Sonic Automotive Inc (SAH) 2012 Q2 法說會逐字稿

Good morning and welcome to the Sonic Automotive second-quarter earnings conference call.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer set period. (Operator Instructions). As a reminder ladies and gentlemen, this call is being recorded today, Monday, July 23, 2012. Presentation materials which management will be reviewing on the conference call can be accessed on the Company's website at Www.SonicAutomotive.com by clicking on the Investor Relations tab under "Our Company" and choosing "Webcasts and Presentation" on the right side of the page.

At this time, I would like to refer to the Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. During this conference call, management may discuss financial projections, information or expectations about the Company's products or markets or otherwise make statements about the future. Such statements are forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from those statements made. These risks and uncertainties are detailed in the Company's filings with the Securities and Exchange Commission. Thank you.

I would now like to introduce Mr. David Smith, Executive Vice President of Sonic Automotive. Mr. Smith, you may begin your conference.

Thank you. Good morning and welcome to Sonic Automotive's second-quarter 2012 earnings call. I'm David Smith, the Company's Executive Vice President. Joining me on the call today are Dave Cosper, our CFO, and Jeff Dyke, our Executive V.P. of Operations. I'll start today's call with an overview of the quarter after which I'll turn it over to Dave for his review of our financial results, followed by Jeff with a look at our operating results. We will then have closing comments and open the call to your questions.

With that, please turn to the next slide. Our business model and strategy continue to yield positive results. Our team delivered a record-setting sales performance with nearly $2.2 billion in sales during the quarter, an increase of over $239 million, or over 12%, from the prior-year quarter.

All of our revenue lines experienced sales growth, particularly our new retail vehicle sales improving over 22% versus a SAR improvement of only 16%. We continue to keep expenses in line with our yearly expectations and, collectively, we were able to increase net income from continuing operations nearly 20%.

There were two items affecting our reported results, as can be seen from the slide. And Dave will speak to those in his comments.

We have been very busy over the last several months in implementing a plan that we believe will benefit our shareholders and strengthen our Company. If our outstanding tender offer for our 5% convertible notes is successful, we believe the benefits from an improved capital structure will be an important step toward higher overall profitability. We are excited about how these actions will affect the future of Sonic Automotive.

Now, I will hand the call over to Dave Cosper to review our financial performance.

Thank you David. As David mentioned, revenue increased 12% for the quarter and reached $2.2 billion. Gross profit was up 5% and operating profit increased to $60 million. After-tax profit was $28 million, up 20% from last year. EPS was $0.46 for the quarter, up 21% from last year.

During the quarter, we repurchased $20 million of our 5% convertible notes and recorded a loss of $1.6 million after taxes. This reduced EPS by $0.03 for the quarter. We also successfully resolved the state tax matter that resulted in favorable tax accrual and valuation allowance adjustments, and this increased EPS by $0.06 for the quarter.

Next slide please. SG&A as a percentage of gross profit was 77.8% for the quarter. This is in line with our full-year projection of 78%. The slight increase from last year is as much about softer gross PUR as anything else. Our investment in technology and training remains on track as we move to substantially improve our sales effectiveness and the shopping experience for our customers. Jeff will have some details on that in just a few minutes.

Next slide. Net CapEx after mortgage funding was $24 million for the first six months of the year. Full year spending is projected at $95 million. We presently after three new stores under construction, and these are all on owned property and as these stores are completed, we plan to secure mortgage funding (technical difficulty) them.

Next slide. This slide shows our bank covenants, and as you can see, we are comfortably compliant with all of them. As David mentioned, our efforts on improving our capital structure and basically we have a two-step process to do this. For step one, on July 2, we closed on $200 million of 10-year notes with a 7% coupon, and we are in the middle of step two, which is a tender offer for all of our 5% convertible notes. And the tender offer period ends this Friday. We believe these actions will improve and simplify our capital structure and be beneficial for all our debt and equity holders. Consequently, we view this as a win-win all the way around.

With that I'll turn the call over to Jeff.

Thanks, Dave, and good morning everyone. I appreciate the opportunity to share the Sonic Automotive 2012 second-quarter operating results. Before I speak about the results on this slide, I'd like to take a moment to thank our team for recording our best customer satisfaction quarter in Company history as we embark to revolutionize the way customers purchase, sell cars to us, and service their vehicles at Sonic Automotive. I'd like to also thank them for continuing our dedication to our associates as turnover is tracking an all-time low for the year between 20% and 25% as we strive to lower our turnover to below 15% as a Company.

