Ladies and gentlemen, thank you for standing by, and welcome to the MasterCraft Boat Holdings, Inc. Q2 2020 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Tim Oxley, Chief Financial Officer. Thank you. Please go ahead, sir.

Good morning, everyone. Thank you for joining us for MasterCraft Boat Holdings’ second quarter fiscal 2020 earnings call. Today’s call is being webcast live and will also be archived on our website for future listening.Joining me today are Fred Brightbill, MasterCraft Boat Holdings Chief Executive Officer and Board Chair; as well as George Steinbarger, our Vice President of Strategy and Business Development.We’ll start today’s call with a brief summary of second quarter financial and operational results as well as commentary on our outlook for the rest of the year. Following that review, Fred will use the remainder of the call to discuss the rollout of a new strategic plan to drive long-term sustainable growth at MasterCraft. We will then open up the call for Q&A.Before we begin, we’d like to remind participants that the information contained in this call is current only as of today, February 5, 2020. The company assumes no obligation to update any statements, including forward-looking statements. Statements that are not historical facts are forward-looking statements and subject to the safe harbor disclaimer in today’s press release. Additionally, on this conference call, we will discuss non-GAAP measures that include or exclude special or items not indicative of our ongoing operations.For each non-GAAP measure, we also provide the most directly comparable GAAP measure in our fiscal 2020 second quarter earnings release, which includes a reconciliation of these non-GAAP measures to our GAAP results. I would also like to remind listeners that there is a slide deck summarizing our financial and operational results for the quarter as well as our new strategic objectives in the Investors section of our website.With that, I’ll turn the call over to Fred.

Thank you, Tim, and good morning, everyone. When I introduced myself to you on last quarter’s call, I was in the capacity of Interim Chief Executive Officer. As you know, on December 3, I was named permanent CEO. I’d like to begin by saying it is a privilege to have the opportunity to lead MasterCraft, a company that I’ve had the pleasure of working with for the last 10 years, first as a Board of Director since 2009 and then as Chairman since 2015.While I’m quite familiar with the specifics of MasterCraft’s business, strategy and operations, I also have broad industry experience from prior leadership positions at other companies, both within and outside the marine space. When I began my tenure as CEO two months ago, one of my first priorities was to listen to and to learn from our key constituents. Over the past several months, I’ve had the pleasure of speaking with several of our customers, dealers, employees, business partners and investors to hear directly from them about their perspectives on MasterCraft’s strengths and future opportunities. I’m encouraged by the valuable insights I received, which confirmed that MasterCraft is well positioned within the industry.Specifically, we have a focus on driving sustainable, profitable growth, a commitment to innovation, quality and the development of products that provide a truly unique customer experience and a relentless focus on operational excellence and possibly our greatest asset, the know-how and dedication of our talented employees. At the same time, these conversations also revealed that while we have many core strengths, we have a significant opportunity ahead to strengthen our competitive position and deliver an even greater value proposition for our customers, dealer partners and shareholders.This feedback was combined with complete evaluation of the business, including operations, marketing, product development and innovation, dealer network,…

Thanks, Fred. Looking at the top line, net sales for the quarter were $99.6 million compared to $121.5 million for the year ago second quarter, but in line with our expectations heading into the quarter. Equally important, we remain on track to meet our previously issued guidance for fiscal 2020. In our MasterCraft segment, net sales were $67.8 million compared to $76.4 million in the prior year period primarily due to lower unit sales volume as we work to rightsize our dealer inventory level after the weather impacted summer selling season. This decline was partially offset by sales of our Aviara brand, which began in Q1 of this fiscal year as well as favorable model mix at our MasterCraft brand as mentioned in Fred’s previous remarks. It’s important to note that our MasterCraft segment was impacted less than expected from the GM strike.As you may recall in our last earnings call, we shared that we anticipated having to shift several production days out of the second quarter and into the second half of fiscal 2020. During the course of the quarter, our supplier, Ilmor Marine, was able to bring production back online faster than anticipated and as a result, we were able to pull up production days we had originally anticipated with split from the second quarter and to future quarters. This is purely a timing impact between the second quarter and the second half of the year. For the rest of the year, we expect our production to continue in normal course without any shifts related to the strike.In our NauticStar segment, net sales were $15.6 million compared to $19.2 million in the prior year period primarily due to lower unit sales volume. We continue to carefully manage our dealer pipeline as a result of the weather-impacted selling season…

