Ladies and gentlemen, thank you for standing by, and welcome to the Fourth Quarter 2019 Winnebago Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker, Mr. Steve Stuber, Director of Investor Relations and Financial Planning and Analysis. Please go ahead, sir.

Thank you. Good morning, everyone, and thank you for joining us for Winnebago Industries' conference call to review the company's results for the fiscal 2019 fourth quarter and full year, which ended August 31, 2019. I am joined on the call today by Michael Happe, President and Chief Executive Officer; and Bryan Hughes, Vice President and Chief Financial Officer. This call is being broadcast live on our website at investor.wgo.net, and a replay of the call will be available on our website later today. The news release with our fourth quarter and full year earnings results was issued and posted to our website earlier this morning. Before we start, I'd like to remind you that certain statements made during today's conference call regarding Winnebago Industries and its operations may be considered forward-looking statements under securities laws. The company cautions you that forward-looking statements involve a number of risks and are inherently uncertain, and a number of factors, many of which are beyond the company's control, could cause actual results to differ materially from these statements. These factors are identified in our SEC filings, which I encourage you to read. With that said, I would now like to turn the call over to our President and CEO, Michael Happe. Mike?

Thank you, Steve, and good morning to those on today's call. As always, we greatly appreciate your time and especially your interest in Winnebago Industries. This morning, I would like to begin with our annual overview of the progress made in transforming our business in fiscal year 2019, and highlighting key strategic drivers of our performance. We will then turn the call over to Bryan Hughes, who will provide more detail on the related financial results, and especially details on our Q4 performance. I will then return to offer some closing thoughts as we look ahead towards fiscal year 2020. We are extremely proud of the tremendous progress our Winnebago Industries team of employees has made throughout the year, executing against our ambitious goal of transforming Winnebago Industries into a premier outdoor lifestyle company. By staying focused on and continuing to activate against our 5 key enterprise strategies, we have enhanced our performance and built steady, consistent momentum behind our business. Our first and most important strategy continues to be to build a high-performance culture through a unique blend of leadership, accountability and giving. In fiscal year 2019, we maintained our commitment to invest in strengthening and deepening our bench of talented leaders. In addition to our key Leadership Development Summit, we also strengthened talent in many important areas: tech, supply chain, specialty vehicles, sales management and engineering. From an accountability standpoint, we delivered on the quarterly and annual expectations of the financial community, and produce increased earnings per share for our investors. And in the spirit of being a strong corporate citizen, we initiated a more elevated formal level of engagement within the company around corporate social responsibility, including diversity, equity and inclusion, along with community giving. The second enterprise strategy encompasses our intent to strengthen and expand our…

Thanks, Mike, and good morning, everyone. As usual, I will dive right into the numbers, providing some additional context where beneficial. Fourth quarter consolidated revenues were $530.4 million, a decrease of 1.1% year-over-year, driven primarily by a decrease in Motorhome revenues of 12.2%, partially offset by strong organic growth of 6.3% in the Towable segment. Gross profit was $83.2 million in the fourth quarter, a decrease of 0.8% year-over-year. This slight decrease was driven by the sales decline. Gross profit margin increased 10 basis points, driven by favorable segment mix. Fourth quarter operating income was $44.8 million, down 2%, and net income was $31.9 million, an increase of 7%. Earnings per share were $1.01 per diluted share, an increase of 7.4% over our $0.94 in the fourth quarter of last year. Both net income and earnings per share were favorably impacted by an improved tax rate, resulting from the Tax Cuts and Jobs Act. Lastly, we note that net income and earnings per share were unfavorably impacted by due diligence cost of $700,000 or $0.02 earnings per share related to the Newmar acquisition announced on September 16, 2019. Turning to the full fiscal 2019 results. Consolidated revenues were $2 billion, a decrease of 1.5% from fiscal 2018 primarily due to a decline in the Motorhome segment of 17.9%, partially offset by impressive growth in the Towable segment of 6.2%. Operating income for the fiscal year was $155.3 million, down 3.2%, and net income was $111.8 million, an increase of 9.2%. Full year earnings were $3.52 per diluted share, a 9.3% increase from $3.22 in fiscal 2018. Net income and earnings per share were favorably impacted by an improved tax rate, resulting from the Tax Cuts and Jobs Act and a favorable change in estimate related to prior year R&D tax…

