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WD-40 (NASDAQ:WDFC)

Q3 2013 Earnings Call

July 08, 2013 5:00 pm ET

Executives

Maria M. Mitchell - Vice President of Corporate & Investor Relations and Secretary

Garry O. Ridge - Chief Executive Officer, President and Director

Jay W. Rembolt - Chief Financial Officer, Vice President of Finance, Principal Accounting Officer and Treasurer

Analysts

Liam D. Burke - Janney Montgomery Scott LLC, Research Division

Operator

Good day, ladies and gentlemen, and welcome to the WD-40 Company Third Quarter 2013 Earnings Release Conference Call. Today's call is being recorded. At this time, I'd like to turn the conference over to the Vice President of Corporate and Investor Relations for WD-40 Company, Ms. Maria Mitchell. You may begin.

Maria M. Mitchell

Thank you. Good afternoon, and thank you for joining us for our third quarter fiscal year 2013 earnings call. Today, we are pleased to have Garry Ridge, President and CEO; and Jay Rembolt, Vice President and Chief Financial Officer.

This conference call contains forward-looking statements concerning WD-40 Company's outlook for sales, earnings, dividends and other financial results. These statements are based on an assessment of a variety of factors, contingencies and uncertainties considered relevant by WD-40 Company. Forward-looking statements involve risks and uncertainties, which may cause actual results to differ materially from forward-looking statements, including the impact of commodity prices, the impact of introducing new product lines and fluctuating global market condition, including foreign currency exchange rates. The company's expectations, beliefs and projections are expressed in good faith and are believed by the company to have a reasonable basis. But there can be no assurance that the company's expectations, beliefs or projections will be achieved or accomplished. The risks and uncertainties are detailed from time to time in reports filed by WD-40 Company with the SEC, including forms 8-K, 10-Q and 10-K, and readers are urged to carefully review these and other documents and to stay up-to-date with our most recent company developments provided in the Investor Relations section of our website at wd40company.com. Our fourth quarter fiscal year '13 earnings call is scheduled for Thursday, October 17, 2013. And now I'd like to pass it on to Garry Ridge.

Garry O. Ridge

Thank you, Maria. Good afternoon, and thank you for joining us for today's conference call. Today, we've reported net sales of $93.1 million for the third quarter of fiscal year 2013, an increase of 7% over Q3 last fiscal year. Year-to-date, net sales were $275.1 million, an increase of 7% over the prior year period. Net income for the third quarter was $10.3 million compared to $9.1 million in last fiscal year Q3. Diluted earnings per share for the third quarter was $0.66 compared to $0.57 for the same period last fiscal year. Year-to-date net income was $31.7 million, an increase of 19% over the prior year period. Year-to-date diluted earnings per share were $2.01, up from $1.64 for the same period last fiscal year.

Before we focus on the sales results, let's review the progress we've made during the third quarter towards our strategic initiatives, the first one being to maximize the WD-40 brand. Sales of WD-40 Multi-Use Product increased 9% in the third quarter compared to Q3 last fiscal year. Apart from strong overall performance, growth was driven by major -- a major customer-specific promotional program in the U.S. and double-digit growth in our European distributor markets.

Our second strategic driver is to be the global leader in the company's product categories within our prioritized platforms. WD-40 Specialist has contributed incremental sales and is solidifying our leadership position in the marketplace. We launched our new motorbike line in the U.K. during the third quarter. These products meet maintenance and repair needs among motorcycle enthusiasts and mechanics for uses in garage, workshops and motorcycle race events. Expansion into other markets is under consideration.

Our third strategic driver is around building business relationships that impact favorably around our business. This encompasses acquisitions, partnerships and the strategic alternatives for our brands and products. We did not find acquisition opportunities that met our criteria in the third quarter, but we continue to work with partners to explore new product opportunities. We continue to evaluate our strategic alternatives for the Americas home, care and cleaning products during the third quarter. We are in the early stages and no decisions have been made relative to the future strategic plans for these home care and cleaning product brands.

Our fourth strategic driver is around our global innovation efforts. During the quarter, we continue to research and develop new WD-40 Specialist products in the lawn and landscape segment. The products suite is designed to keep machine powered lawn equipment running and operating smoothly. The new product line is under consideration and may be launched in the U.S. during fiscal '14. During the third quarter, we also launched additional SKUs for WD-40 BIKE, not to be confused with motorbike. The go-to market strategy for WD-40 BIKE is different from our traditional model and retail channels, and we focus on the independent bike distributors. WD-40 BIKE products are specialized in cleaning, protecting and lubricating bikes.

