Good afternoon, ladies and gentlemen and thank you for standing by. Welcome to the Kura Sushi USA, Inc. Fiscal Second Quarter 2021 Earnings Conference Call. [Operator Instructions] Please note that this call is being recorded. On the call today, we have Jimmy Uba, President and Chief Executive Officer; Steven Benrubi, Chief Financial Officer; and Benjamin Porten, Investor Relations Director. And now, I’d like to turn the call over to Mr. Porten.

Thank you, operator. Good afternoon, everyone and thank you all for joining. By now, everyone should have access to our fiscal second quarter 2021 earnings release. It can be found at www.kurausa.com in the Investor Relations section. A copy of the earnings release has also been included in an 8-K we submitted to the SEC. Before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance and therefore you should not put undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. Also during today’s call, we will discuss certain non-GAAP measures, which, we believe, can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation nor as a substitute for results prepared in accordance with GAAP and the reconciliation to the comparable GAAP measures are available in our earnings release. With that out of the way, I would like to turn the call over to Jimmy.

Thank you, Ben, and thank you everyone for joining us today. Let me start with a high-level review of our quarterly results and the business update before Steve goes through our financials. As I mentioned briefly on the previous call, our fiscal second quarter results ending in February were materially impacted by the increased severity of COVID restrictions. This was particularly the case in California, where 60% of our restaurants reside. If you recall, California imposed a total ban on both indoor and outdoor dining in early December. While the ban on outdoor dining was partially lifted at the end of January, the ban on indoor dining remained effective throughout our entire fiscal second quarter. While we are pleased with the strong performance of our off-premises sales, it was not enough to offset the loss of sales due to the inability to offer our guests the full Kura Experience created by our dining rooms. Sales in California began to recover in February with the resumption of outdoor dining, although this was partially offset by severe winter weather in Texas, resulting in the temporary closure of all of our Texas restaurants, which lasted up to a week depending on the location. While this was unfortunate, we are happy that our team members in Texas were all safe and are proud of the resilience they displayed throughout these overlapping difficulties. Thanks to their ongoing efforts. Our Texas stores continued to perform well in spite of the winter storm and reduced seating capacities relative to the previous quarter. Our system-wide daily sales volumes in February, exclusive of the impact from weather were among our best we have seen since entering the pandemic. Looking to the current quarter and beyond, we believe that we are poised for continued recovery as the pandemic went down.…

Thank you, Jimmy. For the fiscal second quarter, total sales were $9.1 million as compared to $19.4 million in the past year period, resulting in comps of negative 60%. Turning to costs, food and beverage costs as a percentage of sales were 35.0% or 32.9%, excluding spoilage, compared to 31.5% in the prior year quarter. The increase is in part result of the geographical mix of sales towards Texas restaurants that have lower sushi plate prices. Labor and related costs as a percentage of sales decreased to 22.7% from 31.7% in the prior year quarter, primarily due to a $2.2 million employee retention credit recognized under the CARES Act extension. Excluding the credit, labor and related costs would have increased to 46.9%, primarily due to the effect of lower sales and minimum staffing needed to operate our restaurants that reduced capacities. Occupancy and related expenses were consistent as compared to the prior year quarter at $1.6 million with costs from new restaurants, offset by reductions in percentage rent. Other costs as a percentage of sales increased to 22.6% compared to 11.4% in the prior year quarter due to fixed costs deleverage as a result of the decrease in sales. General and administrative expenses were $2.9 million compared to $2.8 million in the second quarter last year. Excluding the impact of the $400,000 employee retention credit recognized under the CARES Act extension, general and administrative expenses would have been $3.3 million. This increase was primarily due to compensation-related expenses. As a percentage of sales, general and administrative expenses increased to 31.6% compared to 14.4% in the prior year quarter. Operating loss was $3.8 million compared to an operating loss of $200,000 in the second quarter of 2020. Restaurant level operating loss was $1.3 million compared to restaurant level operating profit of…

This concludes our prepared remarks. We are now happy to answer any questions you have. Operator, please open the line for questions. During the Q&A session, I may answer in Japanese before my response is translated into English. Please bear with us.

Thank you. [Operator Instructions] And our first question is from Peter Saleh with BTIG.

