Good morning and welcome to the Pool Corporation Second Quarter 2017 Conference Call. All participants will be in listen-only mode. [Operator Instructions.] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Mark Joslin, Senior Vice President and Chief Financial Officer. Please go ahead.

Thank you. Good morning everyone and welcome to our second quarter 2017 earnings call. I would like to remind our listeners that our discussion, comments, and responses to questions today may include forward-looking statements, including management's outlook for 2017, and future periods. Actual results may differ materially from those discussed today. Information regarding the factors and [indiscernible] materially from projected results is discussed in our 10-K. In addition, we may make references to non-GAAP financial measures in our comments. A description and reconciliation of our non-GAAP financial measures is posted to our corporate Web site in our Investor Relations section. Now I'll turn the call over to our President and CEO, Manny Perez de la Mesa. Manny?

Thank you, Mark, and good morning to everyone on the call. As reported, we had a solid second quarter, with 7% base business sales growth, which was on top of last year's 6% base business growth in the quarter. Year-to-date, our base business sales increased 6% on top of last year's 9% base business sales increase, that benefitted from the favorable weather. This level of growth is a reflection of the resilience and favorable characteristics inherent to our business, together with our team's ability to provide exceptional value, and are being rewarded with an ever increasing share of our customer's business. Our gross margins were solid, especially when you factor in the 30 bips increase realized in last year's second quarter. Year-to-date, our gross margins were flat compared to last year's 30 bips increase, which again benefitted from the favorable weather. Expenses were seasonally a bit higher, but largely as planned, as we continue our ongoing investments in our business. Altogether, a solid second quarter, as we further solidify our foundation as a value-added distributor. Our base business sales growth in our largest four markets, California, Florida, Texas, Arizona, and in the rest of the markets, was 7% in both cases. Within the quarter, the cold and wet weeks, before and after memorial day, adversely impacting seasonal markets, as did the heavier than normal rain in June, in the east. The first part of the quarter had a more favorable weather, which largely offset the adverse weather impact later in the quarter. Also, our base business sales results include our green business, which had a 5% base business sales increase in the quarter, despite the exit of a product line, which adversely impacted sales by 5% in the quarter. On the product side of sales, building materials and related outdoor…

Thank you, Manny. I will start my commentary with operating expenses, where I believe we have gained some traction compared to Q1, so we have a bit more work to do here to reach our objectives for the year. For the quarter, our base business operating expenses grew 4.7% over last year compared to our 6.5% growth in gross profit. This resulted in 20 basis points of operating leverage, as base business operating income was 15.7% of net sales for the quarter, compared to 15.5% last year. Year-to-date, our base business operating leverage is 10 basis points. As mentioned in our press release, we had some growth driven expense increases in areas like labor and delivery costs. In addition, investments in information technology systems and hardware, as well as the timing of recognition of employee health costs, added to our expense growth in the quarter. I expect the cost increases to moderate, as we move into the back half of the year. Our goal here on expenses is, as always, to grow less than gross profit growth, in order to gain 20 to 40 basis points of operating leverage in the year. This means we have a bit more work to do here, to get there this year, which I think is achievable. Our income tax rate in the quarter was 37%, compares favorably to our 38.4% rate last year. A majority of this rate improvement was driven by our adoption of ASU 2016-09, which also increased our share count by 550 basis points in the quarter. The net result of this, was that our Q2 EPS was $0.02 better, than it would have been without the tax accounting change. At this point I leave unchanged, the impact from this accounting change for the rest of the year, that I…

[Operator Instructions]. The first question comes from Ryan Merkel with William Blair. Please go ahead.

Hey, thank you. Good morning everyone.

Good morning.

So first question is on gross margin; and I understand that mix in a tough comp was the reason that gross margin was down year-over-year this quarter. In the second half of the year Manny, should we expect that to continue and then secondly, I think your goal was flat gross margin for the year, so just update us, if that's still the goal?

Right. First of all yes, the expectation is essentially flat for the year, and flat for the back half of the year, as it is flat for the first half of the year. So that's all consistent. Last year, we had a favorable weather as you recall in the seasonal markets, and that helped us a bit, all the way around, more impulse items being sold with a longer pool season, and that helped our margins obviously as well as our sales, and resulted in the strong first half and as well as second quarter gross margins that we had last year, and the fact that they are flat year-on-year, I think is again a very favorable statement, given that being a very tough comp.

