Good morning and thank you for holding. Welcome to Rent-A-Center's Fourth Quarter and Year-End 2014 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. Following today's presentation, we will conduct a question-and-answer session. [Operator Instructions]. As a reminder, this conference is being recorded Tuesday, February 3, 2015. Your speakers today are Mr. Robert Davis, Chief Executive Officer of Rent-A-Center; Mr. Mitch Fadel, President and Chief Operating Officer; Guy Constant, Executive Vice President, Finance, and Chief Financial Officer; and Ms. Maureen Short, Senior Vice President Finance, Investor Relations, and Treasury. I would now like to turn the conference over to Ms. Short. Please go ahead, Ma’am.

Thank you, Mike. Good morning, everyone, and thank you for joining us. You should have received a copy of the earnings release distributed after the market close yesterday that outlines our operational and financial results that were made in the fourth quarter. If for some reason you did not receive a copy of the release, you can download it from our website at investor.rentacenter.com. In addition, certain financial and statistical information that will be discussed during the conference call will also be provided on the same website. Also, in accordance with SEC rules concerning non-GAAP financial measures, the reconciliation of EBITDA is provided in our earnings press release under the Statement of Earnings Highlights. Finally, I must remind you that some of the statements made in this call, such as forecast growth in revenues, earnings, operating margin, cash flow, and profitability, and other business or trend information, are forward-looking statements. These matters are, of course, subject to many factors that could cause actual results to differ materially from our expectations reflected in the forward-looking statements. These factors are described in the earnings press release issued yesterday, as well as our annual report on Form 10-K for the year ended December 31, 2013, and our quarterly reports on Form 10-Q for the quarter ended March 31, 2014 and June 30, 2014 and September 30, 2014. Rent-A-Center undertakes no obligation to publicly update or revise any forward-looking statements. I'd now like to turn the conference call over to Robert.

Thank you, Maureen, and good morning, everyone, and thank you for joining us. As you know we are a year into an ambitious multi-year plan to improve the performance of our domestic RTO business. I will be providing a high level overview of our performance and Mitch and Guy will then provide more detail on our operations and financial results. As I reflect back of my first year as CEO I’m proud of the progress we have made in many areas. But I know there is still a lot of work to do to transform our business and set the foundation for profitable long-term growth. During the fourth quarter, we met our revenue expectations, excluding accounting adjustments, core U.S. same-store sales were close to flat, and Acceptance Now continue to deliver strong consistent same-store sales growth. This resulted in total company same-store sales of approximately 5% for the quarter. In addition, core U.S. operating profit increased year-over-year for the first time in many quarters. However, our EPS fell short of our expectations because our margins were not as strong as projected and our skip/stolen were too high. In short, we did not achieve the desired balance between sales growth and margin improvement that we are dearly seeking through our strategies. As a result, our resolve is strengthened in the pursuit of that balance and the urgency remains high delivering on the initiatives and results that we have promised. To that end, our focus is on improving operational execution by implementing a new labor model for our core U.S. stores, developing a new supply chain model and implementing a customer focused value based pricing strategy. And in our Acceptance Now business, we are already seeing some progress on getting skip/stolen losses back into line. And we remain excited about the growth…

Thank you, Robert, and good morning, everyone. I’ll start with the core overview. Overall, Q4 was a quarter where we made some significant progress of revenues in the core business bolstered by the strong demand we saw during the holiday season. Smartphones grew to approximately 7% of our core U.S. store revenue in the quarter and continue to drive new customers. We have seen some cannibalization primarily within computers and tablets and although cannibalization is notoriously difficult to calculate, we estimate it to be in the range of 25% to 50%. So overall, the new product category has helped to improve same-store in the quarter. Our same-store sales in the quarter were essentially flat at 0.6%, our best number there in a couple of years. Our smartphone offering including some of the world’s best smartphones along with unlimited talk, text and data with the flexibility and convenience of no contract service in a rent-to-own agreement continues to be highly sought after by customers. And we continue to believe smartphones will be about 10% of our core U.S. revenue at maturity. Now from a collection standpoint, our core U.S. rent-to-own skip and stolen losses came in at 3.5% in the quarter, 80 basis point higher than the same period last year almost completely driven by smartphone. To that end we have taken some steps to mitigate those losses including the registration of the unique IMEI number of each bond with a central registry to prevent the theft in monetization of phones in the secondary market. This has been effective in helping to mitigate those losses. We also will be taking future steps including locking down phones in certain circumstances. So managing losses in the smartphone business will remain a key priority for the core business. To bottom-line on phones is they…

