Ladies and gentlemen, thank you for standing by. Welcome to the Target Corporation's Second Quarter Earnings Release Conference Call. [Operator Instructions] As a reminder, this conference is being recorded Wednesday, August 17, 2016. I would now like to turn the conference over to Mr. John Hulbert, Vice President, Investor Relations. Please go ahead, sir.

Good morning, everyone, and thank you for joining us on our second quarter 2016 earnings conference call. On the line with me today are Brian Cornell, Chairman and Chief Executive Officer; John Mulligan, Chief Operating Officer; and Cathy Smith, Chief Financial Officer. This morning, Brian will recap our second quarter performance, including results across our merchandise category. Then John will provide an update on our efforts to improve in-stocks and modernize our supply chain. And finally, Cathy will offer more detail on our second quarter financial performance and our outlook for the third quarter and full year. Following their remarks, we'll open the phone lines for a question-and-answer session. As a reminder, we're joined on this conference call by investors and others who are listening to our comments via webcast. Following the call, Cathy and I will be available to answer your follow-up questions. Also, as a reminder, any forward-looking statements that we make this morning are subject to risks and uncertainties, the most important of which are described in our SEC filings. Also, in these remarks, we refer to adjusted earnings per share, which is a non-GAAP financial measure; and return on invested capital, which is a ratio based on GAAP information with the exception of adjustments made to capitalized operating leases. Reconciliation to our GAAP EPS from continuing operations and to our GAAP total rent expense are included in this morning's press release, which is posted on our Investor Relations website. With that, I'll turn it over to Brian for his comments on the second quarter and our priorities going forward. Brian?

Thanks, John, and good morning, everyone. Our second quarter comparable sales decline of 1.1% was near the middle of our guidance range for the quarter but well below the results we expect to deliver over time. Against that backdrop, we reported much stronger-than-expected profitability. This outperformance was driven by our ongoing cost-saving efforts, which benefited both our gross margin and expense rates in the second quarter. These benefits helped to offset pressure from the current promotional environment, declining comp sales and the investments we're making in our team. I want to pause and thank our team for delivering this outstanding financial performance. At the same time, I want to emphasize that we are committed, first and foremost, to restoring positive comp sales growth in the quarters and years ahead. Based on the conversations with many of you, we know there's a great deal of focus on the broad macro challenges facing retailers, including a consumer focused on experiences, the impact of price deflation and a channel shift into digital. These are real challenges, but they are not new to our business. With the right strategy and strong execution, we've demonstrated our ability to perform in the face of those challenges, and our expectation is that we will continue to be a top retail performer over time. In the second quarter, our #1 challenge was traffic, which affected sales in all of our merchandise categories, and consistent with the first quarter, we saw higher-than-normal variability in sales patterns. Despite these challenges, we're encouraged that we saw the strongest sales performance around key second quarter events, including Memorial Day, the Fourth of July and the beginning of the Back-to-School season. As we analyze the drivers of our second quarter performance, we've identified some company-specific challenges we are actively addressing. This includes meaningful…

Thanks, Brian. Good morning, everyone. As Brian just mentioned, our store teams do an outstanding job serving our guests every day. It's long been a key point of differentiation for our brand. What I didn't fully appreciate until I came into my new role as COO was the workload that our supply chain processes have been driving into our stores. Historically, when we design processes to improve upstream efficiencies in our supply chain, we often achieve those benefits by moving work and complexity into our stores. One of the key priorities of my new team has been to look at the entire supply chain and find ways to optimize it end to end to deliver reliability for our guests while driving efficiency for the organization as a whole. A key measure of reliability is our ability to stay in stock, and I'm pleased that we continue to see improvement even as we begin to compare against improvements from a year ago. In stores, as we entered the Back-to-School and Back-to-College seasons, Target's overall out-of-stock position was better than we have ever measured historically. In addition, out-of-stocks on frequency and commodity items, the items for which reliability is most important for our guests, are in an even stronger position. And in the digital channel, while we have much work yet to do, we have already reduced out-of-stocks by more than 50% in the last 6 months. Our work to reduce variability in our distribution centers has been one of the drivers of these improvements. In the past, an unacceptable number of vendor shipments were received by our DCs either too early or too late. This variability drove a lot of extra workload in the DCs while reducing our reliability downstream. As a result, this year, we have been collaborating with our…

