PetIQ Inc (PETQ) 2017 Q3 法說會逐字稿

Greetings and welcome to the PetIQ third-quarter 2017 earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Katie Turner, managing director at ICR.

Thank you. Good afternoon and welcome to PetIQ's third-quarter 2017 earnings conference call and webcast. On today's call are Cord Christensen, Chairman and Chief Executive Officer, and John Newland, Chief Financial Officer.

Before we begin, please remember that during the course of this call, management may make forward-looking statements within the meaning of the federal securities laws. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could differ materially from actual events and those described in these forward-looking statements.

Please refer to the Company's prospectus filed with the Securities and Exchange Commission and the Company's press release issued today for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statement made today.

Finally, please note, on today's call, management will refer to certain non-GAAP financial measures. While the Company believes these non-GAAP financial measures will provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP.

Please refer to today's press release for a reconciliation of the non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP. Management will also refer to net income and adjusted net income as well as EBITDA and adjusted EBITDA on today's call. For a calculation of these measures, please refer to the Company's press release.

And now I would like to turn the call over to Cord Christensen, Chairman and CEO.

Thank you, Katie. Good afternoon, everyone, and thanks for joining us today. We continued to execute on our strategic business initiatives and are very pleased with our success year to date.

For the third quarter, we achieved net sales growth of 45% or $60.6 million and strong operating leverage, which produced a 350% increase in adjusted EBITDA to $5.4 million compared to the prior-year period. Importantly, our results are on pace with what we expected and they represent our strongest third quarter in the Company history. We are particularly pleased with our results, given the significant weather-related headwinds and store temporary closures our retail partners faced in Texas and Florida during the quarter.

As many of you know, we have one of our manufacturing facilities based in Daytona Beach, Florida. And fortunately, it did not sustain any damage from the hurricane.

From a distribution perspective, we have leveraged the breadth and depth of our distribution network to meet our customers' needs and ensure on-time deliveries. Our ability to successfully manage through these events speaks to the strength of the infrastructure and team we have in place. We believe our category leadership, broad portfolio, value proposition, and strong customer relationships will continue to fuel our future growth.

Our goal of increasing pet health and wellness by improving awareness, choice, accessibility, and convenience of veterinarian-grade pet prescription medications continues to resonate with new and existing customers. This has resulted in our consistent growth across retail channels, including mass, food and drug, club, pet specialty, pharmacies, and recently e-commerce. Pet parents increasingly have greater opportunities to find their veterinarian-grade medications as well as over-the-counter flea and tick preventatives where and when they shop.

Our mission to make pet lives better by educating pet parents on the importance of regular veterinarian care and veterinarian-recommended pet products combined with the successful execution of our manufacturing and distribution strategy has led to approximately $260 million in net sales on a trailing 12-month basis, representing a 44% compounded annual growth rate since 2011. We are well positioned to take advantage of the trends that are happening in the pet industry, where there is rising pet ownership, pet humanization, and increased aging of pets that all depend on better healthcare.

Now to focus on key growth initiatives in a little more detail. First, driving consumer awareness is critical. Our team has done a tremendous job so far. But as many of you know, we are a $260 million company in an $8.6 billion market that is experiencing compounded growth in excess of 6%. This growth is outpacing that of the broader $80 billion pet industry.

We remain in the early innings of the growth we believe we are capable of achieving over time as we continue to educate consumers of the importance of veterinarian care for their pets. To put the opportunity in perspective, if we were able to grow our prescription share by 1%, we generate $50 million in sales for PetIQ.

Second, we are focused on consistently maintaining our pace of innovation, which will continue to broaden our portfolio and in turn support further distribution in new and existing customers. A great example of this is our expansion to all PetSmart locations earlier this year.

Combined with our sales velocity, which is growing at a faster rate than our points of distribution, we have a powerful recipe that we expect will continue to fuel growth in net sales and profitability over the next several years.

Third, the evolution of e-commerce continues to be a compelling growth opportunity for us. And we intend to be a trusted and valued partner to our customers that are pursuing a variety of go-to-market strategies to accommodate today's consumer shopping habits.

Fourth, we continue to focus on increasing SKU penetration with our existing customers. We have demonstrated to our retail and manufacturing partners that we can educate consumers on the importance of regular veterinarian care and vet-grade products.

