Einstein Noah Restaurant Group's CEO Discusses Q4 2012 Results - Earnings Call Transcript

Feb.28.13 | About: Einstein Noah (BAGL)

Einstein Noah Restaurant Group, Inc. (NASDAQ:BAGL)

Q4 2012 Earnings Call

February 28, 2013 5:00 pm ET

Executives

Jeffrey J. O'Neill – President and Chief Executive Officer

Emanuel P. N. Hilario – Chief Financial Officer

Analysts

Nicole Miller Regan – Piper Jaffray

Alexander Slagle – Jefferies & Co.

Will Slabaugh – Stephens Incorporated

Michael Tamas – Oppenheimer & Co., Inc.

Operator

Good day and welcome to the Einstein Noah Restaurant Group Fourth Quarter 2012 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Manny Hilario, Chief Financial Officer. You may begin.

Emanuel P. N. Hilario

Thank you. Good afternoon everyone and thank you for your time today. Let’s begin by covering a few regulatory matters. During our formal remarks and in responses to your questions, certain items may be discussed which are not based on historical fact. Such items, including statements indicating our beliefs, trends, plans, expectations, assumptions, anticipation, guidance, projections, estimates, or the like should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are subject to risks which could cause our actual results to differ materially. For more details, please refer to our earnings release issued today and to the risk factors in our SEC filings.

Now, let me turn the call over to Jeff O’Neill. Jeff?

Jeffrey J. O’Neill

Thanks, Manny. We appreciate you joining us today. I’m going to briefly review our results and then discuss in greater detail our planned initiatives for 2013. On a full-year basis, all of our key metrics set new records, including revenue, adjusted EBITDA, and operating cash flow.

In addition, our free cash flow increased 50%, despite having one fewer operating week in 2012 versus 2011. From an operational standpoint, our focus on supply chain initiatives in the middle of the P&L resulted in the realization of a full $8.3 million in cost savings, up significantly from a year ago.

And we believe there is still upside at the store level and within our manufacturing business. We’ve, of course, also completed a review of strategic alternatives by recapitalizing the company and declaring a one-time special dividend to shareholders of $4 per share. This tangible action to return capital to our shareholders on top of our regular quarterly dividend demonstrates the Board’s long-term confidence in our business, and it’s part of our ongoing effort to allocate capital smartly to optimize returns to our shareholders. On the development front, we added 55 stores to our system in 2012, surpassing the 800 unit mark and ended the year with 816 restaurants across 39 states.

Please note that most of the lighting stores that have been slated to open in the fourth quarter will be or have already opened in the first quarter of this year. With respect to the fourth quarter itself, comp growth plus 1.4% was our highest result of the year, and our seventh consecutive quarter of positive same-store sales growth.

With our brand initiatives already in place, we feel that we are moving in the right direction and then our products and marketing efforts are resonating with customers. And to that point, in 2013, the building blocks for continued sales growth are in place and we’re focused on our marketing mantra of best at bagels, win at coffee, and compete at lunch. Our plan also includes building on the success of our catering business, which grew 23% in the fourth quarter itself on top of a strong comparison from the previous year and comprised approximately 8%of our total sales in 2012.

Our focus in 2013 will be to expand our sales force, build more customer awareness of our catering options through search engine marketing, expand on our lunch offerings, and develop our small city markets. With respect to marketing we have taken a balanced approach of grass roots and mass marketing. This entails a stronger value proposition, local brand activation, directional billboards and a TV media test. We have also rolled out a simplified menu board across the system, which prove to be a traffic boost in our test markets.

Now that we have reviewed our top line plans, let me take a moment to discuss what we’re doing with respect to our cost program. First, we’ve done an exceptional job in the last two years driving efficiencies into our business. This includes $11 million in combined savings since 2010. This year, we’re committed to another $2.5 million to $5 million in savings with our areas of focus including packaging, supply contracts, and distribution center rationalization.

We could not be proud of our team, their effort, and their impact. Manny will go through our 2013 development plans in greater detail. But I will say that the interest in franchising and licensing the Einstein brand is substantial and the quality of operators, many of whom have a strong history in QSR is encouraging.

We currently have a pipeline of over 100 franchise restaurant commitments. From a company standpoint, as was the case in 2012, we will continue to infill existing markets and explore outside opportunities such as relocations, where it makes sense.

And with that, I’d now like to turn the call back over to Manny.

