Papa John's International Inc (PZZA) 2013 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Papa Johns second quarter 2013 conference call and webcast. At this time all participants are in a listen old mode. Later, we will conduct a question and answer session, and instructions will be given at that time.

(Operator Instructions)

As a reminder this call may be recorded. I would now like to introduce your host for today's conference, Lance Tucker, Chief Financial Officer. You may begin.

Thank you, Ashley, and good morning, everyone. With me on the call today are our Founder, Chairman and CEO, John Schnatter; President and COO, Tony Thompson; SVP of Global Operations and Global OST, Steve Ritchie; and other member of senior management team. After a brief financial update, John and Tony will have comments about our business, and the management team will then be available for Q and A.

Our discussion today will contain forward-looking statements that involve risks and uncertainties relating to future events. Actual events may differ materially from the projections discussed today. All the forward-looking statements should be considered in conjunction with the cautionary statements in our earnings press release and the risk factors included in our SEC filings. All statements made on this call are as of today, and we undertake no obligation to update the information on this call in the event facts or circumstances subsequently change. In addition, certain financial measures we use on this call are expressed on a non-GAAP basis. Our GAAP to non-GAAP results reconciliation can be found in our earnings press release, available on the investor relations section of our website. Unless otherwise noted, all comparisons are versus the same period a year ago. This call is being taped, and the replay will be available for a limited time on our website in a downloadable podcast format.

Finally, we ask any media to be in a listen-only mode, since this is primarily an investor call. Now, on to a discussion of our Q2 operating results. We were very pleased with our second quarter results, with adjusted diluted earnings per share of $0.76, up 29%. Our year-to-date 2013 adjusted EPS was $1.60, an increase of 16%. Our second quarter revenues increased 9.6%, primarily due to comparable sales of 3.4% for North America, and 6.8% for international. In addition, the increased revenues were driven by the units in Denver and Minneapolis that were acquired in the second quarter of 2012, higher volumes at PJ Food Service, and a 7% increase in the number of units operating globally on a year-over-year basis. We opened 55 net worldwide units in the second quarter, bringing us to 89 net worldwide unit openings year-to-date. On a business segment basis operating income for domestic company owned restaurants decreased approximately $1.2 million in the second quarter. This decrease was primarily due to increased commodity costs, partially offset by strong comparable sales of 6% in our corporate unit.

Operating income for the North America franchising segment increased approximately $780,000, due primarily to the increase in net restaurants and comparable sales of 2.6% in Q2. Operating income for our domestic commissary business increased by $1.7 million, due mainly to the higher number of units and comparable sales as well as a higher gross margin. We managed commissary results on a full year basis and expect the 2013 full year profit margin to approximate that from 2012. Operating results for our international segment improved approximately $550,000 in Q2. These results were primarily due to an increase in royalty revenue due to the increase in the number of units, and 6.8% comparable sales.

Our effective tax rate was 32.2% in the second quarter, and 32.6% year-to-date. Our effective rate may fluctuate for various reasons, including settlement or resolution of specific federal and state issues. The second quarter income tax rate includes a receipt of certain state tax credits that added several cents of EPS growth for the quarter. However, on a full year basis, we expect no pickup in EPS as the full year rate is still expected to be in the 33% range. On a similar note, our unallocated corporate expenses also included $0.02 of additional earnings per share associated with the accounting for our non-controlling interest. This is projected to reverse in the second half of the year. We repurchased approximately $26.7 million of stock during the second quarter, bringing our year-to-date repurchases to $58.8 million. Following the recent $25 million increase in the authorization, the Company now has approximately $80 million of remaining share repurchase authorization.

Our free cash flow, a non-GAAP measure we define as cash flow from operations less capital expenditures, was $21.7 million year-to-date. Our net debt position, defined at total debt less cash and cash equivalents, was $105 million at quarter end. We are confident in our full year targets and are therefore reaffirming the top end of our EPS guidance range at $3 per share, while raising the lower end to $2.92. We are lowering our capital expenditures guidance from a range of $55 million to $60 million to an updated range of $50 million to $55 million due to lower than planned technology spend in 2013 relative to our new POS system. All other guidance is reaffirmed at previously announced levels. Finally, based on the Company's strong balance sheet, and confidence in its financial performance in cash flows, the Company's Board has declared a $0.25 regular dividend with the first dividend payment to be paid on September 20 of this year.

