Boston Beer Company Inc (SAM) 2018 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Boston Beer Company First Quarter 2018 Earnings Conference Call. (Operator Instructions) As a reminder, this conference may be recorded. I would now like to turn the conference over to Mr. Jim Koch, Founder and Chairman. Sir, you may begin.

Thank you. Good afternoon and welcome. This is Jim Koch, Founder and Chairman, and I'm pleased to be here to kick off the 2018 first quarter earnings call for The Boston Beer Company. Joining the call from Boston Beer are Dave Burwick, our CEO; and Frank Smalla, our CFO.

I'll begin my remarks this afternoon with a few introductory comments, including some highlights of our results, and then hand over the microphone to Dave who'll provide an overview of our business. Dave will then turn the call over to Frank who will focus on the financial details for the first quarter as well as a review of our outlook for 2018. Immediately following Frank's comments, we'll open the line for questions.

Our total company depletions increased 8% in the first quarter. We saw a significant improvement in Samuel Adams and Angry Orchard trends led by our key innovations that include Sam '76, Samuel Adams New England IPA and Angry Orchard Rosé, all of which are generating excitement during the early stages of their introduction.

To date, the response from our wholesalers, retailers and drinkers has been quite positive, but it's too early to fully understand repeat rates on these new products and therefore to draw conclusions on the long-term impact. New craft brewers continue to enter the market, and existing craft brewers are expanding their distribution in tap room, with the result the drinkers are seeing more and more choices. We believe that we are well positioned to meet our longer-term challenges because of the quality of our employees, our beers, our innovation capability and our sales execution strength, coupled with our strong financial position that enables us to invest in growing our brands and creating new growth opportunities.

We're delighted that Dave Burwick has formally joined as our CEO earlier this month. Dave knows our company well, having served on the Board of Directors since 2005, and has an established track record of innovation and business success in the beverage and consumer goods industries. Martin Roper, the company's former President and CEO, has now stepped down as a President and CEO and from the board. We sincerely thank Martin both for his 17 years of leadership as CEO and for the assistance he has provided to Dave during the transition and the onboarding process as well as the strong position he has left the company in as he hands over the reins to Dave.

I will now pass over to Dave for a more detailed overview of our business.

Thank you, Jim. Good afternoon, everyone. I'd like to begin my first earnings call by stating how honored and privileged I am to become the company's President and CEO. As Jim mentioned, Boston Beer has many unique strengths, including our people, our culture and our brands, and I look forward to an exciting journey ahead. I'd also like to personally thank Martin for his great leadership over 17 years and his support for me in my transition to the role.

Now on to the specifics. As we stated in our earnings release, some of the information we discussed in the release and that may came up -- come up on this call reflect the company's or management's expectations or predictions of the future. Such predictions and the like are forward-looking statements. It's important to note that the company's actual results could differ materially from those projected in such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the company's most recent 10-K. You should also be advised that the company does not undertake to publicly update forward-looking statements whether as a result of new information, future events or otherwise.

As I onboard to the company, I'm focused on reviewing all areas of the business with a focus on brand strategies that will enable the company to return to long-term profitable growth. Our depletions increase in the first quarter was primarily due to increases in our Twisted Tea, Truly Spiked & Sparkling and Angry Orchard brands that were only partially offset by decreases in our Samuel Adams product. We're excited that Twisted Tea continues to grow distribution and generate consumer pull and that Truly Spiked & Sparkling is well positioned as a leader in the emerging segment of hard sparkling water.

Samuel Adams performance improved in the first quarter due to the national launch of Sam '76 and increases in seasonal volumes, but these positives were more than offset by declines in other Samuel Adams styles. We had a smooth seasonal transition to Samuel Adams Summer Ale late in the first quarter, which was a few weeks earlier than last year's second quarter transition.

As we go forward, we remain committed to our 3 priorities. Our number one priority is returning Samuel Adams to growth through continued packaging, innovation, promotion and brand communication initiatives while maintaining Angry Orchard and Twisted Tea's momentum and ensuring Truly Spiked & Sparkling's position as a leader in the hard sparkling water category. Our plans to improve our Samuel Adams trends include our current Fill Your Glass integrated marketing campaign, along with focused sales execution on our primary Samuel Adams initiative, Sam '76. The second quarter will also see continued investments in Angry Orchard media. We're pleased by the early reaction to our new campaign and are excited by the national launch of Angry Orchard Rosé cider, which we believe can attract new drinkers to the category from wine and beer.

