Ladies and gentlemen, good afternoon, welcome to the Penske Automotive Group Third Quarter 2024 Earnings Conference Call. Today's call is being recorded and will be available for replay approximately one hour after completion through November 6, 2024, on the Company's website under the Investors tab at www.penskeautomotive.com. I will now introduce Tony Pordon, the Company's Executive Vice President of Investor Relations and Corporate Development. Sir, please go ahead.

Thank you, Leah. Good afternoon, everyone, and thank you for joining us today. A press release detailing Penske Automotive Group's third quarter 2024 financial results was issued this morning and is posted on our website along with a presentation designed to assist you in understanding the company's results. As always, I'm available by e-mail or phone for any follow-up questions you may have. Joining me for today's call are Roger Penske, our Chair and CEO; Shelley Hulgrave, EVP and Chief Financial Officer; Rich Shearing, North American Operations; Randall Seymore, International Operations; and Tony Facione, Vice President and Corporate Controller. Our discussion today may include forward-looking statements about our operations, earnings potential, outlook, acquisitions, future events, growth plans, liquidity, and assessment of business conditions. We may also discuss certain non-GAAP financial measures such as earnings before interest, taxes, depreciation, and amortization or EBITDA and our leverage ratio. We have prominently presented the comparable GAAP measures and have reconciled the non-GAAP measures to their most directly comparable GAAP measures in this morning's press release and investor presentation, both of which are available on our website. Our future results may vary from our expectations because of risks and uncertainties outlined in today's press release under forward-looking statements. I direct you to our SEC filings, including our Form 10-K and previously filed Form 10-Qs for additional discussion and factors that could cause future results to differ materially from expectations. I will now turn the call over to Roger Penske.

Thank you, Tony. Everyone, thank you for joining us today in the third quarter of 2024. PAG generated $304 million in income before taxes, $226 million in net income, and earnings per share of $3.39. Our overall revenues increased 2% to a third-quarter record of $7.6 billion, including a 14% increase in service and parts to a record $778 million. 61% of our revenue was derived in North America, 30% in the U.K., and the remaining 9% came from other international markets. Our retail automotive brand mix is a key differentiator with 72% of the revenue generated from premium brands, 21% generated from volume non-U.S. brands. Our gross margin was consistent in the quarter -- over quarter at 16.4%. Our SG&A expenses as a percentage of gross profit was 71.2% and remains well within the target range and is nearly 800 basis points below pre-pandemic levels. I'm pleased with the financial performance during the quarter despite the impact from stop sale of certain vehicles and the residual impact from the CDK Cyber Security incident. During the quarter, new and used automotive gross profit remained strong. Retail, automotive service, and parts performed at record levels. The retail commercial truck business performed well. SG&A expenses remained well-controlled and equity income from Penske Transportation Solutions increased 14% sequentially despite continued freight challenges. Let's take a look at our retail automotive. We delivered 117,551 units during the quarter. Our new units increased 5%, same-store new units declined 2%. We continue to take forward orders with pre-sold activity averaging between 10% and 20% in the U.S. 32% of our new vehicles sold in the U.S. were at MSRP and the average new vehicle transaction price now has increased 2% to $57,880. Gross profit per new vehicle retail remains strong at $5,072 and was only down…