Thanks, Mitch, and good morning, everyone. This morning I'll walk you through the highlights of our financial results for the fourth quarter and our 2015 and longer term guidance. I'd also like to mention that as I refer to our fourth quarter performance either this year or versus a year ago all members will be presented on a recurring basis excluding special items. In addition, you'll note that we made some changes to our P&L that we hope will provide you with added transparency and more insight into our business and will help drive more accountability for results. This includes separating a line previously known as salary and other expenses into two lines, store labor and other storage sectors. We also have taken all of our depreciation and amortization expense and included as its own line on the P&L. In addition, we no longer will be allocating overhead to our segments in order to provide you greater transparency into the true performance trends of each segment. In addition to the format changes to the P&L and in light of the current attention on revenue recognition standards we took the opportunity of this quarter to address a numbers of our revenue recognition policies. Although the full year impact was only slightly negative, the overall impact of these changes lowered our fourth quarter pretax earnings by approximately $3 million including lowering total revenues by approximately $8 million, lowering cost of revenues approximately $7 million and increasing other store expenses by approximately $2 million. From this point forward, our reported results will incorporate these changes as well the 2015 and longer term guidance I will detail in a few moments. In order to assist you with your modeling, analysis and review, the past two years of quarterly history using the new presentation format…

Thanks, Guy. And before we take your questions, let me just say again that we are not satisfied with our fourth quarter results. We know there is work to do before we can become the reliable and predictable company that we both desire and is worthy if you try. Yet, even with the results of this quarter we do see some encouraging signs. Core comp store sales were essentially flat, a sharp change in trajectory versus the negative trends of the past two years. Core operating earnings were up year-over-year and the flow through of profit has shown dramatic improvement since the second quarter. Loss trends while still high have begun to move down on a year-over-year basis and the forward trends look to be solidifying. Our key initiatives have moved in the planning stage to the implementation stage and are set to provide meaningful results in 2015. As I said, still a lot of work to do, still lot a lot of improvement to make, still a lot of ground to cover, but we believe very strongly that we have the plan to execute and deliver on our promise of balanced growth of top-line revenues and margin improvement. With that, I'll ask Mike to now open the line for your questions.

[Operator Instructions]. First question is from Brad Thomas with KeyBanc Capital Markets.

Couple of questions. Wanted to first dig in just on the trajectory of the core business, if I could. The comp in the core coming in is essentially right in line with your guidance. Could you give us a little bit more color around how the smartphones performed relative to your expectations, what kind of cannibalization you're seeing and what the health of your core customer really looks like right now?

Sure, Brad. This is Mitch. I'll take that. As we say in the press release, it's about 7% of our business. Probably heading towards the 10% we have talked about since we tested smartphones, a little faster than we anticipated; if anything, they've gone I guess you used the word trajectory. A trajectory towards 10% smartphones is probably little faster than we modeled internally. It has been -- there has been some cannibalization. It's pretty hard to peg that exactly how much cannibalization because you -- it's hard to measure in 10th of each customer who walks in the door. But from all the data we have in front of us its somewhere between 25% and 50%, it's somewhere in that range. So it is cannibalizing, but the trajectory is good. As you could see in our forecast for next year, forecasting basically flat same-store sales coming off a year that is overall for the year minus 4% but certainly trending better at the end of the year. So certainly, some positive stuff there and with the expense initiatives that Guy talked about from a labor standpoint and sourcing standpoint, we get leverage out of it. And yes, as I mentioned also, Brad, in my prepared comments, we had a good fourth quarter, I mean there was terrific. It was a good quarter for us. We didn't have a revenue miss. This isn't overall a revenue miss, it's more of an expense miss, primarily a little bit on operating margin and mostly in losses that, as Robert mentioned, are now going in the right direction. So the health customer seems to be back stronger than it has been over the last couple of years, at least as we saw in the fourth quarter and so far this year.

Great. And that leads into my second, my follow-up question. Just around the assumptions on the losses the skips and stolens, first of all, from a guidance standpoint, what are you assuming in terms of the 2015 guidance? And then, more just at a practical level, why do you think these issues have come up, is it the nature of some of the new products like the phones, is there something changing about your consumer right now or is it just an execution as you've had other things going on? What do you think the big culprits have been here on the losses side?

