Welcome, and thank you -- welcome to the AutoNation's First Quarter 2019 Earnings Conference Call. [Operator Instructions]. Today's conference is being recorded. If you have any objections, you may disconnect at this time. Now I will turn the call over to Robert Quartaro, Vice President of Investor Relations for AutoNation.

Thank you. Good morning, and welcome to AutoNation's First Quarter 2019 Conference Call and Webcast. Leading our call today will be Carl Liebert, our Chief Executive Officer and President; and Cheryl Miller, our Chief Financial Officer. Following their remarks, we will open up the call for questions. Chris Cade and I will be available by phone following the call to discuss any additional questions that you may have. Before we begin, let me read our brief statement regarding forward-looking comments. Certain statements and information on this call, including any statements regarding our anticipated financial results and objectives, constitute forward-looking statements within the meaning of the federal Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, including economic conditions and charges -- and changes in applicable regulations that may cause our actual results or performance to differ materially from such forward-looking statements. Additional discussions of factors that could cause our actual results to differ materially are contained in our press release issued earlier today and in our SEC filings, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q and current reports on Form 8-K. And now I'll turn the call over to AutoNation's Chief Executive Officer and President, Carl Liebert.

Thank you, Rob. Good morning, everyone, and thanks for joining us. Before we dive into our first quarter results, I'd like to take this opportunity to give you some highlights of my first 45 days. Let me start by thanking our 26,000 teammates who gave my family and me such a warm welcome. It's truly meant a lot to us. Over the last 45 days, I've been in our stores and visited with several of our OEM partners and vendors, along with meeting many of our customers and engaging with our AutoNation teammates. We walked the lots and the customer care service bays just as I did at Home Depot's 2,000 stores not that long ago. It was a great experience, which I will continue to do regularly. Before I discuss first quarter results, I'd like to thank Mike Jackson for his guidance as I transition into my role. I refer to Mike as founder 2.0 given the tremendous leadership he provided over the last 20 years to both the company and the industry, making AutoNation the nation's premier automotive retailer. It is my honor to work with such a visionary leader. We are committed to executing our operational strategy and our Drive Pink efforts to fund research to cure cancer while enhancing the legacy of this great AutoNation team. Turning to our first quarter results. Today, we reported record first quarter earnings per share from continuing operations of $1.02 per share versus $1.01 per share during the first quarter of 2018, a 1% increase on a per-share basis. However, the first quarter 2019 results include restructuring expenses of approximately $3 million after tax or $0.03 per share. Going forward, my comments are on a same-store basis unless otherwise noted. In the first quarter, we made a strategic decision to…

Thanks, Carl, and good morning, ladies and gentlemen. For the first quarter, we reported net income from continuing operations of $92 million or $1.02 per share versus net income of $93 million or $1.01 per share during the first quarter of 2018, a 1% increase on a per-share basis. The first quarter 2019 results include restructuring charges of approximately $3 million after tax or $0.03 per share. During the first quarter, revenue decreased $278 million or 5% compared to the prior year, and gross profit increased $7 million or 1%. SG&A as a percentage of gross profit was 73.4% for the quarter, which represents a 100 basis point improvement compared to the year ago period. Strong new and used gross profit per vehicle retailed and our previously announced restructuring and cost savings plan drove solid SG&A leverage in the first quarter. We continue to expect full year 2019 SG&A to gross profit to improve year-over-year compared to 2018. The pace of the year-over-year improvement will be kind on gross margins, seasonality and the timing of certain brand extensions. The provision for income tax in the quarter was $34 million or 27%. Floor plan interest expense increased to $39 million compared to $28 million in the first quarter of 2018 driven primarily by higher average interest rate, which rose in line with 1-month LIBOR and higher average floor plan balances. Non-vehicle interest expense decreased to $28 million compared to $32 million in the first quarter of 2018. The decrease was primarily due to lower average debt balances as we paid down debt from free cash flow and lower average interest rates as we refinanced higher-cost senior notes with lower-rate commercial paper in April of last year. At the end of March, we had $2.4 billion of non-vehicle debt, a decrease of…

Thanks, Cheryl. It's been an energizing 45 days, and I've learned a lot. As we continue to move forward in this next chapter and develop our story, we will focus on customer service, accelerating innovation through our brand extension and digital strategies and most of all, execution. We are growing and learning together as one nation, one team with one purpose: to serve and delight our customers. Operator, we will now open the line for questions.

