00:04 Greetings and welcome to the Xponential Fitness, Inc. Third Quarter twenty twenty one Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn this conference over to your host, Ms. Kimberly Esterkin, Investor Relations. Thank you, ma’am. You may begin your presentation.

00:33 Thank you, operator. Good afternoon, and thank you all for joining our conference call to discuss Xponential Fitness’ third quarter twenty twenty one financial results. I am joined by Anthony Geisler, Chief Executive Officer; and John Meloun, Chief Financial Officer. Sarah Luna, President, will also be available during the question-and-answer portion of this call. A recording of this call will be posted on the Investors section of our website at investor.xponential.com. 01:02 We remind you that during this conference call, we will make certain forward-looking statements, including discussions of our business outlook and financial projections. These forward-looking statements are based on management's current expectations and involve risks and uncertainties that could cause our actual results to differ materially from such expectations. 01:22 For a more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC. We assume no obligation to update this information provided in today's call. 01:35 Please note that the third quarter twenty twenty one financial results discussed today do not included contributions from acquisitions and our partnerships made subsequent, including the company’s newest friend BFT, which was acquired in October twenty twenty one and its partnership with LA Fitness and City Sports Club in which studio build out will not begin until Q1 twenty twenty two. 02:00 In addition, we will be discussing certain non-GAAP financial measures in this conference call. We use non-GAAP measures because we believe they provide useful information about our operating performance that should be considered by investors in conjunction with the GAAP measures that we provide. 02:17 A reconciliation of these non-GAAP measures to comparable GAAP measures is included in the earnings release that was issued earlier today prior to this call. Please also note that all numbers reported in today’s prepared remarks refer to global figures unless otherwise noted. 02:35 I will now turn the call over to Anthony Geisler, Chief Executive Officer of Xponential Fitness.

02:43 Thanks, Kimberly and good afternoon everyone. We appreciate you joining our third quarter earnings conference call. Xponential Fitness is a curator of ten leading boutique fitness brands across multiple fitness modalities. Our mission is to make boutique fitness accessible to everyone and we are accomplishing this through our global network of franchise studios. 03:04 For the third quarter, Xponential posted strong results with net revenues of forty point nine million, increasing sixty percent year over year. Adjusted EBITDA totaled six point eight million or seventeen percent of third quarter revenue as compared to one point five million or six percent of revenue in the prior year period. 03:26 Brick-and-mortar gyms are back and our boutique fitness customers, dedicated fitness enthusiasts who enjoy the community aspect of a smaller sized gym are excited to return to in person fitness. In the third quarter, our business saw actively paying members and visitation increased by approximately sixty percent and seventy percent respectively year over year. 03:50 In some ways, you can say that this past quarter was the grand reopening of the global fitness industry, and we're excited to continue building on this momentum. Our strong financial performance combined with our operational excellence has paved the way for continued momentum in the fourth quarter, including our acquisition of our tenth brand, BFT and a new strategic partnership with LA Fitness, both of which I will discuss in more detail shortly. 04:21 During the third quarter, we sold two forty eight franchised licenses bringing us back to pre-COVID franchised license sales levels. In addition, we opened sixty eight new studios and increased our North American system wide sales ninety three percent year over year for a total of one hundred and ninety two point four million, our fifth consecutive quarter of increased system…

14:48 Thanks, Anthony, and good afternoon, everyone. It's great to speak with you today. As Anthony mentioned, we had a strong third quarter with two forty eight licenses sold and sixty eight studios opened, compared to fifty licenses sold and eighty studios opened during the prior year period. 15:04 The significant improvement in licenses sold during the quarter provides visibility into new studio growth. We are seeing consumers excited to return to brick-and-mortar gyms, and as Anthony mentioned, actively paying members and visits are up approximately sixty percent and seventy percent respectively. 15:21 Third quarter North American system wide sales of one hundred and ninety two point four million were up ninety three percent from nine nine point six million in the third quarter of twenty twenty. 15:31 Importantly, this was our fifth consecutive quarter of sequential system-wide sales improvement and Xponential’s highest system-wide sales quarter ever. As Anthony highlighted, this continued momentum is a reaffirmation of the effectiveness of the Xponential Playbook. 15:48 Third quarter North American same store sales increased sixty five percent from the prior year period, reflecting improved membership as pandemic restrictions lessened. Our month of September run rate average unit volume for North America, which is calculated by annualizing the monthly sales for all studios that are six months and older was four hundred and twenty one thousand and equated to a nearly ninety percent recovery when compared to pre-COVID-nineteen levels at the end of January twenty twenty. 16:17 Our franchise business model provides us with highly predictable and reoccurring revenue streams. On a consolidated basis, revenue for the third quarter was forty point nine million, up sixty percent from twenty five point six million in the prior year period. 16:33 Breaking this figure down further into the five individual components, franchise revenue was twenty…

