SpartanNash Co (SPTN) 2014 Q3 法說會逐字稿

Good day, and welcome to the SpartanNash Company Third Quarter 2014 Earnings Conference Call and Webcast. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference call over to Ms. Katie Turner. Ms. Turner, the floor is yours, ma'am.

Thank you. Good morning, and welcome to SpartanNash Company's third quarter fiscal 2014 earnings conference call. By now, everyone should have access to the earnings release for the third quarter ended October 4, 2014. For a copy of the release, please visit SpartanNash's website at www.spartannash.com under For Investors. This call is being recorded and a replay will be available on the Company's website for approximately 10 days.

Before we begin, we'd like to remind everyone that comments made by management during today's call will contain forward-looking statements. These forward-looking statements discuss plans, expectations, estimates and projections that might involve significant risks and uncertainties. Actual results may differ materially from the results discussed in these forward-looking statements. Internal and external factors that may cause such differences include, among others, competitive pressures among food, retail and distribution companies, the uncertainties inherent in implementing strategic plans, and general economic and market conditions.

Additional information about risk factors and the uncertainties associated with SpartanNash's forward-looking statements can be found in the Company's third quarter earnings release, fiscal Annual Report on Form 10-K and in the Company's other filings with the SEC. Because of these risks and uncertainties, investors should not place undue reliance on any forward-looking statement. SpartanNash disclaims any intention or obligation to update or revise any forward-looking statements.

This presentation includes certain non-GAAP financial metrics and comparable period measures to provide investors with useful information about the Company's financial performance. These non-GAAP measures include financial terms identified as adjusted and earnings and net long-term debt. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures and the other information required by Regulation G is included in the Company's earnings release, which was issued after market close yesterday.

And it's now my pleasure to introduce Mr. Dennis Eidson, President and CEO of SpartanNash Company for opening remarks.

Thanks, Katie. Good morning, and thank you for joining our third quarter fiscal 2014 earnings conference call. With me this morning are Dave Staples, our Executive Vice President and Chief Financial Officer, as well as some other members of our executive team.

Today I'll begin by providing you with a brief overview of our business and highlights of our financial performance for the third quarter, and Dave will share some additional details about the third quarter financial results and our outlook for the remainder of fiscal 2014. Finally, I'll provide some closing remarks and we'll open up the call and take some questions.

Let me start off by saying really how pleased we are with the third quarter results. Our legacy retail division achieved another quarter of positive comp store sales, our fourth out of the last five quarters and consolidated earnings again exceeded our expectations, as a result of our cost reduction and integration initiatives. Through the merger, we've strengthened our strategic and competitive positioning, which is allowing us to develop impactful solutions for our existing customers and partners and to secure new business.

Our team also continues to successfully work together to complete our integration activities and to position SpartanNash to take advantage of the growth opportunities in our industry. In speaking of our team, I'm pleased to announce that we promoted Larry Pierce to the position of Executive Vice President, Merchandising and Marketing. Larry joined SpartanNash in 2008 from Coca-Cola, where he served in a variety of positions, including Vice President of Sales for the supermarket, mass and convenience channels.

Larry has been instrumental in leading the merchandising and marketing team through merger and integration activities and demonstrated his ability to work collaboratively across all functions of our Company. We are committed to promoting from within and think we have a great executive team in place, as we embark on the next phase of our transformation.

Now reviewing our food distribution segment results, we posted another quarter of significant growth over the prior year period, primarily as a result of the sales contributions from the merger. We continue to feel good about how Spartan and Nash Finch operations are coming together and have been encouraged to see new business gains and opportunities, as we are putting significant efforts into filling our sales pipeline.

During the quarter, we began rolling out a number of our most successful merchandising programs to the legacy Nash Finch customer base. These programs have been instrumental in driving sales in our legacy business and are being well received by customers in markets where they have been introduced to date.

In addition to these merchandising initiatives, we continue to focus on improving operational efficiencies and on developing and activating solutions for our distribution customers across the network. We've also recently held a number of [fresh and center store] food shows for our independent retailers across the entire network, and we're pleased to see the strong attendance and the energy and the commitment displayed by our customer base. These shows were very successful and enabled us to demonstrate our points of differentiation to our partners.

