Darden Restaurants, Inc. (DRI) Q4 2018 Earnings Report, Transcript and Summary

Welcome to the Darden Fiscal Year 2018 Fourth Quarter Earnings Call. Your lines have been placed on listen-only until the question-and-answer session. [Operator Instructions] This conference is being recorded. If you have any objections, please disconnect at this time. I will now turn the call over to Mr. Kevin Kalicak. Thank you. You may begin.

Thank you, Aubrey. Good morning and thank you for participating on today’s call. Joining me today are Gene Lee, Darden’s CEO, and Rick Cardenas, CFO. As a reminder, comments made during this call will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Those risks are described in the Company’s press release which was distributed this morning and in its filings with the Securities and Exchange Commission. We are simultaneously broadcasting a presentation during this call, which is posted on the Investor Relations section of our website at www.darden.com. Today’s discussion and presentation include certain non-GAAP measurements, and reconciliations of these measurements are included in the presentation. We plan to release fiscal 2019 first quarter earnings on September 20th before the market opens, followed by a conference call. This morning, Gene will discuss our quarterly performance and business highlights and Rick will provide more detail on our financial results from both the fourth quarter and the full year before providing our outlook for fiscal 2019. During today’s call, all references to Darden’s same-restaurant sales only include Darden’s legacy brands. We will begin including Cheddar’s Scratch Kitchen restaurants and our blended same restaurant sales figure in the first quarter of our new fiscal year. Now, I’ll turn the call over to Gene.

Thank you, Kevin and good morning, everyone. As you see from our press release this morning, we had another solid quarter to wrap up a strong fiscal 2018 for Darden. Total sales from continuing operations during the quarter were $2.1 billion, an increase of 10.3%. Same-restaurant sales for the quarter increased 2.2%, and adjusted diluted net earnings per share were $1.39, an increase of 17.8% from last year. Our strategy remains unchanged. Our operating teams are focused on becoming brilliant with the basics. They continue to create exceptional guest experiences by delivering outstanding food, drinks and service and an inviting atmosphere. And at the Darden level, we continue to strengthen and leverage our four competitive advantages; one, our significant scale that creates cost advantages, two, our extensive data and insights that improve operating fundamentals and help us better understand our guest and communicate with them more effectively. Three, the rigorous strategic planning process that our brands cycle through on a regular basis and four, our results oriented people culture which enables growth. All of Darden had a very good quarter. Total sales grew 4% and same restaurant sales grew 2.4%, the 50th [ph] consecutive quarter of growth, outperforming the industry benchmarks, excluding Darden by 190 basis points. Same-restaurant guest counts outperformed the industry benchmarks excluding Darden by 270 basis points. For fiscal 2018, Olive Garden total sales increased 3.7% to $4.1 billion. Congratulations to the Olive Garden team members for achieving this significant milestone. Olive Garden’s momentum as a result of our strategy to drive frequency among core guests. The success of this strategy is driven by flawless execution of the guest experience and continued simplification in our restaurants, craveable Italian food and beverage that appeals to our loyal guests, marketing that reaches the right target at the right time on the right channel with the right message and our ongoing commitment to improving convenience for our guest by focusing on the off-premise experience. Our simplification efforts have allowed us to reduce our promotional calendar, which limits the amount of new activity in our restaurants, enabling our management teams to spend their time focused on execution. As a result, our restaurant teams continue to drive guest satisfaction to new all-time highs. The promotional calendar simplification also enables us to increase our marketing efforts beyond limited time offers and into long-term growth drivers. During the quarter, we continued our everyday value advertising and emphasized week-day lunch messaging that strengthened our lunch trends. Additionally, this quarter we showcase craveable Italian food that appeals to our loyal guests with our big Italian classics promotion. Giant Stuffed fettuccine and the giant meatball provided compelling value and were well received by our guests. Finally, off-premise sales grew 9% and represented 13.8% of total sales for the quarter, further demonstrating the momentum in this area, Technomic recognized Olive Garden with its 2018 consumer’s choice award for best take out experience in the full service segment. Overall, I am very pleased with Olive Garden’s performance. The business momentum is strong, driven by a strategy that is working and we will continue to make the appropriate investments in our team members and our guests. LongHorn Steakhouse had a strong quarter as well. Total sales grew 4.9%, four times the rate of growth of the industry excluding Darden. Same restaurant sales grew 2.4%, the 21st consecutive quarter of growth outperforming the industry benchmarks excluding Darden by 190 basis points and same restaurant guest counts outperformed the industry benchmarks excluding Darden by 280 basis points. LongHorn’s performance is being driven by the team’s inherence to a long-term strategy of investing in the quality of the guest experience, simplifying operations to drive execution and leveraging LongHorn’s unique operating culture. The impact of this strategic focus was recognized when LongHorn received the 2018 consumer’s choice award from Technomic for having the most loyal customers in the full-service segment. This recognition is a strong testament to the great work our operations teams are doing to drive consistent execution and create memorable guest experiences. The LongHorn team continues to make meaningful stride reducing operational complexity. This quarter, we made more reductions in our core menu offerings and our operating processes were further simplified. Additionally, we made our limited time offers less complicated and easier for our teams to implement. This continuous improvement is resulting in better execution. Finally, our emphasis on the culture and focus on team member engagement continues to pay off as evidenced by LongHorn’s industry-leading retention rates at both the manager and on a team member level. Our Fine Dining brands, The Capital Grille and Eddie V's delivers strong quarter with same restaurant sales growth of 2.6% and 3.6% respectively, both brands have distinctive positioning and consistently deliver exceptional dining experiences. The Capital Grille’s increasing capacity in select restaurants to provide additional flexibility for large parties, while Eddie V's is focused on developing the talent needed to support growth. And we remain excited about its future growth potential. Yard House had another good quarter with positive same restaurant sales of 1.4%. The team increased its focus on operational simplification to create consistently great experiences and made significant improvements in both cost of goods sold and labor productivity. And we are pleased with the performance of our new restaurants and believe in continued growth of this brand. Yard House is broadly appealing with four distinct day parts that allow us to meet a variety of guest occasions. Bahama Breeze delivered positive same restaurant sales growth of 0.6%, the 14th consecutive quarter of growth. Our guests come to Bahama Breeze for fun, which is why our restaurant teams continue to create a fun island experience amplified by events such as the successful VIVA LA 'RITA event that took place during the quarter. The brand is uniquely positioned in the marketplace and continues to resonate extremely well with millennials. Seasons 52 generated same restaurant sales growth of 0.4% during the quarter. We took steps to broaden our appeal by improving the value perception. For example, we featured a limited time three course offering that allowed guest to choose a starter, an entrée and a mini indulgence for a fixed price. This improved our value perceptions and contributed to a 2.1% traffic increase for the quarter. As we continue to enhance value, the value equation, I am confident that this entrée brand is poised to capture more guest visits over the long-term. Now, I’ll update you on Cheddar’s. The Cheddar’s restaurants that we own and operate today were fragmented into three different businesses a year ago, each with different systems, policies and pricing structures. While same restaurant sales declined 4.7 for the quarter, the original company restaurants were down 3.3%, while the acquired franchise restaurants were down 7%. During the fourth quarter, integration activity peaked as we transitioned the Darden proprietary point-of-sale system. As we push the integration process to completion, it became apparent the team was losing focus on the basic operating fundamentals; therefore we decided to spend -- to spend marketing and promotional activities. We believe this was the correct decision even though we are rolling over a period of heavy promotional activities last year prior to and immediately after we closed the acquisition. With the integration now complete, we are fully focused on rebuilding the operational foundation and the team has three priorities. One, staff our restaurants, there’s an opportunity in many restaurants to increase management and team member staffing and scheduling more effectively; master the new tools, although the integration is complete the team now has to learn how to use these tools to improve operational effectiveness. As with past acquisitions, this will take time; three, simplify. This is a complex operation that must be simplified in order to improve execution. The team is making progress quickly, but we need to test these changes to ensure we get the desired outcome. We recently asked Paul Veri [ph], a veteran operations leader who experienced first-hand the process of mastering the Darden systems during the LongHorn integration, to lead the operations team at Cheddar’s. With his in-depth knowledge of the Darden systems and his track record of operational success, we are confident he will have a positive impact quickly. Cheddar’s is the value leader in casual dining, and the average restaurant serves more than 6000 guests per week. I believe the leadership team has the right plan in place to improve operating fundamentals and I remain extremely confident that Cheddar’s will add significant value to Darden over the long-term. In closing, I am very pleased with the progress we made against our strategic initiatives throughout fiscal 2018 and our performance continues to reinforce our belief that we have the right strategy in place. I want to say thank you to our 180,000 team members who bring our brands to like every day in our restaurants and who support our restaurant teams from here and our restaurant support center. We know our team members are our greatest asset and I’m confident we will continue to win our remaining focus on being brilliant with the basics as we pursue our mission to make, of making every guest loyal. Now I’ll turn it over to Rick.

