Grupo Comercial Ched Ord

Good morning to all participants, and welcome to Grupo Comercial Chederowa's fourth quarter 2024 conference call. Participating in the conference call today is Mr. Jose Antonio Chederowa, CEO of Grupo Comercial Chederowa, Mr. Carlos Smith, CEO of the company, Humberto Tafolle, CFO, and Arturo Velasquez, IRO for the company. We will begin the call with initial comments on Grupo Comercial Chedrawi, fourth quarter financial results by the company's CEO, Mr. Jose Antonio Chedrawi.

Thank you. You may begin.

Good morning to all, and welcome to our presentation of Grupo Comercial Chedrawi's fourth quarter 2024 results. I will begin by proudly thanking all of our employees for their exceptional work, unwavering dedication and passion for successfully driving our three core strategic pillars, lowest price, best assortment by store, and best customer experience. Their relentless commitment has been instrumental in continuing to grow market share in Mexico and the El Super and Fiesta Mart brands in the U.S. In 2024, our same store sales in Mexico outperformed Lantar, which clearly reflects the hard work and determination of our entire team. At Smart and Final, we launched a new pricing strategy for perishables, which combined with our impactful marketing campaign launched in second quarter 24, are designed to strengthen the banner's position as a primary shopping destination for our customers and increase our customer base. This approach led to a 2% increase in customer count in the fourth quarter of 2024. Our CapEx investment in 2024, which represented 4.1% of sales, showcases our unwavering commitment to long-term, organic growth both in Mexico and the U.S. At the same time, we are actively seeking accretive growth opportunities through strategic M&A initiatives. Furthermore, as shared in our financial release, we are excited to announce that for the second consecutive year, our Board of Directors will consider approving an extraordinary dividend to our stockholders in 2025. This reflects our strong cash generation during 2024 and underscores our strong financial foundation. Now, to start our presentation, please turn to slide four, where I will highlight key achievements of the fourth quarter. Consolidated sales saw double-digit growth driven by positive trends across all businesses. Retail Mexico same-store sales growth of 2.9% for the fourth quarter of 2024 surpassed and taxed results for the 18th consecutive quarter. Chedraui USA same-store sales in the fourth quarter of 2024 posted an increase of 0.8% in dollar terms.

Net debt, cash,

EBITDA stood at minus 0.18 times, with a net cash position of 4,330 million pesos in 2024. CAPEX in 2024 reached 11,454 million pesos, representing 4.1% of consolidated sales. We continue with our organic growth strategy as 57 stores opened in the fourth quarter of 24 in Mexico and two in the US. In the following slides, I will comment in more detail on these key highlights. Turn to slide five, please. In the fourth quarter of 2024, Consolidated sales grew by 11.2% in Mexican pesos, reflecting positive performance across all business segments and a favorable currency impact on Chedragui USA's sales. The positive currency translation resulted in a 16.5% depreciation of the Mexican pesos compared to the U.S. dollar in the fourth quarter of 2023. Consolidated EBITDA for the quarter reached 5,921 million pesos, with an EBITDA margin of 7.6%. This result was impacted by transition costs related to our new distribution center in Rancho Cucamonga, California. and smart finals perishables pricing strategy. We will refer to this facility as RCDC. Excluding transition costs, consolidated EBITDA would have totaled 6,179 million pesos with an 8% EBITDA margin. On slide six, consolidated net income continues to upward trajectory despite the consideration of transition costs in the second half of 2024. Over the past four years, we have achieved a compound annual growth rate of 26.4%. When excluding transition costs and expenses, net income growth in an extraordinary 31.3%. Our return on equity in the second half of 2024 was influenced by RCDC transition costs and smart finals pricing strategy. However, even when accounting for these transition costs and expenses, Our long-term strategic focus has driven our OE improvement, rising from single-digit figures in 2020 to consistent mid-team levels. This positive trend highlights our ongoing commitment to creating long-term value for our stakeholders. In the following slides, we will review the main highlights of our businesses in Mexico and the U.S. On slide 7, same-store sales growth slowed in the fourth quarter of 2024, in line with softer economic activity for this period. Despite this, we continued to gain market share. As for the 18th consecutive quarter, same-store sales exceeded on tax results, growing by 2.9% compared to 1.9%. Our Michedraui loyalty program is an essential element of our value proposition by delivering our customers tailored promotions in our various store formats, especially during the highly competitive Buen Fin and Christmas periods. We continue to increase customer participation in our Michedraui loyalty program, as evidenced by the 5.7% customer growth in the last 12 months to 13 million members. This allowed us to recognize 74% of our sales from loyalty program customers, a record level for the company. Please turn to slide 8. Positive same-store sales and a 2.4% increase in sales floor area drove consolidated sales growth of 3.6% compared to the fourth quarter of 2023. It is important to highlight that the fourth quarter base comparison includes sales of basic food product baskets to the government, supporting emergency programs implemented in Acapulco, Guerrero. EBITDA for the quarter reached 2,826 million pesos, slightly lower than the fourth quarter of 2023 with a 7.9% margin. down 47 basis points due to operating the leverage and higher expenses from accelerated store openings. Finally, on slide nine, we will review the highlights of our real estate division. The occupancy rate increased to 98.4% from 97.3% in the fourth quarter of 2023. Sales, continued to show positive trends with an 11.2% increase compared to the same quarter of 2023, amounting to 391 million pesos. Over the last 12 months, 14,443 square meters of leasable area were incorporated, representing a 3.3% annual growth, EBITDA increased 36.1% compared to the fourth quarter of 2023 and represented 69.9% of sales. I will now turn the meeting over to Carlos Smith, CEO of Chedraui USA for his comments on our U.S. operation. Carlos, please go ahead.

