Penske Automotive Group Inc (PAG) 2014 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to the Penske Automotive Group first-quarter 2014 earnings conference call. Today's call is being recorded and will be available for replay approximately one hour after completion through May 1, 2014. It is on the Company's website under the Investor Relations tab at www.PenskeAutomotive.com. I will now introduce Tony Pordon, the Company's Executive Vice President of Investor Relations and Corporate Development. Please go ahead.

Thank you, John and good afternoon, everyone. As John indicated, a press release detailing Penske Automotive Group's first-quarter 2014 results was issued this morning and is posted on our Company website along with the presentation designed to assist you in understanding our financial results.

Joining me for today's call are Roger Penske, our Chairman; Dave Jones, our Chief Financial Officer; and JD Carlson, our Controller. On this call, we will be discussing certain non-GAAP financial measures such as earnings before interest, taxes, depreciation and amortization. We have reconciled EBITDA to the most directly comparable GAAP measures in this morning's press release, again which is available on our website.

Also, we may make forward-looking statements on this call. Our actual results may vary because of risks and uncertainties outlined in today's press release, which may cause the actual results to differ materially from expectations. Additional discussion and factors that could cause results to differ materially are contained in our public filings, including our Form 10-K. I will now turn the call over to Roger.

Thank you, Tony. Good afternoon, everyone and thank you for joining us today. I am pleased to report that PAG achieved a record first-quarter performance delivering another quarter of double-digit growth in new/used retail unit volume, revenue, operating income, net income and earnings per share. That performance in the first quarter highlights the benefit of our brand mix and certainly the geographical diversification of our revenue base. Income from continuing operations increased 15.4% to $66.1 million and related earnings per share increased 15.9% to $0.73 per share. Each area of our business produced solid performance despite the challenging weather conditions that persisted in many of our US markets during the quarter. During the quarter, our dealerships in the Northeast and Central Midwest lost approximately 280 days of operations due to the weather-related business closures.

Now let's turn to the specifics of our record first quarter. First-quarter results were driven by a 13.1% increase in total retail unit sales to 95,700 and a 20.9% increase in total revenues to $4 billion. On a same-store basis, automotive retail revenue increased 14.9%, including a 7.5% increase in the US and a 28.2% increase internationally. The effect of foreign exchange rates increased revenue by approximately $200 million during the quarter largely due to the March registration month in the UK. Excluding the effect of foreign exchange, same-store retail revenue increased 11.7%, including 19.3% in our international markets.

Our total revenue mix during the quarter, the US was 58% and international was 42%. 97% of our revenue was generated through our automotive dealerships while the remaining 3% came from our commercial vehicle, car rental and other business. In our automotive dealership business, our brand mix was premium luxury 72%, volume 4% and 24% and the Big 3, 4%.

Looking at new vehicles, new units retail increased 11.6% to 50,300 units representing a 6.3% increase in the US and 23.3% internationally. Our premium luxury was up 15.4%, volume foreign up 6.7% and the Big 3 up 10.7%. Same-store new unit retail increased 7.9%. US was up 2.2%; international was up 21%. New vehicle units revenue and gross profit were positively impacted by the mix shift to a higher percentage of international operations during the first quarter. New vehicle revenue increased 18% to $2 billion as new vehicle average selling prices improved 5.8%.

Gross profit per new vehicle retail unit improved 5.1% to $3116 and gross margin was 7.7% compared to 7.8% last year. Our supply of new vehicles is at 48 days at the end of March compared to 49 days last year. Looking at used vehicles, retail 45,400 units in the quarter representing an increase of 14.8%. We were up 15.9% in premium luxury, up 13.7% in volume foreign and up 3.1% in the Big 3. Our used to new ratio was 0.9 to 1 compared to 0.88 to 1 in the first quarter of last year. Same-store used units retail increased 12.2%. US was up 10.2% and international was up 16.5%. Used vehicle revenue increased 21.6% to $1.2 billion as used vehicle average transaction prices increased 5.9%. Gross profit per used vehicle retail declined 2% to $1918 and the gross margin was 7.2%. Looking at days supply used vehicles, it was 35 days at the end of March compared to 38 days in 2013.