Thank you, Tim. As I noted at the beginning of the call, I’m encouraged by the positive sentiment that we have achieved in the underlying strengths of the business. The goal of our recent business review was to make sure we are aware of all the challenges and opportunities ahead of the company and to ensure that we are well positioned to maximize MasterCraft’s long-term value potential. Given our portfolio of leading brands, network of strong customer and dealer relationships, it’s clear that the company has a strong foundation to build upon.Coming out of our review process, we have developed a new value-enhancing strategy, centered on four key pillars that ultimately are designed for one overarching objective to drive sustainable, accelerated growth. First, we are focusing on providing our customers with the best end-to-end experience. This means getting closer to our customers to better understand what they expect from our brands and how we can work with dealers to meet those expectations and improve upon the customer’s lifelong journey. It also means that we are using what we’ve learned from customers earlier in our product development process to deliver on their needs.Second, we are activating a customer-driven marketing strategy across our organization to increase customer awareness, create a community of interest, expand our target market, improve lead generation and ultimately drive sales and market share gains. Third, we are accelerating our operational excellence program across all our manufacturing facilities to drive improvements in efficiency and enhanced quality in the spirit of continuous improvement.And fourth, we are adopting a high-performance organization framework. Strong leadership, strategically aligned purpose, information sharing, open dialogue and collaboration are the hallmarks of our approach, which will also enhance our ability to attract, develop and retain a highly skilled and specialized workforce. Over the long term, we…

[Operator Instructions] Our first question comes from Brett Andress with KeyBanc Capital Markets. Your line is now open.

Hey, good morning.

Good morning.

Fred, if you could elaborate on the strategic growth plan really to improve customer experience and brand awareness. Maybe just frame up, I guess, what were you not doing before? And why that now seems like an opportunity? Is it really as simple as holding dealer workshops and a new website, just anything you can give more detail on there would be helpful?

Well, that’s an example of one of the tools, one of the arrows, if you will, in our quiver. But the real essence of it is, is to understand, in intimate detail, everything there is to know about the customer and the potential customer and then to utilize that throughout all our processes. In the past, we probably spent less time focusing on that detail, probably more generalized what the customer look like and what the attributes were. And as we understand that in very infinite detail, it’s going to lead to significant differentiation in our target, both of customer attributes as well as our marketing.

Got it. And then if you could just talk about the industry trends that you’re seeing in saltwater. How are the larger units being received – the larger NauticStar units being received at the boat shows into retail? And then have there been any changes on the smaller unit side of that industry?

Let me comment. Our 32 has been very well received. The demand has been excellent. So we’re seeing healthy demand on the large side. And we also are upgrading the portfolio throughout. So we’re not abandoning in any way, shape or form the smaller boats. We think NauticStar needs to continue to have the breadth of portfolio that it has over the size ranges that it does.With regard to demand, probably a little bit stronger on the larger side, overall, is my sense. But once again, I think the headwinds that we’re seeing there are near term. There’s nothing demographically or structurally that we see that causes us to believe that the saltwater fish market is not going to be healthy. People are still migrating to the coastal areas in the South. And we expect that to continue. So I think the overall long-term trends still look very good.

Fred, I’d like to also add that I think that, that consumer typically is a payment buyer. And the increases in consumer interest rates, I think, were a headwind. And now that interest rates are stabilizing, we’re hopeful that, that consumers would be – could be back on the market for not only the smaller NauticStar, but I think that impacts the smaller pontoon sales as well.

That’s helpful. Thank you. And the last one, if you could just help me with the trajectory of the average selling prices, really throughout the brand. Is it fair to assume that the recent run rate in MasterCraft and Aviara and also NauticStar are sustainable for the next few quarters with some of the mix benefits that you have?

When you say run rate, you mean ASPs that are consistent at the levels they’re at?

Correct, yes.

My short answer is yes, and the other gentleman may choose to embellish my comment. But we’re going to continue to mix up on Aviara, and then we’re going to continue also to work across the whole portfolio. So I see increased sales at both ends of the spectrum. Don’t expect any significant changes in the ASPs, which, again, have been – the movement has largely been due to up-contenting by customers.