Our fifth strategic driver is our people development, last but in no ways least. Under our fifth strategic initiative, we continue to attract develop and retain tribe members to execute our vision. In the third quarter, we completed our think big reorganization by realigning our innovation teams at the trading block level and providing opportunities for our homecare and cleaning product sales and marketing tribe members, so they could also support customers and initiatives under our multipurpose maintenance products.

That completes our strategic initiatives updates, so let's move on to a little more detail about our third quarter results starting with sales. Sales in the multipurpose maintenance products category accounted for 88% of global sales in the third quarter with category sales up 12% in Q3 and up 11% year-to-date compared to the prior fiscal year period. Products under the category include WD-40 in the 3-IN-ONE brands, as well as immaterial sales from BLUE WORKS brand, which is being transitioned now to the WD-40 Specialist product line. By trading blocks, sales of multipurpose maintenance products in Q3 were up 17% in the Americas, were up 10% in Europe, and up 1% in Asia Pacific compared to the prior year period. Homecare and cleaning products category accounted for 12% of our global sales in Q3 with the category down 18% in Q3 and down 15% year-to-date. Brands under this category include Spot Shot, 2000 Flushes, Carpet Fresh, No Vac, 1001, X-14, Lava and Solvol. By trading blocks, sales of our homecare and cleaning products in the third quarter were down 21% in the Americas and down 16% in Europe and down 3% in Asia Pacific.

Now I'd like to share some of the results around our performance, starting in the segment areas, starting with the Americas. Sales in the Americas segment increased 8% in the third quarter and were up 2% year-to-date versus the prior year period. This segment accounted for 51% of global sales in Q3 as compared to 50% in the prior year period. Total U.S. sales were up 9% in Q3 and up 1% year-to-date. Higher sales of our multipurpose maintenance products more than offset lower sales in homecare and cleaning products. Multipurpose maintenance product sales increased 18% in the third quarter, primarily due to a significant customer-specific promotion for the WD-40 Multi-Use Products that was not conducted in the prior fiscal year period. New and increased distribution of the WD-40 Specialist product line also contributed to the growth. Homecare and cleaning products sales decreased 22% in the third quarter, driven by Carpet Fresh, Spot Shot and our automatic toilet bowl cleaners, which declined by 48%, 29% and 12%, respectively. Homecare and cleaning products continue to generate positive cash flows despite the sales decline, with a portion of the decline stemming from our decisions to reduce businesses in low margin products and programs, which require significant trade, discounts and promotions. Sales also declined due to the decrease in promotional programs, competitive and category declines, as well as the volatility of orders from -- within the warehouse club and mass retail channels. During the third quarter, the management team began to evaluate strategic alternatives for the homecare and cleaning products in the Americas segment. To date, no decision has been made relative to the future strategic plans for these brands.

Sales in Latin America were up 15% in Q3 and up 9% year-to-date, driven by higher WD-40 sales throughout the region. Sales in Canada decreased by 4% in Q3 and were flat year-to-date. The sales decline in the third quarter was primarily due to lower sales of homecare and cleaning products in Canada. Changes in foreign currency exchange rates did not have a material impact on Q3 or year-to-date sales.

Now let's look at Europe. Sales in the Europe segment were up 8% in Q3 and are up 13% year-to-date compared to the prior fiscal year periods. Changes in foreign currency exchange rates had an unfavorable impact on sales in the third quarter, but did not have a material impact on the year-to-date sales. The segment accounted for 35% of global sales in both Q3 and the prior year fiscal period. We sell into Europe through a combination of direct operations in certain countries, as well as through exclusive marketing distributors in other countries. Sales now at European direct markets were down 2% in Q3 due primarily to the customer order flow and lower level of promotional activities period-versus-period, as well as some unfavorable impact from changes in foreign currency exchange rates. Sales in the direct markets are up or were up 11% year-to-date. We sell through exclusive independent marketing distributors in Eastern and Northern Europe and the Middle East & Africa with virtually all sales consisting of the WD-40 brand. Our distributor markets in total were up 28% in Q3 and are up 18% year-to-date. The distributor market accounts for 40% of Europe's total sales in Q3 compared to 34% in the prior year fiscal period. Sales in all of the 3 distributor markets were due to the continued growth of our base business. Sales in Eastern and Northern Europe also benefited from the WD-40 Specialist product line.

