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Ruth's Hospitality Group (NASDAQ:RUTH)

Q2 2011 Earnings Call

July 29, 2011 8:30 am ET

Executives

Robert Vincent - Chief Financial Officer, Principal Accounting Officer, Executive Vice President, Corporate Secretary and Member of Executive Committee

Michael O’Donnell - Chairman, Chief Executive Officer and President

Analysts

Nicole Regan - Piper Jaffray Companies

Jeffrey Omohundro - Wells Fargo Securities, LLC

Andrew Barish - Jefferies & Company, Inc.

Jason West - Deutsche Bank AG

Bart Glenn - D.A. Davidson & Co.

Operator

Hello. Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's Ruth's Hospitality Group’s Second Quarter 2011 Earnings Conference Call. [Operator Instructions] Just as a reminder, today's conference is being recorded. At this time, I would like to turn things over to Mr. Bob Vincent, Chief Financial Officer. Please go ahead, sir.

Robert Vincent

Thank you and good morning. We need to remind everyone that part of our discussion today may include forward-looking statements. These statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them. We refer all of you to our recent filings with the SEC for a more detailed discussion of the risks that could impact future operating results and financial conditions.

Finally, I would like to remind you today that this call may not be reproduced in any form without the expressed written consent of Ruth's Hospitality Group, Inc. I would now like to turn the call over to Michael O'Donnell, Chief Executive Officer of Ruth's Hospitality Group.

Michael O’Donnell

Thanks, Bob, and thank you, all, for joining us today. Ruth's Chris Steak House restaurants continued their strong sales momentum during the second quarter, with comparable sales improving 5.8%. This marks the fifth consecutive quarter of positive comparable sales for company-owned restaurants and 6 straight quarters of traffic gains. Comparable sales at Mitchell's Fish Market decreased 1.4% during the second quarter, with results being positively impacted by approximately 50 basis points due to the Easter calendar shift.

Currently for July, comparable sales trends for Ruth's Chris remain positive in the mid-single digits, while Mitchell's sales are flat year-over-year. On a regional basis, Ruth's Chris 2 largest markets, Florida and California, continue to generate positive sales, as they outperformed the system average. Florida sales rose 6.3%, while California increased 7.5%.

Across the entire Ruth's Chris portfolio of 63 company locations, 53 restaurants reported positive comparable sales during the second quarter. Entrées, which serve as our proxy for traffic, increased by 3.3% during the second quarter, and as we previously noted, have now been positive for 6 consecutive quarters. This is also the second quarter where traffic has increased against positive traffic in the prior year.

Average check also increased 2.4% for the period. Compared to the Knapp-Track benchmarked index for the Steak House segment, Ruth's Chris sales were lower relative to the index by 190 basis points and 180 basis points in traffic. We continue to believe the gap is driven by competitive discounting. As we’ve said in the past, we are taking a different approach, stressing value over discounting and the centerpiece of this, conservative pricing, which has served us well.

Private dining sales at Ruth's Chris Steak House increased approximately 16% during the second quarter, as we continue to benefit from interest in our catering business and the use of our professional satellite services. Our Ruth's Chris franchise-owned domestic comparable restaurant sales increased 5% during the quarter, while international comparable franchise-owned restaurants increased 16.2%, resulting in a blended increase of 7.1%.

Turning to Ruth's Chris brand, as we noted in our last call, we began testing TV spots this past spring as part of a new experience-focused advertising campaign. We plan to expand our efforts in TV as our tests showed promise. We believe that television advertising combined with an improved social media presence will create increased enthusiasm from a broader customer base, although it's important to note that our spending may be reallocated, we will stay within our annual guidance range.

Our Ruth's Seasonal Classics prefix remains the cornerstone of our featured promotional activity and continues to comprise roughly 30% of our sales mix. We believe that our diverse guest base appreciates the option of the prefix classics, and that this strategy has supported our 6 consecutive quarters of traffic growth. While our results continue to show renewed enthusiasm for high-end dining, we appreciate the economic uncertainty that many consumers continue to face and our prefix strategy -- pricing strategy only reinforces the value that Ruth's Chris offers its guests.

At Mitchell's, we continue to work on our broad positioning and our brand positioning where menu marketing and operational excellence are key. While seafood will remain Mitchell's core offering, we are currently working on expanding our selection of non-seafood items, which we expect will be additive to sales as it helps us appeal to more guests.