Emanuel P. N. Hilario

Thanks, Jeff. I’ll briefly review our fourth quarter 2012 financial results before I provide an outlook for 2013. Please not that the fourth quarter of 2012 was a 13-week period, whereas the fourth quarter of 2011 was a 14-week period, so the quarter-over-quarter comparisons are naturally apples-to-apples. The impact of the 14th week in the fourth quarter of 2011 was approximately $7.3 million in revenues and $0.03 in earnings per diluted share.

In addition to the noise caused by the extra week in 2011 as you know, the review of strategic alternative by our board came to a head and culminated in the capitalization of the company. As one would expect, there was significant non-routine expense related to the strategic alternatives process, and to the extent possible we will isolate them. I’ll remind you that there are reconciliation attached to our earnings release, which explain our adjusted earning metrics.

Total revenues decreased $4.5 million, or 2.9% to $110.6 million from $115.1 million. However, excluding the extra week in fiscal 2011, total revenues increased 2.6% for the fourth quarter. System-wide comparable restaurant sales on the 13-week basis increased 1.4% for the fourth quarter and consistent of 3.9% increase in average check. The higher average check reflects product mix capability and modest pricing of 1%, coupled with continued growth in our catering and specialty beverage business.

Company-owned restaurants sales decreased $2.5 million, or 3.4% to $99.5 million, compared to the year ago period because of the additional week in 2011, while comparable restaurant sales increased 1.1%. Excluding the extra week in 2011, total revenues for our company-owned restaurants increased 2.4% on the 52-week basis.

Our company storage restaurant gross margin decreased to 100 basis points to 20.5% that was primarily the function of not being able to leverage, fixed cost over large revenue base as it was the case last year when we had an additional operating week.

The benefit of the extra week in the fourth quarter of 2011 helped restaurant gross margin by approximately 100 basis points. Cost of goods was 220 basis points lower at 27% of restaurant sales, as a result of the cost saving initiatives and operating efficiencies we spoke about throughout all of 2012.

Labor costs were 100 basis points higher at 29.2% of restaurant sales as we had incremental benefit costs, primarily vacation, compared to the year-ago period. Rent and other operating costs both increased 90 basis points versus the previous year due to the leveraging of fixed costs on one less operating week, as well as the net additional 21 stores, many of which will open in the fourth quarter itself.

Our investment and marketing initiatives increased to $2.4 million from $2 million as we had one additional [add vo] in the quarter. But as indicated previously, full year marketing was right in line with our expectations of approximately 2% of revenues. Franchise and license revenue grew 4.7% to $3.3 million from $3.1 million in the year ago period.

This was primarily driven by continued unit sales consistent with fourth quarter of 2011. Franchise and license comparable restaurant sales were also up 2.2% during the quarter. Manufacturing commissary revenues decreased 12.9% to $7.8 million from $9 million in 2011. This was the result of $1.4 million year-over-year swing in commissary revenues as a result of their closure in the first quarter and the extra week in the fourth quarter of 2011.

Revenues from our Whittier manufacturing facility actually grew 2.7% to $7.8 million as a result of additional export revenues. Manufacturing gross profit increased $28 million to $1.8 million from $1 million and as the percentage of revenue grew to 23.2% from 11.3% as we realized cost savings from the commissary closures. General and administrative expenses decreased to $9.4 million in the fourth quarter of 2012 from $9.5 million in the fourth quarter of 2011 and reflect a decrease in expense due to one less week of operation offset by higher variable compensation expense.

Pre-opening expenses were $0.7 million compared to $0.1 million in the prior year fourth quarter as this was related to the 11 company openings we had in the fourth quarter. This line item had an impact to EPS of approximately $0.03 per diluted share. Adjusted EBITDA was $15.4 million in the fourth quarter of 2012 compared to $16.8 million in the fourth quarter of 2011.

Net income in the fourth quarter of 2012 was $3.2 million, or $0.18 per diluted share. Adjusted net income was $5.9 million, or $0.34 adjusted diluted earnings per share excluding the impacts of $0.15 per diluted share for strategic alternatives expense and an employee benefit settlement expense.

Net income in the fourth quarter of 2011 was $6.1 million, or $0.36 per diluted share which was reduced about $0.03 per diluted share for restructuring expenses. The impact of the 14th week in the fourth quarter of 2011 increased earnings per diluted share by approximately $0.03.