Thanks, John, and hello, everyone. Our second quarter adjusted earnings per share of $1.23 was better than the high end of our guidance and just better than last year. Second quarter GAAP EPS from continuing operations was $0.16 lower than adjusted EPS, driven by $0.17 of debt retirement costs due to settlement timing on a subset of our first quarter debt tender offers. This quarter's profit performance was quite impressive in light of the challenging sales environment. Specifically, comparable sales declined 1.1% this quarter, in line with our guidance and well below our plan at the beginning of the year. As expected, the total sales in the second quarter were down more than 7% from last year, driven by the sale of our pharmacy and clinic businesses to CVS. Digital sales grew 16% in the second quarter, contributing 0.5 point of our comparable sales growth. Looking at the components of our comparable sales. Comp transactions declined 2.2%, partially offset by a 1.1% increase in average ticket. While ticket growth was broadly consistent with the last couple of years, traffic performance showed a meaningful change from prior trend. I want to pause and make it clear that we are not satisfied with our second quarter traffic and sales performance, and as Brian described earlier, we are taking steps to grow both our traffic and sales over time. REDcard penetration was 23.9% in the first quarter, up about 180 basis points from last year. However, given that last year's pharmacy sales had a much lower-than-average REDcard penetration, the removal of those sales from this year's results drove a portion of the penetration improvement. Excluding net benefit, REDcard penetration was up about 70 basis points from a year ago. Moving down the P&L. Our second quarter EBITDA margin rate was 11.2%, up about…

[Operator Instructions] Your first question comes from Matt Fassler with Goldman Sachs.

My first and primary question relates to the -- how much impact do you think the CVS pharmacy transition had on traffic? Did you see that dynamic deteriorate from the first quarter? And is there a way to quantify perhaps how much you feel like the spillover effect from that would have impacted the overall comp?

Matt, as I discussed in my prepared comments, our traffic was impacted by a number of factors, including CVS. So we certainly saw a slowdown in our pharmacy operations. We're working closely with CVS to launch some new marketing campaigns to win back our Target guests and certainly to begin to unlock the potential of their PBM network. So that certainly played a role, but we also had other factors that we're focused on right now. We're not pleased with the performance we saw in Food despite making some really good progress in presentation, improving our assortment and, certainly, the freshness of our products. So our #1 focus as we sit here today is driving traffic back to our stores and accelerating visits to our site, and addressing the pharmacy impact is just one of the variables we're focused on today.

And by way of quick follow-up, a different topic. You touched on Apple products down over 20%. We're obviously in the middle of a bit of a pause between the iPhone releases, leading up to one most likely later this year. Is the Apple softness, at this point, really an iPhone story? Or is it a broader issue across the product suite?

Matt, for us, it's a broader story across the product suite. And one of the first things we've had Mark Tritton do is actually spend time with our Apple partners, really making sure that we're putting the right plans together for the back half of the year, that we're ready to capitalize on their new innovation that they'll be bringing to market. But again, as we think about factors that we have to address to improve our traffic and overall sales performance for the back half of the year, we have to improve Electronics performance. It was a significant drag, 70 basis points on our overall comp decline in the quarter, and Apple played a significant role there. So we overindexed with Apple products. Our guests come to us looking for those products. They're looking for the newness and the innovation, and we're putting together plans with Apple and our merchandising teams to make sure we're ready to take advantage of that in the back half of the year.

Your next question is from David Schick from Consumer Edge Research.

My question is on the competitive environment. You talked about all the different things you're working on with traffic. But is there anything out there that you're seeing in -- anything you could highlight sort of in the major categories that's going on in the marketplace that might be affecting your -- either your traffic or your customers' attention and how you're thinking about addressing that in the back half?

Well, Matt (sic) [ David ], I think we've seen this environment persist now for well over a year. It's a very cautious consumer. If we look at the overall trends within retail, we've certainly seen, on a rolling 12-month basis, a slowdown in retail sales growth. But that's not an excuse for us. We're going to make sure we're leveraging our strategic levers. We continue to make sure we improve our in-store experience. As John talked about during the call, we've got to make sure that we offer a sensational in-store pickup experience and also make sure that our site is easier to work with and allows us to ship directly to home. So we're going to make sure we're leveraging the key components of our strategy. I feel really good about the progress we've made in store in preparation for Back-to-School, Back-to-College. I've been out into a number of markets. I don't think our stores have ever looked better. So it's a competitive environment. It's going to continue to be a competitive environment, and we'd better make sure that we leverage our strategy, make sure that we're bringing the best of our signature categories and bringing the value the guest is looking for in core household essentials to win trips and win back trips in the second half of the year. So it's competitive, but it's always competitive. And we've got to make sure that we're leveraging our assets and our strategy to continue to drive performance in the back half of the year.

