Interparfums Inc (IPAR) 2013 Q4 法說會逐字稿

Greetings and welcome to the Inter Parfums, Inc. fourth-quarter 2013 conference call. 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. I would now like to turn the conference over to your speaker, Russell Greenberg, Executive VP and CFO for Inter Parfums. Thank you. You may begin.

Thank you. Good morning and welcome to our 2013 fourth-quarter and year-end conference call. Following the financial review, I will turn the call over to Jean Madar, our Chairman and CEO, for a business overview and then we will move on to your question.

Before proceeding further, I want to remind listeners that this conference call may contain forward-looking statements which involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from projected results. These factors include, but are not limited to, the risks and uncertainties discussed under the headings Forward-Looking Statements and Risk Factors in our Annual Report on form 10-K and the reports we file from time to time with the Securities and Exchange Commission.

We do not intend to and undertake no duty to update the information discussed. In addition, regulation G modifications for the use of non-GAAP financial measures describes the conditions for use of non-GAAP financial information in public disclosures.

We believe that the presentation of the non-GAAP financial information included in this presentation is important supplemental measures of operating performance to investors because it provides a more complete disclosure and facilitates a more accurate comparison of current results to historic results. The information required to be disclosed for the presentation of non-GAAP financial measures is disclosed in our Annual Report on Form 10-K which has been filed with the Securities and Exchange Commission. This information is available on our website at www.interparfumsinc.com.

Once again when we refer to our European-based operations we are primarily talking about sales of prestige fragrances conducted through our 73% owned French subsidiary Inter Parfums SA. When we discuss our United States operations we are primarily referring to sales of prestige and specialty retail products as well as travel amenities, all conducted through our wholly owned domestic subsidiaries.

I think you would all agree that comparing like quarters using US GAAP requirements has not been particularly meaningful since the fourth quarter of 2012. For purists among you, however, those comparisons can be found in the release we issued yesterday as well as in our Annual Report on Form 10-K, which was also filed yesterday.

For newcomers on our call we just mentioned -- I will just mention that in 2012 fourth quarter our Burberry license terminated. Burberry paid us an early termination fee and we booked a pre-tax gain of $198.8 million resulting in an after-tax gain attributable to Inter Parfums, Inc. common shareholders aggregating $93 million.

As a result, in the fourth quarter of 2012 net income attributable to Inter Parfums, Inc. was $99.6 million and diluted earnings per share was $3.24. Excluding the gain on the termination of the Burberry license in the fourth quarter of 2012, net income attributable to Inter Parfums, Inc. was $6.6 million or $0.21 per diluted share.

Then in early 2013, under a transition agreement with Burberry, we continued to operate certain aspects of the business for the brand, culminating in the ultimate sell off and otherwise elimination of Burberry inventory. During that period we incurred minimal advertising and promotional expenses for this brand, which boosted first quarter profits.

Starting in the second half of 2013 there were no Burberry sales booked so comparable quarterly sales declined. Therefore when we talk about ongoing brand sales, we exclude Burberry sales from both 2013 and 2012.

Moving on to our fourth quarter results. Net sales of ongoing brands rose 19% to $105.5 million from $88.8 million. European-based operations generated sales of ongoing brands of $78.4 million, up 22% from $64.1 million.

Sales by US-based operators were $27.1 million, up 11% from $24.5 million. Gross profit was 57.3% of net sales as compared to 63% in 2012.

SG&A as a percentage of sales was 67.6% as compared to 54.6% in 2012, as we spent about $36 million, or over 34%, of net sales in promotion and advertising in the fourth quarter of 2013. As we had forecast we invested behind our largest brands, Lanvin, Montblanc, and Jimmy Choo, and vigorously supported the roll-outs of our first new products for Repetto and Boucheron.

Royalty expense included in SG&A expense aggregated 7.4% of net sales as compared to 9% in 2012. And for the fourth quarter of 2013, we reported a net loss attributable to Inter Parfums, Inc. of $4.1 million or $0.13 per diluted share.

We've talked about fourth quarter sales drivers in our Q4 sales release, but it bears some repeating in the context of our Q4 promotional and advertising expense. Fourth quarter Mont Blanc brand sales rose more than 42% and Jimmy Choo sales rose 11%. Lanvin sales also remained on a growth trajectory and the Repetto signature scent, introduced in May, and Place Vendome from Boucheron which was launched in the fall, were both great performers and exceeded our expectations.