Yeah. I agree. Okay. And then secondly, Manny, you have a pretty good idea at this point in the year about where EPS will end up. So I am wondering, would you put us more to the midpoint of the EPS guidance at this point, or is there a real shot at the high end, if weather cooperates?

Well, typically when we provide the guidance, the midpoint is the fair number to use, and you got to factor in Mark's comments towards the end there about the fact that we have one less sales day in the third quarter. But I think everything is on track, as we expected, about three months ago.

Okay. And then just lastly if I could, many of the distributors I cover are investing in technology in a big way, trying to stay ahead of the competition, and you have always been a leader in this regard. But any update on what you are working on now, and how -- and marry that up with how the customer expectation for service has changed?

Great question. We have been ahead of most; not ahead of all, but ahead of most in terms of using technology to enhance the customer experience, our own operations, as well as how we manage the business, and that continues. Mark, in fact highlighted part of the expense increase year-on-year are our ongoing investments in technology, and that's something that we are not going to compromise at quarter or year, because we may spend a little more than anybody who else would have thought on that, because we are looking at the long term plan. And now mind you, given all that we do and how we carry it out, it doesn't rise to be a significant number in the big picture, but we continue to invest. And in terms of translating that to the customer experience, there has been a number of initiatives that we continue to roll out, both operationally, navigation technology as well as using it from a data and -- data mining and marketing standpoint. So yes, we continue to invest. Items are constantly being rolled out to further enhance the customer experience, and it's part and parcel with business today. I mean, every company today is really a technologically enabled business, it has to be. If you don't use technology, you are behind the curve.

Okay. Thank you very much. Appreciate it.

The next question comes from David Manthey with Baird. Please go ahead.

Thank you. Good morning.

Good morning.

Good morning.

I am interested in the growth algorithm from this point in the cycle forward. You said that your guidance for 2017 implies a 15% contribution margin. I am just wondering, if there is anything materially different in 2018, and then just generally Manny, I know in the past you had outlined how you build up to your growth expectations. Can you give us an idea or remind us, how you hope to achieve double digit earnings growth from this point forward?

Sure. So you start, foundational point there is the installed base of pools, that's what drives the industry, and the increase in net install base of pools, which has been relatively modest, there is a little modest inflation on top of that. You have a recovery of remodel and replace, to get the growth of an ongoing recovery of construction of new pools, and all that together leads to a four-ish type number from an industry standpoint. We then go beyond that with market share gains. And again this year, even though we have a very tough comp from last year, given the type of weather, we are still looking at 6%-7% growth in terms of top line for the year, and then, you take that, and then you take on the base business, a 15% to 18% contribution margin, and contribution margin, by the way, for those on the call, is the difference in base business operating profit divided by base business sales. You take the contribution margin of 15% to 18%, that leads you to double digit operating profit growth, which is what Mark mentioned, in terms of 20 to 40 bips of increase in base business operating margin. And then you take on top of that, share repurchases, that adds usually another 2% to 3%, and you get 15% to 20% EPS growth, which again that formula, which we communicated back, I believe it was in the fall of 2009, we have basically stuck to [indiscernible]. Frankly, we are at the high end of the 15% to 20% range in terms of EPS growth, since that time, and this year will be no different. Obviously, to the extent that we have a tax benefit on the accounting for taxes, I take that out of the equation from all these metrics that's an EPS benefit on the side. But that is what it is, and the fundamental thing is, 15%, 20% EPS growth, no different, nothing substantially different, no changes and I don't envision anything significant in the next -- certainly not the next three to five years.

All right, okay. Thank you for that. And then Mark, you mentioned healthcare insurance expenses. Could you talk to us a little bit about the magnitude of that in the second quarter, and then how does that peel off in the third quarter?

Yes, you bet David. Really, what happens there, is we accrue healthcare expenses while we have actual, then we accrue at the end of the quarter, which is usually a percentage based on some actuarial estimates we get, and that estimate increase in the fourth quarter of last year from 12% to 14% over the last 12 months, all that is to say that, as we move through the year, the accrual rate will lapse when we get to the fourth quarter, and so that's one component of it. The other is the fact that we have had some high individual claims this year, which hopefully will not continue. Although, we certainly don't have any insights there. And so those are why I think the increase will moderate, as we move through the year. The magnitude in the second quarter was about $1 million and cost increase year-over-year.

