J & J Snack Foods Corp (JJSF) 2014 Q3 法說會逐字稿

Good morning and welcome to the J&J Snack Foods third-quarter earnings conference call. My name is Brandon and I'll be your operator for today. (Operator Instructions) Please note that this conference is being recorded. And I will now turn it over to Mr. Gerry Shreiber. You may begin, sir. (pause) Mr. Shreiber, you may begin, sir.

Good morning, this is Gerry Shreiber with J&J Snack Foods. And welcome to our third-quarter conference call. With me today participating in the conference call is Dennis Moore, our Senior Vice President and CFO; Bob Radano, our Senior Vice President; Ken [Shepard], our CED; Gerry Law, our Senior Vice President in charge of Marketing and R&D; and Bob Pape, our Senior Vice President of Sales.

I'd like to begin with the obligatory forward-looking statement. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. We undertake no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date hereof.

Results of operations. We had a very good quarter. Net sales increased 8%, and that's up from 2% last quarter, for the quarter, and 6% for the nine months. Without the benefit of sales from the acquisitions of New York Pretzel in October 2013 and Philly Swirl in May 2014, sales were up 5% for the quarter and 4% for the nine months.

For the quarter, our net earnings increased by 12% to $23.7 million, or $1.26 a share, from $21.2 million, or $1.12 a share a year ago. Again, sales increased 8% but our net earnings caught 12%.

For the nine months, our net earnings increased by 13% to $49.6 million, or $2.64 a share, from $44.1 million, or $2.33 a share last year. Our EBITDA, earnings before interest, taxes, depreciation and amortization, for the past 12 months was $145.2 million, a new record.

Food Service. Sales to food service customers increased 90% for the quarter and 6% for the nine months, 8% and 5% without the sales resulting from the acquisition of New York Pretzel in October 2013. Soft pretzel sales were up a strong 14% for the quarter and 15% for the nine months, 11% and 12% without the benefit of New York Pretzel.

Italian ice and frozen juice treat and dessert sales increased 11% for the quarter and 12% for the nine months. Churro sales were up 6% in the quarter and 1% for the nine months. And bakery sales were up 6% in the quarter and 2% for the nine months.

Grocery and retail supermarkets. Sales of products to retail supermarkets were up 12% for the quarter, and 4% for the nine months. Without the benefit of Philly Swirl acquired in May, sales were down 8% in the quarter, and 5% for the nine months.

Soft pretzel sales were down 17% for the quarter and 3% for the nine months. And sales of frozen juice and Italian ices, excluding Philly Swirl, were down 5% in the quarter and for the nine months.

Handheld sales decreased 7% in the quarter to $4.7 million, and 10% to $14.8 million for the nine months. ICEE and frozen beverages, including Arctic Blast, Slush Puppie, and Parrot-Ice. Frozen beverage and related product sales were up 6% in the quarter and the same in the nine months.

Beverage-related sales alone were up 2% in both periods, with gallon sales up approximately 1% in our base ICEE business for both the quarter and the nine months. Service revenue for others, which has been a growing part of our ICEE business, was up 20% in the quarter and 13% for the nine months.

Consolidated. Gross profit as a percentage of sales in the quarter increased to 32.8% from 31.8% last year, and for the nine months increased to 30.8% from 29.8%. The gross profit percentage in this year's quarter compared to last year benefitted from lower liability insurance costs of about $1.1 million this year, as last year's costs were unusually high. And last year included a product write-down of $500,000.

Higher volume in our food service business also was a major contributor to the higher gross margin percentage. Total operating expense as a percentage of sales increased to 18.9% from 18.1% in last year's quarter. A swing to other expenses from other income accounted for about one-third of the percentage increase with the balance attributable to higher distribution cost.

Capital spending and cash flow. Our cash and investment securities balance decreased $8.6 million in the quarter to $199.4 million as we bought back $5.9 million of our common stock, and that was retired, and spent $17.5 million on the acquisition of Philly Swirl. We continue to look for acquisitions as a use of our cash.

We have invested $129.6 million in mutual funds that seek current income with an emphasis on maintaining low volatility and overall moderate duration. Presently, we estimate annual yields from these funds to be about 3.5% to 3.75% percent.

