Stride Inc (LRN) 2011 Q3 法說會逐字稿

Good day, ladies and gentlemen and welcome to the third quarter 2011 K12 Inc. earnings conference call. My name is Stephanie and I'll be your coordinator for today. At this time, all participants are in listen-only mode. We'll conduct a question-and-answer session towards the end of today's call.

(Operator Instructions)

I would like to turn of the conference to your host for today, Mr. Keith Haas, Senior Vice President Finance and Investor Relations. Please proceed.

Thank you. Good morning, and welcome to the K12 third quarter 2011 earnings conference call. Before we begin, the Company would like to remind you that statements made during this conference call that are not historical facts may be considered forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied. In addition, this conference call contains time-sensitive information that reflects Management's best analysis only as of the date of this live call.

K12 does not undertake any obligation to publicly update or revise any forward-looking statements. For further information concerning issues that could materially affect financial performance related to forward-looking statements, please refer to K12's Form 10-Q and 10-K filings with the SEC. These filings can be found on the Investor Relations section of our website at www.k12.com.

In addition to disclosing results in accordance with generally accepted-accounting principles in the US, or GAAP, we'll discuss certain information that is considered non-GAAP financial information. A reconciliation of this non-GAAP financial information to the most closely comparable GAAP information was included in our earnings release and is posted on our website. This call is open to the public and is being webcast simultaneously on our website. The call will be available for replay there for 60 days.

With me on today's call is Ron Packard, Founder and Chief Executive Officer, and Harry Hawks, Chief Financial Officer. Following our prepared remarks, we'll answer any questions you may have. I will turn the call over to Ron.

Good morning, and welcome to K12's third quarter 2011 earnings call. The results this quarter represent continued growth in our core virtual public school business, increased sales to school districts for online programs, expansion of our international and private school businesses and further investments in new initiatives. Additionally, we're experiencing significant success on the business development front. Our financial performance this quarter was strong. Quarterly revenue was $130.3 million, up approximately 35% from the third quarter last year. Additionally, EBITDA was $21.8 million for the quarter, up 32.5% from last year.

The schools we served had healthy enrollment growth, as well, with 81,666 students, compared to enrollment of 67,560 last year, a 20.9% improvement. Total average enrollments for the quarter, which include private schools and district enrollments on a full-time equivalent basis, passed the 100,000 student mark, a new milestone in the pursuit of our manifest destiny of making a K12 education available to every child.

Another milestone this quarter was TCV's recent investment in K12 and the confidence this investment reflects in the future of technology-based education. TCV has a proven history of success, investing in companies with consistently high growth rates over long periods of time. It's current portfolio of investments includes Facebook, Netflix, and Groupon. Additionally, Jake Reynolds of TCV has joined our Board of Directors. Jake has education industry experience, and we look forward to the insights he will bring to K12, especially on M&A opportunities, as we expect the use of proceeds of the TCV investment for additional strategic acquisitions.

In that regard, I am pleased to announce today our recent acquisition of the International School of Baron. A private brick-and-mortar school, located in Switzerland. This school serves almost 300 students in grades pre-k through 12, including the children of diplomats, ex-patriots and locals who seek a high-quality international education. The school is an Ideal World School that grants a prestigious IB diploma. It also offers the primary years and middle years IBO programs. Fewer than 170 schools in the world offer the full range of IBO-recognized programs.

In addition to our presence in the Middle East and China, this represents our first operation in Europe and will provide with us a new platform that can be attached to one or more of our online schools. Our investment in Web International English in China closed during the quarter, and we are encouraged by the early success of our partnership. They are using our investment to expand their English-language learning centers, and as of the end of the quarter, Web had approximately 35,000 students enrolled in 73 centers across 48 cities in China.

Similarly, student enrollments this fiscal year in our Dubai joint venture have increased 65% from the same period last year. We have introduced new services that are in demand in that region, such as a hybrid English language learning program, modeled on Web centers in China. The early results look promising. We're also pursuing other innovative offerings, such as a program that provides a learning coach for an additional fee, and we anticipate offering a full-time high school program in the region, similar to our Flex schools.

