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Einstein Noah Restaurant Group Inc. (NASDAQ:BAGL)

Q1 2010 Earnings Call

May 06, 2010 5:00 pm ET

Executives

Jeff O'Neill - President and CEO

James O'Reilly - CCO

Analysts

Jeff Farmer - Jefferies & Company

Steve West - Stifel Nicolaus & Company

Matthew DiFrisco - Oppenheimer and Company

Operator

Greetings and welcome to the Einstein Noah Restaurant Group First Quarter 2010 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder this conference is being recorded.

It is now my pleasure to introduce your host Mr. Jeff O'Neill. Thank you, you may begin.

Jeff O'Neill

Good afternoon, and welcome to the Einstein Noah Restaurant Group first quarter 2010 conference call. I am Jeff O'Neill, Chief Executive Officer and president and with me today is James O'Reilly, our Chief Concept Officer.

I'll start by covering a few regulatory matters. Please note that during our formal remarks and in our responses to your question certain items maybe discussed which are not based on historical facts. Such items including statements indicating our belief, trends, plans, expectations, assumptions, anticipation, guidance, projections, estimates and 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 and uncertainties that could cause our actual results to differ materially. For more details please refer to our news release issued today and to the risk factors in our SEC filings.

And now, let's review our key objects for the year which are as follows. First we intend to leverage our strength in bagels and breakfast along with our weakened emphasis and focus on the burgeoning healthy innovation segment in order to drive top line growth. In addition, we'll use targeted programs and promotions in lunch, beverages and catering to drive sales in these areas as well. Second, we are continuing to build our corporate margins by managing the middle of our P&L [typed]. And finally we will continue to accelerate unit expansions.

With regard to our first quarter, I'm pleased with our progress today and believe our numbers and results reflect this strategic and financial progress we made during the quarter. At both senior level and in the field our team is energized about we expect, what we expect to be an exciting year at Einstein Noah.

As noted in our press release, system wide comp store sales returned to positive territory after five quarters of decline and reflect a 150 basis point improvement from the fourth quarter of 2009 and a 300 basis points improvement from a year ago. We also note that despite economic headwinds and stronger competition in the breakfast day part, we were able to increase our averaged check by 1.3% as customers responded favorably to our product initiatives.

At our company operated units comp sales were roughly flat in the first quarter, a 150 basis point improvement from the fourth quarter of 2009 and a 550 basis point improvement from a year ago. We note that due to our geographic concentration, company locations were more severely affected by weather in the northeast, particularly during February.

In terms of our profitability, we realize margin improvement in both our restaurants and manufacturing business, and increased our total gross profit by 15% and our adjusted EBITDA by 22% which demonstrates tremendous progress through the first quarter. It's clear to us that the initiatives we were implementing to improve margins are working.

At store level, we have multiple initiatives crossing most of the P&L with our biggest initiatives focused on managing food and labor outliers. Our supply chain team had made significant advances with year-over-year commodity cost improvements, reduction in freight expenses and implementation of new vendor price verification process.

At our manufacturing and commissary facilities, our teams continued to improve profitability, increasing capacity of a flat labor building on last year's already substantial gains in this area.

From a franchise perspective, we have a pipeline of 64 franchise locations through our development agreements and we look to sign an additional 10 to 15 agreements this year and [razor] pipeline is on 90 to 100 restaurants.

Current franchisees are expected to open 12 to 16 restaurants this year alone including two already opened in the first quarter while our license partners are poised to open to 35 to 45 including five already opened in the first quarter. At the company level we will open about 10 to 12 units, double the number of openings from last year of which we have already opened three in the first quarter. We will also continue our upgrade program which is meeting intended ROIC.

In fact we planned 17 plant upgrade this year and completed five in the first quarter. We also have plans to invest in our kitchen display ordering system, surveillance cameras and a revitalized coffee program along with updated external signage.

I would now like to turn things over to James O' Reilly, our Chief Concept Officer.

