Winnebago Industries Inc (WGO) 2012 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the third-quarter 2012 Winnebago Industries earnings conference call.

My name is Chris and I will be your conference moderator for today.

Presently, all participants are in a listen-only mode.

Later, we will facilitates a question-and-answer session.

(Operator Instructions).

At this time, I would now like to turn the conference over to your presenter for today, Miss Sheila Davis, Public Relations and Investor Relations Manager.

Ma'am, you may proceed.

Thank you Chris.

Good morning and welcome to Winnebago Industries' conference call to review the Company's results for the third quarter of fiscal 2012 ended May 26, 2012.

Conducting the call today are Randy Potts, Chairman of the Board, Chief Executive Officer and President, and Sarah Nielsen, Vice President and Chief Financial Officer.

I trust each of you have received a copy of the news release with our earnings results this morning.

This call is being broadcast live on our website at WinnebagoIND.com.

A replay of the call will be available on our website at approximately 12 noon Central time today.

If you have any questions about accessing any of this information, please call our Investor Relations Department at 641-585-6803 following the conference call.

Before we start, it's my duty to inform you this presentation may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Investors are cautioned that forward-looking statements are inherently uncertain.

A number of factors could cause actual results to differ materially from these statements.

These factors are identified in our filings with the Securities and Exchange Commission over the last 12 months, copies of which are available from the SEC or from the Company upon request.

I will now turn the call over to Randy Potts.

Randy?

Thanks Sheila.

Welcome, everybody, to our conference call.

We are pleased with the third quarter stronger for us than the past few quarters.

Sarah will get into the details of the financials in a minute, but first I'll make a few overall comments.

As we stated in our conference call last quarter, we began the new model year in a much better position than prior years, basically sold out of last year's model products.

In May, we hosted our Dealer Days event.

A key message in our Dealer Days presentation was that we are no longer in survival mode.

My direction is to be a change agent for the Company.

Winnebago Industries is moving in positive direction.

Our new 2013 lineup is just the start on how our products and processes are evolving.

We'll continue to improve our research and design process, be more nimble and responsive and better in tune with the nuances of the marketplace.

A great example of this dynamic is the new value priced Winnebago Vista and Itasca Sunstar 26HE Class A gas models we introduced at the show.

We redefined our typical design, development and prototype processes to fast-track results, and our dealers have overwhelmingly approved.

We've seen tremendous growth in our Class A diesel market share and we plan to improve on that position with the redesigned Winnebago Journey and Itasca Meridian Class A diesel lines, and the luxurious new Winnebago Tour and Itasca Ellipse 42GD Class A diesel that's complete with a 55-inch LCD television.

On the towable side, we also introduced some great new product products, including the value-priced SunnyBrook Remington line of travel trailers and fifth wheels as well as a unique new retro-looking Winnebago Minnie line of travel trailers.

This was the first Dealer Days event we've had for four years and the first time we've had shown towable products at one of these events.

The event resulted in improved sales order position for our motorized products and had a particularly positive impact on our towable backlog.

In the second-quarter conference call, we had reported that towable subsidiary was profitable for the month of March.

Now we are pleased to report that they have experienced their first full quarter of operating profitability.

We are pleased with the progress we are seeing there, with the increased revenues in earnings and continued market share growth.

We believe we have a great opportunity to grow that market over time, particularly with the strength of our Winnebago brand name.

Based on the positive response we've received to our new model year products, our sales order backlog has shown tremendous growth.

As a result, we have taken steps to gradually increase production rates throughout the coming weeks.

Due to the improved backlog and continued low dealer inventories of fresh, new products, we are optimistic about the remainder of the fiscal year.

With that, I'll turn it over to Sarah for the financial review.

Thanks Randy.

I will now review the financial performance of the Company's third quarter of fiscal 2002.

Net revenues for the third quarter were $155.7 million, a 14.9% increase from the third quarter of fiscal 2011.

The net increase in revenue was driven by two primary factors -- increased towable sales volume and higher average selling prices based upon the mix of RVs delivered.

Our motorhome average selling price is up approximately 7.5% and the towable average selling price increased 16.2%.

The incremental revenue generated in our fiscal third quarter allowed us to improve our gross margin by 140 basis points on a year-over-year basis and 260 basis points on a consecutive-quarter basis.