Now let's take a look at Asia Pacific. Sales in Asia Pacific were flat in the third quarter and are up 7% year-to-date. The segment accounted for 14% of global sales in Q3 versus 15% in the prior fiscal year period. Changes in foreign currency exchange rates versus period-to-period did not have a material impact on sales. Sales in Australia decreased 4% in Q3 and were up 5% year-to-date compared to the prior fiscal year period. The sales decrease in the third quarter was primarily due to a lower level of promotional activities and unfavorable impact on changes in foreign currency exchange rate period-to-period. Year-to-date sales growth was attributed to a higher level of promotional activities in the first half of fiscal year, as well as the ongoing growth of our base business.

Sales in China decreased 14% in the third quarter and were down 6% year-to-date. The decrease in both periods is attributed to a lower level of promotional sales year-over-year, as well as lower economic growth in industrial activities in the region. Our development in China is a long-term strategy. We expect to see ups and downs in the short-term, but we are confident that over time we will build a significant market in China. Since opening our subsidiary, we have significantly grown the market, but there is plenty more growth to come in the years ahead. Sales in the rest of Asia increased 12% in Q4 and 14% year-to-date. The increase was due to continued growth of the WD-40 Multi-Use Products throughout the distributor markets, including those in Indonesia, South Korea and the Philippines.

That's the sales update. I'd now like to pass over to Jay, who will continue the review of the financials.

Jay W. Rembolt

Garry, thanks. In addition to the information that we'll present today on the call, we also want to remind you to review our Form 10-Q, which we'll file tomorrow.

Now let's look at the rest of the financials. But first, we stop and review our 50/30/20 rule, and this is what we use to guide our business. As you may recall, the 50 represents gross margin, which we target to be at or above 50% of net sales. The 30 represents our cost of doing business, which is our total operating expenses, excluding depreciation and amortization. Our target for this 30 is 30% or less. And then finally, the 20 represents EBITDA. If we keep our gross margin at or above 50% and our cost of business is 30% or less, our EBITDA will be at or above the 20%. EBITDA is earnings before interest, taxes, depreciation and amortization. The descriptions and reconciliations of these non-GAAP measures are available in the 10-Q and in our investor presentations.

Now we look at our gross margin over the 50. Gross margin in the third quarter was 51.3% compared to the 49.5% in the prior fiscal year period. The increase of 180 basis points in gross margin was primarily driven by prior period price increases, lower promotional discounts, benefits from our supply chain related initiatives, as well as the favorable impact of currency exchange rates. Let's start first with input costs.

We experienced a net unfavorable impact of 10 basis points from the changes in input costs. Changes in the cost of petroleum-based materials and aerosol cans combined to favorably impact our margin by 10 basis points. This, however, was more than offset by changes in other input cost, which unfavorably impacted our margin by 20 basis points. These other import costs include raw materials related to our homecare and cleaning products, as well as valves and other componentry for our multi-purpose maintenance products.

Sales price increases are considered and implemented on a country-by-country basis to help us offset the impact from input cost increases. This period versus the prior period, our gross margin improved by 110 basis points as a result of price increases implemented over the past 12 months. Lower advertising and promotional discounts positively impacted our gross margin by 30 basis points. A lower percentage of sales during the current quarter was subject to promotional allowances compared to the prior year. This was primarily a result of lower sales mix in our homecare and cleaning products, as well as lower promotional discounts on these products. The cost of promotional activities, such as sales incentives, trade promotions, coupon offers and cash discounts that we give to our customers, are recorded as a reduction to sales. The timing and magnitude of these may cause fluctuations in our gross margin from period to period.

Looking at the impact from our major initiatives on our cost of goods, we achieved lower manufacturing cost due to the North American supply chain restructuring project and our local sourcing project in China. The lower cost resulting from these initiatives positively impacted our margin by 40 basis points in the third quarter. China began transition to local sourcing halfway through fiscal 2012, and we continue to realize benefits in the current quarter. The lower manufacturing costs and transfer freight positively impacted our margin by 10 basis points this quarter. We began our North American supply chain architecture project in the first quarter of 2012.