26:26 [Operator Instructions] Our first question comes from the line of Randy Konik with Jefferies. You may proceed with your question.

26:55 Hey guys, how are you? Thanks for taking my questions. Anthony, I want to just start off with you. And get your perspective now that your quarter has come out, you've showed us these very strong numbers. You've talked about AUVs getting towards pre-COVID levels. We've seen a couple of at home fitness businesses report less than stellar results in their quarters. So, I guess it would be very helpful for us and everyone on the call to get your perspective on how you think this all plays out, the push and pull of in person boutique fitness and gym fitness, compared to at home over the next, not just next quarter, but let's just think about over the next one two and three years? Just wanted to get your perspective of how you think this all kind of shakes out? Thanks.

27:48 Thanks, Randy. I've said it t before, and I’ve said it pre-COVID, right. The in-home kitchen wasn't going to kill the restaurant industry, and I think that is true. We’re communal animals. We'd love to work out with other people. We love to be around other people. And so that will always be the way that we are and you're seeing the world has returned to that. 28:12 With that said, at home fitness has been around a very long time. And so at home fitness is not anything new. I think what it does given our GO network and what we have digitally across ten brands, what it does do is give people the ability to take a yoga class at eight zero five A.M. on Saturday when they wake up, if they want to do that for thirty minutes or whatever it might be. 28:39 So, I think what we'll see going forward is this omni-channel approach, but Xponential had that pre-COVID, right? We acquired our video on demand and streaming production, facility in June of twenty nineteen. And so, we were already very prepared to launch into that digital business, pre-COVID. So that was our view pre-COVID. And of course, during COVID us being set up that way allowed us to shift our members from physical to digital and now back into the physical kind of omni-channel approach.

29:17 Super helpful. And then very interesting moves during the quarter, the agreement with LA Fitness, now, give us some perspective on, should we expect to see more on additional gym companies want to proceed with these types of offerings for their members? Could you expand this kind of strategy to other types of fitness gyms out there, both domestically and internationally? And then Meloun on the international front, just update us on where we stand with international development. Thanks a lot.

29:53 Yeah, there’s parts, I'll take the first one first, Randy. So, we have an exclusive with LA Fitness, so we will be opening our locations inside the LA Fitness and we specifically chose them because they are the largest business of that type. So, with that said, they are a corporate owned business, and so it makes a lot easier for us to put our franchise business inside of something that is corporate owned, as opposed to trying to put something that is franchised-owned inside of something franchised-owned. 30:30 And if you look at other brands it could be out there like twenty four hour fitness or lifetime or Equinox or anything like that, they don't have the amount of open doors and units that LA Fitness has. So, I'm sure others may try to duplicate this type approach potentially, but we'll continue on this path here domestically, and then we will see how we do internationally. And so, speaking to your international, we have a thousand plus international stores that are open or obligated to open in twelve countries, including the U.S. and Canada. 31:10 And so, BFT also that deal that we did expanded our international footprint with a one hundred and thirty open about fifteen times what it was prior to that acquisition. So, we are pushing on the international piece of the business as well.

31:32 If I could sneak in one last little question. I don't want hog the call, but when you gave us during the IPO process, you talked about I think six nine hundred door count or unit count kind of potentially in the United States. You've added some brands since it seems like the consumers coming back in a big way to in-person fitness if you own, and then when we have all this international development you just talked about. So, how do you think about the conservatism or realism of that number you shared with the start of the IPO? Thanks, guys.