At the present time, we have several items in the test market, and we will be evaluating opportunities for further roll out. In addition to broadening customer choice, we believe this can also benefit us with respect to productivity gains in the back of the house where we think we have some opportunities to improve execution at Mitchell's.

We are currently featuring a price fix at $19.95 and $24.95 as our value proposition and includes a variety of seafood offerings, as well as a 10-ounce rib eye. Given the seasonality of our seafood and our expanding non-seafood offerings, we see the prefix, as well as limited time offers, as a way to have guests always have something new to experience when dining with us.

We have recently tested some radio advertising in selected markets, and while early, the results have been encouraging. We will also continue to focus on marketing efforts at Mitchell's online and social media and increase grassroots efforts at the local level through community involvement.

With respect to our company restaurant development, we remain active in evaluating opportunities for 2012 and beyond. We recently announced a deal with Harrah's Casino in Cherokee, North Carolina, where we will be operating under a management contract and expect this restaurant to open during the first half of 2012. This agreement supports our approach to seek strategic growth partners in the casino and hotel industries, which offers a captive audience of potential guests and limited investment risk as most of these sites will be built out by the developers.

We also recently completed a relocation project in Portland, Oregon, where we have taken the opportunity to move after 15 years of operations to what will be a better long-term location, closer to the city's downtown district. This restaurant opened on July 11 and has been well received by our guests thus far.

In late June, we also closed a restaurant in Santa Barbara, California, as we exercised an option to terminate the lease. While we are disappointed by this closing, the sales volume at this unit did not support continuing operations. As for further new company-owned unit development, we are active in the marketplace. We are encouraged to be negotiating several LOIs but we'll continue our practice of not announcing specifics until we have a signed lease.

Our Ruth's franchise business is still projected to have 2 openings in the second half of this year. Exclusive of these locations, we currently have an additional 17 commitments for future franchise restaurants over the next several years. And this pipeline should allow us to generate consistent franchise income of $12-plus million dollars annually. I'd like to now turn the call back over to Bob.

Robert Vincent

Thank you, Mike. For the second quarter ended June 26, 2011, we generated total revenues of $92.6 million, an increase of $4.2 million or 4.8% compared to last year. Total company-owned restaurant sales increased to $87.5 million or approximately 5.1% compared to $83.3 million in the second quarter last year. Restaurant operating weeks were 1,117 versus 1,107 last year.

Average weekly sales for all company-owned Ruth's Chris Steak House restaurants was approximately $82,000 in the second quarter compared to approximately $77,000 in the same period last year.

Ruth's Chris Steak House comparable sales increased by 5.8% and consisted of an average check increase of 2.4%, combined with an increase in entrées of 3.3%, our sixth consecutive quarterly increase in entrées.

Average weekly sales at Mitchell's Fish Market were approximately $70,000 compared to approximately $72,000 in the same period last year. Comparable restaurant sales at Mitchell's Fish Market decreased 1.4% and were positively impacted by approximately 50 basis points due to the Easter calendar shift. Franchise income increased approximately 3.4% to $2.9 million from $2.8 million last year.

In terms of our cost structure, food and beverage cost as a percentage of restaurant sales increased 120 basis points year-over-year in the second quarter, primarily driven by unfavorable beef costs. At this time, we continue to project beef inflation of approximately 6% to 7% for the year, which would be similar to 2010 levels.

Beef prices, in general, have trended lower recently, and we have in place a 60-day lock for approximately 40% of our beef needs at pricing levels neutral to last year's costs. And we remain active in pursuing additional long-term pricing arrangements.

In the second quarter, we have the benefit of a menu price increase of approximately 90 basis points to partially mitigate the impact of overall commodity inflation. Although we continue to believe that we have additional pricing power, as we have discussed in the past, we intend to be prudent with respect to future increases.

Restaurant operating expenses as a percentage of restaurant sales decreased 150 basis points from the second quarter last year to 51.7%. This decrease was driven primarily by positive sales leverage. Marketing and advertising costs increased to $3.2 million from $2.9 million and as a percentage of total revenue, increased by 10 basis points to 3.4%.