Thanks, Bryan. Throughout fiscal year 2019, the RV industry has seen its share of challenges from dealers and OEMs rebalancing their finished goods inventories, to the fluctuation in the interest rates, to the impact of tariffs and trade issues on end customer's pocketbooks and confidence. And yet, industry retail has remained incredibly solid, especially our company's retail from a historical perspective, considering these headwinds. The demise of the RV lifestyle has been a bit exaggerated in our opinion from a retail perspective. We would like to take a moment and provide some further thoughts on the health of the overall RV market, and then share some commentary on areas of future focus within the Winnebago Industries team. Over the long term, we, like many of our outdoor industry peers, remain confident and bullish that the growth and penetration prospects of the Recreational Vehicles and Marine segments in North America are trending in a net positive direction. The appeal of the outdoor lifestyle, especially those activities broadly spent with family and friends creating new experiences, is becoming increasingly popular, with what we view as a multigenerational customer base. In addition to baby boomers, who are a key customer group for several of our businesses, millenials and younger demographics are actively seeking unique outdoor experiences. Our customers appear to have a growing sense of adventurism and are opting for healthier and mobile lifestyles. Technology and mobility mediums are allowing all of us to have connected experiences outdoors, regardless of the use case. Campgrounds and marinas remain busy, and in some cases, full. We have seen a steady flow of traffic at retail shows around the country this fall, including the recent California RV show, where attendance was said to be materially higher than a year ago despite several days of high winds…

[Operator Instructions]. Our first question comes from Craig Kennison with Baird.

Question on the promotional trends. The press release called out sales allowances in the Towable business, which affected margin. It was my impression that Grand Design did not discount. So you can confirm those sales allowances are tied to Winnebago-branded Towables?

Craig, this is Mike. I think your assumption there is correct in that the promotional pressure that we've seen on the business has affected the Winnebago-branded RV products more than our Grand Design RV products.

And then Brian, I think if my calculation is right, you had an extra week in the quarter. Anything -- first of all, is that true? And second of all, are there any implications for margin that you call out?

Yes. It's true, Craig. We did recognize this year our 53rd week, and it took place in the fourth quarter. There's not a material impact from that extra week, we believe, in either the top line, frankly or in the leverage equation. I think we managed that 13-week period with our dealer network much like we would've just managed a 12-week period and time the sales accordingly. So we evaluated that, of course, and concluded that there was not a material impact from that additional week.

Got it. And then Mike, finally, kind of a bigger picture question here. But what's your vision for Winnebago as the RV market embraces more digital solutions and thinking smart RVs or the Internet of Things for RVs? I am curious if you think Winnebago needs to develop some of these platforms on its own? Or would you consider kind of partnering with the supplier base who might be able to build things that could scale across other manufacturers? It seems like a tough call given your scale, which is strong, but not the largest in this space.

Yes, thanks again, Craig, for the question. I think my answer in some ways is all of the above, meaning that I think largely around technology that emerges that is applicable to the industries we compete in, we will largely be an integrator versus an inventor of most of that technology. And we will work with suppliers and other key partners to apply and adapt that technology to our products and hopefully a way that gives us a competitive advantage in not only the way that the products operate and the way consumer engages with those products. But in many cases, the information that's generated because of these emerging technologies and how you can use that information to deliver more value for the consumer going forward. So we have created an Advanced Technology Group for the purposes of working on what we call Horizon 2 and Horizon 3 technology application. Often times, you will see the business units in the company be a little bit more risk averse in the short term with their R&D and engineering spending because they have a responsibility and a appetite for monetizing those engineering expenses and getting a return on them quickly. So really the creation of that particular group is intended over the next decade to allow us to leapfrog at times our competitors with hopefully technologies we can apply. So yes, great question. It's one that we're also working on and constantly aware of, but we'll invent or hopefully innovate a few things ourselves, but we'll have to have a network of goods strategic partners that can create our own digital experience for our customers going forward.

And our next question comes from Scott Stember with CL King.

Can we maybe just talk about the delta between -- just trying to smooth out really what's the true order pattern is here for Grand Design in the Towable business. Your retail seems to be accelerating to the upside, I think you are up 17% per stat surveys through August. And obviously, the increase in capacity has helped you push through more units. But what I'm trying to get at is are dealers ordering 1 for 1 at this point in time right now for your Grand Design products?

