如新 (NUS) 2017 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Q3 2017 Nu Skin Enterprises Earnings Conference Call. (Operator Instructions) As a reminder, this call is being recorded. I'd now like to turn the conference over to your host, Mr. Scott Pond, Head of Investor Relations. Please go ahead, sir.

Thanks, Amanda, and thanks, everyone, for joining us. On the call today with me are Ritch Wood, Chief Executive Officer; Ryan Napierski, President; Mark Lawrence, Chief Financial Officer; and Joe Chang, Chief Scientific Officer. Just a reminder, during this call, comments will be made that include some forward-looking statements. These statements involve risks and uncertainties, and actual results may differ materially from those discussed. Please refer to today's earnings release and our SEC filings for a complete discussion of these risks.

Also, during the call, certain financial numbers may be discussed that differ from comparable numbers obtained in our financial statements. We believe these non-GAAP financial numbers assist in comparing period-to-period results in a more consistent manner. Please refer to the Investor Relations page of our corporate website for any required reconciliation of non-GAAP numbers.

And with that, I'll turn it over to Ritch.

Good afternoon, everyone. We appreciate your time this afternoon. And as you saw in our press release today, we generated solid Q3 results with revenues slightly above our initial guidance at $564 million and earnings per share at the top end of our range at $0.76. We're pleased with the sequential gains in Q3 since we typically experience some seasonal softness in the third quarter. I would also remind you that the prior year quarter included $56 million in limited-time offer sales impacting the comparison, while this year's major product introductions are planned for the fourth quarter. Overall, we're encouraged by the health and the direction of our business. We're now moving into the implementation stage of our growth strategy, focused on platforms, products and programs. Although we're in the early stages, I'm encouraged with the progress we're making. Ryan will give a little more detail on our initiatives in each of these areas in a few minutes, but first I would like to share with you how we anticipate these growth drivers will positively influence our business.

Our growth efforts are centered on customer acquisition, and we were pleased to report 7% increase in customers during the quarter over the prior year. Social selling is an accelerator for our business, and we continue to see encouraging progress in markets like the United States, EMEA and South Asia/Pacific as social selling continues to be adopted by our sales leaders. Social selling, together with a positive customer experience, is our platform focus. In driving customer acquisition with products, our focus is to make our exclusive innovations more accessible. I'm confident that positioning our new products optimally will accelerate the pace of customer acquisitions. We introduced a number of new products at our global LIVE! event this past month and believe that LumiSpa, in particular, will be a game changer. We expect this highly innovative facial cleansing and treatment device to be a key contributor to our business. In addition, at our LIVE! event, we introduced an enhanced sales program which we call Velocity aimed at empowering our sales leaders by providing more flexible earning potential, rewarding them faster and building and strengthening future sales leadership. We believe these changes will help accelerate our business as we implement this new plan into our geographies in 2018 and 2019. We believe these changes will be very positive overall to the business.

In terms of our sales leader growth, we were pleased with a 9% sequential gain this quarter. The year-over-year 5% decline was largely due to the impact of LTOs, which led to a short-term uplift in the number of sales leaders in the prior year quarter. I'm encouraged with the way Mainland China continues to perform. I'm also pleased with our South Asia/Pacific business, which generated 12% year-over-year growth in the quarter. The Americas was solid, with particular strength coming out of Latin America. EMEA was in line with our expectations and continues to grow modestly. While trends have been soft in South Korea, Japan, Taiwan and Hong Kong, we believe that the fourth quarter LumiSpa market introduction will positively impact our business and the trends of our business in these markets.

With that, let me turn the time over to Ryan, and then Mark will provide additional detail on our financial statements and projections. Ryan?

Thanks, Ritch, and good afternoon, everybody. Last month at our global LIVE! event, we hosted a sellout crowd in Salt Lake City with tens of thousands more joining online. We took a new approach to this global event with a refreshed format that was attractive to our next-generation customers and entrepreneurs. This was a perfect way for us to celebrate the success of our sales leaders from around the world. I wanted to thank each of you who were able to travel out here to the LIVE! event. During LIVE!, we introduced our enhanced vision of becoming the world's leading opportunity platform and provide a training on our growth strategy including the 3 key drivers that Ritch mentioned: engaging platforms, enabling products and empowering programs.

