MSC Industrial Direct Co Inc (MSM) 2003 Q2 法說會逐字稿

Good morning.

My name is Wendy and I will be your conference facilitator.

At this time, I would like to welcome everyone to the MSC Industrial Direct second quarter 2003 earnings conference call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question and answer period.

If you would like to ask a question during this time, simply press "*1" on your telephone keypad.

If you would like to withdraw your question, press "*2" on your telephone keypad.

I would like to turn the call over to Ms. Christine Mormom (ph) of FD Morgan Wach (ph).

Thank you, Ms. Mormom.

You may begin your conference.

Thank you and good morning, everyone.

Thank you for joining us today to discuss MSC Industrial Direct second quarter fiscal 2003 results.

You should have received a copy of this morning's earnings announcement.

If you have not yet received the release, please call our offices at 212-850-5752.

Also, an online archive of this broadcast will be available within one hour of the conclusion of the call, and will be available for three business days at www.mscdirect.com.

Let me take a minute to reference the Safe Harbor statement under the Private Securities Litigation Reform Act of 1995.

This conference call may contain forward-looking statements that are subject to significant risks and uncertainties, including the future operating and financial performance of the company.

Although the company believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations or any of its forward-looking statements will prove to be correct.

Important risk factors that could cause actual results to differ materially from those reflected in the company's forward-looking statements are included in today's earnings release and in the company's filings with the Securities and Exchange Commission.

The information contained in this conference call is accurate only as of the date discussed.

Investors should not assume that these statements made in this conference call remain operative at a later time.

The company undertakes no obligation to update any information discussed in this conference call.

With that said, I'd like to turn the call -- introduce you to MSC Industrial Direct's chairman and chief executive officer, Mitchell Jacobson.

Mitchell, please go ahead.

Thanks, Christine.

Good morning, everyone, and thank you for joining us today.

With me are David Sandler, executive VP and COO, Chuck Boehlke, executive VP and CFO, and Shelley Boxer (ph), our VP of finance.

I'll begin with an overview of the second quarter of FY03 and our expectations for the third quarter.

David will cover our fulfillment model and Chuck will provide details on the second quarter's financials.

Following Chuck, I'll wrap up and then we'll open the line for questions.

In spite of a very difficult economy, we grew revenues in Q2.

Although revenue growth was below our initial expectations, we did an outstanding job of managing our gross margins and operating expenses and continue to generate significant cash.

We once again exceeded our plan by delivering 42% growth in incremental operating income on the growth of revenues.

We generated 50% growth in net income as compared to the second quarter of fiscal year '02 on approximately 8% growth in revenues.

However, please remember that our read through percentage will vary quarter to quarter, but overtime will be in the 25% range.

We exceeded our 25% plan in the quarter, as our gross margin improved beyond our expectations and we maintained our spending on operating expenses at approximately the same level as the first quarter.

We're continuing to execute our model, gain share, and generate the leverage that's built into our company.

Chuck will provide more details in his portion of the presentation.

We are now almost six weeks into the third quarter.

We saw growth rates decline throughout the second quarter and into March.

The rate of decline has escalated since the onset of the Gulf War.

At this stage, we have no forward visibility for revenues.

All that we can tell you is what we've experienced quarter to date.

Our revenue growth versus last year, after adjusting for the Easter holiday in '02, is 4.5%.

However, we must cautious that daily sales and the rate of growth have decelerated since the war began to 3%.

As a result of our lack of visibility, we're unable to forecast the top line for the quarter and feel that we are all best served by indicating our current revenue experience.

The quarter will be more challenging to manage on the op-ex line as we want to ensure that we're properly staffed to provide outstanding execution for a level of revenues slightly above that which we are experiencing at this moment.

We're confident that we're going to manage our company well through this uncertainty, and gain share over competitors who do not have the depth and the balance sheet that we enjoy.

Thanks, and I'll now turn the microphone over to David.

Thank you, Mitch.

I'd like to start by discussing what we are hearing and seeing in the field.

It's clear to us that the economic recovery has not yet reached the industrial sector.

Employment in that area continues to shrink, and activity is still well below the levels of 2-1/2 years ago.

As Mitchell noted, we are seeing a slowing of momentum.

Feedback from our customers is that their customers are reducing orders to the bare minimum or putting them on hold.

