Pilgrims Pride Corp (PPC) 2014 Q2 法說會逐字稿

Good morning, and welcome to the second quarter 2014 Pilgrim's Pride earnings conference call and webcast. (Operator Instructions). Please note that the slides referenced during today's call are available for download from the Investor Relations section of the Company's website at www.pilgrims.com. After today's presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Rosemary Rasor, Investor Relations for Pilgrim's Pride. Please, go ahead

Good morning. Thank you for joining us today as we review operating and financial results for quarter ended June 29, 2014. Yesterday afternoon we issued a press release providing an overview of our financial performance for the quarter including a reconciliation of any non-GAAP measures we may discuss. A copy of the release is available in the Investor Relations section of our website, along with the slides we will reference during this call. [inaudible] 8K are available online at www.sec.gov. Presenting to you today are Bill Lovette, President and Chief Executive Officer, and Fabio Sandri, our Chief Financial Officer. Before we begin our prepared remarks, I would like to remind everyone our Safe Harbor disclaimer. Today's call may contain such forward-looking statements [inaudible] our outlook and current expectations as of the date of this release. Additional factors not anticipated by management may cause the actual results to differ materially from those projected in the forward-looking statements. Further information concerning these factors has been provided in today's press release, our 10K, and many of our regular filings with SEC. I would now like to turn the call over to Bill Lovette.

Good morning, everyone, and thank you for joining us today. We recognize $2.2 billion in net revenue for the second quarter of 2014. Our EBITDA of $338.6 million, or 15.5% margin improved over an already strong comparison point of $264.6 million, or 12.1% margin for the same period in 2013. Our net income of $190.4 million or $0.73 per diluted share, reflects the impact of doing a full taxpayer during the current year. Our consistent margin performance is a direct result of the discipline we've demonstrated in applying our strategy. Our partnership with key customers has enabled us to continue to support them with the products in high demand during an extended period of tightening chicken supplies. We're developing innovative offerings to engage consumers, and we're seeing an increased demand for small birds at fast food, and in the deli case. Our energy and resources will continue to be directed towards further improvement in mix, and maximizing the advantage derived from the breadth of our portfolio. We continue to benefit from having a complementary offering of both small birds and large bird [inaudible] products value by key customers. After a period of rationalizing our prepared food sales volumes, we are now realizing a nice improvement in profitability from sales in this business unit.

Our relentless pursuant of operational excellence has resulted in continued improvements to yields, reduce plant costs and improved safety for our employees. In fact, we recently learned that eight different Pilgrim's facilities will soon be recognized for their excellence by the joint industry safety and health council based on the reported injury and illness rates at these locations over the past three years. We are pleased to see our team members' commitment to health and safety acknowledged publicly.

We continue to innovate new ways to view our business and optimize our operations. We are seeing a lot of excitement as we roll out new tools and methods to improve sales mix and operational efficiency. Given our results to date, we are very confident that we will exceed our $220 million target for yield and plant cost improvements. This is in large part due to the successful execution and feedback loop that is the foundation of zero based budgeting. While we recognize the value of efficient plants and equipment, we believe the competencies we've identified are the direct result of our people. Our team has only just begun to create value at the BBB method and per the continuous cycle of identifying gaps and then closing them through effective management, we still see plenty of meat on the bone. I should also point out the positive results we generated still include lingering effects of the propane shortage in February and March as those costs rolled into May. The next component of our strategy, increasing sales of value added exports, has shown great progress so far this year, as well.

We have increased both volume and revenue year over year in part, due to optimized mixed value [inaudible] volumes have shown increase while we continue to convert our sales from commodity bulk frozen leg quarters into value added products that consumers demand in foreign markets. We've also seen development of our [inaudible] brand and wholesale channels in Mexico. Our chicken frank's have found a positive reception in key markets with triple digital growth year over year. And, to top it off, we've increased sales to direct customers at the final destinations improving margins on those sales. Export growth continues at a steady pace and continues supporting our growth objectively recently brought on board Alexander Ivanikoff to head our export business unit. Alexander brings several years of experience in the global protein space and we're pleased to have Alex on our team and look forward to his leadership in this role.