Thank you, Gene, and good morning, everyone. We had another strong quarter with total sales growth of 10.3%, driven by 8.1% growth from a full quarter of Cheddar’s sales and the addition of 35 net new restaurants at our legacy brands, and same-restaurant sales growth of 2.2%. Fourth quarter adjusted diluted net earnings per share from continuing operations were a $1.39, an increase of 17.8% from last year. This quarter, we paid $79 million in dividends and repurchased $27 million in shares, returning a total of $106 million of capital to our shareholders. Looking at the P&L this quarter compared to last year, food and beverage was favorable 60 basis points as pricing, cost savings and synergies more than offset commodities inflation of just below 1%. Restaurant labor was unfavorable -- favorable 90 basis points as continued wage pressures, workforce investment and Cheddar’s brand mix offset pricing and productivity gains. Restaurant expense was 40 basis points favorable due to sales leverage and workers compensation expenses. G&A was favorable 40 basis points driven by sales leverage and a reduction in the mark-to-market of our deferred compensation liability and other equity programs. And we recorded a $4.5 million impairment during the quarter, the bulk of which were attributed to certain restaurant locations. As a result, EBIT margin expanded 30 basis points above last year and absolute EBIT grew 12.9%. Our 20.4% effective tax rate in the quarter was 290 basis points favorable to last year’s rate due to tax reform, partially offset by the tax impact of our deferred compensation hedge. Turning to our segment performance, Olive Garden and the Fine Dining segment both grew sales this quarter, driven by a positive same restaurant sales and net new restaurants. Segment profit margin increased in these segments even after the incremental workforce investments. By leveraging same restaurant sales growth and managing costs effectively. LongHorn’s segment sales also grew this quarter, driven by positive same restaurant sales and net new restaurants. Segment profit margin was 19%. Adjusting for the workforce investments, LongHorn’s segment profit margin would have been 30 basis points higher than last year. Looking at the other business segment, total sales grew 38.9% due to a full quarter of Cheddar’s sales in both same restaurant sales and new restaurant growth at the other brands. Similar to last quarter, segment profit margin was 170 basis points lower than last year, due to the brand mix impact of adding Cheddar’s and for moving consumer packaged goods out of this segment, primarily to Olive Garden. Fiscal 2018 was another great year of progress as our brands continued leveraging the power of Darden’s competitive advantages resulting in double-digit total sales EBIT and EPS growth. Total sales grew 12.7% to $8.1 billion, and EBIT grew 10.2%. These results coupled with tax reform resulted in adjusted EPS growth of 19.7% while investing $20 million into our workforce. Other accomplishments during fiscal 2018 included, returning over a $0.5 billion to shareholders consisting of $314 million in dividends and $235 million in share repurchases, realizing approximately $10 million of cost synergies from the Cheddar’s acquisition, completing the rollout and integration of systems to all Cheddar’s location and issuing $300 million of new 30 year debt at 4.55% replacing $311 million of our outstanding notes tendered that had higher interest coupons. This morning, we also announced that our board approved a 19% increase to our regular quarterly dividend to $0.75 per share, which results in a yield of 3.2% based on yesterday’s closing share price. And finally, yesterday our Board of Directors also approved a new share repurchase authorization for up to $500 million of Darden’s outstanding common stock. This replaces the previous plan and does not have an expiration date. Now that we’ve wrapped up another year, I want to take a moment and remind you of our long-term value creation framework we introduced in December of calendar 2015. This framework called for a 10% to 15% total shareholder return assuming a constant earnings multiple. Looking back, investors who bought our stock at the beginning of fiscal 2016 reinvested all dividends in Darden’s stock and held to the end of the fiscal 2018 earned an average annual total shareholder return of 18%. And looking back over any 10 fiscal year period, since becoming a public company, we have consistently achieved or exceeded our targeted total shareholder return range. As we look to the future, we will still target a 10% to 15% total shareholder return, but are making two minor modifications to the framework. First, we are updating the targeted EBIT margin expansion range to be 10 to 30 basis points. This reflects the fact that we’ve already expanded EBIT margin by more than 200 basis points in the last three years. Second, we increased the share repurchase range to be between $150 million and $250 million. This change reflects our growing free cash flow and the significant share price appreciation since the introduction of our framework. Now turning to our outlook for fiscal 2019, we anticipate total sales growth to be between 4% and 5% driven by same restaurant sales growth of 1% to 2% and 45 to 50 new restaurants. Capital spending between $425 million and $475 million, total inflation of approximately 2% with 0% to 1% commodities inflation and 3.5% to 4.5% of total labor inflation, which includes approximately 5% hourly wage inflation. Total run rate investments of $35 million related to tax reform primarily in our workforce. Incremental synergies related to the Cheddar’s acquisition of approximately $13 million and annual effective tax rate of between 11% and 12% and approximately 125 million diluted average shares outstanding for the year, all resulted -- resulting in a diluted net earnings per share between $5.40 and $5.56. And with that, we’ll take your questions.