Thank you, Roger, and good afternoon, everyone. We are one of the largest commercial truck retailers for Daimler Trucks North America. Retail truck business is one of our core pillars of our diversified model. We operate 35 full sales and service facilities and 11 standalone service and parts or parts-only facilities. Since acquiring the retail truck business in 2014, we have grown revenue and EBT more than six times through a combination of organic growth and acquisitions and we'll continue to pursue acquisitions as a part of PAG's capital allocation strategy. We believe Class 8 commercial truck demand will continue to be driven primarily by replacement purchases. During Q3, North American Class 8 retail sales declined 1%, year-to-date retail sales were 234,000 units or down 6%. At the end of September, the current industry backlog was 116,000 units or approximately four months of sales. This compares to a backlog of 161,300 units at the end of September last year. Premier Truck Group sold 6,331 new and used units in Q3, which is up 14% when compared to Q3 last year and same-store units increased 9%. Same-store SG&A to gross profit was 57.1% and fixed absorption was 126%. Premier Truck produced a solid Q3 with EBT of almost $57 million. And as we look towards '25 and '26, the anticipated emissions change for '27 and recovery in the freight market should help drive retail sales. Lastly, as you may recall, Premier Truck Group was temporarily impacted by the CDK's cybersecurity incident in June 2024. The system outage was restored in the third quarter and we resumed processing transactions at that time. The outage impacted the efficiency and productivity of fixed operations, leading to lower fixed absorption ratio and lower-than-expected parts and service gross profit during Q3. Turning to Penske Transportation Solutions, I'm pleased to report a 14% increase in sequential earnings for PTS. During Q3, operating revenue increased 3% to $2.8 billion. Full-service revenue and contract maintenance increased to 11%, logistics revenue increased 3%. Rental declined 11% as the continued freight recession impacted the number of units on rental. PTS earnings of $219 million in Q3 increased sequentially by $27 million but we are down $81 million or 27% compared to Q3 last year. Our share of the PTS earnings was $60.3 million, up from $32.5 million in the first quarter and $52.9 million in the second quarter. When we compare the PTS EBT in Q3 to the prior year, earnings were impacted by $21 million in higher maintenance expense, principally due to lease extensions, a $44 million increase in depreciation expense, and a $23 million increase in interest expense from higher rates related to bond refinancing and higher outstanding debt. And finally, a $29 million decline in gain on sale of used trucks. Used truck sales were flat at 8,849 sold units compared to Q3 2023. I would now like to turn the call over to Randall Seymore.

Thanks, Rich. Good afternoon, everyone. I will now discuss several activities taking place in our international operations. In the U.K., we have been busy integrating the 16 dealerships and $1 billion in estimated annual revenue we acquired earlier this year, coupled with the rebranding and transitioning of the U.K. CarShop operations to Sytner Select. With this change to Sytner Select, we can more closely align the used-car operation with franchise dealerships to reduce our cost base. The U.K. new vehicle market remains challenging. Registrations increased 1% during Q3 with retail registrations down 4%. The decline in retail registrations is the result of the U.K. government's zero-emission vehicle mandate, which requires at least 22% of all vehicles registered to be zero-emission in 2024. These vehicles are primarily purchased by fleet customers due to payroll tax incentives and are often at lower gross margin. Same-store new units delivered increased 7% with new units retail down 2% and agency units up 25%. Same-store used units declined 22% as a result of the transition of U.K. CarShop locations to Sytner Select, which focus on lower-volume but higher-quality vehicles. Excluding those dealerships, same-store used units would have decreased 6%. However, serviced and part same-store revenue increased 8.5%. Turning to Australia. As you may recall, during the second quarter we expanded our retail automotive operations with the acquisition of two Porsche dealerships located in Melbourne, the second-largest city in Australia. During the third quarter, these dealerships retailed nearly 400 new and used units, generated nearly $50 million in revenue at a 5% return on sales. Last week, we announced an agreement to acquire our third Porsche dealership in Melbourne. We expect this dealership to add $130 million in estimated annualized revenue and closing is expected by the end of this year, subject to customary conditions. Turning…

Thank you, Randall. Good afternoon, everyone. I will review our cash flow, balance sheet, and capital allocation. Our balance sheet and cash flow provide us with opportunities to maximize capital allocation. As a result, we continue to grow our business through acquisitions and return capital to shareholders through dividends and securities repurchases. During the first nine months, we generated $962 million in cash flow from operations and our trailing 12 months EBITDA was $1.4 billion. On October 16, we announced an 11% increase in the cash dividend to $1.19 per share. So far in 2024, we have increased the dividend four times while increasing the cash payout from $0.79 per share at the end of last year to $1.19, a 51% increase. Using the closing price on October 28, the current yield is approximately 3.1%. The dividend payout ratio over the last 12 months is approximately 28%. We have also repurchased approximately 511,000 shares for $77 million so far this year. Including the upcoming dividend distribution and year-to-date share repurchases, the company will have returned approximately $350 million to shareholders so far this year. In addition to the return to shareholders, we have completed acquisitions representing $2.1 billion in estimated annualized revenues to date this year, including $1.8 billion in retail automotive and $200 million in commercial trucks. Additionally, as we focus on effective capital allocation, we also divested or closed five underperforming locations so far this year, representing $500 million in estimated annual revenue. Our strong cash flow has allowed PAG to keep its non-vehicle debt and leverage low. At the end of September, our long-term debt was $1.88 billion, up $250 million from the end of December 2023. 22% of our long-term debt is at fixed rates. Our variable debt is approximately $4.7 billion, of which approximately 50%…

Thank you, Shelley. As Shelley remarked, our balance sheet remains in great shape and provides us with the flexibility and capital allocation. In conclusion, our results continue to demonstrate the benefit from our diversification, disciplined capital allocation strategy, continued cost control, and the efforts for our whole team. I'm very confident in our model and the performance of the business. Appreciate you being on the call today. We'll open it up for questions.