We want to keep this momentum going and we believe that the way to do that is through an aggressive advertising and promotional program. For the full year net sales of ongoing brands increased nearly 23% to $433 million from 2012's $352.7 million.

In 2013 net income attributable to Inter Parfums, Inc. was $39.2 million, or $1.27 per diluted share. And that's up from $38.1 million, or $1.24 per diluted share in 2012, which of course excludes the gain on the termination of the Burberry license.

In 2013 we generated cash flows from operating activities of $49.2 million, further strengthening our already solid financial position. We closed the year with $399 million in working capital which includes $307 million in cash, cash equivalents, and short-term investments, or approximately $10 per share. And we had no long term debt.

During the fourth quarter we paid a special cash dividend of $0.48 per share on December 16, 2013 to shareholders of record on December 2, 2013. At this time we are maintaining our 2014 guidance, calling for net sales of approximately $495 million, which represents nearly 15% growth in sales for our ongoing brands.

Our current expectations for net income attributable to Inter Parfums, Inc. for 2014 are in the range of $0.93 to $0.98 per diluted share. And guidance assumes that the dollar remains at current levels. Jean, please continue.

Thank you and good morning everyone. Thank you once again for your participation on today's conference call. 2013 was a very successful year for our ongoing brands and very a exciting year full of changes for our Company.

We have added three new brands over this time period. We have the Shanghai Tang, Agent Provocateur, and Oscar de la Renta.

Moving on to our plans for the coming year, 2014 is turning into one of our most prolific launch years ever for both of our established and newer brands. We have already disclosed plans for our first fragrance lines under our new brands including Shanghai Tang, Agent Provocateur, Alfred Dunhill, Balmain, Karl Lagerfeld, plus Oscar de la Renta in late 2014 or early 2015.

Here is a little bit more information along with timing. Our first major launch of 2014 was for Balmain. We launched it for [ber] fragrance called Extatic, which is [nine] select distribution in Europe, in the Middle East and the Far East. This is a woman's line. Later in the year it will be sold in South America and in the second half of this year it will be sold in the US.

As we previously announced the spring is usually busy for us both in Paris and in New York. This week we have just unveiled Karl Lagerfeld, the new scent for men and for women. We launched last Sunday at Paris. We launched yesterday at Macy's and today at Paris Galeries Lafayette as well as Karl Lagerfeld boutiques with the worldwide roll out to ensue as we unfold.

This is definitely and by far our largest initiative and we're going to look at the category in the weeks coming. This should be a very interesting launch for Inter Parfum.

We have also a new fragrance for men for -- under Montbanc called Emblem and it's coming to the market in the next quarter. For Agent Provocateur we will debut two new scents, Fatale and Fatale Pink in the spring. We also have very aggressive plans for [Lanvin] with major launch in the UK.

Then in the summer we have two new fragrances, one for men and one for women under S.T. Dupont. And with our big partnership between Inter Parfum and S.T. Dupont and famous Paris (inaudible) which plays into the third division. And we're going to produce a very sporty men's fragrance line. We'll be starting -- it will be starting in September of this year.

For Dunhill we actually have two new men's scents coming to the market. A smaller product launch that is now and to be followed later in the year with a major launch for Dunhill. While shipments for the Dunhill program should be this year the product should hit the retail shelves in early 2015. But we start booking our sales in the last quarter of 2014.

Also late this summer we launch a new fragrance for Banana Republic, It will be a collection called Modern for Men and Modern for Women. We have a very exciting new program also in the works for Shanghai Tang. It will be a collection of eight products, five fragrance for women, three fragrance for men.

These products -- this collection evoke the glamour of Shanghai in the forties and the product distribution for this collection will begin for very specific geographic market. At this time plans call for the new Shanghai Tang collection to be in around 50 Shanghai Tang stores late in the year with worldwide distribution in 2015.

All of this of course is in addition to a series of brand extension, flankers, and refresh packaging for many of our well-established brands. And of course in 2014 this year we will have full year of sales of legacy scents for Oscar de la Renta, Agent Provocateur and Alfred Dunhill.

I want to once again repeat the point that comes up frequently with investor and when I sometimes see them. I would like to say that while we have added a number of new names in the recent past, we said no to quite a few more.