Thank you. [Operator instructions] Our first question comes from Sara Senatore from Bernstein. Please proceed.

Great, thank you very much. Just a couple of questions about more on really about the demand environment and then maybe LongHorn in particular. You know it feels like there’s obviously a lot of really dramatic price point promotions out there. You talked a lot about being brilliant at the basics, but given that you were lapping Buy One, Take One, can you just talk a little bit about what you saw in terms of your mix at Olive and then perhaps at LongHorn very good comp, but the other, some of the other big Steakhouse’s maybe comped a bit better, so could you talk about the dynamic in that category as well? Thank you.

Good morning, Sara. You know I think about the demand in the space right now, we saw some improvement in April in the benchmarks, maybe fell off a little bit. I would describe the environment as volatile week-to-week, but overall, the demand has been fairly good for the casual dining brands that are well positioned with strong value propositions. In your question you brought up the fact that there are some folks, other brands out there heavily discounting and are being very promotional. We’ll see, we think that that’s not the right place to be right now. We are very pleased with how we – we lapped Olive Garden in the fourth quarter. We thought they had a very very strong quarter. On the LongHorn side, the LongHorn two year stock was approximately 6%, and one of the things that I like where we are in LongHorn right now is we’ve been able to really pull back on some of the incentives that we’ve been, we’ve had in the marketplace not really like our profitability. I really like our margins structure comparative to the other Steakhouse players. So you know sometimes the headline same restaurant sales numbers not all -- all is not the entire piece of the puzzle. I like to look at the whole business model. I am thrilled with LongHorn’s performance in the fourth quarter and a two year stack and you have to remember in LongHorn these are very small boxes that our strategy is that we maximize the blocks and then build another restaurant three miles down the road and that’s how we ended up with 45 restaurants in Atlanta, Georgia.

Understood. Thank you.

Thank you. Our next question comes from David Tarantino from Baird. Please proceed.

Hi, good morning and congrats on another good year. My question is about -- I have a couple of questions about the guidance for 2019. So first on the comps outlook of 1% to 2% I think your long-term range when you shared originally it was comps of 1% to 3% and you consistently either have been in the middle or maybe towards the higher end of that, and just wondering why the guidance for 2019 kind of anchors on the path of that range in light of your comments about the environment being better. And then secondly, yes it doesn’t -- I guess given your tax rate guidance it doesn’t really seem to suggest that at least at the midpoint that you are expecting much margin expansion or you know relative to that 10 to 30 basis points targeted. I’m -- just explain kind of why you might not get a lot of margin expansion in 2019? Thanks.

Yes, David this is Rick. On the comps, the reason that we are at the lower half of our guidance range is as Kevin mentioned on the beginning of the call we are including Cheddar’s next year in our total comp. And as Gene mentioned, we still have some things to go through on the learning of the integration. I mean, we would expect Cheddar’s to be on the lower end of that range, so that would bring us down from what we’ve finished this year a little above 2%. So that’s where we on the comp side. On the margin side, the real difference, the real reason that we be either at the lower end or have very little margin growth next year is the additional workforce investments we are making and based on the tax reform, which actually helps on the tax line. So we’ve got those two things, we’ve got the workforce investment, and actually we are pricing well below our inflation, as you think about what we talked about our pricing ranges normally, and our inflation ranges so both of those things should cause our margins to be at the lower end of our range.

Great, great. And Rick, just one follow-up, the workforce investments. I think the incremental amount is around $50 and did I hear you correctly that the shutters integration savings would be roughly in that same ballpark. So I guess is it more the latter factor that you mentioned around that pricing to cover inflation that’s driving that outlook?

Yes, it’s more of the latter. If you think about pricing and as we’ve said our strategy is to -- is to leverage Darden’s scale, price below inflation, which we’ve done for the last few years and we expect to do that next year.

Great. Makes sense. Thank you very much.

Thank you. Our next question comes from Brian Bittner, Oppenheimer & Company. You may now proceed.

Thank you. Good morning. In the quarter, now that it’s over and you can go back and look back at the results. Is there any way you can tell us what the effect of not running the promotion had on sales and on COGS margins? And then I have a follow up.

Very purposely on this, you know, we all I will say is that our team did a great job of implementing a new promotion to laugh over the Buy One, Take One. And as you can see by our results, we had, we had a very strong quarter. The other comment I would make about the quarter and the promotional strategy and the advertising strategy is that and I said this in my script. We have made the choice to invest some dollars into brand marketing away from promotional activity, which we -- where we believe will drive overall, enhance the brand overall, but is not as effective as your pure promotional advertising. And we think we saw some of that benefit in the quarter of the investments we’ve been making in, the value platforms and advertising that. And so, again I’m very pleased. I think the team did a great job getting you know of lapping one of our most popular promotions, which we had run for an extended period of time earlier in the year. And so the total number of weeks of exposure for that promotion were down, but not down real significantly. So – the team did a great and we're very pleased with the overall results.

Okay. Thanks Gene. And Rick just two questions for you. One on the quarter; the OpEx on a current unit basis was actually down year-over-year. Can you unpack that a little bit more for us? And then, on the 2019 earnings guidance, following up on David's question, is there like specific operating margin range you want us to think about for 2019? Is it like flat to 20 basis points instead of 10 to 30? Any help on that would be great. Thanks.