Our second priority is a continuing focus on cost savings and efficiency projects to fund the investments needed to grow our brands and to build our organization's ability to deliver against our goals. Based on our visibility to opportunities in 2018, we're maintaining our previously stated goal of increasing our gross margins by an average of about 1 percentage point per year over the 3-year period ending in 2019 before any mix or volume impacts while preserving our quality and improving our service levels.

Our third priority is long-term product innovation where we continue to explore beverage areas compatible with our business model for delivering long-term shareholder value with an aim to generating a consistent cadence of those interesting brand innovations.

Based on information in hand, year-to-date depletions reported to the company to the 15 weeks ended April 14, 2018, are estimated to have increased approximately 8% from the comparable period in 2017.

Now Frank will provide the financial details.

Thank you, Jim and Dave. Good afternoon, everyone. For the first quarter, we reported net income of $9.3 million or $0.78 per diluted share, representing an increase of $3.6 million or $0.33 per diluted share from the same period last year. This increase was primarily due to increases in net revenue and gross margin that were only partially offset by increases in advertising, promotion and selling expenses.

Shipment volume was approximately 813,000 barrels, a 15% increase compared to the first quarter of 2017. Shipments for the quarter increased at a higher rate than depletions and resulted in a higher distributor inventory as of March 31, 2018, when compared to April 1, 2017. We believe distributor inventory as of March 31, 2018, was at an appropriate level based on inventory requirements to support forecasted growth of brands and new innovations.

Inventory at distributors participating in the Freshest Beer Program as of March 31, 2018, increased slightly in terms of days of inventory on hand when compared to April 1, 2017. We have approximately 79% of all volume from the Freshest Beer Program.

Our first quarter 2018 gross margin of 50.5% increased from the 47.2% margin realized in the first quarter of last year, primarily due to cost-saving initiatives in company-owned breweries, product and package mix, favorable fixed-cost absorption and price increases, partially offset by higher ingredients and packaging costs.

First quarter advertising, promotional and selling expenses increased $13.8 million compared to the first quarter of 2017, primarily due to increased investments in local marketing, point-of-sale and media and increased freight to distributors due to higher rates and higher volumes.

General and administrative expenses increased by $0.8 million from the first quarter of 2017, primarily due to increases in salaries and benefits costs.

During the first quarter, we recorded a net income tax benefit of $0.1 million, which consists of a $2.7 million tax benefit related to stock option exercises in accordance with ASU 2016-09, partially offset by other income tax expense of $2.6 million. The effective tax rate for the first quarter, excluding the impact of ASU 2016-09, decreased 28% from 46.8% in the first quarter of 2017, primarily due to the favorable impact of the Tax Cuts and Jobs Act of 2017.

Based on information of which we are currently aware, we continue to target full year 2018 earnings per diluted share of between $6.30 and $7.30, but actual results could vary significantly from this target. This projection excludes the impact of ASU 2016-09.

We are forecasting a change in 2018 shipments and depletions versus 2017 of between 0 and plus 6%. We are targeting national price increases per barrel of between 0 and 2%. And full year 2018 gross margins are expected to between 52% and 54%, which we expect to increase during the year due to progress on our cost savings initiatives.

We plan increased investments in advertising, promotional and selling expenses of between $15 million and $25 million for the full year of 2018, not including any increases in freight costs for the shipment of products to our distributors.

We estimate our full year 2018 effective tax rate to be approximately 28%, excluding the impact of ASU 2016-09. We are not planning to provide forward guidance on the impact that ASU 2016-09 will have on our 2018 financial statements and full year effective tax rate as this will mainly depend upon unpredictable future events, including the timing and value realized upon exercise of stock options versus the fair value when those options were granted.

We are continuing to evaluate 2018 capital expenditures, which mostly consist of investments in our breweries and tap rooms and are currently estimating investments of between $55 million and $65 million. These amounts could increase significantly, if deemed necessary, to meet future growth.

We expect that our cash balance of $46.6 million as of March 31, 2018, along with future operating cash flow and our unused line of credit of $150 million, will be sufficient to fund future cash requirements.

