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spk09: Good day and welcome to the Hostess Brands, Inc. Third Quarter 2021 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to your host, Amit Sharma. Please go ahead.
spk00: Thank you, Sarah, and good afternoon, everyone, and welcome to the Hostess Brands Third Quarter 2021 Earnings Conference Call. Joining me on today's call is Andy Callahan, Hostess Brands President and CEO. By now, everyone should have access to the earning release for the period ended September 30, 2021, that was published at approximately 4 p.m. Eastern Time. The press release and an updated investor presentation are available on Hostess Brands' website at www.hostessbrands.com. This call is being webcast, and the replay will be available on the company's website. During the course of this call, management will make a number of forward-looking statements, including expectations and assumptions regarding the company's future performance. The company's actual results may differ materially from these forward-looking statements, and the company undertakes no obligations to update or revise these forward-looking statements. A detailed list of these risks and uncertainties can be found in today's earnings release and in companies' SEC filings. The company will make a number of references to non-GAAP financial measures that we believe will provide useful information to the investors. A full reconciliation of these non-GAAP measures to the most comparable GAAP measures is included in the earnings release. With that, I'll turn the call over to Andy Callahan, our president and CEO.
spk04: Thanks, Amit. Good afternoon, everyone. As you saw in the press release and the 8K filed this afternoon, Brian Purcell has announced his resignation as CFO and will be pursuing other opportunities. We appreciate Brian's contributions to Hostess and wish him well in his future endeavors. We are fortunate to have a very strong finance and accounting group and to have Mike Jernigan on the team who has been appointed as Chief Accounting Officer and will serve as interim CFO as we conduct an internal and external search for a new CFO. I will not be addressing any questions related to this transition on the open call, and as a policy, do not discuss personnel matters. I would like to address the tremendous execution of the team, strong financial results, and in-market momentum in Q3 and into Q4 as we close out the year. Turning to the Q3 results, I'd like to begin by offering a few highlights from our third quarter performance to underscore the ongoing momentum in our business, followed by a discussion of our financial results and updated outlook for the rest of the year before opening it up to your questions. We had an excellent third quarter. Hostess high-quality branded snack portfolio, Broad-based and agile distribution model and executional excellence is propelling us to consistent share gains within the large, sweet, indulgent snack category. At the same time, we are successfully navigating the operating environment to sustain our attractive margin structure while investing in our branded portfolio to deliver top-tier shareholder returns. Consolidated net revenue grew 10.4% in the quarter, continuing the streak of at least 9% growth in every quarter since the onset of the COVID pandemic. That is seven straight quarters of above 9% sales growth. Turning to point of sale trends, our sweep eight goods point of sale trends accelerated sequentially with 13.7% growth led by Hostess branded growth of 14.3% as we continue to strategically pivot our portfolio to the higher margin, faster growing Hostess brand. Snacking categories continue to grow faster than overall food and our portfolio is clearly in the consumer sweet spot as we posted 179 basis points of market share gains in measured channels during the quarter. demonstrating Hostess' advanced branded portfolio, outstanding execution, and increasing advertising and marketing investments. Vortman posted another strong quarter of POS growth. Quarterly POS sales increased 20.5%, well ahead of the cookie category, with most of the growth coming from increased distribution, improved retail execution, and strong consumer demand. We continue to make progress on the key building blocks of Bortman growth, including deeper and broader distribution, activating Hostas' proven merchandising model, building brand awareness, and impactful innovation. Bortman distribution expansion in the C-Store channel is progressing as planned, and Bortman trip frequency, basket size, dollar per trip are all up as shown in the latest 52-week panel data. Our hosted single-serve and multi-pack subsegments both posted solid double-digit POS growth in the third quarter, highlighting that our portfolio and broad-based distribution model is uniquely positioned to take advantage of the evolving consumer snacking trends both at home and away from home. With 40% of our retail sales coming from this C-Store channel, our single-serve offerings are well-placed to benefit from improved mobility with increase in vaccination rates. In fact, our single-serve POS sales increased 15.4% during the quarter and 18.2% on a two-year stacked basis, as we leveraged our superior execution capabilities to post a 290 basis point