Yes. Brian, I'll start with the second question. I would say you're probably closer to flat to 20 basis points than on the higher end of that range as the follow-up to the question. And if you look at our restaurant expense line, it's primarily workers comp difference versus unpacking anything else. But the big driver of the drop in restaurant OpEx is workers comp and the synergies that we've gotten from the Cheddar's acquisition.

All right. Thank you.

Thank you. Our next question comes from Jeffrey Bernstein, Barclays. Please proceed.

Great. Thank you very much. Two just broader questions on the industry. One, Gene, I'm just wondering as you get to look at so many different brands and you said you seemed like the casual dinning industry is seeing some healthier demand trends. And I'm just wondering maybe you could talk a little bit about the sustainability or what you think of the drivers? I know in the past you've talked about when the consumer gets a benefit from whether it would be tax reform are lower guest prices that end up seeing the benefit in mix. But yet seems like this go around, mix is relatively flat. You saw a nice uptick in traffic. I'm just wondering if you kind of parse through what you think are the drivers of that? And the second question was just on the industry. As we look to 2019 I know you're guiding to 1% to 2%, I'm wondering what you're assuming in that for the broader industry, because it does seem like your comp gap has narrowed over the past number of quarters. I'm wondering whether you see that narrowing further in fiscal 2019 or how comfortable you are with the potential gap as we think about 2019? Thank you.

Jeff. This is a lot in there. Again, it's hard to predict the future demand in our space. We have tendency to want to look back at the past as a predictor of the future. More discretionary income for the consumer should be good for restaurants, and I'll keep coming up to. Should we good for the well-positioned that have strong brand propositions and have strong value equations all throughout the menu? I still think that the consumer does not want to be told what they have to purchase in your restaurant to get value. They want value in everything that they purchased and that's why these promotional constructs are somewhat – I don't think it's as effective as they have been in the past. Now, as far as our gap and how to think about that, I think that we've had a very good sustained performance of – out performance of the industry. And when we think about it what we're really focused on is how do we invest in our businesses to ensure that we can hit a long-term framework over time of 1% to 3% same restaurant sales growth. And were not trying to maximize the quarter-to-quarter or even year-to-year, and there are times when we really need to make investments to ensure that our value perceptions improving and is better than is better than our competitors. And that's what our focus is. When we think about our guidance for next year, I'll just reiterate, I think what Rick was trying to get across is, we expect Cheddars to be a little bit of a drag to our other brands and have an impact. And that's why that we're down at 1% to 2%. And at this point in time we believe we have the right recipe, no pun intended to really improve the operations in the Cheddar's system and drive same-restaurant sales. But we all know that trying to drive same-restaurant sales to operational improvements takes more time than coming up with an advertising promotional and advertising gimmick to the drive sales. We want to build the foundation that can move this business forward and sustainable for the long-term. And that is our plan and we're going to stick to it. And so that's how -- that's when we think about our guidance. That's what's was impacting it.

Understood. Thank you.

Thank you. Our next question comes from David Palmer, RBC. You may now proceed.

Thanks. Just a follow-up. About Olive Garden, assuming that comp gap to the industry has been hit by not running not only the Buy One Take One, but fewer promotions throughout fiscal 2018. I know you're trying to simplify and improve everyday value. But could you maybe give us some numbers or anecdotes about why this strategy has been good or will be good for Olive Garden heading into fiscal 2019? And then I have a quick follow-up.

All right, David. I don't believe that going from nine promotions to six promotions had any impact on our comparable store sales throughout the quarter. We believe that simplifying a promotional construct allows us to execute at a much higher level, at the restaurant level. We believe that it takes some cost out of the overall system from a training standpoint, from a supply chain standpoint. Our belief that we as restaurateurs sometimes get bored with our own messaging faster than the consumer does when you look at the frequency of our consumer. So we believe this was a really important move in our simplification effort and we believe it had no impact on our overall same-restaurant sales for the year or the quarter.

And then, back to Cheddar's, I know you're talking about using new tools and the staffing up and the simplification there. Lot of that sounds like stuff you've done before even at a greater scale with Olive Garden. What is your thought about the rate of improvement you can get with just these tools and the learning curve? Is it something of a six to 12 months nature?

Yes. I'm not going to put a timetable around it. Our challenges are significant here especially in the acquired franchise restaurants. And we had to weaken the base of the base restaurants by pulling human resources out of those restaurants that help staff, the acquired restaurants. I would say around this is you know they're in their 14th month of integration, which is really the low point. And even I think about where I was at and how I felt at the 14 month of integration when we were acquired. It wasn't a great place. And I talked, there's a few others on my team around what it was like. And we're thinking about that and trying to help the Cheddar's team really focus and get back to what we call, brilliant with the basics. We got a great team. We got great people. They all want to do the right things. We just need to ensure that we can help them, get those basics. And we're going to start with staffing. The turnover rates are too high. We're not fully staffed before we can make meaningful improvement in the overall guest experience. We're going to make meaningful improvement in the team member experience. So we're focus on those basic things. How long that's going to take? I don't know. Obviously when we start wrapping some of the weaker comparables, hopefully we can get back positive at that point in time.

Thank you.

Thank you. Our next question comes from Gregory Francfort, Bank of America. Please proceed.

Hey, Gene, I just had a follow-up on the Cheddar's integration. Can you maybe walk back through your overall process of integrating the brand? And then just any expectation on like how you think about the relationship between total sales and comparable sales on a go forward basis?

Yes. At a high level when we think about integrations, it's really the first few months is you're assessing the work that you need to do. You bring a third-party to help manage the process and then you design the system. You got to design are our proprietary POS system which is the major change, which in the fourth quarter we had the biggest impact and the biggest impact was on the original own Cheddar's. We've done the franchise restaurants first. And then you start with the real – the first disrupter is the supply chain integration into our supply chain network, which is pretty invasive because when we think about it’s the same product coming in, but the package size is different, the delivery times are different, how you account for, it's different. So there's just a lot of change. And then the big one is the POS system. And then from there when you implement the POS system you implementing all our productivity tools, and that's when you really impact the management because it's all brand new to them. And even though we partner them up with our other local restaurants; that's take time. It's going to take a year for them to become proficient on these new tools which are significantly better than the tools that they had and should improve productivity. And there was also -- we also have to make changed to all the benefits and programs and put them on our programs, which is disruptive. And I think from a human standpoint during this process what you think about is how this is going to impact you and you're really concerned about that. And that takes your focus away from everyday taking care of guests and taking care of team members. So that's really that the process. Remind me the second part of that question?

