Winnebago Industries, Inc. (WGO) Q3 2015 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Winnebago Q3 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call will be recorded. I would now like to introduce your host for today's conference, Mr. Scott Folkers, Vice President, General Counsel and Secretary. Please go ahead.

Thank you. Good morning and welcome to the Winnebago Industries' conference call to review the company's results for the third quarter of fiscal 2015 which ended on May 30, 2015. Conducting the call today are Randy Potts, Chairman of the Board, Chief Executive Officer and President; and Sarah Nielson, Vice President and Chief Financial Officer. The news release with our third quarter earnings results was posted on our Web site earlier this morning. This call is being broadcast live on our Web site at investor.wgo.net and a replay of the call will be available on our Web site at approximately 1 PM Central Time today. If you have any questions about accessing any of this information, please call our Investor Relations department at 641-585-6803 following the call today. This presentation may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements are inherently uncertain. A number of factors could cause actual results to differ materially from these statements. These factors are identified in our filings with the Securities and Exchange Commission over the last 12 months, copies of which are available from the SEC or from the company upon request. I'll turn the call now over to Randy Potts. Randy?

Thank you, Scott. In our fiscal 2015 third quarter as a result of contributions from both our motorized and towable operations, we saw growth in our top and bottom lines. Our earnings improved despite various factors which impacted the year-over-year comparison including our continued investment in an ERP system and Strategic Sourcing project which we talked about last quarter. Importantly, both of these strategic initiatives are progressing as planned and on schedule. Although they have an impact on our near term earnings through the added expenses, we anticipate these projects will provide long-term benefits. Also, in our motorized business, we continued to experience factory inefficiencies during the quarter. This increased our manufacturing cost and impacted our margins. As we previously discussed, these inefficiencies are partly attributable to our strong growth rate over the past few years which has resulted in addition of many new employees. Of note, we did see some improvement in these inefficiencies comparing the third quarter to the second quarter. There were other items that impacted year-over-year results and Sarah will discuss those shortly. In addition to investing in our business through the two strategic initiatives, also made two very important property investments during the quarter. On the towable side, in April we closed on the purchase of the previously leased facilities in Middlebury, Indiana, which covered just about 277,000 square feet on a 31-acre campus. This purchase furthers our commitment to expanding our market share within the towables segment and underscores its importance to our long-term future. Along with great products, including some new introductions, we have good leadership in place and are excited about the opportunities that lie ahead. The towables group made a substantial contribution to our results this quarter as it not only achieved its sixth straight quarter of profitability, but also grew revenues, gross margin, and operating income. On the motorized side, in early May, we closed on the purchase of a 33,000 square foot building in Waverly, Iowa, which expands the company's sub-assembly operations. This new facility is within 100 miles of Forest City, and will enable cost efficient transportation of component parts to our main campus. The new Waverly facility will manufacture wire loom assemblies for the company's motor homes and by relocating the work out of Forest City, will enhance the Forest City capacity. We're in the midst of making modifications to the building in order to prepare it for use and anticipate hiring to begin in July, ramping up to approximately 70 employees by the end of calendar year 2015. As a result, we expect to begin benefiting from this capacity expansion in the first quarter of fiscal 2016 with further benefits as the fiscal year progresses. Collectively, the investments we've made and those we'll consider going forward confirm the favorable outlook that we have for our business. We're optimistic for other reasons as well. To start, orders booked within our motor home business grew approximately 11% on a trailing 12 month basis. Wholesale demand for our products remains strong and we expect continued strength going forward. Additionally, consumer demand in both motorized and towables continues to be favorable. Motorhome retail registrations increased year-over-year by 12% on a trailing 12-month basis, driven by healthy demand across several product categories. This growth was achieved despite the timing issues related to the differing Apollo rental delivery schedule in the third quarter of fiscal 2015 versus the prior year. As a result, 160 fewer units are being accounted for in this year's third quarter retail stats. Those units will be included in our fiscal 2015 fourth quarter retail registrations. Increased motorized registration follows the past several quarters of very strong retail demand, which drove industry-leading growth. Consumer demand for our towable product was also strong with retail registrations increasing 8% on a trailing 12-month basis. In closing, we're pleased with our third quarter results which were very positive during a period of continued investment. We remain encouraged by the demand that we see from both dealers and consumers. Our enthusiasm for the future is also supported by recently issued update from the recreational vehicle industry association, which forecasts continued industry growth through calendar 2016. Given this favorable outlook, coupled with our industry-leading RVs, we believe we're well-positioned to generate improving financial results in the future. Now, Sarah will review some of our other key business highlights in addition to the financials.

