holidays. Considering the headwinds we were facing of low consumer demand and the negative impact of higher ocean freight rates on margins, we were pleased to have achieved our second consecutive quarter of year-over-year sales increases and to have remained consistently profitable throughout the first nine months. Our revenue increase was driven primarily by shipping our backlog that had been elevated during the first half of the year due to production delays and ocean transit bottlenecks. Ultimately, we will need better demand to continue to produce sales increases. We are in fact, encouraged by a noticeable pickup in demand since early November and by what we have heard and seen as we visited retailers around the country in the last 30 days.

While demand in the third quarter was weaker than expected, orders have been trending favorably in the current fourth quarter. Average daily orders for November outpace daily order rates in the second and third quarters of this fiscal year. November was the best month for incoming orders since April. Because we've successfully focused our inventory mix on those best selling products that drive our business, we are well positioned to meet this increased demand and to ship customer orders for in-line merchandise almost immediately. We are also encouraged by how well our newest products introduced in the last year or so, have been performing at retail despite the challenging environment. As our more transitional, casual, and trend forward collections like Abbott Place, Sanctuary, and Melange Accents sell well at retail. It confirms that we are headed in the right direction in remerchandising and freshening our product assortment. The October high point market was solid, not stellar, our new introductions were well received as we continue to expand our product categories and price points. For example, we've build on our 20 year leadership position in upper medium price accent furniture by introducing an opening price point Envision Accents line. We also continued to strengthen our position in whole home collections by Sanctuary and Abbott Place with the introduction of the upscale 55 piece Trilogy collection and a more moderately priced [Macado] collection. Following our strongest ever Opus Designs Youth furniture introduction in April we had another successful youth bedroom market this fall with the introductions of [Ava].

We also had our second outstanding market in a row for Envision line of casually styled and moderately priced wood furniture to appeal to a younger consumer. We expect to ship $15 million of Envision case goods this year. Also in October, we introduced the Company's first fabric seating collection with the Hooker Upholstery line of exposed wood trim sofas, love seats, and chairs, correlating with major wood furniture groups which Alan will elaborate on later in our call. In addition to our comprehensive product introductions, we also received very strong response to a new cross-stock container program that allows dealers to combine our best-selling items from five of our largest source factories at an average savings of 15%. With orders processed within 48 hours, and delivered to the retailer's store in 30 to 50 days. We really see this program as a game changer that leverages our financial and logistic strength to create a win-win for us and our retailers. Retailers like the flexibility of being able to pull a lot of different products together so they can have a strong and sellable merchandising mix, buying broad but not deep, with less inventory risk to enhance their margins. Just as this quarter was eventful and significant for Hooker Case goods, it was also an important one at Hooker Upholstery. At this time I would like to call on Alan Cole to discuss the accomplishments in the Upholstery Division. Alan?

Thank you Paul and good morning. Certainly the most significant event for Hooker Upholstery occurring just after the close of the third quarter was our announcement that we will consolidate our Bradington-Young operations and our Corporate Offices into Hickory, North Carolina by the end of January 2011. This will involve closing our older and less efficient Cherryville, North Carolina plant and offices and transferring most of our employees to our newer and more efficient Hickory plant and the nearby office facility. We believe this is a great move both operationally and strategically for Bradington-Young. In the short-term, it will enable us to significantly lower our break even point with the goal of achieving profitability domestically at current sales levels. In the long-term, the consolidation can also be a great launch pad for future growth. We have the property to expand the Hickory facility as needed for the foreseeable future, and a lot of good employees are transferring with us from Cherryville to Hickory. In addition, there is abundant skill label labor and a network of strong Upholstery suppliers in the Hickory area. There are multiple advantages both short and long-term to this move. Once the consolidation is complete, importantly our manufacturing capacity will be aligned to our demand so that we will be consistently running at 90% capacity utilization or better at current sales levels. We believe this is an ideal situation both for efficiency and for maintaining high service and quality levels to our customers.