G&A expenditures remain constant at $5.4 million in both periods, however, as a percentage of total revenue, decreased 30 basis points to 5.8%. During the second quarter of 2011, we incurred $41,000 of preopening expenses, compared to $340,000 in the prior year.

Operating income was $8.4 million in the second quarter of 2011, compared to $8.3 million in the prior-year second quarter. The second quarter of 2010 included a $1.1 million restructuring benefit related to a change in estimate for a terminated lease obligation.

Interest expense was approximately $700,000 in the second quarter compared to interest expense of approximately $1 million for the same period last year. 2010 results included a favorable mark-to-market noncash adjustment of $300,000 related to an interest rate swap agreement.

Net income available to preferred and common shareholders was $8.5 million or $0.20 per diluted share on a share base of approximately 43.2 million in the second quarter of 2011 compared to $3.7 million or $0.09 per diluted share on a share base of approximately 42.8 million in the second quarter of 2010.

Net income available to preferred and common shareholders for the second quarter of 2011 includes a tax benefit of $4 million or $0.09 per diluted share. Excluding this adjustment, net income was $0.10 per diluted share in the current quarter.

Net income available to preferred and common shareholders for the second quarter of 2010 included a net benefit of $0.3 million or $0.01 per diluted share. Excluding this adjustment, net income was $0.08 per diluted share in the prior year period.

With regard to our balance sheet, long-term debt at the end of the quarter was $40 million, a reduction of $5 million from the end of Q1.

Based on our results for the first half of 2011, we are reiterating our previous outlook, which includes the following: cost of goods sold of 30.5% to 31.5% of restaurant sales; marketing and advertising spend of approximately 3% to 3.5% of total revenues; G&A expenses of $23 million to $25 million; effective tax rate of 25% to 30%. We anticipate fully diluted shares outstanding between 43 million and 44 million. CapEx spending is projected at $10 million to $12 million, and we are projecting that free cash flow will be in the range of $21 million to $23 million.

I will now turn the call back to Mike.

Michael O’Donnell

Thanks, Bob. Before we turn the call over to questions, I'd like to specifically thank and congratulate Bob Vincent, as he will soon transition to the newly-created position of Senior Vice President of Corporate Strategy. Bob has provided tremendous leadership as CFO during a very challenging time and has proven to be invaluable to this organization.

We know that he will do an exceptional job in formulating our corporate strategy as we build on our current success and lay the groundwork for long-term growth of our brands. In addition, equally as exciting, his youngest daughter gets married on Saturday. So congratulations to Bob, his family and to his daughter Kate.

With Bob moving on to his new role, I would also like to welcome Arne Haak, who will assume the Chief Financial Officer duties on August 8. Arne comes to us from AirTran Airways, a wholly-owned subsidiary of Southwest Airlines, where he most recently served as Chief Financial Officer.

During his tenure there, he put together an enviable track record of restoring the company's financial stability in 2008, which included a record cash position and the highest level of profitability in that company's history. Arne brings more than 20 years of senior-level finance and planning experience to Ruth's, with an extensive and diverse financial skill set that we believe will build upon our existing financial leadership and create value for our shareholders.

So with more stability in our business, a balance sheet that's gaining strength with each quarter and an executive team that's been strengthened, I firmly believe that the foundation for evaluating funding and executing a proven growth strategy is in place. Combined with our strength of our franchise system, which remains the heart and soul of the Ruth's brand, and our continued hard work at Mitchell's, I am very optimistic about both brands’ market opportunities, as well as our ability to increase cash flow and enhance shareholder value. As always, we appreciate your interest in our company and are now available to take your questions.

Question-and-Answer Session

Operator

[Operator Instructions] We'll take our first question from Nicole Miller, Piper Jaffray.

Nicole Regan - Piper Jaffray Companies

I did join a few minutes late, so I apologize. Could you give us third quarter, today, Ruth's Chris comp trends?

Robert Vincent

Nicole, this is Bob. We announced that we have been positive in the mid-single digit range for the Ruth's brand, and for Mitchell's, we are flat year-over-year.

Nicole Regan - Piper Jaffray Companies

Okay. And then can you talk to us about where we're at in the recovery cycle? I mean, you're now comping positive on positive, so as you think about clawing back the lost revenue in the recession, kind of talk to us about the stages of recovery and how long this positive comp trend can persist.