Yes. Traditionally, in the second half of our fiscal year, there are more custom-ordered boats. And that consumer typically orders more of the options on the boats. And so seasonally, we typically see a bit more growth in the option take rates in the second half of our fiscal year. So yes, I agree that the trends you’re seeing should be sustainable.

All right. Thank you.

Thank you. Our next question comes from Michael Swartz with SunTrust Robinson Humphrey. Your line is now open.

Hey, guys. Good morning. I know you don’t want to get into breaking out Aviara, the benefit from that quarter-to-quarter. And it sounds like even without Aviara, MasterCraft ASPs would have been up. But is there any color you can provide us? Or just give us a sense of how, I guess, impactful that business has been the last few quarters? And maybe where you see that going over the next 12, 18 months?

Well, let me start by saying, once again, we expect Aviara to deliver between $10 million and $15 million worth of revenue this year. We’re on that track. We continue to ramp up. We feel that obviously next year, at full run rates, we’re going to see a dramatic increase in the overall sales for the year. But we’re right on our plan this year. And MarineMax is able to sell all the boats we were able to produce.

Yes Mike, this is George. I would just add, we were – basically, if you think about the first half of the year, we were really just selling the 32. And so we just started shipping the 36 late in the – in our second quarter. So you’re going to see more than half of the volume for what we expect for the full year at Aviara hit in the second half of the year, just to give you some direction. And that’ll ramp up obviously in Q3 and then it’ll ramp up even more in Q4 as we start shipping the AV40, which we’ll be launching at Miami next week.

Okay. That’s very helpful. Thanks, George. The other question I had is just on the implied guidance. So if you look at the back half of the year, I think you’re implying kind of low single-digit revenue decline, but a flattish EBITDA dollars. I think that’s generally the way it works out, too. So maybe help us understand, with the declining top line in the back half of the year, how you maintain margin? Is it some of the operational initiatives and benefits coming through from that? Or is it year-over-year comparisons? I’m just trying to better understand that.

Mike, this is Tim. As we just alluded to, the ramp-up in the Aviara will significantly impact the second half more so in Q4 than in Q3. So we have a back-end loaded plan, if you will, driven by that as well as our initiatives to drive the dealers’ inventory lower. So we continue to adjust production so that the dealers’ inventory is healthy, and we’re making good progress in that area.

Great. Great. And then final one for me is just on – in Canada, there’s a lot of talk and I guess consternation around this luxury tax that might be going into effect on product above $100,000. Just any color or any sense of how your dealers are thinking about that, and maybe how they’ve adjusted their order patterns going into that?

We – Fred and I were at the Toronto boat show. And the dealers were concerned, but in some cases, they’re using that as a closing tool, don’t wait to buy your vote because the luxury tax might be coming. And I don’t think it’s a done deal that the luxury tax will be implemented. But certainly, it’s an area of concern. And in the short run, I think it’ll probably boost sales as opposed to hinder sales. But from what we experienced in U.S., we certainly don’t – we’d rather not see the luxury tax implemented in Canada.

And I think there was a general sentiment that they’ll come to their senses, and there’ll be some significant modification before implementation.

Okay. Thanks a lot.

Thank you. Our next question comes from Joe Altobello with Raymond James. Your line is now open.

Great. Thanks guys, good morning. I guess the first question on dealer inventory levels. You guys have said in the past pretty consistently that it probably takes the entire fiscal year to reset channel inventories, although it sounds like you’ve made a fair amount of progress fiscal year-to-date. So is that still the expectation? Or could we see wholesale and retail more in line by the spring, let’s say?

Yes. We have made good progress, Joe. And because the primary retail selling season is in Q4, it’ll probably take Q4 before all of it’s flushed through. But we’re making good progress, and we are applying retail rebates in a judicious manner, looking for pockets of heavy inventory, certainly, applying those to non-current inventory. So we feel good about the progress we’ve made. But I think it’ll probably take the entire fiscal year before that’s completely flushed through.

Yes, Joe. And as we’ve always said, I mean, our goal here is to be in a position for renewed growth in 2021. So we’re comfortable with that approach and feel comfortable with the guidance that we’ve given. And really, it sets us up really well for renewed growth starting next fiscal year.