Aside from the consolidation plans, we had other important accomplishments at the Hooker Upholstery this quarter. Especially considering that summer and fall business was well below our expectations. Some of these accomplishments include first, our nearly 11% sales increase for the Hooker Upholstery Division marked the fifth consecutive quarter of double-digit sales gains. We believe that compares favorably to overall industry performance during the same period, and is further indication we are gaining market share in new retail placements. That being said, I do want to point out that we anticipate our year-over-year quarterly sales increases will begin to moderate in Upholstery and level out as we cycle into comparisons from the earlier periods in which we had higher sales and the comparisons become tougher. The Main driver for our revenue gains this quarter was our Seven Seas Import Upholstery line at Bradington-Young, where we increased shipments nearly 50% over a year earlier. This was the culmination of a strategy going back 18 to 24 months, when we determined to more aggressively pursue import leather business while not deemphasizing our domestically produced leather line. We expanded in all categories including leather sofas, sectionals, motion upholstery, reclining chairs, and executive seating, and have had great dealer response in these categories. In part, because the margin contribution for the Seven Seas Imported Leather is above our average margin contribution, Bradington-Young did achieve profitability in the third quarter even though overall sales were below budgeted levels. The Upholstery Division as a whole, which includes both Bradington-Young and Sam Moore, improved to an operating loss of 2.8% of sales compared to 6.8% for the same period a year ago. This improvement came as a result of better manufacturing efficiencies due to higher sales along with ongoing cost reduction efforts. Obviously, the Bradington-Young consolidation scheduled for January of next year will further enhance our manufacturing efficiencies.

At the most recent October high point market, Hooker made a historic introduction as we launched the Hooker Upholstery Collection. Our first fabric seating line with exposed wood trim sofas, love seats, and chairs that correlate with major wood furniture groups from Hooker. The program was well received by a broad range of retailers and exceeded our expectations. The Collection Upholstery Program plays to our strength as a total home furnishings resource by making it easy for retailers to buy and merchandise complete room settings including the seating, living room tables, entertainment centers, desks, and credenzas with all the items correlating for a finished, stylish look. Retailers felt the Upholstery line was priced well and well differentiated with a style, finesse, and quality level consistent with Hooker's brand positioning. We expect this to be an important incremental business opportunity once the new Upholstery line begins to ship early next year. Also at market, we continue to experience nice gains in placements for Sam Moore for our accommodations, modular and sectional seating program. Sectionals and modulars and other non chair seating will be an important growth engine for Sam Moore in the future. Because of Sam Moore's historical limited niche in custom chairs, it has been much harder to grow our sales and efficiency in this difficult economy. That's why it is essential for us to broaden our product footprint so that we can get Sam Moore to the sales levels needed to be profitable. Also at Sam Moore, we had a smaller labor force reduction this quarter of approximately 16 employees, primarily in manufacturing, that will further reduce our break even point and match our labor force to the current sales levels. In conclusion, I would echo Paul's comments that demand has improved significantly since early November compared to the third quarter, and we are encouraged by this development.

Thank you Alan. At this point I would like to call on Larry again to discuss factors that drove our sales and earnings performance this quarter.

Thanks Paul. Much of the sales increase realized in our fiscal third quarter and first nine months was due to the improved shipment of order backlog as Paul mentioned earlier. Case Goods volume unit increase compared to both the prior year quarter and nine-month period. Upholstery unit volume continues to be encouraging, as we realized significant unit volume increases at Bradington-Young and modest gains at Sam Moore for both quarterly and nine-month periods. Overall, average selling prices decreased nearly 2% during the third quarter and decline slightly over 2.5% for the first nine months as compared to both prior year periods. Primarily due to the increased sales of lower priced products but also due to lower discounting due to a better sales environment and lower returns on allowances thanks to improved product quality. Gross margins for the fiscal 2011 third quarter declined slightly, primarily due to higher freight costs on imported product in our Case Goods Division partially offset by increased Upholstery margins primarily due to manufacturing efficiencies from higher production rates and cost reduction efforts. Margins for the first nine months of fiscal 2011 increased less than 1% , primarily due to the decrease product discounting and returns and allowances and savings from the closure of our California warehouse and increased margins in our Upholstery Division, resulting from increased Upholstery sales.

