Q1 2024 Lazydays Holdings Inc Earnings Call

Participants

Kelly Porter; Chief Financial Officer; Lazydays Holdings Inc

John North; Chief Executive Officer, Director; Lazydays Holdings Inc

Amber Dillard; Vice President - Operations; Lazydays Holdings Inc

Steve Dyer; Analyst; Craig-Hallum

Mike Swartz; Analyst; Truist Securities

Brandon Rollé; Analyst; D.A. Davidson.

Presentation

Operator

Greetings, and welcome to the Lazydays Holdings first quarter 2024 conference call. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Kelly Porter Chief Financial Officer.
Thank you. You may begin.

Kelly Porter

Good morning, everyone, and thank you for joining us. On the call with me today are John North CEO. and Amber Dillard Vice President of Operations.
Before we begin, I would like to remind everyone that we will be discussing forward-looking information, including potential future financial performance, which are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from such forward-looking statements and information.
Such risks, uncertainties, assumptions and other factors are identified in our earnings release and other periodic filings with the SEC as well as the Investor Relations section of our website. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results and any or all of our forward-looking statements may prove to be inaccurate, and we can make no guarantees about our future performance, and we undertake no obligation to update or revise our forward-looking statements.
On this call we will discuss certain non-GAAP financial measures. Please refer to our earnings release, which is available on our website for how we define these measures and reconciliations to the closest comparable GAAP measures.
With that, I'd like to turn the call over to John North, our Chief Executive Officer.

John North

I think going from Morning, everybody. Thanks for calling in. As usual. I'll kick things off, I'll let Andrew talk about operations. Kelly can speak to the financial results and then we'll hopefully take a couple of questions. We, along with the rest of the industry have been working hard to adapt to the current retail environment, namely sales topline softness, coupled with an industry-wide inventory overhang of aging 22, 2020, 22 and 2023 units.
To that end, we have been focused on what we can control first, inventory health, second, increasing used procurement, third, driving finance and insurance performance higher And fourth, controlling costs. I'm pleased to report we have made significant progress in all these areas since we spoke to you about 60 days ago, the variable in the equation that has been outside of our control as retail demand. The increase in sales velocity we expected through March and April did not materialize based on the most recent SSI data nationwide, new unit sales were down in March, over 17% from 2023.
We performed better than the market, but still saw year-over-year declines. We attribute this to three factors. First, as lower consumer demand second is negative equity on many units purchased during the pandemic. And third is dealers that we compete against that were slower to respond and discount aging inventory did so and that drove consumer traffic toward their better deals and away from our healthier priced offerings.
Fortunately, we have fantastic partners with our OEMs, lenders and investors. We have received continued financial support on our units and inventory flexibility on our credit facility again this month and a further injection of liquidity raising $15 million through an expansion of our mortgage financing.
Our cash position today is almost unchanged oriented. The first quarter share remains almost 20% higher than where we finished the third quarter of 2023.
In summary, our inventory is healthy. We are driving operational improvements and vehicle gross profit per unit continues to improve, but increasing unit volume continues to be elusive given the start to the year and our outlook for the rest of 2024, we are projecting a pretax loss, but anticipate positive EBITDA and adjusted free cash flow.
Finally, the team has engaged working hard together and continues to identify ways to pursue every retail opportunity that is available in the market. I want to thank all of our employees for their hard work. And with that, I'll let Andy take it over.