Got it. Thanks, George. And then just secondly, on the promo environment. Gross margins were down obviously but it sounds like that was all volume-related. And given the ASP improvement you guys have talked about this morning, doesn’t seem like we’re seeing a lot of heavy promotional dollars out there. Maybe give us an update on where that stands? Are you seeing an easing of the commercial environment as we get into the boat show season?

I don’t see an easing, I see the continual competitive environment that exists in the industry. We’re not the only ones with selective incentives, our competitors are doing similar programs. So I view it as business as usual. This is part and parcel of the way the industry operates, nothing out of the ordinary, nothing that’s irrational, but once again, everyone competing select – doing what they need to do to make sure they’re moving the product they need to move.

Joe, I’d like to just add. Because of the way the accounting works, we accrue for any incentives we expect to spend on a product that’s in the field inventory. So our spending is up year-over-year, we properly accrued for that at June 30. So we are fairly aggressive in moving that inventory, but you don’t see that much movement until the retail quarters – the quarters where retail is more predominant.

Yes. Got it. Okay, thank you guys.

Thank you. And our next question comes from Eric Wold with B. Riley. Your line is now open.

Thank you. Good morning. A couple of kind of follow-up questions on previous topics. I guess, one, on the inventory levels in channel. I guess maybe frame just how much of a come through there is between the three brands out there, where have you made the most progress, where have you made maybe the least progress? And then you kind of look to kind of push through the model 2019 while still kind of emphasizing model 2020. How do you kind of level set that and kind of maybe not have model 2020 go by the way. So it’s going to push that, the more you got to balance that demand?

Well, I would just say that we’re in the best shape at MasterCraft and NauticStar, and probably the biggest challenge is existed Crest. But once again, given their ramp-up in the selling season and so on, we still feel good about our ability to have inventory where we wanted at the end of the year. Model 2020, wholesale sales were obviously restricted as a result of what we’re doing to balance up inventory.

Okay. And then on Aviara, I know you’re not giving any guidance in terms of sales beyond the $10 million to $15 million provided for this year. So maybe kind of looking beyond a sale guide, can you give a better sense of the magnitude of production ramp you can see over the next kind of 12 to 18 months? What’s the current kind of unit production capacity at Aviara? What can that get to land this year? And is that just becoming more efficient with the collection process? Is it based on incoming order flow as you’ve launched 36 and the 40? What drives that ramp? And how – what’s the magnitude of the increase you can see in the next 12 to 18 months?

I’m probably not going to give you every detail that you’re looking for, but let me characterize it again as $10 million to $15 million for this year, as George indicated earlier, heavily weighted towards the end of the year as we continue to ramp. Think of the rollout of those models, again, at the beginning of the year primarily selling 32s, and then we add the 36 and then at the end of the year, we have the 40. So as we roll into next year, and we’ll provide a better insight into what we expect those volumes to be as we give guidance for next year, it’s going to be a very significant increase as all of those are fully running at full rates.

I’d like to add, MarineMax is the perfect partner for this brand. And they’re excited about the sales that we’ve generated so far, they’ve indicated they can sell all we can produce, and we love to hear that and we’re going to continue to work on meeting that demand. But we’re not going to ramp up and sacrifice quality in any way. So we will produce less this year, really, than I think MarineMax would like. But in the long run, we’re very bullish on this brand.

And once again, I just can’t overemphasize how important the quality of that product is to us and how careful we’re being in making sure we’re delivering that. So if it takes a little extra time in the ramp up, so be it. We’re not going to push units out the door in any way to sacrifice quality.

Okay. Just quickly follow up. It sounds like even though you’re consolidating Aviara into MasterCraft. When you give guidance next year, you still will call out Aviara specifically, is that correct?

Yes. Eric, this is George. We’ll likely give you guys some direction of the magnitude or the impact that Aviara will have on the MasterCraft segment. We’re still working through exactly how we’ll do that, but we recognize some directional guidance on that is appropriate, and we will look to provide that.

Yes.

Very good. Thanks, George. Thanks, guys.

[Operator Instructions] Our next question comes from Craig Kennison with Baird. Your line is now open.

Hey, good morning. Thank you for taking my questions. I had a question on the Design-a-Boat initiative that you had mentioned. I imagine there’s a lot that goes in on the front end to make sure consumers can interact in the right way, but I imagine it’s even more complex on the backend. So what has to happen from a supply chain or operations perspective for you to support kind of these Design-a-Boat initiatives?