During the first quarter and the periods from April 1, 2018, through April 20, 2018, the company repurchased approximately 119,000 shares of its Class A common stock for an aggregate purchase price of approximately $22.6 million. We have approximately $156.1 million remaining on the $931 million share buyback expenditure limit set by the Board of Directors.

We will now open up the call for questions.

(Operator Instructions) And your first question will come from the line of Vivien Azer with Cowen and Company.

This is Gerald Pascarelli on for Vivien. Jim, I was wondering if you could just talk about kind of the current pricing landscape, what you're seeing and then, in particular, what you're seeing from other craft beer players within the space, please.

Yes. Well, first off, we're maintaining our 0 to 2% guidance there. And what we're seeing within the craft beer space is some downward price pressure primarily from the introduction of 15 packs at the sort of the static package level, much less downward pricing pressure and some upward ability for 6 packs and 12 packs. So if you look at the same packages, we've been able to raise our pricing a bit reflected in the IRI numbers. And we think that is fairly common across craft markets and craft brewers. The biggest issue is introduction by some brewers of 15 packs at a price slightly above 12 but a lower price per unit in it. So -- and that's a somewhat limited number of craft brewers with significant volume in that 15-pack. So it's kind of turbulent. There's not widespread downward price pressure that we're feeling in craft, so it's much more coming in the form of tactical pricing on unusual pack sizes.

And the next question will come from the line of Judy Hong with Goldman Sachs.

So my first question is really for Dave. First, welcome. And I just wanted to get your response to why you took the job and what you think is the biggest opportunity for the company is.

Okay, Judy. Thanks for the question. There are a lot of reasons why I took the job. First of all, I had the good fortune of being on the board for 13 years, so I knew the company well. And what I knew about the company is it's a company that has a tremendous mission, it has great people, a really special culture, a growing portfolio of strong beer and nonbeer brands and the financial wherewithal really to invest to grow the business. So the foundation is just super strong. And I think -- and Jim obviously is like the kind of person who has got a great vision for the future of this business, and I think there's a lot there. So I think -- by the way, it's also very similar to where I came from in my prior role with Peet's where it's a sub-brand with similar circumstances. So I think there's a lot of opportunity [too]. When you look at the business, the biggest opportunity facing us is the beer business and Sam and getting that -- and getting the trajectory going differently on that business. And I'm very confident we'll be able to do that.

And do you have any early thoughts in terms of how you think you can turn the Sam Adams brand around just utilizing maybe some of your past experiences?

It's -- so I'm like in week 4, day 3. I'd be -- I'm a little hesitant to go out on a limb just yet. I think -- what I'd been doing really spending a lot of time with the team, a lot of time actually immersing myself in this -- in the insights. There's a lot of great consumer insights and learning that the team has uncovered and understanding what we've been doing and starting to kind of in my head kind of put stuff together and working closely with the team. So I don't have any answers right now, but I'm very confident that we're going to have some answers, and we're going to move pretty quickly in getting there.

Okay. And then, Jim, I guess I wanted to get your thoughts on the Rosé cider. It seems like the brand is off to a very strong start, particularly in terms of getting distribution. So I guess just anything that you've done differently in terms of getting distribution more quickly, what do you think the runway is for a brand like this and, more importantly, what do you think it's doing for sort of the broader Angry Orchard franchise as a whole.

Well, those are all good questions. It is off to a very strong start, though I think all of us here are, while optimistic, want to see longer term what's the trial and repeat of that trial. I think it's off to a strong start because, first of all, it just makes sense. It's an easy thing to grasp. It's visually very appealing, so -- and rosés are hot. And second, we've had great execution by our wholesalers, great execution by our salespeople and a strong reception from the retailers. They looked at it, and they just said, "Oh, this is an obvious thing. This is great." And as a result, it is now, I believe, the #1 new product introduction in what I'll think of as the greater beer space: beer, ciders, hard sparkling waters, FMBs, all those things in that space. I believe that Angry Orchard is the #1 innovation, new innovation in that space, and Sam '76 is #2. I think that it is bringing new attention to the Angry Orchard brand. It's obviously turned the trends around a little bit. I think what we saw was the cider category getting pretty healthy by the end of 2017, like down 1% or 2%, and trending towards positive. And I think the introduction of Angry Orchard Rosé has accelerated that return to health and healthy growth of the cider category in general and of Angry Orchard as well.