Many are taking a wait-and-see attitude until the war is resolved.

Many of our customers have also expressed concern that the run-up in energy prices is forcing them to cut back on spending, and there have been some reduced workweeks and some work force reductions as well.

However, MSC is growing as we are executing our model and taking share.

A case in point is a customer in Texas.

About two years ago, this customer went through a bankruptcy and reorganized.

We were still doing some business with them, but the bulk of it went to a regional competitor.

The customer was unhappy with this distributor's manual system, as well as their own heavy workload and sourcing MRO supplies.

This customer had very high inventory levels, but was still experiencing a significant number of stock-out situations.

Our solution-oriented selling approach indicated that our VMI system was right for them.

The customer made the switch to the MSC solution, which has generated significant savings for them.

Last year, we increased our business from a minimal amount to over $350,000,and this year, the customer has fully integrated all of their needs to VMI, and we are now running at about a $720,000 annualized sales rate.

MSC has also eliminated the customer's out-of-stock situation, reduced their direct labor costs and reduced overhead and inventory.

This type of win-win exemplifies MSC's total cost reduction solution and is why MSC will continue to take share, outgrow the sector and drive excellent sales and earnings growth over the long term.

Turning to the details for the quarter, once again, I'm pleased to report that the execution of our model continues at very high levels, and our metrics are coming in at target levels or better.

Our customers tell us our service is the best in the business, and this is one of the reasons we gain share and ensure future growth.

Overall, go rates continued at 99% and all DCs hits their first pass of go rate goals.

Accuracy levels continue to be excellent with run rate at about 1.8 errors per thousand.

Call center staffs continue their high levels as well.

The call abandonment rate was less than 1% and we averaged 61 calls per associate per day.

As we still view the marketplace with some caution, we will continue to manage our field sales hiring quarter to quarter.

We ended the second quarter with 450 associates and plan to maintain approximately this number in the third quarter.

In the second quarter, we mailed 8.7 million pieces of mail, about as expected.

By concentrating our efforts in more productive sectors, we continue to generate excellent overall response rates.

We generated more new customers in the second quarter of this year than we have in any of the last several quarters.

Total active customer count was 338,000 at the end of the second quarter, compared to 334,000 last quarter, and 328,000 in last year's second quarter.

We expect that we will mail approximately 8.3 million pieces in the third quarter as we continue to improve the effectiveness of our mailing program.

All of our regions continue to grow in the second quarter with the Midwest leading the way with a growth rate of 14%.

The Northeast was the weakest at 4%, reflecting the effects of the snowstorms of January and February.

The Southeast and West both grew in the 8% range.

Sales to the manufacturing sector grew 6% in the second quarter, and sales to the non-manufacturing sector grew 14%.

The sales split changed slightly to 73% manufacturing versus 27% non-manufacturing, as the non-manufacturing sector continues to outgrow manufacturing.

Our average order size remained unchanged at $223 in the second quarter.

MSCdirect.com continued its outstanding growth in the second quarter.

Sales through the site were 21.4 million, representing 10.2% of consolidated sales with an annualized run rate of $86 million.

This represents growth of approximately 55% over the second quarter of fiscal year '02.

In conclusion, I'm extremely pleased with our performance in the second quarter.

We executed our plan and grew in a very tough environment.

However, we continue to remain cautious based on our view of the economy, the uncertainty related to the war, and what we are hearing from our customers.

I can tell you that the small distributors that control the bulk of the market will suffer further as the level of pay and increases and drags on their financial performance, resulting in a further deterioration of their customer service.

This bodes well for MSC as it translates into increased market share.

And finally, I'll take this opportunity to express my thanks and appreciation to all of our MSC associates who continue to stay focused and execute at such high levels.

Thank you, and I'll now turn the mic over to Chuck.

Thank you, David.

Once again, we've completed an excellent quarter financially and exceeded our financial goals.

As you know, we've committed to grow operating income by 25% of our sales increase in fiscal year '03.

As we've said in the past, that commitment is based on the entire fiscal year.

Seasonal factors may result in some quarters being either higher or lower than the 25%.

In the second quarter, we beat the 25% yardstick, generating 42% incremental operating margin on our sales increase.

This was extraordinary and was favorably impacted by higher than expected gross margins at 45.3%.