Thank you, Antonio. Good morning, everyone. I'd like to start by providing an update on the status of our distribution center in Rancho Cucamonga, California, also known as RCDC. As of the fourth quarter of 24, we have successfully closed two of the five legacy distribution centers, and we are on track to complete the transition process by the end of the second quarter of 2025, as previously discussed. Dry products at our legacy distribution centers are now distributed by the new RCDC, And we are in the process of completing the transition of chilled and frozen products, which will be complete by the end of Q2. As mentioned in prior meetings, the total capital investment in our RCDC will be approximately $120 million, of which 96 million has already been deployed. In addition, I would like to comment that during this quarter, we launched a new perishable pricing strategy in all Smart and Final stores. designed to increase customer traffic and position Smart and Final as a primary shopping destination for our customers. This strategy is also supported by the marketing campaign with the tagline, Smart and Final, where else? That kicked off in the second quarter of 24. The strategy primarily involves offering key perishable products at everyday low prices. In Q4, the pricing strategy resulted in a 2% increase in customer count at Smart and Final stores. and we expect traffic to continue to grow in the coming months. While we are currently subsidizing these lower prices, which impacts gross margin and our average retail price, we believe this is the right strategy for sport and final for the long term, which will be supported by lower cost of goods through our optimized and more efficient supply chain. Please turn to slide 10. Chitraui USA same store sales in the quarter increased 0.8% versus the prior comparative quarter. This growth was driven by low single-digit increases at El Super and Fiesta, which helped offset a slight decline in same-store sales at Smart and Final. It is important to note that our sales performance was impacted by a negative calendar effect caused by Chitraui USA's use of a weekly 4-4-5 fiscal calendar. Fiscal year 2024 excluded the last two days of December, which are strong sales days. Ciudad USA sales increased by 2.2% in U.S. dollar terms, supported by both same-store sales growth and a 1.5% sales floor expansion over the past 12 months. Due to the depreciation of the Mexican currency against the U.S. dollar by 16.5%, total sales increased by 18.7%. Our organic growth strategy remains on track, with the opening of two El Super stores during the quarter, bringing the total to six new stores in 2024. As previously mentioned, same-store sales growth at El Super and Fiesta Mart was in the low single digits, driven by a solid increase in customer count. While smart and final sales have been impacted by a lower average transaction size, particularly among business customers, we remain focused on enhancing pricing strategies and expanding our perishable offerings to strengthen smart and final's positions as a primary destination for customers. Please turn to slide 11. The pricing strategy at Smart and Final, coupled with transition costs and operating expenses related to RCDC, impacted operating leverage at Smart and Final. This resulted in a decrease in EBITDA for Chedraui USA in dollar terms, as well as a 14.2% decline in Mexican pesos. EBITDA margin for the period represented 6.8% of sales. When adjusted for transition supply chain costs and expenses, EBITDA decreased by 6.3% in Mexican pesos, representing 7.4% of sales. Similarly, when excluding transition costs, the combined EBITDA margin for El Super and Fiesta Mart stood at 9.3%, marking a 20 basis point decline compared to the same quarter in 2023. This was primarily attributed to higher expenses related to the increase in store openings in 2024. Excluding transition supply chain costs and expenses, Smart & Final's EBITDA margin was 5.7%, with the primary impact stemming from the ongoing pricing strategy initiatives. We remain focused on refining our strategies to optimize operational efficiencies and drive sustained growth in the future. This concludes our report on the U.S. operation.

