Good afternoon and welcome to the Caleres Second Quarter Earnings Conference Call. My name is Jessie and I will be your conference coordinator. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded. At this time, I will turn the call over to Ken Hannah, Senior Vice President and Chief Financial Officer. Please go ahead.

Good afternoon. I would like to thank you for joining our second quarter 2019 earnings call and webcast. A press release with detailed financial tables as well as slides are available at Caleres.com. Please be aware, today's discussion contains forward-looking statements, which are subject to a number of risks and uncertainties. Actual results may differ materially due to various risk factors, including but not limited to the factors disclosed in the Company's Form 10-K and other filings with the U.S. Securities and Exchange Commission. Please refer to today's press release and our SEC filings for more information on risk factors and other factors, which could impact forward-looking statements. Copies of these reports are available online. The Company undertakes no obligation to update any information discussed in this call at any time. Joining me on the call today is Diane Sullivan, CEO, President and Chairman. I would now like to turn the call to Diane.

Thanks, Ken and good afternoon and thank you for joining our second quarter call and for your continued support of Caleres. During the quarter, we continue to successfully execute on our strategies to strengthen the emotional connections we have with our consumers. Our deep insights, combined with our industry-leading footwear capabilities, allowed us to deliver relevant product, supporting continued growth in the Brand Portfolio, positive same-store-sales growth at Famous Footwear and record second quarter total sales. Our focus on expense discipline also allowed the top-line performance to translate into improved profitability for the quarter resulting in a solid increase in earnings per share. Turning to the details of the second quarter. We are pleased to have delivered product that resonated across multiple consumer segments this quarter. The weather certainly resulted in the later spring that impacted our sandal business and there was a noticeable increase in demand for novelty and newness. We also experienced retailers managing their inventories which led to a moderation in replenishment orders. Fortunately, the investments we have made in product design, development and speed to market allowed us to manage and respond to these trends in a timely-efficient and profitable way across our Brand Portfolio. We also made excellent progress injecting more freshness into the assortment at Famous Footwear contributing to a 1.5% increase in same-store sales and successfully worked our way through certain underperforming athletic styles from a key vendor in the quarter. We are pleased to have returned to positive growth with this brand heading into back-to-school. We expect our underlying momentum at Famous to continue into the third quarter as we have experienced a solid start to back-to-school and are confident that we are on track to deliver our eighth consecutive year of positive back-to-school same-store sales growth. In addition to delivering compelling…

Thank you, Diane and good afternoon, everyone. For the second quarter, we reported earnings per share of $0.61. Our adjusted earnings per share was ahead of last year and expectations at $0.62 excluding $0.01 to Vionic integration-related expense. Our consolidated sales for the quarter of $752.5 million were up 6.5% over the prior year, including the addition of Vionic and two additional months to Blowfish sales as well as the planned reduction in Allen Edmonds sales. Our Brand Portfolio total sales were up 17.9% year-over-year in the quarter or 0.4% excluding the impact of acquisitions and the planned reduction at Allen Edmonds. Famous Footwear delivered a strong second quarter reflecting significant progress on our product assortment and marketing initiatives. Same-store sales were up 1.5% for the quarter reflecting sequential improvement throughout the quarter and are up 0.4% for the first half. Total sales at Famous Footwear were $419.8 million, down 2.2% as we operated 35 fewer doors versus the prior year and ended the second quarter with 973 total doors. Let's turn to consolidated gross profit and margin. For the second quarter, consolidated gross profit of $305.9 million was up 4.4% and our reported gross margin came in at 40.7%, down approximately 80 basis points from the prior year reflecting continued growth in the Brand Portfolio. Our Brand Portfolio reported gross margin of 34.7% in the second quarter, down approximately 80 basis points from the prior year primarily driven by markdowns on spring inventory, less replenishment, and retailer concessions. As Diane mentioned, the later spring impacted our sandal businesses, retailers were managing inventories and there was a noticeable increase in demand for novelty and newness, all impacting margin in the second quarter. For Famous Footwear, second quarter gross margin of 43.4% was down approximately 15 basis points year-over-year. This was…

Thanks, Ken, and just to wrap up before questions, we are pleased with our ability to react quickly to the changes that we’ve seen in the environment, which we see as an important validation of the capabilities of our people and our model. As a company, we remain focused on operating with excellence, and creating consistent profitable and sustainable growth over the long-term. We look forward to sharing more with you about our plans and long-term vision for Caleres at our upcoming Investor Day on October 2nd. And with that, I’d like to turn the call over to the operator for Q&A.