For the year, net income was $12.7 million, or $0.74 per diluted share compared to net income of $13.2 million, or $0.78 per diluted share. On the 52-week basis, adjusted net income increased $3.2 million, or 25.2%, to $16.4 million, or $0.95 adjusted diluted earnings per share, compared to adjusted net income of $13.1 million, or $0.78 adjusted diluted earnings per share.

During the fourth quarter, we paid a one-time special dividend of $4 per share, as well as quarterly dividends of $0.125 per common share to fund. For the year, we paid a total of $76.6 million in dividends. As part of the completion of the strategic alternatives process, we recapitalized our balance sheet and thereby increased our term loan A from $75 million to $100 million and our revolver from $50 million to $75 million. We’ve also extended the maturity date to December 2017, or another two years. Total debt as of January 1 was $136.7 million and consisted of $100 million under the term loan A and $36.7 million under the revolver.

Our cash balance at year-end was $17.4 million and we increased our free cash flow for 2012 by almost 50% to $22.7 million from $15.4 million. In terms of our 2013 outlook, we provided the following; 60 to 80 system-wide openings, including 15 to 20 company-owned restaurants, 15 to 20 franchise restaurants, and 30 to 40 licensed restaurants.

Capital expenditures of $20 million to $22 million, cost of goods inflation of approximately 2% to 3%, which the company expects to be offset to efficiency initiatives. Pre-openings expenses of $65,000 to $75,000 per new company-owned restaurants, interest expense of $6.5 million to $7.0 million, and an annual effective tax rate not to exceed 39%. However, the company will continue to only pay a minimal cash taxes for the next several years.

And now I would like to turn the call back over to Jeff.

Jeffrey J. O’Neill

As we’ve discussed today, we have an exciting year plan at Einstein Noah. One never build our prior year accomplishments and solidify our unique position as the destination from menu items that are always fresh baked and fresh brewed. I’m particularly excited about our new products, our marketing plans, and our ability to execute. And I also think the pipeline of sites we have for 2013 is extremely strong.

So in closing, in addition to continued strategic progress this year, we’ll once again be focused on financial performance, our improved metrics across the Board. Specifically, we want to further capitalize on our asset light model and build on the almost 50% increase in free cash flow we generated in 2012. Progress in this area will continue to put us at an advantageous position of smartly allocating capital and optimizing long-term shareholder returns.

And with that, I would like to open it up to any questions.

Question-and-Answer-Session

Operator

Thank you. (Operator Instructions) And we’ll take our first question from Nicole Miller with Piper Jaffray.

Nicole Miller Regan – Piper Jaffray

Thanks, good afternoon. In the opening remarks you talked about Bagels coffee and lunch. Could you maybe give us some more color about where you are in terms of the percentage of sales today? How these could grow and maybe help lift comp and then also the margin opportunity? Thank you.

Jeffrey J. O’Neill

Okay. So, Nicole, the first thing is, so we really have – as we’ve looked over the last couple of years, we talked about the strength we had in Baked Bagels and Breakfast and a little bit sluggish at lunch and we finished up the year, coming out of the year a little, stronger trends in our lunch side of the business as we also tested a new value layer. So part of what we’re looking at next year that we’re really bullish on is in everyday value layer, $3.99 and $5.99, if you go into our restaurants now, you’ll start to see for the first time we just put it up a couple of weeks ago on a national basis, this new everyday value of $3.99 and $5.99 combos.

And so, based on the tests that we did last year, we feel confident that we are going to get our traffic moving in the right direction and get our lunch business growing as effectively as we have with our breakfast daypart.

We also have a strong lineup of innovation. So when you think about our base plan next year, I look at it as a strong base layer of value, everyday value. But in addition, we have some great new products with that big eat sandwiches that we’re also going to be featuring at the same time.

So in fact, out in our restaurants right now, we have the $3.99 and $5.99 and then we have our very popular Nova Lox feature. And in the first three weeks of that, that’s a very strong double-digit in growth of that sandwich, which is a great lunch sandwich. So and then in addition, we’ve got a strong layer of beverages.

So we’ll have our everyday value and then a strong lunch coupled with a strong specialty beverage, which we really think is a good mix of providing value and then also providing strong check as well. So that’s really the base of our program for next year and that’s why I feel quite excited about the focus that we have and the opportunity that we have in lifting our traffic numbers.