32:09 Yes. I still think the TAM we shared the IPO is valid plus the acquisitions we've done, you know BFT after that TAM. And so, we will continue to go at it from a scientific approach. We don't look at it on units in a population basis or something like that. We use boxed in and scientifically approach what our TAM is, which it by nature makes it conservative. 32:39 And the way we do that is by looking at our current membership and how they act and behave and what metrics they are more than did they go to college and do they make money? So, we actually create very specific profiles for the brands and then once we have that very specific profile, we go back out to the U.S. Map and we say okay, where do all these profiles live within two mile radius that can hit our AUV targets? 33:06 And then from there, it gives us how many stores we could open in what areas with longitude and latitude pinpoints that would give us that member profile within that radius at that AUV. So, obviously, as you sell more and you expand that brand and you expand that modality, the TAM expands, and if you are willing to take a lower AUV, by let's say, twenty five thousand a year or fifty thousand a year, you could still have a very profitable store in a secondary market with a bit less AUV and increase TAM that way as the brands starts to head toward maturity and something like a Club Pilates for instance.

33:52 Very helpful and very thoughtful. Thank you so much.

33:56 Of course, Thank you.

33:58 Our next question comes from the line of Alex Perry with [Bank of Securities] [ph]. You may proceed with your question.

34:04 Hi thanks for taking my questions and congrats on a great quarter. Just first, could you talk a bit more about the rationale for the acquisition of Body Fit Training, and maybe give us a little more color on the domestic wide space opportunity you see for Body Fit Training in terms of door count? It seems like the functional training space is pretty competitive in the U.S. with another player with some pretty significant scale, maybe talk a little bit more about, sort of what differentiates Body Fit Training versus the other players that's out there and one more on that is maybe just remind us on terms of the near term P&L impact of the acquisition? Thank you.

34:46 Yeah, I'll handle the operation part and I’ll let John handle the P and L impact, but there are other players both in Asia Pacific and the U.S. in the functional training space. We had said on the last earnings call that this was a modality that we would be looking at in terms of M and A. 35:08 So, that's – we're continuing on with that. What we really loved about BFT is that in the face of those headwinds in Australia, they returned better AUVs than the market. They sold more stores and opened more stores than some of their competitors in the space. 35:29 So, we really like that. We like the workout itself, the modality itself and what they do inside of BFT. Really liked Cam and Rich and [indiscernible] the guys that were running it and so they'll continue to stay on as master franchisees of Asia Pacific, while we develop the domestic footprint. 35:51 We don't have a specific number on TAM and we don't really report specific TAM numbers, but we do believe it is in line with the TAM that we see on a brand basis in the other Xponential brands in the portfolio. We'll continue to use that same sort of scientific data driven analysis to get the TAM that I just talked about in the previous question, as we start to develop that. And John, do you want to speak to the financial piece of it?

36:27 Yes. So in regards to the financials, from a balance sheet perspective, we disclosed that we paid forty four million for the IP, and that was a mix of some cash off the balance sheet and some term loan that we had drawn and then from a P and L perspective, the margin impact is very similar to all our other master franchise agreements where we receive a percent of the revenue or the margin generated by the master franchisor from P and L perspective that revenue is recognized in the period, and it usually comes from things like your license sales, your royalties, and the equipment or merchandise sales and they have an immediate recognition in the period in which they're generated. 37:09 So, high margin, hundred percent flow through. And in Q4 as we disclosed on the release that BFT acquisition has already had an accretive benefit to our P and L since acquiring it in late October.

37:25 That's really helpful. And then just a follow-up. It seems like run rate AUVs and license and sold came in well ahead of expectations? Maybe just talk through the key drives there and when would you expect run rate AUVs visitations and actively pain members to sort of reach pre-Covid levels? Is that something you're targeting by like 1Q twenty twenty two or when should we expect those numbers to reach pre-COVID levels?

37:58 Yes. Great question and we disclosed on earlier calls that the recovery back to pre-COVID levels we expect to happen in the first half of twenty twenty two. We continue to make progress as you see through our Q3 results on granular way back up to those levels. So, we're remaining with our first half expectation that that's when we're going to get there. 38:18 If there's any factors outside of our control, we’ll be sure to update you guys, but at this point in time, we're sticking with the first half of next year, to get back to pre-COVID levels. And on a membership basis and visit basis, we've already wells surpassed pre-COVID levels and we've done that based off of studios recovering, but also the introduction of a lot more new open studios into our system.

