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Toro Company (NYSE:TTC)

Q4 2012 Earnings Call

December 05, 2012 11:00 AM ET

Executives

Kurt Svendsen - Managing Director of Corporate Communications and IR

Mike Hoffman - Chairman & CEO

Renee Peterson - CFO

Analysts

Sam Darkatsh - Raymond James

Robert Kosowsky - Sidoti

Jim Barrett - CL King & Associates

Operator

Good day, ladies and gentlemen, and welcome to The Toro Company Fourth Quarter Earnings Conference Call. My name is Regina and I will be your coordinator for today.

At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of today’s conference. (Operator instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today’s conference, Mr. Kurt Svendsen, Managing Director of Corporate Communications and Investor Relations for The Toro Company. Please proceed, Mr. Svendsen.

Kurt Svendsen

Thank you and good morning. Joining me this morning for our fourth quarter earnings call are Mike Hoffman, Chairman and Chief Executive Officer; Renee Peterson, Chief Financial Officer; Tom Larson, Vice President and Treasurer; and Blake Grams, Vice President and Controller.

We begin with our customary forward-looking statement policy. During this call we will make certain forward-looking statements which are intended to assist you in understanding the company’s results. You are all aware of the inherent difficulties, risks and uncertainties in making predictive statements. The safe Harbor portion of the company’s earnings release, as well as SEC filings detail some of the important risk factors that may cause actual results to differ from those in our predictions.

Our earnings release was issued this morning by Business Wire, a copy can be found in the investor information section of our corporate website, thetorocompany.com.

With that I will now turn the call over to Mike.

Mike Hoffman

Thank you Kurt and good morning to all our listeners. We welcome the improved weather conditions during the fourth quarter that eased the grip of summer’s extreme drought and helped drive stronger retail sales across most domestic markets. As we said during our last call, addressing higher than desired levels of field inventory was a prime consideration for the quarter and we’re pleased to report that field inventories once again in good shape as we now move into fiscal 2013. While we experienced favorable retail sales for the quarter, overall shipments were down due to the reduced demands for our snow products following last year’s mild winter. To put this in perspective, the drop in snow shipments caused us 2 to 3 points of growth for the year and accounted for most of the decline in our fourth quarter revenues.

The good news is that with the exception of snow, fiscal 2012 was a solid year. We once again delivered both record revenues and earnings per share. We achieved a 4% increase in net sales for the year and 16% growth in earnings per share to $2.14 which includes the $0.07 for investments associated with the acquisitions that we have mentioned in previous calls. Renee will discuss our financial and operating results in more detail later in the call.

Turning to the results of our individual businesses, first, golf sales ended the year strong with solid retail in September and October as weather conditions improved in our ’13 pricing on tier four compliant products was announced. Golf course owners enjoyed good cash flow this year driven by increased play in revenues and chose to use some of their gains to take advantage of our latest product introductions as well as favorably priced pre-tier 4 product.

Our tracking reports indicate we are maintaining our market leadership position as we are still outpacing our primary competitors by winning more of the available equipment deals. Our new (inaudible) [3:09] are also helping propel sales, superintendents, club managers and owners have recognized that our new green (inaudible) [3:16] riding units deliver a clearly superior quality of cut.

The irrigation side of our golf business, we saw growth in our domestic markets for the quarter. Renovation projects got off to an early start this past spring and then settled into a steady flow through the course of the year. Our ability to help courses affordably upgrade their existing systems with our latest innovations has played a significant role in promoting growth. We anticipate these opportunities will continue due to the high number of ageing systems. Internationally sales of golf irrigation products were down for the year. The slowdown in new course construction and economic issues in Europe continue to dampen sales. Like golf, our landscape contractor businesses also enjoy strong fourth quarter retail activity across much of the country. The southern and eastern markets continued their positive late summer sales pattern while improved moisture levels have strong fault programs helped boost sales in the Midwest. Demand was especially strong among larger acreage owners who buy professional grade products. Our new turf management products including our 30 inch Stand On Aerators which are used extensively in the late summer and early fall also contributed to the good results.

Professional grounds product sales performed well for the quarter under strength of their productivity. As we have mentioned in previous calls, tighter budgets have prompted municipalities to increase productivity by equipping their small staffs with our high performance large arteries (ph).