First, let me talk a little bit about engaging platforms. Social selling is transforming our industry, and we are working to be a global leader in this space. We have seen the early impact of social selling in both South Asia/Pacific and the Americas, where we reported 28% and 26% customer growth, respectively. Beginning this quarter, we will roll out new tools that empower our sales leaders to more effectively acquire new customers and build their sales teams through their social networks. These tools will continue to roll out around the world over the next several quarters.

Next, let's talk about our enabling products. Our sales leaders were especially excited about our new line of social selling products, particularly the long-awaited ageLOC LumiSpa device. We anticipate strong results in the fourth quarter based on the positive response from our global preview of LumiSpa at LIVE!. We will conduct market previews of LumiSpa through the end of this year, then in the first half of 2018, we will launch the device in all markets. Now if you joined us at LIVE!, you saw nearly a dozen new product concepts. Some of these were intended simply as market tests, allowing our sales leaders to provide input and help co-create potential new products. Others will be folded into our social selling portfolio over the next few quarters, including Powerlips longwear lip color, the Dr. Dana nail system -- Nail Renewal System, Tru Face Essence Ultra uplifting cream and our new Raw Beauty naturals line. We expect all these product innovations to support customer growth moving forward.

Finally, let me talk about our empowering programs. As Ritch mentioned, we introduced a new sales program, Velocity. This program is designed to do 3 things: one, provide a more flexible opportunity for our sales leaders to reach their personal goals; two, reward performance faster by providing compensation on a daily, weekly and monthly basis; and three, build stronger leaders. We expect this program to drive growth in our sales force and generate higher monthly productivity. We anticipate the initial rollout of these -- of the program to begin in the Pacific markets later this year and then globally over the next 2 years. In addition, we announced Blu Rewards, a new customer loyalty program designed to enhance the customer experience and increase lifetime value. As you can see, we are moving forward at an accelerated pace, executing our growth strategy.

And with that, I'll turn it over to Mark.

Thanks, Ryan. Let me now walk all of you through some of our third quarter highlights and provide my perspective on how we see the balance of the year. As a reminder, we have provided more detailed financial information in our release and in -- and on our IR website.

As Ritch mentioned, we're pleased with the sequential growth of the business with revenue of $563.7 million. I would note that the third quarter of 2016 included LTO sales of $49 million from South Korea and $7 million from Mainland China. Our quarterly earnings per share came in at $0.76 compared to $0.98 in the third quarter of 2016. The prior year benefited from LTO revenue and a lower tax rate due to the closing of Venezuela. During the quarter, we paid $19 million of dividends and repurchased roughly $26 million of our stock, while improving our net cash position by approximately $25 million sequentially. Our remaining share repurchase authorization is $152 million. Our revenue guidance for the fourth quarter is $650 million to $670 million, with earnings per share of $1.16 to $1.21. We continue to anticipate approximately $100 million of revenue benefits associated with the introduction of LumiSpa. Based on this guidance, we anticipate revenue growth of approximately 3% for the year. This places 2017 revenue at $2.263 billion to $2.283 billion with earnings per share of $3.20 to $3.25, both within our prior annual guidance.

Finally, as we mentioned on our last call, we held an investor luncheon at LIVE! in lieu of our annual Investor Day, where we have typically provided guidance for the coming year. Therefore, we plan to provide 2018 annual guidance when we release our Q4 results.

Operator, we will now open up the call for questions.

(Operator Instructions) Your first question comes from the line of Faiza Alwy from Deutsche Bank.

So I guess first question, Mark, for you is just the 4Q guidance seems to have declined because you lowered the fiscal '17 guidance a little bit. I know it's within your range, but the overall sales guidance and the overall EPS guidance is lower at midpoint. So can you just talk to us about what's changed from 3Q -- from 2Q until now?

Sure, Faiza. Maybe let me just -- Ritch here, speak real briefly, and then pass it over to Mark for the exact numbers. But we really like the way the business has trended through the year. This is our third quarter where we were really able to deliver on the higher end of our guidance range. Projections came in very closely with how we anticipated the business -- or the business came in as we anticipated the projections were. So we really feel good about the way the business is trending. I wouldn't read too much into the guidance, but Mark, you want to speak too?