38:41 Perfect. That's really helpful. Best of luck going forward.

38:45 Thank you so much.

38:48 Our next question comes from the line of Joe Altobello with Raymond James. You may proceed with your question.

38:53 Thanks. Hey, guys. Good afternoon congratulations.

38:57 Thank you.

38:57 So, looking at the guide for this year, you raised openings, you raised revenue, you raised EBITDA, you left your system wide sales range intact. Just curious what the thought process was there?

39:11 Yeah. So, when we initially set guidance, it was mid-August, right, so only about four months left in the year and from the perspective of the fact that we have pretty highly predictable reoccurring revenues and our ability to forecast those [accurately] [ph] is pretty high. We set that range with only four months left of the year. 39:28 So, there's not a lot of time risk associated with what potentially could happen around system wide sales. So, I thought we delivered both on a studio opening and a system wide sales are fairly accurate depiction of where we thought we would land. 39:43 Openings has been a little bit better than we had expected. So, we did move the guidance up there, but system-wide sales is falling within the range that we expected. And again, it's pretty predictable and you only out one quarter. 39:54 In regards to the revenue and adjusted EBITDA, we talked on the call that we wanted to be conservative, freshly minted public company, even in a downside scenario, we want to make sure that we were delivering on our guidance from a performance perspective. So, we took a more conservative approach on overall revenue and overall adjusted EBITDA, but for the system wide sales, only being four months out, we felt that we had a pretty good forecast. We are hitting it. We continue to perform to those levels. So, no reason to change the guidance at this point.

40:31 Understood. And maybe in terms of the studio openings for next year. I think the expectation was you could potentially achieve your long term cadence of around two hundred and fifty to three hundred and fifty lease studios, is that still the case and how should we layer in potential openings for BFT, for example, as well as the LA Fitness and City Sports above openings as well. Are those wholly incremental to those numbers?

40:56 Yes, I mean from the guidance we provided right now, the two thirty two fifty for this year, that would exclude any material benefit of the BFT or the LA Fitness announcement that we made. So, as we move into twenty twenty two, there'll be incremental openings associated with those two additional relationships that we formed.

41:21 Okay. Are you ready to quantify how many potential openings from the acquisition and the license agreement or the development agreement?

41:28 As far as BFT, we haven't put anything out there yet. In regards to the LA Fitness relationship, there is a minimum development schedule. We committed a minimum three fifty over five years that has a more back end weighted opening schedule, but that should give you some kind of indication related to that. As far as BFT, we're in the process of getting the financial disclosure document filed with the states where it's required and then from that point we'll begin the process of selling licenses. 41:56 And then as we discussed, there's about a six to twelve month timeline from once you sell the license to getting it open. So, if there is any impact related to BFT in the U.S. markets, that will come in the latter half of the year, but should be noted that BFT already has a portfolio of already sold licenses in the Asia Pacific region that they'll be continuing to open, so those will be accretive. 42:22 So, in twenty nineteen, we opened four hundred studios. We guided to about two fifty this year. I think it's fair to say that we’ll be well north of two fifty, but working our way closer into the three hundreds next year.

42:37 Okay, great. Thank you guys.

42:40 Thanks Joe.

42:41 Our next question comes from the line of Brian Harbour with Morgan Stanley. You may proceed with your question.

42:48 Yeah. Hi, guys. Hope you are doing well. Maybe just one more quickly on the guidance. So, it is the kind of increase in revenue and EBITDA guidance entirely due to BFT or are there and is that kind of representative of what they usually do in a given quarter or is there anything else that's changed within that that we should be thinking about?

43:10 Yes. The majority of the guidance that or the increase in the guidance was driven by the existing portfolio that we already had. BFT, yes will be incremental and accretive to our P and L in twenty twenty one, but the majority of the increase is driven by the nine core brands we had prior to BFT.

43:28 Okay. Got it. Maybe one bigger picture question. I think that it seems like the first quarter of twenty two will save up to be quite a strong season for sign-ups for a lot of in-person fitness concepts and all the indicators are kind of in the right direction. Is there anything you plan to do, kind of outside of the norm in terms of marketing or in terms of supporting franchisees to help them really kind of capitalize on that and make it a great quarter for them?