And now, I'd like to turn the call over to our Founder, Chairman and CEO, John Schnatter.

Thanks, Lance, and good morning to everyone. We're glad you took the time to be with us on the call today. I'll begin as I always do by congratulating our franchisees and our operators throughout the world on another strong quarter. We built some nice momentum throughout the first half of this year, including as Lance noted, solid second quarter comp sales in both North America and international divisions, a strong increase in EPS, and continued momentum in net restaurant openings, including the opening of our 1000th restaurant outside North America. While the operating and competitive landscape remains challenging all around the world, our operators continue to persevere by focusing on quality and consistently delivering on our better ingredients, better pizza, brand promise each and every day. That focus on quality continues to be a winning strategy for us. It also continues to resonate with the consumers as they recognize Papa John's as a leader in customer satisfaction during the quarter for the 12th time in the past 14 years by ranking Papa John's the number one national pizza company in the American Customer Satisfaction Index survey. This recognition is humbling, and continued validation that our focus on quality is a winner.

Next, I'd like to briefly comment on our international business which continues to perform very nicely. Our franchisees throughout the world have fully embraced doing things the Papa John's way in every aspect of the business. And, as a result, we're performing very well operationally around the world, and are continuing to grow our brand. During the quarter, as I mentioned, we opened our 1000th international restaurant. Very few brands in any industry have opened 1000 stores internationally, so we view this as a significant milestone, which we will celebrate globally later in the quarter. Next, I'd like to comment on the decision by our Board of Directors last week to initiate a quarterly cash dividend to the shareholders. As Lance noted a dividends of $0.25 will be paid out September 20. This is the first cash dividend in the history of the Company, which speaks to not only our consistent, strong operating performance over the past few years, but the solid financial footing of the Company.

Finally, as you know, last week, our Board also approved the promotion of Tony Thompson to President and Chief Operating Officer. Tony has been a valued leader in our organization, who has earned the trust and respect of his peers, key members and our franchisees. I congregate Tony on his promotion and am excited the two of us will continue to work together to drive the Company forward.

With that, I'll turn it over to Tony for his remarks. Tony?

Thanks, John. I would like to echo John's congratulations to our system on another solid quarter. Each week, we face increasing challenges from a variety of areas, including our competitors and a still struggling global economy. But our system consistently remains focused on the fundamentals running their operations, the Papa John's way. As a result, they have risen to meet each and every challenge, and have positioned themselves and the Company for continued growth. Let's look a little deeper at the second quarter numbers. From a sales perspective, our North American operators posted a 3.4% positive comp sales performance during the quarter, including a strong 6% positive comp sales increase for our company owned restaurants.

Our international operators also posted a solid 6.8% positive comp sales during the quarter. A continued focus on the fundamentals and consistently delivering on our better pizza brand promise throughout the world are driving our steady and consistent sales performance. Our global product and service scores remained at an all-time high through the quarter, which has enabled us to meet the high expectations of our customers. During the quarter, we realigned our international division under the leadership of Steve Ritchie, who is our SVP of Global Operations and Global Operation Support and Training, which has given us even better alignment between our North American and international operations. So I continue to remain very bullish on the future of Papa John's international operations and the runway we have for continued growth as we continue to plant the flag of better ingredients, better pizza around the world.

Much like our sales, we are very pleased with our global development efforts during the quarter, and through the first half of the year. We opened 55 restaurants during the quarter, and have more than 1300 in the pipeline scheduled to open over the next six years. We're seeing increased -- increasing interest from around the world from perspective franchisees to be part of the Papa John's family. And I would note that the caliber of potential franchisees is at a higher level now than I have seen since my time with the Company. So, with more than 4250 restaurants operating today in 34 countries, and with the amount of runway we have both in North America and throughout the world, I am very excited about where Papa John's is headed both in the near and long term.

Finally, I too, would like to touch briefly on the dividends the Board approved last week. From John's founding of this Company nearly 30 years, we've always taken a sound, steady, financial approach to building Papa John's. This dividend reflects the strength of our brand, and our commitment to increasing shareholder value. I'll close by saying overall, I'm very proud of what we've accomplished in the second quarter, and through the first half of the year. Our talented and dedicated franchisees, operators and team members remain committed to delivering on the better ingredients, better pizza brand promise. As a result, we continue to attract more customers to our brand and strengthen our market position. Our focus on a shared success with our franchisees, team members and shareholders has been a proven strategy which will continue to serve our brand well in the third quarter and beyond. And with that, I'll turn it back over to Lance for questions.