Michael O’Donnell

Nicole, I think, we -- consistent with what we -- sort of the actions that we've taken, we believe that the recovery in our case and at least on the Ruth's brand will be -- we're forecasting it could be steady. We're forecasting it to continue to be really driven by our continued excellent execution. We have not taken, as you know, aggressive pricing. We're trying to build this primarily through traffic gains and through other lines of business like our Catering business and our Private Dining and satellite businesses, et cetera. So I think, we see the improvements really in a broad segment of our business, like special occasion business continues to show improvement. Our everyday user continues to show improvement. Our business-to-business experience shows improvement. So we think that as long as the economy continues or the higher end of the economy continues to do reasonably well, we will continue to track in that regard.

Nicole Regan - Piper Jaffray Companies

And one final question. I know it's awfully early to ask, but looking forward to this holiday season. Last holiday was good. You saw more people come in. They started to spend a little bit more. What are you doing to plan for this holiday season to trump that?

Michael O’Donnell

Well, I think, that we opened -- we were open last year, as you recall, we were opened for Thanksgiving, and we were highly successful with that. We will do that as well. We experimented with some openings at Christmas, and we will probably broaden some of that as well. We've got aggressive plans around our gift card business. We've got aggressive plans with our sales people around private dining. And to the extent that the things that we did last year, we expect to repeat that, and we would expect to have a strong fourth quarter.

Operator

Next, we'll hear from Jeff Omohundro with Wells Fargo.

Jeffrey Omohundro - Wells Fargo Securities, LLC

And considering your new position in corporate strategy and the focus on development, I wonder if you could maybe take us through a little bit of the thinking around or the scaling of the opportunities that you are looking at and how you would anticipate restarting development. And where do you want to be in terms of LOIs, say, as you progress over the next quarter or 2? That's my first question.

Robert Vincent

Well, Jeff, again, I think the new position really is to assist Mike and the board to – in evaluating whatever opportunities there may be to enhance shareholder value. Specifically, with development, I think, we’ve talked about it that over the last year, we have began to ramp up resources internally to really be more active in the real estate area. I think we've come full circle. And very honestly, both Mike and I are very proud of the fact that 3 years ago, there were 6 leases that we had to negotiate our way out of. But yet now, we, just recently, mid-July opened a new location in Portland, Oregon, which is very, very exciting for us to come full circle. I think that we've got multiple LOIs, as Mike spoke about, that we are currently -- we have some signed, some negotiating on others. And I don't want to get into -- I don't think we want to get into a numbers game as to we're going to have 10 or we're going to have whatever. I think that what remains consistent with the organization is that we’re very active, and we’re very excited about the opportunity. And we’re going to continue to pursue that in a very prudent way. We're not looking to go out and overbuild. We’re not going to go out and overspend or overpay for real estate. But I think that we're very excited about the opportunity in front of us, and we're just going to methodically go through it and seize upon it.

Jeffrey Omohundro - Wells Fargo Securities, LLC

And my second question relates to sales building initiative, particularly as we look at the more challenging prior year comparisons in the second half of this year. It was mentioned that you'd be resuming some television but keeping the total marketing spend, I believe, in line with the forecast. How are you thinking about the weights of TV against your market? And how you might sequence that through the second half?

Michael O’Donnell

Jeff, we have, as I said, reallocated the funds that we had been using both locally and are looking at national television. And I'd really not -- rather not get into the amount of weight, etc. But I can tell you that it's substantial, and there is a substantial number of weeks involved in this that we feel very good about. We worked very hard on with our advertising partners. And we'll be building up to -- in the early fall up to through and into the holiday season, with what we think is fairly substantial weight, but it will be focused really on branding more than anything else. And then, as we actually get into the holiday season where things get cluttered, we'll go -- we'll be back really to more of our grassroots sort of thing. So we see this as an opportunity to really prepare ourselves for the holiday season, to really have a presence out there. And we're really very excited about it.

Operator

Next, we'll hear from Bart Glenn with D.A. Davidson.

Bart Glenn - D.A. Davidson & Co.

I was just curious given the favorable mix trends, did alcohol improve as a percentage of mix?

Robert Vincent

Bart, actually, alcohol was even with the year ago, overall as a percentage of mix.

Bart Glenn - D.A. Davidson & Co.

Okay. And is there any variance between comp store sales trends for weekends versus weekdays?