Thanks, Randy. To start, I'd like to provide some color on how we grew consolidated net revenues by 7.6% in the fiscal 2015 third quarter. In large part, the increase was due to an increase in motorized unit shipments and the structure of a significant rental transaction. Approximately, $11 million of the revenue increase is attributable to a greater level of units recognized as revenue from the Apollo rental program. The 2015 program does not have a repurchase obligation whereas the fiscal 2014 program recognized a majority of the Apollo units as an operating lease due to the repurchase option. Our towables group also contributed to the overall increase in sales with unit and ASP growth resulting in a 15.9% increase in revenues. Specifically, looking at our third quarter ASPs year-over-year, here are the key changes. Class A gas ASP was $96,306, down just over 1%. Class A diesel ASP was $198,940, down nearly 4%. Class C ASP was $70,015, just up over 6%, a result of increased sales of our View and Navion product, which are built on the Mercedes-Benz chassis and include higher-end features. The increased ASP was also achieved notwithstanding shipments of a greater level of rental units. Class B ASP was $77,241, up nearly 10% as a result of increased sales of our higher priced Era models. Finally, total motorized ASPs were $91,007, just over 3% lower primarily the result of mix. Moving over to our towable product. Travel trailer ASP was $21,395, up nearly 6%. And our fifth wheel ASP was $49,807, an increase of nearly 21%. Thus, towable ASP in aggregate was $26,909, up over 12%. In the third quarter, our motorhome dealer inventory increased 19% compared to last year and stood at 4,501 units as of the end of the quarter. However, on a sequential basis, motorized dealer inventory declined 6% when compared to the end of the second quarter, which reflects the strong spring retail selling season that we have seen. On a year-over-year basis, dealer inventory of our Class B and C motorhomes has increased significantly due to the strong retail demand of these products. Our retail market share for Class B and C products is up nearly 56% and 17% respectively on a trailing 12-month basis. Given the solid consumer demand for these products, we anticipate that they will continue to generate increased retail demand. Also, as we have mentioned before, higher year-over-year dealer inventory levels are attributable to our strategy to ensure that all of our product offerings are well represented across our dealer network. Given our efforts on this initiative, over the past 12 months, we have expanded our physical dealer locations by 10%. As Randy mentioned earlier, our gross margins have improved on a sequential quarter basis as we have begun to resolve some of the manufacturing related inefficiencies. While we did face approximately 45 basis points of pressure to gross margins from these inefficiencies, they were partially offset by improved margins up from the towable business. Compared to last year, operating expenses increased in fiscal 2015 third quarter, primarily as a result of $800,000 of incremental costs associated with ERP and our Strategic Sourcing project. As Randy noted, these two strategic initiatives are progressing well. Starting with the ERP project, we continue to estimate that total costs will be $12 million to $16 million over a three-year time frame and estimate that approximately 40% of the total immediately expensed over the life of the project. Thus far, in fiscal 2015, we have invested $2.7 million into ERP, of which $1.1 million was incremental operating expense related to external implementation assistance. We anticipate our ERP investment to significantly accelerate in the fourth quarter of 2015 to over $4 million, as we approach key milestone go-live dates this fall. Now that we have six months under our belt on this project, one of the key benefits that we see with our new technology platform is that we will have better visibility on a more frequent basis to manage our operations more effectively going forward. Notably, in light of a limited labor pool in Northern Iowa, the capability to better utilize the available labor resources will be very beneficial to us. As it relates to our Strategic Sourcing project, we are also making great progress. So far this year, we have invested $1.3 million, of which $375,000 was incurred during the third quarter. We expect to incur a similar amount in the fourth quarter. As we have previously noted, when fully implemented, we anticipate this investment will provide gross margin expansion of 30 to 50 basis points. The overall effective income tax rate for the third quarter of fiscal 2015 was 170 basis points lower compared to last year. The decrease is primarily a result of the change in terms of the 2015 Apollo transaction, which increased the level of applicable tax credits available to us this year. For the year, we still expect a tax rate in the 31% to 32% range. Our operating cash flow was strong during the third quarter as we generated nearly $53 million as a result of both profitability and reductions in inventory and receivables. We are pleased with this performance and with the help of our balance sheet which has no debt and $49.2 million in cash. This strong cash generation facilitated $9 million of capital expenditures during the third quarter, largely attributable to the purchase of facilities that Randy highlighted. For the full year of fiscal 2015, we continue to estimate $15 million to $20 million in capital expenditures in aggregate. While we are still in the planning phases for fiscal 2016, we do anticipate capital expenditures to be in excess of our fiscal 2015 level. In closing, we are pleased with the quarter, which included many positives. As we finish the fiscal year, we look to the future with enthusiasm as we believe ample opportunity exists to grow both revenues and profitability. With that, please open the line for questions.

