SpartanNash Company (NASDAQ:SPTN) Q1 2016 Earnings Call May 26, 2016 9:00 AM ET
Katie Turner - IR, ICR, Inc.
Dennis Eidson - President and Chief Executive Officer
David Staples - EVP and Chief Operating Officer
Chris Meyers - EVP and Chief Financial Officer
Mark Wiltamuth - Jefferies
Shane Higgins - Deutsche Bank
Ajay Jain - Pivotal Research Group
Scott Mushkin - Wolfe Research
Hello, and welcome to the SpartanNash Company's First Quarter 2016 Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.
I would now like to turn the conference over to Mr. Dennis Eidson, President and Chief Executive Officer. Please go ahead, sir.
Hi, good morning, this is Katie Turner, and welcome to the SpartanNash Company's first quarter fiscal year 2016 earnings conference call. By now, everyone should have access to the earnings release for the first quarter ended April 23, 2016. For a copy of the release, please visit SpartanNash's website at www.spartannash.com/investors. This call is being recorded and a replay will be available on the Company's website for approximately 10 days.
Before we begin, we'd like to remind everyone that comments made by management during today's call will contain forward-looking statements. These forward-looking statements discuss plans, expectations, estimates and projections that might involve significant risks and uncertainties. Actual results may differ materially from the results discussed in these forward-looking statements.
Internal and external expectations that may cause such differences include among others, competitive pressures among food, retail, and distribution companies, the uncertainties inherent in implementing strategic plans and general economic and market conditions. Additional information about the risk factors and the uncertainties associated with SpartanNash's forward-looking statements can be found in the Company's first quarter earnings release, fiscal Annual Report on Form 10-K and in the Company's other filings with the SEC. Because of these risks and uncertainties, investors should not place undue reliance on any forward-looking statement. SpartanNash disclaims any intention or obligation to update or revise any forward-looking statement.
This presentation includes certain non-GAAP metrics and comparable period measures to provide investors with useful information about the Company's financial performance. A reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures and the other information as required by Regulation G is included in the Company's earnings release, which was issued after market close yesterday.
And it’s now my pleasure to introduce Mr. Dennis Eidson, President and CEO of SpartanNash Company for opening remarks.
Thanks, Katie. Good morning and thank you for joining our first quarter of fiscal 2016 earnings conference call. With me this morning are Dave Staples, our EVP and Chief Operating Officer; and Chris Meyers, our new EVP and Chief Financial Officer, as well as other members of our executive team.
On the call today, I'll provide a brief overview of the first quarter and highlights. Dave will then give an update on our business segments and Chris will offer you additional detail on our financial results and guidance before I issue some closing remarks and we'll open up the call and take some questions.
We were generally pleased with our first quarter adjusted results in that our adjusted earnings per diluted share of $0.54 were in line with our expectations especially considering the challenging operating environment. Our strong performance demonstrated SpartanNash's disciplined focus on our key strategic initiatives relating to driving new business, improving operational efficiencies and maximizing on our merger synergies. We're encouraged by our ability to secure new independent customers and the progress we're gaining on our merchandising and marketing programs both for our food distribution customers and our retail stores.
We have a diverse pipeline of sales opportunities and are excited about how our highly efficient network is being viewed by others in the industry. We also remain committed to best serving our existing retail, distribution and military customers and believe all of the efforts being put forth in our distribution and retail operations will continue to improve their experiences.
Furthermore, we're pleased to have announced earlier this year an increase in the regular quarterly dividend of approximately 11% to $0.15 per share beginning in the first quarter of 2016 for an annual rate of $0.60 per share. This represents our sixth consecutive year of dividend increases.
Finally, with respect to the organizational development, we're delighted that Chris Meyers joined us as CFO in April. Chris was previously CFO at KeHE Distributors, the second largest natural and organic wholesaler in North America. Chris has strong background in food distribution, accounting and finance, experience in acquisitions and driving operational efficiencies makes for an excellent fit at SpartanNash and we're looking forward to his financial guidance. As a result, Dave has transitioned out of the interim CFO role and is now fully with chief operating officer responsibilities.
And with that, I'd like to turn the call over to Dave. Dave?