I think it varies by segment. I think in the core business its been smartphones; they bend at a higher rate. I mentioned a couple of things in my prepared comments that we -- some we've already done and some we're going to do going forward to reduce that. The bottom-line on smartphones is they're at a lower margin, both gross margin and pick up the losses, but they're helping profit margin go up for the first time in many years because they're incremental to the business. And though they're not as high a margin as some of other things they're certainly -- when you add them on you get more leverage out of the business. So I think in the core business its smartphones, but we're not just sitting here using that as an excuse saying that they're smartphones and we can't do anything about it. I mentioned we're now registering them which makes it almost impossible for consumers to monetize those forms using a central registry and we're also in the process of working out a technology where we can lock them down which we should have by the end of the first quarter; where we can lock them down in certain circumstances. So working hard on the smartphones; that’s the core of the business. On the Acceptance Now side, a little of it is normal based on as the business matures. I think the majority of the problem has been execution. Our Acceptance Now management team would say the same thing if they were talking, it's been execution. Probably, Brad, we've grown fast. It’s a business that hardly no volume just five years ago, and as you see in your guidance, it’s an $800 million plus business now. We put new technology out there from an iPad standpoint. And there's been a lot going on. So, I think we went backwards from an execution standpoint. Really a heavy focus in the last two quarters and we're seeing it. December was the best month of the quarter and January comes in the same way. And when we look at what's in the pipeline right now that's due to write off in February and March we're going to be flat, which -- we should flat in March year-over-year. So that’s been mostly a focus in Acceptance Now lot going on and it's not an excuse; it's just a fact. And the fact is we need to get better and we already are getting better. As far as what's in the guidance for losses, I don’t know if I have that specific but I can look at some numbers give you on a -- do you have that right off the top of your head?

Yes, I think what we have in guidance for the core is that we expect losses at -- we expect earlier in the year to see similar losses in smartphones that we saw earlier, but we expect the overall impact to still be down or losses to be a little bit worse in the core area as we have the full year impact of smartphones for the entire year. On Acceptance Now, we actually expect that the trend that we have will continue. As Mitch outlined, we’re flat, we believe we’ll be flat year-over-year after the first quarter when our losses were inline. You may recall that losses got worse from second quarter through the fourth quarter on and so it's our belief if we can get the losses inline by the end of the first quarter as we expect that we should be able to make some progress and actually have lower losses year-over-year for the last three quarters of the year.

Great. Well we know you're working on a lot of exciting things and so wish you good luck with that.

The next question is from John Baugh with Stifel.

Yes, good morning. I was worried if you could delve into the gross margin commentary around smartphones. With the pricing being where it is the puts and takes on you mentioned it’s lower gross margin product, are we seeing higher early payouts on that? Just walk through all the various pieces of that gross margin calculation.

Sure, John. Yes, when I say lower margin I know it is primarily around the 90 days payment cash pricing to be competitive in the marketplace and no contract phones. So it is the 90-day option that’s lower than our normal margins, maybe the overall rents also a little bit lower but it’s primarily in the 90-day area. And you do get them paying out a little faster on the early purchase option. So yes, that’s where that is; it's in the 90-day and the purchase option arena. It's not like they’re dramatically lower. I mean the difference in lower -- you know our average when you think about gross profit the way we calculate it between 70% and 75% on our core products. I'm taking about smartphones coming in in the 65% range; it’s not like its 20% lower or anything like that. It's the difference between a 70% and 75% range and actually coming in at 65%.

Is there service revenue in there that would also dilute that number?

The service expense is in there that would reduce its some. That’s certainly part of it is the higher service cost.

I think he's referring to the --

John, if you are asking about the air time that we sell? Is that what you mean by service revenue?

Correct, correct, and I would assume that’s more of a pasture; you have a little small markup on that that will hurt your gross margin percentage.

I said it comes at a very high margin because it’s a commission on the sale of that product. So the revenues all are quite good in the early months and then we planned at a lower commission rate as the air time stays on but given there’s really certain no expenses associated with that it comes at pretty margin but --

Once we get the --

Once we get the --

Small percentage of what the customer pays with it.

Yes.

Okay so that actually helps gross margin. Okay, I was wondering on Mexico, the loss there surprised me. I noticed the gross margin there was down materially from where it’s been. Could we just talk Mexico for a minute and what you are thinking about that business going forward?