share gain in the convenience channel during the quarter. At the same time, some pandemic-driven changes in consumer behavior appear to be sticky. For instance, work from home remains elevated and is leading to incremental at-home snacking occasions. Our multi-pack and bagged donut business grew 12.4% during the quarter and 22.5% on a two-year stack basis. Similar to the C-Store channel, we are capturing disproportionately larger share of this growth, evidenced by our over 200 basis points of market share gains in the grocery, dollar, drug, and club channels. Notably, unlike many of our food peers, our two-year sales trends are accelerating. signaling sustained top-line momentum from strong consumer demand and higher repeat rates, as opposed to a pandemic-driven spike. Two-year stack consolidated net sales increased by 25% during the quarter, our best two-year comp since the beginning of the pandemic. This strong momentum is driven in large part by our strong innovation, as we are benefiting from a deeper understanding of our key consumers and their purchasing behaviors. Additionally, Our LTO programs, or limited time offerings, around back to school and fall performed well during the quarter. Our vitality rate, a measure of the success of our new product innovation, is trending towards the higher end of our targeted range, reflecting solid contributions from baby bunts, crispy minis, and muffin sticks. For instance, baby bunts, One of our key innovation launches continues to build on a strong start. Lemon Baby Buns and Cinnamon Baby Buns were the number one and four top-growing SKUs in the sweet baked goods category during the quarter. In fact, Lemon Baby Buns is already up to number four amongst Hostess branded multi-pack SKUs in terms of velocity, with trial and repeat rates ahead of expectations. We expect this momentum to strengthen even more with the recent introduction of single-serve baby buns in the convenience channel. Crispy Minis, our multi-textured offering geared towards millennial and Gen Z consumers, is attracting new and incremental consumers to the Hostess brand. Crispy Minis distribution is building steadily and will get a boost with the introduction of the single-serve four-ounce packaging to be sold at the front end of the store. Muffin Stix has been a key innovation for our on-the-go consumer, achieving solid distribution build in the convenience store channel with repeat rates exceeding expectations again. Across Bortman, we continue to build distribution for super grains while distribution and velocity for mega wafers are trending in line with initial expectations. We are supporting our innovation through incremental advertising and marketing support. Our Live Your Most campaign launched last quarter is driving greater engagement across digital platforms, positioning us to win within both consumers and retail partners. With our maniacal ROI mindset, we continue to invest in capabilities and data analytics to further strengthen our new product innovation and sharpen our retail execution, leading to better performance at the shelf and more sustainable share gains. Switching gears, our executional excellence extends to our supply chain, which has enabled us to hold our margins relatively stable despite labor challenges and very high inflation. We are taking pricing actions across our portfolio and customer base. These pricing actions began to flow through our P&L during the quarter and will provide increasing benefit in Q4 and into 2022. We are actively monitoring the operating environment and are prepared to take additional pricing as necessary. We are continuing to experience strong consumer demand for our brands despite higher retail prices, although it's still early and retail shelf price resets by our customers continue to increase to fully reflect the new prices. As expected, we are facing greater inflationary headwinds in the second half, driven by higher input, logistics, and labor costs, as well as stronger than expected volume growth as we made incremental commodity purchases above our existing hedges. Like our peers, we continue to face a challenging labor environment, leading to higher overtime costs and elevated hiring and training expenses. Our team has performed exceedingly well through the current labor environment, and we are taking additional steps to mitigate these challenges by investing in our workforce and employment experience, which we expect will have a positive impact on our cost structure and production capacity over the long term. I am extremely proud of our agile supply chain, which has continued to execute at high levels in the face of our strong volume growth and tough labor markets. While labor availability and supply chain constraints have indeed pressured some parts of our portfolio, our flexible manufacturing footprint and lower cost distribution platform have been the key enablers of our ability to mitigate unprecedented cost pressures, maintain high service levels, and continue to generate strong operating performance. We are confident in our ability to mitigate these headwinds over time through a combination of higher prices, revenue management actions, and productivity initiatives. Now, I'll turn to the quarterly financial results and I'll revise outlook in greater