Okay, Thank you very much.

Sure.

The next question comes from David Mann with Johnson Rice. Please go ahead.

Hi, thank you. Good morning. Manny, on the last call you talked about -- you started to see a change or an acceleration in underlying demand. Can you just talk a little bit more about -- are you still seeing that in the channel? And how that perhaps might continue into the back half and into next year?

Sure. From a contractor standpoint, demand is not an issue at all. And in fact, since you live in Atlanta, you were witness to the heavier rains that happened throughout the southeast, especially, vis-à-vis, most years in terms of June. And that really just pushed back some of the work. So yeah, demand is a non-issue, contractors in the space, whether they are building pools, remodeling pools, replacing equipment on pools, their backlog is whatever they want it to be, because the demand is there, and we don't see that changing. Now I will also go to the other side, because I talked to a couple of times I think in previous calls, which is that, the capacity to serve that demand is constrained, and is not unique to the swimming pool space I think it applies to all trade sectors and other sectors as well. There is frankly a labor talent/labor shortage in the contractor space. And we are not exempted from that. So the point here is, if the demand was there and could very well be there for the industry to grow faster than it's growing, the constraint is just capacity. But again, it provides us with the confidence, that we are going to be on track, and not just a 2017 phenomena, but for the next X number of years, given the fact that certainly the demographics, the demand characteristics, all those factors are there.

Thank you. In terms of the commercial business, the Lincoln Aquatics acquisition, can you talk a little bit about that opportunity? It seems like from our checks, that company was -- well albeit, not that large, was fairly well regarded in that segment?

Very much so. It's interesting. I met the principal that owned and ran Lincoln back -- in the fall of 1999, as I was exploring that commercial space and trying to prioritize growth opportunities for the company. And as you I think witnessed, I believe about eight years ago, that moved up enough on the radar screen to become a priority opportunity for us, and over the course of the past seven-eight years, we've quintupled our commercial business to last year, just shy of $100 million and certainly just over $100 million this year, excluding Lincoln acquisition. The focus of Lincoln is very complementary to what we are doing. Our strength within the commercial space, was in the HMAC sector. We played in the larger pools as well as water parks. But our strength was more in the HMAC sector. Lincoln's strength is more on the larger pools, whether it be municipal pools, YMCA pools, competitive pools, as well as water parks. And that just is a nice complement to us. It will further our business in the commercial space by the fact that we can leverage each other strengths. Our ability to serve our network, our relationships throughout North America, coupled with their technical expertise of the team there, as well as their existing customer base.

That sounds great. On the green business, last couple of quarters, you have struggled a little bit. It sound like you tried to address some execution issues. Would you say, that has all been fixed now with the performance this quarter, or you still feel like you have some room to go there?

We are certainly moving in the right direction, in the green business. I mean, the fact that we exited a product line and if we take that out of the equation, our base business sales were up 10% in the quarter, I think is a reflection of the fact that we are certainly moving in the right direction in the green business. Are we where we want to be? And the answer is no. It's also no in the blue business domestically, it's also no, internationally. We are never going to be where we want to be, because we are always going to look to be a lot better than we are. And that opportunity exists throughout the organization, and it's part of our culture that we have to get better every year in everything we do. And the [indiscernible] applies, but the fact that again, taking out the business we exited, the fact that we are up 10% year-on-year in sales in the quarter, is certainly a reflection of our moving forward in a very positive way.

Great. And then, one housekeeping question for Mark, as it relates to the ASU benefit. It sounds like you didn't change your expected impact for the full year from the prior quarter, and it sounds like that was based on the price at the beginning of the day, we are about $11 lower right now. Can you give a sense on -- if the price, let's say was at this level for the rest of the year, what would that do to you, the ASU impact and what would your pro forma guidance look like?

Dave, that's a good question. That's a difficult question to answer though. There is a couple of factors there. One is the ASU, the other is our stock expense. The stock expense is, I would say, would have a favorable impact. On the ASU side, what this lower stock price might do, is encourage less people to exercise options or push the exercise out. So I really can't tell you at this point. We will have to take a look at it, where the stock price is now or what it ends up with, has certainly changed. So I don't have a good answer for you. We will have to kind of play that by year, and hopefully, all understand the complications and estimating what that ASU impact is. And I guess the bottom line for me, is it's an accounting change, it has nothing to do with our business. That's why we call it out and try to make transparent what the impact is. Whether it's positive or negative or from our projections, I don't view as being material to our business.