Nicole Miller Regan – Piper Jaffray

Okay. That’s actually very helpful, because I get some contacts around how it could help traffic and then also mix shift.

Jeffrey J. O’Neill

All right.

Nicole Miller Regan – Piper Jaffray

The second and last question, Manny, the pipeline you talked about and laid out for growth, can you talk about where you are in terms of the LOI and lease signing process please?

Emanuel Hilario

Yeah, so on the company stores; I would say we have above half of them already in the LOI process even permitting and construction. As a matter of fact, I believe one of them has already opened. So we’re pretty – I would say 50% of it is pretty marked in and landed in and we’re obviously developing the rest of the pipeline for the company stores. You’ll need time of approximately six months to open up a store from the time we find it.

Nicole Miller Regan – Piper Jaffray

Thanks again.

Operator

And we will now go to Alex Slagle with Jefferies.

Alexander Slagle – Jefferies & Co.

Thanks, good quarter, guys. I had a question on the cost savings initiatives you’ve planned for ‘13. I was wondering if you could give some more color on the potential magnitude and timing and sort of what that means for the cost of goods line for 2013 assuming you’ll still have the menu crisis also going through in ‘13.

Jeffrey J. O’Neill

Yeah, so Alex, we’re in a couple of things from a cost point of view. So when looking at about 2.5% inflation and we feel that the initiatives that we have in place now that we can offset that inflation for next year and with some potential upside. Let’s put it that way.

We have some strong roll over initiatives from the $8.3 million that we put in place throughout the year as a base. And then we have some supplier partner opportunities and we still think there’s some outside opportunities in manufacturing. And then we’ve brought in sort of a cost consultant to help us. So to take a look more broadly on some of the initiatives that we have going on in some of the opportunities. As you know, we have a cross functional team that meet regularly and presents to Manny and I on an ongoing basis.

And so, we went looked outside for a strong industry consultant, who is also helping us to understand some of the opportunities closely and the thing, to keep in mind and this is the focus that the team have is, all of these are with the only caveat that we will not touch anything that has to do with moving our formulas in anyway or anything that will affect the customers’ appreciation of the great quality products that we have.

So this is all outside of anything to do with ingredients or anything that’s customer focus. This is all back of the house invisible to the customer. We done after three years with good success and we feel that we can do that again this year.

Alexander Slagle – Jefferies & Co.

Okay, thanks. And then just one question on the same-store sales fourth quarter, are there any weather impacts you can quantify our stores lost in the hurricane? And then on the first quarter anything to think about in terms of modelling for the first quarter?

Emanuel P. N. Hilario

Well, I’ll start with the fourth quarter and turn over to Jeff. For fourth quarter, there is nothing really materially either from positive or negative relative to other.

Jeffrey J. O’Neill

Yeah, for a first quarter point of view, I think that there has been some, a little bit of softness relative to their expectations coming out of the year. But nothing that’s insurmountable, it was more in January and February has come back. Obviously, we know that with all of the noise around the fiscal cliff and everything else, payroll tax and all of that. I think the industry saw a little bit of softness in January. We were immune that. Although, as I said with the programs that we have in place and with the initiatives that you see in the storage right now, we feel good about the quarter and we actually feel good about where we’re heading for the year.

Alexander Slagle – Jefferies & Co.

Okay, thank you.

Jeffrey J. O’Neill

Very good.

Operator

Now we will now go to Will Slabaugh with Stephens Incorporated.

Will Slabaugh – Stephens Incorporated

Hey, guys congrats on the quarter and really I wanted to go back to the same-store sales and the comp number. Impressive mix shift improvement there, wondering if you could go into a little more detail of what’s driving that, maybe what people are trading up on the menu to and kind of what you think trends are going to be like as you move into FY 2013?

Emanuel P. N. Hilario

This is Manny. I’ll start with two things obviously catering and the continued success we have there is really helping to check. And the second item that’s helping to check as Jeff mentioned earlier, we’re coupling into value strategy with some big eat sandwiches. In the fourth quarter, we had a Tasty Turkey sandwich that was a premium price. So those items really have been helping the check as well as our continued focus on driving bulk or the bulk of business at the store level.

Jeffrey J. O’Neill

And as we look to this year, couple of things I obviously mentioned a rollout of what we’re calling are plan to win. So think about plan to win, which is our traffic driving initiatives. We tested for eight months in Denver, Dallas. This year we really like what we saw there and we’ve rolled out parts of it this year starting a couple of weeks ago with the menu changes that we made.