Robert Vincent

Well, as we have spoken before, in early 2010, the Sunday through Wednesday segment of the week was outperforming the Thursday, Friday, Saturday business. Frankly, that gap closed as we moved through 2010 into 2011. And it's probably running pretty consistent in terms of the strength of the growth in both segments being fairly balanced.

Bart Glenn - D.A. Davidson & Co.

Great. And then just one other question. You mentioned how many stores were comping positively. I was just curious for the small portion of the base that hasn't returned back to positive comps. Are there any specific initiatives to those stores or those markets to kind of regain some of that momentum?

Robert Vincent

Well, let me -- first, as a factual piece of information. Of those 10 stores, 5 of those stores or half of the group were negative less than 1%. So we don't have really any real gaps, if you will, in terms of individual store performance.

Michael O’Donnell

I think, Bart, we are on a relatively small base of restaurants. We have individual plans for every one of our restaurants, the ones that are doing very well and the ones that are not performing quite like we’d like them to. So I think that each of the restaurants -- we're really more a collection of restaurants than we are a chain. And every restaurant has different opportunities so some may have a stronger initiative in terms of their outside sales efforts, some may have stronger initiatives around happy hour or early week. It's just really and truly a store-by-store basis.

Operator

Next, we'll hear from Andy Barish with Jefferies.

Andrew Barish - Jefferies & Company, Inc.

Two questions. On beef cost, is it fair to assume that tenderloins are where you're getting the flattish kind of short-term contracts and prime is still tough to lock up? So any early 2012 direction would be helpful on beef overall. And then, secondly on Mitchell's Florida, any signs of improvement? I know there are a couple of units that had been impacted there. Your Ruth's Florida business is obviously strong. Anything going on, on the Mitchell's front in Florida, a little bit better?

Robert Vincent

Andy, your first question regarding beef. I think, clearly tenders have moderated a little bit better, more than prime cuts. In June and July, our tender costs were actually less than they were in April, May. Prime has come down a little bit but still probably running high-single digits year-over-year. The lock though that we have in place for the next 60 days is actually for both cuts. It's for all our prime cuts, as well as our tenderloin cuts. And again, that's at neutral pricing year-over-year. So I think that the folks that we work with on the beef side have a little bit more optimism that there may be some locking opportunities here in the near term. So that's probably the update there. In terms of the Mitchell's performance in the state of Florida, we have 4 restaurants, as we've said before. And yes, we have seen some improvement in all of those 4 restaurants.

Operator

[Operator Instructions] Next, we'll hear from Jason West with Deutsche Bank.

Jason West - Deutsche Bank AG

Can you talk a little bit about the economics of the casino units, in particular the one you're opening in North Carolina? How do we model that? Is that -- we model that as full ownership? Or is it a JV type of structure? And is there CapEx associated with that on your books?

Robert Vincent

Jason, it is really a JV kind of structure. And it's going to be kind of a revenues -- a profit-sharing kind of arrangement. We will have no invested capital. And so whatever that revenue sharing opportunity is, it will probably be reported through other income.

Jason West - Deutsche Bank AG

Okay, got it. And can you give us just the numbers on where you stand on the units right now, company, franchised and Mitchell's? Just so we have our models updated for any closures or anything.

Robert Vincent

Okay. Well, we just closed one restaurant in the Ruth's system, so we have 63 corporate Ruth's Chris. We have 67 franchised Ruth's Chris, and we have 20 Mitchell's Fish Market.

Jason West - Deutsche Bank AG

20?

Michael O’Donnell

Yes.

Jason West - Deutsche Bank AG

Okay. I had you guys at 23 there. Has there been some closures in that system?

Robert Vincent

No, we have 3 Mitchell's Steakhouses.

Jason West - Deutsche Bank AG

Okay. Got it. And then looking out to next year on the CapEx side. If there’s no money on this one unit, and I guess you don't know exactly how many other units you may open on the company side. But roughly CapEx, you think flattish, next year moves up. Kind of what are you thinking there?

Robert Vincent

Jason, I really think it's a little too early to speculate there. We start our planning cycle post Labor Day. And I think probably at the end of third quarter, we'll have a better sense of what some of that activity might be. We're going to continue to do some remodeling, as we have this year. And then, again, as Mike said earlier, we've got several negotiated LOIs out there, and so we'll see how that all kind of -- how that evolves, if you will.