Amber Dillard

Thanks, John, and good morning, everyone. As previously mentioned, we have continued to focus on improving our inventory health. To recall the journey we have been on in early November. We had approximately 120,2022 model year units and over 200, 2023 model year units and stock. As of yesterday, we were down to 5, 2022 units and just under 300, 2023 units remaining.
We have also reduced our on-ground new inventory from over 4,700 units in November to under 36 hundred today. As of today, more than 90% of our inventory is 2024 or 2025 model year. We believe this is among the healthiest in the industry Additionally, our OEM partners are thoughtfully and slowly introducing 2025 model year units, of which we currently have less than 50 in stock. They are slowing model year change where they can to preserve the pricing power on 2024 units.
Another area of strength is our approach to our used inventory. We have made a concerted effort to ramp up our internal purchasing activity and the team has acquired more units sequentially every month this year, given our focus on reducing new inventory at year end, we slowed our used unit acquisition cadence in the fourth quarter, but have increased it significantly over the last 75 days with an incremental effort in May that is delivering more than four times higher lead volume compared to April.
Our used unit typically generates five to six times more lead volume than a new unit, which therefore drives more potential customers into our sales funnel with fewer units in stock. Current gross profit per unit on inventory bought from consumers has been consistent with our pre-pandemic historical results. So we are doing everything we can to generate more leads more purchases from consumers and thereby more traffic and revenue to our stores.
Another focus has been F&I. We have been making meaningful improvements in our result due to enhancing our people process and product to provide a couple of examples. Our F&I per unit on a same-store basis increased $170 per unit year over year, despite average selling prices on units declining by over 13%. Our financing penetration on units increased from 59% in January to 69% in March and is at 75% so far in May without the benefit of having as many aggressively priced units that are easier to finance due to a lower loan to value ratio.
I am proud of our financial services managers for the effort they have shown to increase our gross profit generation in this critical revenue stream.
Finally, regarding cost control, relative to last year, we are within 20 basis points of SG&A as a percentage of revenue in the first quarter, while total revenue declined 8.5%, and we have seven more locations in operation compared to 2023. The absolute change in SG&A expense is lower by almost $4 million or over 8.5% on an absolute basis. Overall, the opportunities for self-help and generating optimum performance for our stores remain substantial and achievable. We look forward to providing incremental updates as the operations team has additional time to drive these improvements.
Finally, I'd like to echo John's comments and thank our employees. We have a mission culture and focus that is second to none in the industry. We are aligned in all pulling together, and I am both humbled and honored to lead our store personnel.
With that, I'll turn the call over to Kelly.

Kelly Porter

Thank you Amber, please note that unless stated otherwise, the 2024 first quarter comparisons are versus the same period in 2023. Total revenue for the quarter was $270.6 million, a decrease of 8.5% from this point on all metrics will be on a same-store basis unless otherwise stated, new unit sales declined 11.1% in the quarter, and gross profit per unit excluding LIFO, declined 75.7% as a result of our aggressive discounting of 2022 and 2023 model year units.
Used retail unit sales decreased 4.6% and gross profit per unit decreased 51.4%. Finance and insurance revenue declined 5.6% during the quarter, primarily due to a decrease in unit volume and higher chargebacks As Amber mentioned, F&I per unit increased 3.3% despite lower average selling prices and fewer unit sales. Our service body and parts revenue decreased 20.6% and our gross profit decreased by 18.9%. Our gross margin on service, body and parts increased 120 basis points. Adjusted net loss was $21.4 million for the quarter compared to net income of $1.2 million last year. Adjusted fully diluted earnings per share was a loss of $1.63 for the quarter compared to zero in the prior year.
Moving on to liquidity and capital allocation. On May 15, we raised an additional $15 million of capital generated through mortgage financing on owned real estate. The mortgage facility has a current balance of $50 million and includes real estate with a basis of approximately $127 million. We estimate we can generate an additional $45 million in mortgage proceeds by refinancing these locations at a 75% loan-to-value rate. Similar to the other properties we financed earlier in 2023.
Working with our syndicated lenders, we received a modification of our financial covenants through the first quarter of 2025. I want to thank our bank partners for their partnership to allow us the room to navigate the current economic environment and focus on improving operating results throughout 2024.
With that, we can open the call to questions.

Question and Answer Session

Operator

(Operator Instructions)
Steve Dyer, Craig-Hallum.

Steve Dyer

Thanks. Good morning, Tom, thanks for taking my question. I'm just kind of a question on new vehicle gross margin at a level that I don't think I've seen or you would imagine probably is that just a function of kind of blowing out old model year or fixed cost absorption or all of the above.

