The Middleby Corporation (MIDD) Q1 2014 Earnings Report, Transcript and Summary

Good morning, and thank you for joining us for the Middleby Corporation First Quarter Conference Call. With us today from management is Selim Bassoul, CEO; and Tim FitzGerald, CFO. We will begin with comments and then open the call for questions. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Tim FitzGerald for opening remarks. Please go ahead, sir.

Okay, good morning, and thank you, everybody, for attending today's conference call. I will put through some initial comments about the company's 2014 first quarter results and then we'll open up the conference call for questions. Net sales in the 2014 first quarter up $372.5 million increased 13.8% from $327.5 million in the first quarter of 2013. The first quarter sales reflect the impact of acquisitions completed in 2013 and the first quarter of 2014, including Celfrost, Wunder-Bar and Market Forge. These acquisitions were not fully reflected in the prior year comparative results, and accounted for 5.8% of the sales growth in the quarter. Excluding the impact of these acquisitions, sales increased $26.1 million or 8% over the prior year quarter. This increase reflects an organic sales growth of 9% at our Commercial Foodservice Group, an increase of 5.9% at our Food Processing Group and a 7% increase at Viking. At the Commercial Foodservice Group, we continue to realize growth driven by increased sales to restaurant chains looking to upgrade equipments and adopt new technologies to improve efficiency of store operations. Sales in international market slowed in the quarter to 5%, due to timing of restaurant openings with chain accounts in China and Brazil, which are expected to rebound in future quarters. Sales at the Food Processing Group increased 5.9% in comparison with the prior year quarter. This was in comparison to a strong first quarter in 2013, which has grown 18% and included revenues associated with the large order. Sales at Viking increased 7% to $62.8 million for the quarter. First quarter revenues were impacted by the adverse disruptions related to reorganization of distribution for Viking. During the first quarter, we completed the acquisition of 2 distributors and canceled an additional 2 distributors. The transition of these 4 distributors covered the eastern half of the U.S. and Canadian markets. With these acquisitions completed, we have now all distribution operations in the U.S., Canada and Mexico integrated as part of the Viking business. We're in process of reorganizing those operations now to improve sales, customer service and operational efficiencies, and expect those activities to be largely complete in the second quarter. We anticipate sales growth will improve in future quarters as these distribution initiatives are completed, and we see the impact of new-product launches that are now starting in production. Gross profit for the first quarter increased to $143 million from $121.3 million in the prior year, and the gross margin rate was 38.4% as compared to 37% in the prior year quarter. The gross margin rate reflects the impact of increased margins at Viking and the Food Processing segment. Although the gross margin at Viking improved as compared to the prior year quarter of last year, it declined approximately 5% in comparison to the second half of 2013 as a result of the first quarter distributor acquisitions and integration. The impact to gross margin is primarily caused by the acquired inventory at the distribution operations, doing so only at the distribution markup and assets for manufacturing and distribution margin. We anticipate that this margin impact will continue as we deplete the acquired inventory associated with these distributor additions, and is replaced with new Viking inventory manufactured post the acquisition. We anticipate this impact will continue in the second quarter and have a lesser effect in the third quarter. Once this transition of inventory on the channel is complete, we anticipate the gross margin rate will revert to levels higher than in the second half of 2013. Selling and distribution expenses during the quarter increased $10.8 million to $47 million. This increase includes $9.3 million in selling costs associated with Viking distribution operations acquired in 2013 and the first quarter of 2014, and that reflected in the prior year or prior quarter results. There were also $1.6 million in increased selling costs associated with the acquisitions of Celfrost, Wunder-Bar and Market Forge. Excluding the impact of these acquisition-related activities, selling costs were relatively constant with the prior year first quarter. General and administrative expenses decreased by $2.8 million to $40.1 million. This reflects an increase of $4.6 million associated with the acquisitions, offset by a $3.5 million decline in noncash intangible amortization expense, and a $4.2 million decline in restructuring charges as compared to the first quarter of 2013. General and administrative expenses in the first quarter included $2.6 million of nonrecurring expenses associated with the integration of the recently acquired Viking distribution operations. The tax provision for the quarter amounted to $17.6 million, at an effective rate of 34.5%, as compared to prior year provision of $12.6 million at a 32.8% effective rate. The increased effective rate reflects a greater mix of domestic earnings with higher tax -- associated tax rate. Cash flows used by operating division amounted to $13.6 million in the quarter and reflected the cyclical impact of first quarter payouts on 2013 sales and incentive programs in addition to cyclical working capital build as we move into seasonal, stronger midyear periods. Noncash expenses added back in calculating operating cash flows amounted to $12.5 million for the quarter, including $6.9 million of intangible amortization, $3.7 million of depreciation and $1.9 million in noncash stock-based compensation. During the first quarter, the company utilized $3.2 million to fund capital expenditures and $45.7 million to fund acquisition-related activities. And total debt at the end of the quarter amounted to $655.4 million as compared to $571.6 million at the end of the 2013 fourth quarter. And the company's debt-to-EBITDA leverage ratio at the end of the quarter approximated 2x. We are pleased to announce the recent acquisition of Processing Equipment Solutions or PES. This acquisition adds a unique and complementary waterjet cutting technology to our Food Processing Group. Annual sales of PES are approximately $15 million, and we believe there are meaningful sales in operating synergies with this acquisition. Syed, this is all for the prepared commentary, can you now open up the call to questions?