These gains were partially offset by higher freight costs as a percentage of sales for Case Goods during the first nine months of the year, and $0.5 million charge related to the fire at one of our distribution facilities during the fiscal 2011 first quarter. Selling and administrative expenses decreased both as a percentage of sales and in absolute terms compared to the corresponding three and nine-month fiscal 2010 periods, primarily as a result of cost cutting measures implemented during fiscal 2010, and lower employee benefits expensed and lower bad debt expense. Operating income for the fiscal 2011 third quarter was $1.7 million or 3% of net sales. Compared to $1.8 million or 3.4% of net sales in the fiscal 2010 quarter. For the nine-month periods, operating income was $4.9 million or 3.1% of net sales in the current year, compared to $657,000 or less than 0.5% of net sales for fiscal 2010. This improvement was mainly due to improved domestic upholstery plant utilization and the absence of asset impairment activity during fiscal 2011 as compared to the corresponding prior year period. That improvement was partially offset by expenses related to the fire at our distribution center during the first quarter.

Our balance sheet remains strong and continues to help cushion us from some of the impact of the current difficult sales environment and our lower profitability . At quarter end, we had cash and cash equivalents of nearly $20.5 million. We remain debt free and have over $13 million available from our recently renegotiated revolving credit facility, which remains in place until July 31, 2013. Additionally, we have $14.6 million available to borrow on cash surrender value of the life insurance policies if needed. We continue to maintain our quarterly dividend at $0.10 per share thanks to our cash position and the belief that our product and business model position us to take advantage of the economic recovery as it develops. Our strong financial position also gives the ability to take advantage of opportunities that may present themselves in this still challenging financial environment. Now, I will turn the discussion back over to Paul for his outlook.

Thank you Larry. Throughout this year, I've been proud of how our employees and managers have successfully focused on those factors over which we have control. These include developing products and programs to stimulate business and engage the consumer, continuing cost reduction efforts, improving product quality, and leveraging our financial and logistic strength to float best-selling products and have them in stock to provide better service to our customers. Our solid market in October will build on the products we have introduced over the last few markets, that are in the pipeline and performing well at retail. All along, we've said that all we really need to turn the corner was a little help from the economy. As we have mentioned already in this call, we are encouraged by what we have seen in the last 30 days at retail, as orders trend in a positive direction we are well-positioned to leverage a current uptick in consumer demand as well as any sustainable improvement that may materialize. Thank you , this concludes our formal remarks. At this point, I will turn the call back over to Tramitha, our operator for questions.

Thank you. (Operator Instructions) Our first question is from Todd Schwartzman with Sidoti & Company. Your question please.

Hi good morning guys. Can you talk a little bit about raw materials for the quarter and your outlook more importantly for Q4?

Alan, do want to take that since you are probably more directly involved with raw materials then the manufacturing at the two Upholstery plants, and then I will speak to prices we're seeing on finished goods?

Sure. We are seeing materials that come from Asia, which is both our fabric that we utilize most of that is manufactured in Asia now, as well as our leather pricing going up at, what we consider to be a higher rate than we have seen in quite some time. The fabric increases seem to be yarn shortages and particularly related to cotton. The commodity prices of cotton have gone up dramatically over the last probably 60 days now. And as a result, we are seeing significant price increases from our fabric vendors. Generally on average, probably in the range of 5% plus but occasionally getting into a range of 10% and 15%. Now we think this will moderate some as, there always tends to be an over reaction as the commodity prices tend to level out. Nonetheless, we still believe that we will see material increases in our fabric area in the range of 4% to 5% ultimately. Leather has not been quite as dramatic, but there has been an escalation in hide prices fairly significant, and we are seeing leather increases right now in the -- again in the 4% to 5% range. We don't think that they will be quite as dramatic as the fabric increases have been,. We are not seeing increases necessarily in the other areas such as foam products and so forth, but of course fabric and leather are two of our largest purchase categories, so we are, in answer to your question, we are seeing increased material increases in our raw materials area above what we have seen for quite some time.