John North

Hey, Steve, good to hear from you. And I think in short, you described it well, probably lower than anybody could imagine. But yes, that's exactly what happened. I mean, we've seen our new vehicle gross margins recover pretty dramatically in April and so far into May. I think the big the big change for us in the first part was really needing to get through a lot of that inventory and get healthy. And we saw the writing on the wall and took our pain and move through it. And that's what happened. I think what we were hoping would happen in March and April as we would see seasonality pick up and we sell some more units.
The grosses are there on the '24 in particular, we're paying a lot of attention to the quantity of inventory. And Amar talked about that are down to 3700 units less than I think as of today, which is which is way like even compared to where we were this time last year with a lot more stores now. And we did that for a couple of reasons.
Number one, we want to make sure we're really careful with the high end and the motorized pieces because those have been even slower to move. I think everybody's seen the low end towables are where it's at and where I shared with you this morning over 30% and what we sold this year in travel trailer segment is under 39%, which is which is way different than our mix has been historically. And we've been focused on that intentionally.
That's also where the market is to be frank, I mean, I think Colin's been the number one trailer from SSI. three months in a row this year. That's like a $12,000 or $15,000 a unit. So we've been we've been thoughtful about the high end and heavy product as well, the motorized product, and that doesn't generate the grosses that it has historically because I've been trying to turn it faster with floorplan financing at 8%, funding of $500,000 or $700,000 a unit gets pretty costly every month if you're not turning out. So it's a combination of all those things. You know, I think in short, we feel really good over the inventory is the grosses are there. We're just we're just hoping and trying to everything we can to drive more retail sales and really leaning into use excess where the market is.

Steve Dyer

It's really helpful. Thanks, John. I mean as it relates to mix, it sounds like you have the late model stuff where you want it. Do you have the mix to the holdings of the world? We're in these to be relative to demand right now yes.

John North

I mean, you know, fortunately, Amber has run our supply chain for the better part of a decade and has really good relationships with OEMs and is able to get product at the right price points. I mean, I call out a couple of things. You've got the product, the Catalina stuff that that's done for us, that's a really good price point pretty competitive at that at that entry level, first-time buyer price points.
And then even like Grand Design, they're coming out of the low end stuff that's more affordable because they see where the market is and their number one partner in terms of units, I mean, I think 40% of what we sold in '23 with Grand Design.
So yes, we can get it. That's where the market is. And you see the margin differences when you look at us versus Camping World. So obviously, on a much lower ASP, you can see a margin in the 10s, but there's a balance there because we are also really good partner with an integrated Newmar I tip. And that felt that the higher end motorized stuff for has been phenomenal to us. And so we want to keep everybody happy as best we can. We're trying to buy units and keep their factories moving and be a good partner and also be really careful to protect ourselves because when you get heavy on inventory starts to age, you end up having the last six months that we've had and that that's not very much fun. And I think that's where the industry has been. I just think a lot of dealers do it in private because they don't but there quarterly results like we do.

Steve Dyer

Are you happy to get to do the design you know, when you start out just kind of looking at macro and so forth, parts and service was sort of a sort of focus and I don't know to the degree you've been able to do what you want to do, just given you've been triaging and some of these other areas. But can you kind of give a little bit of color kind of what you're working on there and how that's gone relative to expectations?

John North

I'm sure I mean, I think you're right. We had to focus on the sales side of the organization, and we leaned in pretty heavy starting about, I would say, August of last year. And we're and we're really laser focused on sales. I think obviously, there's always incremental things you're doing on the sales side in our operating part of the business. But in particular, like F&I was just such an opportunity for us. We needed to start there. I mean, there's thousands of dollars per unit being left on the table if we can continue to drive them.
Our Camino performance and improvement there. But I think as we got through the end of the year and into January, we've been pivoting our focus now into service. And you're exactly right, I mean that to me is one of the foundational things that is more consistent in this business. And there's a reason that we call it fixed operations as opposed to help cover your fixed costs. And if you think about sizing it, I mean, I think from just this, you're at 5.5% of revenue was serviced out of the total is actually 10%-plus. So that's that's an area where there is tremendous opportunity and capacity.
And we've done so many things behind the scenes. We just brought in new recruiters, technical recruiters were partnering with trade schools to get more technicians. There's so much low hanging fruit there and opportunity. But, you know, anytime you're making people changes at any level, it always takes longer to really see that pay off. And so it's probably not going to be something we're going to turn on in a quarter.
And so is everybody thinking about their model I think be gentle. But in terms of where the long term for this business could be, I think it easily be 10%-plus and the gross margin is higher than in automotive. I mean, it's typically to see a typical to see a 60% gross margin. And in a well-run service department, you can do a 25% to 30% operating margin. I mean that's a really, really good consistent business. And I think for whatever reason where we find ourselves, we just haven't emphasized that the way that we should and that what we what we kind of jokingly, say in the businesses, sales in the first one and service sell the second and third, and if you take care of customers and you make their product usable. And unfortunately, these are homes on wheels.
They get towed at 75 miles an hour and things go wrong. If you can, if you can overcome those things you create really good value prop and the OEMs love you. The customers are happy. There's really good recurring revenue. So we're working on it. It's just, you know, to your point you've had to triage mode of things, but it's been a it's been a big focus area 30, 45 days for us. And I can tell you there's there's just as much opportunity there. There's there's there's a lot we can go, get it just going to take time.