And now we've completed the majority of the transition activities. The goal for the project was to improve service delivery to our customers, also reduce the overall costs within our supply chain network. In the current quarter, transition costs were minimal and were more than offset by savings we realized from lower manufacturing fees. The net of this project positively impacted our gross margin by 30 basis points this period.

We experienced a favorable impact from changes in foreign currency exchange rates within our European segment, which positively impacted our gross margin by 30 basis points. Cost of goods are sourced in pound sterling, while revenues are generated in euros, pound sterling, as well as some in the U.S. dollar. The value of the euro increased period-versus-period, causing revenues from euro-based countries to be more -- to be worth more in pound sterling, thus improving the gross margin. Sales mix in all other miscellaneous impacts negatively affected our gross margin by 20 basis points in the quarter. And this would also include the impact of higher sales from our lower margin distributor markets.

The themes discussed for the quarter for gross margin also apply to year-to-date results. Gross margin year-to-date was 50.8% compared to 49.1% in the prior fiscal year. The increase of 170 basis points in gross margin was primarily driven by the prior period price increases, lower promotional discounts, along with benefits from our supply-chain-related initiatives. This completes the gross margin discussion. Now on to the 30 or the cost of doing business.

In the third quarter, the cost of doing business was 34% of net sales compared to 33% in Q3 of the prior year. Our goal is to have the cost of doing business at or below 30%. Period-versus-period, our sales increased by 7% in Q3, while our operating expenses increased by 10%, causing an increase in our cost of doing business percentage. Year-to-date, the cost of doing business was 33% of net sales, the same as in the prior year period. In the third quarter, approximately 78% of our cost of doing business came from 3 areas: 45% was related to our people costs, the investments in our tribe; 21% is from our investments that we make in marketing and advertising and promotion; and 12% in freight, the cost to get our products to our customers.

Now on a little bit more detail of our SG&A expenses. In the quarter, in Q3, our SG&A expense was $25.7 million versus $22.7 million in the prior fiscal year quarter. As a percentage of net sales, it was 27.6% in the current quarter versus 26.1% in the prior year period. The increase was driven primarily by higher employee cost, which increased $3.3 million due to a higher bonus expense accruals along with higher compensation costs associated with annual merit increases and higher staffing levels. This was partially offset by lower professional services and the favorable impact of changes in foreign currency exchange rates. Sales -- SG&A expense year-to-date was $74.9 million versus $67.3 million in the prior fiscal year period. As a percent of net sales, it was 27.2% in the current year period versus 26.1% in the prior year. Advertising and sales promotion expense in Q3 was slightly lower at $6.6 million compared to $6.7 million in the prior year period. As a percentage of sales, A&P investment was 7.1% in Q3 compared to 7.7% in the prior year period. A higher level of advertising and promotional activities in Europe was more than offset by the lower activities in Asia Pacific, as well as lower cost in the Americas. Year-to-date advertising and sales promotion expense of $18 million was $1.5 million lower than the prior year fiscal period. Advertising and sales promotion expense as a percentage of sales decreased to 6.5% year-to-date from 7.5% in the prior period. The decrease in advertising and sales promotion expense was primarily due to the lower costs associated with promotional programs conducted in the Americas segment. Amortization of intangible assets in the current quarter remains constant at $0.5 million compared to the prior fiscal year period. Year-to-date amortization was $1.5 million compared to $1.7 million in the prior year period. Total operating expenses in the current quarter were $32.8 million versus $29.9 million in Q3 of last financial year. Operating income in Q3 was $15 million compared to $13.1 million in the prior year quarter. Year-to-date total operating expenses were $94.4 million versus $88.4 million in the prior year period. Operating income year-to-date was $45.3 million compared to the $38.1 million in the prior year.

EBITDA, the last of our 50/30/20 measures, was 17% of net sales in Q3 compared to 16% in the prior fiscal year period. Year-to-date EBITDA was 18% of net sales compared to 16% in the prior fiscal year. Again, we target EBITDA of 20% of net sales, but expect variations from time to time as sales, A&P investment and other expenses fluctuate with the timing of our activities. Our EBITDA percentage is also in fact affected by investments we make for our future growth. The provision for income taxes in Q3 was 30.6% versus 29% in the prior fiscal year quarter. Year-to-date, the provision for income taxes was also 30.6% versus 29.3% in the prior year period. The lower tax rate in both year periods reflect benefits from the release of uncertain tax position reserves that were associated with the expiring statutes in fiscal year 2012. We did not have a similar benefit in the current fiscal year.