We are very, very careful as we search for and analyze new opportunities to make sure that this fits with our existing portfolio of brands and with our [A list business model]. And when the right opportunity materialize we will definitely be ready to seize this opportunity.

So to sum up, we are very enthusiastic about our business. We are seeing some good growth from our ongoing brands, as Russ mentioned before, Lanvin, Jimmy Choo, and Montblanc, and of course -- and we're seeing some good growth for our newer brands and this will sell the growth of the potential to our business.

We have a very strong balance sheet, as Russell so mentioned, with something like $300 million in cash, so we are of course looking for acquisitions, new license, over growth initiatives, achievables. If you have questions on this we'll be happy to answer.

We also have the global distribution, it's important to know that, in over 100 countries and highly respected in our industry. All that and a terrific product pipeline in the works for 2014 and beyond and definitely the confidence we have in the future of our business.

So before we open the floor for question, I would like to mention that we lost a good friend and a very wise director of Inter Parfum. Our friend Serge Rosinoer passed away. He was known as the CEO of the Clairns Group for a long time and he passed away at the age of 83.

We'll be looking to fill his seat on our Board with I hope an equally capable and experienced individual. So this will end my remarks. And operator, we can open the floor for questions.

(Operator Instructions)

Linda Bolton Weiser, B. Riley & Company.

Hi. Your gross margin was quite a bit better in the fourth quarter than it was in the third quarter. Could you explain why that is?

And also, would it be a good idea to use the fourth quarter gross margin as a rough proxy for what to expect in 2014? Thanks.

Yes, hi, Linda.

You're right. The gross margin in the third quarter came in at around 55% versus 57% for the fourth quarter.

One of the reasons for the low margin in the third quarter is that's really when we're doing most of our promotional selling. So you have a tremendous number of sniff tests that go out to the retailers during that particular period. Somewhere in between is probably the right number.

I would say certainly we're going to work to try to get to the higher side of that. So going forward, somewhere around that 57% or maybe just shy of the 57% would probably be correct.

But as we approach a year or a period when we are going to do those gift sets, it's very typical to see a little bit of a drop in the margin during that period.

And so the gift set period again in 2014 would be kind of that third quarter period? When you said that --

It typically is in the third quarter. So you could have a little bit better margin in the first and second and fourth, with a slight drop in the third. Hopefully it can blend into an overall year somewhere close to a net 57%.

Okay, great.

And then can I just ask you about -- you certainly have a number of major growth initiatives lined up for 2014. And I was wondering if you could comment how balanced it is between the first half and the second half. Because it looks like there's a number of big things in the first half and then some big things in the second half.

And the Karl Lagerfeld launch is -- I think there's a little in the first quarter. But I assume it will be mostly in the second quarter, and then more in the second half.

And then related to that, the Montblanc launch for men, is that going to be mostly sales in the second quarter starting? So if you could just comment on the cadence and first half versus second half? Thanks.

I can try.

Let's talk about Karl Lagerfeld because I'm in Paris right now, and I spent most of the week looking at the setting of cost and the accessories of resort cost perfume. (inaudible)

So Karl Lagerfeld is happening as we speak. So we have sales of Karl Lagerfeld fragrance in the first quarter and of course in the second quarter.

After that, I would say that we'll have another season of Karl Lagerfeld for reorders based on dates and sell through in the fourth quarter. But most of the selling will be done at the end of the second quarter, so the first six months of this year 2014.

Do you agree, Russ?

Yes. Typically, especially because we're building exclusives at certain locations. So as we continue to go to a broader distribution, you're going to see more sales later on as the year continues.

Okay. And we are doing the Montblanc Emblem. Emblem will be shipping with more in the second and third quarter.

So we see the largest incentive that we have from Paris and the largest incentive that we have out of the US will be the Dunhill, which will happen in the fourth quarter of this year. ¶

So honestly, every quarter we have something important. So I think at the end of the day, it's going to be quite balanced.

Okay, thanks a lot guys. I appreciate it.

Thank you, Linda.

Frank Camma, Sidoti.

Good morning, guys.

Good morning, Frank.

Just a couple questions.

Advertising and promotion obviously was big as you signaled in this quarter. Just wondering. Obviously it should be fairly high next year as well with the number of launches you have.