We’ve had the Design-a-Boat out there for several years. We’re enhancing that interface with the consumer, and it’s one reason we have the appropriate lead time for all of our boats. In that way, it allows us to make – both manage our inventory in the factory as well as maintain quality. So we expect nothing different there and the consumers love to color their own boat, design it, pick up their own options. And once that order is placed from the dealer, again, we have the proper lead time to make sure we have the inventory.

And just to clarify, Craig, the interface with the operating side of the business exists today and will exist tomorrow. So those orders flow right into our ERP and manufacturing systems.

So maybe just add a little color. What’s the time line between when a consumer makes those choices and a boat would be delivered? What’s the window of time required time required?

It’s going to depend on the model and when the dealer is able to fill that slot. There may be models where we’re virtually sold out for the year. But most of the dealers will have some slots that they haven’t picked out the specs on the boat so that they’ll sell the consumer that slot. And so it’s going to depend on the model, depend on when the next slot is available. So it’s one reason that we encourage consumers to order their boats early as to make sure they have it for the all-important start of the boating season.

Is this just a MasterCraft initiative? Or do you have this capability for all of your brands?

We’ve actually rolled out a new website at NauticStar. And so some of the internals are going to be shared across the businesses. So actually, MasterCraft is the second step and ultimately, we’ll have it across all our brands.

Yes. But Craig, to be clear, all three of our brands today, if you go to the website, there is a Design-a-Boat feature and Crest and NauticStars have been recently updated and MasterCraft is the next on the list.

Thank you. And then just on your dealer base, George, I guess as you’ve kind of introduced yourself to many of your key dealers, where do you think there are opportunities to enhance kind of dealer satisfaction with your brands and really grow those relationships?

Well, I think as Fred alluded to in his prepared remarks, I think there is a tremendous opportunity across all the brands with our dealers to improve the communication that we have with our dealers and helping them understand the unique value propositions of each of our brands and who the right consumer is and how to effectively market to those consumers. So we’re looking to provide those tools to our dealers and they’ve been very receptive and pleased with some of the things that we’ve started to bring to the table around those items.Certainly, we value the relationships that we have with our dealers, and I think it’s incumbent upon us to continue to improve those relationships and help the dealers that require it. We’ve got a lot of really strong dealers, but there’s always dealers that we can provide more help to help them market and sell the boats that we sell them. So that’s our focus. It’s not only focusing on the customer internally, but helping our dealer take that approach as well. And the more we can do from the OEM side to provide them the tools to do that, that’s effectively what we are looking to do with this new strategy and internal perspective that we’re taking.

And I would say another big element is the lead generation. I mean make no mistake that in addition to all the blocking and tackling, the sales process, the delivery process, the service process for which dealers are such an important partner, we are going to accelerate the rate at which we provide them quality leads.

That’s great. Thank you for that. And then finally, Fred, maybe or Tim, either of you, just comment on capital allocation strategy. And with new leadership, has there been any change in the philosophy around where you put your capital to use?

There’s no change in our philosophy. We are using any excess cash flow to pay down debt through the remainder of this fiscal year. We continue to discuss capital allocation at every Board meeting, and we’ll do so at the upcoming one. It’s no exception. I expect, as we pay down debt, we’ll continue to evaluate all the alternatives available but at this point in time through the remainder of the year, we’re sticking with our strategy of paying down debt. Once again, from the standpoint of trying to build the strongest balance sheet that we can and maintaining the maximum financial flexibility for all the alternatives that may exist strategically.

So in the debt reduction makes sense to me as well. Curious when you think you’ll hit that point where your debt is at a point such that you could support a buyback of some kind with your stock where it’s at today?

Well, at the end of the year, we’ll pay it down into a range that we think certainly could support that. Once again, we’ll evaluate all the alternatives at that point. We could do it today if we needed to. We have the flexibility. We just think the most prudent course is to pay down that debt and have as much flexibility as possible. We don’t see a downturn on the horizon. But if there was one, there’s no substitute for cash and a strong balance sheet.

Great. Thank you.

Thank you. And our next question comes from Tim Conder with Wells Fargo. Your line is open.

