Good afternoon. My name is Ian Rob, your conference operator today. And at this time, I'd like to welcome everyone to the RH Third Quarter Fiscal 2016 Q&A Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] And I'd now like to turn the call over to Ms. Cammeron McLaughlin. Please begin.

Thank you. Good afternoon everyone, thank you for joining us for RH's third quarter fiscal 2016 Q&A conference call. Joining me today are Gary Friedman, Chairman and Chief Executive Officer; and Karen Boone Co-President, Chief Financial and Administrative Officer. Prior to this call, we posted a video presentation to our Investor Relations Web site ir.restorationhardware.com, highlighting the Company's continued evolution and recent performance. Before we start, I'd like to remind you of our legal disclaimer that we will make certain statements today that are forward-looking within the meaning of the federal securities laws including statements about the outlook for our business and other matters referenced in our press release and video presentation issued today. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings, as well as our press release issued today for a more detailed description of the risk factors that may affect our results. Please also note that these forward-looking statements reflect our opinions only as of the date of this call and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. Also during our call today, we may discuss non-GAAP financial measures which adjust our GAAP results to eliminate the impact of certain items. You'll find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP to GAAP measures in today's financial results press release. A live broadcast of this call is also available on the investor relations Web site at ir.restorationhardware.com. With that, I'll turn it over to the operator to take our first question.

[Operator Instructions] Our first question is from the line of Matt Fassler from Goldman Sachs.

Thanks a lot, and good afternoon, good evening. My question really relates to underlying demand as best you can address it. You said in the video that written sales were not quite up to expectations in the third quarter, and certainly that was the case it sounds like in November. If you could talk about the cadence of demand and the impact that some discrete items might have had on it, specifically your discussion of the later mailing of the books, and also the weakness they had in November, perhaps what you've seen in the brief couple of weeks since then?

Sure. Matt, this is Gary. There is really three things we can kind of look at and somewhat quantify today, and that is that there's a real softness in November; November got off to a very slow start. We think that was created by some distraction around the election. At least that was our hope early on. As we got past the election, our business was building at a slower rate than we had anticipated, and as we dug into looking at some of the implications around that, one of things that stood out was our books were getting in home slower in November specifically than we had planned. So beginning in November we lost about a month of books in the delay, and also impacting the business is really this -- a poor performing holiday collection, and we believe some of that in looking back is from probably being too aggressive in pulling too much of the holiday content out of the store. Our thesis was we could consolidate holiday in the DC, consolidate the inventory in the DC, move more of the sales to direct, offer free shipping, and we could run the business at a more productive level and at a higher margin, and our thesis, it proved to be incorrect. I think we're just losing too much of those conversions from the store traffic in the stores. So, one of the things we're considering is next year layering back in some of the holiday decor and gift items. We won't put the stocking stuffers back in, we think that's just a legacy business that doesn't associate with our business, with our current content, but that's really the key things. For us right now, I think what's difficult is as we sit here today how do we…

I guess a brief follow-up just to get clarity, are you getting any comfort from the build that you've seen since business presumably troughed around the election, is it driving closer to a rate that would be consistent with your long-term growth expectations, or is it still subdued given the holiday issues and the mailing of the catalog and the timing of the mailing?

No, it's clearly subdued, and we've forecasted it to be subdued from a demand and revenue point of view through the rest of the quarter, but my point being is if you take that new base, right, and you build off the base into next year, we feel very good about what the next year looks like and the bridge back to business performance that would be more in line with what we'd expect.

Thank you.

And our next question comes from the line of Oliver Chen from Cowen and Company.

Hi, thank you. I have a question regarding the SKU rationalization. So, why did you guys pursue a little more aggressively than you originally expected? And also on the CapEx line, do you have flexibility there to continue to kind of tweak that number down in the event that your free cash flow doesn't materialize how you'd like it to? And Gary, I think you articulated this, but if you could've done this over, over the past year, just what would you have highlighted that some differences you would've made, and I think also we wanted to know about the source book, why was it a little bit later? You had mentioned that was one month longer -- later than planned? Thank you.

