Titan Machinery Inc (TITN) 2013 Q1 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome, to today's Titan Machinery Inc. first quarter fiscal 2013 earnings conference call. At this time, participants are in a listen-only mode. Following the formal remarks, we will conduct a question-and-answer session, and instructions will be provided at that time for you to queue up for questions. Hosting today's conference will be John Mills with ICR. As a reminder, today's conference is being recorded. And now, I would like to turn the conference over to Mr. John Mills. Please go ahead, sir.

Thank you. Good morning, ladies and gentlemen. Welcome to Titan Machinery's first quarter 2013 earnings conference call. On the call today from the Company are David Meyer, Chairman and Chief Executive Officer; Peter Christianson, President and Chief Operating Officer; and Mark Kalvoda, Chief Financial Officer. By now, everyone should have access to the earnings release for the first quarter ended April 30, 2012, which went out this morning at approximately 6.45 eastern time. If you have not received the release, it is available on the "Investor Relations" portion of Titan's website at titanmachinery.com. This call is being webcast, and a replay will be available on the Company's website as well. In addition, we are providing a slide presentation to accompany today's prepared remarks. We suggest you access the presentation now by going to Titan's website and clicking on the "Investor Relations" tab. The presentation is directly below the webcast information in the middle of the page.

Before we begin, we would like to remind everyone that the prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions. These statements do not guarantee future performance, and therefore, undo reliance should not be placed upon them. These statements are based on current expectations of management and involve inherent risks and uncertainties including those identified in the "Risk Factors" section of Titan's most recently filed 10-K. These risk factors contain a more detailed discussion of the factors that could cause actual results to differ materially from those projected in any forward-looking statements. Titan assumes no obligation to update any forward-looking statements that may be made in today's release or call.

Lastly, due to the number of participants on the call today, we ask that you keep question period to one or two questions and then rejoin the queue. The call will last approximately 45 minutes. David Meyer will provide highlights of the Company's first-quarter results, a general update on our business, and review our recent acquisitions. Then Mark Kalvoda will review financial results in more detail, and Peter Christianson will discuss our segment operating results and our fiscal 2013 annual revenue, net income, and earnings per share guidance range, along with our outlook modeling assumptions. Then we will open the call to take your questions. Now, I would like to open the call to the Company's Chairman and CEO, Mr. David Meyer. Go ahead, David.

Thank you, John. Good morning, everyone. Welcome to our first quarter of fiscal 2013 earnings conference call. As John mentioned, to help you follow today's prepared remarks, we have provided a slide presentation which you can access on the Investor Relations portion of our website at www.titanmachinery.com. If you click on the "Investor Relations" tab on the right side of the page, you will see the presentation directly below the webcast in the middle of the page.

On slide 2, you will see our first-quarter 2013 results, which were in line with our expectations. Revenue for the first quarter was $421.7 million, our pretax income was $12.4 million, and we earned $0.36 per diluted share. Our business continues to benefit from organic and acquired growth across both our agricultural and construction segments, driven by a healthy agriculture economy and steady improvements in the construction market in our footprint. During the quarter, we made several key acquisitions across all growth platforms, including agricultural retail, construction retail, international, and rental. The first quarter operating income reflects the seasonality of our increased rental business and a traffic growth platform, which we have expanded our rental fleet by approximately 200% from a year ago. While we have modeled and increased our annual operating income from this business unit, the first quarter seasonality had a negative impact on our results, which was in line with our expectations and positions us well for a strong year in our rental business.

Based on our first-quarter results and outlook for the remainder of the year, we are reiterating our annual revenue net income and earnings per share guidance for fiscal 2013. Peter will provide some additional comments on our guidance in his remarks, but looking at slide 3, you will see that we have continued to expect to generate between $1.95 billion and $2.1 billion, net income attributed to common stockholders between $53.8 million and $58 million, and earnings per diluted share between $2.55 and $2.75 based on 21.1 million weighted average diluted common shares. I am pleased that since our IPO, our Company has delivered 16 consecutive periods of quarterly year-over-year revenue growth, demonstrating our ability to execute on our acquisition growth strategy as well as our organic growth opportunity.

