Mission Produce Inc
NASDAQ:AVO
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Mission Produce Inc
Earnings Call Analysis
Q3-2024 Analysis
Mission Produce Inc
In the third quarter of fiscal 2024, Mission Produce reported a notable revenue increase of 24% year-over-year, reaching $324 million. This growth was primarily driven by a remarkable 36% increase in avocado sales prices, a result of the constrained supply influenced by adverse weather conditions affecting production in Peru and Mexico. Despite volume reductions, domestic avocado sales remained resilient, reflecting strong consumer demand even at higher price points in the U.S. market.
The company's gross profit also saw a substantial increase of $8.6 million, totaling $37 million, leading to a slight improvement in gross profit margin, which rose by 50 basis points to 11.4% of revenue. The Marketing & Distribution segment was a particular highlight, showcasing improved per-unit margins, which were mainly attributed to a beneficial mix of sourced fruit and effective internal initiatives. Cost management efforts contributed to approximately $2.5 million in savings year-to-date, despite a 16% increase in selling, general, and administrative (SG&A) expenses, largely due to performance-based incentives.
In the Marketing & Distribution segment, net sales surged by 25%, resulting in $321.3 million for the quarter, bolstered by avocado pricing increases. Adjusted EBITDA for this segment increased by $10.7 million to $26.8 million. Additionally, mango sales demonstrated significant growth, with volumes increasing by approximately 40% and revenues doubling to $14 million compared to the previous year. The International Farming segment, however, faced challenges due to El Niño's impact, resulting in a dramatic decline in sales volume of over 40%, yet managed to maintain adjusted EBITDA relatively steady at $4.6 million.
Weather conditions posed a significant challenge, particularly in Peru, where El Niño led to lower harvest yields. To cope with these challenges, Mission Produce implemented proactive cost optimization measures. Looking ahead, the company anticipates some recovery in harvest conditions, hoping to revert to more normalized levels as weather stabilizes, especially in their avocado and blueberry farming. The expected avocado sales volume for the fourth quarter is projected to be slightly below the third quarter level at approximately 25 million pounds.
As of July 31, 2024, Mission Produce's cash and cash equivalents stood at $49.5 million, representing an increase from $42.9 million at the beginning of the fiscal year. The company showcased a $62.7 million improvement in year-to-date operating cash flow compared to the previous year, reflecting an enhanced operational performance. Mission Produce is poised to continue managing its capital prudently, focusing on debt reduction while supporting ongoing investments in farming and distribution capacities. Capital expenditures are expected to remain within the $40 million to $45 million range for fiscal 2024.
Despite ongoing challenges, including anticipated flat to slightly lower industry volumes in the fourth quarter, Mission Produce maintains a positive outlook. They expect prices to decrease sequentially but to remain approximately 15% above the previous year’s average, indicating sustained demand. The blueberry harvest is also expected to ramp up, potentially offsetting lower average selling prices with increased volumes. Overall, the company appears well-positioned to leverage its diversified network and efficient operational strategies to drive future growth.
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Greetings, and welcome to the Mission Produce Third Quarter 2024 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded.
It's now my pleasure to turn the call over to Jeff Sonnek, Investor Relations. Please go ahead, Jeff.
Thank you, and good afternoon. Today's presentation will be hosted by Steve Barnard, Chief Executive Officer; and Bryan Giles, Chief Financial Officer. The company's President and Chief Operating Officer, John Pawlowski, will also be available on today's call for participation during the Q&A session.
Comments during today's call and the accompanying presentation contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
All statements other than statements of historical facts are considered forward-looking statements. These statements are based on management's current expectations and beliefs as well as a number of assumptions concerning future events.
Such forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from the results discussed in the forward-looking statements. Some of these risks and uncertainties are identified and discussed in the company's filings with the SEC.
We'll also refer to certain non-GAAP financial measures today. Please refer to the tables included in the earnings release, which can be found on our Investor Relations website, investors.missionproduce.com, for reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures.
And with that, I'd now like to turn the call over to Steve Barnard, CEO. Steve?
Thank you for joining us today. Our momentum in fiscal 2024 continued with another strong financial performance in the third quarter. We grew revenue by 24% year-over-year to a record $324 million and generated a 49% increase in adjusted EBITDA to $31.5 million.