Sure, yes, let me kind of address this from bottom to top. I'm going to take it backwards, but why are the books in later than planned; one, we're one of the few people that mail a book our size and our complexity. Some of our books are mailed in bundles, but we mail a 600-page book. Our printers don't really have other books of that size besides phone books, right? And so, our books don't go through like a typical catalog goes through a facility, and our book goes through multiple facilities. So there's always a chance that there's going to be some delay in the printer, which we had some delays, but as -- you know, likewise, when you go through the U.S. Mail postage system with a book of our size, at each of the books that -- each of the points that it moves through, whether it's going from the printer to VMC or in SCF, you know, Special Center Facility, and then breaks out to a post office and then the post office's ability to handle it and move it, you know, our books can be somewhat imperfect in predicting how they move, how they move through all those points and all those steps. So we had some delays as we move through the printer and we had delays as we move through the postal network, and those delays were compounded in the postal network, I think what we didn't anticipate, this is the first time we mailed and had books going in November and in December, so the November books is where we missed. And I think we missed because, you know, we went into a very crowded time, right? So you have all the holiday mailings, and the other point is you had…

Then Oliver on…

Okay.

So, any follow-ups on that one, I can pick the other two.

Oh, I was just - Karen I was curious for investors who are concerned about free cash flow and the outlook there, it would be great to be briefed on your thoughts around that CapEx.

Yes, sure.

And strategically the SKU rationalization was, why were you like incrementally more aggressive, was that an effort just to make sure you're clean, because it looks like you've been prudent about trying to make sure you're aggressively managing inventories as well?

Yes. So the two questions are definitely tied, because they both impact our free cash flow. One, our working capital has been something that we're very interested in making sure that those inventories get down as you guys saw. We ended last year with our Q4 miss with much higher inventories that we wanted. So, some of that ongoing assortment we just managed through lower receipts, but there were that critical evaluation of the SKUs as Gary mentioned, to see what we no longer needed in the assortment. So we've been making great progress in that initiative. As you can see at the end of Q3, our inventory was at plus two and that includes the Waterworks. So really great progress with that, but as we're heading into Q4 with some of the slowdown of what we saw in November, whether it was the election or the consumer, whatever the reason, we don't want to be sitting on some of that inventory and we want to move through it. So, we went to at the beginning of the month or about the 11th, we went to 20% off sale. A lot of the stuff that's on sale is that SKU [rationalization] [ph] merchandise and then we also just took a little bit deeper markdowns on some of that. We are planning to continue to do that through the end of the quarter, just to make sure we are clean by year-end and do get through what we wanted to get through. So, that has obviously a very positive impact on our cash flow situation as we head into next year if we can continue to make improvements on getting our inventory down. The second piece of that was a capital you saw that we took our range down. That's really just based on the lower sales on what we're looking at. We're taking a much more critical look at what projects we have on deck, what's in [flight] [ph], where do we need to be more critical in that spend. I still feel really confident in what we have the ability to effect, both in the real-estate and other projects, what's nice to have, what's a need to have, and we'll continue to be diligent in that to make sure we reach and deliver that free cash flow positive goal in 2017.

Okay. Thank you. Best regards.

Thanks, Oliver.

And our next question is from the line of Steven Forbes from Guggenheim Securities.

Good evening. Gary, if you can, maybe just taking a step back, given the amount of the challenges this year in recent addition to the team. Can you just give your thoughts on the organizational capacity of the business, given everything that's going on as we look out, kind of into '17 and beyond here?

Sure. Yes I think we have the strongest team we've ever had historically, I think especially the -- let me start at the top. I think the changes we made in creating the office of the President to drive breakdown silos, drive collaboration, drive a cross-functional view of the business as we drive our key strategies and priorities and decision-making through the company, I think it's just beginning to make a very big impact and I think when I look back on my career years from now, my sense is that -- I'm going to look back and say this is one of the business decisions I've ever made, because the silos that are being broken down and the collaborations that are happening and the way we're now starting to lead and make decisions for the future, I think are just significantly better decisions, more fully informed. And we're going to start seeing impact -- benefits from that as we look into next year. So that is also trickling down to how we've organized the organization at a level below, right. So we've created internal Chief Merchandising Officers inside the business. We've three of them, they control cross functional teams that had merchandising, product development, sourcing, inventory management where many of those functions were independent, and the -- again breaking down the silos and the leadership the leaders we have there, I think they're fantastic and we're going to see big impact from the business there. And I think the next big piece is really what DeMonty has done with in a very short period of time, in the supply chain operations call center part of the business. I think the organization that he has put in place and the strategies they are developing, the urgency they have the fresh…

Thank you, Gary. And then maybe as a follow-up, kind of touching one of the topics you mentioned there, pertaining the home delivery and the progress you're making on those initiatives, can you touch on where you are today both in terms of your customer satisfaction scores with delivery in general? And also Gary, if you can -- where does the company sit today versus where it needs to be as it relates to completing by that final mile and the completing the transaction itself?