Great. Thanks. Thanks for taking the question. Jimmy, I think you mentioned that Texas was already comping positive. I think that was versus 2019 results, can you just give us a little bit more color, is that a number from the month of March or April or how do we think about that performance so far in Texas?

Sure. Peter, thank you for your question, but please allow me to answer in Japanese, Ben can translate. [Foreign Language]

So, the period that we are referring to in terms of Texas comping positively would be the period in March subsequent to the reopening of our seating capacity to 100%. I believe that was on March 10, but that compared to the same period in 2019 is what we are comping positively against.

So, post March 10, correct, okay. Alright, very helpful. Okay. And then on the off-premise sales and thanks for giving all that detail on the monthly figures, any color you can provide, I mean does it look like the off-premise business gave back a couple of hundred thousand in terms of revenue there from January going into February and kind of stayed consistent in March, I am assuming that’s all just because the dining rooms reopened, can you provide a little bit more color, if you expect to kind of sustain that level, that 650, 680 or you expect that, that number will come down even further? Thanks.

Yes. Peter, this is Steve Benrubi. I will speak a little bit to that. So we did see in February when outdoor dining was opened up again in California, it clearly had some impact in the amount of off-premises, where we went from $860,000 in January to the $650,000 in February. What was really encouraging to us is, in spite of the mid-March or even early March in Texas, further expansion of capacities, we still saw that off-premises, it actually grew in the month of March in dollars to $680,000, which was about 13% of sales. And from our standpoint, it’s a little speculative at this stage, but we do feel like there is some level or some core of Kura Sushi customers that continue to want and will want off-premises as an option, and it gives us confidence that that we feel like an opportunity for mid- to-high single digits mix when things normalize could be something we could end up at on on-prem for the mix.

Excellent. And then just lastly, on your commentary to be a little more aggressive for getting ahead of 2022 development, can you just talk about the real estate environment and what you are seeing, are you seeing good opportunities, at least it sounds like you are to build more stores or are you just getting better real estate. And just give us a sense on construction costs and if you are seeing any relief there or is it just more of the same, more inflation? Thanks.

Sure. I want to answer this question. [Foreign Language]

So, when Steven referred to sort of more aggressive strategy regarding fiscal ‘22, this would be more in terms of pushing the overall timeline further towards the beginning of the fiscal year ‘22 as opposed to increasing the number of units. Our goal remains that 20% unit growth CAGR that we keep mentioning.

[Foreign Language]

In terms of real estate opportunities, we are seeing a truly great pool to draw from. And as a result, we already have a substantial number of leases signed for fiscal ‘22 pipeline. We have a number of leases and LOIs under negotiation. The real estate opportunities are great. Peter, if I could just add, you had asked about the number, I would just mention that we haven’t commissioned the white space study yet. We still feel that the best time to do this is following the pandemic just given that there are so many moving targets, but we do believe the white space, pre-pandemic in the white space, post pandemic will not be the same, the world is a different world now.

Great. Thanks for the color.

I think you had asked about construction costs as well. We are not being...

[Foreign Language]

So the biggest variable in terms of our build-out costs would be whether or not we are using union labor. In fiscal ‘21, we opened 2 stores in areas that required union labor for the first time, and they were materially more expensive than our typical build-out costs. But otherwise, we are expecting our fiscal ‘22 stores to be in line with what we have seen in the past.

Thank you.

Thank you, Peter.

And our next question is from James Rutherford with Stephens Inc. Please proceed.

Hi. Thanks guys for taking the questions. I wanted to follow-up first on the question Peter asked at the beginning about comps in Texas, it’s a really positive sign to see that to turn positive since they reopened, could you perhaps quantify the magnitude of that positive comp? And then also just give us where California is running on a comp basis compared to 2019, just to help us as we calibrate our models?

Yes, I will share. On Texas, it was a low-single-digit positive comp. And just to confirm what Ben had said earlier, it was March 10 when Texas went from 75% to 100% capacity in the restaurants. So, it was really for a 3-week period. Obviously, it’s still a short window, and we would caution reading too much into a short time like that, but it was encouraging. For the month of March overall, we came in at a negative 31% comp, that’s coming off of February. And again, that’s negative 31% [ph] against 2019. And that’s coming off of a down 57% in February. So, there is a clear positive move really throughout the business. California, for instance, during that post, beginning of indoor capacity period, California was running mid-30s down comp in March, and that was for the last half of the month, and that was much better than what we were seeing through the course of Q2, where the comps came in down 77%. So, a lot to be excited about, but at the same time a lot to be careful about knowing that there is still road ahead until everything is really back to normal.