I guess the follow-up to that would be, it's competitive, as you say. It continues to be competitive. Is there any change in the balance of whether it's new products and merchandising or pathways brought to market or pricing? Anything changing in the way the competitive environment looks to you, the makeup of it?

David, you've used an important term that I've been using internally, and that is balance or rebalancing. And as I look at my experience now over the last couple of years at Target, we're best when we balance both ends of our brand positioning. We've got to deliver on the Expect More component, and I think we've done a sensational job there. Our progress in Apparel and Home has been really significant. And we've got to make sure we never lose track of the other side of our brand promise, and that's the Pay Less side, and that's all about those core household essentials that we have to make sure are presented effectively in store, in our circular, on our end caps to our guests each and every week. So as we think about the back half of the year and the keys to driving our business going forward, we've got have both of those levers in balance. We've got to continue to make sure our signature categories, and particularly those important Style categories, continue to connect with our guests, and we've got to deliver great value through household essentials, those everyday products that drive that Target run. So that balance or rebalance is critically important to the actions we're taking in the back half of the year.

Your next question is from Oliver Chen with Cowen and Company.

We had a question regarding the dynamics you're seeing between fill-in and stock-up trips. How are you feeling about that in your research? And also, as we look towards the back half and model our views on comp store sales, what would you prioritize as the biggest drivers to improve traffic in terms of the different initiatives that you're pursuing in light of what you're seeing? And just another question we had is why do you think this happened in pharmacy in terms of what was the consumer experiencing in your store that made the transition a little more disruptive than you would have wanted?

Yes. Well, let me try to break apart those 3 questions and have Cathy and John jump in as appropriate. As we think about the rebalancing and the work that we're doing from a merchandising standpoint, an in-store presentation standpoint and also a weekly advertising standpoint, we recognize we have to continue to deliver the right presentation for that stock-up occasion and, particularly in the back half of the month, have the right assortment, the right presentation, the right availability of the items our guest is looking for in that fill-in occasion. So we're activating and ensuring we put those changes in place to find the balance as we speak today. So we're certainly very focused and aware of the fact that we have to win on both fronts. We've got to have the right assortment for that stock-up occasion, and we need to make sure we have the right pack-price architecture to meet the needs of the guest during that fill-in occasion. So we're very focused on that. From a CVS standpoint, I'll let John jump in here. It's not a surprise to us that there's been some disruption, and I think for all of us on the call, we know what it's like when we change a pharmacy prescription and move from one provider to another. And while they're staying in our location, they've got to sign up for some new programs. They're entering a new environment. There is some time that that's going to take, but we've been very pleased. John's been working with his CVS counterparts on the transition. We've had great collaboration and great partnership. We're starting to activate the marketing and the personalized messaging, and we expect, over time, we'll see that business accelerate. And we expect pharmacy and the partnership to be a future driver of traffic and growth. But, John, why don't you talk about some of the things we're doing at store level with CVS?

Yes. I think I'd start by first echoing what Brian said. We thought going into the deal we had a great partner. And certainly, what we have observed through the transition here, been a great partner to work with. Our teams have worked together very well to transition. We've done the best job we can in transitioning guests. But as Brian said, change is change, and sometimes you just need to work through that. From a go-forward perspective, we're working with CVS certainly on some of their capabilities that they'll bring to bear for Target and, as Brian said, unlock their PBM network into our stores. But more importantly, day to day in the stores, we see great guest service -- continue to see great guest service from our pharmacists, CVS would note that probably the best scores they've ever seen in a transition like this, and then starting to work with them to engage the pharmacy more back into the store through things like the opportunity here at Back-to-School, Back-to-College with flu shots and having the pharmacy play a more prominent role as we go forward. And so the teams continue to develop plans like that. They're very focused on it. We're focused on it, and we're very excited about the opportunity here as we continue to move forward.