Turning to finance and insurance, revenue increased 22.2%, including an 18.6% on a same-store basis. F&I improved on a worldwide basis $82 to $1097. F&I per unit was $1048 in the US and $1190 per unit in our international markets. In the first quarter, 63% of our F&I income was generated in the US and 37% was generated in our international markets. Our service and parts business had another solid quarter with revenue increasing 10%, including 7.3% on a same-store basis. Customer pay on a same-store basis was up 7.7%, warranty was up 3.9%, our body shop is up 15.9% and PDI up 5.4%.

Service and parts gross margin improved 90 basis points to 59.2%. In total, overall gross profit improved $97 million, or 18.5% while overall gross margin was 15.4%. Gross profit flowthrough was 17.1% and was impacted by the severe winter weather in our Northeast and Central US markets where we experienced negative flow-through rates during the quarter. However, the negative flow-through was offset by our geographic diversification as both the Western region and our international operation produced significant flow-through during the quarter. Our West flow-through was 29% and our international flow-through was 39%. Operating income increased 13.8% to $119.7 million and operating margin was 3%. Our effective tax rate was 33.9% compared to 32.9% in the first quarter of 2013. We expect our effective tax rate to be between 34% and 35% for the remainder of the year.

Turning to our international automotive business, we produced another very strong quarter highlighted by a 21% increase in total units retail. Our new units were up 23.3%, used units up 18.6%. In fact, the overall UK market remains quite strong with registrations improving 13.7% in the first quarter. We expect the new vehicle registration market to remain resilient throughout the year buoyed by a strong economy, new product introductions and continued attractive financing offers.

Turning to Penske commercial vehicles and car rental, during the first quarter, the commercial vehicle business generated approximately $95 million in revenue. Our brands represented approximately 11.1% marketshare. We believe the commercial vehicle business provides an opportunity for our Company to grow revenue and profitability while diversifying the overall footprint of our business. On the car rental side, our business continues to grow. For the quarter, our revenue increased 102% to $13.7 million. We now have 6000 cars in our fleet. Our utilization rate of those vehicles is approximately 70%. Commercial vehicles and car rentals generated 21.6% gross margin in the first quarter.

Looking at the balance sheet, at the end of March, total nonvehicle debt was approximately $1.1 billion, essentially flat from the end of 2013. Our total debt to capitalization ratio improved from 42% at the end of December to 40% at the end of March and our debt leverage improved to 2.1 EBITDA. Excluding approximately $101 million, the Penske car rental line of credit total vehicle debt would have been approximately $974 million and the debt to capitalization ratio would have been without the car rental debt approximately 37%. Total liquidity was $411 million and effective April 1, 2014, we increased the capacity on our revolver from $375 million to $450 million and reduced the borrowing rate on collateralized borrowings by 25 basis points.

Our vehicle inventory was $2.4 billion and increased $500 million when compared to March of last year. New was up $403 million, used was up $99 million. On a same-store basis, vehicle inventory increased $302 million compared to the end of last year, new up $226 million and used up $76 million. Capital expenditures for the quarter for corporate and ID facilities were $34.5 million. We estimate CapEx for 2014 to be similar to 2013 at approximately $130 million. Additionally, we spent $28.5 million on the procurement of vehicles for our car rental business. Our EBITDA improved 16.6% to $130.2 million.

During the quarter, we announced several acquisitions and items that we believe will provide future growth and profitability for our business. We signed a letter of intent with Porsche cars in North America to construct a new Porsche dealership in Broward County, Florida. The new dealership will represent our seventh Porsche dealership in the US and our 15th on a worldwide basis.

We completed one acquisition in the first quarter acquiring BMW Greenwich, BMW Mamaroneck and a service center in Port Chester. We expect this transaction to generate approximately $190 million in annualized revenue. This acquisition complements our existing scale in Connecticut where we operate Mercedes-Benz in Greenwich, Porsche and Audi and Mercedes in Fairfield, Connecticut and Honda in Danbury, Connecticut. Additionally, we expect to open a new Toyota dealership in Surprise, Arizona on May 1, 2014. Upon opening, it will represent our 16th Toyota dealership in the US and our 22nd dealership in the greater Phoenix market.

In closing, I am very pleased with our performance in the first quarter and believe our results continue to demonstrate the benefit and strength of our brand mix and our geographic diversification. With a strong balance sheet and a positive outlook across our automotive dealership, car rental and commercial vehicle businesses, we are poised for continued growth. As we move forward, we will continue to evaluate our market position and we remain committed to pursuing strategic and opportunistic acquisitions to help our Company achieve long-term success and prosperity.

