Haverty Furniture Companies Inc (HVT) 2014 Q3 法說會逐字稿

Good day, and welcome to the conference call regarding Havertys' Q3 2014 financial results. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Dennis Fink, Executive Vice President and Chief Financial Officer. Please go ahead, sir.

Good morning, everybody. During this conference, we'll make forward-looking statements which are subject to risks and uncertainties. Actual results may differ materially from those made or implied in such statements which speak only as of the date they are made and which we undertake no obligation to publicly update or revise. Factors that could cause actual results to differ include economic and competitive conditions and other uncertainties detailed in the Company's reports filed with the SEC.

Our President, CEO and Chairman, Clarence Smith, will now give you an update.

Thank you, Dennis. Good morning. Thank you for joining our third-quarter conference call. As we reported previously, our total sales for the third quarter increased 3% to $198.5 million. This was our best total sales volume quarter in the past seven years. Our comparative store sales increased 3.5%, and our written comparative store sales were up 4.6%. Our total sales for the first nine months of the year are up 1% and up 1.9% for comparative store sales, which had been up 11.5% for the nine months last year.

Total written comp store sales for the fourth quarter to date are up approximately 3.5% on top of last year's quarter-to-date total increase of 5.6%. As a reminder, delivered comp sales for the full fourth quarter were up 9.5% last year. Our pre-tax earnings for Q3 were $12.5 million, with EPS at $0.34 compared to $0.42 last year.

During the quarter, we had four stores in the midst of closing sales as well as three local area warehouses. With the activity, the average written ticket was flat with a year ago. The number of tickets was up, and the closing rate improved.

Gross margins were 53.5% versus 53.9% last year, with the decrease due in part to a LIFO charge versus a credit last year and also to the impact of the store and warehouse closings.

We have an aggressive store opening and relocation program underway. For the second half of the year, we will have opened 6 stores and closed 4 stores by year end. We plan to net one new store for the year, ending with a sale of -- selling square-foot increase of approximately 2% and 120 stores.

This past week, we had a celebration of our opening at our new Atlanta Buckhead Style Studio, featuring more contemporary and urban scale products with an emphasis on special order and custom choice.

We returned to the store site that we exited 24 years ago with an exciting new look. We feel that this format strongly complements our position in the heart of the fastest-growing retail market in the South and appeals to the intown customer.

We relocate to a larger and better position store in Winston-Salem next Friday and a week later open a new store in Kissimmee, the fastest-growing market in Central Florida, replacing one of our older Orlando locations. Our new Southeast Florida flagship store in Coconut Creek is scheduled to open late this year and includes the introduction of our outdoor furniture line. This completely remodeled former Carl's Furniture store will be the second largest store in the Company and will help establish Havertys as a significant player in that dense and fast-growing market.

We will strengthen our position in Southeast Florida further, adding another completely remodeled former Carl's location in Fort Lauderdale in the spring of 2015.

We have major remodeling projects underway in several of our markets and are nearing the completion of our five-year Bright Inspirations remodeling program, which should be over 95% finished in 2015.

We've substantially completed the additional rack storage projects in Florida and Virginia DCs and are reviewing our plans to expand our Western distribution center in 2015 or 2016. We want to make sure that we have our best-selling products in stock and are better able to respond quickly to our customers' needs in our fastest-growing and further-out markets.

Our marketing team is continuing to invest in enhancing our website and mobile access as well as new means of using the latest tools, the digital tools, in our stores. In 2015, we'll be investing a larger portion of our marketing budget in our CapEx for mobile development and website enhancements.

Our Internet sales are growing at a higher rate than our overall store sales. And while the Internet sales are less than 2% of our total, over 80% of our customers use the site to research and to manage their sales and delivery process.

Our in-home design program, each design continues to grow and develop. We now have 92 salaried designers on staff serving 105 stores, offering free in-home design service to our customers in most of our markets. We're very pleased with our new designers joining our team and the significant positive impact on our stores' professionalism. They've added a real energy to our overall team.

We're now offering services that our customers have wanted from us, and our stores are becoming more experienced in providing full design service to the more fashion-oriented customer.

We're excited by our new stores opening and the stronger positioning in several of our most important markets. We are finally receiving in enough containers to begin catching up with demand on our best-selling products and to allow us to display many new collections. This inflow is helping us to increase deliveries in October and in the final two months of 2014.