In another key growth area, our rental and construction businesses bolstered by incremental sales from acquisitions mirrored the general trend for the quarter by rebounding following the sluggish summer. Integration efforts related to our stone equipment and Astec underground acquisitions are proceeding smoothly and are on schedule.

Moving to the home front. Sales in our residential business were down for both the fourth quarter and the year but as I mentioned earlier, the lack of demand for snow products is the primary culprit. Our residential lawn products retail improved for the quarter as more normal moisture levels returns to the Midwest. The residential, commercial and do-it-yourself irrigation businesses had a challenging year due to the economic housing and weather issues across the country. While we saw packets of growth in areas like California and much of the Midwest, the gains were offset by sluggish results on the east coast.

We are however pleased to report that our latest water saving precision irrigation products continue to earn industry claim. Our extra smart precision soil sensor we launched earlier this year, received Handy Magazine’s 2012 Innovation Award, an Editor’s Choice Award from Popular Mechanics and most recently an Irrigation Association New Product Award at the 2012 Irrigation Show. These prestigious awards highlight the water and money saving benefits these innovations offer.

Next, our recent entry into the professional lighting market has proven to be very promising. Our lighting business enjoyed good growth to the leveraging of our distribution channel, the success of our new LED drop in lamp strategy and the general growth trend in the industry. Similarly our micro irrigation business contributed to strong performance. Course around the world are investing in micro irrigation technology as they strive to increase yields and efficiencies. Looking forward, our new factory in Romania will provide additional capacity; enable us to take advantage of market growth opportunities.

I will now turn the call over to Renee to detail our financial and operating results. Renee?

Renee Peterson

Thank you Mike and good morning everyone. Sales for fiscal 2012 grew to $1,958.7 million compared to $1,884 million for fiscal 2011. We achieved net earnings for the year of 129.5 million or $2.14 per share. This compares to fiscal 2011 earnings of $117.7 million or $1.85 per share. Net sales for the quarter were $339.3 million compared to $368 million for the same period a year ago. We delivered net earnings of $251,000 and broke even on a per share basis compared to earnings 0.08 in the fourth quarter of fiscal 2011.

For the year we repurchased approximately 2.6 million shares of company stock at a cost of about $93 million. This includes roughly $600,000 shares in the fourth quarter at about $25 million. At year end, we had approximately 1.5 million shares remaining on our authorization. Our professional segment sales were up 7.3% to $1,330 million for the year. This includes 5.6% growth for the quarter, $229 million.

Professional segment earnings were $232.1 million for the year up 13.2% compared to fiscal 2011. The professional segment net earnings for the quarter totaled $20.8 million, a 21.2% increase compared to last year. Our residential segment sales for the year declined 2.6% to $607.4 million. The fourth quarter sales saw sales fall 29% from a year ago to $102 million which is attributable to reduced shipments of snowthrowers. For the year, residential segment net earnings were $57.9 million up 6.4% from last year when a pre-tax charge of nearly $5 million was taken to account for a walk power mower rework issue which reduced earnings. Residential net earnings for the quarter totaled $6.7 million down 43.4% from last year, again due to reduced demand for snow shipments.

Now on to our key operating results. Gross margin for the year was up 60 basis points to 34.4% as a result of both a price increase taken to offset material costs and the impact of our productivity initiative gaining traction. For the fourth quarter, gross margin improved 100 basis points to 33.3%. product mix impacted both the quarter and the total year margin results. For the fourth quarter a higher professional segment versus residential sales ratio helped improve margins. For the year, although margins were up, they were negatively impacted by product mix within the segments. We anticipate gross margin for fiscal year 2013 to improve by about 40 basis points. SG&A expense as a percent of sales decreased by 10 basis points for the full year. Even with the incremental SG&A investments for the Stone and Astec acquisitions we were able to improve by leveraging fixed expenses over a higher sales volume. SG&A increased by 230 basis points for the quarter due to significantly lower shipment levels. For fiscal 2013, we expect SG&A to be flat to slightly higher as a percent of sales due to increased engineering investments.