James O' Reilly

Thanks Jeff. As we have discussed on prior calls, building consistent growth in comparables sales will be driven by focusing on transaction driving programs while growing check through strong menu mix initiatives. To that end we are working diligently on increasing our sales volumes through product and promotion innovation, investing and marketing expense to increase the awareness of our marketing initiatives and introducing average check driving options that increase consumer spend while still balancing our priced value relationship

During the first quarter, we continued to execute against these strategies and launched major promotions across all our core lines of business. On the product innovation front, we launched twisted bagels which are delicious, freshly baked, bagel flavor combinations. We also launched our new lighter side menu, featuring six freshly prepared breakfast and lunch items all under 400 categories. One of these items is our new yogurt parfaits, which exclusively features Danone's Activia Yogurt. We are also continuing to test the gluten-free bagels with plans to roll it out nationally.

These and other healthier fair initiatives are really cementing our reputation in the category and we intend to make them a permanent feature of our menu based on customer response. To counter act the check impact of our free bagel promotions we implemented some check building efforts including the launch of two new limited time-only premium expresso drinks. We also launched our largest ever on [on-cup switch dates] promotion.

Our lunch day part remains a priority for our brand and as of May 3, have introduced a new fresh and healthy approach to lunch line called bagels and sandwiches. A line of three specially prepared sandwiches made to order on a new bagel which is thinner and has less calories.

With regard to our catering business, we have focused on the roll out of our online ordering systems to ebcatering.com. Catering sales currently represent 5% of our total mix similar to the fourth quarter and we are very pleased with our progress in the last six months. Online ordering is not only more convenient for our customers but it is more cost efficient and combined with our fresh baked approach to the business, we believe catering remains an area of upside for us.

Finally, on the advertising front, we placed a portion of our planned increased advertising investment in March and just a few days ago began our second national promotion on Facebook which has already generated incredible buzz. It provides a free bagel and cream cheese coupon to customers who choose to become a fan of Einstein brothers on Facebook providing a significant base of customers we can market to directly and efficiently. We already have more than half a million fans on the Facebook network and expect this new effort to generate even greater customer trail.

To further bolster our marketing efforts, we recently welcomed food service veteran Jeff Keune to the new position of Vice President of Marketing and formed a partnership with Young & Rubicam Advertising who will be our agency of record.

Jeff will be responsible for leading and executing key marketing initiatives and will have overall responsibility for product management and the marketing calendar and you will report directly to me.

Looking forward I know I speak for our entire team in saying we have the right strategies for delivering continued improvement in our comparable store sales performance throughout 2010 and we'll keep executing on what we already view as successful initiatives that are moving our business forward. Jeff.

Jeff O'Neill

Thanks James, in terms of our financial results total revenue increased slightly to a $108.8 million compared to a $100.4 million in the first quarter of 2009. Company owned restaurant sales grew by 0.3% and $90.7 million. While company owned comp store sales decreased 0.2% with a decline in transaction but an increase in the average check. This is due to so many items that James just mentioned as well as the rollover of a trial generating initiatives we began in the first quarter of 2009. As mentioned earlier, our business was also impacted by the severe weather that hit the East Coast in February.

The slight decline company comp store sales was partially offset by the addition of five more location on a net basis compared to a year ago. Our investment in market initiatives were 1.5 million higher in the first quarter compared to the prior year at $2.8 million. This disparity was due to the fact that last year our marketing efforts began in mid-February whereas this year our market initiatives were conducted throughout the three months period. However our trial generating centers were not as deep in the first quarter of 2010 resulting in a decline in transactions but a subsequent increase in the average check.

Company owned restaurants; the restaurant gross profit increased 200 basis point to 16.9% in the first quarter of 2010 compared to 14.9% in the same period last year due to favorable cost across most line items at the store level. Cost and goods sold were also 200 basis points favorable as a percentage of restaurants sales at 28.3%. The majority of this improvement was attributable to lower cost in our agricultural commodity as well as the impact of our cost initiatives in this area. We continue this decline and we're locked in for roughly 69% of our week needs for the remainder of the year.

Labor cost improved to 110 basis points to the 30.6% of restaurant sales due to our continued work on our labor matrix initiative with particular emphasis on managing store outliers. We also benefited from a decrease in our healthcare benefits costs versus our 2009 results. Rent and marketing cost increased by 160 basis points to 14.2% of restaurant sales driven mostly by the investment in our marketing initiative as well as rent cost related to the new units.