Thank you, Dennis, and good morning, everyone. On the operations front, we continue to be encouraged by the traction we're beginning to gain on several of our key operating initiatives. In our food distribution segment, we saw sales growth over last year, primarily due to contributions from our new business efforts despite negative pressure from continued deflation mainly in proteins and dairy.
Speaking of our new sales, we began distributing private brand products to one of our newest accounts, Gordy's in February, and we're fully servicing the account as its primary distributor by the end of the first quarter. In addition to Gordy's, we are excited about our relationship with Amazon, while still a relatively new account, the volume has been greater than we expected and we believe that it has significant growth potential. This relationship is a great example of our commitment to pursuing solutions for difficult logistic issues, and we continue to look at opportunities to grow sales with other non-traditional customers.
As a result of the hard work provided by our sales teams and our growing reputation, we continue to feel positive about our current sales pipeline in both traditional and alternative sales channels, as we focus on providing supply chain solutions for a variety of industry. During the quarter, we continued rolling out our merchandising and marketing strategies to all of our independent customers. We continue to see greater buying of our programs, including our value added and expanded private brand programs as well as other in-store innovation.
As an example, we held a model store event for our Michigan, Indiana and Ohio customers this month. And I was very pleased to see the hundreds of representatives from our customers participate, share their appreciation for the learnings they took away and provide us valuable feedback.
We also continue to work on initiatives to improve operations, including our supply chain optimization and asset utilization efforts. During the first quarter, we consolidated our warehouse in Indiana into our Lima, Ohio facility, and we announced the combination of our warehouse in Statesboro, Georgia, with our facility in Columbus, Georgia, which will occur in the second quarter. We expect that the merger of these facilities will lead to lower cost over time for our customers as well as enhance product freshness and selection. Additionally, we should experience improved efficiency across our food distribution and military channel.
In the retail segment, our sales trend was primarily impacted by the deflationary environment, competitive new store openings, and the impact of unseasonably warm winter weather. We estimated the new store openings had a negative impact of approximately 190 points on comp stores sales and we expect the majority of this impact will be cycled by the end of the second quarter.
As we move into the remainder of the year, we have several key initiatives to improve our top line. First, we will invest in the Omaha geographic region and plan to remodel and re-banner eight stores to the Family Fare. We will then re-launch the entire Omaha region as Family Fare, while completing the rollout of our customer loyalty program to that region. As part of this process, we recently closed three stores in the Omaha region that did not fit the rebranding and marketing strategy.
Secondly, we continue to invest in our analytical capabilities to provide us with helpful data and insights that enable us to make greater inroads into the areas of targeted and personalized marketing and more relevant product and assortment selections. We have recently completed a full review of our customer segmentation to help us better understand our customers in each of the markets we operate, allowing us to drive greater engagement and build our share of the customer's wallet by offering the products and value they desire. In addition, we will begin rolling out a new in-store marketing program to better highlight our unique products and value offerings across the Family Fare value.
On the product side, we continue to expand our private brand program and Living Well offerings for both our distribution customers and company-owned stores. This expanded offering includes our natural and organic whole circle private brand line as well as significant increase in SKUs across organic produce and healthier specialty items. We will also introduce Open Acres, our new private brand for fresh products. This new brand will be rolled out during the upcoming year featuring items in meat, deli, bakery and produce. The introduction of the brands closes the gap in our portfolio of private brands that existed in our non-Michigan footprint. These products will deliver national brand or better quality at a significant savings to our consumers in both company-owned and independent store locations.
For the first quarter, private brand unit penetration in our retail operation was 22.9%, which continues to place us above the national average. We ended the quarter with approximately 7,100 private brand items. Sales in our military segment were down 3.6% this quarter, primarily due to lower sales at the DeCA-operated commissaries an usually strong first quarter in the prior year. As our new business gains associated with the distribution of fresh products was not enough to offset these declines. This new sales program will continue to grow over the remainder of the year, and we are hopeful that the expanded volume as well as other sales initiatives will bring our top line back to our seat last year's levels as we get into the remainder of the year.
With that, I'll turn the call over to Chris for further details on our financial results and an update on the outlook for 2016. Chris?
Thank you, Dave. I'll begin with the detailed overview of the results for the first quarter, and then review our guidance for fiscal year 2016. But before I get into the financials, I want to say how excited I am to be here at SpartanNash. I look forward to working closely with our customers and our associates in meeting more view in the investment community in the coming months.