Ashley, I believe we're ready for questions.

(Operator Instructions)

Dave Carlson, KeyBanc.

I have a couple questions. Taking into account some of the comparability issues in 2012, the marketing incentive, the 53rd week, it looks like EPS grew around high teens, 18% in the first half, and guidance now suggests about 10% to 17% in the back half of the year. Can one of you speak, maybe Lance, to the reason for the more guarded outlook in the second half, especially considering it looks like cheese prices appear less inflationary? Are you seeing any sales weakness third quarter- to-date, other cost issues that might be the reason for the lower assumed earnings growth rate?

Lance, why don't you give some analytics, and Steve or Tony, you can follow up with the competitive environment --

I'll start with that, Dave, and thank you for the question. As I noted my script, we're confident with our full year targets, and we're tracking pretty well in line with our internal projections, which are a little bit different from a timing perspective than some folks on the street had. As you know, we have volatility in our quarters, and that's why we guide to annual amounts, not quarterly. With that said, I will give you a few specifics here to help you work through the numbers a little bit. We were helped by about $0.05 by tax and JV accounting items that are going to reverse in the second half, so there's a little bit of timing shift going on there.

In addition, as the folks on this call are certainly aware, we manage our food service business to a full year profit margin. And in order to adhere to this policy, and make the amount of money we have committed to making to our franchisees, we do expect margins to be a little lower in the second half than we saw in the first half. A couple other items, just to give you even a little bit more details, we entered into an interest rate swap, and it locks our rate under 2.5% for nearly five years, so long term, we think it's absolutely the right thing to have done. With that said, that does impact us $0.02 in the second half. And then finally, again, as this group is aware, this does remain a very competitive category, and Steve and Tony will speak to that. But as our comp sales and EPS guidance should indicate, we're very confident we are going to have a second -- strong second half, I should say. But, as a reminder, we're only halfway through the year, so we felt like reaffirming our guidance makes the most sense at this juncture.

This is Tony. And, although we don't comment on how we're performing in the current quarter, no question it's a competitive environment, and much like we've seen in the recent past, we're very confident in our marketing strategy. We take a very comprehensive approach from national all the way down to local, and we're -- we work very well with our franchisees. They embrace the strategy that we're working on, and to go back to Lance's comments, very confident in where we will land for the year. The other thing I would say is on the international front, you are seeing the continued momentum that we have at international. Achieving 1000 stores is a great milestone for us. The milestone and beacon of where we're headed, so stay tuned on continued growth internationally.

Dave, this is John Schnatter. You know, I've been in this a long time, and Pizza Hut is at $5 a pizza, and Domino's and Pizza Hut are at $6 a pizza, give or take. You know, in my 36 years of doing this, I've never seen the bigger players at that low a price point. While we're weathering the storm, of course, it's something that we're paying attention to.

David, it's Steve. Let me just echo some of that as well. Back to Lance's point, Tony's points, on our full year plan, still very solid, quarter-to-quarter, you're always going to see some variability in what you're seeing in terms of overall performance. But the competitive environment does remain very focused in the consumer on value. For Papa John's, it's how do we define value? We believe the consumer long term defines value on quality, and Papa John's, being the strongest brand in the quality and then recognized in quality 12 out of the last 14 years in the America Customer Satisfaction Index is really how you look at our business on quality, consistency and simplicity for the long term. So again, just reiterating, I feel really solid about our full year guidance.

Great. Thanks for the -- thanks for some clarity there. One other thing, in the 10-Q, it was mentioned that bonus pay offs was lower for general managers during the second quarter. With the comp being up 6%, I was a little surprised that GMs didn't receive more of a bonus. Can you kind of talk to why was that the case?

Dave, this is John again. First, I really appreciate an investor and analyst watching out for that GM, because that's something that we're very astute to. We believe that everything starts with that general manager, and he or she has to win for the enterprise to win long term. So we're watching that very succinctly, and Steve, why don't we give you a little color on why the bonuses went backwards at the GM level.