[Operator Instructions] And our first question comes from Josh Chan from Baird. Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division: I was just -- wanted to clarify some of the Viking costs and whether what is recurring and what's not? So I guess my question is around that $2.6 million of nonrecurring charge that you called out, what does that include? And then also do you expect the $9.3 million of selling costs to kind of continue as you continue to operate this distribution operations?

Yes. So the $2.6 million is nonrecurring. Most of that is severance costs, but it all has to do with kind of reorganization. So those would be nonrecurring in nature. The $9.3 million, that relates to kind of ongoing business operations and includes both the distribution that we acquired last year, as well as the distribution operations that we acquired this year. That would actually probably step up a little bit given that we completed the distribution acquisitions kind of mid -- through the first quarter. Most of them where complete kind of right at the beginning of February there. Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division: Okay, okay. And is there a way to sort of ballpark the impact that the step-up accounting charges had in gross margin in the quarter?

Yes. Well, it's kind of I mentioned there, it's a little bit -- our little bit of science, that we kind of estimate that the impact was about 5% for the Viking gross margin, which was running around 38% in the back half of the last year. And that step down to 33%, 34% in the first quarter, that was primarily driven by this distribution reorganization or acquisitions. Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division: Okay, that makes sense. And if I can switch over to Commercial Foodservice. Could you talk a little bit about the order rates that you've seen through the quarter, whether any month was particularly strong? And any difference that you see in April potentially?

I'm sorry. Is that question you said, it related to Commercial Foodservice? Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division: Commercial Foodservice, right.

Yes, the order rates were good throughout the quarter. They were perhaps a little bit stronger in the March timeframe. And then, I think that we did see some effect of weather in kind of January, February time period. Some of that rebounded a little bit in March, but we were up in all those periods.

Our next question comes from Tony Brenner from Roth Capital Partners.

A couple of subjects. Viking's sales were up 7% in the, excuse me, in the first quarter without the benefit of any new products. You've got 50 new products in the pipeline, which will be launched in the second half of the year. And I'm just wondering, given your control now over Viking's distribution, just what kind of an acceleration in sales growth is reasonable to look for?

Tony, I'm going to answer that. First of all, Good morning. Second, I will tell you that at this moment, we are working with our dealers in order to reduce the number of dealers we do business with. So one of the #1 issue we're facing right now is Viking has around 1,700 dealers who are basically coming back to -- we want to make sure that we get most probably less than 1,000 dealers. We would like to be around 800 dealers. This will most probably this year create a little bit of distraction from the sales because we want to basically have the brand available and dealers who support us, who partner with us and which means, 3 things. One, making sure that they are displaying our latest-end technologies and displaying it correctly. Number two, making sure that they are poised for growth. So if you're not going to grow with us, you're not going to be able to become a dealer of Viking, not when we introduced -- we're introducing 50 new products. Number three, we want to make sure that we restrict people, where in the past, Viking did not do that, restrict people from selling in others' territories. Which means if you're an Internet dealer, you're not going to be able to sell outside the territory. You need to be able to service that customer. Number two, you cannot basically sell a builder from New York into California, and then expect somebody to service that builder because that created quality issues and brand issues for us. So we've limited a lot of those types of transactions. Having said that, I don't know what the impact is going to be on changing those programs, and making sure that we partner. So it's going to be another year of transition. Now the offsetting part is going to be people love our new products. We launched the French door oven. And so far, we've had hundreds of orders coming through on the French door oven without even explaining it properly. People saw it on the store, they see it on the Internet or on our website, and they are ordering it. So we know that the new products are going to be very successful, but I think the transition from 1,700 dealers to less than 1,000 dealers is going to be a big change for us this year, given the...