I would also like to thank each member of our team for their contributions to our success and in particular to those who persevered through the difficult winter conditions in the Northeast and Central US markets. Also thank you for joining us today on the call and for your continued confidence in our business. At this time, I'd like to open up the call for your questions. Thank you.

(Operator Instructions). John Murphy, Bank of America Merrill Lynch.

Good afternoon, Roger. Just a first question on capacity, both in the dealership itself and then also in the service bays. If we could think about North America or the US and the UK markets separately. I mean are you capacitized correctly as far as your store base, as well as your worker and salesforce base within your dealership for the sales part of the business as it ramps up? And then also capacity utilization in your service bays, how much room do you have left to go there? So if we could that that both in the US and UK separately.

Let's talk about on the sales side of our business. I would say that every one of our retail outlets is looking for more salespeople as this market has moved towards 16 million. We are probably short of the proper sales associates. And many of the manufacturers have opportunities for us, BMW with our product geniuses. We have got other people as delivery specialists. So we are reaching out in some cases for a different type of person to take on the sales process and I would say this is similar not only in the US, but internationally.

When I look at the service capacity from the standpoint of bricks and mortar, we have invested over $2 billion in facilities over the last seven or eight years and I think our capacity is in good shape. The issue is again to try to attract mechanics that want to make it a career and we are utilizing UTI and other places where we can get young people to move into be apprentices in our business.

I know in Europe, in many cases, we have 10% of our workforce, which are operating as apprentices, not only in the fixed side, parts and service, but also on the sales side. So I would say we have capacity from a bricks and mortar standpoint. We are obviously looking at more people on the sales and also on the technical side. Our fixed absorption during the quarter from a parts and service standpoint was approximately 73%. So again I think we are right-sized. We could use more land as we expand our used car business, but other than that, I think we are meeting or exceeding in most every case the requirements for our planning potential from each of the manufacturers.

Great. And a second question, do you think there is an opportunity on the used car side or is the market coming at you as we see a rise in leased vehicles being returned, particularly for the luxury brands over the next maybe six to -- six months to next three to five years?

Well, as you know, 66% of our revenue is premium luxury and of that -- of BMW, Audi, Mercedes, Lexus, Porsche, probably 50% to 55% is leased. So the good news is those are 30 to 36 month leases and we see those cars coming back and we get first choice on those. So that is a nice pipeline of vehicles for us from the standpoint of opportunity.

So I know there has been lots of discussion about a big surge coming back. We look forward to that specifically as we go forward to build our used car business. So to me, the pipeline is good. From the standpoint of volume foreign, we are getting the benefit from the 6000 cars that we have in our rent-a-car fleet and we will turnover probably somewhere between 3000 and 4000 of those over the next 12 months. And those will provide us excellent cars for retail. Those have been specked at the time of purchase with sunroofs and some of the things that make those cars more desirable in the marketplace.

So a used car opportunity I think is there. We must use the technology now that is available to us. I think we have now opened up the used car market not just who drives by, but for the power of the Internet and what we have done to reengineer some of our websites call to action some of the tools we are using is going to make a difference and certainly the CPO programs offered by the manufacturers, we are running at about 35% CPO and those get the benefit of all of the typical finance and benefits on leases and also the financial transactions that are covering the CPO. So to me, it's a big advantage when we go in the premium luxury side.

^ And then just lastly, because it is becoming really en vogue to open standalone used car stores, is that something you would consider sort of maybe in conjunction with your auto malls are really on a true standalone basis or is that just something that wouldn't make sense for your business mix?

Well, we've watched Carmax over the last 10 years and they have been able to build a brand, which is significant in the marketplace, to get the benefit of not having to worry about specific guidelines on franchises and market areas. But, from our perspective, I've looked at it and we have taken a couple of sites in the UK, which were formerly locations where we had new car franchises, but too small to meet the market requirements and we have opened up other makes used cars there. I think we have three today and they have proved out to be successful.