Our Mexican operations delivered strong margins, once again, with April and May driving the strength, while June started to show a somewhat counter seasonal softening. During the third quarter we typically see a slight downward trend as two holidays impact demand, but the flexibility of the operating environment enables companies to adjust more quickly to pricing volatility. As a case at point, we are now seeing prices for live and processed chicken strengthen again and believe demand will continue to support solid margins. We view Mexico as a strong center of growth and our efforts to expand in that region are progressing well. Our project in Veracruz has construction under way on both the feed mill and hatchery, and we've already begun signing up contract growers to support the facility. We are on target to begin sales by June of 2015. With that in mind, we are very pleased with the transaction we recently entered into to acquire Tyson foods Mexican operating unit. We were paid $400 million in purchase price in cash, free of debt, and anticipate the combined entities will generate incremental sales of $650 million for Pilgrim's. We have a deep expertise in the country and the acquisition is highly complimentary to our existing operations in terms of geography and portfolio.

We expect the antitrust was used to conclude and enable us to complete the purchase before year-end. The strategic move is exactly the type of accretive purchase we've been talking about since our investor day earlier this year. Looking at the end of [inaudible], we continue to see breeder supply issues impact egg availability, egg production rates and hatch-ability. We don't expect material improvement until sometime in 2015 at the earliest. There are several factors that are in flux in this dynamic and it takes time to resolve it. [inaudible] are increasing but [inaudible] placements year to date continue to lag. We've also seen significant declines in coal storage levels to date. These supplies remain lower and pork supplies are limited as well. Recent USDA retail sales data showed [inaudible] at close to $6 per pound with June showing the [inaudible] straight month of record highs. [inaudible] average $5.46 per pound in June, a record high for the eighth straight month. With average pork prices above $4 a pound in May and June, the fact that chicken prices have eased off a bit is positive news for our industry. We would expect poultry prices to benefit from the pricing environment across the entire protein complex.

Chicken markets have shown continued strength in whole bird and with the second quarter reflective of healthy pricing across the board. Demand pressures have held prices relatively strong and we believe this will continue well into 2015. After a period where wings had somewhat tepid pricing environment, we're seeing them strengthen once again. Adding to that, the Georgia [inaudible] market continues to be at record levels.

It's important to recognize here that Pilgrim's results don't just follow the full peaks and troughs of pricing trends. Our portfolio [inaudible] shields us from some of the lower prices, at the same time means we don't have the volatile spikes in pricing either. The overall impact should be a more stable margin structure over time.

On the feed ingredients front, we're seeing indications of continued positive environment for historically high yields for both corn and soybeans. Most of the US has had adequate moisture levels and there are strong implication from recent acreage and stock reports that stocks [inaudible] was more favorable and there will likely be a healthy rebuilding of corn and soybean stocks for the current crop year. While indications are that fewer acres were planted, expectations for high yield from [inaudible] crop [inaudible] similar to last year. As we near harvest, it appears we can be in for a record corn and soybean crops in the US [inaudible] large crops harvested from South America as well. Our stock to rebuilt prices also likely retreat and we see a downside opportunity for feed ingredients. So, at this time I'd like to ask our CFO, Fabio Sandri, to discuss our financial results.

Thank you Bill, and good morning, everyone. We reported net sales of $2.2 billion for the second quarter, with EBITDA of $338.6 million, or 15.5% margins. We generated net income of $190.4 million, or $0.73 per share during the quarter, reflecting our position of food taxpayers both in US and in Mexico. As our operation delivers strong results both in US and Mexico, our SG&A expense increased year over year in part, due to higher annual performance [inaudible] accruals. Looking to our balance sheet [inaudible] cash flow from operations activities combined with our focus on cash flow generation and our discipline in managing our working capital, has enabled us to generate more than a $100 million in free cash flow, reducing our net debt to zero as of quarter end. This resulted in our reduction of $8.4 million of interest expense in the quarter, or $13.8 million year to date when compared to last year. We recently established a new revolver in Mexico with better terms than we have previously, and we continue to monitor the market to identify opportunities to reduce our interest costs even further by either renegotiating or extinguishing our last piece of debt which is the 2018 notes.

