Mastercraft Boat Holdings Inc (MCFT) 2019 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q4 2019 MasterCraft Boat Holdings Earnings Conference Call.

(Operator Instructions) As a reminder, this call is being recorded.

I would now like to turn the call over to Tim Oxley, Chief Financial Officer.

You may begin.

Thank you, operator, and welcome, everyone.

Today's call is being webcast live and will also be archived on our website for future listening.

Joining me on today's call is Terry McNew, MasterCraft Boat Holdings' President and Chief Executive Officer.

Our agenda includes a strategic overview by Terry, followed by my analysis of the financials.

Then Terry will discuss our expectations for fiscal 2020 followed by the Q&A session.

Before we begin, we'd like to remind participants that the information contained in this call is current only as of today, September 12, 2019.

The company assumes no obligation to update any statements, including forward-looking statements.

Statements that are not historical facts are forward-looking statements and subject to safe harbor disclaimer in today's press release.

Additionally, on this conference call, we will discuss non-GAAP measures that include or exclude special or onetime items and not indicative of our ongoing operations.

For each non-GAAP measure, we also provide the most directly comparable GAAP measure in our fiscal 2019 fourth quarter earnings release, which includes a reconciliation of these non-GAAP measures to our GAAP results.

Before turning the call over to Terry, I'd like to remind listeners that there's a slide deck summarizing our financial results in the Investors section of our website.

With that, I'll now turn the call over the Terry.

Thanks, Tim.

I'd also like to thank everyone for joining us today.

As you saw from today's press release, MasterCraft Boat Holdings delivered strong operational results in the fourth quarter, closing out our fiscal 2019 on a strong note.

For the year, net sales increased more than 40% to $466.4 million, adjusted EBITDA increased nearly 24% to $79.3 million and fully diluted adjusted net income per share grew nearly 31% to $2.81 per share.

Despite many headwinds faced throughout the year, including import tariffs, adverse weather throughout the country during the selling season, especially in June, and macroeconomic uncertainty, our team once again generated record levels of net sales and adjusted earnings.

Moreover, our strong cash management practices enabled us to significantly reduce our total debt with pro forma net leverage at 1.3x adjusted EBITDA at year-end versus 2.1x when we acquired Crest in October of 2018.

Our MasterCraft brand gained market share in the towboat segment over the last 12 months, driven in large part through several highly successful product launches over the course of the past year, including the X24 and X22.

MasterCraft continued its run as the undisputed industry innovator in the towboat category according to the National Marine Manufacturers Association and Boating Writers International, receiving its sixth consecutive innovation award in a row and 8 in the last 10 years.

This is a remarkable achievement when you consider no other towboat manufacturers received the innovation award more than once.

Our continued investments and tireless dedication towards innovation have created a legacy that's unrivaled in the industry.

As we transition to model year 2020, MasterCraft's entry-level series, the NXT, was completely redesigned with the NXT20 and the NXT22, offering our customers even more value, performance and features, including an upgraded base engine, a new helm experience, an enhanced seating layout and an optional cool-feel interior.

Our NXT series has been a breakthrough success for the company since it was introduced in 2015 and continues to be a growth avenue for the brand.

A third product launch at MasterCraft will be announced later this month in September, rounding out our model year 2020 introductions and complementing our balanced product portfolio.

Fresh models and new innovations are the lifeblood of the MasterCraft brand, and we're excited about this year's model lineup.

Turning to Crest.

Since we acquired the business in October of 2018, the brand has continued its market share gains, finishing the fiscal year with #8 market share in a highly fragmented pontoon segment.

As we develop a similar product development and innovation process at Crest that we have at MasterCraft, we believe we can drive Crest to a top 5 market share spot in the pontoon segment over the course of the next 2 years.

The past 9 months, we have been focused on rationalizing Crest's current product portfolio and anticipate bringing new models to market in the near future.

In addition, we've made significant progress on several operational initiatives begun after our acquisition, having increased production capacity with minimal capital expenditures required.

While still early, we believe Crest can grow its gross margin profile from the mid-teen percentage at the time of acquisition to the low-20% range over the next few years driven by volume gains and the implementation of our operational excellence playbook.

NauticStar continues to be a top 6 market share player in the highly fragmented saltwater fish and deck boat segments despite a contraction in the overall saltwater fish market.