Thank you, Carlos. We now turn to the consolidated financial results on slide 12. Consolidated sales amounted to 77,582 million pesos, an 11.2% increase year over year. Driven by positive sales trends in all businesses and a positive foreign currency translation due to the 16.5% depreciation of the Mexican peso compared to the US dollar. Gross profit rose 6.8% and 8.2% without the supply chain transition costs and expenses. This result is impacted mainly by smart and final pricing strategy. Consolidated operating expenses, excluding depreciation and amortization, increased by 16.2% and 15.9% without the transition supply chain expenses. This increase was mainly due to higher labor costs in Mexico and the U.S. and an acceleration in store openings in both countries. Consolidated EBITDA declined 7.2%, representing 7.6% of sales, and a 3.1% decline after adjusting for transition supply chain costs and expenses. The EBITDA margin excluding these transition expenses represented 8% of sales. Financial expenses increased by 31.1% to 1,607 million pesos, mainly by higher interest expense due to the capitalization of new property rents and the new distribution center in accordance with IFRS 16. When excluding this impact, financial costs would have increased by 11%. Consolidated net income totaled 1,363 million pesos and represented 1.8% of sales. This decline is once again explained by the different effects regarding the operation of RCDC. When eliminating this impact, net income totaled 1,876 million pesos and represented 2.4% of sales. Finally, please move to slide 13. We closed the year with a net cash position of 4,330 million, and our financial leverage was minus 0.18 times compared to the minus 0.24 times in the same period last year. Fiscal year to date, CAPEX invested reached 11,454 million pesos. equivalent to 4.1% of sales, and is 53% higher than the previous year. This is explained by an increase in the opening stores in Mexico and the United States, as well as the investment made in the new distribution center. It is important to highlight that the cash generated by our operations allowed us to fund this higher CAPEX and improve our cash position versus previous year. Now, please allow us to move on to the question and answer section.

Thank you.

At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

One moment, please, while we poll for questions. Our first question comes from Antonia Fernandez with Oppenheimer. Please proceed with your question.

Antonio, you're live with the speakers. Are you muted? Antonio Hernandez from Actimber.

Antonio Hernandez from Actimber. So basically, two quick ones. What do you expect going forward for smart and finance in terms of revenue growth, same-store sales, and then I have a quick follow-up. Thanks.

Are our speakers muted or? Can you hear me? Yes, we can.

Okay. Let me, let's try that again. As I was mentioning, we've made quite a bit of progress at Smart and Final since Q3. As you've seen, sales improved versus previous quarters. We don't have sales where we want them to be just yet. But customer traffic was positive. We grew 2%. And another very important indicator of a very positive trend is that our unit volume grew by over 5% during the quarter. So the environment that we've got right now is one of increasing traffic, increasing unit volume, but we've got internal deflation that we've created by implementing a very, very aggressive pricing strategy focused on perishables, which we believe is a key component of driving more frequency, more traffic through produce and meat. And we've complemented that with key items in the grocery department, which have created an environment where we've got deflation at about 6%. when you see an environment of food at home inflation of about 1.8. As many of you know, implementing an aggressive pricing strategy takes time. We have an example of that. If you go back to the initial stages of when we purchased Fiesta, we did something very similar. It takes time to grab hold. But you can see where the Fiesta banner is today. Regardless, in Q1 of 25, we are seeing positive comps at smart and final. Customer count is better than it was in Q4. And unit volume is even better than it was in Q4. So we firmly believe that we're on the right track. We understand that there's a little bit of pain. as we implement a very aggressive strategy, but it's important. We need to convert Smart & Final into a primary shop instead of a fill-in shop and grow the customer base, which is what we're seeing is happening today.