Now, I would like to provide some color in each of our industries that are key to our Business. On slide 4, we provide an overview of our Agricultural industry. We continue to benefit from several factors that support a strong operating environment for customers in our Ag segment. In our footprint, reduction conditions are favorable. Spring planting is near completion with crop emergent significantly ahead of the five-year average. Also, there are increased acres in production today because our customers experienced flooding in their fields during this time last year.

Finally, crops in our region have generally experienced adequate moisture thus far in the production cycle. The low projected 2011 crop carryover and reduced South American crop yields are driving favorable commodity pricing for our customers. USDA's most recent estimates project net farm income will be $92 million(Sic-see presentation slides) in calendar 2012, which is significantly above the 10-year average of approximately $72 billion, reflecting the increased long-term demand for agricultural products. Farmers continue to drive very solid and healthy income aligned to maintain strong balance sheets for providing excellent return on investment opportunities for equipment purchases.

Tier 4 combine production is on schedule, and we began delivering the new Tier 4 combines in the first quarter of fiscal 2013. Our customers have been very pleased with the Tier 4 tractors that we delivered a year ago, and we expect similar performance and privilege from our Tier 4 combines. CNH Agricultural Equipment capacity is now booked fourth quarter, and we are comfortable that our current level of new equipment inventory in calendar year 2012 production slots will enable us to meet our annual sales plan.

Now, turning to the Construction segment of our business on slide 5, we've outlined an overview of the construction industry in our markets. This year's first-quarter was not impacted by regional flooding, which increased last year's first-quarter construction rental demand. This year, the milder weather increased revenue in construction parts and service and returned rental demand in line with historical trends. Our Construction Business continues to benefit from increased energy industry activity in our region, including coal, natural gas, and oil. North Dakota has now become the second largest oil production state in the United States. As many of you are aware, several of the states in our footprint are capitalizing on the Bakken, Three Forks, and Tyler oil formations. In addition, recent oil fuel explorations suggest that the Bakken formation may extend as far west as the Rocky Mountain Front in Montana. With our recent acquisitions of the Colorado construction locations, we will expand our exposure to the Niobrara formation in eastern Colorado and Wyoming.

Our agricultural customers continue to drive demand for our construction equipment to use in their farming operations, including feed lots, material handling, land improvement, and land maintenance. Given these factors, combined with our expanding Construction Business footprint, we have increased our new inventory on hand to support this growing demand and are excited about the long-term prospects of our this segment of our Business. Most CNH Construction Equipment capacity is now booked into the fourth quarter. We believe that her current level of new equipment inventory in our calendar year 2012 production slots will enable us to meet our annual sales plan.

Turning to slide 6, we are continuing to expand the Titan Machinery footprint in both our core upper Midwest market and in Eastern Europe, through strategic acquisitions as well as selective new store openings across all of our growth platforms, agricultural retail, construction retail, rental, and international. In the first quarter of fiscal 2013, we completed four acquisitions consisting of three construction equipment locations in Colorado and one agricultural equipment location in South Dakota, one rental yard in Montana, and seven agricultural equipment locations in Bulgaria. We also opened one new agricultural equipment location in Romania. For the second quarter to date, we announced yesterday an agricultural acquisition consisting of two locations in Nebraska. We are pleased with our acquisitions to date, and we remain focused on expanding our footprint through selective acquisitions and store openings in our existing and contiguous markets as well as evaluating opportunities for future growth abroad.

In summary, we are excited about our organic and acquired growth opportunities for the remainder of fiscal 2013 and the strong year-over-year revenue and earnings-per-share growth we expect to achieve this year. Now, I would like to turn the call over to Mark Kalvoda, our Chief Financial Officer, to review our financials in greater detail.

Thanks, David. Turning to slide 7, our total revenue for the fiscal 2013 first quarter grew 32.5% to $421.7 million, with approximately 49% from organic growth and 51% from acquisition growth. All of our revenue sources contributed to this quarter-over-quarter increase. Our revenue growth reflects higher sales in both our Agricultural and Construction segments and resulted from continuation of a strong agricultural equipment market and an improving construction equipment market in the region in which we do business. Our revenue also benefited from growth in the rental business and our Construction segment, which reflects our initiative to expand this growth platform through strategic acquisitions and the investment in our designated rental fleet at our existing locations. I will provide more details on our rental business in a moment.