Second part was just, how you talked about total sales and comparable sales is playing out? How you think about that relationship going forward?

Yes. On that relationship going forward, I think that we believe in the relative share model and Cheddar's relative share in the markets in which they compete in is very low. And prior management had a – I was really adverse to adding a lot units into the marketplace because of the headline comp number. And the example I like to give is that we've got – we're doing over a $100 million in sales in Olive Garden in Orlando Florida and we're doing close to 22 or 23 million in Cheddar's. So the opportunity is for us to be able to do a lot more volume there which is going to put pressure on the headline number in these markets that we're growing out. And so we think long-term that the real focus on Cheddar's for us is going to be how do we grow top line sales by adding units and maintaining a relatively healthy comp number, but we can add 15 units to the Orlando market and expect comps to be solid. But we think by becoming more – by having a bigger relative share we will increase the overall profitability of the overall business.

Great. Thanks.

Thanks you. Our next question comes from John Glass, Morgan Stanley. You may now proceed.

Thanks very much. Gene, at one time I'd heard you talk about LongHorn potentially being a national brand if you could sort of get the West Coast and California markets to work in particular. Where are you in that process of discovering whether that is feasible, and that you're able to more rapidly expand our West in particular?

I think we're within 24 months of having a couple restaurants open in the great state of California.

Okay, great. Thank you. And then, Rick, on the guidance and the reduced long-term framework of 10 to 30 basis points versus 20 to 40 in the past or 10 to 40 in the past. Is that just the function as you framed that is doing so much margin expansion you can get in this business? And you've already achieved a lot. Are you also factoring in just a higher level of reinvestment necessary in this business? You're factoring in that wages are structurally going to be in that four plus percent range? Are there other factors I guess, just what you've already done that impact your view on the lower margin expansion opportunities in the future?

Yes. There are a few other factors. As I said, we have taken -- we have increased our margins couple hundred basis points since we announced that framework. We've also taken significant cost out of our P&L. We continue to find other costs to take out, but we have been reinvesting a lot of that. Just to frame it, it's only a 10 basis reduction in the top end. So it still – it's only going from 40 basis points to 30. But as we've mentioned we continue to price below inflation. We put our price below our competition which is our strategy that put pressure on margins. And we use the Darden scale advantages to find other cost saves to help that. Wages are, as we said our hourly wage we have inflation of around 5% in our guidance for this year. And so that's why we're bringing that down. There's nothing structurally different other than wages are little bit higher. We are continuing to go after our strategy of pricing below our competition and pricing at a range that doesn't drive a whole lot of top line margin at the restaurant level.

Thank you very much.

Thank you. Next question comes from Will Slabaugh, Stephens Incorporated. Please proceed.

Yes. Thanks for taking my question guys. And this is actually [Indiscernible] on for Will. And my first one is kind of around -- you continue to simplify operations at both Olive Garden and LongHorn, and specifically thinking about kind of LongHorn and removing the good amount of SKUs the last couple of quarters and yet comps have remained pretty impressive in the loyalty factor as well. And so, at many restaurants we've seen something similar done and it's become a drag on those businesses. What has allowed you to implement kind of these streamlining initiatives and continue grow same-store sales without bringing disruption to the in-restaurant operations?

Well, the way we think about this is the process from the back door to the table. How do we simplify all the procedures? How do we simplify the processes between the grill and the expediting station, and how we quickly get the food to the table? So we break it down into those areas. I think as we think about pure menu simplification, it's the art not the science. It’s the art of being able to put a menu together that covers all the significant areas that your guest want to be covered without having a lot of products doing or working in the same ways and ensuring that you have unique interesting products in each of those categories. And if you do that, I think that you can create -- artfully create a menu that meets the consumer needs, but yet allows you to simplify your execution, so that you can execute that product at a really, really high level. And when we think about our industry no one has done this better than Hillstone. And for many, many years they've had a very limited menu and executed extremely high level. But if you ever study their menu, they do a wonderful job of hitting every possible area our consumer might want to dine. And I think that's what we're trying to do is, remove the duplicity in our menus with similar products really providing an opportunity for our guest to eat what they want but without having two choices in the same particular area. And that's where we're focused on. And we think there's still – we believe there's still lot of work to be done here. And so, at the end of the day, we need it to deliver on the food side, a product that's executed the way it's been designed to be executed with and being delivered extremely hot and favorable to the guest. And that's what we're obsessively focused on.

Yes. Appreciate that. And then just one quick one on kind of the progress at Olive Garden on third-party delivery, I know in the past you've been more focused on the opportunity of large party catering. But is there any update on either of those fronts?

Let me provide an update on this. We have met with and have test going on with all third-party delivery services of scale. There continues to be significant hurdles that we need to work through, such as how do we ensure that these delivery services will enhance our brands? Can it be flawlessly executed for our guests and our team members? Can we create a sustainable incremental growth at scale that's additive to our company? Can we agree on viable economics? And lastly, can we ensure that we own the data? Now, those are the things that we need to really work through in order to get to a place that we are -- we can partner with one or two of these organizations. We're still testing, doing small order self delivery. We'll continue analyze what the opportunity is there. We also recognize that we have 400 plus restaurants out there that are participating on a local basis with some of these companies. Those aren't what I would call sanctioned tests, but they are part of what's happening. We think this is an interesting space. However there's a lot of hurdles to get over also including how do we deal with a $0.5 billion we're doing in Olive Garden take-out sales today and how would that's be impacted and what the margin impacts are of that? So that's our update on where we are with the third-party delivers. We are continuing to meet with them and try to understand what opportunities are.

Sure. That's it from me. Thanks guys.

Thank you. Next question comes from Jon Tower, Wells Fargo. Please proceed.

Great. Thanks for taking the question. Olive Garden on a two-year basis the traffic trends were pretty solid. And I'm just curious if you could breakdown where you're seeing the growth? Is that coming in earlier parts of the day? I know one of the promotions you did in the fiscal third quarter was focused on that three to 5 O'clock time window? Or you're seeing greater growth during the weekdays or weekends? If there's any kind of breakdown you could provide for us that would be helpful?