Our capital spending was $10.5 million in the quarter as we continue to invest in plant efficiencies and growing our business. We are presently estimating capital spending for the year to be $40 million or so. A cash dividend of $0.32 a share was declared by our Board of Directors and paid on July 2nd.

Some commentary. Sales of soft pretzels and food service continue to grow and be extremely strong and includes new pretzel products such as rolls, twists, sticks and soft pretzel buns to casual dining restaurants and club stores.

Our whole grain soft pretzels for schools is selling very well as we prepare for another round of changes in school food service regulations. Frozen juice and ices sales in food service were up, as we are again seeing growth in our school business, as well as in other channels.

Handheld sales and food service continue to decline, down about 9% for the quarter. Churro sales were up 6%, even though sales to a major fast food restaurant chain were down close to $1 million for the quarter. We expect sales to this chain to come to an end in the current quarter.

Sales of soft pretzels in our retail supermarket were [slightly] low in the quarter, as sales of newer products, Sweet Cinnamon and Pretzel Dogs were down, as these two relatively recent product divisions may not have long-term viability. We think the other reduction in sales to grocery was an aberration that we are strategically putting together programs to correct.

Frozen juice and ices were down 5% in the quarter and for the year, as this product group continues to have challenges. Handheld sales in retail supermarkets were down 7% and we continue to tweak our product offerings and our marketing promotions.

In frozen beverage, gallon sales were less than 1%, but an improvement over the second quarter. So although we need to do better, we are gratified that our ICEE business continues to grow both in gallons and sales.

Service revenue to others was up 20% in the quarter and 13% for the nine months, as this area of our ICEE business continues to perform extraordinarily well.

Our estimated income tax rate was at 35.6% for the quarter this year, and 36.4% last year. We are estimating a rate of about 36% in FY14.

I thank you for your continued interest. And now I will turn it back to the audience for questions.

Thank you. We will now begin the question and answer session. (Operator Instructions) Jonathan Feeney.

Could you give us a volume number in organic basis? I think you told us organic sales are up 3%. Could you give us an idea how that's split between volume and pricing?

Jonathan, this is Dennis here. Organic sales up about 5% and --

[That's what I thought.]

Roughly one (multiple speakers) more than 1% of the 5% would have been attributable to pricing.

Okay.

So we had some strong organic sales for the periods that we discussed.

Can you give us a little bit more detail from your commentary, Gerry, about the school business? You mentioned new regulations behind, could you tell us what you expect from those or what we should -- what impact that should have on the business? What changes you're making.

Well, as we know our school business has kind of suffered the last three or four years because of de-regulations and the reformulations. However, we think we're ahead of the curve with our product offerings we have.

Our soft pretzels are now being made with whole grain and 50% grain. We've taken out the sugars. We've taken out the trans fats. So we are at the top of the list for products to be included and be approved.

And we're starting to see, although last year we stabilized which was a down a couple years, school food service sales have a nice bump this year. And it's like it's not the top of the hat yet but we're starting to recover. And we think we're going to see some significant growth this coming year.

So overall we've had a good quarter and we think we have something to crow about, but we're not letting the roosters out.

There we go. Waiting for it. Last question, please. You talked about rolls, twists and buns leading this growth in food service, which is very impressive. But is there also a new customer factor here? Or is all this growth coming from existing customers?

No, it's all new customers, new channels. And I might have made this statement before. But about four or five years ago we were lightly represented, if at all, in the fast food and casual dining restaurants. Now all of a sudden we're doing on an annualized basis somewhere between $50 million and $60 million worth of business.

And all of this is organic growth. All of this are products that we have developed in our R&D channels and moved into production. We're making these products at several of our pretzel plants. And it's all new growing business.

Great. That's great detail. Thank you very much.

You're welcome.

Akshay Jagdale.

Wanted to ask about churros. You mentioned the one. So first of all, in the quarter, the growth was pretty solid despite declining sales to that one customer. Can you talk about how your growth plan for that particular product segment has changed as a result of this change in expectations for this large customer?

It's my understanding that the reason they're discontinuing is more related to their recent breakfast initiative, which is causing some space issues. But nonetheless, are churro sales going to grow next year? And if so, at what rate, despite this decline in sales from this one customer?

Well, this one customer's sales declined $1 million in this quarter. And nevertheless, we were up 6% for the quarter. And although it's true that we are in a little bit of a squeeze competing for space with new breakfast items, I mean, you've seen some of them advertised.