Very good. Thank you for all the insights. Good luck for the rest of the year.

Thank you.

Thank you.

The next question comes from Matt Duncan with Stephens Inc. Please go ahead.

Hey, good morning Manny and Mark.

Good morning.

So Manny, I appreciate all the comments around the online model and sort of the impact on the industry. Obviously, it front of mind for a lot of people right now. One other question that we all get a lot, I suspect, at least I know I do, is around pricing, and sort of the directionality of pricing and all these various distribution verticals. Can you just address -- are you seeing any kind of change in the competitive price? Is it business as usual, and maybe sort of walk through your key product categories, what you have experienced from a price perspective over the last few years, I think that'd be very helpful?

Sure. Well, the -- just to provide a little bit of insight. When I joined the company 18.5 years ago, one of the top two or three items that was then an issue, was the internet and how the internet was going to affect business, and going back to 2000-2001, there were close to 1,000 storefront retailers largely, that were selling products online, and it was primarily an arbitrage play between the larger year-round markets, and the smaller and seasonal markets, in terms of what the retail prices were, and the guys in Florida and California selling to consumers in New York and Ohio. I will say the greatest pressure there happens in the 2005, 2006, 2007 timeframe. That was the greatest stress period, because there were so many guys playing, and then at the same time, there were a few guys that were -- call it a special focus on the online channel, as opposed to being storefront retailers that were arbitraging prices between markets. And then, Amazon came into it about 10 years ago, that drove the cost to get traction on page 1 for these guys that were specialists in this space. Made a little bit harder for them, so there was a little bit of a shakeout that happens, and the last few years has been pretty stable. Manufacturers have the cognizance of the sectors and customers have been -- come up with professional grade or trade series products. They have been more -- improved their communication on their packaging, to make sure that their products are installed by professionals. Most of them have differentiated their warranties to acquired a professional installation, because god forbid, you'd have a regular pool owner, trying to put in a pool heater and blowing up his home in the process.…

But Manny, maybe to tie a bow around this and to be perfectly clear, your stock seems to be very confused about what's happening with pricing and gross margin for you, specifically. It's a shoot first, ask questions later world around gross margins right now. Price had no impact on your gross margin this quarter, correct, it's simply just --

Oh, no. The online channel had no impact. It was all product mix. As I mentioned, I think last quarter, about $10 million of business that we did, and shipped on early buy in the first quarter of 2016. Got shipped in the second quarter of 2017, and early buy shipments are a little lower margin than regular day-to-day shipments. And so therefore, it's a not -- that's not the factor. Frankly, the factor is, the fact that equipment sales, which are generally speaking, a little lower margin than the rest of our products, grew a little faster than the overall sales growth. I mean 7% base business sales growth, equipment was 9%. So the fact that equipment was a little higher, that's in essence, it.

Okay. Yeah, I just wanted to make that clear for anybody that didn't quite catch that yet. So last thing real quickly, on 3Q revenue growth and then the impact from Lincoln. It's a market, that sounds like the one last day, the 1.6% drag, you were at 7.5% revenue growth this quarter, so should we extrapolate that, I mean, something closer to 6% is more likely in the 3Q, and then what are Lincoln's annual revenues?

Well to answer your first part of your question, I think that's a reasonable adjustment to make. In terms of Lincoln, Manny, do you want to address that?

Lincoln did about $20 million for the year, a little shy of $20 million. So you divide it by four. That business is not as seasonal. So it will be, call it [ph] five in the third quarter.

Okay. Very helpful. Thank you.

Thank you.

[Operator Instructions]. Our next question comes from Garik Shmois with Longbow Research. Please go ahead.

Thank you. Just wanted a little bit more color on how to think about the improved operating leverage expectations in the second half of the year. Also just given the context of the one fewer shipping days in Q3. Should we assume that Q3 is still a, call it a transition quarter, as you get up to speed with the freight and with the labor, or should the operating leverage improvement to EBIT balance is spread across the second half?