Yes. I would follow along the same lines as Ritch laid out. We're really happy with the way Q4 is shaping up. It will look to be roughly 25% year-over-year. I think that's a healthy growth rate year-over-year. We still expect to include roughly $100 million of LumiSpa. As we built the forecast and we narrowed our range to the normal $20 million revenue range and the normal $0.05 EPS range, we came up with the high end at $2.283 billion and the $3.25. So nothing really changed in the business, it's just a narrowing of the range as we rolled out the Q4 forecast.

Okay. And then, is there anything you can tell us about, for 4Q specifically, by market? So LumiSpa, the $100 million, sort of how do you expect that to break out between the various regions?

Let me just, from a high level. Most of the product sales will happen in November and December as we did previews in October that were positive. But those were only really for our top leaders. So the allocation of the units that we have available for LumiSpa have really been built out based on the size of each of the markets and pretty representative of the size of each of the markets. We anticipate the fourth quarter to be really quite strong in all of our regions, and I think our biggest -- our biggest focus is to continue to drive customer acquisitions. So I would anticipate that we'll see strength in our customer numbers as well as our sales leader numbers in the fourth quarter.

Your next question comes from the line of Tim Ramey from Pivotal Research Group.

It's great to see the momentum returning to the business.

Thank you, Tim.

It struck me that perhaps I was being too bullish about the fourth quarter, at least with regard to FX. I thought it would be probably more neutral, and it sounds like there will still be some negative FX impact in the fourth quarter. Is there one thing you'd point to there or was I just being too optimistic?

We're not projecting a huge FX impact. It's 0 to 1% is what we're looking at for the quarter.

Okay. And then, sort of my perennial question, it was a modest commitment to share repurchase. You have your first kind of monster quarter coming out in 3 or 4 years. Why not be a little bit more aggressive, at least taking cash below debt?

Yes. Thanks, Tim, for that question. And just to reiterate our priorities, I think our first priority is to stay focused on investing on the business. So that's always at the top of the list. We pay a healthy dividend. And then, really from there, we look at what our excess cash is, how are we doing cash-wise. We'll have a strong fourth quarter in terms of cash from operations. And generally, we try and -- first of all, the first priority, offset any dilution from our equity incentive. And then, if we have excess cash, really deploy that to generate shareholder value. So we'll continue to follow those same principles as we go into the fourth quarter.

I would only add to that, Tim is you did see an increase in share buybacks from us this last quarter. We bought back $26 million, and we're at over $50 million for the year. I think we're being reasonable managing our excess cash and again trying to maintain that cash net neutral position or get closer to that.

(Operator Instructions) Your next question comes from the line of Doug Lane from Lane Research.

I know you didn't talk about 2018 in specifics, but I was starting to look at putting 2018 together. Can you -- in your -- tell us in your mind, how you're looking at the quarters unfold? It sounds like you haven't really differentiated among markets in quarters in the specificity that you have in the past. But can you help us, just is there any one particular quarter that's going to benefit from the rollout of the LumiSpa more than any of the other quarters next year?

Yes, Doug, thank you for that question. We debated on whether we ought to go early with our 2018 guidance. We felt like we'd be better off to do it as we see really this fourth quarter, which is where all of our ammunition has been placed for this year. It really makes more sense to us and gives that visibility in terms of what's going on and then guide next year. As the quarters roll out next year, we don't have any specific plans with -- as we talked about in the past, kind of these LTO revenue numbers that seemed to skew our numbers. First of all, from a comparison side, 2017 will have one big quarter and the rest mostly flat. I think 2018 will be much more calibrated throughout the year without any plans for big product launches. So while the LumiSpa launch is in the first half of the year, there's not necessarily any significant event that should really shift things from one quarter to another, as we see it today. So I'd anticipate a more consistent revenue number throughout the year quarter-to-quarter. With generally speaking, Q1 being your softest quarter in the year, followed by Q3, and then your stronger ones are going to be Q2 and Q4.

And Doug, the only thing I would add -- this is Mark is we did debate releasing the 2018 numbers early. By announcing and releasing them with Q4, it's really allowing me, as I build my first annual number with the company, to dig deep into -- with each of the markets and really understand and help them refine their forecasts and hopefully be able to put together for you guys a very nice 2018 guidance number with a lot of thought and detail into it.