But just as far as the timing, would the fourth quarter always be kind of the highest end for that to support that holiday spend? Or does it really rely more on launches?

No. There is spending in every quarter, but the lion's share is definitely towards the end of the year. This year, 34% of sales was the fourth quarter spend, whereas in the third quarter it was only approximately 16% of sales.

Keep in mind that the sales number is typically a lot higher in the third quarter than it is in the fourth quarter. But most of that spend is happening in the fourth quarter to support the holiday distribution.

Okay, great. And the only other question I had was on the cash flow. It looks like for the year you only spent about $5 million on CapEx. But in past years you've averaged more like close to $10 million, if I did this right.

Was there a particular reason for that, and should we expect it to return to that kind of $10 million level?

No, I would not expect it to return to the $10 million. The reason for CapEx being as high as it was in years past was the build up of the Burberry cosmetic business.

That business disappeared together with the termination of the Burberry license, and therefore there are no dollars being spent on build encounters in department stores all over the world.

Okay, great.

So your current year spend is a little bit more typical.

Next year in 2014, because there are so many new product launches, we'll probably see a little bit of an increase because of molds and tools and things like that. But I wouldn't expect to see anything significant.

Okay. Great, thank you.

I would like to take this opportunity to add that as you have seen, we have been able to increase our sales very strongly in 2013, by over 20%. And we're looking at something like 15% gross earned profit, which is much higher than the industry and the market.

And I think that our (inaudible) to other invest in the fourth quarter for Lanvin was very wise. And we continue to in this year of 2014; we continue to invest a little bit more. Not as much as we've done in the fourth quarter, but a little bit more than the third quarter because the brand that we have in the portfolio has great potential.

And for a Company like us, where we have lost almost 50% of our business when we split with Burberry, to be able to grow all the other lines and quickly. And I'd say, I don't want to put it wrong, but in three or four years from now being back to where we were with Burberry is a goal that we all have here.

So due to the life cycle of the brands in the portfolio, I think it's very wise to invest more than before.

Sure, thank you.

Thank you, Frank.

Joseph Altobello, Oppenheimer.

Hi, this is Maury in for Joseph.

Hi, Joe.

So just to go back to discussing advertising. By any chance for 2014, could you give how you see advertising to sales ratio? And also as well, are you seeing a high return on your levels of advertising?

Well, I think clearly the latter part of your question, I think Jean just really answered that from the standpoint that we believe that it's extremely important to put money behind our brands, to try to continue the momentum of the type of sales growth that we believe that these brands have as potential.

Going into percentages and so on and so forth for advertising, as I historically said, I think that the numbers are going to go up a little bit from where we were in historic periods.

We used to be somewhere around -- anywhere between 16% to 18% maybe 19% of sales. I think that those numbers are going to go up into the low 20%s, with a pop in the fourth quarter because, as I said earlier in answer to a previous question, that's where a good amount of the ad spend actually is spent.

Okay, my next question is I know you just already mentioned you're talking about what your plans were for cash flow with acquisitions and new licenses. But I was wondering if you can possibly give a little bit more detail or color on what they may be or what you are possibly looking at?

I'm sorry. I didn't hear the beginning of the question.

Yes, sure. Let me reiterate.

So you were discussing earlier about what your plans for cash were. You discussed you're looking at possible acquisitions and licenses. So I was wondering if you could possibly provide a little bit of color on what they may be?

Yes we can. We are looking at saving the fragrance industry. We are not looking at acquisition outside of our field.

When I say fragrance, it's fragrance for boutiques all related to the boutique. And the cash that we have, we could expect to do something a little bit more, to look at something of a large size.

We're connecting with regulators to -- our latest deal was we took the license for Karl Lagerfeld, which is not (inaudible) of cash. But obviously, we're always looking at two or three years at the same time.

But like I said in my remarks, we are super selective and people know that. So we are always contacted by either people who are not in the fragrance business and they would like to look for a license or people that are already in the business and they would like to switch from the licensing to another.

But of course, as you know, no guarantees can be given that we'll do a major acquisition in the next coming months.

Okay.

Russ, you wanted to add something?

No I think that you covered it. This is a question that has been asked before and I'm sure is going to be asked many times again. We would love to be able to utilize all of the cash to buy brands that could be accretive to our business.