I will, and David, thanks for the question. I think, again, just really pleased with the corporate restaurant results as you continue to see these -- our corporate team 11 consecutive quarters of sales growth, just really speaking volumes to performance and leadership side, and that's really attributed to the general managers. The general managers have done a phenomenal job in executing our strategies and producing overall solid performance. We are, however, rolling over a huge year in 2012, specifically in the second quarter. As you just talk about variability, what creates some of the fluctuations in the bonus piece, those related payouts continue to be strong. However in comparison to the second quarter of last year, the primary reason for the lower bonuses really just a function of the quarter 2 bonuses being exceptional and the fact of the commodity headwinds for this year versus last year is really the primary driver. You see about 1.5% increase in food costs this year in the second quarter versus last year second quarter.

Okay. Great, and finally, I was hoping you could speak to the potential impact that the promotional activity has had, or is having on the cost of sales line?

Dave, I'll give you kind of the, what my perception is on the consumer, and their perception on pizza, and then, Lance or Steve, you can piggyback on the costs. At the end of the day, the pizza consumer recognizes that you get what you pay for, and $5 or $6 pizza is really not a pizza that reflects quality. Again, I've been doing this a long time, and you just can't make a superior quality pizza with superior quality ingredients for $5 or $6. It's impossible.

Yes, David, and thanks, John, for that. I think that's the point as I was alluding to before, in the second quarter, about 1.5% higher year over year. That, again, specifically related to cheese and the front part of this year versus last year, the cheese is actually a little bit higher priced, $0.24 higher than the second quarter. However, the headwinds in the first half of the year have a little bit of a tail wind, and the back half of the year given the future prices on cheese. So I have some optimism again back to our full year guidance, but again those fluctuations quarter-to-quarter, being primarily commodity driven.

Thank you guys very much.

Peter Saleh, Telsey Advisory Group.

Congratulations on the quarter. I wanted to ask about your big picture market share, Maybe if you could give us an update on where you are today in terms of market share for the pizza category, and just give us some perspective where you were a couple years ago, and what's your outlook for the pizza category over the next 12 to 18 months.

I'll give you our outlook on the business, and specifically Papa John's and then Steve, why don't you give a market share analysis. I like our business, Peter, and I like our business model. I think our model provides the consumer with exceptional quality, and exceptional value, and I think in this environment, that's exactly where we need to be.

Yes, Peter, it's Steve. Maybe I'll add a little bit more color. As you look at this holistically, we feel good about the pizza category in general. Pizza remains to be a very a strong value to the consumer. If you look at the last couple of quarters, we believe the category to be flat to slightly up, which is speaking to the fact that the nationals continue. If you look at the three major players in the second quarter results, very pleased with our performance. Domino's numbers showing that the nationals do continue to take away some of the sales from the regionals and the independents.

And you know, I'll just echo back to the corporate performance. I think if you look at our corporate results, those are our most tenured markets and most penetrated and have the heaviest scale. We're not just of number two, three, four player in the markets. We were the number one so, that speaks volumes to the long term potential on the quality platform and the potential that Papa John's has within the category of gross share.

Peter, I'll jump in for a second. This is Lance. From a numbers standpoint, you can look at the data just like I can and know we continue to gain share, and holistically going forward, we continue to open units, and we continue to have positive comps, continue to grow our technology. I feel confident we're going to continue to steal share.

Peter, this is Tony. I'll add a couple comments as well. To Lance's point, the big chains are obviously growing because of share a voice, and as well as share voice media weights, and technology. And as we continually talk about our leadership in the amount of online sales, and digital sales that we have and our position, where we're headed, continuing to grow. The big chains are much more sophisticated, and we see -- we are very bullish on the future, the use of digital as a key part of our strategy.

Could you just give us an update, or rectify why the company owned comps are significantly ahead of franchise? Is there something that you guys did differently There seems to be a bit of a gap for the past couple quarters now.

Steve, why don't you take that question.

Yes, Peter, thanks for the question. I think I addressed this last quarter. The answer remains the same, our corporate leadership team has done a phenomenal job at executing our operational, our marketing strategies, I think just really speaking volumes to the leadership. We continue to lead and share those best practices with the franchise side of the business, I spoke to the 11th consecutive quarters of corp comp sales growth. It is eight consecutive quarters on the franchise side of the business.