detail. Third quarter net sales increased 10.4% to $288 million. The increase was primarily due to continued strength in sweet baked goods, which increased by 10.6% during the quarter. in addition to a 9% increase in cookies. Year-to-date consolidated adjusted net revenues increased by 10.1%, showcasing a remarkably consistent top-line momentum, reflecting year-to-date growth of 9.5% in sweet baked goods and 15.6% in cookies. Adjusted gross profit of $99.3 million increased by 8.9% for the quarter as higher volume, favorable product mix, pricing, and productivity more than offset transportation and input cost inflation. As expected, adjusted gross margin declined approximately 45 basis points to 34.5% as higher sweep aid goods gross margins were modestly offset by Bortman due to the timing of pricing actions. On a year-to-date basis, adjusted gross margins were essentially flat at 35.5%. Adjusted EBITDA for the quarter was $64.8 million, up from $60.2 million in the year-ago quarter. The increase was driven by higher gross profit, partially offset by higher advertising and marketing spending to support our top-line momentum. Year-to-date adjusted EBITDA increased by 10.9% to $195.6 million for the first three quarters. Our effective tax rate, excluding discrete items, was 26.7%, compared to 24.3% in the prior year quarter. The effective tax rate for the prior year period benefited from the allocation to the non-controlling interest, which was eliminated in the fourth quarter of 2020. Adjusted net income of $28.9 million for the quarter increased 14.2%, from prior year, while adjusted EPS of 21 cents per share increased 10.5% as the third quarter adjusted diluted EPS reflects average fully diluted shares outstanding of 138.1 million versus 127.6 million in the year-ago period. At the end of the quarter, we had cash and cash equivalents of $228.1 million and net debt of $866.3 million with a leverage ratio of 3.3 times, down from 3.9 times at Q4 2020, driven by our strong operating cash flows. During the quarter, we successfully completed the amendment for the cashless exchange of our outstanding warrants. The settlement of these warrants, which expired on November 4th, resulted in the issuance of a total of approximately 10.7 million shares. Separately, we repurchased an additional $25 million worth of shares since our last update for a total of $50 million spent. through the end of the third quarter. We are very pleased with our third quarter performance, and given our strong year-to-date top-line performance, we are raising our full-year net revenue growth guidance from 7.5% to 9% to 9% to 10%. Our full-year adjusted EBITDA and EPS guidance remain unchanged at 260 to $268 million and 83 to 87 cents per share. We now expect full-year inflation to be towards the higher end of our mid-single-digit range, with inflation approaching 10% in the back half due to higher freight, labor, commodity, and energy-related costs. That being said, we believe higher realized prices and additional productivity initiatives will offset rising costs leading to relatively flat gross margins. Our EPS guidance assumes an effective tax rate of 27.5% and average shares outstanding of $139 million, consistent with our previous outlook and includes dilution from the completion of the successful cashless settlement of our outstanding warrants. Our 2021 CapEx guidance remains unchanged at $60 to $65 million, and given our solid year-to-date cash flows, we expect our net debt leverage to be approximately three times by year-end. As we delever almost a full turn in 2021, we remain committed to executing against our key capital allocation priorities, including investing for growth, deleveraging, making strategic acquisitions, and returning cash to shareholders. So to conclude, we remain confident of achieving sustained top-tier growth through the remainder of 2021 and beyond, highlighted by our updated outlook in an increasingly challenging operating environment. Our brands have strong consumer tailwinds. We have good visibility on pricing and competitive dynamics in the category. We are driving cost savings throughout the supply chain and sharpening our revenue management toolkit to offset higher inflation while continuing to invest in growth. With that, I'm available for your questions.
spk09: Thank you. If you would like to ask a question, please say no by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We ask that you please limit your questions to one only and one follow-up. Once again, that is star one to ask a question. And we'll pause for just a moment to allow everyone an opportunity to signal for questions.
spk08: And we'll take our first question from Pamela Kaufman
spk09: Morgan Stanley.
spk07: Hi, good evening.
spk09: Hi, Pam.
spk07: So, Andy, I just wanted to get your thoughts on how you're thinking about the sustainability of top-line growth. I guess if you could break it down in terms of what your views are on the category growth outlook and then Hostess's ability to continue to gain share. And then I guess how you're thinking about growth across channels and various PAC formats. Given that you saw strong growth in both multi-PAC and single-serve continue this quarter, how are you thinking about the performance as mobility improves?