With our balance sheets stronger than ever, we continue to make for additional green field, or MMA opportunities that can create value for our shareholders and that can lay a path for sustainable growth and reduce volatility. As we have indicated, our strategy is directly towards growth in complimentary segments and geography, and we will continue to seek diversified opportunities to enhance our position in the branded and packaged food category. Our focus is on improving in opportunities that are created with cash flow supportive of rapid deleveraging. We have exhibited a disciplined approach to improving operations, and we have demonstrated we know how to create value within acquisition. We will continue to evaluate each prospect that presents itself and we have the restraint necessary to wait until an opportunity arise where we can add value to our shareholders. With that in mind, we are very pleased with the transaction we recently entered into acquired [inaudible] Mexican operating unit. We will pay the $400 million purchase price in cash, free of any debt, and we anticipate that the combined entity will have $1.6 billion company with strong brands and extended [inaudible] in the growing Mexican chicken market. The acquired assets are not running at the same level as the PPC operation and we see a lot of opportunities to capture synergies, [inaudible] best practices, and better serve our customers.

We expect the antitrust reviews to conclude and enable us to complete the purchase before the year end. This strategic move is exactly the type of accretive purchase we have been discussing throughout the year. As mentioned before, we recently entered into a new revolving agreement to cover potential working capital needs in Mexico. This agreement is at a lower rate than our previously revolver and does not have any [inaudible] fees.

While we anticipated our cash flow will cover our working capital needs, this new agreement provides flexibility as we integrate the newly acquired assets. Our CapEx spending for the quarter was $43.1 million spent primarily on safety, quality, and on increasing our operational efficiencies, reducing costs in US and extending capacity in Mexico through the [inaudible] project in Veracruz which will enable us to be more flexible with [inaudible], and increase our product offering. We will remain committed to funding projects between the rapid pay back period as this is one of the more effective uses of our free cash flow. And, we continue to evaluate and approve the project that may purchase above our original estimate spend of $150 million for the year.

Operator, this concludes our prepared remarks, please open the call for questions.

(Operator Instructions). Our first question is from Brent Hundley, with BB&T Capital Markets. Please, go ahead.

Can you hear me?

Yes.

Hi. Good morning. My first question actually goes back to the facilities that you intend to acquire in Mexico. Fabio, you talked a little bit about how they're not running at the same levels. Can you go into a little bit more detail, I guess, about how long it takes to bring them up to your level or to Garner synergies, best practices, et cetera, and then can you talk about if pricing differs between geography? Does it differ at all where those plants are located versus where yours are, et cetera?

So, Brett, they are very profitable just not at the same level as the PPC operation. There's a little bit difference between pricing in regions, but we believe that's not the biggest difference that we have. I think we are operating at a better level. We will look into the synergies that we have, and we believe in one year we'll be able to achieve the full potential of the synergies.

Brett, I'd like to add to that. We believe that there's a great team of people in that operating unit, but we operate our Mexican business really no different than we operate here in the US. We have a clear strategy, a vision of being the best managed and most respected operator in the industry. We have a management methodology that we follow, and a defined process that we follow. Improving mix, improving yields, improving plant costs are all key parts of that operating model. And as you well know, we're if not the most efficient in terms of SG&A in the US and Mexico, we're certainly there close to the top and we see it no different in Mexico.

The great thing about operating with this new unit is it gets us into a different geographic region in Mexico and the North Central. That's a part of Mexico that we don't currently serve with a great deal of product. And so, that allows us to again operate in a geographic region, basically, supplying a new consumer base.

We also have some duplicative assets primarily in distribution centers, so that will allow us to create synergies from a logistic and transportation point of view. And so, again, as Fabio said, we look forward to getting through the antitrust clearance, and getting approval and starting to work on improving that operation.

The other benefit, Brett, is that they have a prepared food brand in local and Mexico [inaudible] that we believe that we can leverage just like we are doing with our [inaudible] brand internationally.

Okay. That's really helpful. I appreciate that. My second question is just back more towards the US, Bill. I'd love to get some broader comments from you. As we've watched corn and meal values come down it it looks like feed could potentially be really helpful for you in the industry in 2015. And so, what we're trying to do is compare that to the supply expectations that we expect and we expect demand to remain strong next year. But I'm trying to get a handle on supply. And so, I wanted to talk to you about if you can give some comments on what the ability is for the industry to expand next year. What is available from breeders? Just how much head can be put down from breeders? What would be your wait outlook? And together, can you go through maybe a low case of what supply could increase in calendar 2015, and then maybe a high case of what supply can increase? I think that would be really helpful as we try to bring together these different moving parts.