There's not much we can do about it. Although we've offered up to Taco Bell, which is the customer. But it appears that our regular churro business still has strong signs of growth and expansion.

As a matter of fact, we're going to have a new product addition to churros, which are going to hit in a couple of weeks. And Gerry Law, why don't you tell us about what the new product is?

We have a new churro product coming out. We've signed a licensing agreement with Mondelez for an Oreo churro.

So the favorite cookie of everybody, Oreo, is now going to be included and featured as an Oreo churro. Now, your next question is, why didn't we show that to Taco Bell before this?

Yes. Well, you --

Akshay, that's ongoing.

So where will this Oreo churro be sold? What customers? Is it the current customer base?

It's going to be offered out in about a week to all food service customers. We just signed the license agreement. And I keep saying Kraft, it's actually Mondelez. But we have been continually pushing this product line and our licenses and all of our products. So we're just not giving up and we're not horsing around.

So at the end of the day, net net, you now know compared to three months ago that we're not going to have Taco Bell sales for the next year. But you also know you're launching this product and your current sales other than Taco Bell for churros are doing really well.

So net net, should we -- is your expectation for churro sales growth higher or lower than what you had three months ago?

Well, we hope they're going to be higher. And we have always been able to meet the challenges, whether it be a school food service challenge, or the multiple closing of major chain stores like K-Mart.

We've always been able to meet those challenges and exceed our performance year to year. This is not a one year wonder here. This is now what we're coming up on 43 straight years in a row of profitability and of sales growth. And 172 straight quarters, soon to be. So we are cautiously confident that we will continue to grow our sales.

Okay. And just on another. So there's another segment that I guess hasn't really performed that well, retail supermarket overall. I know you did this big sales meeting not too long ago. And since then your performance -- sales growth aggregate has accelerated quite a bit.

Are you making any major strategic or changes in the retail supermarket segment? Do we need to have a better or different product portfolio? Is that why you made this Philly Swirl acquisition, I guess?

Can you help me understand where you stand in your thought process on retail supermarket, given organic sales growth trends there have deteriorated quite a bit, especially in the most recent quarter?

So is this something of a long-term concern to you? Or you think it's short-term and you'll fix it with some initiatives that are in your control?

Well, thank you for answering my question, because you not only hit on the problem, but you were helpful in at least the evaluation of what's going on there.

The sales meeting that we had, and I think it's about two years ago, not only was it a working sales meeting but it was a celebration of our 40 years in business. And we were able to tack on assignments and follow it out.

In our -- the Philly Swirl acquisition, we thought that was a -- we know it was a niche product. It fit in with our novelty group. We think that the management team that came along with Philly Swirl is a good one. And we will benefit from them not only in the near-term this year but for the long term.

The operation is efficient. They are running at the rate of $24 million to $25 million a year. So that's a nice fit within our novelty section. And it is a niche. And everything we do over the years has been driven by being -- having a niche product, being the low-cost producer, and dominating the marketing and distribution channels. That's another example of it.

Why are retail sales to supermarkets down so much in this quarter? We don't have all the answers to that. But we do know we haven't lost market share. If anything, our market share is a little bit up. There's a few competitors, very, very small ones in there. So we're not losing to competitors.

There seems to be some analysis that perhaps the pricing end of it and the movement of the promotions at retail might have hurt us. But I'm going to turn it over to Bob Pape, who's sitting here, who's responsible for retail. And we've had several discussions with regard to strategy and what we can do to change it to get back on track. Bob, say hello to Akshay.

With the retail business the thing that we've been trying to do is we tried to look at our efficiency against our trade spend for this quarter. And put some changes to our price point for some of our promotions, which doesn't seem to have played as well as we would have liked. So we're making some modifications to that.

And again, as Gerry mentioned in his opening statement, there have been some items that were flanker items that we had put into distribution that weren't performing as well as we would have liked. And I think that that obviously drove some of the decline.

So we will be adjusting our promotional plan for the remainder of the year. And make whatever necessary modifications.

Just one last one, Gerry. And I realize all my questions are critical. I think it was a good quarter. But just in terms of acquisitions in light of this recent acquisition you made on Philly Swirl, your most recent track record hasn't been as stellar as your previous ten years, if I may. And I'm referring to the handheld business specifically.