On slide 8, our gross profit for the quarter increased 33.3% to $70.4 million, reflecting -- primarily reflecting higher revenue. Our gross profit margin was 16.7% compared to 16.6% for the same quarter last year. Gross margins were positively impacted by higher sales and favorable mix shift to our higher-margin Parts, Service and rental business, generating 57% of our gross profit for the quarter. This was partially offset by lower equipment margins compared to the same period last year.

As many of you know, our equipment margins fluctuate from quarter to quarter. We strive to maximize our margins in any given quarter while maintaining market share to ensure our long-term, high-margin after sales product support business. Our rental gross margins were higher last year due to the flooding in the first quarter of last year. We believe our larger rental fleet will generate increased gross profit and have a positive effect on Construction gross margin in the coming quarters due to the seasonal nature of the rental business.

Our operating expenses of the percentage of net sales in the first quarter of fiscal 2013 were 13% compared to 12.4% for the same quarter last year. This increase was due to our Construction segment comprising 18.5% of our business compared to 13.3% for the same period last year. Our Construction segment has historically carried higher operating expenses as a percentage of revenue than our Agricultural segment primarily due to the rental business and occupancy costs. Our pretax margin was 2.9% compared to 3.8% in the first quarter of last year. The decrease is due primarily to the increased operating expenses previously discussed as well as an increase in floorplan interest expense associated with higher level of equipment inventory.

Earnings per diluted share for 2013's fiscal first quarter were $0.36 compared to $0.40 in the first quarter of last year. For modeling purposes, keep in mind earnings per share reflect a 15.6% dilution primarily caused by our May 2011 follow-on offering increasing our diluted share count to 21 million for our fiscal first quarter of 2013.

Turning to slide 9, we provide an overview of our balance sheet highlights at the end of the first quarter of fiscal 2013. We have cash and cash equivalents of $106.7 million. Our inventory level was $823 million as of April 30, 2012, compared to $748 million as of January 31, 2012.

I would like to provide some additional color on our $75 million inventory build during the first quarter of fiscal 2013. New inventory, including acquisitions, increased $83 million from the end of fiscal 2012 to support our forecasted equipment sales and to compensate for longer lead times for production slots. Our used equipment inventory including acquisitions decreased $19 million reflecting our strategy to build new inventory levels and maintain used inventory levels. As David previously mentioned, we are comfortable that our current level of new equipment inventory and our current production slots with CNH will enable us to meet our annual sales plan.

Separately, our rental fleet assets increased to $98 million from $62 million as of January 31, 2012. This increase is in line with our strategic goal to ramp this growth platform of our business ahead of the seasonal increase and demand for upcoming quarters. As of April 30, 2012, we had $274 million available of our $800 million floorplan line of credit. As we previously announced, on April 24, we completed a private offering $150 million principal amount of 3.75% convertible senior notes due in 2019. The net proceeds from the offering were approximately $145.2 million. We expect to use the net proceeds for working capital and general corporate purposes, which as you will see on the next slide, could include repaying portions of our floorplan financing facilities, long-term debt, and the acquisition of or investment in companies or assets that complement our business.

Slide10 gives an overview of our cash flow statement for it the first fiscal quarter of 2013. When we evaluate our business, we look at our cash flow related to equipment inventory, net of financing activities, with both manufacturers and other sources, including non-manufacturer floorplan notes payable and convertible notes, which are reported on our statement of cash flows as both operating and financing activities. Our initial use of a portion of the proceeds from convertible debt was to reduce our floorplan notes payable balances resulting in a higher level of equity in our equipment inventory that we have historically maintained. We used this adjustment to maintain a constant level of historical equity in our equipment inventory at 15%. When considering non-manufacturer of floorplan proceeds and the impact of our convertible note proceeds on our equipment inventory financing in fiscal first quarter of 2013, our net cash used for inventories was $15.9 million. In our statement of cash flows, the GAAP reported net cash used for operating activities was $24.9 million. We believe including all equipment inventory financing as part of our operating cash flow better reflects the net cash flow of our operations. Making these adjustments, our non-GAAP adjusted cash provided by operating activities during the first quarter of fiscal 2013 was $1.7 million. Now, I would like to turn the call over to Peter to discuss our Agricultural and Construction operating segments in more detail and to discuss our fiscal 2013 annual guidance. Peter?