Manufacturing and commissary revenues decreased 1.9% to $8 million in the first quarter of 2010, while gross profit grew by $211,000 which was 18.7% higher compared to the same period last year. Manufacturing cost of good sold were down due to both favorable raw ingredient cost and efficiency gains. Franchise and license revenues grew 16.7% to $2.2 million reflecting strong royalty streams driven by the additional eight net franchise locations and 25 net license locations since March 31, 2009. Franchisees and licensees comp store sales were also up by 1.2%.

Our general and administrative expenses rose by $800,000 to $10 million in the first quarter of 2010 compared to the same period in 2009 due to an increase in our incentive based compensation expense. As mentioned upfront, adjusted EBITDA increased to 22.3% to $8.7 million. This was a result of effectively reducing costs at the restaurant level while expanding the gross margins in our manufacturing and commissary segments.

Depreciation and amortization expense was $4.3 million for the quarter inline with historical trends and we expect depreciation and amortization expense to be in the $18 million to $19 million range for the year. Taking all of these items into consideration, income from operations was $4.5 million for the quarter and up $1.3 million compared the year ago period. Interest expense rose to $1.8 million from $1.2 million last year, resulting from the additional redemption that began accruing on July 1st 2009 due to the unredeemed balance of the Series Z preferred stock.

We continue to expect between $12 million and $15 million of the Series Z preferred stock to be outstanding on June 30th 2010. And we now have until June 30th 2011 to complete the redemption. (Inaudible) can exchange 50% of the shares into shares of freely trading common stock at their discretion.

The key takeaway here is that any concern over the Series Z is now behind us particularly as the economy improves. As we said in our previous conference call, recognizing our deferred tax asset would result in minimal cash income taxes for the next several years although we continue to book a tax rate on our P&L of approximately 43.6% compared to the 2009 rate of 41.3%.

On a GAAP basis, net income and diluted EPS for the quarter were $600,000 and $0.03 respectively. However we believe the more meaningful measure of our performance can be seen in the tremendous progress we've made in improving adjusted net income and adjusted diluted EPS which rose to $1.5 million and $0.09 respectively. This represents adjusted net income growth of nearly 26% and adjusted diluted EPS growth of nearly 29% year-over-year.

Cash flow from operations hit $12.2 million which is an increase of $3.7 million or 43% compared to the year ago period while CapEx during the quarter was $4.5 million. At the end of quarter, the ratio of debt-to-EBITDA as defined in our credit facility was approximately 1.8 times.

To conclude, I believe we are making great progress in raking more awareness for our brands and offering our customers products that are innovative and provide for healthy alternatives that are built around our core bagel and breakfast heritage. We view ourselves as having a distinct competitive advantage as no other restaurant brand offers the quality and freshness of a bakery café with the speed of a QSR. We're building a sustainable cost advantage for our business and enhancing our operational efficiencies which will enable us to translate the accelerated growth in revenues that we are working towards into consistent and reliable growth in adjusted EBITDA.

And lastly, we're continuing to drive unit growth primarily through franchise and licensing, although we also plan to open 10 to 12 company units this year with a focus on our more developed markets such as Denver, Dallas, Atlanta and Washington D.C. Together with our franchise and license partners we look forward to reaching approximately 750 total outlets in 2010.

Operator both James and I are now ready to answer any questions you might have. So, please open the lines for the Q&A portion of our call.

Question-and-Answer Session

Operator

Thank you. (Operators Instructions). Our first question comes from the line of Jeff Farmer with Jefferies & Company.

Jeff Farmer - Jefferies & Company

I think you spend close to $4.5 million on advertising last year. Do you have a sense of where that number could trend in 2010?

Jeff O'Neill

Yes, Jeff, from advertising point of view and the marketing point of view overall, we are looking at somewhere in around doubling that number plus or minus a little bit and as we go through the year we are really looking on a quarter-to-quarter basis determine how the economy is working, what's going on with the competition and really assessing at that point in time where we are in the type of investment we need to put from a marketing point of view to assure that we are getting a great balance between those close in returns where we are building the business long term. So, I would say from that perspective think of somewhere at around $8 million to $10 million, as a ballpark number.

Jeff Farmer - Jefferies & Company

I believe you did touch on this, but the level of direct mail in FSI coupon support in the 1Q '10 versus the 1Q '09 was there decrease, increase, stay flat, where did that go?