With K12's rapid growth comes the imperative to invest in the systems to support that growth and the customers we serve. As I mentioned on our last call, we planned for our new Oracle ERP system to go live on April 1, and it did. Furthermore, we did it within budget. Our investment in this system will enable us to manage the Company more efficiently from an accounting, finance and operational standpoint. The initial implementation took over 9 months of hard work, and I would like to acknowledge the contributions of Rob Moon, Harry Hawks, Oracle and the respective teams. Additional ERP modules will be phased in over the coming months.

We're also investing a second data center in a different geographic area to ensure redundancy and sufficient capacity. This will help mitigate operational and natural disaster risks and allow for improved capacity and performance of our online school and related systems.

As anticipated, the business development environment for new states and cap expansion is robust. Indiana recently passed a law that expressly authorizes virtual charter schools on a statewide basis with no enrollment caps. As a result, we'll be seeking to serve a new statewide charter school in Indiana, in addition to our hybrid schools in Munsey and Indianapolis.

I'm encouraged by legislation passed by both chambers of the Florida legislature authorizing virtual charter schools and statewide virtual education programs, as well as open enrollment. We expect the governor of Florida will sign the legislation within the coming weeks. We believe there are several other possibilities to open new states or increase enrollment caps that will come to fruition in the near-term. With regard to Louisiana, our first new state authorized this year, we have more applications than we have available slots.

Our core Virtual Academy business continues to produce excellent results. In-year enrollments increased versus last year and retention has improved. Our acquisition of American Education Corporation and Aventa were intended to expedite the expansion of our institutional sales business, and we're beginning to see the advantages of a broadened product portfolio. Between K12, Aventa, and AEC, we added 112 new customers in the quarter, including school districts, county education offices and charter operators. Not only did we see strong demand within each product set, but we also saw the first tangle benefits of cross-selling across the portfolios. For example, the existing K12 customers bought Aventa credit recovery for their districts, and existing Aventa customers added A-Plus remediation products to their purchases.

We now employ 30 sales representatives that are complimented by 17 AEC distributors that utilize an additional 120 representatives. Our business of providing turnkey online higher-education programs in systems through our capital education subsidiary is now signing up universities. Capital Education recently signed a multi-year contract with Trinity International University to support its new online adult completion program. Under this agreement, Capital Education will provide a range of services in support of Trinity International's academic program, including technology, curriculum and other services.

Capital Education also has a contract with Sierra Nevada College and has a pipeline of potential new customers. Middlebury Interactive Languages, our joint venture with Middlebury College, continues to grow and yield promising results. The foreign language instruction camps will begin their 4-week emersion programs late next month on 6 college campuses, up from 4 campuses last year. Testing was completed on its new Spanish 1 and French 1 online courses, which will be released for the upcoming school year.

Our acquisition activity has not slowed down our efforts to introduce innovative educational solutions, such as Flex Schools, providing our learning systems in traditional brick-and-mortar schools and experimenting with other pilot programs and partnerships. While start-up losses are to be expected, these initiatives are critical to identifying viable new channels in which to distribute our products and services. We expect to launch additional Flex and hybrid schools this upcoming coming fall.

Our Product Development group is focused on making our curriculum more effective engaging, while publishing new courses, such as our new proprietary pre-algebra and algebra courses. It is rewarding to have our curriculum recognize in the form of award nominations from respected organizations. Our Math-Plus product is a finalist for the Association of Education Publishers' highest honor, the Golden Lamp Award, and we were selected as a finalist for 2 CODiE Awards from the software Information Industry Association. We were also pleased to announce that there have been over 100,000 downloads of our new mobile apps, that include money-counting games, timed reading programs, and the periodic table.

As we mentioned on our previous call, we expect state education budgets to be down again on a year-over-year basis, and we have built this into our models; however, we will not have full visibility on this until all state budgets are finalized. We are reaffirming the announced guidance we provided on our second quarter earnings call. Revenue of $550 million to $520 million,(Sic-see press release) EBITDA in excess of $72 million, and the operating income in excess of $31 million. We would like to point out the business development environment continues to be this favorable.

It is likely that we could spend more on the marketing in the fourth quarter than we have budgeted so as to capitalize on this extraordinary high-growth opportunity. This additional spending would not result in any corresponding fourth quarter revenue; however, the increasing marketing expenses would drive significant revenue growth in fiscal year 2012.

In summary, we are pleased with the progress we have made this quarter in growing the core business, acquiring adjacent businesses, and attracting additional investment to support our long-term growth plans. We are especially energized by the addition of new states and cap expansions. Now, I will turn the call over to our CFO Harry Hawks, who will provide more detail about our financial results.