Brett, so it all starts in our business with purchasing a pullet from the primary breeder company. And as we've talked now for well over a year, that industry had reduced its supply chain, thereby reducing the amount of breeders available to buy. And then, at the same time, as we've seen the mix in the US grow in large bird de-boning, there have been some dynamics in the breeder supply chain where those high yielding breeds have become less productive from an egg production and hatch-ability standpoint. So, you have those two dynamics going on at the same time.

We do know that if you start at the pedigree level, it can take as much as 170 weeks to begin to grow that supply chain. We don't know, because we're not in that business, where that expansion, if at all, is in that 170 week process. But all indications are that we don't see a material or significant amount of growth available from the breeder supply in the next 12 months. So, that gets us at least into the back half of 2015.

It would be just a complete guess on my part if I were to try to put any numbers around that. I think the low side is probably staying where we are in terms of supply, or growing a small amount because, again, we don't see any growth that's going to happen in the first half of 2015. And if we do get growth, it's going to be in the back half. And, I think, even at that, it will be relatively small.

I appreciate it, Bill.

Yeah. And as a follow on to your point, I think what that really means is with beef and pork where they are, and where we think they'll be in the next 12 months, and with what I just said, I mean, I think it really sets up a nice pricing environment for margin creation through 2015, especially given adequate corn and soy supplies.

Thanks.

The next question is from Farha Aslam, of Stephens, Inc. Please, go ahead.

Hi. Good morning.

Good morning.

Question around your Tyson de Mexico acquisition. Could you just share with us what the current EBITDA of that business is? What type of synergies you plan to achieve and when, and a little bit more color around the brands and the products that you're going to move forward with as a combined entity in Mexico?

As we mentioned, they are profitable. I think they're in the single digit, close to double digit EBITDA margins.

We can't disclose exactly what those are but I think it's fair to say that there's a pretty good sized gap. If you see our numbers in Mexico for this quarter and the last 12 months, we're, we think, best in class operator in Mexico. Again, as I mentioned in the previous answer, there's a reason for that. It doesn't come by luck. We have a very defined and disciplined operating model that will take into that new business and apply to that.

As far as brands and mix, that's a part of our improvement plan. We think that there's opportunity to improve the sales mix in that operation. Fabio mentioned the [inaudible] brand, this gives us yet another avenue to reach Mexican consumers, and the ability to grow our product offering with that brand. And we think there's a growing demand in northern Mexico for product. I would just remind that you while we, like any other chicken producer in the US, enjoy the benefit of having a strong trading partner like Mexico, we're also a producer inside of Mexico and we're committed to healthy growth of the local chicken production. And we continue to grow our Company in Mexico creating more jobs, paying more taxes, and contributing responsibly to the local Mexican communities in which we operate. We're excited to be able to operate in a different geographic region now with the acquisition that was announced on Monday, and look forward to providing our leadership and commitment and growth opportunities for the La Laguna area of [inaudible]. We believe that there's a great team of people there and now that we bring a long tenured expertise of doing business in Mexico, we're confident that the business will continue to become stronger and grow even larger, benefiting the local economy as well as greater Mexico.

And, again, on the synergies, [inaudible], and I wasn't sure if that $650 million in sales you mentioned was the sales of Tyson de Mexico or also included the new facility that you're starting up.

Yeah. Good question. So that does not include the new complex in Veracruz, that will be incremental. The $650 million is simply their annualized run rate. And we would see that as a minimum amount as it would be our plan to grow that business from its current state.

Okay.

And as far as synergy, I think you can look at the same thing that we've done in the US and Mexico the last three years. We have a keen eye toward creating efficiencies with SG&A. We have a keen eye in terms of increasing plant yields, or reducing plant costs and improving sales mix. So those are the primary sources of value that we expect to create.

I think there's also reduction of risk by operating throughout the entire Mexico instead of concentrated just on the central part of Mexico like we were before, and the increase in portfolio breadth that we have. We have full solutions from prepared foods produced in Mexico and in [inaudible] and fresh products produced in Mexico.

Right. And then my second question goes back to kind of Brett's question earlier. I mean clearly right now, you're benefiting from very strong trends but you're also executing at a very good level. Could you give us some color about near term margins and profits that you expect your business to generate? And then, what, on a normalized longer term basis, you think Pilgrim's can execute at?