spk04: Yeah, thanks for the question, Pam. I do appreciate that. And I guess the headline is I feel really good about our ability to continue to grow sustainably over the long term and to grow in the top quartile of our peers. There's several reasons for that. One is we're in subsegments of we're in snacking, which is snacking is growing greater than food. And we're in subsegments of snacking that are also growing at a greater rate. We've done a lot of work in understanding our consumer and the need states in which they sit. And therefore, we've been able to invest and try to differentiate and innovate within those need states that are going to solve consumers' problems at a greater rate than our competition. And that's what leads to greater than category growth and share growth over time. So I feel really good about that. We have good building blocks of growth. We've invested in our quality. We've invested in our consumer understanding. We've been innovating there. And we've been investing in our mix and category fundamentals. So I feel really good about our ability to invest over time. If you break it down now into our PAC forms the way you've talked about it, our immediate consumption or single serve, we feel good about that. With increased mobility of consumers, During the pandemic, we invested in category fundamentals, increasing shelf, increasing stores, fixing our mix, bringing innovation like muffin sticks, of which I mentioned. All of those basic fundamentals, servicing our customers, have led to when consumers' mobility comes back, they've been coming back with Hostess because of the fundamentals and the investments in those I've talked about. When you look at the multi-pack business, which is typically a bring-in home and then use in different areas, we believe there's a really sticky consumer shift within consumer spending more time at home equals more time snacking. And therefore, there are more within those occasions that we've invested in, both in consumer insights and within those innovations. So when you put the model together for us in quality, understanding the different need states, bringing innovation, and then ramping up our advertising and marketing to help drive that, we're seeing good results. The final conclusion of that is what I said in my prepared remarks. We've been able to take advantage and get more consumers when they try our business. What the data would suggest is they repeat on our hostess brands at a rate that's two times the category in total if I look at it over the last two years. So, our repeat rates are good, and that's a good indicator that we're doing a lot of things right and we're building our franchise, not just winning in the short term, but a win in the long term. So, sorry for the long answer, but there was a lot to that question. So, the headline is, I feel good about where we're at.
spk07: Thanks. That was helpful. And just on pricing, can you talk about the magnitude of the list price increases that you've taken? and if you anticipate needing to take more pricing over the coming months.
spk04: Yeah, so we haven't quantified the pricing, but we have priced in the mode. If you look at the first half, you know, our pricing was a component of some of our growth, but a lot of that was really driven by volume and mix. We'll see an increasing benefit of our pricing as we're moving into Q4, and that'll be more balanced with pricing. on the margin side and a little bit more driving growth on the revenue side. Relative to pricing and managing our margins over time, we have a full toolbox to be able to do that. We look at pricing, we look at managing our productivity, revenue management toolbox. And we see inflation, as I said, approaching 10% in the back half, and we'll be prepared to price as needed. And we believe our that our brands can sustain that in the marketplace because of previous investments that we've made.
spk07: Thank you.
spk09: Thank you. Next, we'll take Ken Goldman with JP Morgan.
spk03: Hey, thanks so much. Two for me. First, Andy, just a quick question on the M&A environment. We're hearing a little bit, and it's just speculation right now, that maybe some targets are getting a little bit or potential targets across every industry are getting a little bit more eager to sell before some potential tax changes. Are you hearing anything about that? Is there any urgency you're hearing from potential targets right now, or is it more kind of steady as she goes in terms of interest from their side?
spk04: We see targets and opportunities Continually, we're always active in making sure we're monitoring the environment, you know, that it is one of our value creation strategies and use of cash as we talked about over time. I honestly, from where I sit, Ken, for the rest of the call, I haven't seen a dramatic, like, you know, it has to happen right now, although there are some that come and have different urgencies, but that's, from where I sit, at least that's not tremendously unusual. I think the real good part about where we're at, we don't need M&A to create value. We feel great about our organic growth ability, the portfolio we've had, the way we've been able to transform it over time, and the capabilities we've invested in and the growth model that we have. So we certainly continue to look. We're generating our strong cash flow and have that optionality to continue to create value. But if it doesn't happen, we'll be disciplined about it and have a good use of cash, invest in their core business and deleveraging.
spk03: Thank you for that. And then I wanted to pivot a little bit. I realize you're not talking about 2022 yet, but just wanted to get a sense, you know, you're taking a little bit of pricing and More and more pricing will flow in rather in the first quarter. Just trying to get a sense for as you think about heading into next year, you know, as some of your hedges may be rolling off, but you also have more pricing. How do we think about sort of when the worst is over as you think about sort of pricing and productivity net of cost? Again, no one has a crystal ball, but just trying to get your sense for, hey, is the worst over here or is it going to get a little bit worse in the first half before it gets better in the second half?