Now on to the new vehicle slide. As you can see from the slide, new retail revenue was up 21.3% and our new retail volume was up 22.3% while gross was up 6.2%. We continue to see strong new retail volume across all segments and all markets. New vehicle day supply was 46 days ending June.

Next slide please. Our pre-owned business continues to improve as the second quarter was the largest pre-owned volume quarter in Company history. Pre-owned revenue was up 4% while volume was up just under 3% for the quarter. Total pre-owned and related gross is up just over 1% as inventory mix in newer-model pre-owned import vehicles caused some margin and volume erosion for the category. The mix has been adjusted and margins have returned to normal levels in July.

As you can see on the slide, we hit 87 units per store for the quarter, up 6% from an average of 82 units in our record-breaking first quarter that we set in Q1 and ahead of the 79 that we averaged in 2011. We have two out of our five regions now averaging over 100 units per store with the others making progress towards our goal.

The exciting news for us is that our SEMS initial test phase in Texas is coming to an end and a full company launch schedule begins in August of 2012. Our days supply was 31 days and certified pre-owned was 26% of our total pre-owned sales, in line with our strategy.

Next slide please. As you can see from this slide, Fixed Operations revenue was up 3.2% and gross profit was up 2.2% for the quarter. We broke the record for revenue and growth that we set last quarter having our all-time largest fixed revenue and gross quarter in Company history. Customer pay revenue was up 3.6% while customer pay gross was up 3%. Internal and sublet revenue was up 7.6%, while internal and sublet gross was up 12.9%. We're on schedule to have all stores operating with our service pad process by year-end. Results we are seeing from this launch are fantastic and we will share more details as stores come online -- as all of our stores come online.

Warranty revenue was down 7.9%, and warranty gross fell 9.4% as warranty continues to shrink as part of our sales, just over 14% of the total fixed operations revenue mix.

I'd like to take this opportunity to thank our team for their hard work and dedication to creating one of America's greatest companies to work and shop. With that, now I'll turn the call back over to Mr. David Smith.

Thanks Jeff. Our team really appreciates the time you've given us today to review the quarter. We are very pleased with the results this quarter and the benefits we are seeing and the continued execution of our various operational and financial strategies.

As we look into the last half of 2012, we are hopeful that the positive trend of growth in automotive retailing continues, and anticipate the full-year 2012 SAR to be in the low 14 million unit range. Based on our performance through the first half of the year, we are increasing our continuing operations diluted EPS guidance to a range of $1.62 to $1.70.

Before we take questions, I want to take a minute to thank all of our associates and vendor partners that join together every day to help us build one of America's greatest companies to work and shop. It is an honor and a privilege to help lead our great company and we thank you. With that, I'll open it up for questions.

(Operator Instructions). Rick Nelson, Stephens.

Thank you, good morning. I have to ask you about the incremental training for IT, (inaudible) costs that you absorbed in 2Q. Was there anything unusual in your expectations for the SEMS launch in August from a cost standpoint?

Rick, this is Dave. The costs for the IT and training were basically flat with Q1 and it's roughly in the $3 million neighborhood incremental year-to-year. And frankly I don't see any increase the SEMS launch.

No, we have been absorbing the SEMS costs on a monthly basis, Rick, starting in January. It's all expected. The costs are all right and mine with what we projected them to be. And we're just very excited to get SEMS up and running in the store. We're launching it. It's been a little bit disruptive because you're really moving from a decentralized pricing and appraisal model to a centralized pricing and appraisal model, so you are really changing the culture of all of our stores. So I am real pleased with where we are, with the product. We are real excited to get it launched, and all the costs are right in line with what we projected them to be.

So we got the costs, and now the revenue, the margin, and the volume we will look forward to seeing.

I noticed the other G&A in your breakout was up about $5 million. Is that kind of incremental IT, or I guess where exactly does the debt tender cost show up in the financial statement? (multiple speakers)

The debt tender costs really haven't hit our income strip yet. A lot of those will be amortized over the life of the deal, and -- (multiple speakers)

We called out $0.03 and EPS related to the --

Yes, I'm sorry. Yes, that's in other income, and that's related to the $20 million we bought back in April. And that was before we even undertook this latest strategy to issue long-term debt and do the tender offer. That was part of our normal retirement program of the convertible notes. You're exactly right, that was worth the $0.03.