The favorable gross margin was helped by modest price increases, favorable product mix, the efforts of our product team to increase margin through purchasing power, increased freight revenue, and by higher than expected vendor rebates.

The adjustment for vendor rebates is a one-time item and consequently we expect that gross margin in Q3 will be in a range between 44.8% and 45.2%.

Operating expenses increased slightly in Q2 over Q1 as we absorbed some one-time costs related to the disposition of three small machine shops, some severance pay, and absorbed higher freight costs.

We expect operating expenses to be approximately $76 million in Q3, as we will staff to a level of revenue that is slightly higher than our current run rate so as not to disturb our high level of customer service.

Our effective tax rate has been adjusted to 38% for fiscal year '03, reflecting the fact that we closed some open audit years in Q2.

The accounting rules require us to reflect the catch-up effect of a change in the effective tax rate in the quarter in which the change occurs.

Accordingly, the tax rate for this quarter was 37%, bringing the year-to-date effective tax rate to 38.3%.

The benefit generated from the change in the effective tax rate in the quarter is approximately equal to the one-time cost we absorbed in Q2.

Turning to our balance sheet, we continue to produce excellent results.

Cash flow for the quarter met expectations as we generated $7.3 million in free cash flow.

Depreciation and amortization once again exceeded capital expenditures as net fixed assets declined $2.3 million in the quarter.

MSC will continue to generate significant free cash flow in fiscal 2003.

Our free cash balance grew to $74 million at the end of the second quarter, and is currently at $90 million.

Since our last conference call, we have not repurchased any more company stock, although the program is still active.

Working capital grew slightly in the second quarter, reflecting higher levels of sales.

We also made two large tax payments in Q2, accounting for the drop in accrued liabilities.

DSOs improved to 40 days in the second quarter from 43.5 days at the end of last quarter.

Inventory turns were an annualized 2.1 in Q2 as we added $2 million in inventory.

Our return on average equity continues to exceed our average cost of capital, as our pre-tax return on equity was an annualized 16.5% in the second quarter, 19% excluding our cash balances.

This was about the same as Q1, but significantly better than last year's pre-tax return of 10%.

In summary, we had an excellent quarter financially.

We exceeded our expectations on improved operating margin, delivered solid cash flow, and continue to manage the balance sheet.

Thank you, and now I'll turn the microphone over to Mitchell for the wrap-up.

Thanks, Chuck.

Our company is extremely well-positioned to grow revenues and earnings.

We've proven that relatively small increases in revenue generate leverage.

A strong balance sheet has provided us with the ability to improve gross margin, and attract the interest and loyalty of our supplier community.

We continue to use six Sigma (ph) techniques to take cost out of our processes and improve our operating systems.

We are relentlessly taking share by maintaining focus on our value proposition, and as a result, are enhancing our brand in the marketplace as we grow.

We're working hard to ensure that we're positioned to win big when the industrial environment and the economy as a whole recover.

Our team is driven, motivated, and confident.

Thank you, and we'll open the line for questions -- Wendy?

At this time, if you would like to ask a question, press "*1" on your telephone keypad.

We'll pause for just a moment to compile the Q and A roster.

Your first question comes from David Matheny (ph), Robert W. Baird.

Question for you on gross margin.

Was some of the gross margin improvement due to the buy-in that you made last quarter when inventory was up a little bit?

Could some of that be selling margin related to that inventory build?

Sure, that's a piece of it, Dave.

We use average costing so it takes some time when we make the purchases to actually flow through to the cost of goods sold, so that was a piece of it, but that's certainly a big factor improving the margin year over year.

It's a continuation actually of the margin you saw in the first quarter.

The big difference between Q1 and Q2 of that 30, 40-basis point shift is basically this one-time true-up of our vendor rebates.

We're on a calendar year as it relates to rebates, but obviously as you know, our fiscal year closes in August, so during the second quarter, we true up this calendar year rebates with actual accruals, and that added some extra basis points to our margin this quarter.

Do you have an idea of the magnitude of that?

I would say basically from last quarter to this quarter, the full 30 basis points in improvement from that perspective was really the rebates on the margin and some incremental freight revenue that we were able to read through.

So both those events were kind of one-time catch-up things that were really the difference between Q1 and Q2.

Ok.