[Operator Instructions] And our first line we will go to is John Murphy with Bank of America. Please go ahead.

Hi, John.

Hi, Roger, how are you? Just first question, Roger, on the stop sales because it's kind of flowing through the business in a number of ways. I'm just curious if you can give us an idea of kind of the impact in the quarter and kind of what you expect near-term, potentially though also on the flip side, the coming benefits on parts and service and when that may hit. And maybe just more broadly, because you've been in the industry for a long time, what do you actually think is going on here? Because it seems like it's pretty pervasive and not isolated to one specific manufacturer part.

John, let me have Rich talk about the U.S. and then Randall talk about international. Okay, Rich?

Yes. Hi, John, good afternoon. Yes, so I think like you mentioned, it's a detriment on one side and the benefit on the other. And certainly, as you look in the quarter, the amount of stop sales we saw were more pervasive than we've ever experienced. And so that's disappointing. And I'll talk to some of the reasons why, at least from the feedback we've received from the OEMs in a minute. But I think I'll focus on BMW because obviously, that was probably the one that got the biggest headlines and was the most impactful from an overall volume. When you look at 26% of our worldwide revenue being with BMW and that recall impacting about 1.5 million units globally, it certainly impacted both the business here in the U.S. and our business internationally as Randall will talk too. So when the announcement came out, it was an impact to about 60% of our BMW ground stock and 100% of our MINI ground stock. And there is two things that we did proactively very early on. The first was to acquire vehicles from BMW that were kind of in their internal, for offer sale that enabled us to source vehicles that were not a part of the stop sale. So that our retail teams had some units to sell, not knowing how long this stop sale was going to occur. So that was number one. Number two, the teams, both at the dealerships regionally and with our brand-management team work very closely with BMW's parts and service organization, understand what was needed to make the repairs, what training was needed so that we could get ahead of it. And then we prioritized that work when the parts came available because the way BMW in the U.S. was metering the parts is they would only give you more parts if all the vehicles from the first parts they shipped were updated. And so we felt that it was necessary to prioritize those repairs and get as many vehicles updated as soon as possible. So then if you look at the impact then from that, the sales is about a $6 million gross impact from the sales side of it and then about a $4 million net impact in gross when you factor in the warranty work that was necessary to get those stop sale vehicles updated, and that's on a on a global basis. So that's kind of the approach we took here in the U.S. and I'll hand over to Randall who'll talk about the international market.

Yes. So it was other than the U.K. was effectively a non-issue. Italy and in Japan, we have a decent BMW footprint, but we were able to get those vehicles back on the road. In the U.K., similar story here to the U.S. parts availability and timing and they prioritized, as you would expect, customer vehicles, new vehicles, and then used vehicles, which were still in the process of addressing. So from a new standpoint, it's probably more of a push rather than a cancellation. But used, as you can imagine, we did have some cancellations as customers if they wanted to buy a used car in early September aren't going to wait till November. So that was really the effect in the U.K.

And then the second part of your question, John, what do we think is going on? So obviously we've had discussions with each of the OEMs to understand what's going on. There is two main reasons that we would point to that's been consistent from the feedback we've received. One, the increasing vehicle complexity and the software that goes into these vehicles these days because there is a lot of the recalls we've seen have been software-related, take the Porsche Macan, for example. And then just how deeply the supply base cut their costs and workforce during the pandemic, they're just having a hard time ramping back up the demand and their production forecasts have increased. So those are the two things that we hear from the OEMs as being consistent to some of the underlying problems here.