Got it, okay. And then, Frank, maybe in terms of the SG&A expenses. It was up meaningfully year-over-year. I know you called out both the freight expenses and the investments in marketing. So I'm just wondering if you can parse out the component, how much was freight cost going up and how much was marketing going up.

Yes. So if you look at the total, it was close to $14 million that we spent more in the first quarter versus last year. And I would say 80%, about that is our investments into marketing. And the balance, freight was about 20%. And then if you look at freight, as you know, freight rates are going up. So the volume impact is just shy of 50%. And then the rate component, which you will see probably across the industry, rates are going up for freight.

(Operator Instructions) And the next question will come from the line of Kevin Grundy with Jefferies.

So my question is on the guidance. I think both top line and EPS the Nielsen data was very strong inter-quarter. I think there was some expectation in the market that you may even raise guidance for the year given some of the strong trends. So questions related to that. How did the quarter come in relative to your own expectations? And I know you don't guide for the quarters, but it came in ahead of The Street from a revenue and EPS perspective, understanding some of this was some timing benefit. But if you could comment on that, how the quarter came in relative to your expectations and then also where you expect to land based on what you know now. And I know there's some uncertainty with how some of the new -- some of the -- what the consumer response will be as you move through the year on some of the newer products. But where -- if you could kind of help people a bit, where do you expect to land both with respect to depletions and EPS relative to the guidance from here.

Yes. So Kevin, I think we're pretty happy with the quarter how it came in. Clearly, we were expecting higher growth rates than the average for the year. Because if you recall last year, Q1 was pretty weak because we had the 2 Spring Seasonals that were not working, and Q1 was down significantly last year. So that's why we're planning for this quarter to be in terms of growth rates pretty much the best quarter of the year. Having said that, we are pretty happy with the performance overall versus what we thought we were going to come in. Related to the guidance, as you know, Q1 is the smallest quarter that we have. It's at the beginning. We just started launching the innovations. The growth is innovations driven. So I think we want to see more repeat in the market. And at this point, I think it's -- yes, what I can say is we're pretty confident that we can deliver within the guidance that we have, and we'll have to watch the upcoming quarters.

All right, that's helpful. And Frank, another question, I guess, just with respect to the outlook. So some of the freight costs have moved higher, and some other input costs have moved higher. You guys stayed pat with the guidance kind of across the board. What are some of the other moving parts? Or is it just some of the increase here is not to a degree or magnitude that you needed to move within the range for any of those?

Yes. I think it's too early. There are quite a few moving pieces. As you know, you always have swings in the input costs as you go in. Freight is one thing that came up. It was pretty high at the very beginning of the year, has moderated a little bit. There's talk about the tariffs on steel and aluminum, which has an impact. We're in touch with our suppliers. At this point, we don't feel that we need to change the guidance based on those input costs and that we feel that we can manage that. That can change. We have to see what the real costs are that are coming through, but this is what we see at the moment.

And then just last one related to that. Just given the pricing dynamic that Jim spoke to and came up on the last call, do you have confidence if need be if -- should commodity cost and oil, et cetera, move higher from here, do you feel confident enough behind the portfolio at this point that you could take additional pricing? Or does that -- would that seem unlikely in the current environment if necessary?

I think it's premature to talk about that. We have -- I mean, as you know, we've guided to pricing between 0 and 2%. We think we will fall within that range. And that pricing occurs throughout the year. What -- if you look at the commodity prices and you look at the cost increases that we have talked about, they are facing the entire industry. And I think there was talk early in the year also that there might be a bit of pricing pressure. I think we worked that in one of the earlier questions like if there's downward pricing pressure, given that we have those commodity increases and freight increases, that probably will make it a little bit more difficult to see downward pricing.

And the next question will come from the line of Caroline Levy with Macquarie.

Can you hear me?

We can.

Loud and clear, Caroline.

Great. First of all, David, nice to reconnect. I think I knew you in Pepsi days.

Yes, you did, indeed.