How many dealers now are exclusive to Viking?

I don't have that number, but I know that there are few that are totally exclusive to Viking. We know we have a few that are -- I wouldn't say exclusive or anything, I would say, they carry fewer lines. They don't have as many -- I don't know if anybody is exclusive for Viking. The dealers in general cannot be exclusive to Viking or to any other brand because if consumer is coming in, they want to be able to showcase one versus the other. Similar to our dealers in commercial, we don't have exclusive dealers in commercial side. But at the end, I would say, we are pleased to all. I would say 100 dealers that are very biased towards Viking. That means they would basically display Viking better than they display anybody else. And we want that number to basically double. We want it to go from 100 to 200. And we want to also take the 1,700 down to less than 1,000 this year.

Got it. Kitchen renovation project, a week or so ago you got a pretty nice shout out from -- at Rensi, at Famous Dave's Barbecue, who indicated he's going to use Middleby to redo their chain's kitchens. How many chains or casual chains are you working with now on kitchen renovation, and that you can name?

Well, the question has been basically how many we've had has now through Chili's continues to be done. I think that so far that's a kitchen that's gone from -- to field test right now other than Chili's. I'm calling them right now as you speak basically, Tony, so bear with me.

I'm sorry, I missed that.

Basically we have 17 companies -- 16 companies that are now in field testing our Kitchen of the Future.

And how many are being rolled out?

I could tell you that at this moment, nothing is being rolled out. At this moment, all is filled up. Some of them have 60 stores in field. Some of them have 10 stores in field test, all of them have at least 7 in field tests. So we don't have it rolled out yet. So basically, at this moment, the field test is what we expect to roll out. As I always mentioned in the last conference, it's going to take some time. This is not a -- this is a major, major change for somebody. It's not only making sure that they change their procedures, their labors, their training. So as you know, it's a very interesting testing. And I'm going to speak to you so far as well as we say, as a CEO, Interim CEO of Famous Dave, they said there's a company in Chicago called Middleby Corporation. This one's from his April 24, 2014, earnings conference release, "Called Middleby Corporation has some of the best testing technology in the world, and they are partnering with us to do a complete analysis of our kitchen, path to new cooking techniques, new cooking systems with the objective of reducing labor, making our products more consistent and delivering to the customers with a higher level of quality, reducing utility costs, eliminating the use of natural gas to the extent we do today." So if you look at it, this is the advantage and we're working with him, with one of those 16 companies that we're working with. It's coming from the CEO down and we are very optimistic that kitchen efficiency is becoming very important. Because the more efficient kitchens are, the less square footage they need in those kitchens. And with the minimum wage cost going up, labor cost is going up also, which makes our automation and the Kitchen of the Future becomes more relevant. So it's a matter of timing, Tony. So I can tell you it is something that it's here to stay? Yes. It's being implemented at Chili's. I just said to you what's Ed Rensi said as you mentioned, and I look at it I would say literally. So others things that I'm seeing through this is as you get the ebbs and flows during the course of the day when we have casual dining doing lunches, dinner, and through the weeks when you have busier Friday, Saturday versus Monday, you see that their labor basically stays the same because they need to basically start the kitchen whether it's a busy Friday versus a poor Monday. They can't tell on Monday, "I'm sorry, I'm going to offer only 2 menu items." They have to -- offer a similar regular menu items they offer on a Saturday at lunch versus the Tuesday at lunch. What's happened is that people are coming to us saying automation now is becoming key to us. So for this one if you look at the experience in putting a flexible system which is the Kitchen of the Future does that. So to answer your question, I have a roll out, I have 16 chains in field test, not in lab test, not in pre-lab visit. They are in field test. Around, basically right now over -- around 200 stores being field tested right now, I am told, what I call 16 concepts, 16 chains.

Got it. The acquisition of Market Forge, I think they make steamers, is that correct?

They make steam, yes.

You got, I think 3 other subsidiaries that make steamers, and I'm just curious why you would acquire a steamer company when you're pretty well-represented in that segment already?