There is a gap, that gap really as you start to drill down, there is variability and penetration in some of those franchise markets, and the predominant amount of our growth over the last three years has been in the franchise markets. So we continue to focus on getting more penetrated in some of these franchise markets and just fundamentally believe in the long term side of our business that we will continue to show growth. But really, it speaks volumes again to the corporate side of our business, in our most penetrated markets, from a market share perspective, we continue to lead the pack.

And lastly, for me, can you talk about the partnership that you signed a few weeks ago, a month ago in the UK, and compare that with, the partnership you have here with the NFL in the US?

Tony, you want to take that question?

I sure will. We're very excited about our partnership with the football league, and we anticipate the same engagement with the football fans in the UK, much like our partnership with the NFL. We know they are very avid fans, and our footprint in the UK compliments the team structure as well, so we're very excited about that.

I'll add to that a little bit. I think it speaks volumes to the power of the brand. Papa John's has grown significant scale in the UK, and in partnership. Folks are reaching out to our brand, similar to the NFL, so we're very pleased with that, very early infancy of the partnership, but excited about the platform and the opportunities this provides us to continue to grow in the UK.

Just a follow-up. Will you integrating the Papa rewards with that as well?

Tony, you want to field that question?

Yes, we probably don't want to share too many specifics on how we will use Papa rewards. We already have Papa rewards in the United Kingdom, but we wouldn't want to share strategically how we would utilize that.

Great, thank you very much.

Mark Smith, Felti and Company.

Can you speak to the cadence of comps during the quarter?

Can you repeat the question, please, Mark?

Can you just speak to the cadence of comps, or sequential comps month-to-month during the quarter?

Lance and Tony, do you understand the question?

I do. Mark, I'll take that. We don't give the month to month to month cadence. We strictly report on a quarterly basis.

Okay. Any change in the online mix?

Mark, it's Steve. John, I don't know if you were jumping in there.

Go ahead, Steve.

Mark, I can tell you that it remains to be over 40%. I'm very pleased with the fact that among chains, we believe we are the category leader, and our online sales mix continues to be a big focus for us in the long term side of the business leveraging that technology.

Mark, this is John, it's growing at a very attractive rate.

This is Tony. We feel like there still is significant upside in our digital sales.

And then lastly, just on the tax rate, Lance, did you say that you're expecting it to be about 33% for the year? As we model, should we be looking at this as 33.5% or 34% going forward?

Mark, what I did say is it will be around 33% for the year, so you can work out how that has to look in the second half in order to get to that number.

Perfect, thanks, guys.

[Kim Yen], S&P Capital.

Can you talk a little bit about your dividend initiation, and what do you think your, I know that you're increasing your financial leverage. What do you think the long term financial leverage where you'd like to be would be in the future?

Lance, do you mind fielding that question.

What we have already said was for 2013, we expect our leverage to be between 1 and 1.4 times EBITDA. And I think what you'll see over the longer term is us continuing to balance making investments in the business without taking the EBITDA ratio to levels that you see from our competitors. So I would expect, I would probably characterize it as the 1 to 1.4 times EBITDA, signals a little bit more aggressive stance on debt than we've had in the past, but I wouldn't model it much higher than that if it were me.

One question about the international. I know that continues to be strong. Was there any geographic region stronger than others? And likewise, do you see any weakness?

Tony, why don't you take that question.

Could you repeat that?

Ken, I'll take it. Yes, I think you're asking just geographically breakdown on comps. We don't get into specifics on that. I can tell you the 6.8% comps two year of 12.9 really represent that we get a lot of momentum in the international side of the business. I'm just coming off a visit in the quarter to China, which has been a big focus for us as an organization, and I've got a lot of confidence on momentum in the progress and the early stages of some build-outs in corporate China. So from a financial perspective, some short term investments with some losses, but for the long term side, really got a lot of optimism around the potential in a very strong country, and good brand presence as the number two player in the category.

Kim, this is John Schnatter. The difference between international today versus three or four years ago is night and day. They just have really good products and service scores, they have been very consistent -- it has good momentum.

This is Tony. Just to comment on a couple of the things I said during my opening, the 1,000th store opening really is significant for us as, I'm going to call it a beacon of shining the light down the road ahead. We are very, very bullish on the future for our international business. We've spent a lot of time working, building and working on the infrastructure, and we're really excited about the work that Steve and his team have done. We have got a great team in place, and there's going -- there's a tremendous amount of upside. I've said before, that runway is wide, and it's long. And the 1,000th store really is a key milestone for us that's going to jettison us into the future.