James O'Reilly

We did a same number of coupons but we changed the type of coupons, the discount themselves weren't quite as deep which Jeff explained and he explained the difference in transactions and average check.

Jeff Farmer - Jefferies & Company

Did you discuss April (inaudible) result trends?

Jeff O'Neill

Jeff as you know, we don't guidance on that but basically as we take a look at the numbers as with many people and as you saw with the numbers overall, we saw sequential improvement once again for the third quarter in a row and our anticipation is that we'll expect to see those kinds of trends as we go forward.

Jeff Farmer - Jefferies & Company

You did touch on this, on the DNA number, but with bonuses coming back in other corporate overhead likely reemerge in 2010, where do you think that absolute G&A number ends up in 2010 just ballpark?

Jeff O'Neill

We're not going to give specific numbers on this. I think from my perspective what you saw in Q1 is going to be pretty representative of what you see quarter-to-quarter as the year goes on. There is nothing extraordinary in Q1 that we would highlight that says that that trend would be any different going forward.

Operator

Our next question comes from the line of Steve West with Stifel Nicolaus & Company.

Steve West - Stifel Nicolaus & Company

Yes, Jeff, why don't you give a quick update on where you guys with the CFO search?

Jeff O'Neill

Yeah, Steve, we actually have had a real sort of robust line up of individuals that we've been looking at since the announcement of the departure of Rick and we are very close to announcing a CFO, in fact, I would say in the next week we should be able to make an announcement on an individual that has been close to the restaurant business.

Steve West - Stifel Nicolaus & Company

And as you look at the deferral if you will of the preferred Z, as you were redeeming those, can we expect against for the rest of the year, the interest expense to be about where we are with the last three quarters going to the rest of year or maybe just kind of a slight decline in that trend?

Jeff O'Neill

Yes, it will be a slight decline in the trend that we have right now and it's just couple of things as we continue to payoff on the redemption that we have, like we have in the past, we will start to see a decline in that.

Steve West - Stifel Nicolaus & Company

And then you guys had very strong improvements in the store margins, you can see in the stores, you guys have obviously been working pretty hard. Are these sustainable as we go forward, if we do sort of see some decent same-store sales comps at some point where we expect to see those margins expansion even accelerate here?

Jeff O'Neill

Yes, I mean you have named it and we have worked hard, I think there is a real disciplined focus that we put on our teams, both from a supply chain, great results and from an ops point of view as well and the great news is about this, I mean this our real focus on sort of tightening up things like weight management, inventory management, total (inaudible) food cost, the real discipline and nuts and bolts of running a business and the way we have been looking at it is by looking at focusing on those outlier's door when you think of the bottom 10% and matching those up to stores that are doing average or better than average and really helping those teams to understand how they can over perform. So, really rising up from the bottom where biggest issues are in outlier store and that's where we have seen the biggest improvement there and I am really pleased with what ops has been able to do not only in the last quarter, this has been ramping up but I was anticipating this to happen. It's been happening little by little and I was pleased in the first quarter to see the great trends that happened there.

Operator

Our next question comes from the line Matthew DiFrisco with Oppenheimer and Company.

Matthew DiFrisco - Oppenheimer and Company

Looking at the development agreements, you have 15 signed, your goal is to you think yield 90 to 100 additional franchisees. How many of that 90 to 100 do you get secured by the current 15 that you have signed?

Jeff O'Neill

There is about half that Matt, I think about where we are now versus where we want to be coming out of the year. So, put it another way we signed about 12 development agreements last year and we are expecting based on the pipeline of development agreements that we are currently speaking to that there should be somewhere 12 to 15 additional development agreements this year and that combined with the development agreements we had prior to 2009, all in we should have a pipeline. We are expecting a pipeline of 90 to 100 stores coming out of the year.

Matthew DiFrisco - Oppenheimer and Company

Did you give any color sort of how your day parts are going? Are you seeing any faster growth as far as I mean I know the majority of your business two-thirds comes pre 10 am. Your initiatives to get the afternoon day part going or is the comp share equally across day parts or you just proportionally seeing some initiatives work maybe in the lunch time that's getting a little greater growth.