[Operator Instructions]. Our first question will come from Bret Jordan.

A question on the pricing strategy around new. I mean, obviously, some great improvement in gross profit per unit with that negative impact on units. Is there a sort of a level of new unit trend that you're comfortable with? I guess, to some extent, if you were to shrink units to the point where it hurt fixed live bridge, I guess, that will be a problem. But could you tell us maybe how you're setting this price model?

I'll start, then Cheryl can jump in. I think one of the things in this industry, and you know it as well as we do, is we're going to continually balance price and volume throughout this process. What I'm really proud of the team, though, is it's easier to do that when you're managing your inventory. And we -- as we think about how we serve our customers and manage that price/volume equation, it's ensuring that we have the right vehicles on our lots to serve our customers. And we're not relying on discounting, and we're not relying on in-the-quarter plays from the OEMs in order to deliver that. That gives us the flexibility to serve those customers. But I think the key aspect to that effort though is being able to leverage a strong customer financial services offering and deliver that to our customers in a unique matter that only AutoNation can do. And Cheryl, you want to talk a little bit about the mix related to it?

Yes. We like the balance that we start in the quarter. And certainly, when you look at the $200 improvement in total variable gross, you saw a great outcome from that. At those levels, you also saw the benefits that we got in SG&A leverage with that improving 100 basis points year-over-year. To your point, we are careful with the units because we don't want to lose too much of the F&I on a dollar basis if we go too far gone on units, but we do feel comfortable with the play that we've struck. Love the fact that we had the highest new vehicle PVR that we've had about 2 years. So really like the results of from that perspective. And we'll continue to make sure we hit that right optimal balance between units and gross profit on the new side.

Okay. Great. And I guess a quick second on the brand extension strategy. Circle maybe where you are around some of the parts initiatives. And I always ask that question, but is there a way that we can sort of start maybe hitting that from how much is it contributing to a revenue -- from a revenue standpoint? Or just sort of give us some perspective of where you are.

Great. Why don't I tell about where we are, and I'll let Cheryl take the second part of that is, well, I'm pleased we have 6 distribution centers now that are up and operating for our parts business with 2 forward-stocking locations. We'll open our seventh distribution center in May, and we continue to see the brand extension strategy as significant, significant both in serving our own stores in the customer care and service side, but also serving our 83 Collision Centers and executing that. So it is in the early innings, but we are pleased with what we see. And building out a global supply chain to support where we're going, it's something I've done in a prior life with a brand similar to AutoNation called Home Depot. We're excited about it, but we are in the early innings. And Cheryl, if you want to talk about the revenue profit split, you go ahead.

Yes, Bret. When I look at it, the biggest marker to me is really the improvement in customer care growth as a percentage of revenue. So when I look at margin structure, that's up 60 basis points year-over-year. So we're still investing in that. I think the great thing was we were able to pull through SG&A leverage even while we continue to invest. But I do like the improvement in margin. You've seen that over the course of several quarters with also that type of margin expansion, particularly driven by the parts initiatives that we have in place when we started off with the brand extension and break salaries, et cetera.

Our next question is from Derek Glynn with Consumer Edge Research.

I just wanted to dig into F&I a little bit. And despite a mix shift to used, you were really able to push that PVR number to new heights during the quarter. And can you just elaborate on that on what's driving it and how sustainable that growth is in F&I?

Yes. As you guys recall, F&I was our first brand extension. So 2/3 of profitability comes from the product side with roughly 1/3 coming from the finance side. And as we pushed into the AutoNation-branded products, which were really well received by the customer, you see the continuation of the profitability in that segment. As you correctly point out, when we look at total PVR, we do expect potential pressure there only from a mix perspective. So we feel very good about the continued pull-through of the F&I products. But just keep in mind that when you shift in more used units than new, the dollar could weigh down potentially as a result of mix shift. But we feel very good about the broad sustainability of the products and financing for our customers.

Got it. And then Carl, can you just discuss the key learnings you've had over the last couple of months on the job and walk us through and elaborate on the near- and medium-term priorities?