In terms of priorities for the free cash flow, how would you rank those buybacks ownership of properties, other CapEx?

Yes. You know, our three priorities of course that we've been on for several years now are base business, number one, owning our property, number two, and reducing our debt number three. So we're going to take care of the base business first. And we're going to own properties as they present themselves. Those actually would be ahead of reducing debt.

Now, this structure that we are undertaking right now of course pulls ahead our effort to reduce -- take out the converts if our tender is successful, and gives us a nice long-term funding ten-year debt at a good rate.

Now, the cash we had targeted for the converts over the next two years of course is -- we're going to look at all options and what's best for the Company, but we clearly are focused on making sure dilution is handled well over time.

Got you. Because you're raising more capital than the converts will require, should we assume that differential would be bypassed?

Yes, and you probably saw in our press release we got a $100 million authorization for repurchase of common stock. So that's about as close to a yes as you're going to get from me, Rick.

Thanks a lot. And good luck.

Brett Hoselton, KeyBanc.

Good morning. I want to dive into the SEMS a little bit, the investment there. And I guess my first question is it sounds like you're kind of at a run rate around $3 million. I presume that's the run rate you're probably going to continue out through the remainder of this year. Is that a fair assumption?

That's correct. That's correct.

Now, as we get into the first quarter of next year, does that investment essentially go away in its entirety, or does it continue and ramp down over some period of time?

I think it continues and starts to ramp down probably in the second half of 2013. And that's a lot more than SEMS. There's a lot of things going on here at Sonic in each part of our business.

Right. We've got the service pad which is an iPad rollout on all of our service drives, which makes life a lot more convenient for our customers and helps us execute better. We've got sales pads iPads that are going in the hands of all our sales associates which is a long-term part of our customer experience process, so all of those dollars, all those projects wrap into that dollar amount. And those dollars will ramp down over time, but when you look at SG&A as a percent of gross, the lift we're going to get by centralizing and the early results we are getting back in some of these stores is going to -- it won't be felt anymore. It's just -- you sort of get bloodied a little bit going through the door because you're launching all of these activities that we want to have in the store with the value of new IT products that are out there and the processes we want in place.

And at the same time, you're changing the culture that's going on in the store. It's very rare for an automotive company to have all their appraisals done centrally and all their pricing done centrally. That's not something that's happened in our industry, but we are going to have such great control over our inventory and our pricing that it's going to make us a heck of a lot more effective. Our margins will go up, our volume will go up, and we're seeing that in our test stores. And our volumes are up and our margins are up, and so it's going to make a big difference for us moving down the road.

As you think about the iPads, both in the service front and the sales department, and the rollout there, how does it benefit, let's say, the service writer or the assistant service manager? How does it benefit them or how does it benefit the sales associate?

First of all it makes life a lot easier. If you ever spend any time in a service drive and you saw what a service writer has to do now with a big chief tablet and a number two pencil, there's some sort of form they have to fill out with a clipboard and run back to the computer and put information in, which inconveniences the customer. Now you can take a service pad and it actually forces the service writer to do the full walk around at the car with the customer. It's really neat. I was in a store the other day and the customer has taken the service pad out of service writer's hands and filling it out themselves. And it makes a big difference. Our effective labor rates are growing; the number of hours per RO are growing significantly. And so it's just an overall easier process using technology and process to enhance how we do business, which in our industry has been a little bit archaic over time.

Then the same thing on the sales side. You can imagine how long it takes you to buy a car. I don't care where you go, the average is somewhere between 2.5 and 3.5 hours once you've made a decision to buy a car. With the processes we are putting in place, we are going to be able to -- after you've made the decision to buy a car, our target is to be below one hour, we will have you out the door. And that's a big significant difference, especially if you think about the generations of buyers that are coming on that have no time. You think about your children, and how they use technology today, they spend all their time on their iPads and their iPhones and texting and doing all those things. They don't have a heck of a lot of time, at least in their minds. I'm not so sure what they are so busy doing, but at the end of the day, it's going to make the buying process a heck of a lot easier for the consumer. And you just have to come experience it, and I invite you to come into one of our stores here over the next few months and enjoy the process. I'll sell you a car while you're at it.