Combined with our solid working capital management, these results translated into a $62.7 million improvement in our year-to-date operating cash flow performance versus the prior year period, which showcases our team's remarkable execution this year.
We are particularly excited about these results given the challenges we faced on our farming operations in Peru this year with El Nino resulting in poor growing conditions across the region.
Our ability to pivot and ultimately capitalize during this environment underscores the enhanced alignment we fostered between our sales, operations and sourcing teams. This enabled us to effectively leverage the advantages of our global sourcing network to meet customer demand while simultaneously maximizing per unit margins.
While the industry shortage of Peruvian fruit created headwinds for our farming operation, it created opportunities in our marketing and distribution segment to really shine. The market experienced strong consumer demand during the quarter and coupled with the supply shortages, this helped support continued strength in the pricing versus our prior year.
The industry's more constrained supply environment overall, both in Peru and Mexico was an opportunity for our team to bring Mission's comprehensive capabilities to bear to service customer demand globally.
For instance, we were able to leverage our deep relationships and sourcing capabilities to supplement the lower industry volumes with California fruit where harvest yields were over 50% larger than the prior year.
Our team's agility in quickly identifying the opportunity in California gave us a competitive advantage in meeting customers' needs, resulting in a record share of the California source market for Mission.
Although our Marketing and Distribution segment was the highlight of the quarter, we were pleased with our ability to mitigate the impacts from the smaller crop in our International Farming segment.
As I mentioned, the market supported a healthy pricing environment during the quarter, and combined with cost optimization initiatives, we were successful and largely offsetting the lower volumes of owned avocados sold to generate positive adjusted EBITDA at a rate similar to the prior year.
Looking ahead, we've taken proactive steps to ensure the long-term health and productivity of our orchards following this weather cycle. We're encouraged by the signs of improvement and look forward to the return of a more normalized weather condition.
As I noted earlier, our cost optimization efforts played an important role in helping mitigate the challenges from this growing season, and we expect them to translate into improved operational efficiencies when growing conditions normalize.
Turning now to blueberries, where we are approaching the start of the harvest season in our fiscal fourth quarter. Our exceptional cash flow performance this year has put us in a position to accelerate our expansion plans. As a result, we are pulling forward several projects that we were originally slated for future periods. This underscores our commitment to growing this promising segment of our business.
The Blueberry business not only complements our existing offerings, but also aligns perfectly with our strategy of delivering high-quality, differentiated products across multiple growing seasons.
I'm also pleased to report that our strategy to drive market share growth in the U.K. is well underway. In fact, our U.K. facility achieved profitability this quarter for the first time since opening just a year ago. This is a direct reflection on our team's focus on being nimble.
We have been working hard on penetrating this market in a fashion that's sustainable and profitable. This required a refinement to our approach as the team successfully adapted to the local market dynamics, fine-tuning our strategies to better align our customer relationships.
Looking forward, we are excited about the opportunities at this facility and our investments in additional capacity of Fortis. In closing, I want to thank our team for an outstanding performance we achieved this quarter. Their hard work has not only delivered exceptional results but has also reinforced Mission's position as the industry leader.
Our diversified network of global assets continues to be a key point of differentiation for us, providing us the flexibility to successfully meet our customers' supply needs. Looking ahead, we remain well positioned from a competitive standpoint, while our growth strategy and sound balance sheet with modest leverage provide us the tools to drive value for our shareholders.
With that, I'll pass the call over to our CFO, Bryan Giles, for his financial commentary.
Thank you, Steve, and good afternoon to everyone on the call. I'll start with a review of our fiscal third quarter financial performance, touching on some of the key drivers within our three reportable segments. Then I'll provide an update on our financial position and conclude with some thoughts on the current industry conditions that we are seeing.
Total revenue for the third quarter of fiscal 2024 increased 24% to $324 million, driven by a 36% increase in avocado sales prices. This price dynamic resulted from lower avocado supply available during the quarter due to a combination of weather impacts on free development and production in Peru and fruit harvesting disruptions in Mexico.