Yes. It's great. Well, first and foremost, what I wanted to do is set out and get into the stores and spend some time there. My first week on the job though, we took the executive committee, and we started with Waymo on the West Coast and really spent some time with them and our partnership with them then what we're doing, followed by store visits in the west, followed by market reviews where I was able to dive into the performance of most of our stores in the west. From there, we were out back with several of our OEM partners. I still have a long way to get through them. I'm probably 1/3 of the way through at this point, with the next 2 or 3 weeks accelerating more. And then I've had the opportunity while back here in Fort Lauderdale in our South Florida stores to spend time both with customers and teammates. I would describe right now, for me, is I'm in a listening journey. And that listening journey is to kind of harness the power of our 26,000 teammates. More or less, though, these general managers who run our stores, for me, they're the center of our universe. So what we spend a lot of time is asking those general managers what can we do to help you serve customers better. What do you need from us to help you execute the play? And how do we accelerate this effort that we have around brand extensions? And so that's where we spent the bulk of our time. Turning in Q2, I'm going to spend some time with Scott Arnold and our team in the Collision Centers. I'll be out in stores here as much as I can. And I think by the end of Q2, it would be a great opportunity for me to give you the layman's version of what it means to move from retailing at scale to automotive retailing at scale. And I'm excited to share that.

Our next question is from Armintas with Morgan Stanley.

Carl, just curious here with your background in digital, if you have any incremental thoughts on the digital strategy. I know it's early days, but any sort of things floating around in your head after this 45-day stint?

Great. Thank you very much, and just a great question. One of the things I'm fortunate is prior to me, AutoNation had made some commitments to invest in digital and invest in the online experience with autonation.com. So I feel great about what I'm inheriting. And the opportunity, though, as we've talked to the team, is to look for ways where we can move from a dotcom type of experience to a mobile type of experience and mobilizing that for both our customers and our teammates. And so early 45 days in, there's opportunity to digitize the inside. That's all the things that our teammates have to go through that are either paper-based or manual and processed and then opportunities to mobilize the digital experience for our customers, specifically as it pertains to service, how to set up a service experience or service appointment as well as how to shop and find inventory that the customer would want. So I'm excited and energized around that effort. We've got several thoughts, and we're working on several pilots that we could use as spreads in a natural way to go test and learn some of the new capabilities down the road and look forward to sharing those with you when we have those up and running.

Great. And Cheryl, maybe for you, $8.7 million of gains related to store divestitures. How do we think about that opportunity through the rest of the year?

Yes. So as you know, it's a little challenging to forecast exact cadence of those. I think broadly, though, we continue to optimize the portfolio. You've seen us do that over the last several years as we've raised capital to reinvest in brand extension. We still have some further to go, but I would say that the pace of that has likely slowed from prior. So I would think of that as opportunistic going forward.

Our next question is from Stephanie Benjamin with SunTrust.

I just wondered if you could talk a little bit -- I was hoping you could talk a little bit about your used portfolio, your ability to continue to drive goods, service and F&I on that side as well as the few U.S.-based stores if there's any update or anything you're seeing just with the overall used strategy.

Yes. So we like the improvement year-over-year in used gross profit. So as we look at total used growth, we feel very good about that. We are very focused still on the One Price strategy. So as you saw us, when we first implemented that, we needed to get that settled within the organization, and that is going extremely well. So we like the momentum that we're seeing on that part of the business. Certainly, that's an area of opportunity for us on the service side. And as we continue to improve our service offerings, as we pull through additional cars within our business that we see a lot of upside opportunity, not just in the reconditioning of the units, but also in caring for those units for our customers. Same as F&I, so when we think about the total cycle of use, we like the potential profitability that we continue to see in F&I, which remains strong as well as the incremental opportunities we see in servicing those vehicles. We continue to service vehicles that are further out on the age curve. And you've heard the industry on the dealers, I talked about this several years ago, where we were focusing on the in-warranty period. And we continue to push on ways to extend out that service cycle of use for our customers.

Our next question is from Rick Nelson with Stephens.

So a couple of modeling [indiscernible] unit, can you discuss the drivers there and the opportunities to expand that? And are there any line ups as to where you see that potential?

Yes. On the F&I side, Rick, certainly we continue to see the opportunities to increase penetration at certain stores. So we always work in quartiles, and there's always an opportunity to focus on the stores, as we talked about. You have to consider the fact that with used units growing faster than new units, which have hit plateau, certainly the dollar mix will weight differently on used, which is typically $300 less on a per-vehicle retailed basis than the new side. But we still view that as good opportunity and very solid potential. And again, with that being our first brand extension, you see the success in the customer acceptance of the AutoNation brand.