Operating earnings as a percent of sales improved 70 basis points to 10.5% for the year including a fourth quarter decline of 130 basis points to 1.2%. we anticipate that our destination, 2014 focus on productivity as the means of achieving continual profit improvement will positively affect our earnings this next year. Interest expense finish even for the year, interest expense for the quarter was down 5.9% from the same period a year ago to $4.1 million. Our effective tax rate for the year was 34% compared to 32.7% last year due to the expiration of the domestic research tax credit. We expect our effective tax rates for fiscal 2013 to be about 33.5%.

turning to the balance sheet, accounts receivable at the end of the year total $147 million, a slight drop compared to fiscal 2011. Net inventories were up 13% to $251 million. As we shared in our last call, the inventory growth was driven by anticipated customer demand related to the Tier 4 transition.

Finally, trade receivables increased 5.7% to $124.8 million. As you know, we continue to remain focused on inventory, accounts receivable and trade payables management. At the end of the year the company’s 12 month average networking capital as a percent of sales was slightly above last year’s level coming in at 15.2%. we ended the year with operating cash of $185.8 million fueling an increase in free cash flow to a more normal level of about $140 million. While we expect inventory levels to be lower next year, our capital expenditures are projected to be about $60 million slightly higher on additional investments to enhance our new product development capabilities and increase capacity to support further micro irrigation growth. We expect next year’s depreciation and amortization to be about $50 million. Free cash flow next year is expected to be similar to this year's level.

I'll now turn the call back to Mike for his concluding comments.

Mike Hoffman

Thank you, Renee. This shows we got the record straight, our trade payables increased 5.7% so let that be reflected. Thank you. Now to talk little bit, at '12 results were certainly tempered by economic and weather forces beyond our control. And although we fell short of reaching the levels we had at times anticipated during the year, we are pleased with our overall performance. Along with our record revenues and earnings per share results, fiscal 2012 featured additional highlights including three acquisitions, increased dividends and continued stock repurchases. We look-forward to another strong showing in fiscal 2013. While always cognizant there are no guarantees of favorable economic and weather conditions, we see many encouraging signs of business opportunities for the year ahead.

The National Golf Foundation reported earlier this month that 2012 experienced the largest single year increase in golf rounds played since 2000, a national gain of more 30 million rounds. As a result, golf course revenues improved. The National Gold Foundation's customer research shows that the intent to purchase golf equipment by courses has risen steadily over the past 12 months, breaking out of the slump that started in late 2008. As the NGF finding state this bodes well for our industry. Tier 4 regulations will drive some early purchases of pre-Tier 4 products. We will have both pre-Tier 4 and Tier 4 compliant products available to meet our customer needs.

On the golf irrigation side, increased rounds played and the financial health of courses should promote irrigation system upgrades and renovations in 2013. Additionally, while the drought and Hurricane Sandy affected the entire industry, recovery from both should generate additional renovation and replacement projects. Our landscape contractor businesses are also optimistic about fiscal 2013 based on improving business environment for contractors and continued new product sales momentum. New products were introduced over the last two years along with those unveiled at the recent GIA show continued to be enthusiastically received by our contractor customers.

Furthermore, contractors are reporting that in spite of the uncertain business climate they encountered the last 18 months, they are cautiously optimistic about 2013. Many of their customers would cut back on their contracts to bare bones levels in response to the economic downturn have begun to add back turf management and renovation services that are more profitable for our contractors.

They are proven to be a resilient customer base, constantly adapting to offset lost business by diversifying the services they offer. We are well-positioned with an even broader line of equipment to help them succeed.

Our rental business will also continue to benefit from the recovery in the landscape contractor field. Contractors are purchasing and renting our products at levels exceeding pre-recession activity. The rental market is expected to continue to grow in 2013. Prospects for our residential business in 2013 are also encouraging although we do not count on their accuracy and we have seen little evidence to-date, long-range weather forecasting models predict normal snowfall levels across most key markets this winter. As normal snowfall returns, consumer demand will respond in fuel retail activity.

Field inventories of spring residential products are in good shape. As a result, we expect to see solid pre-season booking orders from our channel partners. We are also cautiously optimistic about the growth opportunities for residential irrigation. Positive movement in the healthy market along with the effects of last year's drought have the potential to help spur sales of our award-winning precision irrigation products. Our lighting business also stands to benefit from this housing improvement.