On the US side, we have probably taken a little bit different approach by increasing the footprint from a geographic standpoint on our used car business. I think that today if I do a better job in getting utilization of my existing facilities -- an example of that is, in the Central area, specifically in Atlanta, we have two BMW stores, which sold approximately 120 new at each one of those during last month in March. One sold 450 used cars retail and the other sold 250. So we are proving that using the right tools that we are able to drive the used car business to our local site. And what I see, you have a cost associated with going to a separate site. You have got heat, light and power, you have got additional management and obviously you have got to build a brand. And to me, I like the halo, the umbrella effect of the brand we are representing in that particular market.

Now I am going to standby on the curb and watch this and obviously if it looks like it is getting traction and it is the way to go, we have the benefit of moving forward. But, today, we are going to focus on other areas of growth, one being a commercial vehicle platform or geographic footprint internationally. I think we would probably continue to invest there before we would open up standalone used car operations. We have invested, as you know, over $2 billion, as I said, in facilities.

Great. Thank you very much.

Rick Nelson, Stephens Inc.

Good afternoon. Roger, (inaudible) has probably more exposure to those weather-affected markets than any of your peers. Is there a way to quantify the impact on the EPS in the first quarter?

Well, I think I touched -- when you look at the markets that were impacted all the way to Atlanta, Washington, New Jersey, Connecticut and Rhode Island on the East Coast and then when you look at the Central area, you have Cleveland, obviously Indianapolis, Madison, Wisconsin and Minneapolis, so a significant part. And when we looked at our numbers, we had no flowthrough in those particular markets for the quarter, yet we had strong flowthrough, almost 30%, in the West and almost 40% internationally. But what I did was take a look at January and February against the budget that we had set up. Now these budgets are generated based on previous years' metrics and history and when we looked at February year to date, we were about $8 million behind on earnings before taxes in both the Central and the East and we clawed about $2 million of that back during March because of the strong close on March.

So I think before any other costs, we probably had $0.04 impact. That is the easiest way for me to explain it. Obviously impact on our SG&A but obviously there is nothing I can do about that. We will get some of that business back. I think the new car business probably sits on the sidelines, waits for better days to shop. People that want to buy a specific used car certainly probably went ahead and did some buying through the Internet. The service would be the most area that was affected and from that standpoint, because our mechanics work on a flat rate hour, they want to continue to get business. I think we will see that creep back in. The business that we lost during the quarter obviously would be the service business, the consumable business, the oil changes, the tires, the mufflers and some of that work. Obviously, it went off to some of the other providers. Warranty work will come back to us. So overall, I think it will flatten out; there is no question. And this impacted our flow-through and our gross profit, but again we had a great quarter and we are moving on and that is the last weather report I want to give you this year.

Okay. Also used car comps have really broken out. In the past two quarters, your used to new ratio, 0.9 to 1. The drivers there, as you've touched on, is that the off-lease and rental fleets have availability that's the driver there. Do you think it is sustainable?

Well, the off-lease, I think you have got to look at the different manufacturers and what is the penetration by the captive and I think if you look at our peers, most of the peers that are dealing in premium luxury are leasing. And those lease vehicles, we get the opportunity from the captive finance company to buy those and with those, it gives us a strong chance to grow our used car business. The rental vehicles are key for us. That was a strategy from the beginning. The business will generate a nice profit for the full year and yet we get the benefit of these vehicles from a sales standpoint when we sell them off to the dealerships.

Also, we are going to auctions. We are using e-commerce to buy vehicles and there is no question that the retail first is a term we have used. We have gone for the metric what is our wholesale to used retail, not what is our used to new ratio. And I think we are starting to sell vehicles. If you look at our Penskecars.com, we have cars under $5000. So we are running the gamut from $5000 to $250,000 on the superpremium. So we have really opened up the field for us, so we have the benefit where we are going.

We are using FirstLook and we are using vAuto to be sure we are pricing right in the marketplace and from a CRM perspective, we standardize on dealer stock across our network, which has proved to be very beneficial plus some of the mobile apps that we have been able to integrate in the used car process has been -- I think that is key. We are really driving this.

Thanks for that color and good luck going forward.

Thanks, Rick.

Brian Sponheimer, Gabelli & Co.

Hi, Roger. I just wanted to talk a little bit further into the future with you about acquisition opportunities. Your balance sheet is now levered at 2.1X. Your EBITDA this year, roughly speaking, will be about $550 million, maybe $600 million next year. What is the leverage target that you think you are most comfortable at from a growth standpoint?