Well, the main reason really Garik, is that in the first quarter, we had a super tough comp. I mean, last year's 2016's first quarter was extraordinary. And therefore, the fact that we had positive year-on-year sales growth against last year's first quarter, and we are flat on operating margins versus last year's extraordinary first quarter, I think was an accomplishment in itself. So you take that off the table, right, and you begin to come back to more normalized levels. Again, our contribution margin was 18% in the second quarter. I expect it to be comfortably north of 15% at the back half of the year, where we have more reasonable year-on-year comparables. So it's nothing -- we don't have -- the back half of the year was solid last year, good in every respect, but it wasn't extraordinary. We didn't have the weather lift that we had in the first quarter of last year.

Okay. That's helpful. I might have missed it, but I was wondering if you could touch on two areas that have been double digit growers for you; underlying growth within the commercial sector, excluding the Lincoln acquisition, as well as building products? How did that perform in the quarter? Don't necessarily expect any change in trend, but would love to get any color on how to --

Sure. Building materials, as I mentioned, was up 12% in the quarter. Building materials continues to be a category for us that A, we are gaining share. B, we had a little bit of a breeze behind us with the ongoing recovery of remodeling, and the favorable macroeconomic environment. And the third, we should never dismiss, is that because of our efforts and investments in marketing, and education of our customer base, as we roll out new products within the building material sector, we are helping expand the market, whether it's new tiles or new pool finishes, new testing [ph] products. We are helping grow the market overall, and I think all three factors have been an integral part of why our growth has been very strong in that sector for the past eight-nine years, and why it should continue to grow at double digit rate on a go forward basis. When you turn to commercial, commercial is an area, as I touched on when I mentioned Lincoln, commercial is an area that -- again, we have focused on more completely as an organization, about eight years ago. And since that time, we have made a number of investments in stocking locations. We have made a number of investments in talent in the field, to provide expertise to help our customers, and as a result of that, those investments, we have gotten a return and increased share. And again, our share in that space, while it has grown significantly over the past eight years, is still less than our share with the residential sector. And I think that bodes well, in terms of continued growth for the following X number of years.

Great. Thanks a lot.

Thank you.

The next question comes Ken Zener with KeyBanc. Please go ahead.

Hi gentlemen.

Yes sir.

So obviously, I think Manny, you talked clearly about how the percent of the channel related in online, and this is all about Amazon today, I apologize but it -- as well. You are not alone today. The appliances are going online apparently too, vis-à-vis, that move was another announcement Amazon made today. So if I could just make this personally, and I just think it's really important, because this is a conversation I have had far more in the last quarter than I have had in all this time I have covered you. You talked about why it's 5% online in the market, freight costs, bulkiness, the need to have a professional installation. And my pool servicer who does a lot of pools, upward of 1,000 agrees with you. However, this is less about today versus tomorrow. So if I were to -- and I am going to give you an example, so you could example with granularity. If I am one of the 70% of pool owners that self-services my own pool, and then my pump or my filter breaks. I go online, I see a pump for 420 on Amazon. I call up a pool person, who I don't use, since I am self servicing. And he gives me a quote for labor and the pump for $480. What keeps me from buying that pump online, and then having it shipped to my house, thinking that the price is lower by $70, which it is? And why wouldn't I just override the fact that the pool person is going to say look, you are going to lose some warranties, if you buy it through that channel versus me, since I am already a price sensitive biased, since I am servicing the pool myself. That's kind of the dynamic that I think people are trying to discern here, as it relates to this transparency?

Sure. The fundamental, and this has been -- this is not a new event. The fundamental is twofold, one is the individual, the pool owner is a higher end demographic, and that higher end demographic, to save whether it's $60 or $70, typically is not going to invest the time to figure out, first of all, what they need, and if that pump is eight or 10 years old, it may not be the same pump that he has already. So it's going to be in the likelihood of a new and different pump. So that's factor number one. Factor number two, the time it takes to wait and get it, in the meantime, the pool will not be circulating water, which means it's going to turn green, and so -- I mean, I put it this way --

Well you'd think I'd ask to install it too.