Hi, John, this is Robert. I think as we indicated last year we stopped deploying capital down to Mexico as in last June and wanted to allow essentially 12 months of opportunity for our operators to marinade on some of the changes that we’re making to improve the overall health of that business. We do have many markets and many stores that are very, very profitable and positive cash flow, but there are others that – that we believe have opportunities for improvement. And so we’re going to continue to evaluate that over the course of the next six month. And so June of 2015 we will evaluate our performance there and consider several different options of how to move forward, but right now we are optimistic that we can make an impact and improve those results given the initiatives; we’ll just be evaluating that over the first six months of this year.

Is it a traffic problem in the stores that aren't dealing well, I mean is there specific loss is high, any kind of color on what?

Yes, I think and Mitch feel free to wade in it. I think from our perspective it’s not a traffic problem it’s more of a loss problem as well down there in Mexico in verifying in residences and things of that nature. We are making changes that how we are addressing our operating guidelines as it relates to verification and things of that nature. And so traffic has not been the problem, but collecting on the money and managing the losses have been, and we’ve got a number of initiatives to address that. And I don’t know if you want to add some more color, Mitch, but.

Well you mentioned its primarily what the initiatives really relate primarily to a different verification program than we’re used to using here in the U.S., and not to get too much detail of a base, basically you have to verify in the feel versus over the phone and that changes the systems and so forth, and so they can collect and control the losses. So it’s kind of re-engineering our business model. Really on the front-end, John, the verification process is in the process of looking tremendously different, and that's the initiative that we’re watching to see how that works and we’ll know more by the middle of the year on what direction we should go in Mexico.

Okay great. And my last question quickly may be for Guy is, if you're charging off at 150 days, that’s five months, and you're referencing that you think the charge-off will be flat by the March quarter. So you have visibility into all the delinquency buckets going into that. Is there a thought process about giving us one or two datapoints in the future on delinquency trends?

Yes. John, as Mitch said, we've been able to see really since probably the middle of November our year-over-year past due metrics come into line versus where they were a year-ago. Whereas, if you'd to look at those back for the entire year of 2015 you certainly saw gaps in those two lines; our 2014 past due metrics were running higher than 2013. So by having our past due metrics in line sort of since early to mid November that gives us a lot of confidence that when those come out at the end of the funnel by February, March, end of the first quarter that we’ll be back in line year-over-year from where we were in the first quarter of 2014, which was still an okay number. The numbers went up in Q2, Q3 and Q4. Those were the numbers that if we can extend the trends we're seeing now we'll start to see year-over-year improvement as opposed to just lesser deterioration, which would be progress. But in terms of specific numbers, I guess the ones I can give you are since November our year-over-year past due metrics are in-line with where they were a year-ago.

And that's primarily a 30-day plus metric that we look at in that business. Because it's a monthly model, John, we look at 30 plus as a leading indicator.

And then, any thought about giving that on an ongoing basis or I’m not sure you want to do that or what?

If we feel it would be helpful I think to telling the story should it change from where we think or expect things to happen, John, we could provide the additional color. But given where we think it's going right now, I think the color we’ve given you today in the past due metrics hopefully is helpful to getting you comfortable and we can get those numbers back in line by the end of the quarter.

Next question is from John Rowan with Sidoti.

Do you know what the comp in the core stores would have been ex-smartphones?

Well, I mentioned, we put the cannibalization in a range of 25% to 50%. So if you think about flat and smartphones be in 7%, then you are somewhere from 3.50% to negative 3.50% to negative 4.50% in that range. And if you think about where were are -- if you look at the trend we were running, we were running we were running, if you go back to second quarter I think it was minus 4.7% and improving as we can see the second quarter it was better than the first. So I think its somewhere between 3.5% and 4.5% or if you want to widen that range it would be between negative 3%, negative 5%.

Okay. The inventory you mentioned was up on a year-over-year basis. Can you give us an idea of why that is? I just want to make sure that it's not more goods coming into the core business from Acceptance Now?

Good question. As I mentioned, we calculate it it's going to be a lot higher until we comp over the smartphone rollout, having all those smartphones and idle a lot of different models on the display shelf and so forth, but it was 26.8 without smartphones in the core lower than last quarter. There is a lot of things we're going to move around in that number this year with the sourcing distribution initiative and so forth, but we'll continue to give you metrics so that you can compare year-over-year and so you can get comfortable that it's not more merchandise coming back from Acceptance Now and I can tell you it's not more merchandise come back from Acceptance Now; it is a little lower than it was last quarter and that $60 million or $70 million in the idle inventory is all the smartphones.