Well, we said our debt-to-capital we said kind of 50% would be a top. We would like to be in the 40% to 50%. I think the capital markets are very open to us from the standpoint if we wanted to put in some more subordinated debt, we have looked at that over the last several months. But from a growth perspective, I see strategic and opportunistic acquisitions here in the US. Only 10% of the US market today has been consolidated and we see a good pipeline as far as deals are concerned looking at us in the face. Here in the US, we have got a new Toyota store opening up in Surprise and then Open Point for Hyundai in Texas. We have got the Florida point for Porsche, which we have signed, which is good.

And then we look at Western Europe where our BMW business continues to grow and we have opportunities now in Spain and then our commercial vehicle platform, which we've started in Australia has really opened up an opportunity for us to grow in those markets and our investment we have in the Freightliner dealership here in the US is giving us some good ideas from the standpoint of growth.

So I would say keep our leverage below 50%. Obviously we want to watch interest rates from the standpoint as we fund some of these acquisitions. The cash flow has been strong and I think what we want to do is have a balanced balance sheet from a standpoint of automotive trucks, retail and leasing and I think the distribution business will add another value to us in Australia. So overall, we are open for business and pricing is, on the good deals, is certainly higher than it has been in the last couple years, but I wouldn't walk away from a business like we bought certainly in Greenwich, the BMW business.

Right. So I guess my math, not yours, based on your cash flow, if you want to take it to 50%, that gives you about a $700 million debt cushion that buys roughly $3 billion to $3.5 billion worth of revenue.

I am going to go with your calculation, so let's say that is right.

All right, so that is $0.40 of incremental EPS for 2015 if you get there.

I hope to put that on the board, yes.

A lot of opportunity. Thanks a lot, Roger.

Brett Hoselton, KeyBanc.

I was hoping to touch base a little bit more on the gross profit throughput. I understand the Eastern European was impacted by -- still look at the Western European number, Western number that you had there and you have got 29% throughput and that is a little unusually low. You guys -- I kind of tend to think of you guys are going to be at least at 30%, maybe up into that 40% range or something along those lines and it varies quite a bit. But what are your thoughts there? I mean do you have an expectation or hope that you can get to a specific number?

Well, let me be sure. The 29% was our West US flow-through and 39% was our international just to put it in perspective. I think our target is 35% overall for the Company. And obviously, we had negative flow-through in Q1 both in the East and in the Central area.

And as you think about the 29%, was there anything -- in the Western US portion, was there anything that caused it to be below the 35%? Was anything unusual in that or was it just kind of one of these quarters that you fell a little short of the target?

Well, for sure, I know we spent more money on advertising in the West during the quarter. We were carrying some excess personnel as we are opening up the Toyota store in Surprise on May 1. So we probably had 60 days of hiring people and going through the training process, which would add some extra cost there. So to me, those would be areas that might have some impact. But I think when you look at a same-store basis, we are probably fairly close to our target.

And then talking about gross profit per unit, luxury obviously performing reasonably well. Volume foreign still seeing some pressure. I was hoping you can talk about gross profit per unit in both of those segments. What is driving the outperformance or the improvements in luxury and then what is pressuring the foreign volume numbers in your stores?

Well, when you look at luxury by itself, we were at $3900 a vehicle in the first quarter last year and almost $4200 this year. When you look at that, that is a very good result and I think that is due to a number of things. A lot of it is leasing. We don't have the interbrand competition with the premium luxury. We have got 300 BMW stores, plus the same thing in Mercedes, probably half of that in the standalone Audi and Lexus has 184 partners. So we see that as an advantage. They have given us the chance to cover the markets with more geography in what we would call our PMA or primary market area.

So to me, that is a benefit in the premium luxury side and I think you would see that within all the peers. If we put our numbers up, you would see premium luxury being stronger. There is some pressure in that middle segment, which we see with Honda and Toyota and Nissan. But, again, those pressures produce some very good used cars on trades, which I would say the residual value both on Honda and Toyota has never been better and those are cars that we get nice profit and good customer reception from the standpoint of use. Domestic, we are only at 4% domestic, so I don't think we really -- we don't move the bar at all on the domestic side.

And then as we think about your F&I per unit, obviously it was a very nice improvement both in the US and international operations. I was hoping you could talk about what is driving that and then your expectations going forward.