Oliver, this is Cathy. I'll add a little bit more, too, around priorities for driving traffic in the back half. And we're really excited because we go into this part of the year where we have a lot of the events, and that's where Target really has some great plans. We always have great plans. Back-to-School, Back-to-College, we're excited about. Obviously, the launch of Cat & Jack has started out very successfully with a lot of learnings that we took away from Pillowfort, both online and in stores, and then, obviously, we go into our prime time. And so standing tall on the events that we typically have always done, but we're really well positioned. And then it's the things that Brian and John have already mentioned, the rebalancing of our messaging. We are relooking at all of our Grocery efforts around presentation, assortment and promotion of the Electronics, the newness that Brian mentioned and then, obviously, the work that John just said around CVS.

Yes. So Oliver, as we think about the second half, we've got to continue to build on the things that are working today. Even in a challenging second quarter, we grew market share in the important Apparel space. We saw very strong results in our home categories. We continue to be a destination for toys. So we've got to build on the things that are working and ensure that we're also winning trips for those core household essentials. So we'll be focusing on rebalancing, on leveraging the improvements we've made, both in store with our in-store pickup process and also online. And we're not altering our strategic focus. It's making sure we get our strategies in balance and we deliver against both signature categories and those important household essentials that drive traffic to our stores and put cars in the parking lot.

Your next question is from Kate McShane with Citi.

I think when you gave guidance for Q2 originally, it was because of some of the higher inventories that you flagged at other channels, especially with regards to Apparel. So I was just wondering how much you think you're benefiting from some of the weakness that we have seen at the brick-and-mortar department stores, especially when considering your women's Apparel comp was up mid-single digits during the quarter.

Well, we certainly think we are winning in the Apparel space, and I think a lot of that's really driven by the changes we've made, the improvement in our assortment, in quality and being more on trend with some of our fashion assortment. I talked about Xhilaration performing very well in the quarter. Who What Where continues to be a real winner for us in connecting well with our guests, and we've also matched that up with an improved in-store experience. We've been talking about mannequins for a while, but the role that our visual merchandisers are playing, the investment that John and I made last year to ensure we had not only mannequins and home vignettes but the talent in our stores to maintain that experience 52 weeks a year is certainly connecting with the guest. So we think we're benefiting by really executing against the strategy we've been talking about for several years, making sure we have the right quality, innovation, presentation in our stores and we surround our guests with great service. And that's paying off with market share gains in a challenging environment, where we continue to see improvement in our Apparel and home assortments.

Your next question is from Greg Melich from Evercore ISI.

I wanted to follow up a bit on traffic and then get into the guidance a bit. On traffic, if you think about it a different way, I think about a year ago, traffic had recovered nicely to, say, up 1%. And overall retail sales are growing roughly where they were, just looking at the government data, and now the traffic is obviously down a couple of percent. Is -- do you see any differences in terms of geographies or other things going on, income demographics around your stores, where that traffic trend is different just looking at the last 12 months?

Yes. Greg, we certainly do, and Cathy and I talked about this at the end of the first quarter. We've seen quite a bit of variability on a day-to-day, week-to-week basis between different markets. We've seen particular strength in many of our West Coast markets, very strong performance in California, driven by a great performance in L.A. and San Francisco, but other parts of the West Coast. We've seen pockets of softness on the East Coast. And we've really tried to make sure, market by market, we're looking at those dynamics, looking at the competitive dynamics, understanding what we can leverage from the markets where we are seeing increases, like Los Angeles, and bring that into challenged markets. But we've seen, over the course of this year, in 2016, much more variability than I've seen in many, many years. So we're drilling down on that, and as we think about our plans for the second half of the year, we're building market-specific action plans to make sure we address the market-specific needs of our stores and our guests.

That's helpful. And then, Cathy, I think on the margins, I just want to make sure I got the guidance right. If I take the midpoint, I get to the -- you mentioned the third quarter flat EBIT margins, although I imagine ex the CVS sale, they would be down like 30 bps. In the fourth quarter, I -- is that right?

Yes. So it's slightly down EBIT margin. We said gross margin and SG&A, about where they were last year.

Fourth quarter, is -- does the guidance imply that EBIT margins are going to be flat?

It is slightly up, so -- yes. So slightly down, Q3; slightly up in Q4.