Thanks, Mark. Now, turning to slide 11, you'll see an overview of our segment results for the first quarter. Agricultural sales were $360.1 million driven by acquisitions and organic growth due to the favorable ag economy for our customers in the first quarter. We generated and Ag pretax income increase of 10.6% to $14.3 million. This increase was primarily due to higher sales and was partially offset by compression and equipment margins, which Mark previously discussed.

Turning to our Construction segment, our increased revenue reflects strong top-line growth, which was driven by acquired growth, organic growth, and the expansion of our rental business. We're ramping up this segment of our business in line with the recovery cycle of the industry and our strategy to expand our rental business. The first quarter pretax loss reflects the cost associated with ramping up both the rental business and retail business. We believe we are positioned to generate increased gross profit and positive construction operating results in the upcoming quarters.

Turning to slide 12. This shows our same-store results for the first quarter of fiscal 2013. Our overall same-store sales increased 16.2%, highlighting solid year-over-year improvement in both segments. The improved Agricultural same-store sales of 13.4% for the first quarter of fiscal 2013 are reflective of the continuation of the strong agricultural economy. Our first-quarter fiscal 2013 Construction same-store sales increased 34.9%. This improvement underscores the improved construction equipment market and higher rental revenues. For the first quarter of fiscal 2013, overall same-store gross profit increased 16.9% year-over-year, primarily reflecting higher sales.

For modeling purposes, it's important to remember that we calculate same-store sales by including stores that were with Titan for the entire period in which we are comparing. In other words, only stores that were part of Titan for the entire three months of the first quarter of fiscal 2012 and the first quarter of fiscal 2013 our included in the first-quarter same-store comparison. In the first quarter of fiscal 2013 a total of 28 locations were not included in our first-quarter same-store results, consisting of 17 Agricultural stores and 11 Construction stores.

Slide 13 shows our fiscal 2013 annual guidance. As David said, we are reiterating our previously issued guidance and continue to anticipate achieving revenue for the full year ending January 31, 2013 in the range of $1.95 billion to $2.1 billion. Net income attributable to common stockholders is expected to be in the range of $53.8 million to $58 million, resulting in a earnings-per-diluted-share range of $2.55 to $2.75, based on an estimated weighted average diluted common shares outstanding of 21.1 million.

When modeling our business for fiscal year 2013 forecast, we continue to expect our Ag same-store annual sales growth to be in the range of 3% to 8%, and we expect our Construction same-store annual sales growth to be in the range of 18% to 23%. We expect our equipment margins will improve and will be approximately 10.4% for the year. It's important to note that two quarters last year had equipment margins of 9.2% and 9.3%, and our annual equipment margin for the fiscal year 2012 ended up being 10.1%.

Slide 14 is a historical analysis of our pre-tax income seasonality. As you recall, on our fourth quarter conference call, I noted that we were looking at this year's first quarter being more in line with the three-year average versus last year's first quarter, which was impacted by late spring planting and regional flooding. This slide illustrates that during the past three years of 2010, 2011, and 2012, our average pre-tax income during the first half of the year was approximately 30%, and the second half was approximately 70%. Although the individual quarters are impacted by weather and other factors that may fluctuate, the first half and second half of the year remain relatively consistent. Our first-quarter results were in line with the three-year average and our expectations, and we believe we are positioned to achieve our annual guidance.

Before we take your questions, I'd like to conclude by thanking all of our employees for their all of their hard work and thank our valued customers for their continued support. Operator, we're now ready for the question-and-answer period of the call.

Thank you. (Operator Instructions) And we'll take our first question from Steve Dyer with Craig-Hallum.

Thank you. Good morning, guys.

Morning.

Morning, Steve.

Operating expenses, you noted a bit high, I think, and attributed a lot of that to Construction. How should we think about that maybe as a percentage of revenue, or however you want to give color on that going forward through the rest of the year?

Yes, Steve, this is Mark. Yes, we talked about it just with CE being a higher percent of our Business now, and the ramping up of that rental fleet, which started in the second quarter of last year. It creates a higher operating expense as a percent of sales. So, throughout the remainder of the year, it should be a little bit more in line because we ramped that up in the second quarter -- we began ramping that up in the second quarter last year, but you'll still see it -- year-over-year, you'll probably see it just a little bit higher than what we ended up last year.