The key factor for the margin improvement relates to better fix cost absorption as we produced more product in the quarter.

Towables specifically contributed to improved results in the third quarter, generating operating income that resulted in $0.01 of EPS for the fiscal quarter, the first accretive quarter since the acquisition.

This compares to a $0.01 loss in the same quarter last year.

The investments we have made over the past several quarters are beginning to produce positive financial results in the near term and we expect to build on that momentum.

The increased total backlog, coupled with the strong retail return rate and relatively low dealer inventory we are experiencing in this segment, validates our belief that there is room to grow this portion of our business in the coming quarters and years.

As Randy mentioned, we held our Dealer Days event inside the fiscal third quarter, which was the primary reason our selling expenses increased from the prior year.

Our cash balance remains flat at approximately $80 million at the end of the third quarter.

During the quarter, we invested an incremental $9.7 million in our inventory to support the increased backlog position.

We continue to evaluate multiple uses of cash with the primary objective of increasing shareholder value.

Over the past several years, our investment in our facilities and in our employees have been minimal.

These are areas that we deserve prudent consideration in the near future to help support future growth and increase efficiencies as the industry continues in a slow recovery mode.

I would also like to highlight that we do have an outstanding stock repurchase authorization for $58.9 million remaining that is available to us.

Lastly, I wanted to discuss the topics of deferred taxes.

We established a valuation allowance against all of our deferred taxes in fiscal 2009 in light of the significant losses incurred that year and the challenging Company and industry outlook at that point in time.

We have kept nearly a full valuation allowance against our deferred tax asset since then, most notably due to the fact that we have three-year historical cumulative loss positions.

We anticipate that, in our fourth quarter of fiscal 2012, we may finally moved into a three-year cumulative income position.

This positive factor, along with our future outlook, may eliminate the uncertainty of realizing our deferred tax asset.

If this conclusion was reached, it could result in a one-time non-cash income tax benefit of approximately $33 million to $35 million.

I will now turn the call over to the operator for the question-and-answer portion of the call.

(Operator Instructions).

Kathryn Thompson.

Thanks so much.

You had some nice improvement in gross margins from the last quarter to this quarter.

How much of the improvement was driven by volume or lower raw materials or lower discounting?

Just roughly in those three buckets, what were -- how did it really split up in terms of the overall improvement in gross margins?

When you look at the gross profit, the key points -- and I briefly touched upon it -- most notably with our fixed cost absorption, because we were producing more in light of our increased demand that's evident in the backlog, that almost notably derived more margin impact from a discounting in the perspective at the revenue line is very much equal and not a factor in any improvement, either on a year-over-year basis or on a quarter basis.

From an ASP perspective, that also helps to some degree and we also did receive some benefit from an efficiency perspective on the labor side, but most notably it is in the fixed-cost absorption.

So discounting, really lower discounting didn't necessarily help margins?

That wasn't a factor for us in the third quarter comparing year-over-year or sequentially.

Maybe you can give an update on discounting trends?

Discounting trends -- we definitely had the seasonality in the third quarter associated with any rental volume, and that is similar to what we typically see in our third quarter on a year-over-year basis.

From the standpoint of demand and interest, as Randy touched upon in our new model year product, the interest is evident and very high in light of where our backlog order position is that.

So I don't have any, I guess, any specific examples of --

The backlogs aren't necessarily driven by discounts, maybe?

No, I don't have that perspective.

And I understand you had Dealer Days and that contributed to outsized backlogs.

If you could -- to the best of your ability, if you were to peel back the Dealer Days, or maybe separate what's driving the outsized backlogs -- in other words, if we had a 90-plus% increase in backlogs, if you didn't have Dealer Days would've been up like 30%, maybe if you can help us understand how to think about that backlog number on a more normalized basis, understanding that we really haven't had normal in four or five years.

Dealer Days -- we had a very strong order position in motorized going into Dealer Days.

So Dealer Days, I guess from a historical perspective, wasn't -- we didn't expect that to be in the same scale of an ordertaking event that it historically was.

I think the change in the business climate has, really has dealers ordering when they need product and not necessarily waiting for events like that.

So it was a great event.

It was a good opportunity to build relationships with our dealers, but it is the business -- the ongoing strength of our product line that is driving the backlog, not specifically that event.

Okay.