Once our retail partners see the benefit of the category and our execution, we are provided the opportunity to expand our footprint and add additional SKUs. For the third quarter, we further expanded our SKU penetration to existing customers as a result of our expanded product line.

Finally, margin enhancements. We are very proud of the infrastructure investments we've made to develop a strong customer-centric business model. This enables us to execute efficiently on our growth strategies.

We continue to enhance our manufacturing capabilities and production within our factories. Today we produce approximately 50% of our manufactured products ourselves and are operating at less than half of our full capacity. This is an exciting dynamic that will generate long-term benefits, but shouldn't overshadow the near-term leverage we will continue to realize from the scale-related efficiencies as well as ongoing improvements in distribution.

Before I turn the call over to John to review our financial results in more detail, I'd like to thank Scott Adcock, my friend, business partner, and cofounder of PetIQ, who retired effective October 31 from his duties as President and Board Director for health reasons.

This is a critical time for Scott to completely focus on his health and well-being, and we will greatly miss his leadership and the passion and enthusiasm he brought to PetIQ. He has been an incredible partner and his contributions to our mission have been invaluable as we have transformed a shared vision into reality with the growth of PetIQ.

I am very proud of what we have achieved together as we set out to build a strong corporate and financial foundation that would support our culture of growth, innovation, and execution. In honor of Scott, the team will continue to bring his vision forward in a great business. We are pleased with our success to date and even more excited about our future opportunities for growth.

With that overview, our CFO John Newland will take you through some of the financial results.

Thank you, Cord. I will now review our third-quarter financial summary. Net sales increased 45.3% to $60.6 million for the third quarter of 2017 compared to $41.7 million for the same period in the prior year.

Net sales for the quarter were primarily driven by growth in distribution and velocity as compared to the prior-year period. Gross profit was $12.5 million or 20.7% as a percentage of net sales compared to $6.2 million or 14.8% as a percentage of net sales in the same period last year.

Gross margin expansion of 590 basis points versus the prior-year period was primarily due to the significant sales growth, creating improved economies of scale, as well as improved sales mix in more profitable categories and continuous improvements we are realizing in procurement.

General administrative expenses were $10.7 million compared to $7.9 million in the prior-year period. This includes a $2.3 million of expenses related to our initial public offering that we don't expect to recur in Q4. Even with these additional expenses, G&A as a percentage of net sales decreased 140 basis points to 17.7% for the third quarter of 2017 compared to 19.1% in the third quarter of 2016.

Net income was $0.9 million for the third quarter of 2017 compared to a loss of $2.5 million for the prior-year period. Reported net income includes $2.3 million of nonrecurring expenses related to the Company's IPO, which closed during the third quarter.

Reported net income also includes a $0.6 million tax provision for the quarter as the Company transitions to a taxpayer status from a pass-through entity. For EPS modeling purposes, we suggest using the full 35% statutory rate.

Adjusted net income was $3.9 million in the third quarter of 2017, which compares to an adjusted net loss of $0.5 million in the prior-year period. This adjustment excludes the $2.3 million of IPO expenses as well as the $0.6 million of taxes. As a reminder, adjusted net income and adjusted EBITDA are non-GAAP financial measures which are reconciled to net income in the financial tables that accompany the third-quarter earnings release.

Turning now to the balance sheet, at the end of third quarter, the Company had cash and cash equivalents of $46.5 million on an outstanding balance -- on a revolving credit facility of $18.1 million. The increase in cash is primarily due to the receipt of $44.4 million in net proceeds associated with the Company's IPO, which closed July 26, 2017, providing us ample ability to pursue our growth strategy.

In addition with our healthy cash from operations, we paid down $15.5 million on our revolver and fully paid off our $4 million term loan compared to June 30, 2017.

As we look to the balance of fiscal 2017, I would like to remind you that our fourth quarter is our smallest due to the seasonal drawdown of flea and tick inventory at our retail partners. With respect to 2018, we have a great degree of confidence in our growth prospects after completing the recent line review process with our retail partners.

This concludes our financial overview. I will now turn the call back to Cord for our closing remarks. Cord?