Thank you. [Operator Instructions] Your first question comes from Laurent Vasilescu with Macquarie. Your line is open.

Good afternoon. Thanks for taking my question. Congrats on the progress with the second quarter. I wanted to first focus on Famous Footwear. I think in your prepared remarks, as well as the PowerPoint Presentation, you talk about the progress by months. Maybe could you guys, maybe parse out a little bit more how the months progressed? And maybe the quarter-to-date comp trends?

Hi, Laurent. Thank you for the question and for the comments. It really was that Famous, we are very pleased with the great execution that the team did in the second quarter and it was a combination of three factors. With the great execution from an assortment and merchandizing standpoint, making sure we were giving our customers access to very high demand styles and brands across categories, I think they really were super sharp in terms of their assortments. We also saw improvement in our athletic assortment with our return to growth at Nike. That helps us a bit. And also, it’s the enhancements in our marketing and our loyalty programs including that return to TV advertising which generated the response that we were really expecting to. So, it really wasn’t any one thing. It was really a combination of all of those things that allowed us to continuously improve our performance sequentially in the quarter. And as I said, we are really feeling very confident that we are going to show the eighth consecutive positive comp for back-to-school season at the end of third quarter when we report. So, really feel like everybody has done a terrific job staying hyper focused in executing well at Famous.

That’s great to hear. And then, maybe Ken, I think Slide 6 of the PowerPoint presentation, it parses out about $0.16 in expenses related to brand acquisitions and exits. Could you possibly parse it up by brand and maybe by quarter for us?

Most of that is all associated with the acquisition of Vionic. So the – we had called out – we have taken all of the markdown expense that was associated with the announced exits and that was at the Carlos Santana brand and DVF. So, all of that is behind us and for the most part, all of the Vionic integration expense that we had called out for this year which remind everyone was the amortization of the purchase price back through the inventory, the purchase accounting and that pretty much turned through the first half of this year.

Okay. That’s very helpful. And then, can you parse out, in terms of the guidance, it’s encouraging to hear that you are reiterating it in the face of day to day tariffs. Does the guidance includes the incremental tariffs of 10% or 15% we’ll see from list 4A and 4B? And then, secondly, where should the revolver stand by the end of the fiscal year?

Yes, so the revolver, we’re at $300 million and what we had expected, we will be down below $250 million at the end of the year.

And then, in respect to tariffs, Laurent, our guidance obviously up through Friday the athlete, it includes and it’s certainly the tariffs and everything is the subject of the moment and I think it’s important to keep in mind that we do have this diverse portfolio and we expect less than 40% of our business is going to be impacted by those proposed tariffs. And as we mentioned in our last call, we have taken the steps to diversify the production. We want to make sure we continue to deliver quality to the customer where 40% of our products are outside China. We leverage our sourcing expertise. We are continuing to, because of the sourcing powerhouse that we have, we are able to move at an appropriate pace of what we think is right and we are selectively taking a look at price increases where they are really going to be least impactful to our consumer. So, the situation continues to be really fluid. We were – everybody, I think, eyes went up on Friday with the latest Tweet now, you never know here on Monday what it’s going to be. But we are working in real-time and are confident that we are going to find the right solutions to minimize the risk associated with the tariffs for the balance of the year. So, we are working it every day and doing everything we need to do.

Okay. Very helpful and we look forward to seeing you guys at the Investor Day.

Thanks, Laurent.

Thanks, Laurent.

Your next question comes from Laura Champine with Loop Capital. Your line is open.

Thanks for taking my questions. Really a follow-on. So, what is the assumption for the impact of tariff? So, your guidance is unchanged. It seems like you are executing well. What are you putting in for downside from tariffs? I presumed gross margin, if not gross margin and sales in the back half?

Yes, Laura, I think, what we tried to do was take into consideration what had been communicated as of Friday. And so, there is the list that goes into effect September 1st and then a lot of the athletic products that was pushed really out to December 15th. And so, there was lots of tweets and rhetoric on Friday about potential for it to go higher. This morning there were talks that are being canceled altogether. But we feel like, we have contemplated in our outlook what we knew as of Friday and what is currently on the list that was going to be effective on September 1st and what was on the list to be effective December 15th.