Net sales in our retail segment were also up significantly in third quarter due to the merger, as well as sales growth due to new and remodeled stores. Comp store sales in our legacy retail operations, excluding fuel, increased 0.4% from the prior year. We have made meaningful progress in executing our integration plan for the retail segment. During the second quarter, we completed the remodel and conversion of three North Dakota stores acquired in the merger for the Family Fare banner.

Additionally, the remaining three North Dakota stores were remodeled and converted to the Family Fare banner early this fourth quarter. In fact, the ribbon cuttings for those stores were held just last week and we're very pleased with the community and customer response to our offer. Additionally, we've begun to roll out some of our merchandising plans to the western store base and look forward to fiscal year 2015 when we can augment these programs with additional store remodels. We're committed to creating a grocery shopping experience that embraces locally grown and produced products, builds on our associates' commitments to these communities, and delivers freshness and value. These merchandising and facility initiatives will definitely enhance the experience of our consumers.

Regarding our loyalty analytics, we're moving into additional test categories and remain on track to roll out the program across all of our categories in the Michigan market in 2015. We continue to leverage our consumer-centric marketing to drive engagement with our customers and we'll begin applying some of these programs to our western stores over the course of fiscal 2015. We are also beginning to build a more robust shopper marketing platform that will allow us to leverage the key channels, such as email, social media and digital coupons.

On the product side, we continue to drive both retail and food distribution sales through the expansion of our private brand program. During the third quarter, we added approximately 55 net new products and expect to add approximately 300 unique items for the full year. At the end of the third quarter, private brand unit penetration in our Michigan retail operations was 23.8%, which continues to place us above the national average.

Sales in our military segment exceeded the prior year for the first time this year, as we cycled the majority of the impact from the government's sequestration and mandatory commissary closures last year. While the commissary system remains challenged, we are more optimistic and hopeful we will see sales trends closer to prior year levels as we move forward. We also remain encouraged by the reception we've received from customers where we have opportunities to expand our business and are pleased that we've expanded the number of customers choosing us to be their worldwide partner.

Moving down to our capital plan during the third quarter, we completed two major remodels and opened one new store. Additionally, one supermarket was sold to a distribution customer and one underperforming supermarket was closed. This brings our store count to 165 supermarkets and 30 fuel centers at the end of the quarter. For the fourth quarter, we plan to complete three major remodels and re-banners and to close two stores as part of the ongoing evaluation of our store base. We are also continuing the construction on one new store that's scheduled to open in North Dakota in early 2015.

With that overview, I'll turn the call over to Dave for more details on the financials and an outlook for the remainder of fiscal 2014.

Thank you, Dennis, and good morning everyone. Before I start, in the third quarter of fiscal 2014, the Company established post-merger methodologies for the allocation of profit and corporate level expenses between its food distribution, retail and military reporting segments to better reflect Spartan Stores' and the Nash Finch Company's merged operations. There is no impact to our consolidated financial results, but the operating segment results for the first and second quarters of fiscal 2014 and all quarters in fiscal year 2013 have been revised to reflect the new allocation methodologies. A recap of the effects of the restatement of segment results for previous quarters will be included in our third quarter Form 10-Q filing.

Consolidated net sales for the third quarter increased 187.2% to $1.81 billion compared to $630.1 million in the year-ago quarter. The increase was primarily due to $1.2 billion in sales from the merger with Nash Finch. Consolidated gross profit margin for the third quarter was 14.4% compared to 20.7% in the prior year and primarily reflects the change in segment mix due to the merger and the impact of higher LIFO expense and continued low center store inflation.

Third quarter operating expenses would have been $227.7 million, or 12.6% of net sales, compared to $113.5 million, or 18% of net sales last year, if the charge related to merger, integration, and restructuring were excluded in both periods. On an absolute basis, the increase was due to the inclusion of the Nash Finch operations, partially offset by our work on cost control and synergy realization. The decrease in rate was due primarily to the change in the segment sales mix as a result of the merger and the previously noted cost containment and synergy realization efforts. These results exclude $1.4 million in expenses related to merger integration and $1.3 million in restructuring gains in the current year's third quarter, and $4.6 million in expenses related to the merger in the prior year third quarter.

Adjusted EBITDA for the third quarter increased 103.6% to $55.9 million or 3.1% of net sales, compared to $270.5 million (sic - see press release," $27.5 million") or 4.4% of net sales last year. Adjusted earnings from continuing operations for the third quarter were $17.2 million or $0.46 per diluted share on approximately 37.8 million shares outstanding, compared to $9.3 million or $0.43 per diluted share on approximately 22 million shares outstanding last year.