Now, onto the numbers. Consolidated net sales for the 16-week first quarter were $2.28 billion versus $2.31 billion in the prior quarter. Consolidated gross profit margin for the first quarter was 14.7%, compared to 14.5% in the prior year, primarily reflects certain favorable rebate programs that began in the prior year of the third quarter as well as the mix of sales.
First quarter adjusted operating expenses were $295.7 million or 13.0% in net sales, compared to $302.4 million or 13.1% in net sales in the first – in last year's first quarter and charges primarily related to restructuring and merger integrations were excluded from both periods.
Adjusted EBITDA for the first quarter increased to $68.0 million or 3.0% of net sales and $65.9 million or 2.8% of net sales last year, primarily due to the improved margin, realization of cost reduction initiatives and merger synergies.
Adjusted earnings from continuing operations for the first quarter increased to $20.4 million or $0.54 per diluted share from $16.6 million or $0.44 per diluted share. These results exclude net after tax charges of $0.27 per diluted share, primarily related to restructuring activities associated with our rebranding and marketing strategy for Omaha and our warehouse optimization plan as well as ongoing merger integration and other non-recurring costs and expenses.
For the prior year first quarter, adjusted earnings from continuing operations exclude net after-tax charges of $0.16 per diluted share related to restructuring, asset impairment, and merger integration and acquisition charges.
Turing to our operating segments. First quarter sales for the food distribution segment increased to $991.1 million from $986.4 million in the prior year quarter. First quarter operating earnings for the food distribution segment when adjusted for $2.9 million of restructuring, merger integration and acquisition costs and other non-recurring charges increased 29.8% to $28.8 million, $22.2 million last year, excluding $2 million in the prior year first quarter of merger integration expenses, restructuring charges and a gain on asset sales. The increase was primarily due to merger synergies, favorable margins and lower operating cost resulting from supply chain optimization initiatives as well as lower depreciation expense.
In our retail segment, first quarter net sales were $613.1 million compared to $626.9 million in the prior year. The decrease is due to 3.4% decrease in our comparable store sales, excluding fuel; $14 million of lower sales, due to the retail stores and fuel center closures; and $6.2 million due to significantly lower retail fuel prices compared to the prior year, these were partially offset by gains from stores acquired in the second quarter of last year. Comparable store sales were impacted by issues previously mentioned.
Retail segment operating earnings for the quarter when adjusted to exclude $13.7 million of pre-tax restructuring, merger integration and other non-recurring charges increased to $6.1 million from $5.6 million last year, when adjusted to exclude $8.1 million of non-cash pre-tax, asset impairment, restructuring and acquisition costs. The increase was due to – due primarily to favorable utilities in health care costs, as well as contributions from the Dan's stores acquisition, partially offset by the impact of lower comp sales.
In our Military segment, first quarter net sales were $674.5 million, compared to $699.4 million. Military operating earnings were $3.7 million, when adjusted to exclude $300,000 of various non-recurring charges, compared to $6.2 million last year, excluding $200,000 similar non-recurring charges.
The decrease was due to lower sales volume, a lack of inflationary gains and the change in business mix, as well as the strong first quarter sales in fiscal year 2015. From a cash flow perspective, our operating cash flow for the first quarter was $8.6 million, compared to $48.9 million last year. The decrease was primarily due to changes in working capital, surrounding the timing of vendor and income tax payments, as well as inventory requirements for new business.
During the first quarter, we repurchased approximately 696,000 shares of our common stock for a total of $9 million. Additionally our Board authorized a new $50 million repurchase program that replaces the existing one that recently expired.
Total long-term debt was $486.5 million as of April 30, 2016, compared to $464.1 million at the end of fiscal year 2015. We ended the quarter with leverage ratio of approximately 2.1 times EBITDA and remains committed to our targeted 2.0 times. As we look through the reminder of the year, we are cautiously optimistic given the deflationary environment. We are maintaining our previously issued 2016 guidance of adjusted earnings per diluted share from continuing operations of approximately $2.07 and $2.18, excluding merger integration costs and other one-time expenses and gains.