Finally, in our micro-irrigation field, the row crop and permanent crop markets are expected to continue along their current path of double-digit growth. Toro intends to increase our participation in this growing market to investments around the world. A vital component of our long-term growth plans for all businesses is our foundational drive to innovate. Our commitment to product research and development has remained a constant even during the most challenging times.

Let's take a quick look at a few of the latest additions to our product portfolio. We are poised to capitalize on any favorable swings in snowfall with our industry leading single stage lineup and some exciting new snow products. We just launched a line of compact two-stage snowthrowers featuring three all-new models with retail price points below $1,000. This is a prime sales segment of the snow business where we have underperformed in the past. These new models provide an opening for extending our leadership position in snow.

We also unveiled an all-new electric snowthrower at a very attractive price point. We believe these new products round out our line making it the strongest furthest reaching offering since we originally entered the business over 60 years ago in the early 50s. We are also infused by a significant national retail placement of a number of our new lithium-ion battery powered handheld products next spring including both hedge and string trimmers. Our rental and construction products team is anxious to begin shipment of the new STX-38 stump grinder and our new products from the Stone acquisition will be formally launched under the Toro brand during the rental show this February.

Turning to golf, we are particularly excited that our new light-weight (inaudible) in the business will be hitting the market in 2013. With engine ratings under 25 horsepower this new model provides an attractive alternative to Tier 4 product. We really introduced a number of new contractor products including our latest series of Stand On mowers, a new Rotary broom and exciting new commercial mowers. Building on the success of our residential TimeMaster 30-inch Walk-Behind we launched this past spring we are introducing two commercial versions of this mower for our Toro and Exmark landscape contractors. These new models offer a highly maneuverable wide area machines at very attractive price points that we believe represent a real competitive advantage.

In summary, we remain steadfast in our focus on innovation, quality, cost, productivity, gross margin expansion and SG&A improvement to help deliver operating earnings improvement to 12% or above in accordance with the goals of our destination 2014 initiative. The company expects revenue growth of above 4% to 5% for fiscal 2013 and net earnings of about $2.35 to $2.40 per share.

For the first quarter, the company expects to report net earnings between $0.40 and $0.45 per share, positively impacted by the anticipated accelerated purchases of diesel products in response to the Tier 4 price change. Thanks to the dedication of our employees and channel partners, we look forward to continued growth and success for the coming year. Research shows that in spite of shift in demographics and retail models, customers still expect high levels of service and support. Our employees and channel partners take pride in our shared legacy of striving to exceed customer expectations. These factors bode well for opportunities to succeed.

This concludes our formal remarks. We'll now take questions at this time. Just back to you.

Question-and-Answer Session

Operator

(Operator Instructions). The first question comes from the line of Sam Darkatsh from Raymond James. Please proceed.

Sam Darkatsh - Raymond James

First off, could you help quantify your expectations for the first quarter impact of the Tier 4 pre-buy? What the impact might be of that on either a sales or an EPS basis?

Mike Hoffman

Well, I guess I'd start by saying its somewhat quantified in our guidance, right and so this is as much a bit of a pull ahead as a change for the year. And it's a factor certainly, but those products represent less than 10% of the company's portfolio. So, there will be some increased shipment there, which is why you see our EPS is up somewhat in the first quarter, but again that's reflected overall in the year's number.

Sam Darkatsh - Raymond James

So, my second question would be, looking at the incremental margins next year in '13 look like compared to where Toro normally comes in, now that surprised me a little bit to the extent where I'm figuring you are getting price next year and I'm also figuring that your input costs are fairly benign. Now I know you talked about higher R&D costs. Does the higher R&D cost account for the entirety of the differential between normal incremental margins and what you're looking to hit next year? It seems light.

Renee Peterson

Sam, let's maybe look at the pieces, hopefully that will help to answer your question. If we look at next year from a gross margin standpoint, we do expect to see improvement in our gross margin rate about 40 basis points, and it's really driven by some of the same factors that we saw this year. Price will be a factor. This year, we recognized about 2% realized price. We do expect some increase in commodities. Year-over-year we'll work very hard on our material cost reduction efforts as well. We do see some traction around our productivity efforts and seeing that pass through, but as we look into fiscal 2013, commodities are volatile. I mean that's the area that we have some uncertainty related to and we'll see as the year progresses, what happens from a commodity standpoint. When we look at SG&A as a rate to sales, we expect that to be pretty much flat to up slightly year-over-year and that's where you're seeing the impact of that increased investment in engineering.