I'd now like to turn the call over to Dennis Fink.

Thank you, Clarence. In our earnings release last night, the financial highlights were covered. And I'll only touch on a few of those points now, mostly relating to our expectations. The third-quarter warehouse and delivery was not as efficiently run and operated as last year. Almost all of the extra cost was in labor. We were staffed to deliver more volume but didn't receive all the merchandise from Asia that was anticipated to reach our target.

Our teams are anxious to show what they can do in Q4 now that the merchandise flow is very strong. And such that our staff can be utilized more fully and on a consistent basis, with efficiently scheduled routes that aren't subject to as much change as they were in the last few quarters.

We customarily give guidance for expected gross margins and SG&A expenses for the current year within each of our earnings releases. We don't publicize any sales forecasts but do announce our actual sales within a few days after each quarter end and then disclose how sales for the first month of the new quarter are trending when we announce quarterly earnings.

The fourth-quarter 2014 expected fixed and discretionary type expenses within SG&A include a $1 million increase in total advertising spend versus last year's fourth quarter and approximately $1.1 million of extra fixed type SG&A expenses for the six new stores. Two of those new stores opened in the third quarter, and 4 are coming online in the fourth quarter. Interest costs from the leases that get recorded on our balance sheet from those stores should be an extra $200,000 compared to last year's fourth quarter.

All of our store openings in 2014 are in the second half, and plans for 2015 are for most of the activity to be in the first half. The 2014 weighted average retail square footage increase is only going up about 4/10 of a percent for Q4, and for the whole year of 2014 it's only up 1/10 of a percent. However, the 2015 weighted average retail square footage increase will be up 4% based on our current rollout plans. Tracking this metric helps estimate the future sales-increase percent from additional stores that can then be added to expected comp store sales increases to model the total percent sales increase.

So for the first half of 2015, for instance, we're expecting about a 3.2% increase in the weighted average square footage compared to the first half of 2014. So that is a proxy of sorts for how much extra sales we could get from those new stores compared to the prior year. The second half will be about 4.9% increase in 2015 over the second half of 2014 in weighted average square footage growth.

Overall for the year of [2015], it's about 4% increase for the full year over 2013 in the weighted average square foot outstanding. So the expense increase for the efforts underway opening new stores should pay off in better sales, additional sales next year and beyond.

Our cash balance at September 30 of $78.7 million is presently down by about $15 million to $20 million as our capital expenditures accelerated during the quarter with the store openings so far. And our merchandise purchases have increased, with inbound flow and warehouse inventory going up. The inventory is up, and we do want to have faster delivery fulfillment for consumers going forward and be a little less susceptible to lead time fluctuation caused by the availability of slots on container ships, labor issues in ports and other events that are out of our control.

November and December, usually the peak months for delivered sales, also we are catching up this fourth quarter and bringing in more new merchandise than normal. Some of that also was delayed from Asia over the last six months. All of this goes through our DCs and gets prepped and delivered to our stores on the same trucks we deliver to customers.

We are still in the process of budgeting for 2015 with efficiency and control of discretionary costs in mind. We will give expense guidance for next year after that process is completed and reviewed with our Board.

Operator, at this time we'll take questions from the audience.

(Operator Instructions) Brad Thomas, KeyBanc Capital Markets.

Brad Thomas, KeyBanc Capital Markets.

I wanted to first ask about the outlook for sales for the fourth quarter, specifically with respect to the strong backlog that you had at the start of the quarter. In your press release, obviously you call out that the written sales are up 4% to date and the delivered sales, though, are up 9.5%. As you look out over the course of the whole quarter, what do you think the benefit could be as you work through the backlog?

There's a lot of estimation to go into that, but -- and we do have the new samples that are taking some of our -- or the new showroom floor merchandise that is being delivered as well. So it takes a little bit of our delivery capacity. But the flow is strong enough and of the right items we think that, for instance, if we had a written sales increase for the full quarter similar to what it's been so far this quarter, low single digits, low- to mid-single digits, we ought to be able to have a higher percent increase than that. 2, 3, 4 points perhaps higher on a delivered basis year over year, and that's assuming we don't have any additional supply flow problems.