Scott, this is Mike. Let me address, first of all, the retail pattern and trend that we continue to see on Grand Design, even extended into our first quarter fiscal year 2020 continues to be very solid. We are on a materially higher than what the Towables industry retail trend appears to be. So we are pleased to see that their business continues to have that momentum in the market. We mentioned in the call that we have continued to add capacity in over the last several years to keep up with increased demand for that brand. And some of the online capacity that was annualized and available to us in fiscal '19 was very helpful to working their backlog into a more appropriate place than it had been in previous years where it was extremely elevated and, in some cases, too elevated in terms of timely delivery. The Grand Design business tier, to the latter part of your question, does continue to see good retail replenishment order activity from their dealers. As you know, we just completed the open house event where they also were able to collect a number of additional orders as well. But I would say that the balance between retail replenishment orders for Grand Design and those long term stocking orders that they would have collected at events like open house, have begun to balance. And we see their current backlog at the end of Q4 as one that is very healthy for the opportunity that we have ahead in 2020.

Got it. And moving on to motorized. You talked about the move from Oregon to Indiana, I'm sorry to Iowa for the motorized, the diesel product. What was the impact in the quarter to the negative side? And maybe just remind us again the savings and the benefits that potentially hit in 2020?

Scott, this is Bryan. The impact of Q4 specifically was relatively neutral. For the expenses we incurred, restructuring, relocating, et cetera were basically offset by the savings we think we generated. For 2020, we think there's going to be about $4 million favorable year-over-year from that item.

Got it. And then just lastly, on the Class B side. You talked about better availability of chassis on the Sprinter side. Can you maybe just talk about is that process completed? I know that you, at recent events, Mike, had talked about some other issues with delivery issues from the supplier. Are we all squared away with that? Or are there still some residual headwinds that we have to contend with?

Thanks, Scott, for the question. And I'll be very clear here in case that specific supplier is listening on today's call. The situation is improved, but it is not completely resolved. We continue to work through supply availability issues in terms of timing and 100% accuracy of the specifications of those products. It's improved during the quarter, and we believe we have a get-well plan with that supplier that we continue to work. But I will tell you, we did not go into deep detail during the call or any of our prepared comments about the loss of revenue opportunity and the significant dollars that we spent in rework of those chassis in our Q4. The loss of revenue opportunity in Q4 on Class Bs was probably 8 figures on the top line. And we spent 7 figures of rework expense in Q4 just around this specific issue. And so, no, it is something that is very top of mind. That being said, our Class B team in the Winnebago-branded Motorhome business is doing a fantastic job of getting enough chassis to the market across the various Class B brands in order to effectively move our share higher in the market. I believe our share now is above 40% in some of the recent stats that I've seen, and we continue to move in the right direction.

And our next question comes from Steve O'Hara with Sidoti & Company.

I guess, I'm just curious about two things. First, the outlook for Chris-Craft itself, where that stands. I believe you are in the middle of a CapEx program there and maybe your expectations about growth in that market. Do you think you could exceed the market growth given that expansion? And then just relative to motorized, I mean, Class A came down again pretty sharply in terms of the or very sharply in terms of the deliveries. And I'm just wondering, maybe double that, what's the benefit of maybe trying to turn that business around rather than just pour the resources into Newmar when that's acquired?

Steve, let me address the first question first. Chris-Craft, the business has performed well since we bought it in June of 2018. They have exceeded not only our internal M&A models that we use during the process, but they have exceeded the growth of the industry in their particular segment, which is essentially 20- to 40-foot fiberglass outboard and sterndrive boats. They have a very solid, multigenerational product pipeline and plan in front of them. I talked about the GT launch product that they have been in the process of rolling out. We have a number of new boats coming in 2020 and 2021 that will continue to extend and deepen the Chris-Craft line. We have been very diligent and careful about the capacity expansion project in Sarasota, working with some of our outside partners. We have not broken ground on that. We have been very careful in terms of getting the design and the plan of that plant right. And we will, in the very near future, begin to move towards the construction phase there. It is, I believe, only around 80,000 square feet, which is materially important for the Chris-Craft business, but it's not a huge, huge space when compared to some of our other capacity expansion projects. Let me transition to your questions about the Winnebago motorized health across the line. We certainly continue to perform well in Class Bs. We have struggled in Class As. And Class Cs has been a bit of a mixed bag through 2019. As I look at our backlog going forward, at the end of Q4, our backlog was really in good shape on Class Bs, and our Class C backlog was actually twice as high at the end of F '19 as what we had at the end of F…

Our next question comes from Gerrick Johnson with BMO Capital Markets.