Yes, I think as you look across our supply chain, there're some areas where we're executing at a B, and some areas we're executing at a C level, and we believe we can leapfrog and get everything to an A level. It's going to be -- it's kind of step-by-step as we make these investments, we got a lot of things that we got to test. We're moving in the Bay Area of DC, we got -- we're buying our own trucks, we are leasing our own trucks, we're insourcing it, we're taking a 100% control of the delivery. We just think there's an enormous opportunity here to reduce returns, reduce exchanges, get deliveries to stick delight customers at that point, and I think I said at before the fact that we have outsourced that last piece of the business and it's really been a compounding outsource, right, with many markets where we don't control where we haven't control the hub, we're starting to take more control of the hub, but we don't control the delivery, right? So, you have a third-party kind of delivery group who is scheduling drivers, those drivers are not always consistent, there is an inconsistency in the vehicles, there is inconsistency in the talent and the people are making deliveries, and if you can make a justification at actually going into people's homes with that third-party and in some cases it's third-parties a third-party at the double outsourced compounding outsourced situation, just because it's slightly cheaper. You should make the same argument say why don't we staff our galleries with third-party people and stuff that I'm sure we could do it cheaper, is that it's not the brand we're trying to build. I think we still have some kind of legacy habits, right, and mindset…

Thank you.

And our next question is from the line of Adam Sindler from Deutsche Bank.

Hi, yes, good evening everyone. I was hoping to ask maybe a couple of bigger picture questions here. I think on the call maybe four or five times you talked about transitional year or 54 changes that the market price made, big strategic moves, the bars and interior design, and then you're looking back at 2014 and maybe in 2013 there's a lot of redesign to the full line galleries, and clearly other things are actually important, right? There being flow through to the new model, but at what point do you think it would be sort of prudent to maybe try and unlock in some sort of strategy just do not have pieces moving around so much, because as you become a bigger organization those changes are magnified would be first sort of bigger picture. And then second bigger picture, on the SKU rationalization, I was under the impression as a whole, sort of reason of having a very broad line was to have a very long tail to the product line such that new product is not to simply replaced products, but to actually introduce newness and then sort of balance that against $0.40 to $0.45 of inventory reduction charges.

Well, one, we do have a wide and dominant assortment and we'll have a wide and dominant assortment, I think it's at the high-end of the luxury, and I think we have no peer right? If you tried to -- the question we get a lot is who are your competitors, right, nationally, and I think is that the fact that nobody can really named many of them is because we have an assortment that really doesn't exist in the marketplace anywhere else, you know, at our dominants in depth and breadth. So, but that doesn't mean that you shouldn't go through a SKU asset, it doesn't mean after five, six years of really -- we had four straight years of comparable brand growth of over 25%, right? So, you go through high-growth years, and there's going to be some inefficiencies everywhere in your organization, and so we're trying to deal with this inefficiencies whether it's in the supply chain, whether it's in the assortment, whether it's in what we think was a promotional cadence of the business that wasn't right for the brand long-term whether it's you know, what this store size is and whether -- you say like jeez, when do you stop and lock in a strategy. The investor depth that we present, hasn't it really changed the same, slide right, who is the home brand for the luxury customer, right, like, that question frames our opportunity. RH is building the most dominant assortment at the high-end that we're building the supply chain that offers tremendous value and is completely disruptive. Our real-estate is the biggest value-driving priorities in the company which we've been saying for multiple years here is the transformation of real estate and the continued expansion of our product offer. So, the launch of…

Okay. Thanks, I appreciate that. And then sort of secondly, in the video you talked about the doubling of revenues from the mall-based stores to the full line stores, I know you said more than two times, but just in the past for clarity, it's been closer to two to four times, I just want to make sure that two to four times is still the right sort of outlook to use?