Perfect. Thanks for the call.

And just a quick one regarding the performance in the southern part of the country. Is that because of competition as well being tougher, or is the lower economic activity the main driver of this performance? What was also the sales in this region?

Thanks. Good morning, Antonio.

Well, yes, we have a very big comparison base in the southern region due to the government investments in the past years. Therefore, we have seen a weaker speed rate of growth, and while it's clearly affecting us in Quintana Roo, Tabasco, and in the areas that are close to Campeche, for example. So, yes, even though that we're seeing that trend, we are being able to grow more than that and to grow more than our competition in that particular region.

That is correct. It's another speed rate of growth than what we were used to in the past.

Thanks. Appreciate the call. Have a great day.

Our next question comes from Ben Thor with Barclays. Please proceed with your question.

Yeah. Good morning and thanks for taking my question. Two quick ones. So first, really just associated around your expectations in the U.S. and maybe some of the traffic that you're seeing in stores. And I was just wondering if you had more recently any issues with some of the policy-driven crackdowns on illegal immigration, if that is to a degree somehow impacting your operations in the U.S., as it tends to be in a more Hispanic area, neighborhood where you have your stores. So, Carlos, that would be my first question, and I have one just on the DC integration.

Yes, absolutely. Good morning, Ben. Interestingly, our Hispanic banners have been doing very, very well in Q1. We experienced a similar situation back in 2017. It seems that this particular event is a little different, I would say. Obviously, we're not involved in policy, but it seems to be a little bit more targeted rather than broader. But overall, from our perspective, Our banners are doing very well in the quarter with improved customer counts versus previous quarter. Okay, perfect.

That's good to hear. Thanks for that, Carlos. And then second question also on the U.S. operations. If we take a look, obviously, I mean, right now there's disruption because of the double work and the double DCs, but as that flows through and improves over time, is it fair to assume that the vast majority of what you've been guiding for about a month ago in terms of like EBITDA margin expansion probably going to be driven 3 and 4Q just given what the relative comparison is? And then as you kind of like phase out the integration obviously over time and we look into a more medium term potential from the new DC, just wanted to understand what the capacity of that is. Like how much of like growth can you deliver in the US with that DC being like the one in charge to fulfill the stores?

Yeah, well, let me start by saying that similar to what's happening at Smart and Final, we're making a tremendous amount of progress on the RCDC. As of right now, three of the five DCs are closed. The remaining two will close by the end of Q2, which means that we're slowly beginning to shed duplicate occupancy costs. And you're going to start seeing lower RCDC operating expenses in Q1 that you saw in Q4 and so forth in subsequent quarters. Our labor productivity is improving. Our transportation efficiencies are improving. So we believe that we're going to start getting into a normalized operation during the second half of this year. But as I've said before, and we've commented, our objective is to deliver an extra 50 basis point improvement from 2023 levels at both the EL Super as well as the Smart and Final banner. However, we also see that there's a lot more that we can do. I think that there are tremendous amounts of opportunities related to improving Assortment at the El Super banner. As you know, it's a limited assortment banner. Private label penetration at El Super is going to improve. It's one of the strengths that we have at Smart and Final, representing about 30% of our sales with a very, very well-known, great quality brand called First Street. So apart from that 50 basis point improvement, I think that there are other...

additional improvements that will materialize over time. Thank you very much.

Our next question comes from Aura Melanado with Santana. Please proceed with your question.

Hi, good morning. Thank you for taking my question. Could you please give us more color about the increasing inventories? Is this increase related to the distribution center only or also Mexico operations, and if that is the case, which categories have the biggest increases?

Thank you.

Hi there. I think I caught most of your question. I'm sorry. It was related to the increase in inventory levels on a group level, right? I think the primary reason for that is related to the foreign exchange.

Okay. Thank you.

Our next question comes from Bob Ford with Bank of America. Please proceed with your question.