Yeah. So clearly in this past quarter, we produced 13.7% operating margin and we did that in an environment where we had relatively strong chicken prices and declining [inaudible] costs. Going forward, just on a seasonal basis, we might expect chicken prices to decline somewhat from where they were in May and June. But, at the same time that that's going on, we have declining feed costs again which would provide somewhat of an offset.

That's just the macro environment in which we operate. What we really focus on and spend our energy and time on is that which we can control. And, as you know, we've spent a lot of time talking about our improvements in yield, our improvements in plant costs. In the past two years, we've frankly gotten more improvements in yield than plant costs as a mix of our improvement targets.

We're very pleased, though, that this year it's been more plant cost reduction contribution to that $220 million target, than yields. While we still are improving our yields, we're improving our plant costs even more.

We talked a lot in the last 6-12 months about the implementation of zero based budgeting. And what would we really like about that is it opens gaps. And we have a culture here where we reward people for opening gaps. A lot of managers, especially those with a lot of experience, sometimes aren't too proud to come to management and say hey I've discovered this gap that we have in our operation, and I'm happy to report I'm not doing as good as I could be. Well, we have learned that if we reward our management team for opening those gaps and then reward them even more financially with closing that gap, that creates the improvement model that you've seen take place here at Pilgrim's the last three years. So, it's really more of the controllables that we focus on. We'll continue to improve our zero-based budgeting model, and we expect that will continue to keep us as a best in class operator in the chicken business.

Great. Thank you.

Our next question is from Ken Zaslow, of Bank of Montreal. Please go ahead.

Hey, good morning, everyone.

Good morning.

Talking big picture about your strategy going forward, can you talk what access or what the availability of assets and prepared needs would be, because it seems like you guys take the zero based budgeting and your balance sheet and maybe run it out. Obviously, Hillshire went away, but are there other assets that you are able to look at, and then is there availability, is there something coming your way? How do you see that, because that would obviously transform the Company pretty dramatically.

Yeah. That's a good point, Ken. There are other assets that are operating, and assets that we believe that we could add value to. As far as availability, that remains to be seen. But the strategy that we laid out in March in our investor day has not changed. And I think we've demonstrated through our activities around Hillshire brand, through our activities in building the new complex in Veracruz, and then finally through the announcement on Monday of our acquisition in Mexico, demonstrates that we're focused on growing our company. We'll continue to look for options available to us and that's really all I can say at this moment.

Okay. My second question is, I'm assuming [inaudible] but I need to ask it. Is the impact [inaudible] chicken legs or anything like that out of there, what do you think the impact would be on leg prices and is it substantial or material to how you guys look at your outlook?

I think bolts our Company and our industry over the last few years has demonstrated we really don't have a reliance on the Russian market as we did ten years ago or so. We've done a really good job particularly Pilgrim's, I think, has done a good job of diversifying our product mix and portfolio such that I honestly don't believe that it will have a material impact. For sure on Pilgrim's, or even the greater industry. We operate today, Ken, much more in a global marketplace. And so, when a specific country bans product from one country, this opens an opportunity in yet another part of the world.

And I think the value of our affiliation with JBS and its growing presence in chicken in Brazil creates an environment where we have that diversity and we're able to have the market intelligence that gives us a benefit and allows us to move product around in such a way that we're not beholden by one country.

I think let's speak to a little bit of one of the key pillars to our strategy which is growing our value added exports. So over the last two years we have reduced our dependency on Russia and especially on frozen leg quarters, and increased our value added exports. Less sensitive to that type of event.

Yes. That's what I expected and I wanted to make sure because there were a lot of people calling in on that so I appreciate the answer.

Thank you.

(Operator Instructions). Our next question is from Akshay Jagdale, KeyBanc. Please, go ahead.

Good morning and congratulations on the quarter.

Thank you.

Thank you, Akshay.

So first, just on modeling, if you can help us in the US chicken business, what would the feed costs going to look like near term based on your hedging relative to this quarter, and perhaps if you were to lock in where the future's started today, what would [inaudible] like? I'm at $0.41 this quarter and feed costs per pound, that's one question. And also, related to modeling, how do we model volumes here for US chicken because the back half are pretty easy because last year for several reasons the volumes with down. So that is two modeling questions, then I have one more on more strategic long term.