We remain committed to the growth strategy we developed at the time of the acquisition, which consisted of dealer growth, new product development and operational improvements.

However, NauticStar has continued to experience market-wide challenges that have impacted the business' ability to grow at the rate it was originally estimated when it was acquired in 2017.

Specifically, NauticStar's core market, the saltwater fish boat market, has seen slowing retail demand, especially for boats less than 25 feet in length.

These models represent a significant percentage of the brand's current model mix.

In response, we pulled back production on smaller boats to ensure wholesale shipments align with retail demand, which has impacted operating margins.

These company- and market-specific headwinds, combined with lower valuation multiples of peer group companies, contributed to the company recording a goodwill and other intangible asset impairment charge of $31 million in fiscal fourth quarter.

To be clear, we continue to be bullish about the NauticStar brand and its long-term prospects.

Our dealer pipeline at NauticStar ended the year at healthy levels, given our prudent decision to pull back on wholesale production earlier in the year in both the 251 Hybrid and 32-foot XS center console, will help mitigate the declines in the smaller boat market.

In the near term, this market slowdown has delayed the initial growth projections developed at the time of the acquisition, but NauticStar remains a leading brand in the market it serves.

Combined with the new product development strategies we're deploying, including the introduction of larger in-demand models and the early stages of several operating initiatives in progress, we believe the brand will be positioned better than ever to take advantage of the market recovery, leading to greater operating efficiencies and long-term profitable growth.

Looking at our newest brand, Aviara.

Beginning in fiscal 2020, we began shipping the AV32 to MarineMax dealers across the country.

We're extremely excited about the response the brand has received from MarineMax, consumers and industry experts alike.

After years of consumer insight study, design and engineering and product validation work, Aviara is truly a modern luxury day boat unlike anything else on the water.

The AV32 model began shipping in July of 2019, and the new AV36 and AV40 models are scheduled to begin shipping in the second half of fiscal 2020.

Now I'd like to turn the call back over to Tim to go over our financial results.

Thanks, Terry.

Net sales for the fourth quarter were $122.8 million, reflecting an increase of 28.7% compared to $95.4 million for the prior year period.

The increase was primarily due to an increase in MasterCraft unit sales volume, favorable product mix and price increases, the inclusion of Crest and was partially offset by a reduction in NauticStar volume, as Terry discussed.

Gross profit increased 12.9% to $31.5 million compared to $27.9 million for the prior year period.

The increase was primarily due to the inclusion of Crest, along with the increases in MasterCraft unit volume, price, favorable product mix.

This growth was partially offset by year-over-year increase in warranty expense, resulting from the favorable onetime warranty adjustment taken in the fourth quarter of 2018 as well as the NauticStar volume declines.

Our gross margin decreased to 25.6% for the fourth quarter compared to 29.2% for the prior year period principally driven by the inclusion of Crest.

As Terry mentioned, our goal is to grow Crest gross margin profile from the mid-teens to the low-20% range over the next few years.

Operating expenses increased $34.1 million to $43 million for the fourth quarter compared to $8.9 million for the prior year period.

This increase resulted mainly from the NauticStar impairment charge and the inclusion of Crest.

Excluding the noncash impairment charge, acquisition-related and integration costs and startup cost for the company's new Aviara brand, operating expenses as a percentage of sales decreased 20 basis points to 9% for the fourth quarter compared to 9.2% for the prior year period.

Adjusted net income for the fourth quarter grew 25.9% to $16.1 million or $0.85 per share on a fully diluted weighted average share count of 18.9 million shares, computed using the company's estimated annual effective tax rate of approximately 22.5%.

This compares to adjusted net income of $12.9 million or $0.68 per fully diluted share in the prior year period.

Adjusted EBITDA was $23.8 million for the fourth quarter, up 19.9% compared to $19.8 million in the prior year period.

Adjusted EBITDA margin was 19.4%, down from 20.8% in the prior year period principally due to the dilutive effect of Crest.

Lastly, given our ability to generate strong free cash flow, we've been able to reduce our pro forma net leverage to 1.3x adjusted EBITDA.

Recall that at the time of the Crest acquisition October 2018, we had a pro forma net leverage ratio of 2.1x adjusted EBITDA.

While we believe we have a healthy balance sheet, we will continue to emphasize the payment of debt in the near term.