Hey, thank you. Good morning, everybody. Antonio, given the tough comparison in the solar consumption environment in Mexico, You know, how should we think about market share opportunities and the implications of, if any, from the confessor ruling on WOMX? And then, Carlos, I think you mentioned something in your opening comments with respect to the role of the RCDC at smart and finals and ramps. But maybe you could talk a little bit more specifically about the RCDC and maybe lowering costs, improving freshness, reducing the shrink, improving in stocks and other things. And then when you reflect on the experience that you have right now in Smart and Final in Southern Cal, what are the similarities and differences between Smart and Final and the experience at Fiesta in terms of the responsiveness to the changes that you're making?

Thank you. Thank you, Bob.

I think that Carlos will answer the U.S., And then after he's finished, I'll give you what I think about the growth opportunities, consolidation opportunities in Mexico.

Hey, Bob. Good morning. Yeah, I think you mentioned some of those additional benefits that we're going to be experiencing from the RCDC. The starting point for our investment in the RCDC is the fact that we had a supply chain that was at full capacity. Five distribution centers, Servicing Health Super and Smart and Final, that did not allow us for any future growth from the standpoint of additional stores or from the standpoint of additional categories into centralized distribution which helps you with lower cost of goods right so now that we've set the table to be able to do that okay the assessment of new store openings is much different not only that but the assessment of more regional M&A becomes a little easier to evaluate So putting those things aside, having this facility, we're going to get benefits from an efficient transportation network. We're going to get more efficiencies inside the facility. But we're also going to get efficiencies in-store. And you touched on some of those. Our on-time deliveries to stores are improving dramatically. And that improves freshness. Our in-stock position is improving every day, and that's going to reflect in better sales. So those are all ancillary benefits from the DC. Comparing Smart and Final to Fiesta, two different scenarios. Smart and Final is an incredibly well-managed company. The executive team at Smart & Final is exceptional. We did not have that type of bench when we acquired Fiesta. We did not have the fleet of stores well maintained with proper equipment. So we had a tremendous amount of capex that was necessary to bring that fleet up to standard. None of that has been the case at Smart and Final. And right now, it's really positioning the concept slightly different. You know that we, as Grupo Chivarraui, we lead with a value proposition directed to price, okay? We want to do the same thing at Smart and Final. And we are very, very aggressive when it comes to perishables. You see that at El Super. You're seeing that at Fiesta. And you're going to see that at Smart and Final. It just takes a little bit of time.

And then you gave a little teaser on El Super, saying that it's an edited or limited assortment, but there's a big role in El Super for private label. How do you see the potential to expand that offering further?

with with the improvement in the infrastructure you know in terms of just like the proportion sorry it's it's it's it's phenomenal the the opportunity we've we've set the table for l super because l super's pulling product from the uh rcdc which is common inventory for both banners All of the work that's been done over, I don't know, I mean, as you know, Smart & Funnel's been around 150 years. There's a tremendous asset in the R&D related to our private label that El Super's going to be able to benefit. The catalog is 100% open for El Super to pull from. And not only that, if there's an item that we're not exactly happy with the price point, we've got different brands. We've got... Sun Harvest. We've got Simply Value that meets different price points. And we've got an incredible team within Private Label that is capable of bringing in new items that fit a particular assortment or pricing strategy at L Super.

Tip of the iceberg in Private Label. Exciting. Our next question comes. Oh, I'm sorry.

No, no, don't worry. Don't worry. I think that just about Mexico, well, as we have already said, we're seeing some difficulties in certain regions because of the base created by the investment of the government in the recent years. But besides that, we're being able to grow better competition, even in those particular areas. And while we are very bullish about sustaining that same store sales growth that we have been able to achieve in the past years, and with the store openings that we have put in place. Consolidation opportunities, well, It's difficult to say whether there will be opportunities or not in the near future, but we're open for that. We've proven that we have the capabilities to acquire companies successfully and integrate them successfully and produce value to our stakeholders. So we're open to that as well, Bob.

That's interesting to hear. And then, Antonio, any thoughts on the confessive settlement? Because it does seem to prohibit certain practices, no?

Well, no comments about it. They have not revealed much information about it, so I think that's a matter that between Wal-Mart and the coffee scene.

Understood. Thank you so much. Thank you, Bob.

Our next question comes from Renata Cabral with Citibank. Please proceed with your question.