Steve Dyer

So thanks a lot for all the color, and I'll hop back in queue.

John North

Thanks, Steve.

Operator

Dan Moore, CJS Securities.

Hi. This is Will on for Dan. Has there been any noticeable pickup in demand for used units relative to what you and the industry is experiencing in terms of retail demand for new units ?

Amber Dillard

100%, I mean that there is so much demand for used units. In particular, if you can find like 2016 to 2021 that's up. It's liquid gold, and we're seeing gigantic grosses were really, really quick turns. I was looking at our sales report last night and the buying team bought a by 2018 Tiffin bus. I think we made a $30,000 gross profit on it sold in five days. And that's just on the process side into the financing piece. So I mean, when you can buy those units the right way that's what customers want.
That's where affordability is much better. They don't have the price inflation that you saw through the pandemic and through today on the motorized side, in particular, I mean, the chassis manufacturers have dropped their pricing. And so yes, total costs are coming down on the new vehicle side that the motorized piece has been a lot tougher nut to crack. So yes, in short, without being too long-winded, all the use we can buy that we can buy, right? It snapped up really, really quickly and for healthy gross margin. And that's why we're so focused on it.

All right. That's very helpful. Thank you for the color. Then on what are your expectations for gross profit per unit for both new and used for Q2 relative to Q1? And then how should we think about, you know, the cadence over the balance of the year?

John North

Well, that's a tough question. I mean, we typically don't provide detailed guidance. And I would say in this environment, that's an even tougher question to answer because I think the balance that we're trying to figure out here is volume versus price and what happens in the market. I think what we talked about it in April and March, in particular as we started to set pricing back up because inventory got healthy on the new side, demand wasn't where we wanted it to be.
And I think that's because there's still a lot of dealers that have 2022 and 2023 on the ground and whether they're significantly discounted in many cases, below the dealers cost. And that problem is not getting any better every month. And so I think the incremental marginal customer that doesn't have a preference for a new unit. That's the current model year. He's going to go take those apartments. And so that's been the part we'd have to really balance because as we started to bring grosses up on the new side from what we saw is the volume started to suffer.
And that's that's kind of a difficult question to answer going forward because I don't know how long that that inventory issue is going to be in the competitors, lost traffic. So I'm going to be careful on that one I think what I said is we saw improvement in April. We saw improvement in May. Our inventory is very healthy. So I don't think it's going to be anything like what we saw in Q1.
I'm not sure it's going to go back to where it was in the second quarter of last year on the used side, that feels a lot a lot more like it's been historically, we had some aged use pieces that we needed to work through in the first quarter, too. And so that suppressed our used margin is a little bit as well. And I think we're in really good shape there, too. And I mean, we took our two of our box. You can see on the wholesale line on the P&L. And we took losses in the first quarter to move through some stuff that we needed to get rid of and we did all that. So it is I would say is going to be more normal as you're thinking about the modeling. But I knew it probably worth still being a little bit conservative on just because we've got to continue to work the volume piece, and that's why we're so focused on ethanol.

Okay, great. Thank you for the color. And then I'm what are your expectations for operating cash flow as well as CapEx for Q2 and the balance of the year?

John North

On CapEx, we've got some pieces that we're working through that were in flight. That's tapering off. And I would suspect that you'll see something similar in the second quarter to what you saw in the first and then it should be pretty much done from a cash flow perspective.
You know, I think our expectation is that we're going to be on a of operating cash flow basis, the adjusted operating cash flow that we take into effect, the floorplan financing and we break out that in our in our earnings release, you can see that calculation, but our expectation is that positive for the year. I'm not sure that I can give you a quarter by quarter because some of it's timing related with floor plan and AP. and things that can swing and fluctuate just depending on when a month ends or whatever happens.