These results exclude expenses related to the merger of $0.03 per diluted share, offset by net asset impairment and restructuring gains for store closures of $0.02 per diluted share. For the prior year third quarter, adjusted earnings from continuing operations exclude expenses related to the merger of $0.14 per diluted share and a tax benefit of $0.01 per diluted share related to the favorable settlement of an unrecognized tax liability established in the prior year. These better-than-anticipated results were driven by our continued expense control efforts and exceeding our merger synergy realization expectations, partially offset by incremental LIFO expense and lower inflation-related gains.

Turning to our operating segments. Third quarter net sales for the food distribution segment were $764.3 million compared to $270.2 million in the year-ago quarter. The increase in sales was primarily due to $493.5 million in sales from the merger with Nash Finch. Third quarter operating earnings for the food distribution segment increased 153.5% to $15.2 million when adjusted to exclude $1.4 million in expenses related to the merger integration versus $6 million last year, excluding $4.6 million in merger expenses. The gains from the sales volume of the Nash Finch's food distribution operations were partially offset by $800,000 in higher LIFO expense and lower inflation-related gains.

In our retail segment, third quarter net sales were $521.7 million, compared to $359.9 million last year. The increase in sales was due to $179.2 million in sales from Nash Finch and a 0.4% increase in comparable store sales, excluding fuel. These gains were partially offset by $19.5 million in fewer sales due to store closures and lower retail fuel prices compared to the prior year.

Retail segment operating earnings for the quarter increased 16.8% to $12.9 million, when adjusted to exclude $1.3 million in asset impairment and restructuring gains versus $11 million last year. The improvement in adjusted operating earnings was due primarily to the positive effect of the store closures, as well as favorable expenses due to merger synergies.

In our military segment, third quarter net sales were $523.6 million and operating earnings were $5.7 million, including $400,000 in LIFO expense.

From a cash flow perspective, our current year-to-date period operating cash flow was $117.4 million, compared to $56.1 million for the comparable period last year. The increase was the result of contributions from the merger and favorable expense reductions. As a result of our strong cash flow generation, during the third quarter we repurchased 121,000 shares of our common stock for a total of approximately $2.5 million. As of the end of the third quarter, we had $23.8 million available for share repurchases under our $50 million repurchase program.

Total net long-term debt was $548.8 million as of October 4, 2014, versus $146.9 million at the end of the third quarter last year due to the incurrence of $436.1 million in debt as a result of the merger. Net long-term debt decreased $47.6 million from $596.4 million at December 28, 2013, as a result of the strong cash flow driven by the summer sales season. We anticipate that debt balances will increase slightly through year-end, due to the increased funding for holiday inventory requirements.

We remain committed to reducing our leverage towards the 2 times multiple of EBITDA. With $372.6 million of availability under our credit facility as of October 4, 2014, our capital structure comfortably supports our continued growth initiatives, including potential acquisitions.

I will now provide further detail on our outlook for the remainder of fiscal 2014. Based on our strong third quarter performance and expectations for the remainder of the year, we are maintaining our full year sales guidance, but are raising our earnings guidance for fiscal 2014. Although the economic environment in our markets remains challenging for those receiving SNAP benefits, on average it appears to have stabilized. We continue to anticipate cost pressure associated with the minimum wage increase in Michigan and Minnesota, as previously discussed, but continue to believe that our favorable expenses and merger synergies will more than offset this increase.

For the 13-week fourth quarter, we expect that net earnings from continuing operations per diluted share will be in the range of $0.34 (sic - see press release, "$0.39") to $0.44 per diluted share, excluding merger integration costs and other one-time expenses. For comparative purposes, similarly adjusted earnings per diluted share were $0.31 in the comparable 11-week fourth quarter of fiscal 2013, recast to the Company's new fiscal year format, and with approximately 7.6 million less in weighted average shares outstanding.

On a full year basis, we continue to expect fiscal 2014 consolidated net sales to increase to between $7.9 billion to $8.04 billion, but we are tightening the range of adjusted EBITDA to $232 million to $239 million. And we are raising the range of adjusted earnings per share from continuing operations to approximately $1.75 to $1.80, excluding integration costs and other one-time expenses.