James O'Reilly

Matt, as you know that majority of our business, about two thirds is in breakfast from the sales standpoint. Most of our marketing investment in the first quarter as it was through most of last year was focused on breakfast segment. We've got a strong business there and that's where -- we are seeing so much traction in the past. We are only really just starting a major lunch initiative now to launch the Bagel [Fen] sandwiches which I mentioned earlier in the call. So most of what we did in Q1 was breakfast.

Matthew DiFrisco - Oppenheimer and Company

Okay and then can you also just update us all for how your stand is as far as things that you are doing to comp that might be intentional, I remember a couple of years back you were getting out of late night business out of your drain. I thought it was about this time last year rolling back some prices a little bit and bringing down the average check a little bit. Are we completely done with all those sort of purposeful waits on the same store sales trying to improve the margin structure or any of those linger into 3Q?

Jeff O'Neill

I think it is prudent of us as a restaurant business in this economy not to be too dependant on pricing for our growth. But that has less to do with any pruning or anything and more to do with being consumer centric in our evaluations. We took a little bit of pricing coming the year about 0.6%, but as James highlighted we are looking for combination of promotions, this lighter side menu actually has been doing very well for us and we were just over a year ago names one of the top ten healthiest quick casual restaurants in US and we are trying to build on that because we really think it's very relevant to our customer base. We've got social media and the Facebook that we launched tremendous, tremendous success in the Facebook promotion that we did and we got over half a million fans.

Going into this, we had about 35,000 fans on Facebook and today we have half a million fans that's in one quarter we've managed to get that many fans on our Facebook and we are going to do a little more of our advertising focus in around the social media types of elements which is relevant to our customers. We hired as James mentioned Young & Rubicam out at Chicago and while they are very new to the business in the last kind of four to six weeks. We are very excited about, first of all their knowledge in this area of the business and second of all just their experience overall and their passion for the brands.

Matthew DiFrisco - Oppenheimer and Company

Excellent. And then I guess if you could just talk about the conditions or the appetite for the franchisees to grow, is there any concerns about the box, the cost of the build out? We perceive but I would presume the street looks as relatively inexpensive compared to other franchise concepts but maybe there some Bagel ones that we are just not familiar with on a regional basis that might be cheaper. Is this a environment where you do have an opportunity you think to take advantage of being somewhat of a low cost investment to grow into some markets and have some good regional expansion that you might have been? The years past it was a little bit more of crowded space in franchise side at all?

Jeff O'Neill

Actually think that's really good point and what we are seeing most recently and I would say even in the last month as I've met with franchise and licensing team, we've had a growing interest from what you would call more traditional fast food or QSR franchisees who are calling us and contacting us because of exactly what you just said.

And for a couple of reasons. One because we've got such a relatively low build out cost with still strong average unit volume which means a good return and second of all, we're really relevant from just an absolute basis. Breakfast is growing and breakfast is hot and we're one of the leaders in breakfast and secondly, we're in that sort of healthier side relative to say maybe a pizza or hamburger guides and it gives them a good diversification of their portfolio. So absolutely, we're getting I'd say more interest than less interest out there and it has to do with the largely the growth potential but I also think the economic.

Matthew DiFrisco - Oppenheimer and Company

And I'll just lastly just want to know your opinion of do you think your benefiting from McDonalds advertisements of coffee? Are you saying your coffee business and more people coming in and getting coffee?

Jeff O'Neill

Well we are seeing growth in our coffee business. So that is a fact. And quite healthy growth in our coffee business. You know basically largely our drip coffee, not specialty coffees but we are seeing that. The flipside though is there's a lot of action in the States right now with value meals and so, there's a really a trade off there from where with a lot of noise comes a lot of interest back into breakfast, but also with that and a lot of dollar value menus, there's a lot of trial going on in some of those places as well. It hasn't hurt us but they're just a lot of action going on in the breakfast bakery now.

Operator

Thank you. (Operator Instructions). Our next question comes from the line of [Brian Freckmann] with Lyon Street Capital. Please proceed with your question.

Unidentified Analyst

First of thanks for all the disclosure. I appreciate you guys go in to that length, you guys are a great cash flow generator and it sounds like it's a little bit lost with your tax rate and you're so easy on so on and so forth. Question number one, on the weather any chance you could sort of guess it, how much weather affected you, what's sort of the negative weather on East Coast?

James O' Reilly

We would say most was in February and I would say in the neighborhood of about half a point.