Okay. I just want to make sure I got that right. And then, I guess, last on that, just to make sure. The inventory up 4%, do you guys think, I mean, that you're comfortable with that number, not like part of the third quarter is working that inventory down?

Greg, we're very comfortable right now with our inventory position.

Your next question is from Dan Binder from Jefferies.

Dan Binder. I had a question on the consumer Electronics category. You talked a lot about that today, and I've noticed, in your stores recently, you've had some reset activity, particularly in TV as you offer more 4K. I am curious, as you work through these plans to improve that business, do you think that can be a category that returns to positive comps by holiday given all the changes you're making?

Dan, I think it's going to be largely driven by the new innovation that we bring to the guest in the fourth quarter. So we've certainly seen pockets of strength. I mean there's certainly winners and losers within that space. We've seen continued performance with wearable technology, but it's not overcoming the softness we've seen in mobile, in tablets and in some of the core items. So I think the success of that category, as always, is going to be driven by new news and news that connects with the guest and drives traffic into those categories. So again, it's why Mark and his team are very focused right now in working with our Electronics vendors to make sure we have the right innovation, we're presenting it in a way that's impactful for the guests, and we have to see improvements in a category that's been a big drag on our comps over the last couple of quarters.

And then a follow-up on the Food category. You mentioned you were reevaluating promotion in, I guess, Food and consumables. I'm just curious. It sounds like you'll increase it. So I'm just curious, are you seeing others out there being more aggressive in the category? Is that what you would attribute the softness to? And if that is the case, which channels are you seeing it in?

Yes. Dan, I think there's been a lot written recently about the competitive nature of the Food channel. And for us, on one hand, we feel -- I feel really good about the progress we've made with assortment. If you walk our stores today versus even 6 months ago, aisle by aisle, you're seeing more organic, more natural, more gluten-free, more local items that are on trend. The freshness and the work that John and his team have done from a supply chain standpoint is clearly connecting with the product we're delivering to the guests, and we've seen an uptick in categories like produce because we're delivering better product. But at the same time, market by market, this is a very competitive space. There's clearly food deflation right now that we're facing, and it's a very competitive environment. And back to the earlier question about traffic and performance trends by market, we're looking very specifically at food by market across the country because we face a number of regional competitors, and we'd better make sure our presentation, our promotion, our approach enables us to compete market by market.

Congratulations on the LA25. It sounds like you're getting good results out of that. I was just wondering if you could share with us the likelihood of being able to roll that out. Is it a cost-efficient format? Or are you primarily using it just for learnings?

Well, Dan, we've certainly used it as a learning lab, but our intention is to lift the winners from LA25 and quickly bring them into other stores across the country. And while it's still very early, we have effectively 1 quarter learning under our belt, I'm very pleased with some of the results we're seeing in Apparel, in Home and certainly in Food, where, as I mentioned during my prepared comments, we're seeing performance in those 25 test stores that is clearly, clearly really encouraging from a Food standpoint, particularly in the perishables space. So we'll be looking to leverage that learning. That's part of our strategy that we've articulated for several quarters now, that we want to use L.A. as a test market to lift and shift the winning concepts into more stores across the country, and we'll continue to lift and leverage the learning from LA25 to improve the experience in the presentation of product throughout our Target stores.

Your next question comes from Scott Mushkin from Wolfe Research.

Yes. I wanted to continue on the path where Dan was going. But before I get started, I have to say, on our store visits, you can definitely see the improving execution. So kudos to John on getting that done. But getting back to the Food discussion. Our research has shown some pretty aggressive moves, and I think Dan was getting at this. I mean, are you guys going to match what's going on in the market? And it looks like we're at the beginning end of a pretty aggressive price war. How do you see it? Where do we -- we're now seeing deflation reported by the government at 1.5%, 1.6%, and our pricing surveys are even greater than that. So where do you see this going? What do you guys plan to do to combat it tactically in the short term? And then I wanted to address the longer-term Food business after that.