spk04: Yeah, I think the headline on that is we see elevated input costs and inflation at least through the first half of 2022. We'll see increasing benefit of pricing in Q4 than we saw in Q3, and that will flow through. We'll also see that in the first half. Over time, we feel good about managing our margins, but we're certainly expecting that inflation to be elevated, potentially even more elevated. We're not ready to guide yet for 22 as we move into the first half of 22, but we have a toolbox that we believe will manage those over time.
spk05: Helpful. Thanks so much. Thank you, Ken.
spk09: Thank you. And next we'll take Ben. Benvenu with Stevens.
spk06: Hey, Ben. Hey, how are you? I want to ask just about the overall share of the business. You guys have made a ton of progress. And if I think about kind of the benchmark of pre-bankruptcy, it looks like you're on a trajectory to move through that pretty meaningfully with the velocity that you have and momentum you have in the business. Have you thought about kind of what a reasonable expectation is for what you think your intermediate term market share is? goals might be as we think about the long-term growth of the business?
spk04: Yeah, I don't see our share growth necessarily slowing. When we look at growing and we look at investing in our capabilities, we start with understanding the consumer. And the consumer of which we compete is in a broader snacking universe than even just the way we define our sweet baked goods business. So the way consumers use our products, they interchange with confections and potentially other things that maybe consumers would use in the breakfast morning. And one of the reasons we've been able to capture some of that share was in our activation or advertising or innovation provides some of those benefits that they're looking at within those broader categories. So if you couple that with our availability, our broad-based distribution model, we're 91%, 92% available, which is about 10% more than anybody in our category. Our agile distribution, so we're able to service consumers even during unprecedented constraints within the supply chain. We have built a model that allows us to understand our consumer and then bring it to them where they need it, within the store or whether we're investing online. So I don't think of limiting our ability to be able to grow as a share target as defined within Sweet Baked Goods. I believe it's going to continue to grow over time way beyond that because of the way we've defined our opportunity market.
spk06: Okay, great. And then maybe one more question as it relates to market share, but tying in the innovation investments that you're making of new products, particularly on the breakfast side. In which channels do you think you're seeing the biggest benefit as it relates to market share gains or growth as a byproduct of innovation?
spk04: It's actually where we get the execution. It's broad-based. We've been successful in where it's predominantly immediate consumption. I define that as a convenience channel. We've been successful with innovation on the front end of the store. I mentioned our muffin sticks are doing well. We're bringing out a four-ounce version of our crispy minis, which have continued to build and attracting an incremental consumer to our franchise, which obviously also expands our share because a lot of times they're incremental to the category. So we've seen our innovation successful across channels because, frankly, consumers are omnichannel nowadays. They shop multiple channels in different forms depending on what their need is. So where we get the execution at the store level, our success has followed.
spk06: Okay, great. Thanks. Best of luck. Yeah.
spk05: Thank you, man.
spk09: Thank you. And once again, if you would like to ask a question, please do so by pressing star 1 on your telephone keypad. Next, we'll take Robert Mascow with Credit Suisse.
spk01: Hi, Rob. Hi. Hi, Andy. Hey, Rob. Welcome to the call. I know. It's very exciting. I wanted to know a couple of things, actually. So, The first one is, I think in the mass channel, that's where you've had some challenges this year. Maybe give us a little update on how you're trying to address that and what it requires. And then lastly, I know you don't want to talk about the circumstances for the CFO resignation, but can you give us just kind of a summary of the main big projects that the CFO office is responsible for right now, whether it's productivity or pricing initiatives, and give us a sense as to how you can maintain continuity and not have disruption. Thanks.
spk00: Yeah.