We expect that capital expenditures for fiscal year 2014 will continue to be in the range of $77 million to $82 million, net of anticipated sale leaseback proceeds related to the new store location, with depreciation and amortization now in the range of $87 million to $89 million and total interest expense still in the range of $24 million to $25 million.

This concludes our financial discussion and I will now turn the call back to Dennis for his closing remarks. Dennis?

Thank you, Dave. In summary, we are really pleased with the solid execution of both our operating plan and the integration activities and are encouraged by our positive comp store sales trends. As we look to the remainder of 2014, we remain focused on furthering our integration activities and positioning the Company to realize the long-term opportunities for growth in our retail, distribution and military segments.

During the fourth quarter, we plan to continue introducing new merchandising, pricing and promotional programs to stores acquired in the merger with Nash Finch and we'll continue to enhance our efficiencies and expand our food distribution programs and services for our entire distribution network. Additionally, we'll continue to position the Company to engage its strategy of being a participant in the further consolidation of the industry and believe that our strong capital resources and disciplined management will enable us to execute the strategy, increasing our sales and cash flow, thereby creating a significant value for our customers and our shareholders.

With that, we'll open up the call for any questions.

Thank you, sir. We will now begin the question-and-answer session. (Operator Instructions) Chuck Cerankosky, Northcoast Research.

Good morning everyone.

Good morning.

Dennis, can you discuss a little bit some of the sales building strategies you'll be going after the next 12 to 24 months, especially in SpartanNash's retail and grocery wholesaling operations?

Sure. Well, I would take on the retail side first, and first of all we're pretty encouraged. We had another positive comp sales quarter. I know the number wasn't spectacular in terms of size at 0.4%, but we're feeling a little better, Q4 has clearly started better. Actually the first four weeks, we're at about 1.5% comp rate in our legacy Michigan business, but I do want to remind everybody that at the end of this fourth quarter, if we take the last two weeks, we're going to have legacy Nash comps coming into the reportable comps for Q4. So that will be some indication of what's going on with comps.

And so we're feeling a little bit better. I think the consumer maybe is feeling a little bit better, notwithstanding the food-stamp customer I think is really challenged. I think the lower gas prices more recently feel like there's been a correlation to being able to drive some top line sales at retail across the network. We continue to feel very bullish about the work we're doing around direct consumer marketing and the new tool we have in place Aimia to help us better understand filling the details of what drives consumers to make decisions on purchasing certain SKUs, I think it's going to help us not only with assortment, but also with placement. And it really has a pretty big tail at it because it has also benefits for the distribution segment as well. So we're feeling good there.

On the legacy Nash retail, I would -- and we talked about this since we did the merger, probably under-capitalized would be a fair term for that business. So we're deploying some capital back in those stores. We've done a lot of work in North Dakota. More ahead on Minnesota, we had it considered part of Fargo market, we have six stores in that market. We've remodeled them extensively. In the last couple of quarters, we've re-bannered them to Family Fare, we've relaunched them and we're really encouraged by the early results.

So I think that's a little bit of a template that you can expect us to see -- use going across the Nash Finch portfolio of legacy retail. I think there are plenty of opportunities there. And you can't do that all in one year, it's going to take some time, but some of the assortment work and even re-flowing stores before we re-banner them is going to pay dividends. So we see upside there as well.

Turning to the distribution segment, we had the opportunity to spend quality time with most, if not all of our large independent customers and even some of the balance. And we've been communicating around how we would like to go to market and SpartanNash has a little bit more of a virtual chain approach and that doesn't mean we're going to have 2,000 stores doing everything exactly the same way. But it does mean that -- I think there is consensus among the group.

[And this has] kind of leveraged the $8 billion of revenue that we have, not only with the supplier communities, but with our partners, retailers to drive a better value to the end consumer than we've historically been able to drive with two smaller companies. And so I think there's real gold in that mine, and on top of that I will tell you that the business we make to independent retailers across the geographies that we're in, that are supplied by other wholesalers have been warmly received and we continue to feel bullish about being able to fill the sales pipeline that way as well.

If you look at CapEx for next year, any thoughts on how it will compare to the dollars this year and the number of projects, that sort of thing.

It will be pretty much in line, Chuck.

So a flattish store development program.

Yes. I mean -- so we have a -- so you're talking about new stores?

Well, the CapEx program both in terms of dollars and where it impacts across the segments, but the number of stores involved, new, remodel, relos.