Hi, everyone. Good morning. Thank you so much for taking my question. I have two quick ones here. One is a follow-up regarding location growth opportunities, especially in Mexico. The company had an incredible year. We know that the slowdown is happening and now has been the company in the fourth quarter, but we understand there's a lot of growth opportunities. If you could give us some color in terms of from now on, if there's something changing in terms of growth in Mexico. I mean, in terms of what we need to focus on in terms of store opening in formats because, you know, company was focused more on the smaller formats or included in prior to later that you already comment here in the call. Any further call, it would really be helpful. And my second question is regarding the comments and strategy. I noted some interesting comments on the release regarding the growth. in 2024 in terms of user base and across the new currency so if you also could give some color in terms of where the company are in terms of e-commerce and what would be the further development in terms of partnerships and investments in this area thank you so much

Renata, we are so, so sorry that we were completely unable to listen clearly to your question because the microphone was muffled. So I don't know if you can get another microphone or maybe send in your written question to our team and we'll get back to you. But we were unfortunately unable to hear your questions clearly.

Absolutely. I'll try .

Our next question comes from Fraulein Mendez with JP Morgan. Please proceed with your question.

Hello, guys. Can you hear me?

Yes, we can.

Very clear.

We hear you, Fraulein. Excellent. Thank you so much. I have a question on margins. We saw 30 basis points margin dilution because of the CDC double cost during the quarter. What should we expect for the first half of 2025? Should this impact be a little bit lower versus what we have seen so far in 2024, or should be a similar impact of around 30 basis points throughout the first half of 2025. And my second question, I'm trying to connect the dots between the comments on those 50 basis points that you can see improving smart and final and super at some point. When do you expect for EBITDA margins to reach 2023 levels again?

Thank you. Okay, yes.

Yes, good morning, Roland. Look, I think that as I mentioned earlier, the heaviest portion of additional expenses I think fortunately are behind us. Q4 was a little bit better than Q3. We expect Q1 to be better than Q4 and Q2 to be a little bit better than Q1. we're going to be normalized operating levels in during the second half. But what I can tell you is that we're comfortable with our projections that we've outlined for the market. And with regards to the fifth, with our guidance, I'm sorry, and with regards to our 50 basis point improvement, we expect to see that materialize in 2026.

Probably 2026 could see similar levels of EBITDA margins as the one that we saw in 2023, if I understand correctly, like around 9%.

Correct.

Excellent. And if I may, just a follow-up, since you mentioned that this new CDC opens the possibility for new stores, for new SKUs, Does this also increase how you look at M&A? I mean, are we closer to see something happening, especially in the U.S., where we're seeing a lot of consolidation or a lot of transactions in the market happening? Does opening or the full operation of the CDC also increases the chances of you doing some M&A in the U.S.? ?

As we've said many times before, we are fortunate to be in a position where we are always open to listen and to evaluate for opportunities that may come up in the market. The market, both in Texas and in the West Coast, sometimes has a little bit different dynamic. But we're open to both. And we believe we have a solid foundation with which to absorb some of these acquisitions.

Very clear. Thank you so much for taking my questions.

As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. One moment, please, while we poll for additional questions.

Our next question comes from Miguel Ulla with BVA.

Please proceed with your question.

Hi. Good morning. Thanks for taking my question. The first one would be regarding margins in Mexico. Do you expect something to change in the first half regarding margins, gross margins, particularly, and if these results change your guidance for the full year for 2025? Thank you very much.

Good morning, Miguel.

Well, we have, we don't have any plan to change the guidance. We believe that in Mexico we'll be able to gain 10 basis points compared to the EBITDA margin that we delivered in 2024. We, it's clearly we have a difficult first quarter of the year. due to the base created. We have calendar effects with the Easter week and one day less in the month of February, as well as we still have some sales of that basic product basket sold to the government in the base of last year. So due to that, we expect a difficult first Q, but then We are pretty sure that we'll be able to deliver the same store sales growth that we projected as well as the margin gains that we have already projected as well.

Okay. Just to clarify, the 10 basis is over 2024 results. Is that right?

Exactly.

Exactly. Over the base of 2024 results. Thank you very much. Thank you, Miguel.

We've reached the end of the question and answer session. I'd now like to turn the call back over to management for closing comments.

Well, I want to thank everyone for joining this meeting. I hope to be talking to you soon about the first quarter results.

Thank you.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.