43:57 Hi, Brian, This is Sarah Luna. We have our annual convention coming up in just four weeks, and it's a great opportunity for us to bring our franchise partners together and talk about those best practices and share ideas and make sure that we have a solid plan in place for next year. 44:12 So, you're right and that there are the traditional methods that will help us launch the studios and get them in a great place for January, but in addition to that, it's just sticking to the tactics that we know are strong and bringing the franchise partners together in December to really celebrate all of the great achievements and get everyone fully aligned for having a stellar twenty twenty two. So, we've got that just in a couple of weeks and look forward to seeing all of our franchise partners at that time.

44:43 Thank you.

44:47 Our next question comes from the line of Jonathan Komp with Baird. You may proceed with your questions.

44:53 Yeah. Hi, thank you. Maybe just to follow-up again, a couple of questions on the guidance. I'm just curious first as you look at SG and A, how that's sort of coming in versus what you thought, if there's anything incremental that you're accelerating there? And when you step back and look at the guidance raise for twenty twenty one, is there anything we should think about that sort of non-recurring that's benefiting that we shouldn't flow through in our models looking-forward or how should we think about the profit raise?

45:27 Yeah. So in regards to the fourth quarter, there’s one event that Sarah just mentioned, the annual convention that has from an SG and A perspective, a higher expense in the fourth quarter. So, but the benefit of that as we also provide or have sponsorship revenue that comes in related to offset the expense. So, the investments in our annual convention is nominal, but there will – you will see SG and A increase to that, but you’ll also see a revenue increase that virtually offsets that expense in the fourth quarter. 45:58 So, something to be aware of there. As we mentioned on previous calls, we did have a portfolio of company-owned studios from the impacts of COVID. We discussed that we would be refranchising those out and we've made really good progress and continue to make good progress on delivering on that commitment by the end of the year. So, you'll SG and A ramped out associated with the company owned studios throughout the end of this year, but outside of that, those are, kind of, I would say, maybe the more one-time things you should just take into account. 46:29 As far as anything of flowing out of twenty twenty one into twenty twenty two, we believe our normal run rate business is very similar to our SG and A run rate, is it similar to twenty nineteen, excluding the impacts of stock based comp? So, we see, excluding stock based comp around that sixty to mid-sixty million dollar range around SG & A and that we'll continue to operate now once the corporate studios have been fully refranchised.

46:58 Okay, great. That’s very helpful. Maybe then one, Anthony or Sarah, bigger picture question about the industry, it sounds like the AUVs are recovering roughly as you expected, but maybe the bigger picture question, if others don't see AUVs fully recover well until mid-twenty two, what's your general sense on sort of the state of others that you're competing against? Do you think we'll see another wave of closures and financial pressure for others? Is there any risk of a more competitive pricing industry environment, just any broader thoughts on your ability to continue to operate against others in the industry?

47:42 No, I mean, don't I mean other than our core advantages we have like our digital network GO and the XPASS, which I think your guys are all aware with, but simply put you've sign up at one of our brands and get to access all of our brands. So, we think that is key differentiator in what we do. So, we wish our competitors all the best. 48:06 We don't want to see anybody do poorly. So, we hope that everyone is able to, you know to work hard and obtain customers in this industry, but we will continue to compete with the things that we have and continue to return to our pre-COVID numbers. And so, we have ten brands, multiple revenue streams, the XPASS, digitals, there’s a lot of differentiators that we have that allow us to compete against our closest competitors.

48:37 Great. And if I could just slide in at to end here, any comments on what you optimize in terms of the XPASS structure or pricing it features any comments there and that's it for me? Thanks.

48:52 Sure. I can take that one. As you know, we've been very conservative with the rollout with the XPASS taking about twenty five percent of our system and putting them on the XPASS each quarter. We're at fourteen hundred locations currently on and we'll get the remaining of our studios on the XPASS by the end of the year. 49:09 And really our first priority was to test the technology and watch consumer behavior then to test our marketing campaigns and pricing and the point system, we have made tweaks along the way, but we're in a very good place where we're starting to see that the XPASS is servicing a new customer base that we weren’t currently servicing before. 49:33 So, fifteen percent of account holders for XPASS are brand new to the Xponential ecosystem and about twenty three percent of those that are account holders that did interact with our studios prior to joining the XPASS where deemed as either cooled off or not interested in the franchise base. 49:52 So, we're seeing that this is becoming a new service and product that is exciting a new audience, and there'll be great benefit to the franchise partners in twenty twenty two.