Finally, any comment on the Mill Street Capital bid?

No change to report there.

Great, thanks so much.

Scott Stember, Sidoti & Co.

Good morning.

Sheila, do you have -- sorry -- do you have breakout of ASPs by category?

Yes, this is Sarah.

I do have that.

I'm going to give you a comparison on a quarter -- year-over-year quarterly basis.

So when you look at the overall motorized side of the business, as I mentioned in my prepared remarks, were up 7.5%.

In the gas category, we saw our ASPs move up about 2.3%.

Our ASPs in this quarter were $93,611 versus $91,521.

From a class A diesel standpoint, it was more notable.

We were up 6% year-over-year.

The ASP for the quarter was $197,514 as compared to $186,283.

So total class A as combined was up 6.6% and the average ASP in the quarter was $130,283 versus $122,255.

From a Class E perspective, we were up 3.1%, $70,800 versus $67,925.

Then from a Class B perspective, we were up 6.3%.

Class B for the quarter was $76,204 versus $71,674.

That all averages into an ASP for the quarter of $101,650 as compared to $94,563.

That's great, thank you so much.

Just so I don't forget, because last quarter I stopped at motorized.

On the towable side, I also wanted to give you the breakout there.

I mentioned they were up 16.2%.

Our average towable ASP for the quarter was $25,122 versus $21,614.

We do break those out into travel trailer and fifth wheel.

Our travel trailer was up most notably 14.7% at $21,051 versus $18,361 and fifth wheel was $30,150 versus $29,640, which was up 1.7%.

Thanks again.

Maybe you guys could talk about maybe the towable segment.

You had tremendous growth in your backlog and shipments over a year ago.

Could you maybe talk about, as far as your dealer network, how much -- is there any channel fill going on or essentially filling these dealers with new product?

And just maybe give us a better sense at retail what you are seeing.

Absolutely there is channel fill.

That was one of our initial opportunities is growing the dealer base.

There really was no dealer base for Winnebago towables as there were no Winnebago towables.

So that's been a substantial part of the business.

Then as new products are developed, as we said this Remington line that we introduce at Dealer Days and the Winnebago Minnie line, that creates additional business.

There is just a lot more of those kind of opportunities in the towable market, being as big as that market is, for new products to come out of that facility.

As far as retail, I think about all I could really offer there is we think we are getting good pullthrough of the products that are going to the dealers.

It isn't strictly a channel fill scenario.

Naturally, the product has to be pulled through to the retail level.

I think we are satisfied that's occurring.

Can you maybe touch on the discounting that you are seeing on the towable side?

We have an advantage, you could maybe argue, because so much of what we are doing is new, and that creates a demand that helps negate discounting pressure.

So, it's not a significant factor for us yet at this point.

Okay.

Could you maybe talk about this year with towables, will you have a more pronounced presence at the open house event?

Yes, we are formulating that strategy as we speak.

We do plan to have a larger presence, but I would expect it to be in the scale of the operation we have.

Okay.

Last question, what was the capacity utilization this year, in this quarter?

In motorized, it's about 45%.

Great.

That's all I have.

Thank you.

David Whiston, Morningstar.

Good morning, thank you.

On capacity utilization, do you happen to have the utilization for fiscal Q2?

I believe we were at the low 40s% in Q2.

Okay.

Any update on the breakeven range on motorhomes depending on the mix?

No, no update there.

As we discussed in the previous question on the level of production that we had inside of our most recent quarter, really was helpful from the standpoint of fixed cost absorption.

That's going through into our gross profit.

So, we've definitely had a two-year time frame where it's tenuous on a quarter-by-quarter basis in regards to being very close in line and not too far above what that breakeven is.

But that can vary depending on the level of incentives at the topline and the mix of the products that we are building.

So, no, I guess no significant update on that front.

Okay.

My last question is on the public information that came out with the private equity bid.

It sounds like their goal was to use [do-kit] assembly for -- with Chinese OEMs and utilize more of your capacity.

My question is if the Board decides to go that route in terms of the capacity utilization, do you really need to go private to do that as opposed to just forming the relationships with these automakers yourselves?

No, you would not have to go private to do that.

Would it be your preference go private to do that, though?

That would depend on a multitude of factors.

I don't think one should assume that the facilities we have here are necessarily suitable for building automobiles.