And then I have to install it as well. I mean, the whole likelihood here is, there are people that will drive 10 miles all the way to save a nickel of gallon in gas. Okay. And those people appreciate -- have certainly no appreciation for A, the cost to drive back and forth 10 miles, right? They have no appreciation of their time and the value of their time. So there is always going to be that very small minority that are going to do that, and that has been that way for years and years and years. So that's not going to be any different. I will also make another comment, Amazon has been in this space for over 10 years. If you go back on their web site, 10 years ago, they had thousands upon thousands, right, of SKUs from the swimming pool industry on their web site, as did a number of other online retailers. So that availability, the example that you just highlighted, right, was there 18 years ago and continues to be there, and again, there are those pool owners, small minority, that will go out of their way to drive 10 miles to save a nickel of gallon in gas, and those same guys will buy on the internet, and save $40 or $50 or whatever it is, right? But it's a very small minority, makes no sense whatsoever.

Yeah. Mark, I hear you Manny. But I -- maybe I said $50 just because I viewed it as a retainer to my service person. Mark can you talk, the other element within this backdrop, is that your EBIT leverage, 1Q is an outstanding quarter given the comp. But your EBIT contribution running a bit lighter in the first half, implying a bit of strength, but you talked about easy comps. I think Manny, you highlighted that the equipment sales would explain some of that. But in general, you have talked about how steady your business is. Usually in the first half, it's about 68% of your earnings. It would put, if you apply that to the first half earnings, kind of at the -- actually outside of the 412 plus range. Could you be specific as to why the operating leverage is going to be greater and essentially your second half earnings is going to be great? Because I know in the past, you have talked about, once the pool is open, you know how much money it's making. Why is it so pronounced this year, in terms of the acceleration and leverage in the second half? Thank you.

Well, can I look at the factors that have impacted us in terms of expense growth, and the things that we pointed out there, first of all are volume driven labor and freight. And on the labor side, a lot of the cost increase there is in variable labor, particularly over time and temporary health. And I think Manny mentioned the deceleration that we saw in the quarter, because of weather in the northern, central and northern markets. So that is a controllable expense, that our field is going to begin to clamp down on, as we move through the third quarter and into the fourth quarter. That's one. Two, as I mentioned, the healthcare costs. The increase there was driven by a couple of factors. One, the change in the accrual rate, which was lapped in the fourth quarter, and the other by, unusually higher expenses. I will say, it was $1 million impact on the quarter, but a 20% increase year-over-year, which is very unusual for us. I go back three or four years in time, and our healthcare cost increases have been growing, but very modestly in the 3% to 5% range. The 20% range is just very unusual, doesn't mean it won't continue, but I'd be surprised if it did. And then I mentioned technology spending being another factor. Less than the employee benefits, but also a factor in the quarter, and some of that was driven by some software implementation costs we had in the first half of the year, that we won't have in the second half of the year. So I just look at all those things. Those again are the higher growth categories in terms of expenses, year-to-date, and we don't anticipate that we will have that same level of spending in the second half of the year, and therefore have greater operating leverage.

Okay. Fair. And then these are micro housekeeping questions. Your expected share count for the year, repeat it if I missed it, I apologize. And then explicit 2Q, 3Q and 4Q tax rates. I know you gave that full year, when I just didn't know if it was going to swing around between 3Q and 4Q. Thank you, gentlemen.

Yes. And Ken, I am going to have to make you do a little work, because I don't have the share count forecast with me. I did that on, I believe the year end call, and because the share repurchases have been modest in the first half year-to-date, my [indiscernible] was I would use those -- that share count forecast that I gave then for the rest of the year. I gave it by quarter. On the rates, the 2017 rates that I gave was the annual rate and that varies typically with the third quarter being a little bit better in normal years. This year, because of the significant impact from this tax accounting change, we expected a much greater fourth quarter benefit. And again, I gave that benefit on an earlier call, I don't have the number with me.

$2.5 million.

Yes. So that has a big impact and I don't know the rates specifically, but the fourth quarter would be much lower than the third quarter because of that share count or share tax change.

Understood. Thank you.

By the way Ken, just a point; the share count is approximately 43 million, and I don't -- from a big picture standpoint, other than repurchasing shares, which at this point we don't assume, you would assume -- you wouldn't look at that being relatively flat in the back half of the year.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Mark Joslin for any closing remarks.

Well, thank you. I will turn it over to Manny for his closing remarks.

Thank you, Phil, and thank you all for listening. Our next conference call is scheduled for October 19, mark it on your calendars -- Thursday, October 19, 11:00 AM Easter, 10:00 Central, 8:00 Pacific, when we will discuss our third quarter 2017 results. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.