Got it. And then on the Brand Portfolio, the comp is down. But that doesn’t seem to be hurting growth. Is that cannibalization, what am I seeing in that comp?

Most of that comp is really the planned reduction in Allen Edmonds.

Got it. Thank you.

Yes. That’s really their direct business that we took down is showing up in that negative comp.

Understood. Great. Thanks.

Your next question comes from Rick Patel with Needham. Your line is open.

Hi, good afternoon guys and I’ll add my congrats on the strong execution as well. Just a follow-up on the tariff questions. Any context on how much of the assortment is affected by the September 1st tranche versus December 15th one?

Yes, on the September 1st one, it’s about 70% of our – of products that are made in China for us.

Thank you, Diane. And then, just hoping you guys can talk about the outlook for the Brand Portfolio. So obviously, the department store space is challenged right now and you touched on how they are managing inventories in a tighter way. How do you see this affecting the Brand Portfolio? And could you put your growth expectations in the context for us for 3Q and 4Q?

Yes, I think, I would start by saying that that segment was really what had a negative impact on the margin for Brand Portfolio in the second quarter, as we tried to make sure we had accounted for the appropriate level of markdowns and also discounts and allowances that were required. So, we believe that we have taken that into consideration in the outlook and have closed out the second quarter reflecting a lot of that in our second quarter results.

Yes, I would maybe add to that Ken, too, that we entered the year knowing that the environment was going to be volatile as would it didn’t just happen in the last 90 days and really our view about how we are managing it hasn’t changed and it really comes back that we’ve got to keep our eye on the consumers’ needs, because they are changing more than ever and there is no doubt about it that as retailers continue to manage their inventories more carefully. We have to make sure we redouble our efforts on this front of making sure we create new products and a sense of urgency and newness all the time, because we could see already this spring that because she wasn’t interested in core products. She wasn’t interested in anything that she had seen before. It was really all about newness. So we’ve really redoubled our efforts on that front in the second quarter really looking at our business in the quarter, thinking about what we had, both for the third quarter and fourth quarter. And then making sure that we were responding to that. And I think, again you’ve heard us say this we really been trying to diversify our business model, so we can adapt quickly in these kind of environments and we think ultimately that is what allows us to drive this consistent profitable and sustainable growth no matter what the environment is. So, it really is making sure we stay incredibly agile and flexible and that our team is really paying attention day-to-day on what the consumer wants.

Great. And lastly, could you just provide some color on the outlook for operating margins as we think about Famous versus the Brand Portfolio for 3Q versus 4Q? I know there was some lumpiness in expenses last year and you lapped the Vionic acquisition later in the year. So, it’d be great to have context on modeling.

Yes, I think, as we look at kind of the year, obviously, there has been a little bit of a shift, there is about 60% of the earnings, it’s actually coming in the back half of the year, this year and obviously, big piece of that is third quarter and back-to-school. So, the margin profile we had initially thought that Q2 could be for Famous down as much as a 100 basis points ended up down 15. I think the teams did a nice job managing through that and we are able to come through a little bit favorable. The Brand Portfolio with the question you started with and what we’ve seen in the department store space in our sandal business which is a big piece of our first half results. That looks very different as you get into Q3 and Q$ and we start to see less of a margin impact from those areas of the business. I don’t know, Diane, if there is anything you would add to that?

Well, I think we feel pretty good about how we are lined up in terms of the categories and the assortments really across the company both the Brand Portfolio and the Famous is going into the third and fourth quarters. And again, back to the sandal penetration, we don't really have that headwind because we do had a pretty high sandal penetration here. We've really taken all of the medicine that we need to take on that and still have delivered a decent quarter. So we are feeling, I think – Ken to your point, feeling as optimistic as you can be about where – how we positioned ourselves and it's on us to continue to execute well against that.

Thanks very much. Good luck in the back half.

Thank you.

Thank you.

Your next question comes from Chris Svezia with Wedbush. Your line is open.

Hey, good afternoon, everyone and congrats on the positive performance there.

Thanks, Chris.

Thanks, Chris.

So, I got a couple of things here. I guess, first to go back to Laurent's question, just what, I don't think you answered it Diane. But what was the cadence of the Famous Footwear comp throughout the May, June, July period? Just what was the trend by month?