And then where you talk about 4-1/2% growth, is that year-to-date through the end of March, is that just March, or is it up until when the war started?

David, it's David.

The 4-1/2% is the total month of March, which I guess would be quarter-to-date.

David, I just want to step on that a little bit by saying that we adjusted it for Easter.

If you take pure growth, it's closer to, what -

Six percent.

Six.

That's right.

So we adjusted out Easter being not in this year but in last year.

Do you have monthly data for -- I think we have through November.

Do you have December through February, if March was 4-1/2?

Sure.

David, December was 9.6, January was 7.6, February is 6.3, and as we said, March is actually around 6% without the Easter effect because of the comp, and 4-1/2% when you factor in that -- we're going this year's March, our Easter this year is actually in April versus Easter in March last year.

Right.

Ok.

I have a million questions here.

What about exposure to the auto industry, do you have a rough approximation of what that is company-wide?

David, I can't give you that exposure.

I can tell you that certainly in the Midwest, you know, we are watching the fact that we know that auto production is going to be declining.

You know, we see several adjustments being made there, and we are concerned about the effect that that will have on our customer base, not so much the big three, but our customers, job shops and so forth that service them.

If you remember history, I don't know that we've released our regional sales as a percentage of the whole, but until 1990, our only distribution center was on the East Coast.

In 1990, we opened up in Georgia, and then in -- what year was it that we opened up in the Midwest? 1994-1995, so that gives you at least some anecdotal idea of where the bulk of our sales are by territory.

Right.

Ok.

Great.

Thank you.

Your next question comes from Rob Dauman (ph) with Southwest Securities.

It's actually Rob.

Just a question with regard to your leverage goal of 25%.

How long is the company committed to this goal?

Is that just a fiscal '03 goal or do you expect this goal to continue into fiscal '04, and along with that question, you know, obviously you have the West Coast where you don't have a lot of branches at this point.

Are there any plans, or what are the plans for expansion of branches, you know, west of the Mississippi going out the next few years?

Rob, it's Chuck Boehlke.

The commitment on the 25% read through is really of fiscal year '03, basically take the total sales change over last year and our commitment to the bottom line is 25%, and obviously we've done better than that in the first half of the year, but our commitment is to 25% for this fiscal year as of right now, and we get closer to '04, we'd be happy to share with you, you know, where we might be going in '04.

But right now it's a fiscal year '03 commitment, and that's all we've spoken to and addressed.

Relative to the leverage point to go out west, it's certainly in our thoughts and thinking, but, you know, for competitive reasons, we're really not at liberty to talk a lot about when and how.

A piece of that, however, will relate to, again, our ability to grow the profits and the 25% read through and funding, a lot of that out of incremental earnings.

Ok.

I'm just trying to get a sense of how much leverage continues to exist in the infrastructure if we look out even, you know, 12 to 24 months.

If we assume, you know, mid-single digit kind of revenue growth, there's still enough leverage or capacity left in the infrastructure to allow us to have that kind of leverage, you know, in the next 12 to 24 months as well.

Wouldn't that be the case?

That would be the case, Rob.

There's an awful lot of leverage left in the infrastructure.

It's built up just not over six months or nine months.

This has been a five-year plan in the past, put the infrastructure in place to support a company much larger than the one that we have today, so whether it's 25 or a number close to it or exactly, we'll wait and see and communicate to you later, but clearly it's nothing remotely close to what you've seen in the past five years.

It's much, much higher and yet to answer your question, there is a lot of leverage built into this business, and we'd expect a disproportionate operating income growth relative to top-line sales growth.

Ok.

And lastly, a question on the stock buyback.

We haven't seen a lot of buyback here recently down at these levels.

Would you be more aggressive buying the stock?

We'd be aggressive at buying the stock when we feel it's the right price.

And, you know, as we said on the call, we haven't bought any in quite some time, but it doesn't mean that we don't have our eyes and ears open and won't take advantage of it at the right price for us.

All right.

Thank you.

Your next question comes from Holden Lewis (ph) of BB & T.

Good morning.

Thank you very much.

Can you comment a bit on the advertising pieces?

Obviously they've been coming down, I guess, the past couple of quarters and you sort of commented on the greater effectiveness, you know, in terms of getting those out there and being able to improve your customer base, I guess, using fewer mailings.