The overall business in Olive Garden is strong in all periods. We continue to focus on value at lunch. We continue focus on value from three to five. And with Cucina Mia! platform and some of the other value platforms that we're running when this Giant Meatball was a hit, and the Stuffed Fettuccine was a big hit. That was right in the sweet spot of what we're doing of our core guest. So we're seeing strength all throughout growth of business. I wouldn't point to one particular period.

Okay. And I know a primary objective of management has been to drive frequency of core guest at Olive Garden and pretty much across the brand. So, is there any chance you could give us a breakdown on how the frequency of those core guests have change over the past several years, maybe frame it somehow?

Yes, John. This is Rick. I'm not going to give specific numbers, but we segment our consumers into different groups. And the ones that we are focusing on and the ones that are high-frequency and most recent, and that group of consumers is growing faster than any other group that we have.

Okay, great. And then, lastly just a clarification. I know today you had some new compensation agreements announced. And I was wondering if that's included in that 15 million of incremental tax saving reinvestment into the business in fiscal 2019?

No, John, that's not part of the 15 million.

Okay. Thank you.

Thank you. Next question comes from Greg Badishkanian, Citi. Please proceed.

Hey, guys. It's actually Fred Wightman on for Greg. We saw a large casual dinning franchisee file for bankruptcy earlier this quarter. Is that something that you think is meaningful from an industry perspective? And then if so, what you think that sort of indicates for unit growth or closures across the category going forward?

Yes. I don't think that's meaningful. I think that's more about someone reorganizing their balance sheet. I think there'll be continued store closures and there'll continue store openings as the weak continue to struggle that aren't as well-positioned, they maybe overexposed. But I don't -- I still think that we're going to see a net positive unit growth going into the next couple of years.

Thanks. And then can you just remind us how you're evaluating the returns on that $35 million of employee spending if its turnover or crew satisfaction. Is there anything that you can sort of give us early days or early reads?

No. That's something – this is – I mean, I truly believe that we need to invest in to 180,000 team members who bring our brands to life every single day. We continuously evaluate our position in the marketplace from a benefits and overall employment proposition. And we believe these were the right things to do in order for us to maintain our leadership from a retention standpoint. And I believe we have the best team members in the business and I want to continue to reinvest with them when I have the opportunity. I'm very thankful for what they do every single day. There's no one sitting around me here that serves one meal or cooks one meal. These people do it. And I want to continue to reinvest in them.

Great. Thank you.

Thank you. Next question comes from Chris O’Cull, Stifel. Please proceed. Chris O’Cull: Thanks. Good morning, guys. Gene, the company has argued that if it gets organized to successfully add brands to its portfolio and benefit from synergies. And I know you guys are getting the synergies in the Cheddar's acquisition. But do the integration issues with Cheddar's caused the company to rethink its approach to acquisitions? If so, kind of what have you learned and what things would you change?

No, not at all. I mean, I think that the -- I would call the acquisition indigestion we're having with Cheddar's today was the exact same that we had with LongHorn 10 years ago. I mean, I think we've got -- I've got a very long-term approach to this. And I look and I understand that we are going to have some issues as we integrate brands, but I look at where we are with Yard House today and Eddie V's and in LongHorn and Capital Grille. Cheddar's is going to work its way through this, and its going to be a dynamic brand. And not all these are going to move at the same level. We continue to do it what we call post-game analysis after we do these acquisitions. One of things we did this time is, we moved a little faster with integrating into our systems. We think that was helpful. Hopefully that will play out that we'll recover a little bit quicker. But this has no impact in if anything would make me more confident in our ability to do it. Chris O’Cull: Okay. And then just secondly, can you quantify the impact to Cheddar's same-store sale of pulling the promotions? And will the promotional activity would be more comparable going forward year-over-year?

No. We can't give you the impact of it, but we just know that before we owned it that they were promoting extremely heavily to keep their same-store sales positive, so we didn't have an opportunity to retrieve the deal. And we know that before we got into really the integration, they were continuing to keep those – that promotional cadence alive. We believe like other brands that compete in this space that promotional activity and marketing is not key. We want to put those dollars on the plate. We want to create value where the consumer can see it every day. And I think we all know that there's another competitor out there that does that extremely well and we want to take that strategy and implement that strategy and keep the strategy with this brand. We will continue to focus them on the basics. We believe that we have great competency and in executing the basics of the restaurant operation that we're going to focus this team on doing that. Chris O’Cull: Great. Thanks.

Thank you. Our next question comes from Nicole Miller, Piper Jaffray. Please proceed.

Thanks. Good morning. In our research we saw corporate bonds [ph] go towards the low income or low middle income demographic. And they also have an improved personal finance outlook. Is this anything you could attribute to your same-store sales growth? I would say especially at Olive Garden and maybe at LongHorn?

I think all those types of things are contributing. I wouldn't point to one specific demographic indicator. I think there is multiple indicators out there that are contributing to the overall growth of the well-positioned brands. And so that's definitely not hurting. But I wouldn't I would attribute it singularly for Olive Garden's strength.

And then just second question on the Olive Garden off-premise, I think you said up 9%, 14% of sales. Could you talk about the pieces to go, catering delivery etcetera and how that each perform just quantitatively if possible?

No. We're not going to talk about for competitive reasons for that kind of detail. The one I'd say, I'll get this in is that over three-year period we were up 50% in our off-premise. So our teams have done an extremely good job of ramping up the experience and improving the overall satisfaction of our take-out -- our off-premise consumer. Our guests love the experience. Our team has done a great job with it. They're going to continue to improve their capabilities as the business grows, but a job well done by the Olive Garden team, 50% over three years is fantastic.

Thanks Gene.

Thank you. Next question comes from Matthew DiFrisco, Guggenheim Securities. Your line is now open.

Thank you. I have a question and just a couple quick follow-ups. I guess in the past, Gene, you've been somewhat not so much enamored with a quick casual category inciting that the demographic seems a lot more narrow or smaller than the casual dining audience out there. I wonder -- have you seen a beginning in the industry of the lunch I guess the assault that the quick casuals had on the casual dining lunch business. Has that sort of tapered off for the industry? I mean, I know you guys have improved your value at lunch, but I'm talking more so for the industry. And has lunch strengthened a little bit or the share loss, has that sort of slowed?

Yes. I think the way we would describe it is that it was a headwind with the amount of units, fast casual units being added. That headwinds probably been diminished somewhat as the unit growth for that segment slowed. And I know I think that categories economics are difficult and we've been able to actually come in and give the consumer better value with full service experience. So that's how we think about. We think that the headwinds been removed.