That’s super helpful. Thanks Steven. I know there is still capacity restrictions in play in California as well, but on the Florida opening, I hate to get so granular, but I have to ask, is there any insight you can provide into the acceptance of that location? Is there anything you can share about sort of a sales level of that store compared to what you have seen with new store openings in other markets? And I asked I know you did that with the Fort Lee location, so curious if you could do the same with that Florida store?

Sure. I will answer this question. [Foreign Language]

So in terms of Fort Lee, Fort Lee continues to perform very well. It’s materially outperforming what you would expect based on its capacity restrictions against a run-rate $3.5 million AUV. Like Fort Lee, Aventura and Troy are both doing well. We were very pleased with their performance. What’s truly notable about these three units is that they are all in new markets and they are all in completely different markets, but they are all doing well. We are very pleased. And so I think this is a great bellwether in terms of affordability of our concept across the country.

[Foreign Language]

So Sherman Oaks opened very recently. So, it’s a little bit early to discuss in too much depth, but we have seen a very strong opening. And one of the things that was of most interest to us was that a lot of the customers that were coming in to Sherman Oaks were new customers. So that leads us to believe that there is still plenty of room to infill our existing markets, especially given that Southern California, which is where Sherman Oaks is located, is our Texas market. And so between the portability and the infilling, we still feel there is tons of room for growth.

[Foreign Language]

So, our remaining 2 stores that we have opened this fiscal year are Koreatown and DC. They are both in very metropolitan areas. And whether we are looking at new units or existing units legacy units that have done very well historically, we are seeing pretty much across the board that metropolitan sales are suffering the most. And so while restrictions are beginning to be lessened in those markets, we are still seeing a slower recovery for our existing restaurants in those metropolitan areas. And we are expecting maybe a little bit longer than typical for Koreatown and DC to reach typical maturity. But just like how Texas has begun comping positively once we have been able to – once all the restrictions have been lifted, we are very confident that Koreatown and DC are going to be strong performers over the remainder of their leases.

Alright. It’s encouraging to see the results. Thank you, guys.

Thanks, James.

Thanks.

And our next question is from Andrew Strelzik with BMO Capital Markets. Please proceed.

Hey, good afternoon. I hope everyone is doing well. I actually had a couple more on Texas. I also find the positive comps to be very encouraging. So, you mentioned that you think mid to high single-digit off-premise mix is kind of an achievable normalized environment type of level. Is that actually what you are seeing in Texas right now from an off-premise perspective as you are comping positively? And are you actually in Texas operating at 100% capacity or are there some inherent kind of capacity limitations just in the operations there?

Yes, we are operating at 100% capacities. We are continuing to ask guests to wear masks when they come into the restaurant and when they are moving around away from tables, but it is that effective 100% capacity and we are able to do that within all of the laws within the State of Texas, distancing and so forth. And I will speak just in general that mid to high single-digit off-premises level, we have seen that consistently in restaurants that have had significant amounts of indoor dining capacity really across the chain in Texas and elsewhere for a period of time now and that’s another element that’s kind of a barometer for us on what can be a sustained kind of off-premises level.

Since we have opened up Texas to 100% our off-premises sales in that market have not fallen below mid single-digits. Not a single Texas store is selling low single-digits in terms of off-premises. And so this is hugely encouraging given that it’s our only market that is at 100%, but the off-premises remain sticky.

Okay. That’s great to hear. And my second question, yes, I am just curious, as you have kind of fully restored, where you could be the conveyor belt service model, have you seen any change in the way that people are using the brand? Are you seeing more touchpad ordering? Is it kind of – was the mix all the same dayparts, week parts, any other just broad changes? It’s obviously such a high-touch and vibrant environment. I am just wondering if you are seeing any kind of nuance changes to how customers are using the brand?