That's a pretty gross assumption in and of itself.

That's all I have.

Thank you.

Morris Ajzenman, Griffin Securities.

Hi guys.

Following up on that not necessarily going private, but the capacity utilization, 45% in this current quarter, report a decent profitability though still (inaudible) you have margins higher.

How do we get higher utilization capacity?

The top -- well, the industry overall hopefully as thoughts grow, but even though you undervalue them, you had a mix change that really helped profitability, but [total] unit volume really not kind of going sideways.

Hopefully that changes in the next year or two.

But during the interim, how do we drive capacity utilization?

You can shut down capacity.

You can switch more to the travel trailer.

How do we drive increased throughput or better utilization and sort of thought process that you can kind of share with us, how that plays out.

I think the first thing you need to understand is how we estimate capacity utilization.

We've changed a lot of things in this operation over the last four years.

We historically have used the final assembly operation as our capacity driver.

I don't want you to assume that when we say we are at 45% capacity that that means every piece of our facility is at 45% capacity.

We actually have many pieces of our business that are at full capacity.

To fully use the remaining 65% of our assembly capacity will actually require us to outsource certain components.

So it's not -- when we talk about that excess capacity, we can't think of it in such a way that there is 65% too much factory here at Winnebago.

That might be true in some areas, but it's certainly not true across the board.

So really to use that extra capacity and final assembly means hiring more people.

Yes, Sarah just directed me corrected me that I said 65%.

It's really 55%.

I did my math wrong.

But in a final assembly operation, to utilize that capacity really means it's hiring more people and speeding up the final assembly process.

Just a follow-up, a hypothetical without you (inaudible) cause, but when you move on to the peak of the cycle two, three, four years down the road, whatever it might be, what capacity sort of capacity utilization would you be operating at optimum times?

Naturally, we'd like to get our assembly operation to full capacity on a single shift.

We'd look at that on a single shift basis.

We would be in that something north of 10,000 units.

We definitely have the ability in our Forest City campus along with some of the adjacent work we do in Charles City in Iowa to produce motorhomes in that range of 10,000 to 12,000.

There will be a lot of things to -- challenges to work out to accomplish that would be welcome challenges.

Labor, as Randy touched upon most notably is a key element of allowing us to accomplish those much, much higher levels.

But we have the ability to do that, assuming that we can have the right people employed.

Yes, again, our capacity is driven on our final assembly capacity.

That's what we've always viewed as our bottleneck, thinking that we can outsource the components as we grow where needed.

For instance, we used to have an entire fiberglass fabrication facility.

About three years ago, we decided that didn't make sense in the smaller market.

When we closed that facility and we brought in some of the parts that weren't very well outsourced, we brought those into Forest City for manufacture, and now -- and outsourced the rest.

Essentially what we used to make for ourselves.

So we are currently running that fiberglass manufacturing area which is now in Forest City at about 100% capacity.

We'll have to outsource more as we assemble more product.

That's the model we have built.

We've changed a lot of our vertical integration that way and continue to.

One last question, unrelated.

As free cash flow continues to improve, again that's a presumption on my part, can you list first, second, third, fourth applications on their free cash flow, was in any manner that you think is most important to least important?

Well, I'm hesitant to prioritize it.

I will say that we continue to evaluate the best uses of cash.

Reinvesting in our business, diversifications and acquisitions, stock buybacks, cash dividend are all possible opportunities, and all high on our list.

So we'll be having a board meeting next week, and naturally this, as it deserves to, will be getting a lot of discussion and should get some direction.

Thank you.

Craig Kennison, Robert W. Baird.

Great, thanks for taking my questions as well.

I think you made an earlier comment about potentially spending on capital reinvestment in the business to improve some efficiencies.

But in the context of 45% capacity utilization, I'm I guess a little bit surprised that want to put more money into the capital of the business.

Maybe just talk about what kind of efficiencies you might be able to get that would justify that sort of spend.

Yes, we've got some pieces of our business that -- just pieces of our factory, I should say, that require -- that would benefit from updating.

Again, that 45%, Craig, is really driven on the assembly piece of our business, which is not very capital intensive.

The capital would be more geared towards greater efficiencies in shaping systems in, say, paint systems, those kind of opportunities.

That's helpful, Randy.

Could you maybe frame the return on capital you would expect from a project like that versus let's say rewarding shareholders with some sort of buyback?