Anyway, just excited to see this quarter. And then just to find out, is there seasonality to cider? And I don't know that you called out your spiked seltzer launch, which I also think has been quite successful. Is there any seasonality there? In other words, could those businesses, which are an increasing part of your mix, as well as Twisted Tea, actually be a bigger part of the mix as you move into summer. I recognize your comps are difficult, but the guidance on volume seems quite modest. And in terms of the beer and the ability to turn that around, would you consider flavor in beer because I guess the Rosé has really been a big win on the cider side?

Well, that's -- well, let me answer the multiple questions kind of in the order that you asked. Yes, spiked seltzer is continuing to deliver triple-digit growth. You can kind of see it in the IRI numbers, and we believe that -- and you may want to mute your phone, Carolyn. And we continue to believe that hard sparkling water will be an ongoing product mix where we can put -- and will play a very strong hold. To your second question about seasonality. Yes, Angry Orchard tends to -- be towards the end of the summer; like September, October are really good months. It's associated with the apple harvest, but it is stronger in the summer than in the winter. Same thing is true with hard sparkling water and tea, and I believe that they are probably more seasonal than Sam Adams beer, which it tends to have the strongest performance in the third quarter as people trade up for the holidays. And then your last question about flavors in Sam Adams. I guess I think about it a little differently. I mean, Sam Adams has a lot of flavors in it. They come from the malt, the various roast to the malt that range from a caramel/toffee note to a cappuccino or even espresso notes and mocha and cream stout. The hops will bring in flavors that range from earthy like geraniums in English hops to German hops with floral notes and a little orange fruit in American hops. So we got -- we can get a lot of flavors in the beer with our current ingredients, but we don't see like flavored beer as a big thing. We do make lots of beers with traditional flavors like Porch Rocker, which has some lemon in it. So I guess, I don't see it going the way of FMBs though.

And the next question will come from the line of Pablo Zuanic with SIG.

Welcome, Dave. Congratulations on the launch -- on the results to your new launches, Jim. Look, my questions are going to be mostly about background because, to be honest, given that we don't have so much access to your company as we do to other companies and there are so many moving pieces here, I hope you can bear with me and indulge me in answering what I consider mostly background questions, okay? So the first question, Jim, for example, I guess a very general question would be, do you think the Nielsen and the IRI scanner data out there are they good predictors of your business? Do you have a rough idea of what percentage of your volume they cover? And related to that, if you look at your negative 5% depletions in 2016 and 2017, can you try to break that between what would have been either measured and unmeasured or break between off-premise and on-premise, just give us a rough sense to understand better the company.

Yes. The IRI numbers, which is what we subscribe to, they are a, we think, a good reflection of our volume in the scan channels. When we look at our numbers, internal numbers versus the IRI, they're usually pretty close in that universe. Now that universe is only very roughly 50% of our volume. And to make it even more complicated, the other 50% is a real hodgepodge of different channels. Clearly, the off-premise is not in there, but there's a lot of on-premise that's also -- let me say that again, I got it wrong. The on-premise is not in the IRI numbers. So bars, restaurants, all that draft beer, not in there. And that's a -- those are big channels for us. And then there's a lot of off-premise retailers that are not in there. And then there's many states where you don't have chain stores that was migrating to more of those. But traditionally, Colorado, Minnesota, Pennsylvania or Massachusetts aren't reflected in those numbers. So they're -- I would say they're a decent reflection overall of our off-premise trends of the scanned and nonscanned volume. They are -- they have no real connection with the on-premise trends. And at least for the past few years, on-premise has been much weaker overall for beers. So -- and particularly if you take out the brewery tap rooms, which are becoming a reasonable part of the on-premise consumption in many cities. That means that the on-premise volume that's not controlled by a brewery is probably going down, whereas off-premise is going up. So for us, the last few years, on-premise has been weaker than off.

That's very helpful. And related to that, if you may indulge me, and also we talked about some products that would be overindexed and unmeasured, those liquor stores or the bars that got to be differentiated it. It seems to me like all the FMBs, whether it's tea, hard tea, seltzer, cider, those products are probably underindexed in on-premise, right, and even some of those independent liquor stores, whereas your more typical beer business, Boston Lager and your seasonal products within beer, are probably overindexed there. Is that correct?

I think that's a good assumption.