Okay. And then Rick, with free cash flow guidance is anything we should read into that as far as the return to shareholders that you're guiding towards as far as a signal on your appetite for acquisitions going forward? Or is that still something on the table if you look very long-term as far as the growth model for the Darden portfolio?

Yes. I think as you look at the guidance we've only increase the CapEx by – well, not the CapEx, the share repurchase by $50 million year-over-year. So it's not a significant change. But we do know that because our share price went up we needed to do that. We have plenty of debt capacity if something comes along that makes sense for us, but we're not going to talk necessarily about specific acquisitions or doing acquisitions. We know that our long-term framework works with or without those in acquisition.

Thank you. And then just the last question with -- going back to the delivery question; off-premise being around 13 or 14 for Olive Garden, does that represent an opportunity and something that signals delivery could raise the ceiling? Or some people get concerned sometimes that when you flip the switch delivery, its going to cannibalize the existing off-premise business and add a layer of service to it and cost. So would this be 13% than success you've had with off-premise. Would that delay your rollout of delivery or is this something that says you need to raise the ceiling and delivery might come sooner?

Well, I would go back Matt to the significant huddles I described. We need to get comfortable that we have solved for these, especially in our – its going to be brand enhancing. And so our goal was to meet the consumer needs state of convenience. We're going to continue to focus on that. There are no limitations on a number. We believe through our research that we're capturing up a lot of occasions in Olive Garden. We wouldn't capture the people that using our off-premise services that would probably not come into our restaurants. We believe that people are from the most part the decision-making is and my taking out or dining in tonight, and then they decide where they're going to go. So I'm not as concerned about what the number is. I've said in the past, I think if the consumer – the need state continues grow Olive Garden's off-premise could go to 20%. How we get that, that still yet to be determined. We are focused right now – continue to be focused on large party catering, over $100 with 24 hour notice. We like that business. And we're being -- it's been very well received by the consumer set.

Excellent. Thank you.

Thank you. Next question comes from Andrew Strelzik, BMO Capital Markets. Your line is now open.

Good morning. Thanks for taking the question. I hate to belabor the point on the off-premise business. Obviously growth is still healthy, but at 9% it was a bit lower that we were use to seeing and it's obviously become lot more competitive with others getting involved there. So is there anything that you're considering doing any levers at your disposal to support that growth going forward? And I guess more broadly as we're seeing a lot of concepts talk about incremental growth from off-premise. Where do you think those eating occasions are coming from primarily?

Yes. On the first part of the question I think that we're going to continue to execute our strategy and try to drive the off-premise business. The 9% number does not bother me at all. I think at a two-year stack at 25 and we got a three-year stack of over 50 on an annual basis. So that's healthy. And where is this coming from? I think its trading out of grocery and with some extent, I think for the first we've seen – I saw a chart recently where food, out of home, eclipsed the grocery sales. I might not have that full accurate, but it's pretty darn close. So I think people are just thinking about convenience differently. And we also – let's not forget we have a demographic wave with millennial's coming our way, which could benefit us over time. And there's a lot of good data out there about this demographic wave.

Great. Thank you very much.

Thank you. Next question comes from Karen Holthouse, Goldman Sachs. Please proceed.

Hi. Going back to Olive Garden, the promotional strategy, I know last year was nine promotions or two years ago, I guess at this point with nine promotions. Last year it was six. And I think you kind of framed it is a little bit of testing year to see sort of the cost in terms of traffic versus the benefits in terms of executions, simplicity. How do you feel about sort of those different levers or the puts and takes this year? And how should we think about the promotional calendar headed into next year?

I will get into some dangerous territory here for me to speak to too openly about this as our competitors would love to know what our promotional cadence was going to be next year. All we'll say is I think that our team has executed six promotions extremely well. They kept them fresh for a longer period of time. They use some innovative tactics to do that. And I want to continue encourage them to be creative and to be able to run our promotions on a longer scale and try to reach more consumers through innovative, integrated marketing opportunities. But I'm not going to signal what our promotional calendar is for next year.

Thanks. Understood. Thank you.

Thank you. Our next question comes from John Ivankoe, JPMorgan. Your line is now open.

Hi. Great. Thank you. Gene, we've kind of – you talked obviously lot about your outperformance relative to the industry. But the industry itself same-store traffic in your May quarter, in your fourth quarter were still negative. So, can you comment, I guess why you think casual dining same-store traffic is still negative at this point in the cycle and if there's any insights that we can have maybe on a market by market basis that stuff may be some markets that you think maybe have leading indicators with a positive or negative that may influence the rest of the country in terms of future segment trends?

I'll take the latter part of that first. We see nothing when we look across the individual ADIs. Sales are little weaker in New England in that marketplace, but for the most part it's fairly similarly as we look across the country. Why do I think casual dinning in general is struggling to grow traffic? It’s a mature industry that is somewhat over-restauranted and in an environment like that it's going to expose the weaknesses of brands that aren't positioned well. And that's exactly I think where we are as an industry. And those who have been willing to do less guests, charge more money and try to make additional profit that way are going to end up paying a price. And the brands that are focused on maintaining their guest counts and even driving their guest counts and willing to give up short-term margin and pricing below inflation and competitors will continue to take share. And I think there is some really good brands out there that are really well-positioned that continue to do that. And I think we have a lot of them in our stable. I think we're better positioned than most because of our scale and what we're doing with that and insights. And we'll continue to stay focused on that. But we see an opportunity in a mature market to gain share.

All right. Aubrey, I think we're ready for the next question.

Our next question comes from Stephen Anderson, Maxim Group. Please proceed.

Yes. Good morning. And not to belabor the point about the post integration efforts over at Cheddar's, but in the past calls you've mentioned about maybe rolling out some sales building initiatives and including things like up off-premise sales. And do you think at this point it maybe a bit premature to discuss that as something that you might consider even in the first half of the fiscal year?

No. We're going to be focus on staffing our restaurants, simplifying our operation and improving and mastering the new systems that we put in. Right now these restaurants on average do over 6000 guests a week. I want to delight those guests with a great experience and that's our focus right now.

Okay. And then now regard to some of the menu price rationalization that you've done in a number of markets. Has that process now been completed?

In the Cheddar's system, yes, we've got them fairly much aligned on the right -- on the similar pricing structures and it’s a good question, because that was painful but it was the right thing to do.

All right. Thank you.

Thank you. Next question comes from Brian Vaccaro, Raymond James. Please proceed.