Okay. I'll cover the second part of your question first. In terms of volume for the back half of the year, I think it's clear from an industry standpoint we're still placing fewer chicks than a year ago. So there's not a lot of growth, if any, that are going it come from more chicken production.

One way we've been able to grow, actually, our sales is in moving our mix in some cases to larger birds. But more importantly, to improving our yields. As we improve our yields, with our scale, that actually provides, actually in some cases, a significant amount more meat to sell at, obviously, a much better value. So, we think there are some growth opportunities for us in the back half of the year as we continue to improve yields. But really not in a significant way. And we think that's going to be positive from a pricing standpoint.

On the first part of your question, we've stayed very close to the market on our feed ingredients as we continued to experience an inverse market condition. And, with our pricing model that we changed a couple years ago buying forward corn and soybean mill is not something that is necessary to either create or enhance margin because we're more or less on the market. And, as we said before, the chicken market is really driven by supply and demand of chicken as opposed to the supply and demand of feed ingredients. So, we don't really see the need to hedge or forward buy ingredients that far out. We see an opportunity using all sorts of financial tools. We have the ability to do that. But it's not something that is required for margin creation.

I think your question was really focused on breast meat cost as opposed to breast meat price. We think that with falling feed ingredient prices and improvement in plant costs and yields, our costs will continue to improve.

I'll just add, actually remind you, that it takes 45 to 60 days to raise the birds that will be processed. So, there is a lag between the price of corn and soy that we are seeing on the board and the price of corn and soy and the chickens that we are processing. So we don't see any big changes in the costs around the feed costs in the birds we are going to process, the third quarter compared to the second quarter.

And just to be a little more specific, July was the first months of our third quarter, and it was an absolutely great solid performance. We continued to see improvements and so we're bullish about the chicken business for the back half of 2014, and even on into 2015.

Thank you. And then just to follow-up on Farha's question on normal earnings. What's clear from your performance over the last year and a half is you proved your performance relative to the market considerably, not only closed the gap but now it seems like, at least this quarter and last couple quarters, you're in the top quartile. Maybe you could comment on the [inaudible] numbers to confirm that. So, in a market for commodity chicken that's very attractive from a margin perspective, you're clearly doing very, very well. My question is really in a scenario when the margins for the commodity players turn around, which might happen at some point, what does the bottom end look like? What is the bottom end of the normal margin rates? With your new structure on the cost side and you continue to work on it, also the way you're managing margins. What do you think the bottom is on the margin structure now compared to when you took over? Thank you.

Well, look, we operate like all other companies in an environment where feed ingredient cost and market prices have a driving impact on margins and there's two things that we know for sure, Akshay. With the current environment we produced a 13.7% operating margin for Q2, that's one. And then, two, as I mentioned before, we have a lot of capacity to improve what we're doing now with zero based budgeting and our strategy of relentless pursuit of operational excellence. So, if the aforementioned market conditions aren't conducive, then I'll validate when you said and that is we're very confident that we'll remain as a best in class performer in the chicken business. Specifically, the bottom end of the range, we're still in a cyclical business. It's hard to tell from year to year what feed ingredient costs are going to be and, separately, what the demand and supply for chickens are and, therefore, what prices are going to be. But, if we continue to have the kind of operating environment that we've had for 2013, and now 2014, and I can assure you we're confident this there is enough room to continue to improve, that we're going to be operating at the top of the range of what's possible in chicken margin creation. And I'll just leave it at that. Fabio?

I think I'll just compliment that with something Bill mentioned before. We have a very big portfolio of products and contracts with our customers. So, in the trough, or when the markets are not so strong, we don't see our prices going as down as a pure commodity spot player because we have fixed price contracts, we have [inaudible] we have small birds. We believe this we have smaller volatility compared to a spot operator.

And, I'll pass it on. Thank you.

(Operator Instructions). This concludes our question and answer session. I would like it turn the conference back over to Bill Lovette for closing remarks.

Thank you. At the beginning of this year, we challenged our management team with the statement that 2014 would usher in the year of rising revolution of rising expectations. We're very pleased with the response to this challenge as they delivered performance that we expect will exceed many of our key performance indicators, particularly our target of $220 million of operational improvements. This commitment allows us to continue to operate in the top of the industry, as we said, and with the engagement of our team members, our growers and the rest of our stake holders, we continue to make significant strides toward our goal of being the best managed, most respected company in the industry. Thank you all for your continued support.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.