Please see the non-GAAP Measures section of our press release and 10-K for reconciliation of adjusted EBITDA, adjusted EBITDA margin and adjusted net income to the most directly comparable financial measures presented in accordance with GAAP.

In the interest of time, I won't cover our full year results.

Those are detailed on the press release we issued this morning.

With that, I'll now turn it back over to Terry for our view on current industry and economic environment and our outlook for fiscal 2020.

Thanks, Tim.

We remain bullish on the long-term prospects at both the markets we serve and the brands we own, irrespective of any near-term fluctuations.

We firmly believe our long-tenured industry veteran leadership team and seasoned and dedicated employees, together with our low fixed cost, highly variable cost structure, best-in-class net working capital management and strong balance sheet, position the company to perform in all economic environments.

At MasterCraft, retail trends throughout the first 11 months of our fiscal 2019 were running ahead of plan with year-to-date internal warranty registrations up significantly year-over-year.

However, adverse weather conditions across the country late in our fiscal fourth quarter, along with eroding dealer sentiment driven by macroeconomic and political uncertainty, resulted in a significant decline in retail activity.

As such, our fiscal 2020 outlook factors in lower wholesale shipments at MasterCraft compared to the prior year, particularly in the first half of our fiscal year.

We believe it's prudent to pull back wholesale production to allow for healthy dealer pipelines at MasterCraft heading into calendar 2020 selling season in anticipation of continued growth and the overall performance sport boat segment.

That said, we will vigilantly monitor dealer activity and macroeconomic trends and adjust accordingly as needed.

Similarly, our Crest brand was impacted by the adverse weather conditions and decline in dealer sentiment, offsetting the strong retail performance Crest experienced during our first 6 months of ownership.

Accordingly, we're tempering our wholesale production at Crest for fiscal 2020 to allow for healthy dealer pipeline levels entering the calendar 2020 selling season.

Recall, Crest was acquired during our fiscal second quarter last year.

We're very optimistic on Crest and the pontoon segment overall, and we anticipate that the dealer expansion, product development and operational initiatives we're driving will contribute to long-term market share and profitability gains.

At NauticStar, a quick reaction to the retail declines in the saltwater fishing market led to a pullback in wholesale production, resulting in healthy dealer pipeline levels at fiscal 2019 year-end.

We will continue to be disciplined at NauticStar dealer pipeline while beginning to realize the [AUSP] benefits from new, larger models introduced late last year.

Regarding Aviara, as previously disclosed, our preliminary expectation is for net sales contribution in the $10 million to $15 million range as we ramp up production in the first year.

Aviara, whose financial results will be reported in our MasterCraft reporting segment, is expected to be slightly accretive to MasterCraft's gross margin profile.

It's important to note that due to the start of Aviara shipments in our fiscal 2020, we will recognize incremental operating expenses and depreciation this fiscal year that did not occur in fiscal 2019.

When we achieve full production run rate in fiscal 2021, we expect to realize increased operating leverage contributing to increased profitability.

Based on those factors, the company's consolidated fiscal 2020 outlook consists of net sales being down low single-digit percent, adjusted EBITDA margin being down in the 50 to 100 basis point range and adjusted earnings per share being down a high single-digit percent.

We strongly believe in the long-term value, the full breadth of our brands and capabilities provide despite any near-term market uncertainties.

Maintaining our focus on developing best-in-class innovative products across our portfolio and driving continued operational excellence at all of our businesses will drive meaningful value for consumers while improving our bottom line and generating attractive returns for shareholders over the long term.

Now I'd like to turn it over to the operator for questions.

(Operator Instructions) Our first question comes from Michael Swartz of SunTrust.

Maybe to start off with just some of the commentary with, I guess, recent trends.

And I think, Terry, you had said that retail was pretty strong, I guess, through May and then you saw some softness in June, which we've all seen in the SSI numbers.

But maybe talk about what you've seen July through here and mid-September.

Right.

Michael, to give you a little more detail, our global retail is registered or tracked by internal retail registrations by our dealers was up in the mid-teens through May.

In July, it certainly returned.

We saw that the June data on the SSI was consistent with the weather issues that we've talked about.

The July SSI retail was up significantly driven up by some pent-up demand, of course.

And specifically, we saw the ski/wake segment was up more than 17%, but MasterCraft was up even more than that during the month.

And we also saw a good August, but remember, both July and August are much less in general retail demand than June.

That's the all-important month for the year.