Okay. And then floorplan, that was nicely lower relative to the inventory level. Would you expect -- and I am assuming, as you noted, a lot of that was given the paydown of it, is that number going to be a little bit lower now going forward given the paydown?

With the equity -- the equity in our inventory this time, like I said, was impacted by that senior convertible debt that we had, so inventory levels may be going up just a little bit. That equity in inventory should remain about the same. That equity in inventory at the end was about at 22% versus 17% at the end of the year, so right around that 20% is probably reasonable to expect going forward.

Okay. And then last question, and I'll hop back in the queue. What accounts for the swing in equipment gross margin? It's certainly at the low end of the range, but as you noted, you did that a couple times last year? Is it a different kind of equipment? I know later in the year sometimes it's the -- you hit some sales targets and things like that, but how do we think about that, or how do we model that going forward?

Well, Steve, this is Peter. And essentially it's -- the way we have our field marketers compensated, and the way that we operate our Business, we will aggressively take what the market will give us on margins, but at the same time, we're going to really focus on protecting that market share position. We had market share gains last year, and we want to protect that share position, so that we get this after-sales product support downstream. And so, from quarter-to-quarter, it can fluctuate, but if you look historically, we've been able to maintain a pretty steady level.

Okay. I'll hop back in the queue. Thank you.

(Operator Instructions) Next, we'll hear from Rick Nelson with Stephens Investments.

Thank you, and good morning. You mentioned that CNH capacity is booked into calendar fourth quarter. Wondering what sort of visibility you have into your own order book and where you see this strength, tractors or combines?

Well, we're seeing strength in all segments. Right now I'd say four -- high horsepower four-wheel drives and high horsepower quad tracks are probably the tightest pipeline out there. But we've done a good job of doing some presale going into this -- the order slots, and then also securing some order slots, and also having some of the inventory on hand to meet our revenue targets, Rick.

How do you think that weather affected your Business in the quarter?

Well, if you go back a year ago, I don't know if you remember this or not, but the whole -- this whole upper Midwest area, especially the Missouri River system, was totally inundated with flooding. I would say every piece of construction equipment we could get our hands on was out building dikes or hauling sand bags or doing some reconstruction, moving dirt. It was just -- the semi trucks were rolling, just a big boom. And we didn't see that this year, so this is getting more into your normal, historical level. But last year there was a big shot in the arm from everything we saw in the construction side from that pretty significant flooding. Probably historical levels in some of our markets.

So, do you think that had a pull-forward effect, if you will, a year ago, that compares here in Q2? (inaudible) get a lot easier?

No. This is Peter. And like I spoke about on that last slide, Rick, we are just looking at this as being much more in line with historical trends on the Construction business. Historically, the first quarter and the fourth quarter are your softer quarters in the construction industry, and this is right in line with that. The other impact last year versus this year on our construction was that we were -- during the flood period, there was more on our parts and service side as well.

So, would you expect then, in Q2 that, that parts and service business comes into tractors I'm sure were in the field operating rather than in the repair shops?

It'll be much more in line with our historical trends.

Got you. Thank you.

Next, we'll hear from Robert McCarthy with Robert W. Baird.

Can you hear me?

Yes. Good morning, Rob.

Okay, just making sure. First, I just wanted to clarify, make sure I understand the point you were making, Peter, about seasonality. Is it your expectation that the share -- the first half versus second half split for pre-tax income this year will be consistent with historical patterns? Is that what you were telling us?

Rob, that's the way we've been modeling our Business.

Okay. I wonder if you could update us on what you are seeing in the early days in your new presence in Romania, at least directionally? Are these businesses growing? Are they growing rapidly? Are you having any impact on the business yet? Can you just give us an update on what's happening on the ground there?

It's pretty early to comment on our impact on the business. Right now we're still in the early stages of integrating our operating model into those operations. But what I can tell you is that in the Romanian market, which is the larger market of the two countries that we have expanded into -- in the Romanian market, our plan was to build out the dealer distribution network. As you can recall, when we did the acquisition, they had two distribution locations, and now we just opened a new one in this last quarter, and we will continue to build that distribution out so that we've got the proper market representation. And we think that's going to really drive growth going forward, Rob. In the Bulgarian market, they had a pretty built-out distribution network, and things are going along as anticipated.

And to my question about what's going on with their -- are they up from where they were last year?