Unidentified Analyst

Okay, and then I guess the second thing the CapEx, can you just try and help me breakout what growth CapEx versus sort of maintenance in the quarter?

James O' Reilly

For the quarter as we said we opened three stores. Let me try and do the quick math on this. Probably about close to 50-50 actually a little bit more in the new restaurant. So about $2.8 million in new restaurants to about $1.3 million to $1.7 million in the balance.

Unidentified Analyst

Okay, and then just really quick maybe looking to it, the number of owned stores, licensed franchise if you just give me the actual number?

James O' Reilly

I'll give it to you coming out of 2009, is that okay?

Unidentified Analyst

This quarter like, what was the final count of the stores licensing franchise, just…

James O' Reilly

Okay. So, we were 430 corporate stores. We were 79 franchise stores and about 183 in license stores.

Unidentified Analyst

Great. Thanks so much James.

Operator

Thank you. Our next question comes form the line of John (inaudible) with Morgan Stanley. Please proceed with your question.

Unidentified Analyst

Good. Just a few questions real quick. First, how fast can that pipeline that you're talking about the 90 to 100 stores ramp up especially you're talking with experienced franchisees that may have sites in mind or already have existing units in site. Concepts insides, can this ramp up faster than say some of the older franchisees that are in your system?

James O' Reilly

Generally speaking. The way it will ramp up is by absolute number of franchisees. We're seeing -- generally speaking you think about as if there is a four store agreement, four or five store agreement is going to happen over three to four years. So, not quite one year but average is just like the over year. So, it will probably one in the first year, maybe a couple of next year and one more in the next year as an example. We have a few franchisees who are opening two a year but remember this economy is also tied for a lot of these franchisees still trying to get financing is not as easy as we all know it. It's still very difficult out there. So, we generally look at it as one per year but with some of the new franchisees that are coming in, we expect that to be a little bit more than that.

Unidentified Analyst

Okay and just looking at the margins, manufacturing margins or I think the best that at least I have on the record, Can I guess do you expect that to continue for the remainder of the year and are these obviously lower ingredient costs are going to help but the labor efficiency should continue?

James O' Reilly

Yeah, I think in both cases we are expecting to see those trends continue with what we in place, the initiatives we have in place that we buy as I told you about 65% locked, overall commodities are locked in or around just less than 50% I think for the balance. And we've got some pretty good initiatives there that kind of put us in that kind of situation.

Unidentified Analyst

Great. And then just lastly, what are the returns you're seeing on the remodels?

Jeff O'Neill

Well, our remodel return has been in a little over 3% about 3.5%, what we did this year is we kind of broken it out into a couple of other initiatives if you will. So when you think of a CapEx, we've got new stores, we've got the remodels which we're talking about 17. This kitchen display system is something that is so important to our stores from an efficiency point of view and a very strong return that we decided we had about 80 stores to 100 stores locked over that did not have the kitchen display system in place.

Normally what we would do is we would tie that into a remodel and what we decided to do this year is decouple it and finish the play on the KDS systems on their own so that we can get the efficiencies because we were just seeing for the restaurants that had it. It was just so much better for them and so much more efficient for the customer that we decided to go after that. In few places we've set aside some money there to increase our signage to improve our visibility at the street level because we thought that was prudent and there are some opportunities in that area as well.

Operator

Ladies and gentlemen at this time there are no further question, I would like to turn the conference back to management for any closing comments.

Jeff O'Neill

The real comments I have had is as you all have, we just discussed. We have continued on our trend to positive comps and really pleased with that, its still a tough economy out there overall but we thought our third quarter of sequential improvement. There's a number of areas and we touched on from a marketing point of view. I think its helping us social media and our lighter side menu. Some of the innovation that we had, the signing of the (inaudible) which I really believe is building us for the right kind of growth in the future as we go forward.

And then you all touched on it, we are really proud of the disciplined cost approach that we have been working hard on and getting the results that we have from both in options supply chain point of view. And we really are gaining momentum with our pipeline of franchisees in growth in the licensed areas. So overall, I am pleased with the first quarter and we move on to the second quarter and all of the challenges and opportunities that they just helped out of the year.

With that said operator I think we are done.

Operator

Thank you. Ladies and gentlemen the conference has concluded. Thank you for your participation. You may disconnect your lines at this time.

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