All right. Great. Thank you for taking my questions, sir.

Operator

Mike Swartz from Truist Securities.

Mike Swartz

Hey, good morning, guys. And maybe John, just to follow up on on a answer that you had to a prior question, maybe at the strategic level in terms of your new and new product portfolio, I guess, how do you think about the balance between motorized versus towables? I know this is a business that has gone and lean more heavily into towable over the past decade. Certainly, but just given some of the challenges in motorized that seem maybe a little more structural near term in terms of your cost inflation, affordability on residual values, how do you think about the right way to kind of balance total motorized stock going forward?

John North

Well, I think it's I think it depends. It's a pretty nuanced question. So I mean, I can trying to unpack it a couple of ways. I think if you take a dealership like our store in Tampa, that's been known for literally decades as one of the places the premier places to buy motorized units. I think something like 30% of what Tampa sells as to how to state customers and people will travel and destination shop for this product and come a long way. And so I think in a store like that, having a 25% or 30% motorized mix is totally fine.
I think conversely, if you take our store in Tulsa, Oklahoma. I'm not sure that stocking a lot of motorized units there makes as much sense as really leaning into the towables and travel trailers and fifth wheels so I think it depends a little bit on where we are in the country, the brands that we represent and what the store's been known for. So that's I think about it in our kind of business.
But as it pertains to like the more industry wide conversation, what I would say is there are still some pockets of motorized that are that are really, really important. For example, if you look at like CC. Class C stuff, which is like a larger unit than a B band, which is kind of unusual to me not being super familiar with the industry, but the C stuff has been really profitable for us a little time. I would say we've seen a big diesel pushers in particular have been really, really slow this year.
Those are really typically very expensive units, and I think we're being very careful there. And then the demands were historically incredibly profitable. And there were a couple of OEMs that were early to come out with the Sprinter van that they converted into into a unit, you could campaign. But I would say over the last 24 months has become very saturated and everybody has demand product. And so I think you've got to be very careful on that in that segment, too.
But in short, I mean we're pretty committed to motorized. I think what we're seeing right now is that a lot of people who've been lifestyle are locked out because they have negative equity. And so you're seeing a shift to the low end stuff because it's first time buyers that can just come in and whether they want to camp for $5 a day or whenever they advertisement is and that's why they've been taking share. But I don't think that's a structural change in the market. I think motorized and will always be there. I just think we have to be really thoughtful in terms of how we pursue it, and we'll see how the market develops.
But I don't think you're going to see us move away from it. I think we just are being careful because there's definitely a slowdown in some of those segments in terms of demand right now, but that's not any different than the high end that we all are really expensive travel trailers to, I mean that stuff all policy to be careful.

Mike Swartz

Okay, thank you. And just maybe to parse some of the commentary I think you made you have another another question previously on the retail environment as we've gone into April, May, I think it sounds like nothing has really changed maybe, but is there a way to think about, you know that the comparable new unit volume was down 11% the first quarter. Is there any way to think about how that looks thus far in the second quarter relative to that first quarter number?

John North

Well, I think it's too soon to tell. I think it's too soon to tell. And to be frank with you, it's not something that I monitor on a daily basis in terms of that percentage change. So I'm not sure I gave them committed to memory.
What I would say is that we're seeing definitely some improved traffic as we move into the summer ending up seasonally as you get into the spring and May in particular, you do see a pickup and I would say just anecdotally, I would say relative to April, May May feels like it's a little stronger in terms of demand. But I don't know if that's because there are fewer deals out there for other dealers that we didn't see or if the market is getting better.
I mean, we're just we're just one data point here and a pretty rich tapestry. So I don't know that I want to call it trend. We'd obviously like to see see more demand. And I think from what I read of these from the OEM side, it seems like they're all in 325 to 350 in terms of retail sales and that those numbers seemed to tick down every time they talk about. They've got a better perspective than we do because they see the whole country.
But we remain optimistic that we'll continue to see the strength that we've seen so far in May, and we're obviously pushing and pivoting and trying new strategies with marketing and other things that could hopefully differentiate our results relative to the competition as well. So we're going to keep grinding on and I think there's I think there's an opportunity for us to continue to see that momentum improve. That's our focus.