Sure. I will answer this question. [Foreign Language]

So, it’s actually been quite surprising for us. Right now, all of our restaurants are open with a full Kura Experience and we really haven’t seen too much change in consumer behavior whether we are talking about menu preferences or the mix between things that are taking off the belt versus things that are ordered for the touch panel, how long guests have been, how long guests may take to finish their meals. It’s been surprisingly stable.

[Foreign Language]

This being said, we do believe that safety and food – restaurant safety, food safety is going to be more present in diner’s minds than prior to the pandemic. And so, all the safety measures that we have rolled out through the pandemic whether that’s the plexiglass or [indiscernible] procedures. All those are going to remain in place. And we are also working to develop our systems further to provide for a more contactless experience, so that if there are guests that are concerned about high-touch places, that won’t be an issue for them.

Okay, great. And then just quickly my last one, we are hearing from a lot of people about the challenges in the labor market hiring and how competitive that is. I am just curious as you are looking to ramp up the store growth, be more aggressive there into ‘22, I guess. Just can you comment on how you are finding the labor environment to be for the brand, please?

Sure. [Foreign Language]

The hiring has been an issue industry-wide. And certainly, we have experienced this as well to some degree. We are doing our best to try to get in front of the issue by building out our recruitment team. Our recruitment team today versus the size it was prior to the pandemic is completely different. Through their strong efforts, all of our restaurants are able to operate without operational issues with their current staffing in place, but we realized that with the fiscal ‘22 pipeline, management is critical. And so we are actually hiring earlier than we typically do for management candidates. We are ramping up hiring efforts, preparing for that June 15 date that Governor Newsom has mentioned as a potential date that we might be able to reopen. We certainly want to make sure that we have – we are adequately staffed to capture all that demand.

Okay, great. Thank you very much.

Thanks, Andrew.

And our next question is from Jeremy Hamblin with Craig-Hallum. Please proceed.

Thanks and well done on navigating this challenging environment. Just a follow-up on the off-premises sales here, could you tell me what the average ticket for your off-premises versus your in-store ticket has been in that Texas market?

Sure. Steve, do you mind if I take those?

Yes, go ahead. Go ahead.

So, the off-premises ticket has been about low 30s, whereas the indoor dining has been low 20s, but I would caveat that it’s unclear what the party size so to speak is for our off-premises orders. It’s possible that they are splitting these or it’s entirely possible as well, but off-premises just leads to a larger ticket, people sort of order a bigger basket.

Right, understood. But a helpful info. In terms of I think that’s kind of a remarkable thing where off-premises, was de minimis a couple of years ago and now it looks like it could be mid single-digits, maybe even high single-digits on an ongoing basis, totally changes, what was already an impressive store economic model. Does it make you think about potentially changing the type of real estate that you have or building the box a little bit differently to make your off-premises sales maybe a little bit more customer-friendly, because I don’t know that their restaurants right now are designed optimally for off-premises sales?

[Foreign Language]

In terms of prototype, we do expect our off-premises demand to be steady post-pandemic. And so our future restaurants are going to feature dedicated pickup areas just for off-premises. We may see if there are additional efficiencies we can find in the back of the house just in terms of building a kitchen layout that’s more conducive to parallel operations for off-premises and in-store dining. In terms of the type of real estate, certainly, this is now a part of our site selection criteria, for instance, before curbside dining was not a consideration. Now if we have access to a curb, it’s a bonus. And so that – these off-premises opportunities are just part of the overall site selection suite now, I wouldn’t say that we are doing anything as aggressive as rolling out drive-throughs or anything like Starbucks is doing and having like standalone kiosks with drive-throughs, but we do understand that off-premise is an important part of our business and we are trying to make sure that we make most of it.

[Foreign Language]

In terms of our store size, we will be treating off-premises opportunity as just one factor, similarly, how we will be treating it for our site selection criteria. Whatever we determine the size for a given store, we are trying to maximize our return on investment. And so it’s the – so the store size for a given place is going to be influenced by the off-premises opportunity. Generally speaking, I think the patterns where metropolitan areas trend smaller and suburban areas trend larger are going to stay in place, but we do have a new additional consideration, which we think will help us hone in on that much more opportunity.