Thank you, Ron. And good morning to all listening on the call and on the webcast.

There are four themes I would like to address during my brief time with you. First, our liquidity and financial flexibility are very strong. During the quarter, thanks to strong cash flows -- our cash balance, actually increased from $35 million to $40 million after significant expenditures during the period on Cap Ex, transaction and transformational expenses, increased investment in our product development efforts, investment and new initiatives, and indeed the payoff of the $15 million of bank debt we incurred related to the acquisition of AEC during the month of December. And, of course, as Ron mentioned, we are delighted with our new partnership with Technology Crossover Ventures that closed after the quarter-end, especially their strategic insights and investments expertise. Other than capital leases on computers, we are completely debt-free and, giving effect to the investment by TCV, now have well over $160 million of cash available at this time.

Second, I would like to touch on Ron's comments about our infrastructure investments. We're now very close to completing our mission of achieving transformational change in K12's accounting, financial reporting, analytical capabilities, systems and certain operational processes while implementing a truly-scalable internal resource. These investments not only materially enhance internal management information as we tackle our daily challenges, but clearly lay the foundation to support significant growth in the future, domestically and internationally. One tangible change you will observe during fiscal 2012 is very timely reporting from us much earlier during the earnings season.

Third, just a brief comment on the non-recurring but growth-related expenses we've been incurring this fiscal year. While we don't provide pro-forma or adjusted earnings in cash flow metrics, we do try to give you a considerable amount of explanatory detail in the press release and on this call, so that you may have a better appreciation for expense variances that are transaction-related, one-time only, or startup investment related.

While we expect as long as we're launching new initiatives, acquiring other businesses, and investing in future growth, we're likely to incur these kinds of expenses, we're expecting a deceleration after the current quarter, that is Q4. Lastly, as Ron mentioned, we're affirming the prior full-year guidance we have provided in our Q2 earnings release issued on February 9. From a revenue perspective, and considering our 9-month actual results, the obvious calculation is that our fourth quarter revenue would then be estimated at $121 million at the low-end of the range, and $126 million at the high-end of the range, as compared to $88 million in the prior year.

We would now be pleased to take your questions. Operator, you may open the line.

Kelly Flynn, Credit Suisse.

Can you just confirm that your CapEx guidance is also the same as what you said last time? And also, I know you're not giving next year's guidance, but maybe talk about how we should be thinking about CapEx over the next few years, and free cash flow as well. Thanks.

Regarding the CapEx guidance, let me ask Keith to take that one.

Yes, Kelly, in aggregate, considering CapEx, we're looking for $52 million to $54 million for the full year.

Okay.

In terms of thinking of about next year, we're not prepared on this call to give any CapEx or free cash flow guidance for next year, but let me try to help. This has been a fairly heavy CapEx year for us with all the investment in systems and the like, and so I would expect to see a deceleration in that kind of spending next year. Also, this year as we expanded our offices, we incurred some CapEx associated with build-out of facilities and obviously the data center that Ron referenced in his comments. Projects like that are largely one-time only. Would expect to see us continue to invest in curriculum development and, of course, that has both a current period expense and a capital component to it, so I would expect that to continue to grow as we try to launch new products and support our expansion into new states and new adjacent businesses. Likewise, on the systems development side, as we create new products, we're continually improving the LMS and the student management systems, as well. And so let me ask Ron to --

Kelly, just to add on to that, generally because of what Harry was saying with regard to one-time expenses in systems infrastructure as went though Oracle installation, the second data center. We would expect the capital expenditures to grow significantly slower than revenue. Curriculum development certainly is going to grow slower than revenue. Systems should grow slower than revenue, and we expect the PCs to grow slower in revenue. So I would expect it, going forward you could expect the significantly slower revenue overall.

Okay, but you think it will probably grow?

I wouldn't necessarily say that, I'm not prepared to say whether it will grow or not, what I am prepared to say is it will grow significantly slower than revenue.

Okay. No problem. And just switching gears, Ron, to talk about some of the activity in new and existing states. Can you go back to what you said about Florida and just elaborate on what is going on there, and what potential impact that could have on the enrollments in Florida?