So can you just talk about what do you expect out of this Philly Swirl acquisition? I know it's not huge but it's not only sizable, it seems like one where you can lower the cost. And that's where perhaps you'd be focused.

But help us understand the Philly Swirl acquisition. And maybe compare and contrast it to handhelds. And then give us a status report on where handhelds is relative to your long-term target for it, which I think you'd said accretive by double digits, right, $0.10 or so. So where are we on that timeline? Thank you.

Well, let me take the first part of the question last. All the acquisitions we have made have been accretive. The acquisition of the product line from ConAgra and the two plants, even though we have, let's say, been challenged by maintaining growing the sales, there were two big customer losses that were in play almost prior to our acquisition.

So those loss -- those customer sales are really essentially being filtered out. We have improved the product margins. We have improved the product quality. And we have strategy in mind to grow it.

We still believe that that product line is accretive to our business and will continue to be so. One of the other benefits that we're getting out of this, we have added pretzel production and capability to these plants, which gives us some benefits with respect to logistics.

Philly Swirl had developed a niche. They were found in various supermarkets as well as the club stores and major accounts like Walmart. And they seem to have a good following. It's a kids' item. The production process runs very, very good.

We looked at that very cautiously and very carefully and with deliberation. And we were satisfied with not only the plant efficiencies. But particularly the plant management that came with it, Jan [Gruzinsky] and his staff. And we decided to operate it as a separate, autonomous subsidiary. And we believe it's going to do very, very well.

So we're still looking for acquisitions. Some of them are a little small pieces of the puzzle that fill out something like a New York Pretzel. Others are like some of the acquisitions we made on the beverage side with ICEE and Dan Fachner's group, which has been a big part of our growing business over the past many years.

So we're still continuing to look for acquisitions. But we're growing organically. And I think that's an important point that we don't want to lose sight of. We started in business 42 years ago making a little soft pretzel product.

And now that product has expanded into multiple, multiple kinds of soft pretzels sold everywhere from a street corner with a guy with a hat, to on a casual fine dining restaurant being put out there as a bread alternative or an appetite substitute. And we're still looking to continue to grow that business together with the other products.

Thank you so much. I'll pass it on.

Jon Andersen.

I wanted to ask about the bakery business, which performed, looks like extremely well in the quarter. Sales up 6% in food service. I think that added pretty meaningful to the organic sales growth in the quarter.

Could you talk a little bit about what you're seeing in that business? And whether the growth we experienced this quarter is sustainable going forward?

Some of it is timing, Jon. Some of it is, there's a couple of new products and new customers. Gerry Law, you want to comment on the bakery business?

We have a couple new customers that we've been dealing with. Some co-pack businesses in St. Louis that we're packing for. And primarily that's been the driver in St. Louis. And like Gerry said, some of it is timing with frozen cookie dough coming in a little bit earlier than last year.

Okay. The soft pretzel business at retail, the supermarket channel, that's been a business which I guess has performed a bit better than some of the other product lines at retail.

This quarter that wasn't the case. You talked a little bit about some of the innovation a year ago that may or may not carry forward. Could you talk about your plans in that part of the business going forward?

I think at some point you had mentioned that you were going to be launching some restaurant-style pretzel sticks and buns into the supermarket channel. Is that something that you've already done that you plan to do in the future? And how should we think about that business going forward?

Jon, it's a good question, good point. We've launched it, like, now. It was launched in June. It includes a pretzel stick and a pretzel roll. And they're going to be going into two segments in the retail supermarket. One in the frozen bread doughs, and the other as a complementary flanker to our pretzels.

So we'll have more to report on that probably come October. But they were just launched.

Okay, great. One thing, I wanted to come back to the licensing agreement with Mondelez. Could you -- I wasn't quite clear on what the licensing agreement offers.

Is this going to be a different product all together? Is it just the brand name bringing a certain degree of credibility or appeal that you think can help you with food service customers? If you can talk a little bit about what you expect this licensing agreement to bring in terms of improving the value proposition of the offering in food service.

Well, I'm going to give that to Gerry Law in a second. But if you go back and you look at some of our licensing agreements that we've been able to establish and maintain over the years, one that comes to mind is ICEE.