Yes, I think if you look at the capital plan, the total dollars will be relatively consistent, the allocation will be relatively consistent and I would say the remodel flow will be relatively consistent.

Okay. And then finally, Dave, anything to talk about regarding a share repurchase policy at Spartan, since you had nibbled at that a little bit in the most recent quarter.

Yes, I mean, as you know, we've had a share repurchase -- this program has been in place for a number of years now and has a couple of years left on it. I think we've always been somewhat opportunistic at share repurchase, and I think we try to manage dilution somewhat with share repurchase. As we said, typically our priorities are growth and continuing to position the balance sheet in the right position to allow us to continue to further our growth. And so share repurchase will be a small component probably of our ongoing capital strategy.

All right. Thank you.

Mark Wiltamuth, Jefferies.

Hi, good morning. Wanted to get some feedback on how far through the synergy totals you think you are and how many years out you think that extends. And then, how that's going to flow into the different segments? It seems like it will be a little more focused on distribution and retail, but maybe not so much on the military side. A little color there, thanks.

Yes, we [articulated] early that the synergies were $52 million and we anticipated that we'd get those in a three-year period. We do believe that the number is going to be greater than $52 million. We also in terms of pace had identified year one of being around $20 million, we will clearly beat the $20 million synergy target this year. And the assumption with regard to synergies by segment, [right, there's virtually -- there's almost none, Dave in the military. If there is, de minimis if there's any]. So it's spread between the retail and distribution segments.

Okay. And what areas are you finding that you're doing better than expected?

Well, there's probably a number of areas, but I think probably the biggest by far would be just in our ability to combine programs, whether that be product procurement, non-product procurement, services and really just realize pretty substantial benefits out of that. And so it's not just any one area, but really when it comes to the combination of the different services and products that we buy, I think that has really been a real plus for us and that ranges from benefits to products to services. And I would say that by far has been maybe a little bit more beneficial than we thought.

I think personnel costs have been a little better than we thought. And I would just want to -- plus, just to say, putting together these two companies is not easy as any mergers may be, but our associate base has really taken the challenge head-on. We're asking people to do more than I have a right to ask them to do, because sometimes we have some people leaving spots, but we're asking (technical difficulty) to do two jobs and I'll tell you what, I couldn't be more proud of the effort that the associates at SpartanNash have put forward as we get close to the one-year anniversary of the merger, which is November 19.

Okay. As we're looking forward into that retail segment, should we be thinking about a negative comp for the fourth quarter and into the next year, as the Nash Finch operations start to show up there in the comps?

You should not be thinking about a negative comp in the fourth quarter. The legacy Nash retail will fold in, I think, only two weeks, the last two weeks of the quarter.

One of which is the 53rd week.

And one is a 53rd week. So we have that added delight, right? We're going to be challenged with reporting on a 53rd week, but it will not go negative in Q4. Q1, I think I would rather, Mark, let us kind of get through Q4, we'll give you some guidance at the end of the fourth quarter on where we think comps are heading next year.

Okay. Thank you very much, and congrats on the success on the merger so far.

Thank you.

Scott Mushkin, Wolfe Research.

Hi, good morning. This is actually Brian on for Scott. Thanks for taking the questions. Just wanted to start on the -- you said the two store closures in this fourth quarter coming up, as it's part of like an ongoing review. Just wanted to see how far along you guys were in that process, as you kind of keep looking at the stores and where you're set up.

I think we're pretty far along. I think we have a pretty clear view of where we want to go with that. And so this will round out the current year and then I think you'll see a few more next year. And then I think that really, what I would call, finalizes our plans as we finalize our plan for all of the retail division. And so next year you're going to see a continued investment and remodel effort in that retail group along with the re-flows and resets that Dennis talked about. You're going to see a lot of the positives going in and there'll be a -- there'll still be a few more closures, but a lot more of the beneficial aspects will be going in as well.

So, yes, you kind of turn the page and become kind of a net new store builder rather than shutting, is that right?

Well, not in the next year.

Not next year, but as you move after that, yes.

Yes.

Okay. And then just wanted to touch -- and the price of gas, you talked about how it helps. You've seen some help from the consumer as the price of gas falls. Can you remind us how it helps your distribution business, the fuel surcharges, how the lags work there within, how it helps you out the falling price of gas?

What we -- we worked on a fuel surcharge basis with our independent customers in the same program we have with our retail stores. So as the cost of diesel fuel comes down, we reduce the fuel surcharge, which of course silently reduces their cost of goods delivered. And there's potentially a little bit of a margin benefit on the retail side.