Alan, do you want to also address the price increase that we put through to our customers?

Yes, we anticipated some of this at the October market, and we took a substantial price increase at Sam Moore, on balance probably between 4% and 5% effective price increase. A touch less at Bradington-Young since we had increased prices there at the April market, probably in the 2% range at Bradington-Young. So we have anticipated a lot of the raw material increases as long as they don't get more dramatic than they are now we think that we have adequately covered ourselves for the moment.

And Todd, at a Case Goods side, we have seen some pressure on cost from our suppliers. Probably looking on average at increases for finished goods in the low single digits, and we also had a price increase on the wood side of our business back in September. That we believed would cover those cost increases. But certainly our suppliers are seeing wage rates go up, they are feeling the effect of currency that is slightly strengthened against the dollar, and maybe a little bit of pressure on other inputs.

And on Case Goods, what about the Container supply demand cost scenario right now?

That is a good question, because really that has more of an impact on our cost of goods sold and gross margins than price increases from our suppliers. We have seen Container prices moderate probably 16%, 17% from the high back in mid-summer. Which really gets us back to a rate that we negotiated in May after we negotiated our contracts, they put on two peak season surcharges as there was a lot of freight to move from Asia, and once we got through the fall, they took both of those surcharges off, we are back to more normal rates. Rates that are at or slightly below what we price into our products.

Is this further moderation in the cards for next quarter or two?

I would be surprised. Who really knows, but our forecast is that they'll kind of stay where they are. We may see some short peak season surcharge right ahead of Chinese New Year, but we think it will go away after Chinese New Year and we are forecasting rates to be a little more stable next year. I think there is more capacity online then there was this spring, and it doesn't seem to be the shortage of containers. But usually all that comes up right ahead of the contract negotiations.

Okay. So for fourth quarter on a year-over-year basis, what you forecasting in terms of an increase? If you can quantify that.

In terms of increase on freight?

Yes.

I really think we are not going to see an impact in the fourth quarter. We are still as our inventories have grown, we have some LIFO adjustments to recognize freight increases throughout the summer and earlier this year. But I think we don't see prices increasing from now through the end of January. We have gotten some kind of sense from a few of our orders and freight lines that there could be a peak season surcharges, but we are not even -- we haven't gotten that from all of them, and we are not confident that the ones that have threatened it will actually put in place. I think they have to give notice just to be able to institute it later. But I don't think it will be a significant impact on our fourth quarter cost.

And on the Upholstery side, if you could maybe lump together the leather seating companies with this latest venture of yours, kind of treated as one entity, what would you say is the total production capacity for Upholstery?

Well, I think maybe you are referring to the Collection Upholstery that we introduced at the October market. And that actually, that program at this point is fully imported. So, in the numbers will be a part of our Imported Upholstery or Seven Seas Leather Program and lumped in with that. And our domestic shipments today or domestic capacity I should say today, is probably in the -- at Bradington-Young in the $35 million range, and that's -- our shipments are running just slightly less than that. And then our imported would be around $20 million in the low 20s, if that gives you a sense of scale. So our Imported Upholstery as compared to our domestic -- in this, I am talking Bradington-Young only, our Imported Upholstery is about 40% of our total Bradington-Young shipments. And then our domestic is about 60%. Now, that doesn't include Sam Moore, but that maybe gives you a sight. Does that answer your question?

Yes it does, and it sounds like there's no, tell me if I am wrong here, there's no plan to bring onshore any of that Imported Upholstery?

Not per se. Now there may be a possibility at some point that we do produce some domestic correlated upholstery to give some special order options to our Hooker Collection Upholstery. We have discussed that. But the Upholstery we have introduced at this point has all been fully made imported.