Can you, you know, give us something that provides some comfort that, you know, reducing your mailings is not going to - you know, a lag effect, they don't result in some reduction in the growth of your client base, or something that gives us comfort that the productivity of each of your mailings is, in fact, better than it has been in the past?

Holden, it's David.

Actually we're really excited about what we've seen for results in that area.

I mean, our team has been very focused on improving the effectiveness of -- you know, of the programs.

That ranges from things like the effectiveness of our brochures in terms of the way that they're merchandised and priced to our circulation and prospecting, the type of lists that we use, where we're focusing those lists, making sure that we're putting more money into more productive places, and frankly stripping the dollars away from those lists and places that give us lower returns.

And I think, you know, at the end of the day, what it adds up to is that you've seen that we've been able to produce more customers and increasing our productivity, getting more sales out of less pieces, and we think that bodes really well for us.

I guess a lot of direct marketers just kind of look at the response rate, for instance, you know, on a per-mailing basis or what have you.

I mean, what kind of metrics can -- can you point to any metrics that really sort of hammer home the - you know, the effectiveness argument you're making, or is this a trust-me scenario?

No, not at all.

Actually our response rates have been solid.

Our sales per piece, if you take a look at our number of pieces, both our circulation of our brochures and our prospecting and certainly one broad metric is if you take that and you divide it into overall sales, you'll see that we've actually got an increase in our productivity there, and that's one of the big places that the team is focused.

So we take a look at that.

One of our metrics is to monitor the actual cost of the brochures.

That's been improving favorably.

Another metric is the actual sales per piece of the brochure.

That's been improving favorably.

We've done a lot of good work on the productivity side of the direct mail equation, which effectively is yielding more customers on less mail.

So we're getting a much bigger bang for the buck based on what we've put in place, and frankly, we're going to continue to focus there because we see that we've still got an awful lot of opportunity.

And you've been able to do that just by, you know, I guess, buying better lists or better utilizing your IT, or how have you gotten there?

I want to be careful to not get too close to giving away, I guess, the -- you know, the house, but in terms of competitive information, but, you know, we've got an awful lot of data.

I mean, the area is very analytically run.

We react to the data as we learn and as we watch the results, and based on that, we're able to kind of shift things around, and because of our focus on doing that, we've been very successful producing more with less, effectively.

And I think, Holden, there are long-term benefits that we're starting to get to, which is the ability to look at not only piece performance, revenue per piece and response rate, but it's looking at long-term retention within classes of customer, customers' long-term revenue generation within classes of customers, and it's the aging of data, the length we've been collecting it and the sophistication of our IT that's allowing us to really use that as a tool to do better near term and long term.

On the gross margin, can you explain a little bit about, you know, what the change in mix is that is benefiting the gross margin?

Really, the change in the mix, Holden, is just in those areas that we've had the most success, really, in going out into the marketplace and being able to negotiate to, if you will, some opportunity buys and take some cost out on a permanent basis, the mix of the products where we've been most successful, which is where we're spending our efforts, has caused the margin itself.

So it's kind of in combination with the buy better opportunity and the opportunistic buys.

Obviously we're doing that in products that are selling, and the shift in the overall mix to a better position for us there.

So the mix is you're pushing products that have an inherently better gross margin during this point, and that's what you're referring -

That's what the mix is the result of, yes.

That's basically what that is.

Ok.

All right.

Thank you.

I would like to remind everyone, if you would like to ask a question, press "*1" on your telephone keypad.

Your next question comes from Jeff Jermato (ph) of William Blair & Company.

Good morning.

I was hoping you could help me elaborate on some of the non-recurring items within gross margin SG&A and the tax line to help us with modeling going forward.

Sure, Jeff.

This is Chuck.

In the margin as we answered the first question, I think it's roughly 30 basis points in the margin.

What I'll call non-recurring, at least not for the third quarter, there will be a true-up again at some point in time on the rebate once we get closer to the end of the year and into the first and second quarter for next year can, but for modeling purposes, in what we see in Q3, that was a non-recurring event and the total of those non-recurring events was roughly 30 basis points.

In the SG&A line, there's three machine shops actually that we shutdown.

There was a small asset write-off and severance payments and so forth that went along with that that virtually accounted for the bulk of the increase in spending from Q1 to Q2.

That was almost exactly offset down below in the tax line down there.