I guess anything like that would be related to the US ports because it's on the way and we're already loading or offloading and delivering a lot of that product. But the only other thing would be really the winter weather coming early. Last year, we had storms four months of row, including in December. But other than that, if the order rate continues to come in nicely, we ought to be able to deliver out part of that backlog.

Some of our backlog is year over year particularly -- compared to two years ago is based on higher percentage of this custom-order upholstery program that we've had that has been so successful. So that takes little time, a little bit longer to fulfill just because it's being made after the customer orders it.

Okay, great. And if I could follow up with a question about gross margin, it was down in the third quarter, and the guidance is for it to be down again in the fourth quarter, admittedly against difficult comparisons and LIFO benefits that you had last year. Clarence, as you think about the Company's gross margin going forward, is there still room to keep moving it up, or is there something that maybe is structurally topping out where it could be for Havertys? Or have there been any changes in the competitive landscape? How are you thinking about gross margin going forward?

I think there's still room to move it up. We have an enormous amount of product that we've developed and are excited about that is arriving now, and we reviewed that to make sure that we're getting credit for the exclusivity for the fact that we are sourcing it direct and taking the rest of bringing it in, et cetera.

So I do think there's some room for growth on the gross margin. You mentioned the two things, as we said in our call, about what hit us the most last quarter. And a lot of that's going to be behind us, so I think that there's opportunity for it. I know we're not estimating that it's going to be up, but I do think there is opportunity particularly in the case goods program and the new collections that we're bringing in.

Brad, I'll just add that the fourth-quarter margin slippage is really more related to one-time or close-out events and some LIFO impact that is coming in a little higher than maybe you would expect it. So I think flattening out is more likely comparable condition sort of number in this third and fourth quarter. We just have a little bit of headwind on margin just because of those two things.

Great. And I apologize that I missed it, but can you quantify what the drag is from closeout activity? It's probably 10 to 12 basis points in Q3 and maybe will be 20 basis points in Q4, something of that magnitude.

Perfect. I'll turn it over to someone else. Thank you so much.

Thank you, Brad.

David Berman, Berman Capital.

Just a real -- real quickly, your designer sales program, can you embellish on that? Do you feel -- I think you've got 90 people or something in 119 stores. Do you kind of feel -- how do you feel that's worthwhile? How can you tell that it's actually adding incrementally more than what it's costing?

And the second question would relate to the new stores, if you can embellish further about how they are doing through in July, August, I think another one in October. How are the three new stores doing? Thank you very much.

Well, we've only got a little bit of track record on the new stores; I will answer that first. The new stores that we have opened, we are very pleased with. The store here in Buckhead has just been open fairly a week, so we don't have enough track record on that. But the ones that we opened prior to that, we are pleased with. We're really excited about the relocations we've got coming in the next couple of weeks. They are much better locations. The store is going to be a lot better; we're excited about that.

The in-home design program, and we call it H Design, has been successful in helping us increase our average ticket. It's over to 2 and -- 2 to 2.5 times more than our average sale when we get in the customer's home. So we are providing a service and helping to reach customers that we weren't serving in the past.

In our better stores, it's 20% to 25% of what sales are, and we've got to go in those stores to get it up higher than that, probably in the 30% range. So it's new. We are bringing on a new staff, and we are pleased with what it's doing for us. And I think that it's helping reach, as I said, a customer we had didn't reach in the past. We also are offering product mix that we didn't have in the past like the accessories and the rugs, all of the whole package.

So I do think that it's a way to separate ourselves from the promotional players. I think it's going to be important -- more important in the future. And so far, it's been a real plus for us.

All right. Excellent, excellent. And if you can just talk about -- your payout ratio, as I understand it, is about 25%. And I understand you're a cyclical business. And I'm impressed that you pay $1.00 dollar dividends every now and again. You've, I think, paid $2.00 in the last three years. So your cash balance would be probably be close to $4.00 if you didn't do that.

I'd like to see a high dividend -- annual dividend. And also I see you have a share purchase program. Just FYI, we much prefer the cash one-time dividend. But if you can just comment on the dividend, the annual dividend. If that was higher, I think that would be helpful to investors long term.

We increased the quarterly dividend last year, and we have a record of generally increasing that as we go forward. But we did have a strong cash position which allowed us to give a $1 dividend last quarter, and we were pleased to do that. I think it was a good play. We also authorized -- the Board authorized another $10 million to buy stock back.