Sam Darkatsh - Raymond James

So by math, it looks like your engineering costs might be up, what $10 - $15 million or so is my guess, assuming I'm in the ballpark what are you looking at a really big 2014 and 2015 new product lineup, that seems really outsized from a normal range.

Mike Hoffman

Yes. I think you wouldn't necessarily attribute all of it to engineering. We certainly had a long standing strategy of keeping our engineering investment at a solid level and that will continue and it will be up somewhat in fiscal '13. This is early in the fiscal year. There is lots of uncertainty out there. We’re guiding to this at this point, things going on at the macro markets could influence these things to Renee's point on commodities if the economy heats up a bit, but if it goes the other way, then obviously we have got some headwinds. So this is probably as precise as we can be at this point. We are driving towards the destination 2014 goal of 12%. We closed this year out at 10.5. We know that's a point that can happen and all of a sudden done. So it means ultimately we will have to drive incremental margins.

Operator

The next question comes from the line of Robert Kosowsky from Sidoti. Please proceed.

Robert Kosowsky - Sidoti

Now I was wondering if maybe in the quarter you can help bridge the margin expansion that you saw. Maybe put into buckets between product mix, under absorption of fixed costs that you might have seen in the residential market and some core productivity improvements?

Renee Peterson

Yes, really the drivers are the same from a total year perspective Rob with the exception of product mix. As we have stated earlier when we look at, although the pro residential mix was favorable overall for the year, within the year, it was really offset with unfavorable product mix within the segments when we looked just at the quarter that improvement that we saw the 100 basis points, a bigger factor is the professional residential mix than it is from a total year standpoint. That's the biggest difference. We continue to see overall as I said earlier, price realization offset with slightly higher commodities and the impact of our productivity initiatives being the drivers.

Robert Kosowsky - Sidoti

Okay but as far as order of magnitude within the quarter, it was product mix is the major driver for margin expansion and than the other initiatives after that?

Renee Peterson

Product mix would be a driver that's different versus the total year.

Robert Kosowsky - Sidoti

Okay then also I'm just trying to square your revenue growth forecast because it only looks like you're looking for maybe $80 - $100 million of revenue growth and we just had a pretty substantial drawdown in snowblower sales that might reverse a little bit into next year and I'm wondering why the conservative revenue outlook given some of the other positive things that you mentioned like?

Mike Hoffman

Well, as we start the year up, if you look back at last year, this is a good example, we started last year not in the materially different position than we were at about size and then things heated up and we went from 5 to 6 to 7 and then in the next quarter, we went to 7 to 8 then because of the obviously with the summer conditions with that ended up back at 4 to 5. There is a fair amount of uncertainty out there. You guys all are reading about it whether that's Europe, whether that's issues going on in the US economic environment. We're certainly hopeful snow will be better. We haven't seen any snow yet. We are certainly counting on some of it even in the 4 to 5 guidance. So it's that time of the year that we are just trying to get a better look at what or how our markets are going to react and so far things are trending okay, but as always we'll know more tomorrow.

Operator

The next question comes from the line of Jim Barrett from CL King & Associates. Please proceed.

Jim Barrett - CL King & Associates

Mike one of your competitors indicated that North American market would grow at a mid-single digit rate in '13. Is that broadly your view as well?

Mike Hoffman

Yes I mean that’s largely reflected in the guidance. We're on the 70% US if you will and so we're growing 4 to 5%. We certainly don't see Europe as a growth market this next year. That's the next largest part of the portfolio and then you move off to Australia which is sound and Asia which we had some pick up in Japan this last year, but China continues to be a bit soft. So, it certainly in the domestic context that's about where we are.

Jim Barrett - CL King & Associates

Internationally, can you separate the performance this past year between Europe and the rest of the world in terms of growth or lack thereof?

Mike Hoffman

Yes, and that's reflected in the numbers we talked about. Europe was under the most pressure and so that we saw a decline there, that's the largest part of the international portfolio. Australia was solid year-over-year, similar results. Asia, small part of the portfolio was less than 5%, but Japan’s recovery from tsunami helped, but China continues to remain a bit soft on new golf developments. We still believe that's going to be okay in the long run we are getting signals in that regard but that's just moved a little slower than expected.