Well, let's say the first thing is focus and we had discussions at our Board meeting with the Board looking at what our peers are doing out there and when we look at our business, again, because of premium luxury, a big portion of our business is leasing and when you think about someone leasing a car for 30 months, it is hard to sell extended service contract and some of the things that you might sell on a 48 or 60 month contract. So we think we have some downward pressure there.

In the UK, they have been hit quite honestly with some very low priced financing and they are only getting flat over there. But to me, we have done focus, we have put more people in the field. I think the people have done a good job who are helping us maybe take best practices. We are doing some more training both online and Penske to Penske type training, which are paying off. So from our standpoint, as we look forward, we were up $82 for the Company for the quarter and I think when you look at it from a US perspective, we were up about 7% and internationally, we are up about 8%.

So I think that if we can continue that type of growth throughout the rest of the year and end up 7% or 8% in both markets, we have done a good job. I don't think you can push it much farther at least at the moment. Remember today that only 67% of our financing comes in the US and of that, I think only about 40% of that comes from actually financing reserves, the balance of it is product reserves that we get for selling particular products.

Thank you very much, Roger.

(Operator Instructions). Scott Stember, Sidoti.

Good afternoon, Roger. Could you talk about on the used side and the opportunity of the increased amount of leased vehicles coming into your markets and how that impacted the certified preowned program in the quarter and maybe going forward how that could look?

Well, a big portion of our business is used cars. At least supply is coming off of leases and today, 34% of the cars that we sell typically are certified preowned. And when you look at it from the standpoint by areas, certainly the West Coast is at about 36% and the other regions follow in pretty much similarly. But I see the certified preowned driving one thing. It drives a loyal customer who knows they have in many cases the same warranty that is available on the new vehicle, in many cases the same financing or lease terms. So to me, that is a real opportunity and we use that where we can.

One thing we do do however, what I don't want to do is start doing a lot of reconditioning on used cars to drive the cost of sale up because at the end of the day, the advance rate by the finance company will be limited based on market pricing. So we need to watch that. So I think the 30%, 35% is probably a sweet spot and the good news is, as we do this used car business, we are driving our parts and service business up because we get the internal gross profit. And I think that has been some of the benefit we have gotten as our margin on parts and service is approaching 60%.

Great. And on the parts and service business, could you maybe breakout the performance, the UK versus the US and that was a pretty healthy number that you guys put up despite the fact that you lost all those days of operation. Could you maybe also just talk about what those numbers could have looked like had you been able to capture all that business?

Well, I think when you look at the same store and you exclude exchange, we were at 5% and the US was probably mid-4%s and the international business was around 7%, which would give us the 5.3%. And when you look at our revenue on a same-store basis, 70% of our revenue comes from customer labor, at least it did in the quarter, 20% came from warranty and the balance 10% came from body shops and PDI. So the good news is even though we hear about all these recalls, at the end of the day, customer labor is key. We get our margins there and that is the opportunity for us to grow because now what we are doing, we are looking at some of the tire business, we are looking at the oil changes and overall, to me, that is going to grow this gross profit because we have ToyotaCare, we have some of the Full Circle products that BMW offers and with that that drives that service business.

To me, we have got to get more technicians. We have got to extend our hours and those are things that every one of our stores are working on because we have the brick-and-mortar capacity I mentioned earlier, but I think from a human capital standpoint and the manpower in some cases, we are behind and that can give us opportunities. The one thing we don't know is recalls are not predictable. Today, I think with all the visibility at GM, you are starting to see more of these recalls at the moment, but the good news is that the two-step distribution system being the OEM -- to the OEM dealer that is what we are here for. We are here to take care of that customer, fix his car and get him back on the road or provide him with a loaner. So to me, this system is working.

Great. And last question, can you just talk about how April was looking comparing it to what we saw in March?

Well, when I look at the business in April from the standpoint that we are not double-digit increasing in April from the standpoint of new, but I think we are 7%, 8% at least when we look at it overall for the business on new and probably a little bit less than that on used. But you don't really get a true number. A lot of these deals closed in the last 10 days, but overall I see a nice lift over last year.

Great. That is all I had. Thank you for taking my questions.

Thanks a million.

And Mr. Penske, you have no further questions in queue.

All right, thanks again, John. Talk to you next quarter. Thanks.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.