Thank you. Then just think about used vehicle gross profit per unit. In the past couple of years, you've kind of ranged around that $1400 to $1500 per unit. You're down more in that $1300 this past quarter. Is there anything in particular going on there and what are your expectations going forward? Do you see it kind of staying in that $1300 range or do you expect you're going to push back up into that more typical $1400 to $1500 range?

No, I expect us to be somewhere between $1400 and $1450, somewhere in that ballpark. Really, we came out of March with a lot of current-year model and one-year-old Honda and Toyota product. And Honda and Toyota are running incredible specials on their new vehicle Camrys and Accords and Corollas and so it's put a lot of pressure on that product almost to a point where you can sell new cheaper than you can sell used. And so it created a little bit of a mess for us. That's why you want to have a centralized inventory management process in place because it stops all that.

I think you'll see margin shrinkage in a lot of different -- not just us. You saw it in others -- you'll see it in others too. I expect it to bounce back in or around the $1400 mark is where we sort of target to be; that's our sweet spot. And we are already seeing the numbers back up -- $75, maybe even close to $100 a car for March and it will keep marching north after that. It was just a little bit of a blip there for us.

Thank you very much gentlemen.

[Rahu Shatah], UBS.

This is Colin Langan actually. Do you hear me? Yes, I was just -- could you just clarify the revised guidance range? Is that putting in any estimate for the convert tender, or is that pre the impact of the convert?

This is Dave. That's excluding any impacts associated with the tender offer. That thing is still outstanding, and there's a whole number of things related to that, and we'd just as soon see the dust settle on that before we speculate on what that might do to us.

Okay.

I can tell you this. If everything goes the way it should, the way we are expecting and hoping, it's a good thing for everybody, and we'll get a lift out of it.

Of the. And when is the timing of that going to be announced?

Friday is the end of the tender period, and then I think it takes a day or two to assess things and clean things up and close. And so we'll know first of next week.

Okay. And so I guess the guidance went up, at least the midpoint here. What is driving the improvement through the rest of the year? Is that mostly the sales outlook getting a little bit better?

Sales outlook is better, and we've held our guidance -- we'd held it for a while at the $1.55 to $1.65, and I think we'd noted on one of our calls that if things continued that way, we would be at the high end of the range. And if you do the average between what we have provided, it's $0.01 or $0.02 over the high end of our range. And so I think it's very consistent with what we have been saying since the last call.

Okay. And then on the total sales basis, other dealers seem to perform a bit better. I know you outperformed the market. Any thoughts -- was geography working against you this quarter?

No -- go ahead.

This is Jeff Dyke. Here's the thing. If you look at brand mix, we are really heavily weighted with BMW and Honda. And you've got some other groups out there that's more heavily weighted with Mercedes Benz and Toyota, and those two brands just outperformed BMW and Honda. BMW is up. It's 16 big stores for us. I think we sell more BMWs than anybody in the country. And they are only up about 4.5% so far for the year. And so that is certainly a piece of it. And Honda as well, they are not up -- they are up but they are not up like 80% with Toyota. We are outperforming them maybe by 100% in terms of their growth. So it's a little bit of mix is playing a role in that. That's why we are so focused on pre-owned, quite honestly, and what we are doing in fixed operations because it offset that. In years past, we wouldn't have had the pre-owned growth and the lift we have seen, and we would be stuck with low volume in BMW.

The good news is when you talk to BMW, I met with their executives the other day, they look at the back half of the year as being much, much better than the first half of the year as they've got new product coming online and some inventory issues that they have resolved. And so we look to have all that behind us by the end of July, and some wind in our BMW sales as August gets going.

Okay. And one last one. You talked about used revenue per unit, but on the new side, you were actually a little bit lower than your target of 21% to 23%. Is it the same reason that caused that to be a little bit below the target range?

It is. We are being very aggressive with Honda, just because of that. The last thing I'm going to do is give up market share, which we are not doing, right? We are holding onto our share. And that gets a little bit expensive while BMW is recalibrating and getting some inventory issues settled. So yes, that's what's causing it.