By the way, we also made changes to our menu board. We’ve simplified the menu board and had a positive impact on – certainly the customers liked it and it’s easier from a speed of service point of view. So that was good. But the traffic driving initiatives, we look to extended hours. We have tested and are about to rollout sort of a happy hour piece that’s tied into those extended hours.

I talked about the balance marketing calendar with everyday value combos, leveraging our Bagel leadership in both. So in addition to the strength of catering, which will continue this year, our bulk business has also been strong. We tie that into on premise in total. And that’s a good piece of our business on premise with good margins and one that we continue to expect to grow on.

The big eat sandwiches, which is a good balance from our everyday value and then specialty beverages, which is something that we want to continue to focus on with that good trends since we put in our coffee platform over a year ago. And our specialty beverage remains a big priority for us to continue to build our mix strongly over the next few years.

Will Slabaugh – Stephens Incorporated

Yeah, great; thanks for the detail. And Manny, more on a housekeeping item, menu pricing for 2013, can we expect that 1 to 1.5 range or am I off there?

Emanuel P. N. Hilario

I mean, it will be very modest. So it will be more closer to the 1 and the 1.5.

Will Slabaugh – Stephens Incorporated

All right, thanks guys.

Jeffrey J. O’Neill

Take care.

Emanuel P. N. Hilario

Thanks Alex.

Operator

(Operator Instructions) And we’ll take our next question from Brian Bittner with Oppenheimer & Co.

Michael Tamas – Oppenheimer & Co., Inc.

Hi, this is Mike Tamas filling in for Brian. You talked about labor deleveraging because of I think vacations in the fourth quarter, if I heard that right. So did I hear that right and then is that something’s that continue going forward or is that sort of like a one-time thing, was there anything special in there? Thanks.

Emanuel Hilario

Yes, so actually for the fourth quarter, we talked about benefit cost as being a primary with vacation there. So it was a combination of both store level bonuses because the stores performed very well in the fourth quarter. So we had both store level bonuses as well as vacation in the fourth quarter. So hopefully, the bonus will continue to going forward because that’s a sign of performing right at the store level. The only other

Jeffrey J. O’Neill

The only other add that I’ll add to Manny’s comments, we also saw some cost related to the ramp up of our ‘14, close ‘14 new openings – 10 to 14 openings in the fourth quarter. So when you think of that with the cost associated with those all coming in, largely in December, you get that investment as the stores open up, especially over the holidays. So that was a bit of a one time that added to it as well.

Michael Tamas – Oppenheimer & Co., Inc.

Great, thanks. Let me just ask one more. I mean you talked about some efficiency offsetting the 2% to 3% inflation and we’re talking lower pricing about the one percentage, 1.5% range. So there are opportunities for you to improve your food margins as we look towards 2013.

Emanuel Hilario

I mean obviously, we’re all dependant on niche initiatives were ultimately able to capture. So we’re clear right now. We too believe that the inflation being the 2% to 3% with some modest price and then about $2.5 million to $5 million of savings. So ultimately, I think that’s determined by savings as Jeff mentioned earlier. We’re very active on that. We are looking everything from supply contracts to the side of the distribution system. So the answer is it will be dependent on exactly how much initiatives we’re able to catch and bring down.

But right as I sit here and look out for the year is after totaling, reasonably strong about corps performance because we actually do have modest inflation relative to the environment plus already very strongly identified as cost savings.

Jeffrey J. O’Neill

This year, we really want to put an emphasis on our traffic and that’s where our focus is going to be and we feel really good about that area of focus, it’s important to us. That obviously, plus the continued growth of our new units.

Michael Tamas – Oppenheimer & Co., Inc.

Great, thank you.

Operator

And we’ll take our next question from Matthew DiFrisco with Lazard.

Unidentified Analyst

Great, thank you. This is Phil sitting in for Matt. I just wanted to get a sense from you guys about you’re feeling about the microenvironment in general? And then you mentioned that you might have saw a little bit of challenge in January due to payroll tax. But there’s been more than a few companies out there that have risk concerned by a combination of factors like higher gas prices and delayed tax refunds along with the payroll tax? So I was just wondering if you anticipate feeling any headwinds from these issues.