Thanks, John. At PetIQ, we remain uniquely positioned for future growth with a business model that is supported by attractive macro trends and differentiated operational characteristics that are revolutionizing how pet parents obtain their pet healthcare products.

We appreciate your interest in PetIQ. And with that overview, we would like to open up the call for questions. Operator?

(Operator Instructions) Kevin Grundy, Jefferies.

I wanted to start with your outlook for 2017 and then maybe get a peek into 2018, given some of the meetings you just had with some of your key customers. Can you give us an update? Obviously, the year-to-date results have been very, very good. So congratulations on that.

But now it seems like the last update we got on 2017 would now imply a pretty soft Q4. But my sense is that's just sort of a stale number. So maybe you can help us with 2017 based on what you are seeing in the business.

And then looking out to 2018 and then maybe even beyond that, do you still feel comfortable with the 20% sales growth that you shared during the IPO process? And then I have a couple follow-ups.

Thanks, Kevin, for the question. I think as you've been with us a bunch and you know how the retail market works, we don't have any new item placements that are happening during fourth quarter.

So Kevin, obviously we have had three great quarters in 2017. I think you've been able to now see the discipline we've added, how we've planned our business. Our business is such that most of the retail activity and new business comes on during the early part of the year.

And if we are doing well in Q2 and Q3, then the likely outcome is that Q4 we'll do well. And we expect that Q4 will continue to be in line with the way we've structured and ran our business all year. And we are hopeful that we see that trend continue and we believe it will.

We don't provide guidance, as you know, but we feel good about how we performed. And I think all you guys have been around and watched us to know that's a likely outcome for the rest of the year.

We've had a very successful process in going through the line review processes for this fall and for what will happen for next year. We've just completed what is a six-week process we go through for both a bottom-up and a top-down for every item and every customer.

We still stand by our growth targets for the future and don't have any updates to those targets at this point for next year. Feel great about where the business is and where we are heading and where the overall Company's trends are going out in the future.

I won't comment beyond 2018, but we still feel good about the overall macro trends to support a long-term growth targets that we communicated that we still stand by.

That's helpful, Cord. Can you drill down a little bit on distribution? Maybe not even call out specific customers, but as you are looking out to 2018, does that distribution look any differently to you now, Cord, than it did three months ago? Are you leaning more heavily into online and are you picking up more online?

Is there still -- do we have a lot of gains here in pet specialty, which has obviously been a big story in 2017? Maybe just some color on distribution for looking out to next year.

Yes, well, I think we are excited that we are seeing great gains everywhere, Kevin. And I think the business is resonating, it's growing, it's delivering great customer experiences across all the channels.

We haven't seen anything different than what we saw midyear or what we are seeing in the back half of the year as it relates to that. We see a lot of our brick-and-mortar customers figuring out how to balance their businesses and how to do well, at least with our product lines in their environment. And we are seeing all of those customers be part of our plans and a part of how we've been beating our plans year to date.

We are seeing the same momentum and gains everyone is seeing online. And we see that continuing to expand and grow for us. And then as we were well positioned midyear, we think we are gaining knowledge and experience with every day that goes by. And then I think we are applying that to our total business.

So I don't see any significant big changes in distribution; more of the same. We are gaining items, we are gaining doors, we are doing things smarter, and we are seeing those same efficiencies come into it. All those things need to be there to maintain the 20% growth rate. Right now we feel like those things are in place and that's what's happening.

Okay. And then one more and I will pass it on. Cash on the balance sheet right now -- so the balance sheet is in very good shape post the IPO process. What are the intentions here with the cash? Because the balance sheet is in good shape, albeit inefficient at this point.

Are you actively looking at M&A? Is that something that interests you? What are the plans here with cash and when can we expect to hear more? Thank you.

Thanks, Kevin. We have cash in some short-term investments that are very liquid in nature. And we will continue with that mindset for the not-too-distant future, I guess, at this time. And yes, we will always consider if it's a good fit. Whether it's M&A activity, we will certainly consider it. And if it's a good fit for the business, we will take it into consideration.

Okay. Thanks, guys. Good luck.

Jon Andersen, William Blair.

Could I just -- I just want to start with the growth in the quarter, 45%. Congrats on that. Could you talk a little bit about the composition of that growth? Are you seeing a similar level of consumption growth or takeaway?