ICEE now has annual revenue of probably close to $0.5 million, most of it falling to the bottom line or close to it just on licensing of its name for other products. In this particular case with the Oreo churros, we needed something to help kick-start sales on a recognizable level to fast food restaurants and casual dining restaurants.

And I don't know if -- I wasn't as familiar with the Oreo product's growth the last couple years. But it appears to be strong. Like, double digits, 12%, 14% the last couple years. And we've noticed that restaurants are really interested in licensing to complement the product.

So Gerry Law in our marketing group met with Mondelez who we have a business relationship with. We've been running some of their products in our cookie plant, in our fig bar plant in Moscow Mills, Missouri.

So one thing led to the other. And this took about a year in there. They visited us. We visited them. We finally put together a licensing agreement. We hope we pay a lot of money because the upfront fees are very, very minimal. There are none. So this is going to be a win-win situation for us. All we have to do is sell and grow the sales.

Terrific, that's helpful. Just one more clarification on the schools business. You did mention new regulations, Gerry. I just want to make sure I understand that through your reformulation efforts over the past couple of years, you feel like that work is now complete.

And because you're kind of ahead of the curve that puts you at an advantage as schools are evaluating those programs? Or do these new regulations, will they have implications in terms of further product reformulation for you in the future?

We think we're there. We believe we're there. We haven't seen nor studied all of the new regs. We have people on our staff that have that responsibility. And Mimi Ford, our Vice President for School Food Service, attends these meetings and engages with these people.

And we have gone through the tough process of reformulating over the last 24 months, over the last two years. We think we're there. We've seen a trickle up, a climbing up in our school food service business the past, oh, couple of quarter or so and we think we're ready for some significant increases.

Now, keep in mind that this is a solid part of our sales. And for about three or four years, it was declining roughly at a 10% rate in there. And now it appears to have bottomed out and we're looking forward to it growing again.

All of our new pretzel products are essentially improved. We've taken all the sugars out of our juice bar products. And we think -- we believe that we're there and the new regulations will not (technical difficulty) the business.

That's helpful. Thanks, guys. And congratulations on a good quarter. You have something to crow about.

Thank you.

Cue the sound effects. (laughter)

Will do. Will do.

Thanks.

Thank you, Jon. And thanks for your insights, too.

Robert Costello.

A couple questions. The advertised products that Dunkin' has put out, is that your products? Or are you supplying them? Or --

Dunkin' Donuts?

Right.

(multiple speaker) in their 1,500 stores?

Right. The billboards with the pretzel.

Yes, that's our product. And I've got to really give kudos to a couple of our people because when we heard that Dunkin's was looking for a pretzel and they had been talking to others about developing it, we jumped in and we made some product.

And I mentioned that our R&D capabilities has gone from being there to being, like, really significant. But that is our business. We secured that business and it went from a small test to an expanded test in 1,500 stores. And I think right now it's even being' expanded into 5,000, Steve, is that right?

No, within approximately (multiple speakers) --

(inaudible) the answer? (laughter) So, but, yes, that's ours. Thank you, Bob.

A year or two ago, you mentioned your biggest growth opportunity was the food service category of your different divisions of your company. You still think that to be the case with the size of the division relative and the opportunities?

Still growing. And it's growing at a rate ahead of our other businesses. And hopefully it'll continue to grow.

Good. The Philly Swirl product, you mentioned the marketing efforts and the changes you might consider in retail. That product seems to be priced on the lower end. Is that an opportunity for you where you weren't selling a frozen retail novelty at that end? Or is that just discounting in the summer at the retail end?

If you look at it, it's priced on the lower end. But if you look at the price per ounce, it's kind of unique. So we're satisfied with the overall margins there. And the package size gives it a little bit of a benefit.

We decided we were pleased with how it was being run and managed. And we've made no significant changes to that since we acquired it in May. If anything, what we were going -- that we'll do is we'll take a look at the business and how it performed this summer. And we'll take a look at it come October, November in there to see what we can do to further their growth and expansion and provide other resources there.

But retail's their chief market point?

It is.

Supermarket?

Retail and clubs.

Yes. All right. Question on the dividend. You spent about 8% or 9% of your cash on hand, or however you want to look at it, $20 million some on the dividend. A year ago you doubled the dividend.

How you look at raising the dividend or use of cash relative to the cash on hand or your earnings? What is the philosophy internally that you use with -- you said you have about $130 million invested in the mutual funds. And you have $199 million, so that leaves you maybe an extra $40 million a year aside from the dividend, give or take, that you still have available.