Yes. Well, Scott, I'll start with we're playing to win, and we've invested heavily in that very important category. We've had a long-term commitment to Food. We think it's very important for our guests. And over the last couple of years, while we've done it in a very disciplined fashion category by category, and I appreciate hearing you say that you've seen improvement in execution and, hopefully, in presentation, we've added thousands of new items, and we've worked with our vendor partners to make sure we're bringing the right innovation category by category. Our team is absolutely going literally item by item, commodity by commodity to look at how we source and how we flow product to improve freshness and the quality we present to our guest. So we've got to make sure we have the right assortment, the right presentation, the right quality. We have to have the right promotional strategy to compete, but we're playing to win both short and long term. We think it's very important that we continue to make progress in this space. We're going to make sure we do it in a very focused manner. We really like what we're seeing in LA25. We're not going to roll it out to 1,800 stores tomorrow. We're making sure that we can validate what's working and how can we drive profitable sales in that space, but we are playing to win in Food, and we're going to continue to roll up our sleeves and make sure that we're into the details, finding ways to unlock the growth potential in that critically important category.

So Brian, so to kind of dovetail more into the longer term. When you were at Safeway, you guys obviously did a lot of remodels that drove comp. LA25, it sounds like traffic's positive there. But in the article, I think it was in The Journal, they talked about the board is very reluctant to put more capital behind the Food effort. Talk us through this. I mean, you've got a traffic issue. Consumables mean traffic. But if you won't invest, it's hard to get the traffic, so you're almost kind of caught in a catch-22 here. And I just want to get your outlook or your thoughts on what I'm saying given the longer-term need for traffic and to drive traffic into the store to make earnings rise continuously as we look out in the out-years.

Yes. And, Scott, in all due respect to The Journal, let me speak on behalf of our leadership team and the board. We have no hesitancy at all in investing capital in our business that drives growth and the right returns. And as Cathy has demonstrated throughout the last few calls, even in challenging times, we generate significant cash flows, and we want to make sure the first thing we do with that cash is invest back in our business. So it's why we're spending time looking at LA25. It's why we've been testing a number of different features throughout our stores from Apparel to Home to Food. It's why we're so excited about investing in flex-formats, where we see a very strong response from the guest. Those are delivering very strong returns, well ahead of our original plan, and Food plays an important part in those smaller flex-formats. So despite what you may be hearing, we have absolutely complete support from the board to make sure we're investing capital behind the initiatives that are going to drive future growth. So again, we're not playing for just the short term. We're playing for the long term. Those capital investments have to be done on behalf of the guest and our shareholders, but we're looking right now at a number of different opportunities to continue to invest to drive growth. So there's no hesitancy at all in making those investments. And as you just said, Food and perishable and consumable categories will play a very important role in driving traffic to our stores and in the future, we've got to continue to bundle that with the work John's doing to make sure -- and we're investing and improving our in-store pickup processes and experience. That's an investment we're making and an investment we're making for the holiday season. We're continuing to invest in our digital assets. So there's no hesitancy at all from this management team nor the board in making the right investments in our long-term success.

Your last question comes from Joe Feldman from Telsey Advisory Group.

Brian, one of the questions I had was, you guys have made a lot of changes in the stores, and we clearly see them. And obviously, we talked all for the past hour about a lot of them. I'm curious about the marketing or communication of that, though, to just the consumer. I mean we see it because we're all following the company pretty aggressively and in the stores. But I wonder if there's more could be done on the advertising side to tell people that you've made so many changes in Grocery or that the home department looks better in a lot of stores. Or can you talk a little bit about that and where we're at in terms of when we'll see something like that communication-wise?

Yes. Joe, it's a great question for us to end on, and I'll take personal responsibility for this. I talked earlier about the fact that we've got to be rebalancing our messaging, and we've done a really terrific job of elevating our messaging and communication around our signature and, particularly, our Style categories. As we go forward, I've used this term before, we've got to make sure we're rebalancing. And we've got to make sure we continue to elevate our messaging, our communication around Style and those core household essential categories, which include Food, that drive traffic to our store and are important to our guest. So making sure we go back to the brand promise. We've got to make sure those Expect More categories, like Style, we continue to elevate, and we've got to make sure we deliver the Pay Less component and ensure that we balance the work that we're doing from a Style standpoint with the progress we're making on those core household essentials, which include Food in that offering. So it's a really important question. It's certainly a big area of focus for us in the balance of the year and into 2017, and I think it's going to be part of the formula that drives traffic back to our stores and improves comp store growth over the balance of the year and into 2017. So operator, with that, we're going to conclude our call. And I thank all of you for joining us for our second quarter earnings call today. Thanks for participating.

Ladies and gentlemen, this does conclude today's conference call. Thank you for participating. At this time, you may now disconnect.