All right. Also, the strategy that you have to push margin versus volume. I'm hardly pleased with the outcome. Is that a long term strategic shift in your project?

Excellent question. It is the play and execution model that we're running now. And the way I'd caveat that is we want to be very thoughtful and mindful to what we're doing at this stage of the economic cycle that we're in and really staying close to our new vehicle inventories and making sure we have the right vehicles to offer to our customers, especially when you look at retail being down. We want to make sure that we're not left on hand with a lot of inventory that we have to play a lot of games at the end of the month or end of the quarter to move that through. So it was really economic driven. And what I'm pleased about is that the team responded in a significant way in Q1. And so you can expect us to run that for the next quarter and to continue until we get a little better handle on what economic climate might look like.

Next question is John Murphy, Bank of America Merrill Lynch.

Just another follow-up question on the change in strategy here. Carl, I mean, the automakers are looking always to deliver more and more vehicles. And hopefully, you sell them through. So when you run this strategy of preferencing your new GPU over volume, it kind of might create some friction with the automakers than it historically has. How are your early discussions been going with the automakers? And do you see that kind of as a risk in being able to keep this strategy up?

Well, I kind of start with my early conversations with many of our OEM partners. I've been extraordinarily transparent on the play that we're running and why we're running that play. I believe we share the same passion, and that is to create loyal customers in those brands for life. And how we do that when customers come into AutoNation stores, regardless of franchise, is creating that great experience that is both transparent and trustworthy. I know this conversation, having run manufacturing in highly dependent overhead businesses like appliances a while ago at GE, that you want to run your factories all out, and you want to make sure you're hitting your target as they see fit. I think it's a balance that we have to strive because of the customer experience we want to deliver in our stores, and it's one of the reasons I'm so proud of our operating team is we're very careful and mindful of having the right inventory at the right time. And I anticipate those will be more friction-filled conversations down the road, and we're going to have to make those choices with our OEM partners. But the intent we have is to deliver a peerless customer experience for AutoNation customers, and I think the manufacturer is sharing that. And that will be the conversation we have. I'm guessing it will continue to ramp based on our current performance.

Yes, John, I think what's great here is that the breakeven star for the manufacturers is much lower than what it was previously. So as we think about getting into this plateau with retail units down single digits across the industry, we feel like the manufacturers make it to have their houses in order. And so comparatively, we feel like the dynamics are much more orderly and gives us an opportunity -- combined with interest rates being lower, right? So the fact that we're not getting interest rate hikes into this year gives us a great opportunity to continue to focus on an orderly slight bring down of inventory that makes sense for the manufacturers as well.

Yes. And I'll add to that, Cheryl. The conversations I've had so far, the OEMs have embraced the fact that we really have our efforts around satisfying customers and delivering that customer experience. They have been extraordinarily, I'll call it supportive this early stage. And what I've asked each one of them that I've met with is if they want to pilot or experience or try something different, we want to be the brand they come to because we want to learn alongside them on how to serve customers better regardless of brand. And we want to be the laboratory that helps them share in that vision we have for our customer experience.

Sounds very logical and good. Just a second question. As we look at the segments here, it looks like domestic was particularly challenged in the quarter relative to everything else. Is there anything that's specifically going on there? Or is this maybe the strategy that's driving this? I'm just trying to understand how big revenue and profit decline there more so than in the other 2 segments.

Yes. I'll -- this is one of those that Mike would love to weigh in on. He's not here with us today. So he's handed the reins over. But this is -- a lot of the domestics are in the transition from sedan to SUV. And you specifically think about what Ford's trying to do. And you heard their earnings yesterday. They -- it's great to see them talk about the strength of trucks and what the play they called and what they're running. It's going to take time, though, to, as kind of I'll call it domestics, move away from sedans into the SUV model. One of the things that we're really ensuring we're focusing on with them is do we have the right inventory? Can we operate in our environment to support that? But they're going through a little bit more of a turmoil with how they thought about their strategy to serve customers, and I'll use an Ford as that example.

Great. And then just lastly, and Cheryl, I apologize because my phone broke up, I think, when you're talking about this. The SG&A on a year-over-year basis, I think you're saying might be a bit lower. I just want to make sure I got that right and if there's anything on cadence through the year with investment. I apologize you may have talked about it, but my phone broke up for a second.