50:05 Okay. Thanks again.

50:09 Our next question comes from the line of Peter Keith with Piper Sandler. You may proceed with your question.

50:17 Hi thanks. It's [indiscernible] on for Peter. Appreciate taking my questions. Just want to look at sales and member trends the past few months and the cadence of the ongoing rebound. When you described the progress you're seeing as a steady build back or has there been any inflection point in the past few months, being consolidation here and related to that, I was wondering if you're seeing any notable differences between brands or geographies as momentums continue to build.

50:50 We've seen a steady build back with members coming back into studio visits and membership sales. So, there hasn't been volatility. It really is just been kind of slow and steady. Some nice increases across the board. And yes, about regional improvements and increases. Obviously, as we saw California and New York open those sales have started to come back on that again, but there isn't really any sort of region across the country, which is performing much better or much faster than others, but basically, it's very consistent. 51:23 I think most importantly to call out there's no Delta issue, So we've seen really great increase in studio traffic and great increase in other revenue streams across each of the studios.

51:40 Okay. That's helpful. Just a quick follow-up, are all the studios back to one hundred percent capacity now or they still distancing measures, you're taking in any classes, or are they limiting the amount of people per class?

51:57 We don't have a one hundred percent of the studios back to one hundred percent of the capacity, however, the majority are back to full capacity. Of course, there's some regions and we don't track all the different states and local mandates, studio by studio. So, there is little bit of inventory that we still have access to and that gives us excitement about putting more members in through XPASS in some of our other partners, but we're very close to getting back to one hundred percent capacity and one hundred percent of the studios.

52:28 Okay, great. Thank you.

52:32 Our last question comes from the line of John Heinbockel with Guggenheim. May you proceed with your question.

52:39 So, Anthony let me start with how do you think about if there already any bottlenecks to the ability to grow in the U.S., right, because you've got more brands than ever, you've got more mud partners than ever, and I think right in the past, your peak studio openings were four hundred, what are the bottlenecks? And do you think the business in theory should be well equipped to do more than that? Is that just you want to be certain about execution, how do you think about that?

53:16 Yes. So, I think we don't really see, kind of massive bottlenecks, but in the business in general, franchisees need access to capital and access to leases. And so, access to leases during COVID and still post-COVID are better than they were pre-COVID. So, that's good. Lending has come back, you know Xponential at a zero default rate on its SBA loans, which allowed our franchisees to still continue to access capital. 53:52 So, we're still continuing to see the same challenges in the business we saw pre-COVID to getting stores open or getting access to capital. Franchise sales are as we reported really back to its twenty nineteen run rate, so franchise sales are back and then that will eventually flow through into signed leases, franchisees acquiring capital and getting open.

54:23 All right. Then maybe when you think about the LA Fitness partnership, what modalities or what brands do you think will occupy the vast majority of the three fifty or four hundred they're going to do? Will there be multiple modalities in a single LA Fitness? And I assume the pricing will be consistent with the external studios around those locations? Is that fair?

54:53 Yeah, that is fair. You hit the nail on the head, So, it'll be consistent with the pricing and around those geographies, those studios, we will be starting to roll out the Club Pilates brand and the stretch lab brand and then continuing with other modalities as we go forward, but we do have the ability to have multiple brands inside of the same LA Fitness location, ad so we'll make sure that we access that where relevant and then make sure that the brands are complementary to each other, and what LA Fitness is doing inside of their box as well.

55:37 Okay. Thank you.

55:40 Ladies and gentlemen, we have reached the end of today's question and answer session. I would like to turn this call back over to Mr. Anthony Geisler for closing remarks.

55:49 Thank you, operator, and thanks again for joining our call today and for your support of Xponential. I'd also like to thank the entire Xponential Fitness team and of course, our franchisees for their hard work and dedication to our business. While we’ll certainly speak on our fourth quarter call next year, over the next few weeks we’ll be participating virtually at the Morgan Stanley Global Consumer and Retail Conference, and the City Global Consumer Conference and in-person at the Roth Consumer Conference. So, we hope to speak with many of you during these events and hope you all make it a great day. Thank you.

56:21 This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.