It makes a lot of sense with all that's going on in the fourth quarter. And then finally, just to follow on Tim's question, should we expect with the cash coming in from the fourth quarter, should we just expect directionally more stock buyback in 2018 than 2017?

I think It depends on a lot of things, Doug, that we don't know today exactly, how's our stock trading, how does the underlying business indicators move. And I think those are kind of things you weigh as they come. I think if you look at us over the last about 10 years, we've averaged about 2% net reduction in outstanding shares every year. So if you're kind of looking historically, you'd say, okay that's sort of where the business generally goes, but it really depends, I think, as the year plays out how to intelligently use our cash and do we have other needs that could generate higher shareholder value inside the business. So hard to project, I think, today based on what we know but, historically, sort of a 2% reduction as consistent with where we've been.

Your next question comes from the line of Olivia Tong from Bank of America.

This is actually Chris Carey on for Olivia. I just wanted to go back to the first question on guidance to just make sure we understand. Because I guess, the prior outlook for local currency sales for the full year if you just take reported sales growth and back out FX was sort of in the range of 4.5% to 7%, correct me if I'm wrong. And now we're kind of looking at 3.5% to maybe 4.5% at the high end. And Q3 reported sales were at the high end of the Q3 guidance range. So I'm just trying to parse out what's changed to bring that down a little bit for the full year? And maybe comment on some of the activity or engagement you've seen around LumiSpa? And then, I have one follow-up, if I could take it.

Yes, let me take a shot at a couple of those. And then Ryan, maybe you can speak to what we're seeing in the LumiSpa market and talk a little bit more to the guidance. Yes, the business at the beginning of the year, I think we were guiding kind of that 5% local currency growth, if I remember right. Today, it looks like it will be around 3% reported. And then depending on where currency comes in, somewhere around -- so far it's been trending about 1% negative currency impact. So possibly, slightly below where the local currency guidance was at the beginning of the year. Having said that, we've really been encouraged by the way the business has trended throughout the year, particularly with the underlying indicators. The growth that we've seen in customers, we believe, will turn into sales leader growth as we go forward. Our anticipation of a strong fourth quarter feels right. The momentum that we have coming into the fourth quarter seems to be really solid. So overall, I don't think the guidance is really off that far where we have been all year long. We've been right on the top end of the range. So -- and as Mark said, we've just sort of fine-tuned the guidance in the fourth quarter [sales] to the middle of the range of where we were last quarter and with strong numbers coming out of the business. So Ryan, maybe you want to speak to the LumiSpa?

Chris, regarding LumiSpa, as we mentioned, we really have -- are just a few weeks into this product introduction that we previewed at LIVE! with our audience here and broadcasted it. And generally speaking, very enthusiastic response from the field sales leaders about the product. We will -- as Ritch mentioned, the majority of sales activities around this at the market preview level will happen in November and December. In October, we've done some limited leader preview or leader trial sales that are very small quantities just to train and educate our leaders a little bit further at the local level. And those have been a good response to that. So we continue to be really positive about this product. As Mark mentioned, we expect about $100 million in revenue coming through LumiSpa for the quarter.

I think the other thing that we're encouraged, too, this is a kind of follow-up, Chris, with just one thought here. Last year, our limited-time offer sales, I'm talking about 2016, were somewhere around $162 million. We really tried to modify how we're launching products going forward and really stay focused on driving customer acquisition with sales leader growth as well. So this year -- last year, let's call it $160 million or so. This year, it will be less than that. But our overall business has performed -- the core of the business, I would say, has performed quite well. So we'll continue to drive that going in, but I think the major success, as we look at this quarter, will really be based on how we're able to move the underlying metrics of the business.

Got it. Got it. And then, just one follow-up, if I could. You mentioned the LTOs from last year, roughly $160 million in Q1 and Q2. And if I look at the incremental sales that you got on a year-over-year basis, it's quite a bit below that. Whereas for Q4 this year, the guidance would imply you'll get over $100 million in sales growth year-over-year. So maybe just how you expect to drive, not just the LumiSpa business, but the remaining parts of the business in order to hit the sales guidance.

Yes, you bet. So last year, yes, Q2 and Q3, has the $160 million in it. And this year, it's all in the fourth quarter. Again, the way we drive incremental revenue going forward really is to see new growth coming in through the customers and sales leaders of the business. So our anticipation is about $100 million benefit, that includes some cannibalization of the other parts of the business. And again, the $162 million that we mentioned before is really a [growth] number in terms of what that LTO looked like.