Hey, good morning. This is actually Marc Torrente on for Tim. Just a few questions for us. Any sense on how your inventory is relative to competition in each of your segments and any promotional implications there? And then any other color on inventory position, and I guess retail outlook in your key international markets?

Let me start with just a comment on the inventory versus the comp. I think it’s generally the same condition around the industry. There’s targeted incentive programs, I know from the boat shows, older models from our main competitors. So they are doing – no matter what’s articulated, we see the same kind of action in the marketplace that we’re taking. So nothing unusual. But once again, an emphasis on trying to make sure that older inventory has moved. Regarding – and I’m sorry, you would…

Yes. I’d just like to add, when you – it’s obvious from our financials, we’ve reduced wholesale significantly. So that means the percentage of non-current is going to be higher because there are fewer currents out there. And that’s the reason we are spending our retail rebate dollars to help the dealers get rid of that non-current inventory. So that’s a big emphasis as it has been throughout this fiscal year.

Okay. And then any commentary on the inventory position and outlook for international?

Yes. On the international side, obviously Australia has been impacted by the natural disaster that’s occurred over there from not only the fires, but the drought that preceded the fires. But that’s not that significant part of our business. Canada is holding its own right now. And they’re all a little bit nervous about the possible luxury tax. When I look at Europe, it is flattish, and we’re very pleased with that since the retaliatory tariffs on the European product remains. So the international business is important to us. We’re going to continue to support our international dealers with judicious rebates and other things to help them stay healthy.

Okay. And then, Fred, lastly, I wanted to get a sense of your view on M&A going forward? And would you consider any strategic shifts in the current portfolio?

No. We’re committed to these brands. Having said that, we think that the addition of Aviara is the last major category of fast-growing segments that we wanted to participate in. So our focus is going to be very much on maximizing the performance of the businesses we have in the segments we’re participating in for the foreseeable future. There may be a point in time down the road where we feel differently. But at this point in time, that’s our focus, and we see tremendous opportunity within that.

Okay. Thank you, guys.

Thank you. And our next question comes from Brett Andress with KeyBanc Capital Markets. Your line is now open.

Hey, thanks for the follow-up. I know it’s still early, but is there any way to put a finer point on what you’re seeing at the boat shows so far? Just any way to quantify maybe the sales increases or the traffic increases that you’re seeing?

Traffic is more mixed. I mean the NMMA reports that are out there show some slide in traffic, but our results in terms of sales are very solid. And that leads us to feel cautiously optimistic. But again, we track for a couple of weeks after a show. And so we only have a small portion of shows actually having completed that period to get a full reporting in year-to-year comparison. But what we see so far looks good. There’s – as you well know, every show is different. There’s individual challenges. Houston had a playoff game, the first weekend that canceled the Saturday of the show and another playoff game in the second weekend that wasn’t at home, but nonetheless, affected traffic. So weather hit Toronto when we were up there, blizzard hit the first Saturday of the show, Detroit also. So all of those things take place. But when we boil it down, the essence of what we’re seeing leads us to feel good that the consumer is back, that the consumer is still going to be active, and we’re staying very close to it.

Thank you.

Thank you. And our next question comes from Michael Swartz with SunTrust Robinson Humphrey. Your line is now open.

Hey, guys. Just make sort of getting back in – the question I had is just more of a housekeeping on. I think you said it during the quarter, G&A benefited – G&A expense benefited from lower executive compensation or compensation expense, I forgot how that was awarded. What was the year-over-year change in that bucket? If you have it.

I don’t know that we have that exact data point in front of us. We can certainly follow up with you. But I think the biggest driver of that was obviously the transition with the CEO. With Terry’s departure, there was some forfeiture of stock-related comp and some other compensation benefits that would have – were part of that. And then obviously with our forecast for the year being down year-over-year, you would expect to see some comp down versus prior year, but we can follow up with you and get you more specifics on that. I just don’t have that data point in front of me.

Okay, great. Thank you.

Thank you. And I’m not showing any further questions at this time. I would now like to turn the call back over to Fred Brightbill, Chairman and Chief Executive Officer, for any closing remarks.

Thank you for joining us today. To reiterate, we are at an exciting point in MasterCraft’s evolution, and I look forward to sharing our progress during next quarter’s call. Thank you.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.