Yes, the way to think about it, when we use the Denver model, right, back then we had a smaller assortment; we weren't impacted by Modern or team yet or a lot of SKU growth. So, as we did all our real estate deals during that period, right, when we presented that, we had lower base volumes. So, our expectation was to get two to 4X, and we at that point -- somewhere around a 3X we thought was about the right number. Our average store volumes since that point have grown from $8 million to $12 million in an average gallery. So, all our numbers that we thought for every market, if you look at our business from -- every market that we said, we can go from here to there, the number there it's still correct, it's just on a bigger base. So it may start at a 2X. May have started at 2.5X, but also I'd say with the layering on of hospitality, that's incremental and the extra business that hospitality drives to the gallery at least based on our first test, it gives us some expansion. I think what we're saying is we have at least a 2X lift to the retail sales in every market, right, off of bigger base now.

All right, thank you, I appreciate it.

Yes.

And our next question comes from the line of Peter Benedict from Baird.

Yes. Hi, guys, thanks. Just a clarification, so on the fourth quarter it looks like the implied CBR down high-teens maybe, the top line acceleration you're thinking for next year, and I think you said up kind of each quarter, then in CBR you think will be up like in the first quarter or is it just kind of total revenue is up and then CBR catches up later in the year?

Yes, I think we're at this point talking about total revenue. We are not…

We are not giving quarterly guidance here. Yes, yes.

But I will say that some of the things that are non-comp right now that are making a pretty wide delta between total revenue and the brand comp, things like Waterworks, things like membership revenue, new stores. New stores, we won't have -- there will always be a number there, but some of the other things are going to back into the comp base. We've planned to put membership revenue in as soon as that anniversaries are launched, and then in May of next year is when we will anniversary the launch, actually that acquisition I should say of Waterworks. So, those are some of the big drivers that are pushing that delta further than normal, and that will shrink down middle of next year.

Okay, that's helpful, thanks. And then, on the membership program, it looks like at least over the last couple of quarters, so when you've had it for a full quarter, so 2Q, 3Q, you've been signing up maybe 7,000 to 8,000 members a week, at least that's been the pace. Is that the level we should be thinking about going forward in the fourth quarter? How are you thinking about the pace of signups from here?

Yes, it's ranged between anywhere from 5,000 to 8,000 a week depending on the week and depending on what's going on with our volume. I don't think that's going to change too much. It's generally pretty consistent with sales. As we said, 90% of our volume is coming from members, so we don't expect that percentage to change, so it should just track with sales.

Okay. And then just the last question around that, to the degree that you've been able to track it or look at it, can you comment on how the member has behaved kind of before you had the member program to the degree you had details about how they were spending with you, and then what their shopping habit has been since. I recognize it's not a long period of time, but any early thoughts on that?

The only thing I think we've commented on is the average order is slightly bigger, and the time to transact is longer. So without the promotional kind of urgency dates that drove someone to, oh, I better purchase this now, they're working through their interior design cycle, and it's taking longer to close an order.

And what we're really tracking or anxious track is, as Gary mentioned, the renewals, and then the repeat buying, because furniture -- buying furniture is sometimes an event, and what happens, does this create loyalty, or what happens with those things. So we continue to monitor those, we're still in the first year of the program, so not ready to really speak to any of those yet.

Okay, fair enough, thank you.

And our next question is from the line of Budd Bugatch from Raymond James.

Good afternoon, this is Bobby filling in for Budd, I appreciate you guys taking my questions. I just had two quick clarification questions. One on the Modern rollout and the traditional galleries, can you give us an update on how many that furniture has been rolled out in, and kind of when do you expect that rollout to be complete?

Sure, that effort got completed at the latter part of Q3, so at the end of October all of the legacy galleries save about a handful who are transitioning to big stores next year, got the Modern product, and got design ateliers.

Okay, so all that is complete. And then for the list -- the list is where you're referring that it's coming at a slower pace or it's just six to eight weeks, like you kind of saw in New York, with the Modern…

We think it'll take six to eight weeks to kind of ramp up. And then the other thing is we would expect in the first quarter of next year to get another lift when we mail the Modern book. So we will mail the second mailing of Modern in the first quarter of next year. The stores will be set with Modern. The customers will -- a lot of the current customer base will get exposure to Modern, and that will start to lift, and then we'd expect another lift when the book drops in the first quarter.