Okay. Last question is on Opus. Could you quantify the sales contribution for the quarter and maybe say whether or not you think you're gaining share in the Youth area?

I would say the sales contribution has been very minimal. And Opus will finish this year as a smaller entity then it was last year. We have, I think focused it better. We've gotten rid of a lot of products that really were not important in Opus. We reduced the length of the line, I think we have a line that is more profitable now, and everything in it has merit and is producing, but it's really a relatively insignificant part of our business today Todd, and I would say you are looking at 1.5%, 2% max. I think there's opportunity to grow it, but I think it is a piece of our total, it is not going to be as important as a Home Office, Home Entertainment, Accent pieces, Collections, things like that.

I've got it. Thank you very much gentlemen.

Thank you. Our next question is from Matt McCall with BB&T Capital Markets. Your question please.

Thank you, good morning everybody.

Good morning, Matt.

Just following up on one of Todd's questions, did you quantify the impact of the freight inflation year-over-year that you saw in the quarter?

I would say in the last couple of quarters the impact has probably been around 2%.

What about a dollar basis, Paul?

A dollar basis --

Yes, what was the dollar increase that you faced in the quarter? I guess, just give me the 2% of -- what number? Or just give me the dollar --

Our wood shipments for the quarter were probably 35-ish, somewhere in there, so you're --

Oh okay. I see what you're saying. Okay. That is helpful. Then it was interesting to hear, I think Alan used the word demand has improved significantly since November. Just curious if you see that more of the market trend or a macro, a result of macro improvements, or are you having better luck on share gain, or increased placement? Per se?

I think it is probably a little bit of all. I do think in total demand is improving. I haven't seen the reports yet from some of the people that track total industry cells. They are usually several months late in providing that information, but my sense is that business in general has picked up across the country. There may be pockets where it hasn't, but it goes hand-in-hand with improvements in consumer confidence, it looks like retail sales were better in November. Christmas looks like it's shaping up to be better. Markets performed pretty well in general the last three or four months, so I think all that has impacted our business. Interestingly, wood kind of lagged Upholstery most of this year, and I think what we are seeing more recently is wood's for whatever reason seems to have -- is seeing a little more of an uptick which we are comping against lower numbers too, than Upholstery, but just since the wood business this time has picked up a little bit more than a Upholstery maybe, or certainly more than the leather business. I also think it has to do with the products we have introduced over the last few years, and that they are retailing. We have gotten really good reports back on Sanctuary, Melange, Abbott Place which were all introduced in 2009, and have retailed in what was a pretty lousy environment this summer and early fall. So the fact that they are performing in that sort of environment, our in stock positions improved significantly as our inventories have grown, and we're able to deliver goods immediately. So any impact or uptick that we see, we can take advantage of it quickly.

Okay, and I was going to actually ask about inventory levels. So, the level is -- is a good spot for you right now? It sounded like you are bringing down the backlog, but as you look out you think you have got the right inventory and the right amount of it as we approach maybe a better period?

Honestly Matt, we've got more inventory than we would have liked to have. I think we didn't foresee sales being quite as weak as they were through the summer and early fall. Our suppliers earlier in the year were behind schedule on almost all of our production. Today, they are trying to ship early. Because they don't have as much demand from all of their customers as they need, and so the lead times have shrunk and those two things have kind of come together to create a little bit of an inventory flood here. The good news is the inventory is focused on our best-selling skews and I don't think there's a tremendous amount of immature risk, but we have a little more inventory than we would like to have and we have plans over probably the next six to nine months to bring it back to little bit lower levels without compromising delivery.

We also expect that the Chinese manufacturers are going to be taking longer breaks during the Chinese New Year and we should be in a good inventory position as we enter that Chinese New Year in late January. And so that should serve us well in the first quarter next year.

Okay. The final question, just looking at average selling price, there may be two things at play here. You talked about some pricing actions, but in the queue I believe you talk about pricing down a little bit, year-over-year. So there is the impact of mix as well, so I guess the question is when you look at some of the new products you are introducing and some of the different price points, talk about the impact on average selling price as we look out the next couple of quarters. Will the price increases offset that? What does the ASP overall look like maybe from a segment perspective?