Thank you. [Operator Instructions] Our first question comes from Gerrick Johnson with BMO Capital Markets. Your line is open.

Hey, good morning. Thanks for the update on Waverly. I was wondering if there are other initiatives that are ongoing right now to help you with capacity and improve your ability to grow sales over time. Thanks.

Yes, Gerrick. There's other things we're talking about. We need to take more steps to continue to participate in the market growth, and the growth of our share within the market. So we're not prepared to discuss the details of those, but absolutely we are considering additional options.

Okay. Let me throw one more in there. And please correct me if the premise here is wrong, but appears there's more used units out there at auction putting some pressure on prices. Is this something to be concerned about in the new product world?

Yes. I don't think so, at least not with our product price points, but there's no real fact to support it either way. That's really just my opinion. I do read -- we don't -- because there's not a lot of stats that support the used market, we don't discuss it a lot internally. I do see some comments on that in some of the trade journals about prices being up, prices being down and supply and demand, that type of thing. But I can't say that I've been exposed to anything that would really suggest it’s the used markets putting any pressure on our sales of new product.

Okay. Thank you, Randy.

You're welcome.

Thank you. Our next question comes from Craig Kennison with R.W. Baird. Your line is open.

Good morning. Thanks for taking my questions as well. I wanted to ask about the rental side of the business. Can you break out how many rental units were shipped in Q3 and then how many are planned for Q4?

Well, Craig, the Apollo transaction is a significant one, and we highlighted at the end of Q2 on the change of the structure of that transaction and have indicated that approximately one-third of that is to be delivered in our fourth quarter. So that is a bit different than what we experienced a year ago and all that had been delivered inside of fiscal third quarter. And so in the June month, we definitely do have some volume of rental. There are other rental arrangements that sometimes cross over quarters that are in the normal course of our business, but the Apollo one is a fair one to highlight because there are still definitely a portion of those that won't show up until you see our fiscal fourth quarter release.

Thanks. So we're trying to calculate essentially a core dealer based retail demand, if you will. So excluding your Apollo order, what did retail look like in the quarter? Do you have any sense for that core trend?

Well, I guess more we look at the challenge -- in the quarter, I will say we can use our retail statistics on internal information through May and our retail registrations were up almost 6% [ph]. But that's despite the fact of a little under 200 units, if you take a third of that Apollo transaction, that are not retail registered that would have been in the numbers a year ago. And so that creates a little bit of a timing composition there. But obviously with the 500 plus unit order in both years regardless of the quarters in which they flow through, that's the most significant component to, if you wanted to break that out on a year-over-year basis. Obviously, the stat survey information is going to be a little bit more delayed and not all of that is noted as quickly as how we look at it because when we wholesale that rental product, we immediately retail register it because it's in service. Does that help you out?

It does. I think honestly we're trying to get to a hard number here, and it feels like there are too many approximations for us to get there, but our guess would be that on a core basis, if you exclude your rental business in both periods, your retail looked pretty good, something like plus 11%. Do you think we're in the neighborhood?

Yes. I think that's a very reasonable way to look at that, Craig.

Okay. And then maybe I'll follow, Randy, with you. You mentioned the ERP system and maybe Sarah that was you on visibility. Could you just add a little color to what kind of visibility you might get in terms of order trends, et cetera?