I would say this, what is going on in Florida, the governor hasn't signed the bill yet, but we would expect that -- right now in Florida, we have a whole series of district partnerships, this is bill would also allow charter schools similar to what we have done in California, so I would expect overall impact on this as you would be able to see a significant growth in the enrollment in the State of Florida.

Okay, great. I will do the rest offline. Thanks a lot.

Sara Gubins, Bank of America.

A couple of questions. The first is, are there any states where you have seen significant changes in revenue per student, either up or down?

We have seen several, I don't want to get in the details of specific states with regard to that, there are some states where we have seen increases that will be actual increases, and we expect some states will be down as a result of budget prices. So there is a mixed bag, but there are some states where we will see increases.

Okay. When should we find out about new caps being lifted, just in terms of timing?

We're in the middle of a bunch of sessions and a bunch of initiatives on that. So I would expect most of that will be known, certainly by the end of June. And as things get affirmed and it's 100% clear, we're very conservative when we actually announce that, we will put out announcements when all the I's are dotted, T's are crossed.

Okay.

There are lots of things that are out there now that are pretty close to certain, but until they're absolutely certain, we don't announce.

Okay. It may be difficult to comment on this, but given all the various initiatives that you're talking about, particularly with potential for state caps being lifted, is it possible that we could see revenue growth in 2012 accelerate versus 2011?

It would be quite possible.

Last question. There is now a very broad range of businesses that you're involved in, could you give us any sense about how you're thinking about this over the next couple of years? 3 years from now, how big do you expect the various businesses to be as a percentage of the total?

I think, obviously it's hard to predict the future, but we don't invest or enter things that we don't think are very high-growth. Let's start with that. Second thing I'm pretty sure about is because our core public virtual school business is growing so rapidly and, as you mentioned, could even accelerate from where it is, we expect that to be the dominant part of our business certainly for the next 5 years. But when I look at it, the potential for teaching English in China and the other things K12 is going to bring to that company, the potential is enormous. There are 200 cities with more than 1 million people in China, we're only in 48 of the cities today with Web, so that business has a potential to be hundreds of millions if not more than $1 billion. The sales of school district is already significant and if we didn't think it had a lot of potential, we wouldn't be doing it.

So I view those 3 businesses that all could be multiple $100 million-plus businesses. And then the private school business probably never gets that large, but it is a very good business that really fits in well with our public virtual school business. So those are the main pillars of p K12. These other initiatives are still in venture stages and it is difficult for me to say how large they could become.

Thank you.

Jeff Silber, BMO Capital Markets.

I wanted to talk about the TCV private placement. I'm just curious, were they talking to other companies like you? And also the flip-side, were you talking to other firms like that and if so, why go with TCV? Thanks.

Well, you would have to ask TV if they were talking to other firms, because they would know that better than I. For us, we chose TCV because TCV is an investor who understands high-growth businesses that can grow for a long time, and that have a lot of runway ahead of them. And I think their experience and their portfolio and their success makes them the right investor for us. They had education investment experience in Capell, I believe, and others, and clearly understand what a business like K12 could become over the next decade as we continue to grow. So it was a very good strategic fit with their long-time growth horizon and ambitions ofK12.

Okay. That's helpful, I appreciate it. I'm going to play devil's advocate here on my second question. You obviously have been involved in a lot of different businesses and continue to be involved in a lot of businesses, does the Company have the Management and depth to really run these disparate businesses?

I think that's a great question, and the answer I think is K12 has a pretty deep Management team, but it doesn't mean we don't need to get deeper. So I intend, certainly with regard to business unit management, to add several key people over the coming years. So I'm not sure any company has enough management depth and we're constantly looking for talent. When you're growing at 35% a year, it's a continually annual thing to bring on more and more talent to handle that growth. So I believe we have the base capability here, but we're going to be adding as we continue to grow at these kind of rates.

Okay, and Harry, just a couple of quick numbers questions, I just want to make sure my math is correct. If I look and I try to back in to your fourth quarter guidance for operating income, does that apply that the Company will have positive operating income in the fourth quarter?

Close to it.

Close to that. Okay. And in terms of the tax rate to use for the fourth quarter?

Tax rate, we spiked up in Q3, as you saw. So probably put a little bit of upward pressure on the tax provision assumption for the year. I think we had previously suggested 47.5%, that could drift up to the 48%, 49% range. Is that responsive to your question?

Yes, that is. I appreciate it. Thanks so much.

Gary Bisbee, Barclays Capital.