The only thing I'd add is generally Q4 is a slightly stronger quarter sequentially to Q3. And if you take that [light] sequential growth, and you add on the $100 million we're expecting from LumiSpa, you can get to the middle of our range relatively easily, hit the high end of our range.

Yes, that's how we really base the guidance.

(Operator Instructions) Your next question comes from the line of Beth Kite from Citi.

If I could just start with a couple of questions on social selling. So for the third quarter, before we talk about some of the newer products, in the regions where you're really now having a couple of quarters in a row like the Americas and South Asia/Pacific with social selling, are there any different products that are working in that portfolio? Or is it just still the continued focus on rolling out that strategy and that concept in those markets?

Yes, great, Beth. This is Ryan. Thanks for the question. Yes, absolutely, social selling is having an impact on the business. And certainly, we're finding it to improve our customer acquisition efforts, as you can see in the numbers. The product mix that typically works in social, it is a bit different than some of our other products -- and these products that tend to work are highly demonstrable or, in other words, easy to demonstrate, which makes them a bit more shareable socially. And so we end up finding products, both existing products, like our AP-24 toothpaste line that has been around for quite sometime, as well as newer products that are really priced at a more masstige level tend to do very well socially. However, again, as I mentioned, we fully expect products like LumiSpa that are again very shareable, very demonstrable to do very well as well. So we're seeing existing products as well as new products perform very well that generally have a very shareable appeal to them.

And I should have maybe prefaced it a little bit more with where I was going which is so much as in the couple of new products that you spoke to specifically that came out of LIVE!, I think you said 4, and we'll start seeing those this quarter and the first half of next year. Just trying to understand like the incremental lift that might give to social selling, either in the markets that you're already kind of having some nice momentum in with a pre-existing social selling portfolio. I guess, I'm just trying to understand, is social selling fundamentally still kind of expanding in a couple of your regions and then you're nicely going to be able to layer on a couple of new products? Just sort of trying to frame out how to think about the numbers and the sales behind that?

Yes, so in other words, I completely missed with my first answer. Let me try again. This is strike 2, right? No, no. Yes, great point. Yes, definitely we're seeing social selling. I mean, it's still an emerging business within our business. We're seeing it do very well, as I mentioned, in Southeast Asia, in Pacific, going very well. We're seeing the Americas, both North and Latin America doing very well with social. We're seeing pockets of it in EMEA, or in the U.K., other markets. And so -- and frankly, we're seeing bits and pieces in other markets as well. It's just not as dominant in those markets. So definitely, an emerging trend, something that we continue to expect to grow moving forward. Regarding the products we launched at LIVE! to support it, yes, each of the products we put forward at LIVE!, including LumiSpa, are really built to facilitate or to be sold socially in an effective manner. So those ones that I specifically mentioned in Dr. Dana, Powerlips, in particular, these 2 Raw -- as well as Raw Beauty, they're each kind of built to be very shareable products socially.

Great. And a couple of those will impact the fourth quarter. Is that, right?

Correct. Yes, we'll begin to see, particularly Powerlips and -- well, Powerlips in particular contributing in fourth quarter.

Okay, great. And then -- thank you so much for that. And then, for Mark, and -- or the whole team, whoever kind of wants to answer this. The G&A spending has -- it's ticked up each quarter this year but in a pretty decent manner from the second quarter to the third quarter. So I guess, 2 questions there. Can you just help us understand -- I mean, I assume a lot of it is behind some of these initiatives with digital, et cetera. Maybe the loyalty program, I don't know, maybe some of the early work from Velocity. So one, could you help us understand some of the drivers behind that $143 million this quarter? And then, when we think about the fourth quarter and modeling that, I think in the past we've roughly thought that the global convention was about a $10 million spend, maybe $8 million to $10 million. So should we tack that on to the $143 million? Or was the $143 million kind of higher than the base would be in 4Q to add the $10 million to?