Great, thank you very much.

Scott Stember, Sidoti.

Good morning. If we circle back to the used side, you talked about you had a mix issue. Does that also largely explain the mid single-digit revenue growth in the quarter?

Yes, there's probably a couple of things going on there. That's one of them, and the other thing too is we are really going through a metamorphosis here with the change over to SEMS. And I've got my entire regional team focused on that launch. I've since actually rearranged some training and refocused my used vehicle directors on some of the things they have been doing for the last four years where we've seen double-digit growth.

I expect, as we move towards the end of the third quarter and into the fourth quarter, we'll return to those normal growth levels. We are really changing a lot of things at Sonic when it comes to pre-owned to prepare for the launch of SEMS. And it's created a little bit of a slowdown there. but I expect it to return. It's not something I'm worried about. It's actually something we knew we would be faced with.

And in general, could you just comment on what you guys have seen for vehicle sales so far in July?

Good. Good. We like July. July has been good so far, both new and pre-owned. shaping up kind of like a May for us, and has been solid.

Okay. And just lastly, I know there's been a lot of questions on SEMS and all the IT spending. But could you give any examples for instance with it seems like you're pretty more far along with rolling out the iPads than most other things, maybe give some examples of some of the stores that have these in place, what the comps look like, the customer pay work looks like compared to stores not on the iPads?

Yes. We are seeing growth, and we've got our Toyota stores have been rolled out. We've seen -- without giving you real specific numbers, we've seen -- and I hope we stay ahead of the curve -- our affective labor rate growth has been real solid up $3, $4 $5 dollars. The number of hours per RO have grown. And most importantly, CSI is better, which is just real, real interesting. Our customers really like the process.

And you have to understand when you've got a company that's been doing one thing for decades in an industry that's been doing one way for decades, it's a big change to go in and bring technology and to do the things we are doing. And we're doing it all very, very quickly. So there's just to be expected, Scott, some bumps in the road. But our performance has been spectacular when -- especially on the fixed operations side. The numbers are just great. And I'll have everything rolled out on fixed operations by the end of the year, the team will. I'll begin to -- I'll make a note in next quarter, we'll have a lot more of the stores rolled out, we will start specifying some of the details that we see behind the launch.

Great, that's all I have. Thank you.

Clint Fendley, Davenport.

Thank you, good morning guys. I know lots of questions on the SEMS today, I'm sorry if I missed it. But did you guys indicate how long you think the entire launch will take here?

Okay. I did a launch of 17 stores at the beginning of the year. Then we added the Texas market, which is now all done, Texas and Oklahoma. So that gives us about 35 stores or so that are on the product. I should have the whole thing complete by the end of Q1. If I can do it faster, I will, but there is a lot that goes into this. So my goal is to have it all done by the end of the first quarter.

Good deal. And I know you indicated that your volume and your margins have improved there in Texas due to the centralized pricing. Can you give us an idea of maybe how much, what the experience has been?

In our Toyota and Honda stores, it's a little bit more difficult because of the mix issue. But we've got stores that are up $200, $250 in PUR, and Texas is such a hot market right now from a volume perspective. We are just selling everything we have there. So I expect -- I sent a note out of our senior team this morning. I expect, with SEMS rolling out, that we are going to see a $200 to $300 lift, a couple hundred dollar lift in PUR from the SEMS rollout. And the volume upside is exponential. Look, we are doing -- we're going to approach 90 units this year per store, maybe a little better, and I think once we have SEMS in full rollout, we blow by our goal of 100 and maybe we are at 125 a store, maybe even better. Who knows? There's so much upside in the pre-owned business that it's just tons and tons of upside. So the system is going to help make a big difference for us.

Good to hear. Final question, I wonder if you guys were planning to update your guidance then again after this Friday?

I haven't thought that far ahead. To be perfectly honest, I want to get it done, and then we'll worry about it.

Okay, great.

There's a lot of moving parts to that, Clint.

Okay, thank you.

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

Good morning guys. Just got a few follow-up questions here. Particularly on new margins down at 5.8%, I know Toyota and Honda have gotten a little bit more aggressive in the market. We've heard that from a number of different dealers. But is there anything else that's going on in the market that you think is unusual as far as pricing or support you need to get to the consumer to really get deals done? Because it sounds like demand is coming back pretty strong, so just a little bit curious that margins on a percentage basis and an absolute basis might be so low right now.