So what we've said was we expect -- we said on the last quarter and then we've reiterated is that we expect this year's total year SG&A as a percentage of growth to be lower than last year. So last year, it was just under 74%. So that's the broad expectation. Certainly, in the first quarter, when you saw the increase in total variable growth of $200, you get a lot of leverage off of that. So we had the 100 basis points of year-over-year improvement in Q1. We did expect more of the improvement to come towards the second half of the year. And as you know, it's not linear during the course of the year. So we do expect definitely improvement during the year, and we have -- we think about the $50 million of restructuring actions. Those are already in place, so you did see the benefit of some of those in Q1 already. And you'll continue to see some of that throughout the year. But as you know, we're also still investing in brand extension. So that's why we haven't given a particular guide below last year's level at this stage.

And is it fair to say that the incremental investment that is pressuring SG&A will be completed this year? And then as we look at forward years, this will ease and the benefits will come through? Is that a fair statement? Or is there more to come?

What I would say is I'm hopeful that we'll continue to do more brand extension investment next year, but hopefully, what we've put in place and start to see is a flywheel effect of those starting to generate returns in the equation as we've talked about, particular in the Collision Parts side. And we're still in ramp phase there. But I'm hoping that the further investment in brand extensions next year but to be reaping the benefits of leverage during the course of this year into next year.

[Operator Instructions]. And our next question comes from David Whiston with Morningstar.

Cheryl, I wanted to start with the balance sheet. You've got over $600 million with the bonds due in under two years. Can we expect a refi transaction this year when the markets are open? And is that load why you're being less aggressive on buybacks? And I think I normally expect you to be given where your stock was recently.

Yes. So the great news is we have a great cash flow-generating business. So we certainly, with our investment-grade ratings and one of the things Carl forgot to mention in his tour was we went to the rating agencies so we had a chance to visit all 3 investment-grade agencies as they rate us. And so we feel extremely comfortable with the bonds. Exactly how we used to finance that, we'll see over the next couple of quarters here, and we certainly have plenty of time. We have an outstanding repriced commercial paper facility, where we issue very favorable rates because of our investment-grade ratings in that market, and certainly, the bond market with our supportive bank group and great fixed income investors that is always fully up and docked. When we think about cap allocation, certainly, that's something we spend a lot of time on. You see us currently allocating capital towards the brand extension investment. You've seen us do share repurchase opportunistically. So we certainly feel like we've got a great balance sheet with $800 million of liquidity, and we will continue to put it towards the highest ROI. You've seen us scale back a little bit on general capital within the dealership base. So we're making sure that our stores are in great shape, but we've already passed through some of the major OEM imaging cycles over the past couple of years. And so we're very bullish on our ability to access and look at the total capital picture as we go forward.

Okay. And Carl, I wanted to ask you a long-term question about how you feel about making investments back in the really not having any benefit for many, many years out. An example, of course, is USA stores. And I'm asking this in light of what Sonic reported yesterday with their EchoPark project, which is finally hitting some traction after a long number of years. And I'm just curious, are you that patient, generally speaking, with investments?

Well, look, patient to a certain degree. I think we're going to be disciplined with our investments. And Cheryl is smiling when Cheryl looked at me. The first thing she did is take me up to see the rating agencies, probably because I came from a AAA or AA-plus company like USAA and wanted to put me out there before that shine wears off. I do believe, though, as we think about test and learn and running pilots, we want to do that in a responsible way as we go forward, but also want to make sure that we show that disciplined execution of putting quarter after quarter of results on the board and delivering on what we said we would do before we entertain those kind of, I'll call it, strategic bets for the long term. I think we owe that, and that builds credibility. And I think by building credibility, it fits in those conversations where we want to go do some things that won't pay back in the current year but will call you back in the planning cycle. But we have some work to do with the current play we're running right now first.

Next question is from David Tamberrino with Goldman Sachs.

First question is on the parts and service side of the business, I know there's been an uptick in warranties. Could you expect to see an acceleration in that business for the remainder of the year?

Yes. Warranties are always challenging to predict. So as you know, last year, those were a drag on comps because warranty levels were down. The industry did see some decent warranty comps in the first quarter, but it's extremely hard to predict those based on recall and warranty cycle.