Okay. And then also, Gary, I mean, you've talked about a lot of the changes that have gone into the business over this year and last year, and I understand you're always going to be innovating, and I do agree that's the way to stay ahead in a changing retail environment. But when you look at kind of the size of change that we had to undertake this year, especially with the new product offerings, what's a more normalized cadence that you would look to kind of refresh a book or re-shoot the book on the core product line? Is it once every 24 months or is it once every 36 that we should think about when we think about kind of a much more longer term strategy picture?

You mean, what's the lifespan of a product in our business, is that what you're asking?

Yes, really, that's what I'm trying to get to. Has that changed drastically?

No, the way to think about it, a lifespan of a product in our business is on the low end. I mean, if we really miss, it's a year to two years. There's a good majority of our business that the lifespan is seven to 20 years, so some of our bestsellers have been in the assortment for a very long time. And if you look at our assortment, the core part of it is still here. We've been expanding the assortment. Where we just went through some significant SKU rashes, where we expanded the assortment in places that the productivity didn't warrant, whether it was sizes, it might have been finishes, things like that, or a few collections. It's not so much that collections are going away, it's within the collections, how do we optimize the offering where we thought maybe an additional size or additional finish and color might have been more incremental that we thought, and it wound up being just sales transfer. So that's where the majority of the SKU rationalization is happening, and where we're being the most aggressive.

Okay, I appreciate the color, best of luck in the fourth quarter and going into next fiscal year.

Okay, thank you.

And our next question is from the line of Oliver Wintermantel from Evercore ISI.

Yes, good evening. Yes, I had a question -- clarification question regarding the one-time costs in 2016, if I got all the numbers right I think it's now about $0.70 to $0.75 and there was $0.90 to $1.00, maybe that's for Karen. Can you maybe walk us through what's different and what bucket has changed? Thank you.

Sure, so it's actually $0.95 to $1.00, so it was $0.90 to $0.94, we're just kind of providing clarity. And the buckets have changed a little bit, but customer combinations related to the RH Modern production delays that stayed exactly the same at $0.30. The SKU rationalization has increased a bit as we talked about going a little bit more aggressive, and having higher penetration of those sales during this time period, that's now at a $0.40 to $0.45 range. And then the last one is the Grey Card or its membership deferral is about $0.25 now. That's how you get to that $0.95 to $1.00.

Got it, thank you, that's helpful. And then just quickly on RH Modern in stock levels, are we back to a 100 or maybe some details there please?

Yes, you never get to 100%, so we're running it about 90% right now in stock and Modern.

But we're fully recovered the vendors -- we absolutely feel good about that everything is kind of back to where…

Yes, 90% is a good number in our industry.

Right. So just the question was if, with the vendors, if that was all sorted out from the issues that we had at the beginning of the year?

Yes, we're all caught up at every vendor.

Great, thanks very much.

Thank you.

And our next question comes from the line of Michael Lasser from UBS.

Hi, this is actually Atul Maheshwari filling in for Michael Lasser, thanks a lot for taking our questions. My first question relates to your Grey Card membership. Now, you mentioned in the video that your Grey Card members account for 90% of your core sales. Assuming 80% of your 3Q sales are core, and dividing that by the total number of members, we're getting a $1,500 spend per member. Is that the right way to think about it?

We don't comment on average order, but yes, it's -- we can't really guide you to think about something that we don't guide.

So I didn't actually hear the number.

I said $1,500 spend per member.

Yes, we don't comment on average order, so we'll have to think about it.

Okay, that's fair. So looking into next year, I mean, your modeling a pretty significant acceleration in your comps. So what's going to drive that acceleration? Is it going to be more member signups or simply more spend per member?

Well, the biggest things are having book. So this year is very depressed, as Gary has been talking about. We haven't has a source book. So that would be more of a comp driver. I mean, certainly in the new stores it's going to have an impact, but certainly that's a comp driver.

…:

Okay, thank you very much.

Sure.

And our next question is Matt McClintock from Barclays.

Hi, yes, good afternoon everyone. Two questions, the first one is, Gary, I understand that the books are what potentially is going to be driving the comp acceleration. But can you speak to the historical correlation between your sales and your business, and stock market, particularly as we may be looking at one of the biggest corporate tax rate cuts in history?