Because we did not manufacture our own steam. So while we did old steamers, Market Forge will be our first manufacturing in steam, a complete line of manufacturing steam. So before we were outsourcing those. So while we have 3 companies doing steam, we're outsourcing it from 3 suppliers. And today, Market Forge allows us to be our own manufacturer.

Okay, the last question. What is the board's intention regarding the stock split?

Well, as put out in the proxy the board has contemplated during the 3-for-1 stock split with our Annual Shareholder Meeting that took place this week, kind of a proposal that was put forth to increase the number of authorized shares was passed. So given that I would think the board would -- is going to kind of reconvene on that situation, there hasn't been an approval on that yet, but I think that was going to be the intent. So I think there's a likely chance that the board would move forward with.

That's 3-to-1 stock split.

[Operator Instructions] And our next question comes from John Dunn from BB&T Capital Markets.

This is John, filling in for Schon. We talked briefly about what was included in SG&A with all these Viking integration efforts, but I want to get a sense of when you think the incremental benefits from all this restructuring will begin to materialize? You had some headcount reductions recently, but is SG&A going to come back down going forward? Or when do you think you'll be able to capture all the savings from this integration?

John, I'm going to share with you, we are not happy with our SG&A. Right now, SG&A is not in line with what Middleby would like to be. So we're going to look at ways to reduce our SG&A. I think it should happen through the next -- less than 60 days. And the reason we're not happy is that is, one, we got 3 things affecting our SG&A. Number one, buying the distributors at Viking; integrating the Viking basically acquisition within our system in terms of the plans that they have, and the people they have. So I'm not -- we took 1.5 years to make sure that we stabilize the brand in terms of new products, in terms of making sure that we get the quality back where it supposed to be. So our SG&A remained something that -- it's a high priority for us because it's higher than we expect it to be. And the third element of our SG&A has been some of the acquisitions made recently both in Food Processing, Market Forge, all that has contributed to this. And I think we are laser-focused on SG&A to make sure that we can continue servicing our customers. But some of the fixed cost of the distribution, the acquisitions we made, I think within 60 days we should be able to see our SG&A -- at least action, I think we're going to take some drastic action to look at our SG&A. And I've always spoken to all our divisional Presidents, who are all ready to implement some reduction. It's not only in people. I think we have things where, for example, when we go to distribution, we were still using our past distributors to warehouse and use the logistics for us at a higher cost. That basically has gone in-house. So we moved the Chicago distribution from Lakeview to us now through Elgin, through Middleby Marshall. Milestone, our former distributor in Dallas, was also using -- doing our warehousing. They truly helped us out during that transition, and we thank them for this but it was expensive. So now we've gone into TurboChef. So TurboChef is -- and those are the type of initiatives that should have an impact most of probably in the third and fourth quarter of this year in terms of SG&A.

Okay. Great, that's helpful. And then you briefly mentioned Asia in your opening remarks. Demand in the region, do you see it as accelerating, decelerating going forward? Because just because on last quarter's call, you mentioned that a large customer there had delayed some store openings because of food safety concerns. Are those issues still lingering, or when does that situation hopefully get resolved?

I would say it's in the process of rebounding. So and then we expect that would be back up in Asia in the second half for this year. And our expectation is still double-digit growth in emerging markets overall. And some of these markets are smaller, and they're driven by more concentrated chains. We're finding that store openings from quarter-to-quarter can impact as it did in -- also in Brazil, but I think that our overall outlook is pretty positive for those markets.

Our next question comes from Greg Halter from Great Lakes Review.

I know you have the announced number there, $3.2 million for CapEx in the quarter. I wonder what your thoughts are for the year at this point?

Well, I think our expectation is pretty consistent with how it's really been over many years. We're between 1% to 2% of sales is our CapEx. Well price pick up a little bit here as we make some investments in the refrigeration area with Viking to kind of upgrade their equipment and launch the new products. So that will probably spike things up a little bit in Q2 and Q3. But overall, we'll still be within that 1% to 2% range for the year.

All right. And speaking of refrigeration, any moves there on the commercial side at this point?