So we have both opportunities. I think the dividend was the right thing then. We'll look at the market and evaluate what makes sense going forward. We are pleased that we are generating cash and intend to keep doing that.

I think, David, your point about the cyclical business is what's on our minds, but there is room to pay more if the Board (multiple speakers).

Well, yes. I understand that. I wouldn't otherwise suggest it except that you are throwing out cash even in bad times; you have proven that. And you do have the $1.50 in share in cash. So I don't think one is too worried about your being able to make it given how well you did during the bad times.

I guess the point about the cyclicality is more that you hate you ever get a number that would have to be pared back because it becomes a higher payout ratio than you wish in a slow time. So you look at it as a one-direction quarterly dividend. But it's judgmental in terms of -- it's up to judgment about how much is enough or how much is too much. And I think we can just -- we pass on the comments that different institutional holders and analysts to our Board, and there is an appetite for more of the dividend. So we will keep that under advisement.

I don't know if there's a right or wrong answer, but there certainly is -- it's important to respond to the people who follow and invest, and we put their interests (technical difficulty).

Yes. Okay, all right. Well, let's keep on going, guys.

Thank you, David.

We'll do our best.

Thank you very much.

Todd Schwarzman, Sidoti & Company.

Dennis, you mentioned the expected gross margin haircut of the clearance items in Q4, estimated 20 basis points. What is your visibility into Q1 in that regard and beyond?

Well, there'll be some more of that activity. We actually had a few local warehouses were closing out as well. So the -- that won't happen next year. And we are spacing it out a little better in terms of our -- well, actually some of the new stores next year, I believe, three of them in the first half are all new locations.

So let's say we have four in the first half, and all of them basically are new locations. A replacement store is scheduled for later in the year. So those four don't have any closeout activity associated with them. So it's the relocations and the outright closings that caused some clearance activity. We have one other store we are closing in that should be in the fourth quarter next year along with the one relocation. So you can see some again in the fourth quarter, but it's not as many in a row as this was.

So I don't see it -- there's always clearance needed. When you close out groups, you don't end up with an equal number of everything. And there's always damages, returns that have to be worked through the system. But I think this is little unusual for us to have this many at one time that we have in July through November of this year.

Got it. As far as receiving sufficient number of containers and timely receipt of those containers, that one largest, perhaps most problematic vendor in China that was giving you some grief earlier in the year, can you speak to that relationship and to what extent that's returned to normal? And if that hasn't occurred yet, when that is likely to happen?

Todd, we've moved the product that was being sourced by that vendor, and it is on the way. We've redone collections. We've -- they have shipped their backorders that they were agreed to do and that they agreed to do, and we are getting those now and filling orders. So that's pretty well behind us.

We're excited about the new collections that we've re-sourced with some other players primarily in Vietnam and also in Indonesia. So that's on the way. I don't see this Chinese supplier being a negative to us from now on.

Okay, great. Also, I'm interested to hear you speak a little bit more about the planned expansion of the Western DC. Specifically, is that to accommodate purely existing markets of yours?

Well, we are adding some stores in Texas outside of Dallas. We did add a few in the Dallas-Fort Worth market in the last year. But that's a smaller facility than our Braselton facility. We own a lot of land out there adjacent to it, and we're bumping up on capacity. And we're just going to need the opportunity to service all the stores out there. And we mentioned that we're closing some of these local area warehouses now. Actually, those are being served by this Western DC. So we're just going to need more capacity to continue to serve those stores and to source more product.

So can you rule out expansion into new markets for you in the Western region?

No, we're going to be growing out there; that actually is where we'll be adding more locations. We are planning 3 right now, and there are a couple more markets that we are looking at that we haven't announced. But no, we'll be growing out West.

So you'll be entering states in which you do not presently operate at some point.

That's possible. Well, no, we would be -- we're entering markets that we presently don't serve.

Okay, fair enough. Thanks a lot.

Kristine Koerber, Barrington Research Associates

I've a few questions. First, can you just give more color on the case goods business? It sounds like you've kind of worked through most of the issues. But are you seeing -- what are you seeing so far on the case goods business? Are you seeing that business rebound at this point?

I do, and I expect that in the next several months to come back significantly because of the product coming in. And I think that what we mentioned about sales this month being up nicely, a lot of that is filling orders that were case goods.