Okay, that's great. Thanks for taking the questions. Appreciate it.

(Operator Instructions) Karen Short, Deutsche Bank.

Hi there.

Good morning, Karen.

A couple of questions on your comps. You've in the past kind of given some color on D&W comps, I'm wondering if you could give some color on how they were comping this quarter. And then you also gave some color on the acceleration that you saw into the fourth quarter. Wondering how D&W -- kind of if they followed the same trend by the same order of magnitude, et cetera into the fourth quarter.

Yes, D&W continues to be the best comping brand that we have that -- and we were 0.4% in the quarter, D&W was positive 1.7%. We don't always give the raw number, that was the number. West Michigan, we have digested -- we have four non-cycle Walmart supercenters in the market, which was part of the reason we felt a little softer there on the comps. We talked about that last quarter. D&W, as we look forward, I would suggest will continue to be the best comping brand that we have.

Okay. But I guess what I'm wondering is with lower gas prices, obviously, that benefitted and contributed to the acceleration in the fourth quarter. Is D&W even more levered to an even greater benefit from that or less, like --?

I think less. Karen, we run a lot of aggressive fuel promotions and we monitor those results. And, in fact, last week we ran -- we ran if you spend $100, we'll let you fill your tank for $1.99 a gallon. And we have some technology that enables us to do that, lots of competitors can't do. And it was very successful. But on balance, D&W seems less responsive to the gas promotions than the core and middle consumer does. They still respond, I don't want you to misinterpret my remark, but not quite as strongly.

Okay. And I'd say that, your comment on gas promotions, just clear us what gas margins were looking like in the quarter and if that was a benefit, obviously, with prices coming down, I would have thought they would have been a benefit.

Gas margins in the quarter were a little bit better in margin per gallon. I think we were about $0.025 better on cents per gallon in margin.

Year-over-year?

Year-over-year, yes. Quarter-over-quarter, right.

Yes.

Year-over-year quarter three. Quarter three a year ago.

Got it. Okay. And then I guess just bigger picture, I know when this merger was initially announced, we talked as loosely about with some of the opportunities you thought you could have with the military, like logistics side of the equation just in terms of expanding product offering and customer base. Like I think even potentially tobacco distribution came up. I'm just wondering if there's an update on that.

Yes. We touched on it a little bit here in the remarks this morning. We're continuing to work hard on that business, the DeCA's business continues to be negative. Now, the third quarter and I don't have DeCA's numbers for Q3, but we cycled all the -- the bulk of the sequestering, the one-week closure of domestic commissaries. So the comp is going to be positive for DeCA and it has our (inaudible) in the third quarter compared to the legacy MDV business a year ago.

It's been challenging, I think, for the whole system to kind of reboot after that sequestration a year ago. We think that we're going to see some better numbers now that we've got all of that behind us and we've anniversaried. We're getting a good reception from suppliers around MDV and our relationship with Coastal Pacific and our worldwide partnership network. I think in the third quarter, we added 5 to 10 worldwide customers to the network. So what I mean by that is they signed up between us and Coastal. And the only -- we're the only distributors that deliver their products to any US commissary in the world. And so we want to say we had somewhere between 5 and 10 new partners in Q3. We've got there with 50 partners of that nature across the whole enterprise and some really familiar names like [Didal] and Diamond Foods and Hartz Mountain, P&G, which is the biggest. We think strategically, we're in a good spot with the model and the business strategy there.

Okay, that was helpful. Thanks.

Chuck Cerankosky, Northcoast Research.

Dennis, any new retail channels you're about to enter that you could talk about or new product lines to better leverage your distribution capabilities?

I would say there is nothing that I'm prepared to discuss.

Well, good luck with that. Thanks.

Well, at this time, we're showing no further questions. We'll go ahead and conclude our question-and-answer session. I would now like to turn the conference back over to management for any closing remarks.

I'd like to thank everybody for their participation today. I thank all our associates again for their hard work and our valued consumers, the independent retailers, suppliers and shareholders for their continued support. That concludes our third quarter conference call and we look forward to speaking with all of your again at the end of next quarter. Thank you.

And we thank you, sir, and to rest of the management team for your time today. The conference call has now concluded. At this time, you may disconnect your lines. Thank you, and have a great day everyone.