Hopefully, we have both on our target, Craig.

I don't want to say it has to come down to one or the other.

Okay.

Then maybe with respect to the backlog, to what extent are you familiar -- are you able to ascertain what the margin is of that backlog?

In other words, you've sold the product.

You know what your margin should be,.

Are you able to give us a feel for how strong a margin is in that backlog relative to what you just experienced in this quarter?

Yes, we have the visibility once the order in our system to look at the characteristic of selling that unit, and do our own financial modeling.

So, to the degree that we have longer visibility and then it shifts into the forecasting side as to laying out what we think will happen beyond the backlog itself.

So we definitely do have that.

As I touched upon in some of the other questions, by us producing at a higher rate, that is where we are seeing the most significant flow-through at the margin because that's allowing us to reduce that level or that percentage of fixed to the overall revenue stream.

So when you look at the third-quarter percentage of our fixed costs, that's now under 7% where a year ago that was nearly 9%.

It was really challenging quarter a year ago.

So the fixed piece of it is one that, as our volumes pick up, we are seeing that really trend like from a margin standpoint.

But that aside, and if we would assume a more consistent run rate, then it's going to come down to the mix of what we are selling and what the variable contribution margin is on each one of those units.

So, we are focused and very keyed in on continuing the gross profit improvement.

It's a constant topic of discussion in regards to the strategies of developing new product and what level of profitability would this provide, because that's where we need and that's where we think we have a very significant opportunity on a prospective basis to improve those margins.

Thanks.

Sarah, for you, the Dealer Days expense, can I assume that hit in May on the income statement?

Yes.

It was all incorporated into our third quarter in approximately $600,000 range.

So --

Okay.

Then, Randy, investors are very curious about demand trends this spring.

It seems as though, in some markets, the strong start to spring seemed to peter off in April, May and June.

Could you give us your sense of how retail trends have been, especially in May and June?

Well, our retails, our retails are strong.

The stat surveys for April just came out yesterday.

I know you're asking about May and June, but April was very good month for us.

I think it's fair to speculate that there is not a dramatic pullback of any type.

Okay.

Lastly, Randy or Sarah, do you have any data on the used motor home market, especially used motor home prices, and to what extent those prices have been falling or rising in the marketplace?

All we get is anecdotal.

With that said, and Sarah can speak for herself, but my opinion is that the used market is strong.

And some dealers do very well with it.

They are looking hard for used product for their lots.

Great, thank you.

[Andrew Weddick], [Weddick] Associates.

Good morning.

I'm just wondering.

Could you give us a sense of any regional differences in business and particularly in the towables?

Is there one region, one or two particular regions that are much stronger in the country?

I can't speak to the towable real well, just because kind of going back to the question I answered before about the channel fill and the very rapid growth rate we are experiencing there, I don't think we have a stable enough footprint yet to really draw any conclusions.

For us, it's been really just constant expansion of that business.

On the motorized side, I think it's fair to say we continue to see challenges on the West Coast.

We have been saying that for several quarters now.

That continues to be a challenge to the economy on the West Coast.

Rich Keim, Kensington Partners.

Thank you.

Most of my questions have been answered, but listening to your comments on capacity and utilization, etc., and we brought some in, farmed some out, if you looked at historically at your -- one of your big volume years of over $1 billion, is it fair to assume that you're never going to get those type of gross profits anymore?

I wouldn't want to lead you to assume anything.

It all completely depends on what the economy does in the future, and what this market we are in looks like.

Forget about the economy.

Let's say you are able to do $1 billion.

If you go back to '04, I think you earned way over -- you had gross profit of something like $160 million.

If you had that type of -- if you had $1 billion in volume today and talking about what you farmed out, talking about that you were at 45% capacity and to increase your capacity you have to add people, etc.

Can you say that, under those type of circumstances, you could have -- you could achieve these old gross profit margins?

This is Sarah.

When you look back, especially prior to the recession, and you picked an interesting year for 2004.

On that juncture, we were seeing gross profits well over 14%.

That was at the peak of the market where there were very little incentives happening at the topline because there was such high demand.

The mix of the products that were being sold were -- they were, for our company, specifically had very high variable completion margins, so really all the stars aligned.