And I'm just trying to get at maybe to what extent you benefited from distribution here or anything more pipeline-like versus -- and demand. If you can talk a little bit about that. Thanks.

Yes, Jon, thank you. That's a great question, by the way. We are really excited to announce that in conjunction with the earnings that we just reported that our beats, if you will, within each of the area categories of the business were consistent.

We didn't have one that outperformed another per se. It was just across all categories we had a very strong quarter. Across all pipelines as well, to the other part of your question, into the different channels equally as strong. So you can't really point your finger at any one particular area and say yes, this is it. It was really strong performance across all categories with all customers.

I think, Jon, the last thing I would add to your question is we had no new fills in third quarter. So everything would have been selling against placement that had been in place prior quarters and what the reorders were on those. So just the opposite.

We get to third quarter and with the seasonal nature of flea and tick, we start seeing customers starting to pull down inventories as they get to the end of that quarter. And so in some cases, just the opposite. We are seeing some depletion that takes place.

So the one anomaly why it was so high in this quarter was that we kicked off a lot of the gains we had in the pet specialty space in Q4 of last year. And this would be the last quarter that you were still seeing the first time that that business was contributing.

But otherwise, it was -- and all of that business was not placement or pipe fill. It was all reorder replenishment. So a very healthy quarter in how those numbers, as John said, consistent beats across all product lines.

Great. That's helpful. Coming back to the line reviews for 2018, can you clarify a little bit for us? Where are you -- I mean, are those complete now? And what level of visibility do you have at this point? I'm just trying to understand the kind of commitment from your retail customers at this point in the year and your level of visibility as you look to the early part of next year.

Thanks, Jon. As I mentioned earlier, we just completed our bottom-up top-down budget process that we did in the exact same timeframe for 2017 back in 2016. That budget was reviewed with our full Board of Directors this past week, and the decisions from the retailers are reflected in those budgets.

We all know that businesses are real businesses, they are not spreadsheets. So we have to take all the analytics and history and experience and philosophical ways that we conduct ourselves. And we just hope we continue to gain your confidence that we are doing that with an experience and a level of discipline that is keeping these calls funner versus not.

And we hope to continue the process we used this year to have similar calls next year as the quarters come through. So it's a lot of visibility and we view our budget as baked at this point for next year.

Okay. Had a question on a couple of retail developments. So PetSmart has set up a pharmacy and they are selling flea and tick health and wellness product, I believe, as well as other prescription items. And then there has been discussion around Amazon potentially selling human prescriptions online, but perhaps also getting more into pet.

Can you just talk broadly about the e-commerce landscape: what you are seeing there, how you think it impacts your business, and to what extent this is opportunity versus risk with this evolving quickly? Thanks.

Yes, thanks, Jon. Well, we actually embrace and are excited about anything that is helping us spread the word around pet parents needing to use and having access to the best quality healthcare items for their pets. And we feel we are a company that is at the center of the wheel and we will service any of those channels.

We are in great standing with those customers that you mentioned. We are excited about their progress in the category and believe that we are a winner in that environment. So we will continue to help aid our customers as they move forward.

We also know, and having said that there has been a lot of opportunities in the past for people to get their prescriptions online. And brick-and-mortar pharmacies have performed extremely well for a very long time. And we still believe that our brick-and-mortar pharmacies will still play a huge percentage of the volume that we have going forward.

And we are extremely well positioned, as we have talked before about our infrastructure and our processes and our competitive advantages that we believe provide us a nice moat for the business. So anything that continues to educate pet parents because we still -- I just read a report today about the number of pets that still are going unserved and the dollars that they represent on the services side.

And if we apply that same percentages to the product side, if we could just get every pet parent that doesn't go to the vet to go once a year, the amount of market expansion would be probably close to a 25%-plus CAGR for the industry.

So we think all this stuff is good. It's going to grow and all ships rise, and we think we will be an incredibly buoyant ship in that environment.

That's helpful. Can I squeeze one more in? So your Company is growing quite rapidly. You are executing well. Scott's departure, it sounds like it was somewhat unexpected for health reasons. It sounds like you are going to assume his responsibilities for the time being.

Is there a -- two questions. Is there a longer-term plan to replace Scott? And more broadly, how do you think about the organization and the people and the capacity of the management team to navigate and support the kind of growth you are looking for over the next several years? Thanks.