No, at this moment we look at refrigeration, as I mentioned to you in the previous conference call. At this moment, it remains a negligible part of our business. It's very, very small. And we are really focused right now on to getting now to this branch of refrigeration which is almost, I would say, almost $800 million market, if not $900 million market in the high-end utilization. And we are focused mostly on the residential refrigeration right now where we are a very, very small player. And we see investment that Middleby is making in -- and I have to say that literally I've been very impressed, some of the new products that have been received. So if you look at Viking, they introduced the new refrigeration under us, under our leadership in July of last year, so less than -- it's been now 9 months. Our refrigeration business is up quite well since we'd introduced those new refrigerator. I think the new refrigerator that we showed at the Kitchen Dash [ph] Show and Architectural Digest Show was very well-received, and they are going to be launched in the first -- at the end of the first quarter of 2014. And it will be a lot better because we're going to be upgrading -- the formerly equipment will be upgrading everything the way we assemble, the body's welding in terms of how we -- not weld but we assemble those refrigerator. We'll invest in a lot of equipment in refrigeration. That's where I see the growth for us to become similar to -- one of our competitor today is around $5 million to $10 million in refrigeration. We see ourselves literally going from around $20 million to really being able to be at $100 million, $150 million easily in refrigeration residential at high markets.

All right, great. And any comments on what's going on in combi ovens?

Our combi oven business is up double-digit growth, I think, between the Blodgett and Hounö. The line -- it has 3 divisions selling combi. Our combi business is doing very well for us. Also another market that has been a big market for us, the combi market is another $1 billion market. And we have seen numbers that I mentioned in residential refrigeration. So we're starting to grow that business nicely for us, but we're still immaterial in that business. So I see our growth -- so far in the past 12 months we've grown more than double digit. It should be, I mean by that in the 40%, 50% growth, and we see that trend continue. So it's still on a small base still to achieve -- it doesn't matter. But as we continue growing in those type of growth, we expect us to be $100 million business pretty quickly.

It will matter if you catch the attention of one of your competitors there, I guess.

Yes, well, yes, we caught their attention. We caught their attention a long time ago, even with a $10 million business because we have technology in water saving and energy saving. That is the best, the best among combi. We will challenge anybody to say that we have the most water reduction and energy reduction in that segment. And they are aware of that. And just to mention to you, we tend to be today more expensive than the #1 market leader in that segment. So we're willing to grow while we are almost 10% to 20% more expensive than the leader in that segment. So it speaks very highly to our capabilities and our features in that business. So people have started recognizing the features of the Middleby combi, while the leader, who is a very competent leader and very well-respected, and they have a great unit. I'm not trying to minimize their impact and their product. They have a very good product quality but our features are, in terms of water reduction, control and energy saving tend to be -- if that's important to you, our products are situated better. And our price is much stronger, 15% to 20%. So people -- a lot of people ask us, "Well how could you be be priced a lot higher than the #1 leader?" And we say, if you are not interested in the features we offer you should not buy our combi, and you should by other people's combis. There's 41 other manufacturer of combi. I say, if you come to Middleby, you're going to get features and technology that are unique versus everybody else. And that's been our position. Of course, I could grow a lot of market share if I just started discounting in basically but this has never been the Middleby way. It's always been features benefit, payback and we've always been priced higher than our competitors on almost every segment. And that's what's been our position. But when you look at ownership of the product, cost of ownership, just to tell you, on our combi, we have the highest warranty than any other combi in United States and in Europe. We have, I think, 2x to 4x the warranty level because of our quality than anybody else.

All right. Well, the competitor may have had a difficult first quarter, so we'll see what happens there. It looks like you're making some decent strides. Tim, on the inventory and receivables side, up a lot obviously, 39% and 18%, respectively. I'm sure acquisitions had some impact there, just wondering if you could detail that for us?

Yes, Greg, it's almost all primarily related to acquisitions. So in the case of -- with Viking, we bought the inventory that was at the distributors and also took back inventories, the ones that were canceled. So that's the primary reason for the increase. There was some investment also in international as we're opening up emerging markets, but it's primarily distribution. The same thing with, we're down in the receivables side. It's the increase in receivables related to the Viking distribution. I'll just make a comment. On the inventory, over time, we would expect that to come down as we're realigning what was 12 distributors and into a -- in a streamlined organization. We'll be able to better kind of manage inventory across the system, and there's probably other of these dollars kind of in the channel, but it'll come down as we kind of improve the logistics and inventory management at the Viking distribution.

And that would obviously help the cash flow from operations which was a use for the first quarter, correct?

It would help, definitely would help cash flow from operations. That's right.

And in your Q, you usually talk about the geographic sales in the 4 areas, U.S., Asia, Europe and Middle East and Latin America. Do you have those either on dollars or percent that they changed in the quarter year-over-year?