We get a lot of different brands coming by. We get a lot of different companies coming by that are not even in our industry.

There's all kinds of stuff, and we weed out a lot of it. But we are also looking into several different opportunities; and hopefully, no promises to be made, but hopefully something will come up.

Okay. My next question is --

If I may add -- I'm sorry -- what I would like to say is that if you look at our guidance for this year, I think it's around a little bit south of $500 million. What is important to know is that we could do $100 million or $150 million of sales extra without adding many G&A or many (inaudible)

So the next $100 million or $150 million could be very, very profitable for us because we have kept the structure the same that it was when we had Burberry.

We have let go a very, very minimum amount of people. So we have all of the human resources and the capability and the distribution to handle more sales. So it's important that if we find very quickly -- and we are looking at it, we're working on it -- to find if it is $100 million or $200 million in sales.

Okay. My next question has to do with guidance.

You reiterated that it's going to be the same for this upcoming year. But back in November you raised it when FX was about $1.35, and now today it's about $1.38, $1.39. I was wondering why there was no change with guidance between November and today?

Because there was no significant change in the exchange rate. We look at the trends in the exchange rates.

We can't predict, and we try not to predict, what is going to happen with the exchange rates. We look at it to try to build --

You're talking about changes in the exchange rate. I'm sorry, I did misunderstand.

Yes.

So thinking about changes in the exchange rate?

Yes. That's what he's talking about.

I'm sorry.

Right, but at the end of December -- December close the exchange rate was close to $1.38 as well. So it really hasn't fluctuated very much between December and today. And that's the reason why we did not change our guidance.

Okay. And then my last question is I got disconnected at one point and you were discussing the Oscar de la Renta.

I was wondering when you were expecting to see sales coming from that brand, and as well as other new licenses this year?

I don't want to repeat. I spent a good amount of time; I don't need to repeat that.

Yes. I think that question has to be answered offline.

You can call us -- you can call Russ at the office, and we'll give you the full -- Oscar de la Renta, the new fragrance will be launched at the beginning of 2015. But Russ will give you more detail.

Okay, perfect. Thank you very much.

Thank you. Do we have more questions?

Adam Joseph, West Main Partners.

Hi, guys, good morning to you both.

A question. If you could give some color as it relates to maybe the health of the consumer buying trends that you're seeing in your key areas: North America, Europe, Asia.

Are you feeling that those habits are going to remain healthy and that you can continue this pace? Things obviously are very positive. Looks like some of these areas obviously have made the turn per se.

Any comment that you can offer specifically on those three areas?

I can try to give you an idea of what's going on. The fragrance market is quite flat. We had, in 2013 we had good growth, especially in the first part of 2013, strong growth coming from Paris and China.

There is often, as you know, a little slowdown in this region of the world. What we are seeing as we speak is a certain strength in the travel retail, and it has been like this since the last six months.

We feel so strong with the US domestic market and in Europe it's -- we say it varies from one country to another, Northern of Europe, East (inaudible), Southern of Europe. But our sales are very, very well balanced between the US, Europe, and the Far East.

Russ, you want to add to--

Yes. The only thing that I'll add to that is that as you mentioned the travel retail. Travel retail has become a little bit more important for Inter Parfum.

What I used to be asked a question as far as what percentage, it used to be somewhere around 10% to 11%. That number is probably close to 15% of our sales today.

I think it's still a little bit below industry averages, which were probably somewhere between 20% and 25%, and maybe even north of that for some of our larger competitors. But we've certainly seen nice growth.

There seems to be -- we could expect bigger growth from travel retail because we start on a small base compared to our competitor. But otherwise, I would say that Europe represents one-third of our business; Italy represents close to 30% of our business, and the Americas are around 25%. So it's really well, well balanced.

Okay, great, thanks guys.

Thank you.

Thank you.

(Operator Instructions)

Linda Bolton Weiser.

Hi. Just as a follow-up, you know we've all been hearing how the retail environment was really hurt in the first six weeks or so of the calendar year because of the weather and everything. And you guys have high growth because of your own Company-specific initiatives.

But I'm just wondering kind of in the near term when we think about our first quarter estimates how, just as an underlying kind of fragrance growth rate, should we be conservative in how we think about the first quarter?

And also, I know you just hate to get into giving quarterly guidance, but it is kind of a weird quarter because of the big decline there will be year over year in your margins and in EPS.