And I'm excited about our plan and our product that we've already got coming to our floors, new collections that's hitting right now. We were impacted significantly for the last six months -- nine months, even -- in getting product in and having a major vendor that stopped making product for us, and now we've corrected that.

Okay, great. And then can you just talk about new store ramp, especially as you enter new markets? Because I'm assuming the ramp time is longer because you don't have the brand awareness.

Well, a number of the stores are just repositioning in current markets. Like for instance, Orlando, Winston-Salem, those are relocations. We're adding 2 stores in Southeast Florida where we do have stores. We are not as strong a player as we would like to be down there, and I think that we'll significantly improve our position down there and our profitability by adding these stores.

And in the markets in Texas that we are opening, we are known out there. So I think those should start out, as we usually have, in cities that are adjacent to our other stores. They should start out profitably within a few months. We think that they're markets that can support a good Haverty store.

I guess I was thinking about next year, 2015, because you are entering several new markets next year. Is there any brand awareness in those particular markets you're going into?

Oh, I think so. We haven't announced one of the cities, but one of them is Waco, which is south of Dallas. And we are known in that area. The other one is in Rogers, Arkansas, which is Fayetteville. We are in Arkansas; been in Arkansas for over 100 years. So I think that we'll have good name recognition. I think we'll be well received in those markets.

Okay. That's helpful. And then as far as on the expense side of the business, the higher delivery and higher sales commissions, how should we think about that going forward as far as the higher delivery expenses? Do they start to subside? And the sales commissions, is that mostly due to the in-home design services?

The sales commission, yes, it is mostly due to that. It is an extra cost for the Company. And earlier we had a question about the payback, and we have to see higher sales and bigger tickets that would demonstrate the payback. We think we will see it. We have seen the number of larger tickets growing, and we think we're going to penetrate a different market. So sales will grow quite a bit as a result of the designers on staff. But you do need to have an increase in sales to pay for it. So it's likely to continue at a little higher level. There are some things can be done structurally to keep that total from growing faster than sales.

In terms of the other, I think we've just been inefficient because -- partly because of the whole supply -- kind of erratic, being able to predict when it's coming and how much stuff to have. And as I was saying, this fourth-quarter I think there's more than 1,000 people that are anxious to show how much they can deliver and how efficiently they can do it in the fourth quarter.

So I would expect that could come down some. We are guiding like for the fourth quarter like it is coming down a little. And I think time will tell. We're certainly going to work hard on it. And for the moment we've got a little lower contribution margin, if you will, than we had earlier. But with the good gross profit that we have, it's still a pretty significant in high percentage that comes to the bottom line. So the answer is one of those costs ought to be coming back down at some point, the other is probably just going to stay little higher. And we'll leverage fixed costs when sales go up.

Okay. That's helpful. And then just lastly, you talk about the new store performance in Texas; in particular, Dallas. I believe about a dozen of your stores are located in the Dallas area. How are those stores doing? And maybe can you talk about the competitive environment -- the potential competitive environment heating up early next year?

Well, certainly it will heat up when Nebraska Furniture Mart moves into Dallas. And we've known about their coming for over three years. We have significantly strengthened our stores there. We repositioned over the past year with two new stores in the outlying fastest markets in the Dallas-Fort Worth region. We've remodeled all of our stores with our latest look -- we call it Bright Inspirations -- and they all look terrific. We've established this H Design program in our stores out there. And I think we have got the strongest management team and sales team in Texas and possibly in our Company. So we're quite ready for our friends from Nebraska.

Okay. Thank you.

(Operator Instructions) Budd Bugatch, Raymond James.

This is David on for Budd. How are you? (multiple speakers) I just wanted to touch on the case goods issue a little bit more. Glad to see that you're finally moving past some of the sourcing problems. And I guess what I wanted to know is at what point during this quarter did you start receiving the new merchandise? Was it towards the beginning or towards the end of the quarter? And also if you could quantify maybe what kind of a drag the sourcing issue and some of the shipping delays had on case good sales in the first, second and third quarters of this year.

Well, I think most of the product has been coming in this quarter, not last quarter, for the new goods. We got some in and was able to fill some orders in. I think that we announced that case goods was down about 2%, and our overall sales were up slightly 1% for the year. So I would've expected case goods to respond almost as well as the rest of the Company. So it might be 2% to 3% -- the negative to not be fully in place with our lineup.