Okay. Well, then maybe on the supply side, how is your technician retention tracking? Where are you in terms of capacity utilization, if you will, for your service base? And what type of challenges, if any, are you seeing from that again, the technician retention side?

Yes. So the great thing for us is, I think, from a physical plant capacity standpoint, it's something we continuously work on. So we feel really good about our plans there. And if there's locations where we see great opportunities, we will add service base. And that's one of the capital uses that we think can be very favorable and have a good ROI where it makes sense. From a technician retention standpoint, the nice thing about selling over 30 different brands and having a large technician workforce is that we can work with our different technicians and offer them additional opportunities, whether it's in market, whether it's additional certifications and training or transferring between locations. So we feel good about the capacity that we have today. Certainly, in Collision, capacity and tax always are a bit of a challenge, and that's something that we continue to work through. But from overall customer care, we feel very good, and particularly with the wage group that we have in place. So one of the things that we've done between training and some very good focus such as that is we really provide a good upward path for our technician population.

Okay. Last question for me or last line of questioning is just looking at new day supply, 77 days at the end of the quarter, it's up from 69, sequentially up from 60. Do you expect that to be where it's down? I understand a lot of question earlier with focusing on new gross profits, maybe a little bit less on units. But curious to hear your thoughts on if the industry and the OEMs are really going to work with you or look at themselves and say, "We need to shut or cut some production," or if maybe they're going to continue to look to turn on incentives in order to help work down those dealer inventory levels.

Well, I'll take that. And Cheryl, please, feel free to jump in. I think we're pleased about where we are. We had 1 less selling day in the quarter this year than we had last year. We think we've done a great job of having not only that days supply inventory, but having the right inventory to do that. And we know we're ahead of the rest of the industry in that regard. And so what we're focused on is that discipline that eliminates or prevent us from getting into the end of the quarter and having to discount heavily, which we know creates all sorts of angst not only in our stores, but it creates friction and pain for the customer if they feel like they're getting serviced the right way.

And I think our ops teams certainly has a lot of experience. We've had to manage through cycles where inventory was too tight, and they've had to manage through that. And we've had to manage through cycles where we had the team manage through that. I think certainly, with the single digit-type declines that the industry has started to see in new, it's something that we expect. And I feel very comfortable that our ops team is well positioned to work with the manufacturing partners to get us to normalized inventory levels.

And our last question is from Rajat Gupta with JPMorgan.

Just wanted to follow up on both [indiscernible] piece. They're starting with parts and services. Based on the other brand extension strategies are in place, I mean, what is the outlook for the remainder of the year in terms of the gross profit, Cheryl? Can you see an acceleration from the 4% level that you had in the first quarter? Just trying to understand what the outlook is baked in for the full year.

We continue to be optimistic about that part of the business. Certainly, it's approaching 50% of the profit of the company. And when you think about that compared to broad retail, that's a fantastic thing to happen from a cash flow generation perspective. So when we think about the components of it, certainly, there was some pressure in the quarter from the loss of some of the predelivery inspection income with the new units being down. So that puts pressure in there. So you see pretty solid pull-through on the margin side with a 50 basis point increase in gross margin. So as we look at that business on a go-forward basis, not just this year but into next year, we feel like that's a critical component for us. And it's also a critical differentiator for our company versus broad retail.

Got it. That makes sense. Just to follow up on John's question on SG&A. Looks like 1Q was below what we've expected from a seasonality perspective, I mean, seemingly all the restructuring benefits coming through. But for the rest of the -- from a modeling perspective, I mean, is modeling off a 1Q based on normal seasonality than with the rest of the year? And when you talked about brand extension initiatives potentially in the year, so I'm just trying to get a little bit more granular on how should we see that progression through the year.

Yes. The broad guide that we provided is below last year. So we would expect to see it below that 74% level. Certainly, Q1 came out with strong performance driven by in part great leverage that we saw with the $200 increase in total variable gross profit. We do have the restructuring plan is in place. These actions are completed. They're not disproportionately into Q1. We do expect to see some of that throughout the year. But I always am cautious with the seasonality in our business and the timing of brand extensions to extrapolate a 1-quarter trend.

Thank you very much. Thanks, everybody, for joining us. We appreciate it. Have a great weekend.

This concludes today's conference. Thank you all for joining.