Hi, thanks and good morning. Just wanted to circle back on the Olive Garden advertising. Notice that their reported marketing spend overall was up about 8% year-on-year. Was that a meaningful driver of Olive Garden comps during the quarter that was maybe able to offset the Buy One, Take One lap and given the intensely competitive environment we are still in, should we expect ad spend as a percent of sales to be up perhaps in fiscal 2019?

First of all, we're just verifying, but our advertising spend in Olive Garden was not up for the quarter or the year. And so I don’t know what you are looking at, but I believe it was actually probably a little less.

Yes, I think you are looking at the actual income statement which didn’t have Cheddar’s in all of last year. When you look at total marketing spend, as we said as a percent of sales, our marketing was down 10 basis points. We are at favorable 10 basis points, so that would have been mainly adding another brand with other sales.

Okay, understood, understood. And I guess any comments on fiscal 2019 overall ad spend as a percent of sales.

No comments specifically on marketing spend, just take – go back to our framework and where we are going to be, we wouldn’t anticipate marketing as a percent of sales to be significantly different year-over-year but no comment on specific ad spend.

Okay, that’s helpful. And then also if I could just shift gears to the food cost during the quarter. Rick, can you quantify the savings that you achieved in the quarter and how we should think about sort of the food cost savings specifically into fiscal 2019 and then last question from me just thinking about your fiscal 2019 EBIT margins if it’s I think you said closer to flat year-on-year, what does that assume in terms of G&A in fiscal 2019? Thank you.

Yes, so we mentioned total synergies for the year. I’m not going to go specifically for the quarter, but total synergies for the year were about $10 million and about half of those are in cost to sales. And, that helped price – offset pricing below inflation. The other part of your question on G&A, we would anticipate as we’ve said before to leverage G&A every year maybe by 10 basis points, so if we are at zero next year that would imply zero EBIT margin, that would imply that our restaurant level margins were down 10 basis points, but we are not saying we are going to be at zero, just assume we probably will get about 10 basis points of leverage in G&A.

Very helpful. Thank you.

Thank you. Our next question comes from Jeremy Scott, Mizuho. Please proceed.

Hey thanks. Just had one follow up there. Just wanted to ask about your food basket, everything we are looking at within the case that you are likely to see more deflationary tailwinds especially on approaching in dairy and of course you mentioned the supply chain benefits of your many simplifications. So I was just wondering what’s behind conservatism in fiscal 2019 assuming that’s the way you are contracted or can we see some relief in the back half of the year or into 2020? Or is there something we’re missing?

Yes, you’ve got to understand about when we take contract and when we buy, we have in our presentation that’s out on the website our coverage this year is about, we’re about 65% covered from for the first half of the year which is about where we were last year within 5% plus or minus and all of those we believe will be at low single digit inflation primarily. So that’s why we think for the year the inflation number we have given is appropriate.

So I guess when you are thinking about maybe the portion that’s not covered, you will likely lock in prices that are well below what you are currently experiencing, right?

Well we are talking about single digit -- 0% to 1% inflation in commodity. So, it’s really a function of when we buy we are pretty much covered as I said 65% and it’s also a function of where we are last year and what last year’s cost. Now, if costs come in lower, and we take coverage when we do, we’ll let you know but right now we still believe that our commodity inflation assumption is accurate.

Great, okay thank you.

Thank you. Our next question comes from Howard Penney, Hedgeye. Please proceed.

Thank you so much. Gene, I wanted to go back to your answer to the delivery question and why you think it’s so important for you to own the customer data as a part of your delivery assessment? Thanks.

Hey, Howard we think it’s really important because these delivery services are net neutral sites. However, their goal is to sell as much food as possible. On their platform we will ensure that we own our data and our data is not used against us. And that’s very very important in this whole negotiation and we want to be able to benefit from our own data but we want to ensure that our data is not used against us and we believe on our platform we talk about data being one of our competitive advantages and we have over the last decade, we have been behind a lot of trends because we’ve built our own proprietary systems so that we can own the data. And we believe that that’s going to be key going forward. So it’s an important part of this negotiation.

Thank you.

Thank you. And our next question comes from Jake Bartlett, SunTrust. Please proceed.

Great. Thanks for taking the question. Rick, I'm hoping you can give us an update on what your cost savings were for the full year in 2018. In the third quarter, there were some pieces kind of given in the Q on the COGS side, but also on the labor productivity in your slides. So I'm wondering what the overall result was for the year? And then it sounds like you're not expecting really material savings in 2019. Just to confirm that, just given your guidance.

Yes Jake, we haven’t specifically called that cost savings over the last year or so, because we’ve generally been reinvesting those savings. And so the only savings we’ve been talking about are synergies from the Cheddar’s acquisition. We did get cost savings in the fiscal year that just ended. We reinvested those as Gene has mentioned in the past, we have reinvested in food quality, in people and other areas. So we are really not ready to talk about any other cost savings.

Got it. But when you say reinvest, you also mean reinvest in pricing? I mean that allows you to keep the pricing low?

Absolutely. That is one of our reinvestments. We did price below inflation, when you include labor and food cost, we price below inflation and if you look at check growth in the industry, our check growth was well below the industry for this fiscal year and the last quarter.

Got it. Okay and then quick question on Cheddar's. Part of the deceleration in same-store sales this quarter was pulling back on promotions as you got the integration going and working through that. Do you expect to quickly reignite those promotions? Or is this one reason why you expect kind of weaker results and kind of Cheddar's bringing the whole same-store sales down for the year for the whole company?

Jake, I mean you’ll start to see us slowly bring back some promotional activity. But right now our focus is on getting our restaurants staffed and ensuring that we are scheduling properly and that are we creating great guest experiences in all of our Cheddar’s-- I mean this is really back to basics and the system has been through a lot, we got – they are all great people. Myself, Dave, George we are fully aware. We went through this, we are fully aware what they are going through and we want to help them get back to doing basic things and when is the right time to start adding some more promotional activity we’ll add some more promotional activity. We have great people trying to do great things. We are just here to try to help them get accelerate that.

Great, thank you very much.

Thank you. At this time, there are no questions in queue. Back to you speakers.

Thank you. That concludes our call. I want to remind you that we plan to release first quarter results on Thursday September 20th before the market opens with a conference call to follow. Thank you for participating in today’s call.

Thank you. That concludes today’s conference. Thank you all for joining. You may now disconnect.