There's about $500,000 if you actually run the math through that hit the second quarter in the tax line, a reduction in taxes, if you will, of about $500,000, which is fairly close to the after-tax impact up in SG&A of those one-time expenses that we incurred.

Net-net, I guess what we're saying is the net income and the earnings per share really are not a function of these one-time events.

They kind of all set in the tax line and SG&A line and net out to the 19 cents that you saw us report.

Now, should we be thinking about a long-term tax rate back to about 39-1/2 when we get to next year?

For next year for Q3 and Q4, as we said, you can plan on the reduction of the rate to that 38.3 approximately, which is how we had to account for and build the second quarter results and project out for Q3 and Q4.

Going forward for next year, yes, I think it's prudent to go back to the 39-1/2.

As we said in the call, this basically reflects the settlement of a couple years worth of tax audits.

We are provisioned and reserved for subsequent years in tax audits, and depending how they turn out at that point in time, you'd be a change up or down in the tax rate, but there's no reason now to do anything different than the39-1/2 for next year.

Based on what you know today, is the gross margin guidance you gave of 48.2 to 45.2 a pretty reasonable range on a look-forward basis?

Forty four point eight to 45.2, Jeff.

I'm sorry, yes.

Yes, that's what we foresee, somewhere in that range for the foreseeable future.

And last question.

You continue to do an astounding job of driving operating profit margins.

Is there a level that you ultimately target as a steady state before you start reinvesting in additional growth initiatives, be it mailings, branches, et cetera?

Jeff, it's Chuck again.

Basically the way we've done this, and obviously we've done better than 25% for the first six months of the year.

The reason we just stay with the 25% commitment is we want the flexibility to have anything over and would above that 25% to take advantage opportunistically of anything that might come along.

That could be in the form of an opportunity to do some hires, execute a project or a program that we had not executed but would like to, but as we said before, this is about responsible growth, meaning profitable growth and just not growth on the top line, and again, while we don't go past that 25 right now in terms of a commitment, it's because we want that flexibility.

It could very well turnout that we may choose to do some spending in a subsequent period if we're over the 25%, so we don't want to back off of that and raise the bar just yet on that number.

Well, thank you, and keep up the good work.

Thanks, Jeff.

Your next question comes from David Matheny of Robert W. Baird.

Just a couple follow-ups here.

When you're looking at the 25% read-through margin, first of all, interestingly, if you strip out the changing gross margin over the past four or five quarters, you're actually right around that 25% on a sequential basis.

That's correct.

Are you looking at it sequentially or year to year?

Our commitment has been year over year.

Do we pay attention to it internally, and obviously give some consideration to that?

As we set our spending targets and what not going forward?

Yes.

But the commitment is year over year with some management attention certainly internally, but the commitment very clearly is 25% read-through on '03 sales for the full year versus '02.

Could you put a number of the impact on the storms up in the Northeast for you?

David, it's David.

We would roughly estimate certainly some number above $2 million.

And we can't project it perfectly.

You could probably argue higher than that, but, you know, certainly $2 million would be a conservative estimate of the effect that we can absolutely put our hands on.

Ok.

And I'm sorry that I don't know this, but what percentage of your sales are private label, if any?

It's a piece of information, David, that we don't share.

Ok.

And then finally, on fuel prices, potentially is there an impact there on SG&A, and is that hitting you today, and is it possible that we pick up a little on the top line in the form of inflation and possibly some pass-through on higher commodities prices and product prices?

David, we are seeing certainly some of the effects of higher petroleum and energy prices.

You know, we've seen it in freight surcharges, which those coming from our carriers have been passed along to our customers.

We've seen it in some of the products like plastics and fluids, and, you know, we've also increased our mileage reimbursement to our associates to compensate for higher gas prices at the pump.

Having said all that, at this point, all of these cost increases are really not material, and in any event, have been factored in to our operating expenses as well as our gross margin forecast that we've provided to you folks.

Great.

Thank you very much.

You're welcome.

I would like to remind everyone, if would you like to ask a question, press "*1" on your telephone keypad.

At this time, there are no further questions.

I will now turn the call back over to Ms. Boxer for your closing remarks.

This is Ms. Boxer.

Yeah.

Thank you very much, everybody, for tuning in today, and we'll speak to you again in a couple of months.

Bye now.