So is that a question?

Yes. Yes, what are doing -- how do you decide in the next three months how much to raise the dividend with regards to the cash on hand? Because I'm just trying to get an analysis of what the trend line is.

Well, we started paying a dividend seven years ago, I think, eight years ago. And we've raised it every year since.

Right.

And we were raising it -- we pay a modest dividend today. It's slightly under -- it's about one and a quarter, one and (multiple speakers) --

Right.

But as we grow cash, and keep in mind we're running positive $8 million to $10 million worth of cash a month after everything. We're looking for ways to use this cash. It's nice to have it but we're looking for ways to use this cash via acquisitions.

In the meantime, I will defer to my partners on the Board and to Dennis Moore. We look at dividends on a quarterly basis. And last year we decided to double the dividend. I don't know necessarily if that will be a similar trend going forward.

But we're comfortable with the payout. And we'll continue to look for ways to use our cash. We're not going to waste it. And in lieu of that we will look to the dividend route.

One last question. Commodity costs. They've obviously been trending down on the corn and wheat versus the last couple years. What do you anticipate any net savings versus what you paid, say, a year ago this year versus going forward?

Well, commodity costs are favorable. And we're probably booked at the current levels probably through January. And if this trend continues, it may be more favorable over the next year. (multiple speakers)

Thanks very much.

The only commodity that we're a little bit cautious with is sugar, because sugar reached nearly an all-time low or close to an all-time low. And it's starting to bounce back.

Right. Is there any case where unlike the past you would go out and buy a year or two out, unlike your historic pattern of only six months?

Probably not. Six months out is -- we're reasonably comfortable with that. And we try and now we're never going to hit the bottom of the market. We'll buy when we think it's a decent market for us.

If the market goes lower, we'll buy more. And we just don't want to be caught in the squeeze that we were about five years ago, six years ago when I think flour ran from $16, $17 up to over $40.

You've got a good memory, 2008. Yes. Yes. Thanks again.

All right. Thank you, Bob. Take care.

Brian Rafn.

Let me ask you, Gerry, specifically on the handheld and some of the novelty side. Hot weather is a big driver. We've had kind of a very cool summer, unless you've had something different out East.

And also the Hollywood cinema movie side has been kind of a mixed bag. Have those two issues had any drag on any specific sales, whether it be ICEE or some of the frozen novelties?

Well, how -- movies. Yes, movies have not been stellar this summer. And our actual movie business on the pretzel side is slightly up because of an expansion with Regal that came along because of the Kim & Scott's acquisition. And our ICEE business -- Dennis, is our ICEE business in movies flat, up?

It's generally been up this past year.

But as long as there's an attendance in in there, we're going to sell our products. But the weather has not been stellar yet for us. But there's only so much we're going to complain about weather and offer up excuses. We're going to hopefully to do our business no matter what the weather is. And we always seem to find a way.

All right. No, I appreciate that. I was giving you an underhand pitch on that one. So I know you're not complaining but you certainly could use some hot weather. So I hear you on that.

Let me ask you, obviously the reformulations relative to the school channel, and I've said in the past Michelle Obama would like to sell frozen broccoli on a stick. The kids won't eat it. I've got a teenager who lives on pizza and doughnuts. So I've been there.

Give me a sense, Gerry, in some of these where you've taken the sugar out and you've taken the trans fats out, are you seeing any from an early adopter standpoint, are these reformulated products, are they more captivating to a younger school children? Or are you seeing it up into the high school range?

And the second part of the question would be, once you've had these reformulations, are they able to sell those products beyond just the school channel? Is it something where you can go out to the grocery channel and say: Hey, we've got this product. Because there are other people that are looking certainly for healthy, viable things that you've certainly put a lot of effort in on the school side.

All parties please stand by. The host has temporarily disconnected. Please stand by. We are going to dial out to them in just a moment. Please stand by. (pause)

Once again, the speaker has temporarily disconnected from the call. We are attempting to redial. Please stand by. (pause)

Ladies and gentlemen, we are still attempting to reconnect to the host. Please stand by. (pause)

Ladies and gentlemen, we are unable to reach the host. We will go ahead and conclude today's call. Thank you for joining. You may now disconnect.