Okay.

Great.

And then just on guidance.

And I guess we're all trying to back into this down low single-digit revenue, what that means for unit volume, what that means for particularly core unit volume, i.e., excluding maybe Aviara and I think you have 1 quarter benefit of Crest.

If I'm doing the math correctly, it looks like something has cut down low double digits to mid-teens.

Is that the right way to think about the volume for fiscal year '20?

Yes.

I think you're looking at it correctly, Michael.

We think -- Tim and I have a combined 60 years' experience in the industry, so we know how to manage in the upside, the downside.

We'll certainly take advantage of that real world experience.

We think it's proper to get the pipelines correct as we enter into the 2020 selling season.

I would suggest that pipelines at NauticStar are very healthy.

They're up a little bit at MasterCraft and at Crest.

And should we see retail respond quicker than we anticipate, we -- as you know, we have a very flexible manufacturing capability, and we can respond quickly.

But we think it's prudent to do so and take it down.

Our year will be more back-end loaded, of course.

Okay.

That's helpful.

And then just one follow-up and then sticking with guidance.

In light of unit volume down, let's just call it 10% to 15% for the year, and that's, again, organic.

I think you said EBITDA margin's down 50 to 100 basis points, but at least part of that is just the dilutive nature of Crest in the first quarter.

So if you take that out, it looks like something EBITDA margin down maybe 20 to 70 basis points on a double-digit unit volume decline.

I guess that doesn't seem as negative as I would've assumed it to be in light of that kind of volume decline.

So do you have some positive offsets that are going into other operating costs or gross margin this year that we should think about?

Well, it's really -- you've been here, you've talked to Tim and I, as most of you on the phone many of you have.

We are all about a low-cost business model, high variable cost.

90-plus percent of our COGS on a consolidated basis is variable in nature.

We have talked about that many times.

This is where it starts to show up.

It's in any kind of a slowdown.

Again, we've been doing this combined 60 years, and we've been through 4 recessions and slowdowns in our career.

So I would really attribute most of it in our ability to protect our gross margins as our variable cost basis.

We can remain breakeven on an adjusted EBITDA basis with unit declines much higher than we would experience in a typical recession.

We don't anticipate a macroeconomic recession at this time but as we look forward -- and the drop across the industry in retail in June contributed to the inventory levels that we have today, and so we are able to adjust rapidly for that.

As we look out into the future, we've got the China trade war and some economic uncertainty, but -- I was in Canada last month or last week, and I was out west at several dealers.

Canada not only experienced the bad weather that we saw in the upper Midwest of the United States, but their national election is next month.

So you look out what happens next summer.

That's right before the 2020 U.S. elections.

And so right now, our view is that, that could cause some pause among consumers.

So if that doesn't happen as we anticipate, and again, we're drawing from our years of experience, but we've seen this algorithm before, we can pivot rapidly.

But to answer your question, I think this demonstrates -- and we've said it would happen, this demonstrates our highly variable cost structure.

Our next question comes from Craig Kennison of Baird.

Following up on what Mike had to say on the retail front, what is the retail outlook embedded in your 2020 fiscal guidance?

Well, we still anticipate retail growth in 2020 across all of our markets, albeit more modest growth than in prior years, given current dealer and consumer sentiment, Craig.

The risk of a protracted global slowdown, trade war concerns, the 2020 elections, as I said in my response to Mike, also are contributing factors in our view.

So as you know, we hesitate -- we hedge a little to the conservative side.

But I think we have that ability given, a, our highly variable cost structure; and b, our flexible -- highly flexible manufacturing system.

We always see that as a benefit, and we wake up every day, whether it's good times or not.

And we kind of resist that, desire to have more bricks and mortar or higher fixed cost from certain activities.

We just really try to focus on the variable.

So in terms of our outlook, that -- those are the factors that we look at and evaluate in our view.

And then how would you describe the promotional environment today to maybe clean out some of that excess inventory?

We're seeing some retail elevated competitor promotions across all boat segments.

We believe everyone's trying to clear the channel.

Our goal is to always -- and again, this is good times or bad, we always evaluate dealer pipeline.

You know we do it every Monday, and we'll continue to help in any area we see that might be elevated pipeline.

But other than that, we -- our goal is to be rightsized in time for the 2020 selling season.

I would add, Craig, this is Tim, we're monitoring the competitive landscape, and we're dealing with some pockets of higher inventory.