Our fiscal year 2016 guidance is based on expectations of sales growth and food distribution, slightly negative comparable retail store sales reflecting the deflationary and competitive sales environment, partially offset by improvements in the second half of the year as a result of capital expenditures, merchandizing initiatives and cycling of competitive pressures. And an expectation in our military segment that's cycling of the favorable first quarter of 2015 and the new fresh business will lessen the impact of the poor performance at DeCA operated commissaries.
From a profitability perspective, we continue to anticipate favorable results versus the prior year through the first half of 2015 as certain favorable rebate programs and contributions in acquired stores are cycled by the third quarter. We also continue to anticipate that the fourth quarter adjusted earnings per diluted share from continuing operations would be lower than the prior year due to significant inflationary benefits associated with LIFO realized in the fourth quarter of 2015 of approximately $0.07 per diluted share. We continue to expect that capital expenditures for fiscal year 2016 will be in the range of $72 million to $75 million, depreciation and amortization expense in the range of $76 million to $78 million, and total interest expense in the range of $18 million to $20 million. This concludes our financial discussion.
And with that, I'll turn the call back over to Dennis for his closing remarks. Dennis?
Thanks, Chris. Well done. In conclusion, we continue to be encouraged by the execution of our strategic initiatives that position us to grow our business and maintain our industry leadership. We continue to enhance our merchandizing, pricing and promotional strategies including extending our organic and private label product offerings and driving greater customer engagement to improve personalization of our loyalty program and the overall shopping experience.
We plan to further invest in our store base and we have a diverse pipeline of sales opportunities in our food distribution and military segments as we continue to explore supply chain solutions that will best serve these customers. We are also making significant headwind improving our overall operations and expense leverage for our supply chain optimization and merger integration efforts. So along with the entire management team, I'm encouraged by the continued progress and look forward updating you as we move forward.
And with that, we'll now open up the call and take any questions.
Yes, thank you. We will now begin the question-and-answer session. [Operator Instructions] And the first question comes from Mark Wiltamuth with Jefferies.
Hi, good morning.
So the distribution segment was really the engine here on the quarter. You generated a lot of growth here on EBIT with very little top-line progress. So if you could talk a little more about some of the initiatives that kind of help you generate that internally driven growth?
Sure, Mark. This is Dave. I think you have to look at all the levers and I think it does talk to the power of our new business initiatives and the work we’re putting in to generate new volume. So I don't want to minimize the impact of moving the top line forward, so that's obviously a part of it. In addition to that, I mean, we've really put a lot of effort into this network. And when I talk about the network, we're really talking about a combination of our food distribution and military network to really begin to look at it more as one overall network dedicated to continuing to offer solutions to very complicated logistics issues. And we've elevated our thinking along those lines, and we've really pushed the business hard along those lines. And I think what you've seen is, is that our reputation in the market is changing and people are beginning to seek us out for these types of solutions.
In order to bring that to reality, we've put in a lot of hard work, we’re rationalizing our network. You've seen us consolidate facilities consistently over the past couple of years that's done a lot of things for our customers from improving the product assortment, for the product freshness to just the efficiency of our entire network. And so, I think that's been a big driver as well. And then we've done a great job our merchant team in negotiating with cost programs for our private brand as well as pharmacy programs, and well that's enabled us to get incremental pharmacy business. It's also allowed us to make those segments a little bit more profitable. So I think those things all come together and drive the bottom line.
And how much more do you think, you have to go there in these internal initiatives, considerably – you certainly have deflationary environment here. So, lot of this are going have to be cost driven here moving forward?
Well, yeah, I mean, I don't fully agree. I think we will continue to do good work on the top-line. I think we'll continue to attract new business, and work hard to get it. And so, as we said, we're continuing to be happy and excited about our pipeline and sales opportunities. Clearly, we have to win them right. I mean but that the new opportunities that we feel good and that they continue to increase. So, we have to do our job and continue to try to win that. Deflation certainly makes it tougher in the core, but we do continue to have new programs and work to expand our private brand offerings and our natural and organic offerings and those types of things to try to continue to be more relevant and drive sales.
But, of course it does get tougher with deflation. However, on the operational front, we try not to let Derek get too much sleep, and so we continuously challenge him to improve and continue to find new ways to get more efficient. Statesboro, that combination takes place this quarter and as we go forward, we'll continue to look for ways to make the network more efficient, but also drive more volume through it.