Yes, just following up on Jeff's question. Does the recent TCV investment change the statement you made last quarter, that you think that the core assets that you have today, or the assets you are going to remain focused on in the near-term, and it would more likely be additional lock-on investments or investments to lever or further grow those, as opposed to striking out in very different new directions at this point?

No, I don't think it changes that. I think that, if you look with regard to the institutional business and with regard to China, there are a whole series of add-on acquisitions that are possible in those businesses, and I would anticipate we're going to be building our business around the 3 businesses I mentioned, which would be China, the public virtual school business institutional business, and acquisitions would slot into those businesses. We're not really looking out to branch into any other new businesses that we're not currently in.

Okay. And then just as you expand into the some of these other ancillary businesses, in particular the institutional business, how much does this allow you to leverage the big investments you're making in curriculum, and is that really a key part, just able to get more revenue off of this big investment you've made the last few years?

Absolutely, not going out and filling the school district institutional business would be like a movie studio making movies, releasing them for the theatre and not releasing them on DVD or on TV. So you're building these incredibly high-quality assets order with regard to our courses, and I would also add the learning systems that go along with that. It makes every bit of sense to distribute those to as widened audience as possible, domestically and internationally. So absolutely these other business, particularly institutional, is designed to leverage those high-quality assets that we have invested in and are continuing to invest money in developing state-of-the-art.

Andy think you mentioned, some progress there and a bunch of account wins and whatnot, but you can give us a sense where we are? I assume it's early days, but how do we gain comfort that given funding issues in the school systems and whatnot that this really can be a really big opportunity for you?

Well, I think you have to -- we believe long-term, it is a big opportunity. Obviously there is going to be blips along the road as you have various state-funding issues, but his is a solution to the problem, not part of the problem. I think you look over a 10-year period, or a 5-year period, there is 56 million kids in the K-12 in the US and several billion outside of US. So we look at reaching that audience through things that schools offer in classrooms, in addition to their brick-and-mortar services. It's an enormous audience, it does not take a large belief to get there. If you just go to the point that I think Christensen makes in his book, which I concur with, in 10 years, every high school student is going to take be taking 1 course online, that creates 12 million online courses in the US alone. We think the opportunity is there, we think our broad product line of not only the highest-quality courses, but also very effectively-priced course, allows us to be in the leading position to capture that.

Great. Thank you.

Gordon Lasik,, with Robert W. Baird.

First round, I just wanted to clarify your comment that you could potentially see accelerating revenue growth in fiscal 2012. Is that organic revenue or total revenue growth?

Well, with regard to the core business, we would say that is organic revenue growth.

Okay. Just another question on new state opportunities and really the impact on revenue per student, you're clearly making some headway in the northeast with Massachusetts and New Jersey. Can you talk about opportunity particularly in that region of the US and then what that could mean broadly to revenue per student if you were to get into higher revenue states.

When you look across the country, the northeast does tend to fund students at a higher-per-pupil than the other regions on average. So clearly as we're able to have success in states that have above-average funding relative to our current averages, it is going to increase that number.

Okay. And then just a quick question on China. Can you give a little more color on your strategy there? Do you need to launch really an aggressive growth plan to expand Web International English's learning centers, and is that entity currently profitable? Do you think it will be next year given your growth plans?

That current entity is close to break-even. I wouldn't say it's necessarily profitable, but losses and profits are not significant either direction, and the profitability depends on how fast you grow the business. Because it is growing quickly. I think we're at 30% kind of growth rates there. So as you invest in new centers, new centers are not profitable in most places in their first year. So you can control the profitability of that by how fast you grow it. We intend to grow China very rapidly. We think the opportunity is immense. We think we have a very competitive service offering, so I would generally think of China for the near-term as a break-even business and we continually invest in growth, and you find yourself in 3 to 5 years with this, it's going to be very profitable.

Great. Thank you.

Trace Urdan, Signal Hill.

Ron, I was interested in your comments regarding the potential to develop the international baccalaureate online. I wonder if you could elaborate on that. And I am interested in specifically how much work would be required to take the curriculum that you already have existing and put it into a format that would be appropriate for that degree and for that credential, I should say. And what, if any, regulatory hurdles would be required to expand from the International School of Berne into other markets, or would there not be any such hurdles?