Got it. And then just maybe a second question, that's very helpful. On upfront grosses, I mean, up $8 sequentially. Everybody keeps thinking grosses in total are going to fall. And then specifically the relative strength of even new GPUs down a little bit more than $200 on their own, it just seems like this is holding up better than anybody is fearing. Are we getting to a point and it was slower on the decline? Are we getting to a point where we're kind of getting to this asymptotic limit where we might be "normalizing now at these much higher levels"? Or is there a reason as we progress through the next 18 to 24 months why there might be "further normalization lower"?

Yes. I mean, I think we feel good about where the grosses are at right now, John. And as you pointed out, sequentially, the compression has slowed. There's no doubt the consumer is still, I think, challenged. The affordability remains to be a question mark, as Roger alluded in his remarks, up 2% in the quarter to over $57,000. Now obviously, we think the rate cuts, if those come forward, that will help with the high penetration of leasing in the U.S. market. But it goes back to our teams as well. I mean, I think, I give a lot of credit there to them making a deal that -- if holding on to the gross and being disciplined in what they're doing, we still have very short supply in Texas in our Toyota and Lexus. And you're seeing the incentives increase, so from the OEMs. So with that, it helps move the iron without us having to discount at a higher rate to move the inventory.

That's very helpful. I got a bunch more, but I'll get back in the queue. Thank you, guys.

Thanks, John.

Thanks, John.

Next we go to Ron Jewsikow with Guggenheim Securities. Please go ahead.

Hi, Ron.

Hi, Roger and team, thanks, and good afternoon. I was wondering if we could start on, you called out the residual impact of CDK on the business. I thought the retail truck numbers, I guess, look pretty healthy in the quarter. So just kind of if we could put a finer point on that and maybe beyond that, there has been some freight market softness. So just kind of any updates you can provide on the order book and tone of conversations with your customers?

Yes, Ron, good afternoon. So Rich again, let me take the first one on CDK. So I think just as a reminder, I think you're aware that we use CDK in our commercial retail truck business. So unlike our peers who have CDK in the automotive business, it's a smaller portion of our business, but still impacts probably on a proportional basis. Again, I give credit to our team and their responsiveness to implement manual processes as soon as possible so that we can at least sustain a business level that was acceptable. The biggest impact, as I said, was on our fixed operations, mostly from a productivity and efficiency standpoint where you know things slowed as a result of having to generate repair orders manually, generate parts tickets manually instead of that automatically filling through our retail management system with the OEM. We also took the decision to pay our employees on the trend prior to the CDK disruption because obviously, it wasn't anything that they had control over. And then when we came out of that through the middle of August, we look back on a three-month, 12-month, and 18-month trend basis to determine what we thought the impact to our business was during that time and we feel it's at minimum $7 million that was an impact in total with some of that being in the second quarter and some in the third quarter. So that's CDK. Then as you look at the freight environment to your second question, certainly, it's lasted longer than any other freight recession that we've had in the past, and we're still in the heights of that at the moment. But I think despite that, you look at our new vehicle sales up 16%, 10% on a same-store basis, used up 5%,…

Okay. That's super helpful and I appreciate all the color. And then I was just wondering if we could talk about parts and service from here a little bit more as a follow-up to the stop sale discussion. A really strong quarter in the third quarter, obviously, fourth-quarter will have less service days, but I assume it's largely the same year-over-year. So just want to kind of get a sense of the potential benefit from stop sales and how it flows through in the fourth quarter and potentially beyond.

Let me take that one. I think a couple of things. When we look at parts and service, our technician counts up 7% and our effective labor rate is up 5%, which obviously makes a big difference. Customer pay, when I look at it across the U.S. was up about 5%, internationally was up 2%. So overall about 4%. Warranty, which was the strongest was up 20% across both the U.S. and internationally. And our collision repair was up about 2.2%. So you can see it's across the Board. And I think the fact that the premium luxury cars are in, we looked at a number, and I don't have it exactly here from a BEV concern to a ICE vehicle. And there's no question that the BEV vehicles now are taking more time because of programming and then they are in an ICE vehicle and I can't give you exactly from an RO perspective. But I think overall, when you look at our stop sale impact, it was about $6 million in sales and about $4 million on the fixed side. So again, we're focusing because remember, when you think about Randall's business, about 70% is parts and service. And we look at Rich's business, it's probably what, 65% and 55% in the auto side. So when you look at those margins comparison to 6% and 7% on new and used, I think the focus is right. We spent a lot of money on dynamometers in the truck business. We've got ways to adjust or look at your tires as you come in the drive-thru. We have equipment now that will tell us about and be able to show the customer their alignment. So a lot of these things are for customer satisfaction and also then drives margin in our shops. So again, and we're investing a lot of money in shops because we see as the BEV units come in, we're going to need to have more space because of much of the programming that has to take place. And when you look at the difference between today, this is probably over the last 2% of our repair orders, the difference between a ICE vehicle, when you look at it from a total cost is about $700 and it's about $1,300 per repair order for BEV. So I'm not sure when that switches around, but the stop sales and the complexity around this software, it's interesting. I see it here in the car business and I can tell you that on our race cars, we're using a lot of software and we spend more time with it sitting there and we do on the track in many days. So this isn't just an epidemic on the car side. It's just so complicated and we're expecting so many things to get done. So I would say that overall, the parts and services are the heart of our business.