You called input costs as a headwind to both margin -- to margin in both segments. We are seeing those materials you use seem to be dropping in price pretty quick inventory turn. So just wondering when you start to see that headwind turn into a tailwind?

Yes, I don't know that we see it turning into a tailwind necessarily, Gerrick. The tariff environment, the general inflation environment is such that it has caused increases, broadly speaking, for the industry. And that's, as I mentioned, been largely offset through cost savings initiatives, negotiations, of course with our suppliers, and ultimate, with pricing. So we make sure that we can, over the long term, cover cost increases with that pricing activity, if necessary and we can offset it the other items. But I don't see it reversing on us, save for some pretty strong trade resolution. And then in the event that trade dispute is resolved with China in full, for example, under that scenario, there would certainly be then ongoing conversations with our suppliers. Remember that we don't buy any of the impacted material directly. It's all through our vendor network. And so there would be a time period where that would need to settle out so to speak. But unless there is a pretty dramatic shift in trade policy, I don't anticipate in 2020 any tailwinds, as you refer to it.

Okay. We're just looking at the input costs, we're seeing steel down, aluminum down and plastic down, and wondering why that's not coming through for you guys.

Yes. From a spot price perspective?

Sure.

Yes. I think, look, our view is Q4 versus Q4 specifically, there's -- it's not on our side because of our negotiation last year, but we're not seeing that kind of reduction year-over-year.

And our next question comes from Michael Swartz with SunTrust.

Just some clarification questions. First off, the reported EPS and EBITDA, I guess, it was $1.01 and $50 million, almost $51 million respectively. Those include the cost related to the Newmar due diligence as well as any costs related to the reconsolidation of diesel production in Iowa, correct?

Correct, it does. The $1.01, includes those costs, we called out the Newmar due diligence cost, which is -- we don't have any transaction cost, obviously and we haven't closed the deal yet. But the due diligence cost we called out that's worth $0.02 that are included in the $1.01.

Okay. Perfect. And then maybe, Bryan, just a little more color on the accounting correction that you talked about, I think, as it relates to the Motorhome business? Did I hear correctly that, that was a negative $10.8 million in the quarter? I think you were trying to call out that you may have been benefited in prior quarters from that, but did I hear that correctly?

Yes. Yes, you did. So just a little more color. We performed our physical account for a work in process inventory once per year and that's just in the ordinary course of closing our books. And as a result that count, which we performed in the fourth quarter, we identified we needed to increase cost of goods by $10.7 million. That caused Q4 costs to be higher, and so you are interpreting that correctly than the -- otherwise it would've been. But to be clear again, the 2019 fiscal year, the full year is correctly stated.

Okay. Okay. That's great. And then just, I guess, when I look at the backlog for Towables and certainly directionally, it's been moving in a very healthy direction. If I look at the implied intraquarter orders in Towables, I mean, it is a large jump this quarter. I think you were up like 34%, 35% year-over-year. So how does that play into your thoughts about dealers, their ordering and stocking patterns and maybe just the overall health of your dealer base?

Yes. I think the health of our dealer base across each of our business slightly varies based on the maturity and the current vitality of the brand. Certainly, I think the Grand Design dealer base has been able to produce the momentum on that brand to date and has the potential and capacity to continue forward as well. We do believe that even in a period where inventory levels appear to have been largely reset, maybe not all the way, but largely reset, the dealers are continuing to be very careful and selective with the brands, but also the models and the amount of inventory that they choose to carry on their lots. And so as I mentioned in an answer to a previous question, we believe that the large stocking order backlog process that was used by many of the OEMs during the later cycles of the recovery, 2015, '16 and '17, especially, has shifted a bit more to a natural reorder process by the dealers. And it really depends, sometimes you have to take the new products out of this discussion as well and talk about, okay, are you introducing a new product to the market and setting new inventory on the shelves? Or have you annualized that and you are now in sort of a steady operating state? So the Grand Design team continues now to refresh their product line. They have not introduced a new subbrand for a little bit more than a year now. So you are starting to see a bit of a settling of orders into more of a replenishment process. And again, as I mentioned, we are comfortable with the orders that we have in hand. We've been very comfortable with the retail that we've seen in the market on that brand. And the open house event was a very solid order production event for Grand Design.