Mike Swartz

Thank you.

Operator

Brandon Rolle from D.A. Davidson.

Brandon Rollé

Good morning. Thank you for taking my questions, first, just on the restocking in this environment, could you talk about your rationale for kind of leaning into taking on more new and used inventory ahead of the model-year '25 rollout? I know on the used side, it seems like one of your larger competitors has actually been pulling back on used procurement throughout the first part of the year. But on the new side, it seemed like you guys were I think you had talked about you know, helping the OEMs continue to run their factories. Can you just talk about the rationale there on both sides?
Thank you.

John North

Sure. I would say we're being pretty careful on the new side, I mean, we're at 3,600 units on the ground today, new and compared to November of last year, we were 4700. So that's a pretty significant change and you don't have it, you can't sell it. And so you got it. You got to be thoughtful about that. And a lot of our partnerships with our OEMs at this point stress decades back, and they're doing their best to trying to be thoughtful and cut production where they can and give us incentives. And we tried to be thoughtful and we can commit to take certain models that we think we can turn on and keep that spirit of partnership alive.
But I would say in general, we are really careful, our inventory is really healthy. And we've been thinking a lot about making sure that when '25 do hit, we've got the capacity to take those on on the used side. I'm not sure I understand behind the curtain that our competitors, and that's always a dangerous thing to speculate about what I can tell you, we've experienced it is six times the lead volume on used units that are on our website versus new and customers that are looking for affordable options as long as you can buy things correctly.
And so I think we're being really targeted around the used inventory we are purchasing, I would say in general, you're not seeing us buy a lot of really late-model used stuff. We're tending to avoid that it has a little bit of a maybe overhang on it in the consumer's mind in terms of quality that was built during the pandemic. But the stuff that's earlier than that is, like I said earlier, I think I used the expression liquid gold. I mean that stuff goes quick.
So that's I would say, a little more nuanced. It's not just buy used or don't buy use. And we don't make crazy whipsaw adjustments here. I mean, this is targeted and I mean, literally Amber approves almost every unit we buy, especially when you get into the higher-end stuff, it's certainly go into her. So I mean, this is like a tactical thing that's executed literally piece by piece in our inventory. That's how much of a laser focus we have.

Brandon Rollé

Okay, great. And just on the model year '25 rollout, I know model year '25 bidding processes going on right now or closing of relatively shortly. What is what's your best guess on where pricing is going for the new model year based on what you've heard from your OEM partners and given the current retail environment obviously are very price-conscious consumers.

John North

Yes, I think on the towable side, we expect maybe a couple of percent increase, at least from what we heard early on from some of our partners. So not not as some significant increase, but definitely skewing a little higher.
And then on the on the two on the motorized side, so I'm dying here follow-up.
On the motorized side, it will be it will be higher than that, just because the chassis prices, you know, the chassis manufacturers, I think are still trying to build to their capacity and they haven't yet restocked their channel. And so those prices haven't come come down, and that's the majority of the cost to that motorized unit. So I would expect that I would expect that's going to be higher. And so that's that's why you're seeing some new models come out. And that's why we're really focused on used on the towables side.

Brandon Rollé

Okay. Okay, great. And just finally, you have exposure to Grand Design. Obviously, there's been more publicity about the flex frame issues on kind of just people saying they're a chassis crack or the welding in the frames. Could you comment on your experience with the flex frame issues, have any, I guess, service or I guess maintenance concerns from it ?

John North

No, I don't know if you saw the Grand Design just came out with a five year warranty retroactive for all their customers. And I tip my hat to Dan and the whole team there. I mean, they really stepped up and handle things exactly the way that they should have. And I think to whatever extent it's an issue and I'm upset in the service departments see it every day, but I think they took a lot of the concerns off the table because they stood behind their product. And that's why there is such an important partner to us. And we have a lot of important partners, but Grand Design is near or at the top of the list for us. And that's because they do things like that and they stand behind their product and they make good stuff. And so we remain supportive of an advanced Grand Design.

Brandon Rollé

Great. Thank you.

Operator

Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over for any further or closing comments.

John North

Thanks for tuning in, and we'll talk to you guys soon.

Operator

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.