I didn't give the trend by month and I am really not going to give the trend by month, Chris. I think, what we basically said was there is sequential improvement that we saw throughout the quarter. I think you can see that the power of the portfolio and we believe that as that we will finish the back-to-school season showing a positive comp for the eighth consecutive year. So I didn't go through it month-by-month, but really nice sequential improvement and really pleased with the consumer response to everything really that the Famous team has put into place that we are feeling very good about the foundation going forward.

Okay. So, let me ask it this way. As I kind of look forward, everything that you've done at Famous, the team that's done there. In terms of product, Nike getting incrementally better, you brought in a kid's refresh with some brands as well.

Yes.

You've got the loyalty program, marketing. So, I guess the question is, I know the guidance is flat to up low singles for the year, you are kind of flattish for the first half of the year. It seems like momentum is building. Any reason why comps wouldn't incrementally accelerate from here or at least hold these levels? Just sure, I know it's a positive for back-to-school, but I am trying to turn you down a little bit more about sustainability, given everything that you've put forth?

Yes, I think we feel very good about the business. But we – it's not only just Famous, we also have the Brand Portfolio. We are running the entire company and we look at the opportunities and risks across the entire brands. So, we think we've calibrated kind of our guidance and given you insight into that taking into account all brands within our portfolio. So, while we feel really terrific about the – what we've seen so far on Famous, it could be better, but until we see it, we feel like our current guidance is appropriate.

Okay. And just on the – just curious what your thoughts, Diane about that boot business into the back half of the year? Just sort of how you are thinking about it either for Famous or for your branded portfolio, relative to the three months ago or where it stands today?

Yes, I actually would say, Chris, on that point, we feel a bit more optimistic about it. I think everybody in their early days there of the second quarter were really kind of wondering kind of what was going to happen. But kind of what we're seeing early right now, Doc Martin at Famous is terrific, short booties are great. Sneaker booties have been – early read on that has been very good as well. So, actually, any of the preview sales that we've seen, some of our retailers do in the summer here has really shown that boots look good. So I would say where we were maybe a little conservative about where boots were going to be. We actually saw them as a plus in the quarter in the second quarter and kind of think that momentum will continue. So keep your fingers crossed on that, because if that works that way that'll be great for the industry as a whole.

Okay, thank you. And then, just last thing here. Just, Ken, just maybe kind of thought process for the third quarter. I know you don't guide quarterly, but it's always helpful that people have a sense of how you are thinking. I think last call you indicated third quarter to be up from an earnings perspective kind of low-to-high single digits. Obviously, we have to back into what the fourth quarter looks like. But any refresh thoughts about third quarter, given Q2 came in a little bit better, margins little bit healthier, comp a little bit stronger. Just any color about Q3 from an EPS would be helpful.

Yes, I think, conservatively, when we were talking before we said, we really thought that will be flat to up slightly when we look out into the back half, I think, as Diane mentioned, we see good momentum and sequentially at Famous. And we see lots of uncertainties across some of the other pieces of the business that literally is changing daily. So, when I look at that, the one thing that I think that we want to make sure people understand is that, the timing of the earnings. It was a little bit more weighted towards the back half and with that, the corporate expenses that we've continued to manage down, I think, three years ago it was $45 million in expense coming through that other segment, down to $43 million to $42 million. I think it's $40 million is kind of what we're expecting this year and so there is a little bit of timing shift between Q2 and Q3, just based on the shift of the earnings. So, when I look at SG&A, we were down about 100 basis points in Q2 year-over-year and we think that will continue and that we'll probably be somewhere around the 35% range in terms of the percent of sales in Q3. And so that should give you a pretty good idea in terms of how to model.

Okay. All right. Thank you. All the best. Talk to you guys, soon.

Thanks, Chris.

Thank you.

Your next question comes from Steve Marotta with CL King & Associates. Your line is open.

Hello, Diane and Ken, let me offer my congrats on the quarter, as well. Diane, would you say that there was an acceleration from the second quarter in the current quarter-to-date period from a comp standpoint at Famous?

There has been sequential improvement throughout the quarter. Yes, there has been.

I understand. Could you also provide a little bit of historical framework around the percent of sales by month in August, September and October? Trying to determine how much of the quarter has passed.