So, I mean we talked in the script I think a little bit about cycling some of our rebate programs in the back half and that, and I think our guidance alludes to what we think about the remainder of this year. But we'll always have more things we can do to get more efficient.
And Gordy's really kicks in full speed at the end of this quarter you said?
Yeah, I would say, because by the time you start to really work through start-up issues and the like, from a top line perspective, you would say it's kicking in full now but I think by the time you work out all the kinks and things associated with any new large account, I think by the end of this quarter, it's running more on a recurring basis.
Okay. Thank you very much.
Thank you. And your next question comes from Shane Higgins with Deutsche Bank.
Yeah. Good morning and thanks for taking the questions, guys. So, your retail comps, they improved sequentially from the fourth quarter into the first quarter. Now did they improve throughout the quarter? Any color there would be great.
We did improve through the quarter. Winter wasn't favorable to us from a weather perspective, as you know, in particularly our northern regions where we get some snow-related tourism that really helps our top line that was pretty de minimis and sort of January was pretty tough. And listen, we're not happy with the negative 3.4, the team is working incredibly hard to make that better. But I'd say, what was nice to see is we got improvements across every region from Q4 to Q1. And that's despite the fact that we went from a slightly inflationary environment at retail to a deflationary environment at retail. So maybe that gives you the kind of color you're looking for.
Yeah. No, that's helpful. And how about comp trends 2Q to date, are they continuing to move in the right direction?
We are – because we are in this Memorial Day shift our current numbers really don't – they don't lend themselves to give really any kind of feedback on that. Last year, we had Memorial Day last week, this year is a holiday, selling to this week. So I'd say we need to go another 5, 6, 7 days in order to figure that out.
Got it, got it. And then if you guys could just provide a little bit of an update on the loyalty program. How many stores are covered by this today and kind of what you're seeing there in terms of sales lift? And I know you guys alluded to the investments you've been making in analytical capabilities. Just any more color on that would be great.
Sure, Shane. This is Dave. So, our loyalty program is fully rolled out in our stores in Michigan. And then wherever we have Family Fare in the west, which is part of Omaha today, and part of North Dakota, and then in our Family Fresh. So it's still in nicely over half of our stores with growth to come, as we alluded to in the note, as we finished our efforts in Omaha over the course of the second quarter, we will end up with that and are fully operational in Omaha, and the S program rolled out.
I think what we're really seeing between that analytics and that loyalty program is, we're getting to the point now where we're starting to benefit from the data, actually I should say, we've already got the data, the knowledge we're able to glean from the information and we've really gone through a review of our segmentation. We believe we have a firmer grasp of our different customer segments, what they like, what they don't, what really they are looking for out of the shop. And I think you're going to see us really deploy that over the next couple of quarters to make a difference in how we're satisfying their expectations.
That's great. Thanks for that color. And just a last one here on the M&A environment. Are you guys seeing, I mean obviously deflations been putting in a lot of pressure on smaller players out there. Are you seeing any kind of change in the M&A activity, your leverage is getting closer to your two times target. Just any color there would be helpful?
Yeah. This is Chris. I think the M&A environment remains healthy, and I don't think that's been significant. I think it was healthy over the last couple of years, and I think it remains healthy going into this year, and there is opportunity that we will continue to explore. But we want to make sure that whatever we do is a good deal that we do pursue.
Okay, got it. Thanks guys, I’ll yield.
Thank you. And the next question comes from Ajay Jain, with Pivotal Research Group.
Yeah. Hi, good morning. I just wanted ask if you can comment on intra-quarter comp trends so far this quarter in retail if you are seeing things getting any worse from deflationary pressures, and if you could also comment on traffic trends quarter-to-date? Thanks.
Ajay, this is Dennis. It's really hard for us to do because of the shifting of the holiday. So, the Memorial Day was – last year was last week. So I don't think we have any useful data, it's going to take us a little bit more, maybe another week before we see that. I would just say that we gave some guidance here around comps for the year, and we called out slightly negative. We also indicated we thought we would cycle the majority of the competitive openings, I think we called out that we're 1.9% drag on the comps, as we get into the back half of the year. So I don't know that we can give you a whole lot more color than that at the moment.
Okay. And just as a follow-up, I know you've got clearly a lot of Wal-Mart exposure in Michigan and in Omaha and some of the other retail markets. And I was just wondering if you can comment on, just in general on the competitive environment, if there is any change out there and whether you are seeing any evidence that the Wal-Mart is executing better now based on their latest results?