But keep in mind that any discounts we deploy will not be on 2020.

Our [mariner] product will be a [noncore] product.

And one thing to add to that, Craig, is, again, most dealers carry other types of products beyond the brands that we have.

So even if our inventory levels improve, if the inventory levels of competitive product or other product that they carry in those dealerships does not improve, that really is something to keep in mind because that can cause a dealer to pause and it soaks up a good chunk of their credit capacity.

And then finally, just maybe talk about your capital priorities.

And to what extent, with your stock trading where it's at today, could you prioritize any share repurchase activity relative to other priorities?

We always are working with our Board on capital allocation strategies.

And as we mentioned in our prepared comments, we're going to deploy our cash to continue to pay down our debt.

And those are our primary focuses right now.

And then again, we've got a very strong balance sheet and great cash flow, and we'll continue to look out for any other M&A opportunity.

We think in a downturn, certain M&A opportunities might come available.

So those are kind of the 3 areas, in particular, that we're looking on.

And we've decided to focus on paying down debt to levels below -- or 1x adjusted EBITDA or below.

So we want to keep the balance sheet.

We want to keep flexible and have dry powder available should there be any opportunities for M&A.

Just -- I'm sorry to follow up on the M&A front.

But are there targets that would be as accretive as buying your own stock back?

I mean I think you're trading under 6x earnings.

It'd be hard pressed to imagine a company of your quality trading at that kind of value.

Yes.

I mean -- certainly, the stock repurchase -- or opportunities are there.

But there are other organic growth opportunities that we could deploy and we're evaluating that could provide even a greater return.

I'm not saying that a share repurchases is not considered because it certainly is.

And you're right, our multiples are relatively low right now, but we're considering all of those.

And I think we have the ability to deploy cash in each of those areas.

(Operator Instructions) Our next question comes from Brett Andress of KeyBanc Capital.

Just a clarification on the cadence of your guidance.

So you gave us expectation for a front-half, back-half split.

But just any more color there in terms of the cadence of either sales or EBITDA for the year or the upcoming quarters?

Just to help us with our models here?

Yes.

There are 2 factors that are influencing this back-end loaded plan.

First of all, the ramp-up of Aviara in the second half with the 36 and the 40 both coming online as well as our adjustments to the wholesale production to get the pipeline in good shape as soon as we can.

And I think from a modeling perspective, maybe 45-55 split between -- for net sales for next year would be -- first half, second half, would be kind of reasonable way to look at it now.

Got it.

And then another one on -- just how many units do you think you have to pull out of the channel, specifically on the MasterCraft side?

So your guidance implies shipping something like 500 less units at wholesale.

I guess where are you right now on the MasterCraft side on a weeks-on-hand basis?

And where do you want to end going into the 2020 season?

Well, keep in mind that our guidance includes a combination of reduction in sales volume as well as mix impact.

With the popularity of our new NXT models, we're likely to be mixing down a bit.

So both those are baked into our guidance.

And we've not previously provided [unit] guidance, and we're going to stick with that.

Our next question comes from Joe Altobello of Raymond James.

Just a few questions to follow up on some of the questions from earlier.

But in terms of the inventory clean-up that you guys are expecting to do this year, I mean how confident are you that you get that done in the first half of this fiscal year?

Or is there a chance that some of that bleeds into the second half as well, given the overhang?

Well, Joe, July and August was good for us.

September is starting off well also.

But after that, the second quarter of our fiscal year, that October through December, is always the lightest quarter in terms of retail so for the year.

So we'll keep an eye on it.

We're pretty confident that we'll be in a very good position come the beginning of 2020 selling season.

If not, it's not a problem.

We know how to adjust for that.

But we think that we've got a line of sight that we should be in pretty good shape.

That's our goal for now and that's what we're targeting.

We think those are realistic.

Okay.

And then secondly, on the promo environment, you mentioned that you are seeing a little bit of a step-up from some of your competitors on the promo side.

I assume that's baked into the EBITDA margin guidance of down 50 to 100 basis points at this point.

That's correct.

Okay.

Okay.

And then just one last one on Crest.

You mentioned the gross margins.

I guess the target there is low-20s.

And if I look at some of your competitors, Bennington, for example, their gross margins, I believe, right now are in the high teens.

So maybe kind of walk us through how you expect to get to that number when somebody who's got 25% of the market is already below that.