Right now, the results are so preliminary as far as the timing on it, what I would say is that the one thing that we do know about those markets -- again, these are developing markets and more similar to what we used to have maybe 20 years ago, in that it's much stronger weighted front half/back half. The back half is -- what we have seen historically in those markets is that their back half, their back two quarters, there's a stronger differentiation in those markets than there is in North America.

Okay. And then, I wonder if we could just spend another moment on the construction segment, and profitability in the first quarter? You had strong rental revenue growth. You had strong sales growth. And yet earnings were down substantially year-on-year. And I'm not -- I'm still not quite sure I understand why. Are we talking about a combination of having invested in some infrastructure plus the absence of a real favorable pricing environment that existed last year? Is it pricing that's the big difference?

No, Rob, this is Mark. It really goes to the rental activity that occurred. We've got a larger rental fleet this year, lower margins this year compared to last year with some of that seasonality going on. We also had just investment in, call it, overhead in our Business where we've got different personnel that are dedicated to that rental business, which is a fixed expense each quarter, then. There's also rental interest expense on the rental fleet. So, there's all these types of fixed expenses that flow into the quarter that when you have a softer revenue quarter relative to the size of the rental fleet, it creates unfavorable conditions as far as your profitability goes. So, there's that piece.

There's also -- we built that rental fleet even more. I talked about that increase in the quarter, and we're positioning that for growth going forward. That's why we're ramping up that business. Also, just to mention another factor that's in there as well is just, we brought in a lot of acquisition stores, a lot of construction acquisition stores last year, and they haven't been fully ramped up yet as well. Second quarter last year, we had some pretty significant acquisition stores came in, so when you're looking year-over-year, that also affects the comp comparisons.

Okay. All right, I will follow-up with you. Thank you, Mark.

Yes.

Next, we'll hear form Tom Varesh with M Partners.

Good morning, guys.

Good morning, Tom.

Can you shed some light on what portion of your floorplans were interest bearing this quarter versus last year, if I'm just looking at the percentage?

This quarter it was -- 53% was interest bearing. And if you look at a year ago, it was 55% was interest bearing.

Okay. All right. So, is the floorplan expense then in the quarter indicative of the run rate on a quarterly basis? Because for my model, that was where I was different. That was the difference in my estimates versus what you guys reported, so I'm just trying to get a grasp on how I should be thinking about that line?

Sure, Tom. So, going forward, what you are going to see is it come down a little bit because of our convertible debt. Some of the proceeds were used to pay down some of that interest-bearing floorplan. But that's going to be replaced with interest -- other interest expense on that piece.

Right. Okay. All right. And the AEM reported some very weak combine sales numbers. Is that timing? Or is that something you are seeing in your regions? Can you shed some light on that?

Well, I think what happened is one of our major competitors, who does typically report a large part of the industry, their shipments were somewhat delayed in that quarter. So, I think you are going to probably see those coming later in the year as what we are anticipating, but they did not deliver, typically, what they had done in that same period previously.

Okay. So, it's not necessarily weakness you're seeing in your Business?

Not in our business at all. It's just that it's coming from one of the other colors out there.

Okay, great. That's all the questions I had. Thank you.

(Operator Instructions) Next, we'll hear from Arthur Weise with Lord Abbett.

Yes. You have been expanding your construction equipment fleet. How do you plan for that? What are the factors that go into determining how much you are buying at any one point?

It's based on -- we have dedicated rental region managers, and these rental region managers put together forecasts with the individual yards that we operate throughout our branches. And we roll that together, and then put in the fleet to support that.

And would you say that last year's activity in this quarter influenced that decision? Or did they realize that it was more one-time in nature given the flooding?

No, I would say that we knew that was one-time in nature. That's just something that was a natural event, and we did not base our forecasting thinking that it was going to flood every year. And so, this fleet that we grew was to support this long-term strategy that we have of building the rental business unit as a growth platform for the Company.

So, your expectation is -- you will get the dividends of the higher rental fleet as the year progresses?

Yes, it is.

Thank you.

At this time, there are no further questions. I'll turn things back over for any additional or closing remarks.

Thank you for your interest in Titan Machinery, and we are looking forward to updating you on our progress on our next call in September. We'll also be attending a number of investor events, and look forward to seeing you during the next few months. Have a good day.

And that does conclude today's teleconference. Thank you all for joining.