I do not have those handy. I know Europe was one of our best growing markets in the quarter, which I believe we had growth that was around 10%. And Middle East was up as well, probably even more than that. Asia, we would have been down in the quarter because of China. And Latin America was also probably flat to down, but I think that was really timing on the quarter.

Our next question comes from Joel Tiss from BMO Capital Markets.

This is actually Richard Carlson in for Joel. So in all a pretty good quarter, definitely on the revenue side, and I was just hoping bigger picture we can step back and discuss some of the end markets? Where do you see the opportunities? What's driving that strong organic growth? And is there any surprise that you're seeing compared to 3 months ago?

Well, I'm going to answer that question. I think the biggest surprise for us would be today, the fact that we are working on several test, not only on the Kitchen of the Future, as I mentioned previously, we are working on with a large fast food company on basically changing their cooking system. And so far, we're basically working with the field test with them almost on, I think, 100 units -- 100 stores. And we're hoping that, that will pass. It's been very successful. We have several also -- test that is going. And I think the biggest challenge that I see for us this year is making sure that the rollout come when it's supposed to come. It doesn't mean they're going to go away. I think those committed to us. It's just sometimes, takes a little bit longer. But I think we're sitting on more steps than I've ever seen. Again, as I said that the company and as you look back, I think 2 years ago, so if I look back to my discussion of 2012, if you go back to our conference call and if you have the transcripts, you can go back and I said, we're sitting at the most tests that we've ever seen. If you look back, while 2012 was a good year, 2013 was even a better year. And why? Because if you look at 12 to 18 months, and a lot of them happened to be in 2013. When I'm sitting at 2014, I say we have more cash than we've had even in 2012, but it could end up falling in 2015 versus 2014. It seems that I'm sitting on the same -- in the same seat, same position as I was in 2012. If you remember early 2012, I think one of you, it could be Tony, Tony Brenner, asked the question. So where do you see your organic gross going? I remember that discussion very vividly and I had answered it, and saying that we're sitting on more cash than we've ever seen, and it came -- it was realized in 2013. It started coming through in 2013 at the time. We had the Chili's. And everybody said, "What's beyond Chili's?" And 2013 ended up to be a great year as Chili's was going down as the big rollup was. I think 2014 is going to end up being exactly the same. We're sitting here looking at big picture, as you say, it's a big picture looking at 2015, 2016 to be very strong years. It's just 50% of those tests end up being rolled out. It's multimillion-dollar project for us.

And I'm sorry to keep beating you guys up on the Viking, but just on the EBITDA margin goal by the end of the year. Is there any extra cost that we're seeing now? Is that going to slow that down? Are we still pretty much on track there?

Yes, I think our expectation is still to get to 20% EBITDA by the end of the year. I think the nonrecurring charges obviously hit this quarter, and kind of the bigger issue is really just the technical issue, which is the inventory in the channel. But once we kind of move through that, we're going to have a higher margin. And then as we continue to streamline the distribution operations, we should be able to achieve that target.

Great. And then I guess last one, I noticed that you briefly mentioned the acquisitions at the end of your prepared remarks, but how much incremental revenue growth is in there, and when do we expect that to close or are they already closed?

I was only talking about acquisitions that we've already completed. So the one I mentioned, which was post the first quarter, was Processing Equipment Solutions, which that closed at the end of April. And that's about a $15 million business annually.

And this is the all -- all the time we have today for question-and-answer session. I would like to hand the conference back over to management for closing remarks.

Thank you very much. I think that ends our conference call for today, and I thank everybody for attending. Thank you very much. As we prepare for our National Restaurant Show will take place next week, I invite all of you to come and be with us at the show. The show -- it starts next Saturday, starting 17 or 18 of May, and it goes through Tuesday. So you're all invited to come and join us. We'll be there exhibiting with a lot of new technology, new innovation of Waterless -- some very unique products that's coming in that have been released specifically. We've won many kitchen innovation awards, and you'll have a chance to see all our products, including the latest acquisition into beverage of Wunder-Bar and the new product. You are welcome, if you want to attend, we'll secure for you badges to come in. It's going to be in Chicago starting Saturday, the 18th.

May 17.

May 17, through Tuesday, and we'd love to see you there. Thank you.

Ladies and gentlemen, thank you for participating in today's conference call. This concludes our program. You may all disconnect, and have a wonderful day.