[Foreign Language]

The message that we want to leave you with is that while off-premises is important, it’s really just one factor in terms of our decision-making. We’re not going to be deciding which states were going to enter or not enter based off of the off-premises opportunity. We’re not going to be building our market strategy around this. But it will just be a standard part of every decision-making process in our site selection going forward.

Great. And that was my next leading into my next question about your future store openings and you have had success now in certainly, Fort Lee, New Jersey, really impressive given kind of the restrictions around there, Florida, Michigan, DC, I think you’re going to the state of Washington as well. In terms of thinking about the next 10 locations or 20 locations, what percent are likely to be in existing markets versus looking into new markets like Michigan or New Jersey, Florida, etcetera?

[Foreign Language]

So this is a point of ongoing reevaluation for us. We’re always trying to decide what the ideal mix is. But for the last several years, we’ve pursued a two-pronged strategy of about an even mix between infilling existing markets and entering new markets. That’s worked very well for us. We think it’s been very useful in terms of establishing our brand presence. Just given how few units we have, we think that the best way for the to country get to know us is by going around the country. And so the new market strategy has been very successful for us. Just as Jimmy mentioned earlier, with Sherman Oaks drawing so many new guests, there is still abundant opportunity in infilling existing markets. And so for the foreseeable future, we’re going to be continuing this strategy, of course, conditions change, we want to maintain our flexibility and respond appropriately.

Okay, great. And then last couple here. In terms of thinking about food costs in the near-term, given where your business mix is, should we assume that your food cost – food and beverage costs are going to be a little closer to that 35% level seen in Q2, in Q3 as Texas continues to be outsized in terms of percentage of mix?

Yes, Jeremy. I think it is wise to keep in mind the mix of our business because it does have an impact, and that was at least some of what you were seeing in the 35% COGS level for the quarter. And then I would just say generally speaking, if you are thinking about food cost, really – and labor to some degree, if you are thinking about a normalized environment and kind of our normal store economics, one is we believe we’ll be able to get back to the kind or store economics we saw pre-pandemic. But really, both of those costs in their own ways are affected by operating at something below historical sales levels in the area of COGS in addition to that market balance of sales, there are elements that are COVID related that can put some pressure on cost of goods around having to move inventory around or substitute some items when demand is just a little bit harder to project and then even some level of spoilage. We always endeavor to have none. But in an environment like this, it can get more complicated in the supply chain and create occasions of some spoilage. And so looking at where COGS is, you can maybe think about it not necessarily as a linear move, but you look at where we are now and then you know where we spend historically, we get to a normalized world, you can probably anticipate something in between. And then labor, of course, with the minimum staffing requirements and restaurants, we ran a 47% labor for the quarter, where historically low 30% is where you seek to be. And it really does take back to pre-pandemic kind of volumes and leveraging of hourly staff in order to optimize or get all the way there on labor. And I would say just like COGS, it’s not necessarily a linear progression, but there should be some element of understanding that if this sales productivity isn’t back to pre-pandemic, the leveraging of labor, it’s just – it’s going to be a challenge until that happens.

Understood. Fair to assume, though, that your labor costs here in – certainly in the May quarter, are likely to track to your kind of the highest levels overall versus during the time, during the pandemic? Meaning that above that $4.4 million that you had in the November quarter?

Yes. I would – thinking about labor as a percent of sales, is probably a good paradigm or place to start from in terms of restaurant economics and with the move in March to a monthly volume to over $5 million versus about a $3 million average in the prior month – prior quarter. Yes, that does create some degree of labor leverage improvement in percent of sales improvement on labor. But as we all know, that move in March sales, we still have a journey to get back to pre-pandemic levels of sales, and just the same, getting back to pre-pandemic levels of labor leverage is – we’re on the path, but work to do still.

Sure. Understood. Great job guys. Thanks for taking all the questions. Good luck.

Thanks.

Thanks.

And our next and final question is from George Kelly with ROTH Capital Partners.

Hi everyone. Thanks for taking my questions. So maybe I’ll start with – I have a two-part question for you on menu pricing. So the first part of that is I go through and I just check your various restaurants’ menu prices, especially just for the conveyer belt pricing. And I’ve seen some modest increases in California recently. So I was curious, what have you seen in the past when you take pricing? And then part two, just earlier in response to one of the questions you commented, just how the world is going to look so much different post COVID with the competitive landscape. And so I was curious if you think longer-term pricing could be more of a lever than it has in the past.