Okay. And maybe one last question, if I can. There was news, I believe, last week earlier this week that one of the large RV transport companies has elected to shut down. Any thoughts on how -- maybe you weren't using them to the extent that some others were and some of your dealers were? But any thoughts on how that might impact you or timing of deliveries or cost of deliveries within the industry overall?

Yes. It's a good question. And I would say a number of our businesses are not impacted by that development at all. One of our customers, Camping World, that we do business with in our Winnebago motorized business especially, will possibly see some impact with the transport that we've seen. But it should be nothing material in terms of our financial results or our ability, we think, to be able to get market. It is, again, I'm not in the middle of this personally, but it is our thought that many of these independent contractor drivers will potentially be shifted with their vehicles over to some of the other transport companies within the industry. So for Winnebago Industries, we became aware of it very quickly. It's not impacting our business on a day-to-day basis. We don't anticipate it much to have impact in the future. And I guess like with any other capitalist market, you'll see someone step in and buy and compete for that particular business within the industry. So there may be a transition period, but we'll do everything we can to make sure it doesn't impact us to a large degree.

And our next question comes from Greg Badishkanian with Citi.

It's Fred Wightman on for Greg. I think in the prepared remarks, you talked about expectations for low- to mid-single digits retail decline in 2020. I believe you said that was for your fiscal year. But you also talked about how you thought the RVIA forecast could be conservative and those tend to be counter estimates. So can you just help us rationalize the 2 different time periods? And any comments on more of an apples-to-apples basis would be really helpful.

Yes. As you are aware and I won't be able to precisely answer your question, but as you are aware, our fiscal year runs from essentially September through August. And you are correct and RVIA forecast is more on a calendar year 2020 basis. I guess, I know other company's OEMs and suppliers do this as well. But we've done some of our own internal modeling here at Winnebago around the inventory levels in the field, the historical, but also some of our own thoughts on dealer inventory turn levels in terms of where they want to run their business going forward. And our estimates are showing that if we can see what I would call moderately okay retail, low to mid-single digits declines for 2020, our fiscal year, that in fact, it may be possible for the industry to have flat wholesale shipments during that specific time period. We are now entering here into the next several months, some pretty significant shipment declines that were experienced a year ago by the industry as dealers essentially turned off spigot. So listen, in my four years at Winnebago, I think, I personally have been accused of being one of the more conservative prognosticators of industry shipments and retail amongst our peers. And in this case, we're probably a little bit more moderately aggressive than some of the other stakeholders. Just because we think if dealers can continue to get their feet under them from a confidence level on the retail side and customers continue to show up in their stores and have an appetite to buy, we think that they will stabilize their inventory levels above where they're at today, which means that they'll, in some cases, continue to even look at stocking backup a little bit. So the reconciliation between the calendar year and our fiscal year, I haven't done that particular math. But listen, our hope is that if the retail environment can stay solid, that dealers will continue to gain confidence over time.

Sure. That's fair. And if you could just dig into the Towables profitability in the quarter, there was a pretty big change in the year-over-year trends versus last quarter. I know the release highlighted some input costs and then also sales allowances. But could you just size the relative impact of those 2 items and then maybe do bit of a deeper dive in the profitability that you saw there this quarter?

Yes. I don't think we're going to disclose the specific details underneath that. The cost input increases, we talked a little bit earlier in terms of the general inflation and the timing with which the supply, the vendors in the industry have pushed through those increases. Some, and many related to trade policy. And so the cost input increases, generally speaking, are the biggest driver. The other side of it or the other part we mentioned, is the allowances. There was a question asked earlier on, hey is that the Grand Design. We though we understood Grand Design does not do discounting, that's correct, they don't. On the other hand, the Winnebago Towables business doesn't have the same cachet with the dealer network. And so they're not in the position that Grand Design is and they are because of the industry dynamics right now facing the higher allowances to move the product under a lot. And so it's really those two impacts, the cost increases as well as Winnebago Towables allowances that has the greatest impact on the margins.