Jason West - Deutsche Bank AG

Okay. And then last thing, just big picture. What's the strategic advantage of keeping the Mitchell's business consolidated with your Ruth's business? I guess this thing is sort of still pretty sluggish here after a couple of years of recovery. Can you just remind us what the strategic advantage of keeping those businesses together is?

Michael O’Donnell

Jason, we continue to do a lot of work around the Mitchell's business. We continue to do very well in terms of the eyes and minds of the consumer. We win best-of awards. Though it's been a challenging time in the higher-end polished casual business for a lot of folks. We've got very talented people refining this, and to the extent that we determine that this can get the kind of returns that we are getting with our Ruth's Chris business, then it would be a growth vehicle. So to the extent that we have invested a substantial amount of money when we acquired the business, we've invested time in it. Any idea that we are being very patient with it because to the extent that we already have this year, if it’s successful then we think we really have some exciting opportunities. If it's not, long term, as successful, we'll have to deal with that later. But we currently believe that there's still an opportunity to do that. But again, I would be the first to say that 3 years ago, when I joined the company, I thought that, that might recover very quickly and be a very aggressive opportunity. I would say that as we've learned more about it and the complexities of the business, the complexities of delivering fish every day, the volume that it needs to do per restaurant in order to be profitable to the level that we'd like. A lot of those things I don't think I particularly understood, and therefore, I thought it was going to be a faster thing. Now I think that we're making great progress in back-of-the-house systems. We're making great progress in the way that we handle fish and the way we deliver fish. And great progress in terms of literally how we run that business. And so to the extent that we continue to make progress, we'll be patient. And if at some point we don't make enough progress and it does not prove to be an investment that would be a substantial growth opportunity, then we have to deal with it differently. But it's still a good business, a positive business that contributes to the earnings. And it contributes to the cash flow of what we do.

Operator

We'll take a follow-up from Andy Barrish.

Andrew Barish - Jefferies & Company, Inc.

I have a bunch of follow-ups in the original question. But directionally, any early results or thoughts on beef for '12? And then just following up on the Mitchell's comments. What’s kind of the -- I think you hinted that kind of back-of-house is sort of the key maybe improvement point, if you will. Can you just give us an area of focus or 2 in Mitchell's that you guys are locked in on, on trying to improve the profitability economics in that brand?

Michael O’Donnell

Two things. One, if we look at 2012 right now at this point in time, and again, this is highly volatile and moving. But I'd say that we’re looking at a year of 6% or 7% inflation in 2012. If I were -- if you said, "I put a gun to your head, and tell me what you think is going to happen now." We obviously are looking for opportunities to -- and we're hopeful that there are opportunities that we can find long-term locks that would be more favorable than that. But again, if you go back and look at our pricing strategy, we’ve been able to improve margins without taking aggressive price. It means I think we have more pricing opportunities, so we're trying to match those kind of opportunities together. So I hope that answers, best I can, Andy, 2012 on beef. In terms of Mitchell's, it's about driving the top line sales, first. I mean, it’s like that $4 million dollar AUV in the Mitchell's group. I mean, that's really, if you end up in the $4 million AUV in that business, then a lot of things get a lot easier. But along the way, just the complexities of this business when -- Cameron had this, did a great job, and they were fairly concentrated in the Midwest. It's very chef-driven and a very complicated sort of processes to make certain things. And they did a great job. I don't suggest that they did not. But things -- as things have changed and the AUVs are not as aggressive as they were back in 2006 and '07, for us to have scalability, we really need to be more efficient than we have been historically. So we're working on things that are -- not to be complicated about it, but kitchen display systems and things that create less labor demand and things that could potentially have better product delivered more ready to be used than some of the intensive labor that we use to having to really butcher our own fish. I mean, we have whole loin fish brought in. So there are some opportunities that we can do some other things outside that would make that much more efficient.

Operator

At this time, there are no further questions. I'll turn things back over to management for any additional or closing remarks.

Michael O’Donnell

Thank you all very much for joining with us this morning. We always appreciate your participation. And as always, it's a great day to go out and eat either steak or fish. Have fun. Thank you.

Operator

And that does conclude today's teleconference. Thank you all for joining.

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