Okay. And just last question, I think it was probably Guy gave some color on the quarterly distribution of earnings, can you just repeat that? I want to make sure I had it right.

Yes, John. We're expecting that in the first and third quarters our EPS will be down more than 10% year-over-year. So in our second and fourth quarters we expect it to be up more than 20 % year-over-year.

The next question is from Matt McCall with BB&T Capital Markets.

So the G&A line jumped out and when you gave some color, I think you said incentives and some initiatives, investments. Can you talk about those because if I do the math right it shows that G&A number up about 17% to midpoint from what you just reported for '14 yet sales going up modestly? What's the inventive assumption? I think you said full incentive, if I wrote it down correctly, and is any of that spending "temporary"?

Yes, so Matt, as you would know whenever we start a planning season we typically plan our incentives at target, and hopefully we have an even better year than we think and our G&A number goes up from there because we pay more incentive compensation, which I think you guys would want too, and obviously our G&A expense would go down if we didn’t have a strong year as we thought. That was the case of this year. The year didn’t turn out as well as we would have thought. So as you can imagine our incentive compensation paid out less than target. And so there is a difference year-over-year on our shot term and out long term plans when you plan a target versus the achievement that occurred this year. The other part of G&A that’s gone up is, we're now as I think Mitch outlined operationalizing lot of the initiatives that previously we might have spent in the professional fees line or in the consulting line, all of these initiatives are hitting to store now. Our point of sales system, as Robert mentioned, in one store and going to roll-out this year, our labor model and sort of the second stage of pilot expecting that to roll-out to all the stores this year; our supply chain model rolling-out to stores in the second half of the year and really a lot of work going on as we do that. So in order to get those initiatives stood up there is a lot of work going on by people not just at our stores but here at the field support center to get that underway. There likely is an opportunity to back off some of those startup costs in those initiatives once they get in place operationalize but this year is a combination of both the incentive comp and some of the costs to get things to that.

Can you talk about the buckets there, what parts incentive comp, what's the assumption there, what parts initiatives, and then if there is a temporary component what would the estimate be for the total?

Yes, I don’t have it right in front of me but my guess is, its about half and half, half related to the increase and incentive comp and half related to the start-up for the initiative.

Okay. And the entire half it’s the start to the initiatives, is that -- how much of its ongoing, how much of it is kind of one time?

It's hard for me to say; a component of that would be just the ramp-up time that we're undergoing right now but I couldn’t put my finger on exactly what the numbers is.

Okay, all right. So moving on to the commentary on margins in '17, you talked about 400 basis points. Can you talk about what's your gross margin outlook is and then the SG&A leverage that you're assuming? And then there are -- continuing on that last question, are there temporary items that we need to keep in mind or incremental improvement in Mexico, kind of what gets you the 400 basis points of improvement?

It's mostly the three items I listed out, Matt. So Acceptance, growth and leverage on Acceptance Now sales which would come in the labor line on Acceptance Now, would also come in terms of leveraging the G&A as a result of growth and sales in that business, which now as you can see with 1150 unmanned locations coming on while fairly small revenue impact in 2015, clearly we believe that’s a good revenue generator 2015 and beyond. And then we've given you a feel of the overtime opportunity and the labor model being $20 million to $25 million and getting to run rate on that at some point later this year with an additional opportunity by having a flexible labor model in order to adjust our staffing to account for peak by season by day week or by day part. So that’s a big component as well. And then supply chain which may not have a dramatic impact in 2015, I mean we think it will in the cash side but not necessarily on the P&L side, but late in 2015 and of course in 2016 we expect to see a lot of cost improvement on the total cost to revenue line related to our sourcing and distribution initiative. So those would be the three big pieces of where we believe we'll deliver on the 400 basis points margin improvement.

Okay, all right. And so one more, so if you net out the converted manned stores to unmanned and you net out the closure, it looks like the total numbers of manned location is going to be flat in '15 versus '14, if I did that math right. Is this -- are we kind of hitting a saturation point from a manned perspective and you're going to see obviously will see more growth from unmanned, but are we going to continue to see additional stores on the manned side, is this year just an adjustment period?