spk04: All right. So let me take the first one first. I feel good about our progress in the mass channel. We have some building blocks and green shoots of success. In total, and that's true across our grocery channel, it starts by understanding the consumer and investing in some of the things we've invested over time, like quality, understanding the consumer and execution. So we have some good, you know, green shoots of success. For across the board, Rob, we are in the process of really laying out plans for 2022. You know, and those are always, you know, kind of partnerships. Our goal is to create sustainable, mutually beneficial relationships with all of our customers across the board, and that's the way we approach each of our engagements. So, we've done things. Our innovation is some of the tops within all of our channels, including mass, including grocery. We're working on building front-end distribution that's expanding, including across mass, including across grocery. We're taking our investment in servicing our customers, which is some of the tops when we benchmark during very challenging supply chain. And we believe by doing all of these things and investing that over time, we'll be successful across all of our channels. And I'm optimistic that'll happen in 2022. So related to... this CFO, I operate our management team is very collaborative. We have five basic behaviors of which we operate and collaboration and managing outcomes are two of them. And therefore, as a leadership team, whenever we have a leadership transition, it is smooth because we are focused on building organizational capabilities Doing it in a very collaborative environment. We meet as a leadership team every other week and go from top to bottom related to through the financials. We've created an infrastructure of processes to be able to do that. So, you know, obviously everything that touches the financials and the discipline of the financials go through, you know, the CFO. Obviously he's responsible for external reporting and treasury, a pretty typical CFO group. But as I mentioned, I am beyond confidence that the strength of the team and the strength of the collaboration that we've built across the organization position as well, we're not going to miss a beat.
spk05: Great. Thank you very much. Thanks, Rob. Thanks, Rob.
spk09: Thank you. And we'll take our next question from Steve Powers with Deutsche Bank.
spk02: Yeah, hey, thanks. Hey, Steve.
spk05: Hey.
spk02: Actually, can we just unpack what I think you said on gross margin in the quarter? I think you said it was down with a drag from Vortman, and I think you alluded to that. Yeah. Yeah, and I think you said that was it. timing of price. So is that a, should we, I guess the question is, should we expect that to be a drag into 4Q and beyond, or does that get trued up with pricing that rolls in and all of a sudden Vortman becomes more neutral to accretive again?
spk05: Yeah, it just basically is a timing thing.
spk04: I feel great about Vortman's. We certainly had a lag on some of the recovery of costs. A lot of it was pricing. There was a little bit, too, on some of the productivity, just adjusting through the but it was mostly Q3. I would expect Q4 to come right back. It's still accretive, and it will be more accretive as we blow through. So think of it as a timing. It's really a timing issue. Feel great about Bortman and the long-term business proposition, the continued growth in our investment in that business. Think of it as timing.
spk02: Okay, perfect. Thank you very much. And I guess you alluded to pricing a couple times before. I guess I wanted to come at it more from a from a volume elasticity standpoint? And just, you know, I'm assuming just given what we've seen so far that right now the elasticities are holding up quite well as they are for most companies. But as you look out and contemplate and roll in more pricing as does everybody else and just puts more burden on the consumer, how are you thinking about elasticities as you shape your planning for fiscal 22?
spk04: Yeah, well, we continue to model every activity we take. It doesn't matter whether it's an environment or not. We try to do our best to forecast and break down the drivers of our business. And what we're seeing right now is the basic fundamentals around consumer behavior, snacking more at home, having more investments or putting those dollars in us, and that's offsetting any impact of the pricing. So the resiliency... of our ability to be able to solve consumer needs are hitting it. Now, you're exactly right that the more you put in, then you stretch the balance of that. But the way I would think about it, we're in a good position to be able to continue to do that given what we've invested in the business. It's also why we continue to invest in growth. You want to invest and build a foundation both in the fundamentals with our customers, our innovation, our quality and our consumer engagement to make sure you have the strongest foundation to be able to continue to build the business, including pricing over time. So, you know, it certainly puts more strain as you put in pricing, but I think we're as good or better positioned than most.
spk05: Very good. I appreciate it. Thank you. Thanks.
spk09: Thank you. And there are no further questions at this time. I would like to turn the conference back over to your host, Amit Sharma, for any additional or closing remarks.
spk04: So I appreciate everyone's participation and interest in HOSIS. You know, as I mentioned, we are extremely excited to continue the strong execution against our priorities as we drive growth and increase shareholder value over time. So thanks again for joining. We appreciate it, and we will see you next quarter. And thanks to the great hostess team out there as well who deliver these results every day.
spk09: Thank you. And that does conclude our teleconference today. We appreciate your participation. You may now disconnect.
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