Well, when we talk about having better visibility, we're looking at the way our processes will change in the future, more from an internal planning standpoint, and we do have great visibility today as it relates to what our orders are in wholesale, retail, and those big stats. More of it's going to be a function of how we plan to use our labor resources, which is such a key focus of us at this point and also to have the ability to model multiple scenarios, so we can better understand supply chain and the ramifications of a scheduled change that could result with just our change in demand or production schedules. So that's some of the things that are really coming out because so much of what's gone on in the last six months is to look at where we can take up steps and just be more effective and better utilize the tools of technology and not as much manual effort.

Craig, I would add that overall we've had really three initiatives in this whole IT modernization process, and it's going very well and the organization is really excited with what we're seeing. It's going to allow us to look at things in a very different way going forward and we're already seeing the benefits of some of that. I mean Sarah mentioned some of the forward-looking ERP kinds of things, but some of the things we've already done have to do with analytics, business intelligence and the way it's allowing us to look at our distribution channel in ways we never have before and with speeds we never have before, it's really impressive. So we're excited about where this is going to take us.

Great. I'll hop back in the queue. Thank you.

You're welcome.

Thanks.

Thank you. Our next question comes from Mike Swartz with SunTrust. Your line is open.

Hey, good morning everyone.

Good morning.

Good morning.

Hey, just wanted to follow up on the – just the ERP cost and procurement cost for the year. I guess I had understood that the costs would be a little higher in the quarter, so did you see a shift-out of some of those expenses into the fourth quarter and then I think to your point on the call, I think you said the expense is related to ERP will be up $4 million in the fourth quarter. How much of that is capitalized versus expensed?

Good question as it relates to a lot of pieces there. So far when you look at what's happened, we had outflows in Q1 between capitalized and expense in aggregate of a little under $1.2 million and it escalated a bit in Q3, investment of almost $1.5 million if you include the internal time that we're also tracking. So the timing of all of this hasn't necessarily happened in a delayed fashion, but the level of capital and expense is going to be – we're estimating a 60/40 split, 60% capitalized, 40% expensed, but on the beginning side of the project it's a little bit more heavily weighted to immediately expensed items. And as we move further into the product – into the project we'll have an opportunity to capitalize a little bit more. But Q4 is a big quarter just with a lot of the milestone dates that we're planning to happen this fall. And so the total spend is anticipated to be in that $4 million range. If you just do a 60/40 split, you could take 40% of that number and that could flow through as an expense. It could be a little bit different. It all depends on how much training notably is done because training we do have to immediately expense. But that looks like that could be our high point in any quarter spend. We still have pretty heavy levels in Q1 and Q2 of fiscal 2016, but not quite at that rate. And as I mentioned, we're still looking at this project in totality to be in the range that we started off with in that $12 million to $16 million time frame. But a lot is going on right now, so Q4 is probably the biggest level we'll see.

Okay. That's extremely helpful. Thank you, Sarah. And then just another question, if I can. Just looking at the implied ASPs in the backlog for motorhomes and I see it's down 7%. Last quarter it was up 6%. I mean how do we look at this just versus I guess the product in that backlog, new product launches, versus – I know you guys had called this out last quarter, but some of the softness in higher end motorhomes. So I guess how to think about all of that in that number.

Well, if you look at the backlog that we reported at the end of this quarter, you'll see on the motorized side that that ASP is a bit under $90,000, and that's a function of the kinds of products that have been very popular. We still do have some rental that will be delivered inside of Q4. So those are the lower price points in that C range, still pretty hefty demand for us on the B side. So the backlog is representative of that. Now, we did see inside of Q3 that we shipped in excess of what our backlog is. And so a lot of fourth quarter is, as you see it in backlog, but there's an opportunity for product to be ordered and delivered inside of the quarter. Does that help you?

Yes, yes. I guess just the one thing that wasn't touched upon was just that higher end motorhome. Are you seeing that kind of stabilize now?

Yes. I think we talked about high-end diesel product is what you're referring to and I think it is stabilizing. It is on the soft side still, the market as a whole. Furthermore, we've lost a little bit of ground in that piece of the market that we're working on regaining. So going forward, I don't think that we'll be -- those high-end price points will be as significant of a portion of our business as they were most recently. I just don't see them. The market for very high-end product early post recession was unusually high. The balance of diesel A's versus gas A's was kind of – well, it was very unusual, and it's more normal now from what we would historically see and it would seem that it would stay in that range.

Okay. Great. Thanks a lot for the color.