Jeffrey J. O’Neill

So we’d say that there is going to be headwinds from an industry overall. I feel quite good about the focus that we’ve put in the last year. Quite frankly when you take a look at it, we’ve been testing this new value layer since last July. And in some respects, I feel like we almost got ahead of the game with this. We had a good time to take a look at it. We’ve been out there for a good eight months with the program before we roll that out.

We’ve had an opportunity to add a real strong premium layer with these – a great line up of new sandwiches, everything from Pennine’s and the Nova Lox and a great Reuben sandwiches that’s – we’re evaluating which is just a perfect combination when you are adding value to be looking at some really delicious check growth areas as well.

So in some respect, looking outside the macro area, I’m sort of looking internally and saying, I really feel that we’re in quite a good position from a marketing point of view to face any of the headwinds as we go through the year with the plan to win initiatives that we have with the strong focus that we’re putting on from an operating point of view to drive frequency with our customers.

So hey, you know what, that the last three years really have been choppy. I don’t see any difference in this year. It’s not easier, but it’s not harder. We’ve been talking about choppy in the restaurant business for a good three years. And I look at next year as or this year at similar no more, no less and I think that we’re just in a much better position to face it this year maybe than we have been in others.

Emanuel P. N. Hilario

Yeah, I would have just say one comment to that is additional debt at 2013 will be valued relative to what you are see in the environment, I think the fact that we saw for the cost side we’ve been very active…

Jeffrey J. O’Neill

Yeah.

Emanuel P. N. Hilario

Both on managing the inflation as well as bringing cost initiatives will really help us be very competitive on the value environment. So I would say from going against that headwind, we set ourselves. That positions ourselves for success in 2013.

Unidentified Analyst

Great, I appreciate the color guys. I just wanted to log in another follow-up if I can. It is nice to see that you guys increase your outlook for the franchise growth from last year’s range. And just wondering is that a result of new franchisees that you plan on joining the system or is this already existing franchises that are going to just be opening additional units?

Emanuel P. N. Hilario

Yeah, I think Jeff stated, and I’ll turn it over to him afterwards. But he said on his prepared statements that we have had an influx of strong demand that people are very interested in the brand. I think right now we have a pipeline of over 100 franchisee commitments for restaurants for the next couple of years. But it’s really been in more of once we concluded our strategic alternatives process that influx actually even went up notch and I think we’ve been getting a look at very strong new people who want to joint the brand.

Jeffrey J. O’Neill

Yeah, the only other thing and I agree with everything Manny said, add that I would or the build that I would put on it is, I also believe we are going to better balance across our portfolio coming into this year than maybe we have in the past. In the last few years, we have been driven by strong licensing, but the same goes not that there is anything wrong with that. But this year and coming out of last year, we have a better – to really a way across our portfolio.

We’ve got a good level of company stores kind of 15 to 20 range and we’ve got a good range of franchise stores with the same kind of 15 to 20 range and then a strong base of licensed stores with a focus on – a greater focus on larger and more revenue driving license restaurants as opposed to just units.

So the team that we pull together and built on in the last, kind of six months a new licensed development team really in place. And they have a much strong focus around airports and a good depth of growth in that side of the business. So I just think we’ve got a more balanced approach to our unit growth, which I like a lot, so…

Operator

There are no further questions at this time. Mr. O’Neill, I would like to turn the conference back over to you for any additional or closing remarks.

Jeffrey J. O’Neill

Thanks. I think we had a good conversation today and we were able to address a lot of the questions that you all had. And I’m just really pleased with the record year that we had in many respects. Both supply chain and manufacturing efficiencies flowed nicely to the bottom line. We continued our cliff of kind of 50 to 60 new restaurants per year and poised for continued growth in that area.

We’re building in our strength in what we like to call fresh baked and fresh brewed, which are really unique positioning for us relative to some of the folks out there. And we think that, that’s something you’re going to hear a little bit more about in 2013 than you have in the past. And we’ve tested the new traffic driving initiatives with strong results and we’re ready to build on that, I would say, as the year goes on. We’re going to really kick that off in a big way starting in April. But we’ve been putting those initiatives out since the beginning of this year with the idea of going live on April with our new traffic driving initiatives across the country.

And then, of course, we delivered a $4 dividend in addition to our regular dividend. So I think, we’re well positioned for 2013. We’ll see it build as the year goes on throughout 2013, and with that, I’d say onward to Q1 and 2013.

Operator

Ladies and gentlemen, this concludes today’s conference. We thank you for your participation.

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