Again, we talk about significant part of our growth outside the US will come from golf development, will come from micro irrigation. Those markets will continue to grow. Golf slowed down a little bit understandably but long-term there has to be more courses built. As we said in the past there is 16,000 courses here in the US and there is 16,000 for the rest of the world. There will be many more for the rest of the world overtime. So we certainly do count on that and as I mentioned micro irrigation will continue to grow. But back to the starting point, it's mostly about Europe and as we look to Europe we don't see that. We are not looking forward necessarily a step change either way as we look to F'13.

Jim Barrett - CL King & Associates

Okay that’s help and certainly domestically end markets improve and recover, are you seeing your acquisition pipeline grow? Interest of sellers is that improving or staying the same?

Mike Hoffman

Yes. I don't know this, it probably hasn't changed materially. We continue to work it as we said in previous calls. So many of these deals are private deals and so even though if things are improving, whether the current owners of those businesses, moms or dads or whoever is running the businesses are ready to sell, it's not necessarily tied to an improving economy or even going the other way it's usually something else happens in the business that causes that slight change. So we continue to work it and last year we ended up as we mentioned doing three acquisitions that will add to the portfolio nicely to this as we look to the future and we will continue to work that.

Jim Barrett - CL King & Associates

Renee, could you explain the trends in other expenses that were up 11% for the year? What should be the longer-term trend in that line item?

Blake Grams

Hey Jim this is Blake Grams, so if you look at the other segment, it is up this year. It's kind of same trend we've seen for the whole year. There are multiple of reasons why the other segment is higher this year, health insurance costs are higher this year, FX a little bit more of a hit this year, inflation all sort of things was the magnitude of other multiple different things that we've seen throughout the year that translated into the fourth quarter.

Operator

(Operator Instructions). And the next question comes from Josh (inaudible) from Longbow Research. Please proceed.

Unidentified Analyst

A little bit more on T-4 if possible you noted that you're going to see some pull forward here in the first quarter. Did you see any in the fourth quarter as well?

Mike Hoffman

Not significantly. The fourth quarter is just very much about the softness in snow and so that's the dominant factor for that, maybe a little bit at the margin, but the fact is most that Tier 4 stuff will take place now as we move into the end of the calendar year and early into the 2013.

Unidentified Analyst

And what kind of price increases should we expect on those new T-4 compliant equipment?

Mike Hoffman

That varies by what they did with the products. There are significant price changes. They could be in the mid to high single digits. They could be 15 plus percent on certain products and some of those it will be a matter of working through the remaining pre-Tier 4 inventory and then moving into the new products. And just to be clear, while the Tier 4 regulation is driving against the standard, the regulatory standard we have to meet. We're also looking at when we do that can we add some value, some customer benefits that will make the products do things better more productively for our customers and we are finding ways to do that. So, it's not totally attributable to just the Tier 4 impact.

Unidentified Analyst

Okay and then you had mentioned you had built up some inventory ahead of the transition here, how many months applied of pre-Tier 4 do you think that you have right now?

Mike Hoffman

Well, I don't know that we have that number. If you look, what we carried over, kind of over and above all in for the total company was 27 million, which part of that is attributable to Tier 4.

Renee Peterson

And Josh we also had some impact year-over-year in inventory related to acquisitions.

Mike Hoffman

Right, that will be second part of investing. We are talking about the incremental there. To what degree pre-Tier 4 inventory, to what degree new products is going to continue to play out in the market.

Unidentified Analyst

Okay and then just one last one from me. The revenue guidance for this coming year 4 to 5%, what does that imply for the pro and residential segments?

Mike Hoffman

Yes we don't break that out. We expect both of them to grow in fiscal 2013. We're counting on some snow recovery, which certainly will aid the residential side of the business and growth on the professional side, growth in golf, growth in the landscape contractor, so we're expecting growth in both categories.

Operator

Ladies and gentlemen I will now turn the call over to Mr. Mike Hoffman for closing remarks.

Mike Hoffman

Well thank you, Jess and thank you all for your questions and interest in Toro. We wish everyone a pleasant and safe holiday season and we will look forward to talking with you again in February to discuss our first quarter results. Have a great day. Thank you.

Operator

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.

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