Matt, I don’t think we've reached anyway near saturation on manned side. Remember, when we are opening 150 stores so there is still plenty of opportunity there. Once we have the technology for unmanned it just makes sense to us to convert lower volume stores that are teetering around whether they're profitable or just because there’s no volume in them. And by having a manned solution in there obviously we're not, well we're not making much by the 100 stores, if anything at all. So it’s an opportunity to move them over to the unmanned to make them profitable right away. So I think it's just a matter of using the opportunity to take out the bottom 10% of the stores and move them over to the unmanned which will increase profitability, but the 150 range every year on manned locations going forward that opportunity is still there.

Okay, thanks. Remind me of the profitability difference manned versus unmanned and you referenced that?

Well there is a difference in volume. The manned will do more volume than the unmanned. And from a profitability standpoint I don’t have that model in front of me on the unmanned. We will, once it’s up and running and especially after we have a few open, we'll put the model on the website just like we have manned but without even one open yet. We've got an internal model, we'll post that once we're -- once we get a few up and running and then we're comfortable with it, but it will be we like the profit numbers, the return on investment is fantastic and we like the profit numbers but it's done at a lower volume, lower cost.

The next question is from Carla Casella with JPMorgan.

Hi, please clarify where you stand in terms of the total number of stores today? I think I missed that. And then planned open closures for the core business, if you can give us the cadence for 2015?

Yes, let me answer your last question first, Carla. So, we haven't planned significant store closures for the core. I think as you may be familiar, our average leased length in the core is five years so. In theory, we have about 20% of our locations coming off lease every year or at least up being for renewal every year. And so that does give us a lot of opportunities to look hard at whether it makes sense to keep a particular store open or not. And we're looking opportunities to do that. And in terms of planning, really all we have in terms of change of capacity is just the lapping impact of the 150 stores that we closed in the second quarter last year. So our capacity is down in the core for the first quarter and part of the second quarter until we'll add that change. In terms of the overall business, most of the store growth is coming in Acceptance Now. As Mitch, mentioned we had above 50 on which 47 opening in Acceptance Now in the fourth quarter and then of course Mitch and I both provided the detail of the opening we think we'll have next year in that business.

Okay. So the total core stores ended the same as third quarter, 2,841?

It was down a little bit, we did a sale of some stores late in the quarter, but overall we're at 2,824 so a little bit down in the core from where we were at the start of the quarter. Acceptance Now locations are up a little over 1,400 now 1,406 and Mexico stayed pretty flat at about 175.

We have probably time for one more question, and last question is from Karru Martinson with Deutsche Bank.

Good morning, just wanted to get a little bit of clarification on the $100 million free cash flow target here. I was kind of surprise to hear you talk about an uptick in working capital for 2015. Can you walk me through this kind of the confidence and will that kind of flow through similar to the EPS on first quarter or third quarter being down and then kind of get regaining that in the kind of the second and fourth quarter?

Yes, Karru, say for the impact of the standing up of the working capital which will come in sort of in the first six month say of the year, it’s probably a reasonable assumption to assume that the free cash flow works its way similar to the EPS trends through the quarter or through the quarters as the year goes on. I think when you look at overall free cash flow, as you may recall, last year we had the negative impact of the differed tax liability reversal. Of course we don’t have that this year, so that takes a negative free cash flow to that drag on free cash flow that resulted on a negative last year won't be there this year. And then, of course, we believe we'll continue to have strong earnings growth in Acceptance Now. Stability in the core as Mitch and Robert had talked about and last dilution in Mexico are all factors that contributed to the free cash flow going out this year.

Okay. And that $100 million target, that's before the dividends correct?

Yes.

Yes.

Okay. And then just lastly, you mentioned leverage has peaked in and will it decline through the course of 2015. Is your view that that will be declining through kind of EBITDA growth or are you using that cash flow especially in the second half to pay down debt?

The combination of factors, Karru, I mean we want to work both sides of the fraction right. So we can do that by paying down a little bit of debt as a result of the free cash flow and also supporting that with strong earnings growth. We believe we can move that down more materially we do both.

Thank you very much. I appreciate it.

I believe that was the last question. So I just want to thank everyone for their time and attention today. Again, some very positive things going on in the business. Certainly disappointed with the results for Q4. I think that strength in our result with the management team and we look forward to providing you further updates at the end of the first quarter. Thank you very much.

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