Okay. That's helpful. So really, we'll start to see -- hopefully start to see more of the benefit from the new products as we move forward.

We are already seeing it, David, as we talked about our sales this month being -- deliveries up that nicely. We'd love to be able to hold that number. I don't know if we can, but we'd like to.

Perfect. And then for H Design, how many -- what percentage of your stores currently have designers in the stores and, off of that, the H Design option? And what is the -- what is your plan for hiring more designers on over the next quarter and through 2015? Any kind of a cadence there?

We mentioned we have 92 serving 105 stores. Our goal is to be probably 100 serving 110 stores or something like that. There are probably eight or 10 stores that we won't need a designer or doesn't justify having them. We are pretty close to fulfilling this program. And I think within the next quarter or so, certainly first quarter next year, we should be in pretty well fleshed out completely with the H Design program.

Okay. All right, that does it for me. Thanks a lot.

Todd Schwarzman, Sidoti & Company.

In Q3, either in terms of written or delivered business, I guess take your pick, can you speak to the mix by category, looking at bedding in particular? And also accessories, what the mix was there, and maybe what the growth rate was for each product category in Q3?

Todd, I will comment on that. I need to get a refreshing piece of paper in front of me. Did you have any other follow-up at this point?

No, that's it.

Well, I'll just speak then from memory. The case goods were down, as we said. That was both written and delivered. Our accessories are actually growing the most. It's a small part of our sales; it's part of that other 10% or 11% we talked about. But they've been up double digits as we have had more focus on that, and there's more attachment with the designer sales. They're getting 3 times or more of the accessory sales that we get from a normal sales ticket. There's a higher factor percentage of accessories from designers, as you would expect.

The mattresses have grown more than average. And I think in the case goods side, the toughest has been the bedroom category. And occasional is flatter, and I think dining room is flatter.

And upholstery is up significantly.

And upholstery is up significantly. Particularly, we called out the special order. So that's a general sense of it, and we think case goods are going to come roaring back.

And if you were to back out the special order, the custom upholstery business, how is the non-custom upholstery doing?

It's up. It's not up like the special order and the custom, but it would be up also. We are double-digit in upholstery. So our overall upholstery business is up as well as the special order.

And I guess it stands to reason as long as you're continuing to add even at a declining rate, as long as you're adding designers, the growth in accessories should be such that that category outperforms the other product category.

I would think that it will continue to outperform. We're learning in it. We are doing a better job. We're learning how to coordinate better. Yes, I would say that the accessory category will continue to probably outgrow all of the other categories for a while.

Do you assign the lion's share of the credit for that, Clarence, to the designers? Or are there other factors, maybe regional factors, going on there as well?

Well, first of all, I give the credit to our buyer. We changed our program out a couple of years ago and brought in a new buyer. A professional who's been in the industry a good while, Susan Black. She's done a very fine job redoing our program.

But we're now sourcing it -- we source it from Asia. We bring in better values. We now warehouse it in our distribution centers, which we didn't before, so we can flow the product and complete a sale all at one time when the delivery is made of the warehouses. We couldn't do that before.

So we completely reworked all of the program, closed out what we had before over the last several years, and rebuilt it. And then we added the H Design, which our designers are adding -- completing the room, completing the package. And that is another enhancement. But if we hadn't done the program to begin with, we wouldn't have the product to be able to complete the package.

I know that the Internet sales, Web sales in total are less than 2% of sales. But just looking at the Web sales, are sales of accessories representing a disproportionate part of that, or is it kind of commensurate with the mix in the stores?

I think it's pretty commensurate with the store mix right now. The product sold over the Internet is a little different than what we sell in our stores. It's product that's more easily pictured like desks, home office, youth; more simpler products is what generally is selling. We only serve for furniture the customers that are in our distribution footprint. So most of them can get into the store to see it, and I think most customers would like to see furniture before they buy it if they can.

Right, right. Okay. Thank you, guys.

It appears there are no further questions at this time. Mr. Smith, I would like to turn the conference back to you for any additional or closing remarks.

Thank you, Lauren. I'd like to thank you for joining us on our earnings call. We appreciate your interest in Havertys.

This concludes today's conference. Thank you for your participation.