You're welcome.

Thank you. Our next question comes from David Whiston with Morningstar. Your line is open.

Thanks. Good morning. Two-part product question first. Is there anything in your current offerings that consumers are asking for that you think you could do a little bit better with the offering or perhaps you don't have that they are asking. And somewhat related to that is, we've got a large mix shift over to Class C right now over A, is that altering the current product pipeline planning discussions you're having for the next few years.

Yes, sure. I'm going to go back to the high line diesel discussion that we just finished. The diesel market is -- the high-end diesel market is particularly strong in lengths that are beyond our current product offering. 45-foot is the longest length for a diesel RV and 42-foot is our longest current product. So that is something that – that's an opportunity for us and when I mentioned that, we're cognizant of what we need to do to get a stronger foothold there. I think it's fair to look towards where we don't have those offerings today. As far as mix, as you mention, our C and B mix is up and really in the market as a general, I believe the C and B retails are growing faster than A bodies in general. So we're really chasing that market growth and we're participating in it very strongly. We look at it differently than we would have 10 years ago because where historically C bodies were a low margin product that mix is different now and that's thanks to some different chassis offerings. Some of those chassis offerings are really a premium product for us now and we're very happy to have a stronger C mix. Some of those C body products are on par or above some of the gas A products. So it's a strong mix and it's really something we're doing intentionally.

That's very helpful. And then moving onto Apollo. Is there – if I heard you right, there's no repo option this year unlike last year, so is that -- I just need a reminder there. Is that every year the two of you decide if there will be an option or is that just up to Apollo each year?

It would be a yearly discussion. We're only two years into this relationship. Their decision to purchase the whole fleet this year would be a good thing for both of us going forward if everything works out as planned. But markets change and their position on that could change too. But we hope to continue the relationship either way.

Okay. And finally, can you disclose capacity utilization for motorized this quarter?

Well, in the past we would have said, based on plant constraints, that we were probably somewhere between 70% and 80% utilization. But based on the physical constraints of the plant, but we're qualifying that of late with our labor constraints. And really based on the number of people we've been able to hire and retain, we're at 100% capacity. The more people that we're successful in recruiting, we do have physical capacity to build more product.

Okay. Thanks very much.

You're welcome.

Thank you. Our next question comes from Kathryn Thompson with Thomson Research. Your line is open.

Hey, good morning, guys. It's Chris calling in for Kathryn today. Just one question I wanted to follow up on Class A backlog decline. Can you talk about how much of this decline is driven by better efficiencies in the manufacturing process versus market share?

Well, we have definitely increased our production rates over the past year in light of having the demand across all product categories and interested in having a more timely delivery process to our dealers. So that is a theme across all products. And that has allowed the backlogs to maintain – be maintained at a lower level than when you would have looked a year plus ago. And we also had some points in time in the recent history where we were constrained on certain chassis platforms of which Class A gas was one of those. Pretty significant for a couple of quarters and that was all resolved and not part of where we are today. So it's a good question because production rates have been a key reason for the change in our backlog and we look at the relationship of what we shipped inside this quarter to what we had in our backlog at the end of Q2 and our backlog was approximately 88% or so of what we shipped this quarter. So it's evidence that we're kind of returning maybe to where we had seen a lot of the trends prior to the recession and there's business that happens inside the quarter that never touched backlog and it's important as we've been discussing our bookings because that's indicative of the demand and on a rolling 12-month basis that's up approximately 11%. Very similar to what we see in aggregate on the retail side which is good.

That's helpful, Sarah. Thanks for taking my question.

Oh, certainly.

Thank you. Our next question comes from Morris Ajzenman with Griffin Securities. Your line is open.

Good morning.

Good morning.

Good morning, Morris.

Hi. Back to the ERP $12million to $16 million total cost over the next three years. You're finishing your first year here of investment. As you model this out internally, can you give us some sort of feeling of, is it sometime next year when it would be, which quarter approximately it would cross over, would not have a negative impact on margins?

Well, we started the project in Q2 of 2015. So as it relates specifically to the ERP project, we had no operating expense for that in Q1 of 2015. So I would say Q2 of 2016 is when you're going to have a year-over-year comparative. Now, we still could be spending more or less from an expense standpoint at any one point in time in those quarters, but that's when we'll lap one year into it.