So, hi, Rich, could you clarify or -- I know you talked about the benefit from stop sales on the parts and service and the revenue that we would have received in the quarter. Can you go through those numbers one more time?

Yes. So you're talking specifically BMW?

BMW, yes.

So on BMW, just to clarify then, we saw about a $6 million impact to gross profit and sales. And then when you factor in the warranty repairs to correct those vehicles to prepare them for sale, the net impact was about $4 million. So you had, let's say, about $2 million in fixed operations that was a gain as a result of correcting the efficiency on those units.

So Ron, that gives you the big-picture piece there, okay?

Yes, that's super helpful as we move forward, and appreciate all the color on kind of the increasing complexity as we are looking more and more like computer on wheels, I guess. Appreciate it though.

Yes. Thank you.

Next, we go to Rajat Gupta with JPMorgan. Please go ahead.

Hi, Rajat.

Hi, good afternoon, everyone. Hi, how are you? Thanks for taking the question. I have a question on the used-car business. Obviously a bit more than expected abrupt correction in the units because of the consolidation of CarShop. I was just curious, looking forward from here is the third-quarter level a good baseline to look at the business, both in terms of units and GPUs, or were there some one-time impacts that hurt the business more than you'd expect because of the consolidation? So just curious if you could give us some guidance on that. And I have a follow-up. Thanks.

Yes, I think in our press release, we talked about even though we showed our used-car business down if we took out 9,000 units, that would have put us up 1% on an overall basis. But as we transitioned from CarShop to Sytner Select, we've taken away real estate and locations that we sold to third parties, which now has given us a base run rate between 2,000 and 2,500 versus 5,000. Now that was done and I would say this, so you see the ultimate used-car number come down, but I think from a gross profit perspective, even on the chassis, we're almost double than where we were before and we're gaining a lot of strength on our F&I, our finance products. And to me, the access to those vehicles now, these are vehicles that come from Sytner OEM business that can't be retailed or certified where they were being put on our Sytnernet, our exclusive, our auction block. We now take those vehicles and they're moved over to Sytner Select. And I can tell you that's made a big difference because we're now sourcing a biggest portion of our vehicles through this process along with OEM. And I think that when you look at our overall gross profit just for the quarter, we were up $318. So I think some of that has a big factor in. Overall, we're up 5%. So number one, it's lower units, higher-margin, less locations. But I think when we look at the product now where we had a loss in it last year, we're looking as we go forward and do our business plans for 2025, we should see Sytner in the U.K. was positive. We also went -- took two down here in the U.S., one in New Jersey and one in Phoenix. And those costs were, I think from an operating standpoint were higher than the business could afford and those have been divested during the year. So when we look at the CarShop U.S., we look at Sytner Select, I think that we're going to have a business going to run somewhere between 2,500 in the U.K. and 1,100 to 1,200 in the U.S., so you could say between 3,500 and 4,000 would be a run rate. And I think the margins are significantly higher than they were before. And we'll continue to look at our sourcing. But I can tell you this, we want to buy on the service drive. We want to buy from the OEM and obviously, trades are a big portion of this.

Got it. Got it. But that's very clear. And just a follow-up on capital allocation. You've done several acquisitions this year. You added modest leverage to the business and still at just 1.3 times, I'm curious how we should think about optionality around maybe increasing leverage and being more aggressive on buyback or even more M&A. Just curious what's the latest thought process around go-forward capital allocation? Thanks.