Net income in Q3 was $10.3 million versus $9.1 million in the prior year. Changes in foreign currency exchange rates had a $0.2 million unfavorable impact on net income. Q3 fiscal year 2013 results on a constant currency basis would have produced net income of $10.6 million. Diluted earnings per common share were $0.66 in Q3 compared to $0.57 in the prior fiscal year quarter. Diluted shares outstanding decreased from 16 million shares to 15.6 million shares. Year-to-date net income was $31.7 million compared to $26.5 million in the prior year period. Changes in foreign currency exchange rates did not have a material impact on net income. Diluted earnings per share were $2.01 year-to-date compared to $1.64 in the prior year period, with diluted shares outstanding decreasing from 16.1 million shares to 15.7 million shares. Regarding the dividend on June 18, the Board of Directors declared a quarterly cash dividend of $0.31 a share payable on July 31, 2013, to shareholders of record on July 16. Based on today's closing price of $57.65, the annualized dividend yield would be 2.2%.

A look at our financial position at May 31. We have a strong solid financial foundation to support our strategic initiatives. Our balance sheet is supported by strong cash and short-term investment balances, low debt and additional liquidity is available under our $125 million line of credit. This enables us to pursue our growth initiatives, which include market expansion and new product introductions. As of May 31, our cash and cash equivalents were $52.3 million, an adequate level to support working capital needs, as well as enough to weather fluctuations in the capital markets and the global economy. We also had $35.2 million in short-term investments, which consist of term deposits and callable time deposits held at money center banks. Our line of credit balance was $63 million at the end of the third quarter. In addition to our regular dividends, which we target a payout ratio of 50% of net income, we also returned capital to shareholders through share repurchases. During the third quarter, we acquired just over 182,000 shares of our stock at a total cost of $9.8 million. These shares were acquired under our share repurchase plan approved by the Board of Directors on December 13, 2011, which provides authorization to acquire up to $50 million of the company's outstanding shares through the plan's end date of December 12, 2013. As of May 31, the company has repurchased nearly 898,000 shares at a total cost of $43.5 million. We expect to complete the repurchases under this plan before the end of the year and begin purchases under a new share repurchase plan that was approved by the Board of Directors on June 18. The new plan provides authorization to acquire up to an additional $60 million of the company's shares through August of 2015. Well, that completes the financial overview. Again, more information is available in our 10-Q, which we'll file tomorrow. And now back to Garry.

Garry O. Ridge

Thanks, Jay. We remain cautiously optimistic about several macro factors, which include stability in the global economy, major import costs and foreign currency exchange rates. As for import cost, we hope that recent stability in petroleum-based materials and aerosol can cost will continue in the near term and that our initiatives will continue to benefit our gross margin. We have updated our guidance in light of our year-to-date results. The following fiscal year 2013 guidance does not include any acquisitions or divestitures and assumes that foreign currency exchange rates will remain close to recent levels. We expect our fiscal year net sales results to be in the range of $356 million to $370 million or a growth of between 4% and 8% versus fiscal 2012. We now project our gross margin to be close to 51%. We expect our global advertising and promotion investment to be in the range of 6.5% and 7.5% of net sales. We now expect net income of between $37.6 million and $39 million, which would achieve a diluted earnings per share of between $2.40 and $2.48, assuming 15.7 million weighted average shares outstanding.

So in summary, what did you hear from us on this call today? You heard that sales grew 7% in Q3 and year-to-date, driven by the growth of -- in our multi -- WD-40 Multi-Use Product and Specialist product lines. You heard that we launched WD-40 Specialist Motorbike in the U.K. in the third quarter and are working on other WD-40 Specialist category offerings to bring to market during next fiscal year. You heard that cost savings from the North American supply chain architect project and our local sourcing initiative in China helped us to achieve our 51% gross margin. You heard that we continue to return capital to shareholders through share buybacks and that the board approved another $60 million share repurchase plan. You heard that we raised our guidance for fiscal 2012 with diluted EPS now in the range of $2.40 and $2.48. You heard that these are exciting times for our tribe members and shareholders at WD-40 Company.