Oh, I would say, Ken, I don't have that in front of me. We can look that up for you, Steve, but...

We could talk about that offline.

Yes, be happy to.

Sure. Ken, was there any material shift in SG&A in the second quarter through the third quarter or vice versa?

No, not particularly. I mean the – across the businesses, obviously, people were cognizant of trying to make sure that anything discretionary that they were being prudent, but really what we have talked about in the expense in the other segment would be the only shift. We had – a year ago in the second quarter, we had some increases in expense associated with some of our medical and casualty where we are self-insured and so, those numbers were little bit higher in the second quarter last year. And so, those were favorable in the second quarter and so, sequentially, there's a little bit more expense that would come through in Q3 there, but that's really tied to the level of earnings in the sales. So it's pretty straightforward. There wasn't a lot of timing pushes out of Q2 into Q3.

Okay, that's helpful. Last question, can you just remind how much duplicative cost there were in the second half of last year associated with the DC?

So the duplicative was really across the first half and then in the second half, when we finally settled on the exit, that all came out as a non-recurring expense. So in our non-GAAP numbers, there was very little duplicative coming through there.

Got you. Perfect, thank you. I'll take the rest of the questions offline. Thank you again.

All right. Thanks, Steve.

Thanks.

[Operator Instructions] Your next question comes from Sam Poser with Susquehanna. Your line is open.

Good afternoon and thank you for taking my questions. First of all, what was the total -- the Brand Portfolio revenue on the – up or down on the existing business including when – if you just put – if you put Allen Edmonds into that number?

Yes, so, we had – because we had planned Allen Edmonds down, we had taken it out and it was up. And Allen Edmonds, as you saw on the comp showed the retail comp for Brand Portfolio was down 9.3%.

But in the Brand Portfolio wholesale number there, what was the...

Up 0.4%.

It was up…

Right? Up 0.4%.

Up 0.4%. He is wanting to include Allen Edmonds, the plan.

Right. And then the other – and so you did about $306 million in Brand Portfolio plus Vionic to get to this total number?

That's right.

Okay. Secondly, when will this plan down of – when will you be complete and Allen Edmonds sort of turns around and sort of gets back to where you want it to be?

Well, I think, we're making good progress Sam, on that. As you know, those kinds of things don't happen overnight and we made that move late last year to reposition the business and make sure that we reduce the amount of promotional activity. What we are seeing is improved relevance of our product assortment. We have reduced the level of promotional activity. That's been good. Over time, we definitely think we have the right plan in place, but we certainly see and I think – there is no – very obvious out there that the move of men to sneakers and moving out of dress shoes has been faster than ever. So we really need to continue to get our assortments back in the right balance. We've introduced sneakers. It's now a growing part of the assortment there. We think we've even got to accelerate that some more. So, it doesn't happen overnight. But we know that and believe that we have the right plan in place to improve our profitability of that business and connect with the consumers even better. So we are – we feel like we are making the progress that we had hoped. Never fast enough of course, but we feel like we're making the right kind of progress.

So, when you think about the China – I am going to go to China, again, I'm sorry, but when you think of the China exposure, I mean, a big chunk of the children's business, I mean that's a business that's hard to get out of China. And when you think about, we are hearing some rumblings that prices might start to go up in kids because it's not a movable business. When you think about the margins going forward with the tariffs, even if the kid's business may be pushed to the end of the year, I mean, how do you look at – how are all this pricing – potential pricing changes is going to work? Are you doing it item-for-item? Are you trying to average it across things or the brands that you are working with at Famous? How are they approaching it? How are they thinking about it? I mean, I know it's very fluid as you put it. But can you give us some color on where things are on...

Yes, a couple of things, on the kids side of it – we don't see that as a big risk for us. Without it we'd really be affected obviously at Famous. The bulk of our assortments there at Famous are really in athletic and sport and where the pressure really might be is other areas. So, I think right now, we are liking kind of what we see in the kids business. And the teams will take a look at if increases are coming through, we'll have to assess that at that time. But right now, we don't see that as being a significant factor for Famous. And I think, again because the big athletic brands and most of their key vendors have diversified their sourcing base and have done that for a while. So, I think we're in reasonably good shape there, always paying attention though. And I think then the other thing on the Brand Portfolio, you said it exactly right. There is not a one-size-fits-all and the good news is when – as the consumer wants newness, there is not there – we're really trying to keep evolving the styles, because we are looking at – we do look at it brand-by-brand, style-by-style and where we think the perceived value is in each of the products and where we – where we can either add value or do whatever we have to do. So there is no one-size-fits-all. I think our teams are doing a great job day-to-day trying to figure out what the best approach is. Some are really easy. Some are not so easy, and it really depends.