Thanks. And obviously, it's somewhat robotic to read a statement for these type of calls. And not easy to put into words a gentleman that shared an office with me for 10 years and helped build the business; and the emotions you feel when you find out that for serious health reasons that he needs to depart the business.

A lot of you have met Scott and know that that was probably the hardest decision he has ever had to make: to put him and his family first and leave the business that he loved so much behind.

Having said that, we are not an immature business. We may be growing fast and may be a business that on the outside looks like that. But we have a tremendously strong infrastructure with extremely deep layers of senior leadership.

Scott had built a team that reported to him that had leaders running their respective departments. And Scott was available to work on a lot of special projects and new initiatives. And we've definitely figured out how to keep everything we are doing working perfectly running.

The Company is taking a time to truly look at what's the best resource to backfill. Because the day-to-day operating of the business and what is supporting our base business's growth rate is in place and is well suited. So it is all about what more can we get and what more can we do.

Because of its sudden nature, we are going to take at least a little bit of time to make sure we properly put together our plan, decide if it is a backfill of a person or if it's a couple people, and dividing up some of those responsibilities.

But rest assured that the team that was in place and the team that you see executing these numbers that are getting done and those things that are happening every day are continuing to happen. And the team is very, very well trained. Scott had recently hired more people in Q2 and Q3 and had been training them, and they have been up to speed and executing on additional work.

So we actually feel pretty good about it. That -- never a good time, but if there was a time that it was going to happen, it would be the least disruptive right now. So we will be back to you shortly. We need a little bit of time to figure out what our best plan forward is.

But make no mistake: we -- you won't ever hear us on a call making an excuse that Scott's departure put at risk our plans for the rest of this year or for next year. We love him to death; he's a brother, he always will be. But the Company is bigger than any one person and there will be no excuses out of us for what happens going forward.

Brian Nagel, Oppenheimer & Co.

This is David Bellinger on for Brian. First, I just want to say thank you to Scott for all his help over the past year or so. And we're wishing him a speedy recovery.

A couple questions from us. Just following up on sales and the adverse weather effect you called out. Was there any negative top-line impact in the quarter and potentially implying that sales could have grown at a rate higher than the reported 45%?

Yes. So again, any time you are speculating on what it could be or would be, we try and use as good of analytics. And we are not here to speculate with you about what could have or would have happened.

What we do know is there's chartable information around the number of retail outlets that were closed in regions due to those weathers in the weeks that they were closed and the days that they were closed. And frankly, the recovery on those markets that we could see historical unit movement through those locations says yes, we have a very good idea that top line was impacted. And we expected it to be better than where it is now.

The magnitude of it is, is we assume there's probably a few million dollars of additional sales that should have been on the top line that weren't there. We feel fortunate that we were able to execute well across all of our distribution centers and all of our people to make sure that in spite of those things that are going on, we were able to have fairly flawless execution and still deliver the number we did.

But you can't cry over spilled milk. It would have been nice to have it, but I think that's why we try and budget in a way that allows there not -- to not have everything go perfect. So we are just fortunate we are one of those companies that didn't have to come on the line and say hey, sorry we missed because of this. It's one of those companies that we beat, but we probably could have beat by a little bit more.

Got it. That's really helpful. And then just my second question on gross margins. So you highlighted the improved economies of scale and product mix as the main pieces there. Can we get any more color on that, be it from new products or elsewhere? And how sustainable can we think of these gains as we look out into Q4 and also 2018?

Well, it was a great quarter for margin growth. But to assume that we will continue at that rate and grow quarter over quarter would probably be unrealistic. However, to continue at that pace, on the other hand, is very realistic. We had a great quarter.

And the other thing that you didn't call out was the fact that we have been working on our procurement pipeline and we saw efficiencies associated with that. So across the board, those three items really drove the growth in margin.

And as long as you have this type of revenue volume, you should expect to see -- unless there is some drastic change of a mix, which is unforeseeable, you should expect to see these type of margins.

Got it. Thanks so much for taking my questions.

Joe Altobello, Raymond James.