In closing, I'd like to share a quote with you from Nelson Mandela: "It always seems impossible until it's done." Thank you for joining us today. We'll now pause and be pleased to open the conference for any questions.

Question-and-Answer Session

Operator

[Operator Instructions] We'll take our first question from Liam Burke with Janney Capital Markets.

Liam D. Burke - Janney Montgomery Scott LLC, Research Division

Garry, could you talk a little bit more about the distribution channel in Europe? I mean, that was up a big number. Is there any particular country or are there any new countries online or what's driving that number?

Garry O. Ridge

The marketing, distributor markets in Europe, it's across the board, Liam. We've had development in -- continuing in the Eastern European blocks, our business in Russia and Poland and other areas. But there is no new news. It's just another step in the build of that business. It does, as you know, as with most of our business, it does bounce around from time to time, but we're happy that -- it was a good quarter, but we're more than happy that it's a good year.

Liam D. Burke - Janney Montgomery Scott LLC, Research Division

Okay. And you mentioned more applications for the multi-purpose marketing. You mentioned multi-purpose lubricant side. The motorbike sales in U.K., bike sales in U.S. and in the lawn-and-garden potential launch, when you're dealing with more specialized distribution, do you have to approach that market differently than you traditional know how to go after the market, where you're dealing with much more retailers?

Garry O. Ridge

It depends on the geography and what our competencies are. We have set up a separate division in the United States to handle the distribution to the independent bike dealers because it is quite different. And that's been operating now for about a year. In the United Kingdom with our motorbike product, we are selling both through the traditional motorbike distribution through wholesalers that are experienced in that trade channel. We're also selling our motorbike range in the U.K. through automotive distribution because motorcyclists do ride into motorcycle stores. As far as the potential for lawn-and-garden, it will be sold through our traditional trade channels in hardware home improvement, where those stores have sections within their units that sell these types of products. And then the other specialist range, which is the, what we call our flanker brand strategy, which are the products of that we launched initially. Of course, they are going through our regular distribution, through mass merchants, hardware home improvements, automotive and industrial.

Liam D. Burke - Janney Montgomery Scott LLC, Research Division

And, Jay, debt stepped up about $18 million this year. Is that just to provide you additional cash because of the international holding?

Jay W. Rembolt

Yes, yes.

Liam D. Burke - Janney Montgomery Scott LLC, Research Division

Now do you see having to continue that? Or, I mean, do you feel comfortable that you have sufficient cash balance?

Jay W. Rembolt

While we would see our line of credit expanding gradually over time as we continue to generate cash that's -- majority of it being held offshore, so in some ways we would continue to see ourselves in a kind of a net cash position, but we would continue to see some level of increase in our line of credit.

Operator

[Operator Instructions] We will take our next question from Joseph Altobello with Oppenheimer.

Unknown Analyst

This is Christina on for Joe tonight. I had a question about gross margin and why you're more optimistic about it for the remainder of the year.

Garry O. Ridge

The main reason we're optimistic about it is it's trending now year-to-date at nearly 51%. So we don't see that deteriorating for the rest of the year. So it's really a reflection of reality.

Unknown Analyst

Okay. And the change in A&P for the year, what was the reasoning behind that?

Garry O. Ridge

Again, it's basically the way it's trended for the year and how the year has unfolded. It seems like it will come in a little lower than normal mainly due to the shift in advertising investment or marketing investment. So again, it's just truing it up to reflect, really, the reality of where it is today.

Unknown Analyst

So we shouldn't expect that, going forward, past of this year?

Garry O. Ridge

I don't want to comment on that. We've traditionally been in that 6% to 8% range for many years. We don't see that that's going to change, but it will be somewhere within that, depending on the promotional activity and what's happening at that time.

Unknown Analyst

Okay, great. And then just one last one, excluding the specialist product, how much was the base WD-40 brand up?

Garry O. Ridge

We only -- we don't disclose WD-40 Multi-Use Product on its own. We report WD-40 as a brand, which includes multi-use product and specialist.

Operator

Ladies and gentlemen, this concludes today's question-and-answer session. At this time, I'd like to turn the conference back to Mr. Garry Ridge for any additional or closing remarks.

Garry O. Ridge

Well, thank you. That was short and sweet. We hope you have a pleasant rest of the day, and we'll talk to again in October. Cheers.

Operator

Ladies and gentlemen, this does conclude today's conference. We appreciate your participation.

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