I think the average selling price is down and there is several things that play there. One is that Envision has been a large part of our growth, and Envision is more moderately priced than Hooker Traditional Collections and some of our even Accents, and Home Office, Home Entertainment products. Margins are comparable, but the average selling price is less. The other thing that comes into play is our Container Direct business has grown faster than the business that we ship one piece or one collection at a time out of our Virginia warehouses. Again, margins are similar on Container Direct generally, probably see the impact quicker on freight rates on Container Direct than we do when we are shipping out of our warehouses, but Container Direct has grown and the average selling price of the same products if they're shipped Container Direct is maybe 15% less. So, that is driving some of that decrease.

Okay, thank you all.

Thank you. Our next question is from Bill [Rosen] with Goldman Sachs. Your question please.

Yes this is [John Ramono]. I am actually a profit shareholder. Can you provide some color on your e-commerce vision going forward. What are you guys doing to drive more people to your site and to your channel partners sites now to have a better experience online and to buy more products?

We don't have an e-commerce strategy. We think that one of our strengths, John is the fact that we are broadly distributed through about 3,000 different retailers and about 26 different distribution channels in the US alone. And to sell online would put us in competition with our customers, and we don't think that's a good strategy. We are doing a lot to try to drive traffic to our customers. We do it through our website, we have a social media marketing effort that has been underway for about a year through Facebook and Twitter and YouTube. We are trying to send people to our website and also to our customer's website.

I know -- I guess, I knew you didn't really have an e-commerce strategy because you're selling things through your 3,700 retailers. What are you guy doing in terms of promotions, how are you getting people to see the Hooker brand. What are you doing through Facebook to drive more people to all of your channel partners sites to say these are the products that you should be looking at, how to find dealers and have a better buying experience overall with the Hooker products?

I'm not sure I can answer all that today. That is something we really weren't prepared for. We do have our Director of Marketing Communications. She's been working with some of our retailers on co-branded promotions, and we have as I say we just started this year with the social media marketing strategy and tried to get on the sites that I mentioned to you and drive traffic to our retailer that way, beyond that --

We do have special national events that we advertised over the website for our retailers as well. To help drive traffic into the retailers. But as Paul says, primarily the website that we are using right now is designed to inform and educate customers and give them more ammunition when they go into the retail environment.

Okay. Are you guys doing anything for mobile, are you building mobile apps so if you want to download into an iPhone apps that people drive around and actually see products that maybe not necessarily buy your products but actually be very informed by your website through the mobile experience?

Today we don't have apps that are targeted to mobile devices. Have you been to our website?

Yes, numerous times.

So you have a pretty good idea of the fact that all of our products are shown and we do have a way to get you to the retailer closest to you that has our products.

Exactly. Okay.

Thank you

Thank you, Our next question is from [Joe Goldstein] with Venetian Research. Your question please Mr. Goldstein, your line is open. Please check the mute on your line. I am getting no response sir. Our next question is from Louise [Guess] with Hooker Furniture. Your question please.

Yes I would like to know -- since I haven't sold my stock, I would like to know, could them give me some highlights on this stock business please?

Louise, I think stock is generally driven by the performance of the Company. We are performing, I think better than most furniture companies through this downturn. Probably, we're going to need to continue to see improved sales and earnings to have an impact on the stock.

Okay. Okay, I'm well pleased.

All right, thank you. I think we have time for one more question.

Thank you. (Operator Instructions) I am showing no further questions in queue at this time. I would now like to turn the presentation back over to Paul Toms.

Thank you Tramitha. That pretty much concludes all of our remarks. We appreciate your interest and participation today, and we will look forward to delivering another good quarter's results in about three months. Thank you for joining us.

Ladies and gentlemen, thank you for your participation. That concludes the conference. You may disconnect, and have a wonderful day.