Let me let Shelley answer that for you. Okay, Shelley?

Hi, Rajat. Thanks for the question. When we look at this quarter and we start all these capital allocation discussions with the word opportunistic and I think we exemplify that this quarter and this year. So if you look at Page 6 of our slide deck, acquiring $2 billion in annualized revenues year-to-date, a big chunk of that came from Bill Brown Ford, which we acquired in July, certainly not a cheap date. But then we also wanted to take care of our shareholders. And so with the most recent dividend announcement, we'll have returned over $350 million to our shareholders to date and continue to grow the business through CapEx. Roger talked about expanded service opportunities and we've opened a number of new stores and purchased about $37 million in land for future growth. So I would say we certainly like the buyback. It's not something that we've turned away from. It just happened to be the opportunities that were presented to us this quarter.

Understood. Great. Thanks for the color. I'll hop back in queue.

Thanks, Rajat.

Next, we go to David Whiston with Morningstar. Please go ahead.

Hi, David.

Hi, everyone. Sticking on the M&A and capital allocation question, I was just curious if you're seeing seller asking prices for M&A coming down as people are resetting their expectations given trailing 12-month profits have been coming down or do you still think because why would you still consider them elevated?

Well, let me say this, we've been at the highest levels over the last, say, 24 months. And -- but when you look at the premium brands, the BMW, the Toyota, the Lexus, and these brands, we still see these things at high levels. Obviously, when we look at the truck operations, they're probably in some cases 50% less from a multiple basis, and your volume for it somewhere in the middle. I think we look at it, not so much what's the multiple. We look at what's the future opportunity from the standpoint of profitability and do we have synergies in the market where we are and that means do we have other stores, can we consolidate into a central office? And that's really been our focus. And on top of that, then we're looking at stores which are not going to produce what we expect going forward. So I would say, if we look, I think year-to-date, Shelley, it's about $200 million of our $2 billion is truck the balance, and all of the divestitures are primarily on the auto side and some of that obviously is CarShop in the U.K. So to me, we're certainly going to continue to buy. Look at the three Porsche stores, I think in Australia will generate probably what, $220 million -- $260 on an annualized basis. There we have the market, we have the capability because we have our headquarters for our Penske Australia power system business there and our truck business. So we get the benefit of the legal, we get benefit of the HR and certainly the finance. So these are things which I think are really key. And I think the diversification that we have given us the opportunity to pick what bucket we want to be in as we go forward. And certainly, from a capital allocation standpoint, we look at where we are and we look at the dividend increases that we've done since November 2020, we've made 17 straight dividend increases to $1.19. And when you think about it, it's a 28% payout with about a 3% return. So hopefully, we attract a shareholder with those types of metrics.

Thanks for that. And then on the agency system in Europe that's been going on for some time now. I'm just curious, have you hearing from other OEMs that they want to do that or is it just sticking to the brands that are already doing it?

Yes, it's a mix. So obviously, Mercedes, we've had many launch in various markets this year. BMW is still on schedule to launch in 2026. You have brands like JLR that have said they are not going to go agency. And then Mercedes is delayed in some of the other markets. But I would say from the largest agency portion, we have obviously is the Mercedes in the U.K. and I would say as we discussed on last call, it continues to be beneficial for us. I think with the current market conditions with interest rates elevated, not having to hold inventory, and having that fixed price, we're seeing some growth on the aftersales there. So, yes, that's kind of the status. And in the U.K. with Mercedes, we think it's been a good year.

I would add to that. The great thing is that our PMA being the size of it is in the U.K., all of the inquiries that come in either through the factory sites come to us. And about 90% of the sales that we have are right. Randall, are really in our PMA, which is exactly what agency is trying to do, a better connection with the customer. So I'd have to say, even though we were somewhat negative on it, we've worked very hard with Mercedes to make it work in the U.K. I'm not sure they've got a great taste of it right now and what they're going to do worldwide, but they have some issues in Australia with it and other things. But at the moment, I think we were up 25% on agency, which would have been basically in the quarter would have been Mercedes-Benz.

Okay. Thanks a lot.

Thank you.

And I'll be turning the conference back to Mr. Penske for final closing comments.

I just want to thank everybody for joining us today. We think we had a great quarter based on all the headwinds we were facing, but thanks for your support. We'll see you next quarter. Thank you.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.