So I mean is there any way you could kind of like -- the consensus is $0.39, but it's a big range from $0.31 to $0.62 for the quarter. Is there any way you could just kind of give us some thought on if we're in the ballpark range here?

Before Russ answers, and I know that he's going to tell you that he's not going to give you any breakdown of the quarter as we usually do.

But one thing, Linda, that's true that the comparison for the first quarter is going to be very difficult. You're gong to have to exclude a lot of seasonal there to compare apples with apples.

But, Russ?

Yes, no, no, I mean I don't usually -- I never really comment on what the analysts do; but you're right. There is a very large spread.

There's one particular analyst who is, without mentioning any names, is way ahead of pretty much all of the others. I don't see any real problem from the standpoint of going into first quarter. But whenever you have one analyst that is a little bit out of line, that kind of skews the numbers for everybody.

So I would always rather see them get a little bit more in line. But based on the consensus, we don't really see any issues. Nobody is that crazy is the best way I can put it.

We don't see any issues in this quarter. And what's going to be very important is what we see in the next weeks and the next month with the potential of Lagerfeld.

I think Lagerfeld has really the potential to become the number one line in our portfolio. Let's see. We're going to look at this very, very carefully.

One last thought that just kind of came to me.

It's very important to really look very carefully at the first quarter numbers of last year. Those have been reported, and clearly that first quarter generated profits that we have never seen before.

The Company practically made its net income for the year because of the transition period that we had with the Burberry business. So taking that into consideration, something like that just cannot be repeated.

It's a once-in-a-lifetime kind of event. So when you analyze those real numbers, I think you'll come up with numbers that are somewhere within the consensus.

Okay, that's very, very helpful.

But can I just to reiterate too the minority interest line, it should be down pretty significantly year over year --the absolute number of minority interest for the quarter?

The minority interest number, if you read our reports carefully, should be approximately 26%, 27% of the profits that come from our European operations. It's down because the profits of our European operations are down because the sales of Burberry don't exist.

It's a function specifically of the European operations, and it represents approximately 26% to 27% of the net income of the European subsidiary before minority interest.

Great. Thank you, very helpful. Thanks.

No problem.

Thank you.

Leigh Ferst, Wellington.

Good morning.

This might be a tough question to answer, but I was wondering how you think about forecasting your sales when you have innovation line up.

Can you give us an idea what your hit rate is? And how do you factor in the high level of innovation when you're forecasting your sales for next year?

Very carefully, which is probably the best way to go.

But honestly, before any new product is introduced into the marketplace, these products are shown to our distribution network on a worldwide basis. And we basically get certain indications from the worldwide distribution network as far as what we believe and what they believe is the potential for each and every product that we're going to launch.

We factor that in together with the potential growth factors of the existing brands, and we come up with our guidance numbers. I've made it sound very simple. It is not very simple, as Jean can attest. It's a very long, tedious process.

We're talking about distributors in 100 countries around the world. Of course we don't go to every single one of them; we go to the major ones. But there are a lot of people involved in this process. And it is done very, very carefully; and it's one of the reasons why we only issue very simple guidance.

It's basically two to three numbers. It's our sales and our earnings or EPS. That's the only information we really want to put out because it's a very difficult process in and of itself.

And when you talked about the launches, you talked about the initial launch. And obviously you can't predict the sell-through.

But what does the 15% look like? Does it reflect the initial launch without the sell-through, or does it make some -- ?

No, no. It reflects -- no.

The 15% reflects the launch with the sell-through. But when we launch a new product, like Russ said, we check at the title of our distributor. And we check the space allocated to new products, and we have some products that work and products that do not work.

So 15% is the weight of that range of what we think the Company can do. Can we do better? We could, absolutely.

Thank you.

Thank you for your question. If there is no more questions, or maybe there is one more?

Thank you, there are no further questions at this time. I'd like to turn the floor back to management for closing comments.

Russ, you want to conclude?

Yes, I just have one last point.

I just want to remind listeners that I will be presenting at the Sidoti Emerging Growth forum next week, March 18, here in New York. And I do hope to see some of you there.

Thank you all for your participation on the call, whether you are on the call live or listening via our webcast.

As always if anybody has additional questions, I am available by phone. Have a great day and thank you for being with us.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.