First, I want to extend my obviously best wishes to Scott as well. Hopefully a speedy recovery there. In terms of the business and the gross margin answer that you just gave, John, a little bit more color on the product mix. Was that specific product lines or was that more manufactured versus third party that drove that improved mix?

Yes, Joe. You know, it's not just -- when we say product mix, it is not necessarily distributed versus manufactured. It could be different items within the distributed and within the manufactured. We don't really go into any more granular level other than that. But we did see healthy sales in the right mix of items that have a nice margin associated with it.

Okay, understood. And then in terms of the lost sales from weather this quarter, you mentioned it was a few million dollars. Are those sales gone or do you expect to recoup those potentially in the fourth quarter?

Yes, Joe, our customers, we found that they are not as disciplined if a month disappears, then they rebuy the next month. So we don't anticipate we are going to see all those come back in the next quarter. We may be lucky and get some of them, but in general, flea and tick, it's a needs in. And it's a customer need them. But usually, we don't see it being a double up and purchase twice as much the next month if they miss a month.

So we anticipate that we will operate as expected in fourth quarter. But we are not expecting to see that bleed over from Q3 into Q4, and we definitely didn't see any sales going the other direction into Q3.

Okay, great. And then just last one for me. In terms of the line review that you guys have had and discussions on 2018, any indication from your retail customers in terms of how much inventory they are going to carry last year -- I'm sorry, next year? Is it more, less, or the same roughly, compared with what they are carrying this year in terms of weeks of inventory? Thanks.

Yes, we haven't seen in any of our line review process or communications any change in any inventory policies from any of our big customers. So right now, the expectation is it would be the same.

The fill -- the natural fill we get for some of our seasonal business in Q1 and Q2, those numbers are coming in and confirmed as part of our budgeting process. And they seem to be in line with what we have done in past years. So right now, it's plan as usual.

And I guess if someone has a really bad year, maybe they will see some change in policy after the first of the year. But right now, the communication is standard business going forward.

Okay, great. Thank you, guys.

Bill Chappell, SunTrust.

And let me echo. Scott is I'm sure listening, and our well wishes to him he'll be on a speedy recovery. Cord, just quickly -- maybe a follow-up. Did you say or will you say that -- I mean, from a mix standpoint, did manufactured and third-party distribution grow pretty same rate in the quarter? Or was one any faster than the other where it might have affected mix?

Yes, and it was funny, Bill. As John said, our distributed and our manufactured as a percentage of what was expected was almost identical. It's scary how close it was, to be honest with you.

Inside of that, you get the products in different categories and there's some bouncing around that happens there as maybe customers choose differently at the shelf or some other things there. But categorically? Very, very similar. And our mix of distributed to manufactured is staying consistent as we go forward. So it's been consistent this quarter.

Got it. And then in terms of looking at the competitive landscape, have you seen anything different out of PetArmor going into next year in terms of more aggressive, less aggressive in terms of shelf space?

Yes, I don't speculate or make comments about competitors. We are happy with where we are with our customers. We know they are a great company and do a great job. But I would be -- it would be a challenge for me to comment on competitors and where they are at right now in the market. We are standing by a 20% growth rate, which means we have to do well, right?

Yes, no. This is true. Last one I guess for me is any update on -- and I'm going to get the acronym wrong -- FTPOA, maybe? The legislation. I'm assuming it's -- along with maybe taxes maybe not going to make it this year, but next year?

I'm so tired of talking about it, Bill, that I don't even know what to think anymore. We've had some of our most successful quarters in growing that segment of our business without it. We feel comfortable that's going to continue. If it happens, great. But no, nothing new to really comment on.

You know, predicting what happens in DC, the more time I spend with it, the more I know it's going to be a surprise if it ever gets done. So we will just keep executing our numbers and our growth targets don't require any of that to happen. So we stand by the 20% without it. So that's about as much as I can comment right now.

Sounds good. Thanks so much.

(Operator Instructions) Ladies and gentlemen, we have reached the end of the question-and-answer session and I would like to turn the call back to Cord Christensen for closing remarks.

Thanks, everybody, for joining us today. We appreciate your questions and your participation. We really appreciate your kind words to Scott. Our kind words and prayers go to him and his family as well at this time.

We look forward to reporting fourth-quarter results and year-end results soon and talking to all of you again then. So have a good night. Thanks.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a great day.