Okay. And gross margins, fourth quarter or fiscal fourth quarter is normally the strongest one, the strongest for your company. Any sort of thought last year was 11.7%, how that plays out this year?

We don't provide forward-looking guidance. So – but, I can maybe go back to some of our key comments that we had for today. We see positive improvement in some of the challenges that have been a drag on margins. That's kind of been a part of our dialog throughout the year. It started really in the first quarter and into second where we had some inefficiencies on the manufacturing side. A lot of them labor related and workers' compensation is a piece of that too. And there's been improvement, but it still definitely was a pressure for us. And so that's a concentrated effort internally. We have put into place some initiatives, notably in the workers' compensation side from a safety program that's going to be started here. It's definitely a program that has to be in place for a period of time to really see a benefit and true change and our experience. But that's under way. We're also – we made a change in our third party administrator on that side to also look at trying to improve the expense associated with workers' compensation. To the extent that we are able to see the benefit of some of the Waverly labor shift, that's going to be positive. We also as we talked about last quarter with the investments that we have made – we are utilizing them such as investment on e-coat and some of the other equipment investments we've made, that's going to provide positive impacts from a margin standpoint. And that's exactly why we're in the midst of a Strategic Sourcing project, to see margin expansion and that's a plan for that to flow through in fiscal 2016. So I guess a few overall comments on margin for you.

Okay. And just one last thought on that. When ERP is completed, Strategic Sourcing's in place, what benefit to gross margins? What increment to gross margins on a run rate once those are done and in place?

Well, we quantified the objective on Strategic Sourcing as 30 to 50 basis points from gross margin. From an ERP standpoint that is not one that we have quantified anything specifically at this juncture. We're very excited about what this is going to do to our business and it's going to be a multiyear investment and take more time for us to be able to share some of that quantitatively externally. One of the things that we also discussed on the last call as it relates to our ERP investment, there's two elements to this project. One is, it is going to substantially improve upon the tools that we have in place today, but we also looked at this to be a mitigation on significant increase of costs that would have taken place in the future because to maintain the aging system we had, that was based on a cobal programming language, it was going to be very expensive to maintain in the future. We were looking at how expensive that would be or would have been without making a change. So there's some mitigation of increased costs that we were looking to avoid as well with our ERP projects.

Okay. Thank you.

Thank you. Our next question comes from Gerrick Johnson with BMO Capital Markets. Your line is open.

Hey, good morning, again. You mentioned briefly about e-coat and some other initiatives like new cutting machines. Wondering if you could give us an update on those. I know the e-coat was supposed to be an August 1 changeover, wondering if that's still on track and how those things are progressing.

The e-coat system has gone very well. That was by far the biggest machinery and equipment investment we've made. I believe it goes 100% live sometime in July. Generally there was just one other small piece of equipment that had to be moved before all product could be routed through the new system and then it's done. So that's gone very well. It's going to serve this company well for the next 20, 25 years. I believe some of the other equipment you might be referring to is some laser processing, steel cutting equipment. That's been installed for quite a while and serving us pretty well. Some of these machines have gotten very complicated and it takes some time to bring them up to 100% efficiency. But, we have really good staff of engineering folks and we think these things do through really well going into them because we're only doing them because we want the investment to have the planned payback. And there will be more going forward. This business has a lot of technology in it and along with opportunities to expand capacity through facilities, there will be more equipment upgrades going forward too as you would expect from a company like ours.

Okay. Thanks. And can you tell us about the plane impairment. Are you guys flying coach these days?

Yes, good question. The plane impairment has to do with a decision to travel via different modes. In looking at the way we've utilized the corporate aircraft in the last few years, it just really doesn't pencil out to own our own aircraft anymore. And it's purely an economic decision. There are lots of transportation modes available now and we plan to utilize them all at one time or another. And that will allow us to be – to travel more cost effectively than by having our own Air Force. And the impairment is a result of having that on the books for a higher value than it was essentially appraised at when we put it on the market.

All right. Great. Thanks a lot.

You're welcome.

Thank you. I would now like to turn the call back to Mr. Randy Potts for any closing remarks.

Okay. Well, thank you everybody for joining us today. Please rejoin us on October 15th for our fourth quarter and year-end call. Please have a safe and enjoyable 4th of July holiday. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone have a great day.