Well, Crest is taking market share.

They're #8 in that very crowded -- I think there's 103 or 110 OEMs in that pontoon, aluminum pontoon segment.

We bought them and they were at -- gross margins were in the mid-teens.

As I stated before, our goal is to get them into the low-20s over the next few years, and they are well on that trend.

So we'll give you more specifics on our first quarter call in November, but we're -- they're already on track to do that.

And again, as you think about it, and this kind of goes back to Michael's first question, we have already, within the first 5 months, converted their manufacturing to synchronous flow.

They've already taken advantage of the working capital procedures and methods that we use, and that helps them improve their gross margin.

When you're building aluminum products like they are, you don't have tooling.

And so it's -- you can affect change more rapidly there because you don't have any barriers as far as perhaps driving a refurbished tool [and they get new] tooling.

So that gives us additional positive momentum there.

Our next question comes from Tim Conder of Wells Fargo.

This is actually Marc Torrente on for Tim.

Just a few for us.

Any additional detail on the international markets?

How are they performing relative to the U.S.?

Any areas of particular strength or weakness?

And how our channel inventories [have grown]?

So you know that we gave tariff support during fiscal '19, especially to Canada.

Those tariffs were rescinded in late April.

So Europe is still impacted by the import tariffs of 25%, level off tariff support to be determined on the market factors throughout the year.

But we feel like dealer pipeline is good there.

Canada weakness, especially in Western Canada, was driven by elevated dealer inventory, given the adverse weather and political uncertainty there.

Again, I was in Edmonton last year -- or last week, and that's a big deal for them.

As we believe it will be next summer in the U.S. elections.

But Australia continues to perform real well for us.

So in summary, we're very comfortable with the pipeline, especially in Europe and Australia, and we're -- we feel pretty good about it.

But overall, I think I'd summarize it Europe is kind of flattish, Australia is really good and Canada, once we get through the elections, we'll be able to determine that a little bit better.

Okay.

Great.

And then could you just update us on the operational initiatives going on with NauticStar and then the progress and timing towards rolling out the larger models?

Yes.

So the 32 XS started production in Q4, the 251 Hybrid was introduced about midyear.

Jay Povlin took over the helm at NauticStar in March, very excited about Jay.

He's a very seasoned industry veteran.

Tim and I have worked with Jay for over 25 years.

Not only is he focusing on product development and operational initiatives, but being a seasoned sales and marketing guy, he's focused on driving sales through growth in the dealer additions and organic growth.

We're getting traction at NauticStar.

Our black belt, many of us -- our VP of business development, George Steinbarger and I are there at the divisions once a month.

And I've got a deep background in operations and engineering, and so we're very excited.

We're seeing some positive results on the bottom line for NauticStar.

Okay.

And then just lastly, it sound like the initial reception to Aviara has been pretty good.

What has surprised you either positively or negatively?

We're not surprised.

We knew it was a tremendous product.

During testing, 2 industry magazine editors, who I've known for a long time, tested our products, the AV32 at that time, both the sterndrive and the outboard.

I ran one of the largest product development engineering groups in the marine world for 6 years, and so I knew that our engineers had a great aspect ratio.

And we felt very confident that the ride handling and performance of the product and not only its -- its aesthetic value but the ride handling was superior.

Those editors of those magazines confirmed that.

In fact, they told us, "You probably ought to put a second production line in place because this is some of the best products we've ever run in this size category."

So we're thrilled.

The boats are going around the different MarineMax stores, and we're just super happy to be partnered with them.

Tim and I have had a long experience in relationship with them with our years at Brunswick.

They're absolutely the right partner.

They're very excited.

We've retailed several of the boats already.

So it is marching right along to plan, and our engineering and manufacturing team, sourcing teams have executed.

We have kind of a tagline here.

We don't miss schedule and we don't miss budget and we do everything right in between.

Aviara is marching right down the integration path, consistent with our internal plans.

So we're very happy about it.

There are no further questions.

I'd like to turn the call back over to Terry McNew, Chief Executive Officer, for any closing remarks.

Thank you, operator.

Once again, thanks to everyone for joining us this morning.

We look forward to updating you on our first quarter results in November.

Thank you.

Ladies and gentlemen, thank you for participating in today's conference.

This does conclude the program, and you may all disconnect.

Everyone, have a great day.