Look. The market is hot. And it's really Honda and Toyota that are driving all that. And some BMW just because their sales are down -- I mean not down, but they are flat in comparison to some of the other major I-line out there. But when you compare it on a year-over-year basis, it's just not a fair comparison because of Lexus and Toyota and Honda and the Japanese imports. So you've sort of got to throw that comparison out the window.

Today, we've got plenty of supply in Toyota and Honda, and it's just a -- it's a very hot market. We are all fighting for market share, and we are not going to back off and I know our competition is not going to back off and it's putting pressure on the margin. And that's nothing unusual. That's why you've got to have a big pre-owned business, a big fixed operations business, and that's what we have been focused on for so long. But I don't find it to be unusual.

I'd find it unusual if somewhere were growing their margins in this environment. I'd like to see that. But overall I just think that's part of a very, very competitive market.

The consumer is coming back; there's no question we are selling more cars. And that's great, and we've got inventory to sell. The manufacturer has done a good job getting us inventory, and behaving on an inventory production schedule, so they are not overproducing. But they are producing us enough inventory for us to all be very competitive with each other and that's what you're seeing in the marketplace.

Great. So there's nothing with the showroom traffic that slowing down or consumers' willingness to buy. It's really more of a function of what's going on at the Toyota and Honda level?

Yes. There's no -- traffic is not an issue.

Okay. Second question -- as we think about parts and service up 3.2% in the quarter, it's had a pretty good stream almost for the last three years. There's this kind of big fear in the market that UIOs would decline as we sort of went through this big decline in new vehicle sales and we would be seeing that hit '10, '11 and '12. It just doesn't seem to be coming through. I'm just curious if you think that cloud is really on the horizon or we're just blowing right through it and people are coming back, in repairing their cars and you're doing a good job with your effort. So we are just never going to see that real whole and things will pick up even further from here.

I mean we seem to be, every quarter, setting a new revenue and gross record. And second quarter was nonetheless. We just set another record, and it's not slowing down. That theory was a good theory for years past, but I just don't think -- I don't see that happening. I've been surprised by a lot of different things, but I don't see that happening. Our business is good.

And our business, if you go back and think about it, we stayed really aggressive the last few years on our new car business, so we didn't have -- if you'll study it, we didn't have the kind of falloff that a lot of other dealers had in new car volume. And so we just -- we don't have -- we didn't that big a shrinkage, so we put plenty of inventory out there and my customers are coming back and our pipelines are full, and our service drives are full, and there is no sign of that slowing down.

That's great to hear. Then just lastly the buyback got tweaked up by about $100 million. I know you guys are somewhat active out there in the market. I know acquisitions are off the table right now. But are you seeing pricing of your stock just wildly more advantageous or cheaper, should I say, than what you're seeing out there in the market and potential to acquire dealerships? I know you're not that active -- you are not active and all right now in purchases, but it seems like you are trading at an extreme discount to what might be going on in the private market. I'm just trying to get your thought process there.

You see it exactly as I do, John. And that makes acquisitions problematic for us. I think, at some point, they will make sense, but with all the other things we've got going on in the business, growing the base business, it's been our focus to keep focused on that and not go out and acquire. We think there's a lot of upside in our base business, and sooner or later it's going to flow through to the stock price and if it's not, then we will have to just use that buyback authority.

Okay great.

(technical difficulty) and it's much lower risk. We are investing in ourselves and things that we know are going to produce instead of going out and buying a dealership that you have to pay a lot of money for that there is risk in. So we see it as the right way. We've had the same strategy now for the last four or five years, and at some point in time the Street is going to see the same thing.

But to be fair, your stock is so underpriced that you guys -- we are seeking out more authorization to buy it back in addition to the investments you're making internally. I mean that would be the rationale to increase the buyback. I'm just trying to make sure we got that logic straight.

It's what you would do too.

Yes, okay. I appreciate it. Thank you very much guys, keep it up.

Thanks.

We have reached the allotted time for questions. I will now turn the floor back to Mr. Smith for any closing remarks.

Great. We thank you for joining us on the call today, and hope you guys have a great week. Thank you very much.

Thank you everyone for joining today's conference call. You may now disconnect.