Thanks, Beth. Yes, I think the short answer is we are seeing, as Ryan mentioned, some expansive growth in emerging markets, like Latin America and Southeast Asia. Those markets tend to be a little bit more expensive for us as we continue to invest to see the growth. So some of that investment to feed that growth is [what's seen] in that G&A line in our overall impact to our operating margin. We are also investing heavily, as you know, into our digital initiatives, and so you'll see some impact there. As far as LIVE!, I think you are in the general range. I would bolt on that number right on top of our G&A spend from the prior quarter.

Your next question comes from the line of Mark Astrachan from Stifel.

Wanted to try to understand the fourth quarter modeling a bit more. So maybe I can make some assumptions, and you can tell me where I'm wrong or directionally correct. So if you take your sales numbers, assume at the high end, and take the gross margin and assume sort of similar to where you are in 3Q, and then to the commentary you just walked through with Beth, the plug would seem to be that selling expenses are down, I don't know, 100 basis points or so year-on-year, potentially more depending on where you come in within the earnings range. Is that a fair assumption? And I guess, if it is, how should we think about the LTOs and the seemingly beneficial selling expense leverage?

Let me just, real quick, share a thought, Mark. Thanks for that question. When we get our revenue going up, it tends to benefit our gross margins a little bit. So there's some there, and then possibly some benefit in the sales expense as well. As we've modeled out the fourth quarter, we also anticipate potentially a little benefit in the tax area from options, stock options that could be exercised. So that could be another number. And frankly, that could adjust your EPS.

And I think you can look back to our last 2 quarters and see the fluctuation there of what happens when stock options are exercised and how it impacts the tax rate.

Yes, that's helpful. And on the selling expense piece, is it fair to think that number comes in around 41% then?

I would say in the 41% to 42% range.

Got it, okay. And then, just a housekeeping item, how much cash did you have in China at the end of the quarter? And can you talk about how you can access that cash -- or ease up access to it, I suppose?

Generally, we're able to get the cash in and out of China with time. So while you have to sort of declare your financial statements at the end of the year in order to be able to dividend back, there are other ways including most of our company stuff we're able to get out as well as do sometimes company loans. So I don't have the exact number. Usually, it's around 40% of what our total cash is, which...

Our cash position in China is somewhere around $100 million. It hasn't changed dramatically over the last couple of quarters. Again, it moves in and out with timing as we're able to get cash out.

And then, just lastly from a fourth quarter revenue standpoint or maybe build-up standpoint, could you talk a bit about how customers and sales leaders are trending relative to the going in expectation and sort of trying to get at the guidance reduction current financial guidance reduction in sort of a different way? Is it that the customers and sales leaders were maybe a little bit light, maybe they were heavier, which would imply then the productivity per customer sales it would be a little bit lighter? So maybe some color there will be helpful.

Let me take a quick shot at this, and then Ryan, maybe give a little more detail. So Mark, as we move down this path of really trying to speed up customer acquisition, moving towards social selling, then Ryan detailed other initiatives that are all meant to accelerate customer growth, it's adjusting the model slightly from what we see. So we see a pretty strong customer acquisition number. Our customer growth numbers in Q2 and Q3 were actually quite encouraging. We saw a nice uptick from Q2 to Q3 in our sales leader number, which is a good sign as we're coming into the product launches that there's energy building there. But the model is shifting just a little bit as we see sort of our past model where we'd really grow the sales leaders first then we launch the product and expect them to go drive the customer number. It's a little bit more customer-driven, customer upfront growth coming in before the sales leader. So we're learning as we go, I believe, as well. But Ryan, what would you say gives you confidence that the...

Only to add to what Ritch already described, as he said, the customer growth is really coming nicely -- taking out these new product launches, right? So the base of the business is growing nicely. I think what we'll see in Q4 with the product launches, our sales leaders growth will continue to improve for the quarter. And so by the end of the quarter, I think you'll see sales leaders and customers at a good place. So we really are looking at the trends as we walk into Q4 and sales leaders will strengthen as well. So...

It looks like that's all our questions. So let me just wrap up. I'm thanking you all for taking the time to join us on the call today. And for us, as a management team, we've been looking forward to this quarter from the very first quarter this year. So we're pumped to be executing our strategy now and seeing the energy that's growing as we bring products to market. It's really go time for us. It's time to really take the ammunition and try and drive the base of our business. So we look forward to this quarter. We look forward to coming back with our projections in 2018 and really driving success as we go forward. So thank you for your attention to us, and have a great day.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may now all disconnect.