I don't think it's easy for us to see in our market space a big change with Wal-Mart, and you're probably better being inside of hold their numbers or for the quarter, and I know they were slightly positive but I'm not sure that actually transcended into the food space. We don't – we haven't seen a material change in aggressive pricing from Wal-Mart or significant promotional shift, so I don't say we don't see a lot of change in their position.
Okay. Just lastly with respect to the pipeline for supercenter openings, can you just give any update on what you're seeing?
Yeah. I think – for the balance of this year, I don't think we see anything in our retail trade area. I think Dave's agreeing with me, the body language, so I think zero for the balance of the year here. I think next year we may have a little bit – I don't think, I don't know that we have those penned out at the moment Ajay, but I's not like some dramatic on slot.
Okay, great. Thank you.
Thank you. And the next question comes from Scott Mushkin with Wolfe Research.
Hey, guys. Thanks for taking my question. So, stalling up on Ajay a little bit on the Wal-Mart thing, I mean obviously they talked about getting a little bit more aggressive. Up at the Michigan they have a pretty good competitor Myer not only you guys, but competitor Myer. How do you think this plays out, are you guys preparing for them? I mean they are making noise. I think Dennis you mentioned their food business was negative, and our research say nicely so on those supercenters. I mean how prepared are you as a company to deal with Wal-Mart if they actually do fall through at this time and get aggressive?
Yeah. Scott, Dennis. I think our business and the people running our business are so accustomed to this supercenter incursion and the activity that goes on with supercenters and we've had super K-Marts here, Myer was – is home grown, probably the best supercenter operator in the country. Wal-Mart heavily invested in the marketplace and again I think we've been able to find a pretty good path. It won't be reactive than we’re being proactive, I mean, I think we through the loyalty program have now begun to mind really some of the drivers for consumer satisfaction, and I think we have a benefit versus the data both Wal-Mart and even Myer in this case, say don't have a loyalty program per say. We have a benefit versus the competitor set and we intend to use it.
So I feel comfortable that we're in a position to better understand the consumer, and I also feel comfortable that the consumer is probably more than any time in the last decade or two gravitating to a more convenient, smaller box, the supercenter 200,000 square feet maybe the fatigue that goes with that. I mean, I guess I’d rather have my hand than theirs.
That's a good color. And just in Michigan, which has a Myer and Wal-Mart there. Do you guys price out to Myer, are they the leader there or they pretty tide or where does it – where does it fall out, and then what would you say your premium is to those two operators, if there is one?
Yeah, I don’t think like we necessarily find anywhere our pricing strategy is. Let's just say that we watch all of the competitors very, very closely in the marketplace and believe that we have kind of a recipe that is tended to work for us here in Michigan. So, I don't know that I can give you a much more detail than that.
All right. That sounds good. And then obviously I miss, I should say Chris to welcome. I don't think it's maybe your first call. So you've joined a great group of people, so I did want to say that. But then I also wanted to…
You’re welcome. And I also – Amazon, you guys talked up Amazon in the prepared remarks. What are you exactly doing for them, and what part of Amazon are you working for? Any clarity there would be terrific?
Sure. This is Dave, Scott. We do our normal types of things, right. I mean we are distributing products to their distribution centers for them to sell. So they fit into that normal model, somewhat maybe different mixes of products. We are servicing the Prime now predominantly, but also beginning to grow into the Fresh a little bit. So those are the two key segments. And it's been a great relationship. I think we were able to tell some operational issues for them, and I think our reputation with them has expanded and that's how the Fresh group has gotten interested.
So you are helping them with their Amazon Fresh and then also the Prime now is the primary advantage. Is it focused mostly on Specialty and Fresh or is it including on the dry grocery or it’s...?
It’s dry and chill.
All right guys. Thank you very much. As always you just do a masterful job with this business, and I'd like say Chris you've joined a great group of people. Thanks.
Thank you, Scott.
Thank you. And that does conclude the question-and-answer session. So I would like to turn the call back over to management for any closing comments.
Well, thank everybody for calling in, and the participation today, and that concludes our remarks for the first quarter, and we look forward to speaking with you again in the next quarter. Thanks.
Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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