Our next question comes from Brett Jordan with Jefferies.

This is Mark Jordan on for Brett. Most of my questions been asked here today, but I was wondering kind of big picture question if you could talk about the company's brand portfolio strategy going forward, maybe should we see some additions in RV, Marine or maybe other adjacent markets?

Mark, this is Mike. That's a topic we'll certainly touch on as well in a couple of weeks at our Investor Day event. We generally do not publicly comment on business development plans or specific targets going forward. But I would tell you that, 2 things, one, we are extremely pleased with the 4 brands that are active in the marketplace that we have in our portfolio today: Winnebago, Grand Design, Chris-Craft and I should say, in a few weeks, the Newmar brand as well. We currently don't own that. So we should be clear about that. But those 4 brands come mid-November, we believe, are a tremendous platform from an outdoor lifestyle standpoint to attack the mid-to-premium side of the industries we compete in. I think most stakeholders that we interact with are beginning to get the business portfolio strategy that we're putting together around premium brands, premium products, premium leadership teams, premium relationships with dealers, premium customer experiences, including the service side and understand that that's the type of portfolio that we're putting together. And so if you look at either the core RV market that we're in today predominantly, or other adjacent outdoor lifestyle markets that we could enter and one we we've already entered in Marine. I will tell you that our eyes are on the premium side of those markets in terms of, we've said this before, but in a very simplistic good, better, best context, we are very much focused on better and best. And so our business development efforts will definitely be targeted at those areas of the industries. But that's not to say that we don't have other ideas for how we can grow our portfolio, our top line and our bottom line in the future as well. So yes, we're pleased with the brands we've been able to pursue. And they are all unique, all present a unique value proposition to the marketplace, but they all have golden threads around their focus on product quality, value, innovation and superior customer service and experiences. And as long as we can continue to put together a portfolio like that, we believe there is incredible value from a synergy standpoint, from an operating standpoint, from a culture standpoint, even working with suppliers and dealers around the portfolio like that, that will continue to hopefully produce great outcomes for us financially and in the market in the future.

And our next question comes from Brandon Rolle with Northcoast Research.

Most of my questions have been asked as well. I guess I would, one, could you comment on your order trends at open house, I'm not sure if you touched on that. And two, with the cleaner dealer inventory setting into your fiscal year 2020 and the expectations for improved retail sales year-over-year, would you expect promotional activity to trend lower in fiscal year 2020 given some of the tailwinds you have going for you?

This is Michael. I'll answer those. We did make a specific comment in the script about our open house results. We will not share those results by brand. But at a consolidated Winnebago Industries level for both the Winnebago and the Grand Design brands, our open house orders were up 11% year-over-year at that event, which we are very pleased with. In terms of your second question, remind me again what that one was. That was the...

It's the promotional activity.

Promotional activity. Thank you. It is, I think, beginning to settle a bit. I mentioned late in the earnings call that we believe that in the RV market, there is a nice equilibrium right now between the dealers and the OEMs in terms of -- I hate to use the word power, but in terms of sort of a push and a pull, and really the good brands with good businesses are gaining favor with the dealers. And the brands that do not have as healthy a product line from an end customer standpoint, and potentially are not serving the dealers as well from parts and service standpoint, are potentially falling out of favor with dealers within the industry. We need to make sure that we have all of our businesses on the right side of that equation. But a lot of the promotional activity as well in the last year, we believe was spent by both the dealers and the OEMs dealing with aging inventory and previous model-year product, 2018 now 2019. And the amount of aging inventory, especially excessively aged inventory and previous model year inventory continues to come down at a nice pace based on the information that we can gather from our inventory finance partners. And so we believe you'll start to see any promotional spending shift from, more from the aged inventory reduction side of the business to driving current model retail going forward.

Thank you. And I'm showing no further questions. I'd like to turn the call back to Mr. Steve Stuber, Director of Investor Relations for closing remarks.

Great. Thank you. And thank you, everyone, for joining us today. We really appreciate you taking the time out of your busy day to join us this morning. And we do look forward to seeing and speaking with many of you, not only throughout the remainder of the quarter, but also again as both Bryan and Mike have mentioned, our Investor Day in New York City on November 6. Thank you, and have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now all disconnect. Have a great day.