Okay. That's good. And then just in terms of the new products that you've launched, can you give us a sense of ACV opportunities? I mean, how far along are you? How far away is Sam '76 versus Boston Lager or even hard seltzer the versus rest of your portfolio, hard cider? Just some comments on that end that would help.

Okay. They'll be kind of general. We have seen the rollout of our new product introductions in the first quarter, and we are very different than the big breweries that you're more used to covering because they have a lot more clout, power, whatever you want to call it, with their distributors. So if AB launches something, they could get into 80% ABV in a matter of a couple of weeks. They're very good at it. Their distributors are very good. Our distributors are equally good, but they -- we're not their primary supplier. They have lots of good products in their portfolio. So we have to be more patient about the rollout of our new products even if the sales per point are very, very strong. So we're only partially into -- by the end of March, only partially into the rollout of our new products. And they really don't get to the distribution that they're going to get for the year probably till maybe the end of May because stores are still doing resets all the way through May. And our distributors are continuing to execute against our distribution priorities and incentives. And for us this year, that applies kind of to all 4 of our -- all 3 of our non-Sam brands, and it applies to Sam '76 and New England IPA as well. So at the end of March, I don't know, I'm going to make a wild-ass guess, maybe we were halfway through the distribution of the new products. And of course, that happened. That kind of went from 0 to whatever -- to halfway during the quarter. So we do see some upside in the second quarter from the continued rollout of very successful innovations for all 4 of our brands: Sam '76 and New England IPA for Sam Adams, Rosé Cider for Angry Orchard and Truly new 12-pack and [oh] Wild Berry 6-pack. And actually, I guess I misspoke, not so much for Twisted Tea, so that continues to gain distribution just on the power of the brand and the sales per point. So we do see that distribution going up as well with the new resets.

That's very helpful. And just one more on the background side, if you can indulge me here. When I think about your seasonals, and I'm not talking seasonality, I'm talking about your seasonal business in terms of beer, just to understand the comps that we are looking at quarter-to-quarter in 2017, in which quarter is seasonals bigger? It seems to me that because of OctoberFest, probably the third quarter? But related to that, just some reference, I think in a previous call you said seasonals are about 1/3 of your sales. But I don't know if that was just for beer or total portfolio, including FMBs. But also, within which quarters are they bigger? And just so we understand the comps, where were the bigger products with seasonals last year? Was it mostly a first quarter issue? Or was something that really was throughout the year?

Yes. Last year, it was mostly a first quarter issue. I mean, it was -- we had a debacle, and we got healthier in our seasonals as the year went on. And in terms of seasonality, it is primarily the summer. So -- and then the fall. Month-wise, it would be kind of April through the end of October, so Q2 and Q3 are the strongest quarters for seasonals.

That's very helpful, Jim. And one very last one. So in the case of Sam '76, in a previous call you described the product very clearly. Where does it compete? I mean, obviously, beer competes with everything. But in terms of the beer segments, where do you see it really competing?

I think it provides a number of benefits for occasions, if you will. The nature of the beer is it has the big flavor upfront. It's got a big ale flavor and hop character and then an almost immaculately clean, crisp finish. So there's nothing like it. And I think part of our plan on rollout and one of the challenges is to just describe it to people because there's never been a beer like this before. It's a very innovative brewing process, and it's a really striking flavor profile. And we see it as a beer for craft beer drinkers who want to stay in craft beer. They want the flavor and taste of craft beer, but they want it in an occasion where they don't want to get filled up, they don't want something that's really bitter and they don't want something with a lot of alcohol. So they want to be able to drink an extra beer, and that's where Sam '76 comes in. It's basically a flavorful, refreshing craft beer. So it puts those 2 together in a way that nothing else is done.

Pablo, let me just quickly jump in on the seasonal business because I know it's a little bit difficult to compare it year-over-year. One of the difficulties that you also have this year versus last year is last year we had 2 Spring Seasonals. So we transitioned to Summer Ale, which Jim described is one of our bigger seasonals. We transitioned last year a little bit later than this year. Because this year, we went back to 1 Spring Seasonal. So last year, we had 5. This year we had 4. And that changes a little bit the transition, but we pointed it out in the earnings release. Okay?

(Operator Instructions) And this does conclude the question-and-answer session for today.

Thanks, everybody, and we look forward to speaking with you again in 3 months. Cheers.

Thank you.

Bye-bye.

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