Yes, well, we've generally -- again, don't take this year because everything is moving. Books are moving, promotional membership. Historically, in a more normalized year, the two biggest correlations in our business is the high-end housing market, not the housing market. So if you look at the broad housing market right now the numbers look good. If you look at the housing market, it houses $1 million and over. It's down about five points against the rest of the market, so it doesn't look very good. So we think there is a headwind in high-end housing. But that doesn't really get reported broadly. So a lot of times people get mixed up, they'll -- because we're an outlier and where we compete in the market, I think, people miss that. And so as it relates -- then the other one is, as we were saying, is the performance of stock market has historically -- our business has tracked with that as another indicator. So those are two of the most important things we look at.

Okay, helpful. And then just secondly, I know that Modern is building, but can you potentially talk to any variances and the acceptance of the aesthetic across the country that you're seeing?

Yes, well, we'll know a lot more as we now see -- as we get a couple of months -- as we get into the kind of the third month of the set. So I look at it and I go, okay, we've kind of got November, December, January. January, February, we'll have a much better sense for how Modern is performing and where it's performing. The initial books that we mailed, we targeted a lot of the mailing into markets that we thought would have better response to Modern. So the first time we mailed the book we -- big targeted mailings into New York, Miami, San Francisco, Los Angeles, Chicago, kind of key markets that were more urban based, and we thought we were more progressive markets. And so as we mailed the second mailing now that we've got a representation of Modern we will support those markets more from a marketing point of view, so I think we'll get a much better read than our first mailing, from a market acceptance point of view. But our expectation is it's not going to respond democratically across the country. Not many of our products do. For example, one of our best selling bedroom collections in the company is mediocre in Los Angeles, right. And so it's -- there are different aesthetic differences in the market, and that's why we only gave about a third of the square footage to Modern. And where our sense is, that we will put it out there, we will get reads, and based on the market reads we'll flex out Modern in local markets based on acceptance and based where we think we have the positive arbitrage. And we will flex it down if we don't have acceptance. So, still more to learn very early stages of Modern.

All right, thanks for that color, Gary.

Yes.

And our final question comes from the line of Jessica Mace from Instanet [ph].

Hi, thank you. My question is on your outlook strategy. You mentioned the opening of some temporary locations which I assume is related to the SKU rationalization, but any other thoughts you could give us on how you view the role of outlet stores going forward?

Yes, outlet for us is really just liquidation channel. First and foremost for what we call second-quality nick-and-dent type items that come back from a return or an exchange, so if something gets damaged in transit it goes to the outlet. We did open up a number of temporary outlet locations to get us through the inventory SKU rationalization and inventory efforts just to make sure we could get rid of the occupancy and not -- and avoid occupancy. So a lot of the locations, eight of the 12 that we're going to open this year are temporary. So anywhere from 12 to 24 months, and we'll be out of those. So you'll see some closures next year as those cycles and meet their 12 or 18-month timeframe.

Understood, thanks. And then my second question, you mentioned some of the headwinds facing the luxury consumer; you mentioned some relative softness at the high end of the housing market. Have you seen that change as you -- I know there's moving pieces in your business that are affecting the beginning of the fourth quarter, but anything you can call out as how that's progressed? Thank you.

We feel the high-end of the housing market has gotten slower, and that's got a more headwind that we're cycling -- if you look at this, the index against luxury brands, the numbers are still slow, but they're historically better year-over-year. So you're going up against the biggest difficulties. I think it's going to be interesting as we come up against January. January of last year, obviously everyone knows with the big drag down in the markets, and so we haven't factored in much of upside based on that because we just factor our business as a run rate, but that's the best we could tell today and this two data points. So it's like the housing market at the high end is a little slower, and it looks like there's starting to be some recovery with the luxury apparel players.

And I would now like to turn the call back to Gary Friedman for any closing remarks.

Yes. Well, thank you everyone. We want to wish everyone a very happy holiday, and look forward to talking to you in the near future, and excited about 2017. As we look forward, we think it's going to be an excellent year. Thank you so much.

Ladies and gentlemen, this does conclude today's conference call. We thank you for your participation, and you may now disconnect.