Sure. I’ll answer this question, George. [Foreign Language]

In terms of the California plate price increase, this is the same thing that we’ve done in past years, where we pegged a minor price increase to offset minimum wage increases. We haven’t used it to increase margin. It’s really just to offset that minimum wage increase. One real advantage that we have is that we have a small plates menu. So the pricing that we take is on an order of $0.05, $0.10, $0.25. It’s not like traditional entree based meal, where you’ve got this big protein, the center of the plate that’s gone from $40 to $60 or $40 to $50. We’ve really had minimal pushback in the past as demonstrated by – we’ve never seen a drop in traffic as a result of pricing. And as far as we can go from our March results, the same is held for the most recent pricing.

[Foreign Language]

In terms of pricing, we are ready to sort of reevaluate market by market, what the appropriate pricing is? In the past, our pricing has purely been a response to minimum wage increases, but we are thinking going forward there might be other occasions for us to take pricing as well. There are a lot of different possibilities that we’re open to, but nothing concrete right now.

[Foreign Language]

The last thing we would like to mention on pricing is that we really do pride ourselves on being a concept that can provide sushi for everybody. We don’t want to price anybody out. We want sushi to be an everyday accessible for many more people than it’s been in the past. And that’s always going to be something that we keep our eye focused on whenever we take pricing.

Okay. Okay. That’s very helpful. Then second question for me, going back to Texas. So this might be a quick answer. But curious if you could break down the comps that you’ve seen within your portfolio there. And what I’m trying to get at is, are there any locations that are maybe dragging down even since they reopened in March 10 or whenever you said it was? Are there any locations that are dragging that down? And what I’m trying to learn is, is there a base of stores performing well above that sort of – I think you gave a low single positive comp. Is there a group of stores performing well above that?

George, I’ll – just to speak a little bit to that. We have seen a little bit of difference. And some of that we would attribute to just the market by market sentiment towards COVID and how much they were affected during the worst parts of it. An example is Houston from a comp standpoint, hasn’t been relatively speaking, as strong coming back out of it as Dallas has. And if you know that market at all and understand just how much Harris County in the Houston area was affected and sentiments are around COVID restrictions. And how that contrasts with a market like Dallas, you could probably guess that there might be a quicker rebound in a Dallas market. So we really attribute more of that to a COVID point of view than anything else, the fluctuation there. But really as a whole, I mean, we’re very pleased with what we’ve seen early on but with what we’ve seen in Texas all around.

Okay, okay. I guess just to dig a little deeper on that. So is it – are there some metros in Texas, where you’d have – you’d have 20% comps or is that way too high?

Yes. I don’t think I want to get into calibrating too much on a store level or a submarket within the state. I think would suffice to say that across the Board – I mean, we’re happy with the customer reaction in Texas as we’ve come back online to full capacities in the restaurants, and we think it bodes well for – ultimately for every part of the state.

Okay, understood. And then last question for me. G&A, I think the guidance was $300,000 to $310,000 per week. What – that’s a pretty big step-up from where it’s been trending. What are those investments that you’re making?

It’s really in the team side of things and a couple of facts. One, there had been freezes on compensation increases through the pandemic period, there was a period of time level we had salary reductions in place that now with more visibility on workups that’s reverting back to standard levels. And then also, really we had held up or deferred some of the hiring intended for the current fiscal year until we saw and felt better. And so there are some areas in the organization that we are going to grow the business in the smartest way possible. We think it’s going to be of a few supplements to the team really in a number of different parts of the business. Ben talked about recruiting, for instance, is an area where we brought on some additional resource given the labor environment and just knowing our plans to be more front-ended with our growth plan in ‘22 and just other ways to analyze the best places for us to be and operate delivers on the brand promise as we move forward. These are always intended for this year, but we had held off on until we had more visibility.

Okay, thank you.

Thanks, George.

Ladies and gentlemen, we’ve reached the question-and-answer session. I’d like to turn the call back over to management for any closing remarks.

Okay, thank you for joining us. We look forward to seeing you at our next earnings call. Thank you.

Thank you, guys. This concludes today’s webinar. Thank you for your participation and have a great day.