If you look at maybe a trend of what our gross profits were over a longer time frame, not so focused in on that one particular year, our gross profit margins have more so fallen in that 12.5% range.

The question in regards to what can we do in the future I think is very much a function first and foremost as to the level of incentives, that is a different landscape today than where we were prior to 2008.

And so that's important.

It also is important that the categories of the products that have been more popular at this point in time, they are the smaller price products in the Class C and the Class A. For us, that has generally meant a slightly lower contribution margin.

So --

but that's today's business.

It is a function of what landscape you look at $1 billion to be in the future.

It's a different market, and a different economic environment.

That's why I started my reply that way, because a lot of things would be different in that environment, and they would reflect on our business and the market in general, the customer, the demand.

Just if you dig down a little deeper on discounting of motor homes.

I'm not really sure what, from your reply, what type of discounting is going on.

I know you partially answered that, but could you go in a little deeper on discounting?

I guess maybe simply to look at it prior to the recession, we were at a very different level, and it's not returned to that level at this juncture.

It's probably about double of what used to be the norm prior to the recession on a percentage of revenues -- percentage of net revenues basis.

That's probably as far as I go with any --

Wait a minute.

You're saying discounting of motor homes is double what it was?

Is that what you --

When you look at it on a percentage of revenues --

Yes.

Yes.

We are on a percentage basis, it's doubled where it had been in the past.

So make it easy for me.

What would you say the average discount of -- on motorhomes are today, of Winnebagos?

It can vary on any particular unit.

Yes, that's why I'm asking average.

Maybe I'll characterize it this way, just using a theoretic example.

Prior to the recession, if you assume that discounts used to trend on very low single digits under 2% as a percentage of net revenue, now they are in the 4% range, as an example of what I'm trying to illustrate.

Okay.

Thank you.

Kevin Ryan, Barry Vogel and Associates.

Good morning.

You might have mentioned this already in the call and I probably missed it.

But what's the operating profit margin on the towables business in the quarter?

From a dollar standpoint?

Percentage standpoint.

And if you have a dollar standpoint, that's fine as well.

What I had characterized in my opening remarks was that we generated approximately $0.01 of earnings from the Towables division in the quarter.

From an operating income standpoint, that quantifies to approximately $355,000.

Okay.

For the quarter?

For the quarter.

That's all I have.

Thank you.

(Operator Instructions).

Craig Kennison, Robert W. Baird.

Thanks for taking my follow-up.

I just wanted to try to reconcile the SSI data that we have quarter-to-date, and then the numbers that you've reported just to get a feel for what happened to me.

I look at SSI data for Winnebago, it appears that your sales for the first two months of the quarter were up something like 8%, so a very good trends.

But it's of course only the first months of the quarter.

If I look at the data you report and compute your retail from that, it looks closer to flat.

So the way we get from a 8% two months into the quarter to flat would imply that May was negative.

But, Randy, I didn't hear you say that and I know that SSI data sometimes doesn't totally jive with your data.

I just want to make sure I'm not mistaking anything.

Maybe I can -- let me file our Q. We always give this key metrics table that lays out exactly retail registrations for us specifically.

Inside the quarter on the motorized side, our retail registrations were 1,414, and that compared to the third quarter a year ago of 1,394.

So it was in the quarter up about 1.4%, so fairly flat.

But this is going to consider all the Canadian A, B, and C and all the US, so it is a little bit challenging when you're using SSI data, because they are not necessarily going to coincide with our fiscal month.

From the standpoint of when things are reported, there's sometimes lags as well.

But --

Yes, and you're cooking it down to some very specific things, Craig.

I was really trying to comment more just at the general nature of how the summer is starting when I said I haven't seen any dramatic shifts.

Perfect, that's what I was looking for.

Thank you.

We have no further questions at this time.

I would now like to turn the call back over to Mr. Randy Potts for any closing remarks.

Thank you, everybody, once again for joining us.

We believe we are seeing some positive signs in the marketplace as you can tell by our remarks.

Dealer inventory continues to be conservative and the inventory on the dealers' lots is fresh and new.

The RV market continues to recover.

Again, thanks, everyone, for joining Winnebago Industries' conference call today, I look forward to talking with you again on October 11 when we report our results for the fourth quarter and fiscal 2012.

That concludes today's conference.

Thank you so much for your participation.

You may now disconnect.

Have a great day.