Thank you. And then lastly on Vionic. Now, Vionic, when you bought it, it's a very -- it's a premium comfort brand. I would assume that's how you are positioning that or how you like to think about it? Is that a fair statement?

Sure. That's a fair statement.

Why is it in Famous Footwear? I mean, I would put it in -- I mean if, for the same reason like Sam Edelman shoes or not in Famous. So they have some Circus subs in Famous, but not Sam. Why is Vionic in Famous?

Well, I think the team wanted to see whether or not some of the entry price product in Vionic would resonate with our – and Famous would resonate with the consumer. And so, I think as being – taking a look at whether or not that would make any sense, that's what the teams did. It was a very small portion of the total buy. It was really a test and I think we continue to test lots of things in Famous Footwear and they have a number of different test store groupings against, I would say, high household income stores. I think, stores that have higher penetration of kids. So there is always testing going on of some things. So I wouldn't read too much into that one, Sam. I think the teams will do the right thing, because it's really all and how the consumer if it works we could...

Well, I understand, but, I mean, you could probably sell some Sam Edelman shoes at Famous too if you tested that. But you haven't tested Sam Edelman in the stores. So...

Well, we have a great business with Circus that we are continuing to – Circus by Sam Edelman.

But that's a sub-brand and I mean why not just create a sub-brand of Vionic for that, that way from a – like the brand itself just stays pure.

Well it's interesting you mention that because, one of the things actually that Vionic has been working on is something called Vionic Beach. And that is an idea exactly about what you are talking about that is -- actually, it's primarily sort of sneakers and sandals and flip flops. And we're kind of positioning it as – and again it's early. We haven't done a lot of – in fact, I think it just came in for our Las Vegas selling. But we are looking at that as being an opportunity to reach a different consumer and different channels of distribution to your point and are hopeful that that if we - once we get that right, that would be the avenue for channel, stores like Famous and really others as well. So we are still in the – getting everybody aligned around where the opportunities for growth are at Vionic. So I'm confident that we'll be doing the right things on that, Sam.

All right. Thanks very much. Continue to success.

Thank you.

Thanks, Sam.

Your next question comes from Chris Svezia with Wedbush. Your line is open.

Thank you for taking my follow-up question. I appreciate that. Two of them actually. Just, how does the renminbi and the movement we've seen relative to the dollar, what, 4% move since August, 8% since mid-May. How does that affect your purchasing? Just curious how you think about that. And the second question, just with, Ken, when you mentioned leverage a 100 basis points. So that would continue and I think for Q3 SG&A rate of 35%, I think last year you did 34.2%. So I am trying to make sure I got that or maybe I am missing something?

Yes, so on the RMB, the – as we go and place orders with the factories, we are taking into consideration what the RMB is at that time. That is what the cost for that factory is. So, any changes would come through with new orders placed specifically tied to RMB. I mean, obviously, we're working with those partners to try to mitigate any impacts of these tariffs and so, we are – they're getting savings. We're working with them to share that with us to help offset the pure tariff. But there is...

And Ken, just quickly – how quickly does that that happen with the turnaround on that?

On any orders placed today I get the benefit of what the costs are. So with our speed model, obviously, we roll that through quicker than a traditional order.

Okay. All right. And on the SG&A question?

SG&A, what we said is that where - we leveraged a 100 basis points in the quarter and that the split on the other that was between the first half and the second half would be more closely tied to the earnings contribution in the second half, which we said was up in the 59%, 60% range when you take the midpoint of our guidance and you back out our actuals through the first half.

Okay. I'll go back and look at that and I'll circle back to you later offline. Yes, I'll get back to you on that. Thanks.

Thanks.

There are no further questions at this time. I turn the call back to the presenters.

Thank you very much for joining us on our second quarter earnings call and we look forward to seeing you on October 2nd at Investor Day. Thanks very much.

This concludes today's conference call. You may now disconnect.