Okay. Thank you for taking my question.

Michael Halen, Sidoti.

Congrats on the quarter, and congrats to you, Tony, well deserved.

Thank you.

I jumped on late so sorry if I missed it, but can you talk about where the Cap Ex savings is coming from this year?

Yes, I'll take that one, Mike. We had originally guided to $55 million to $60 million. We've cut that down from $50 million to $55 million. We are just not spending on the technology side quite as quickly as we originally anticipated, but it's really a timing shift in the next year or so -- kind of a timing shift. The same spend is being spent. It's just going over two years.

Mike, this is John. That was not intentional. In other words, we didn't pull it back, we would actually like to spend faster and move faster.

That's helpful. Thanks. I guess, just besides China, can you talk about which countries you will focus your international expansion on in the back half 2013 and 2014?

Tony, why don't you give him the specifics on the country by country.

I'm going to let Steve start.

Yes, maybe we won't get too specific into countries, but maybe I want to just touch on regions. I can tell you the Latin American region has been a region where we have continued to have a lot of success, the brand has been very well received. As you go country to country throughout that region, that will be an area of focus. I had already spoken to China and that area, and parts of Europe where specifically into maybe Russia, maybe touch a little bit there. But without getting too much further into specifics, those are three kind of the key areas where we have optimism, current success from a franchise profitability perspective which we know will drive -- ultimately drive the development in those parts of the world.

And just are to wrap up on that, you are going to see continued growth pretty much across the board in those three areas, but we don't want to dive down into specifics obviously for competitive reasons.

Fair enough, and in addition to the additional scale that you're starting to gain now internationally, is there anything else going on? Is there any shift in terms of maybe giving the franchisees more leeway in terms of setting up their own menus? Anything else you can point to?

Mike -- sorry.

Mike, I'll answer kind of from a founder and 40,000 feed, and then we'll let Tony maybe dive down a little bit into that. Probably six years ago, we just really weren't making the pizza the way we made it in the states, and we let international franchisees have probably a little bit more leeway in doing things, not the Papa John's way. And what we discovered through the school of hard knocks is that the brand, the way we run it in the US works throughout the world. And that was an insight that was kind of wow, so for the last three or four years, we've actually reined in the franchisees on getting too far out of the guard rails on what is the Papa John's way. I can tell you the product quality from Chile to China to New York is the same throughout the world, and that's taken a lot of hard work at [Shaw Muldoon] and our great R&D and QA team. as we've really implemented what we call the gold standard. And as far as menu, I'll let Tony answer, but we're actually going the other way. We're reining them in trying to be more like the Papa John's in the US than we are letting them do things out of the box. Tony?

Thanks, John. Michael, back to my comments on infrastructure and the work that we've done in the past several years in international. Our focus on process as well as product has been really, really the top priority for us. So to John's point he just made about reigning in, Steve said it earlier, our focus is on quality, consistency and simplicity. And that speaks to the menu, obviously from an economic model standpoint. It needs to be, to have that sweet spot of restaurant efficiency and certainly, our quality standards.

So the menu is a key part of that, wouldn't want to give too much detail other than that, but our focus has to bring our brand back to center of who we are as Papa John's. And that's what John was eluding to for the past several years. So we've put process and infrastructure in place now to help manage that a lot better, and I will echo John's comments, because the leadership team goes around the world now a few times a year. And our consistency of our quality standard of our product is phenomenal, and it's great for us to take John around as our founder and as the ultimate litmus test of that. And it's really exciting, the progress we've made, and go back to everything we're talking about domestically. Our quality position is who we are, and that's what's winning the game, and we know that's going to be the winning hand around the world as well as we continue to do so domestically.

Mike, this is John again. We probably have 100 things in the pipeline that we think would make the Company better in all disciplines, and believe it or not, after 29 years, we're still figure out how to get more consistent with our product and have higher quality throughout the system. So we're still getting better. We're still learning.

Great, thank you guys very much.

(Operator Instructions)

I'm not showing any questions in the queue. I would like to turn the call back over to management for any further remarks.

Great. Ashley, thank you very much, and thanks to everybody for taking time and being on our call. Have a good day.

Thanks, everyone.

Ladies and gentlemen, Thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone, have a great day.