It is a great question. I'm going to take it in multiple phases. So to modify our existing curriculum to satisfy IB standards is not a huge stretch. There are modifications that need to be done because they have very certain types of things they want in their courses, but certainly we have the basis of those courses. We have to, obviously, work with the IB organization to basically get those courses approved by the IB organization, and I'm not prepared to speak on what the barriers are to that.

But I would also add, having a very high-end school in Switzerland, even to attach another online school to it, there are a lot of people that seek this type of education. Even though it's not necessarily IB, we think there is a lot of value, and we were able to acquire the school in Switzerland at an extraordinarily attractive price. So we think the opportunities just to have that brick-and-mortar basis for an international school by itself, even without the IB authorization, is a great thing, but we're going to hopefully work with IB to be able to create those IB courses which, again, shouldn't be a significant investment.

And is there anything else? Given the quality of that asset, is there anything else besides bringing it into an online format, that you might do? Is there a potential for other ground campuses with that brand?

There certainly would be. I'm not sure we're thinking that way at this time, but clearly there would be.

Okay, thank you.

Thomas Allen, Morgan Stanley.

Last quarter I think you guided EBITDA to $72 million, and then you said adjusted would be north of $87 million, so about $15 million of one-time charges. Are you still expecting that for the year?

Yes. The $15 million, as you recall from the prior earnings release and conference call, was $10 million, if you will, of transaction and one-time-only, and merger integration costs, that kind of thing, and $5 million of losses associated with starting up a number of new ventures, several of them, actually. The $10 million is probably creeping up to $10.5 million, $11 million for the full year, but pretty close to what we originally said. And the $5 million could creep up to $5.5 million, $6 million, but pretty close to what we originally said. But that is still indeed an impact on fiscal 2011. So the $72 million EBITDA guidance does not back that out, that is after incurring those expenses and losses, and so I think I'm answering your question in the affirmative.

That is perfect. And thank you for the color on AEC and KCDL in terms of revenue growth, can you give us any sense of the size of the private school business or the growth there?

Can you just repeat that question, please?

In terms of the private school business. In terms of the size of the revenue, we could back into it, for AEC and KCDL--

Okay. Sure. So the Keystone business that we acquired with KCDL, that business is roughly $10 million run rate business in terms of the students that they serve. So that business again is a good compliment to our K12 International Academy, a little bit different product offering and a slightly differ lower price point. AEC, their business is primarily almost all institutional sales, so we don't really think of that as the part of the private school business, we augment that or think about that as part of our institutional sales business.

And let me tag team with Keith. In 2012, next fiscal year, as we talk about the private school business, then we'll be thinking of K12 International Academy, Keystone, of course we're launching the George Washington University Online High School and the International School of Berne. So there is a compliment, if you will, of private school business and so we'll be more expansive in our comments next year as we build these things out.

But our own private school business is growing in excess of 50%. So it is a mix mixture of Keystone, which hasn't been growing much, plus our own private school business. So we'll be able to give you a lot more on the growth rate by next fall, but our business that we started is growing very rapidly.

That's great. Thank you very much.

(Operator Instructions) Kelly Flynn, Credit Suisse.

Can you clarify what you're assuming for share count in the fourth quarter, and then what we should assume in Q1 going forward, post-TCV?

Kelly, so the fourth quarter, the TCV investment closed on April 27. So the 4 million shares would have a weighted days effect for the fourth quarter based on that start date. So if you look at cover of the 10-Q, the basic share count as of May 5 was 35.7 million shares.

Which includes the TCV shares.

Right, includes the TCV shares, and that's just as of that date. So obviously the first 27 days of April, you wouldn't have the impact of those shares, so it gets you probably to a range of 34.5 million shares for the quarter, and, again, we are still, with the Series A shares, using that 2-step method to calculate earnings per share, so it's important to do the pro-rate allocation before you get to diluted EPS to consider the Series A shares, which are 2.75 million in quantity.

Okay. Got it. Thank you.

With no further question in queue, I would now like to turn the call over to Mr. Keith Haas for any closing remarks. Please proceed.

I would like to thank everybody for their continued support and participation today. Tomorrow, we'll be at the Baird Growth stock conference in Chicago and Thursday to the Barclays Capital Global Stock Conference in Boston and we look forward to seeing some of you there. Thank you very much.

Ladies and gentlemen, that concludes today's conference, thank you for your participation. You may now disconnect, and have a great day.