Despite overall volume reductions, domestic sales volumes were relatively flat during the quarter, demonstrating the resiliency of demand for avocados amid higher price points in the U.S. market.
Gross profit increased by $8.6 million to $37 million in the third quarter, and gross profit margin increased 50 basis points to 11.4% of revenue. These increases were primarily driven by stronger per unit margins on avocados sold in our Marketing & Distribution segment, which were attributed to a combination of favorable mix of sourced fruit and internal initiatives that Steve spoke to.
Within our International Farming segment, gross profit was down slightly during the quarter, excluding the $3.2 million asset disposal for undeveloped land in Peru, as the adverse impact of lower harvest yields on fixed cost absorption was largely offset by higher sales prices and cost savings measures.
SG&A expense increased $2.8 million or 16% compared to the same period last year, primarily due to higher employee-related costs, including performance-based incentive compensation and stock-based compensation expense.
Higher performance-based incentive compensation is largely explained by our improved year-to-date operating performance relative to the prior year period. We continue to focus on reducing controllable expenses, and we have achieved approximately $2.5 million of cost savings fiscal year-to-date in areas such as professional fees, travel and operating costs, among others.
Adjusted net income for the quarter was $16.7 million or $0.23 per diluted share compared to an adjusted net loss of $10.3 million or $0.15 per diluted share last year. Adjusted EBITDA increased $10.3 million or 49% to $31.5 million as compared to $21.2 million last year. This improvement was driven primarily by stronger gross profit performance.
Turning now to our segments. Our Marketing and Distribution segment net sales increased 25% to $321.3 million for the quarter, primarily driven by the avocado pricing increases I described previously.
Segment adjusted EBITDA increased $10.7 million to $26.8 million as a result of higher per unit gross margins. During the quarter, we achieved avocado pre-unit margins that were above our targeted range, supported by a heavier emphasis on California sourced fruit.
The California crop was much larger than was originally expected, giving us more flexibility in addressing supply challenges brought about by lower volumes available from Peru and Mexico and enabling us to better utilize capacity within our Oxnard packing facility.
Avocado supply was nonetheless constrained during the period, resulting in a higher price environment that required more aggressive pricing strategies across our retail and foodservice programs. Though still a relatively small part of our operation, it is worth noting the success we experienced within our mango category during the quarter.
Mango volumes increased approximately 40% and revenues doubled in comparison to prior year to $14 million. We achieved meaningful improvement in our per-unit margins as we continue to diversify our customer base and grow domestic market share.
Total segment sales and adjusted EBITDA in our International Farming segment were $27.4 million and $4.6 million, respectively, compared to $38.2 million and $4.9 million in the same period last year.
Despite experiencing a reduction in quarterly sales volume of greater than 40% from our own farms due to the unfavorable El Niño conditions in Peru, we were able to hold adjusted EBITDA relatively flat as a result of cost containment efforts that were implemented near the end of the prior year harvest season and an advantageous pricing environment.
While we had anticipated a higher-priced market, the average sales prices realized were stronger than we had expected at the end of the last quarter. Activity in our Blueberries segment has traditionally been concentrated in the first and fourth quarters of our fiscal year in alignment with the Peruvian blueberry harvest season, which typically runs from July through February.
As such, we expected nominal contributions from the Blueberries segment during our fiscal third quarter. Net sales in the Blueberries segment totaled $1.6 million compared to $1.4 million in the prior year period, and segment adjusted EBITDA decreased slightly to $0.1 million.
Shifting to our financial position. Cash and cash equivalents were $49.5 million as of July 31, 2024, compared to $42.9 million as of October 31, 2023. We are very pleased with our operating cash flow performance year-to-date, which is up $62.7 million versus the prior year.
Net cash provided by operating activities was $55.4 million for the 9 months ended July 31, 2024, compared to cash used in operating activities of $7.3 million for the same period last year.
The increase was driven by improved operating performance and favorable changes in working capital, the latter of which was driven by higher grower payable balances at the end of the third quarter, resulting from a heavier concentration of fruits sourced from California growers, which generally have longer payment terms than fruit sourced from other regions.
In addition, growing crop inventory was favorably impacted by the previously mentioned cost containment efforts, combined with the accelerated harvest timing in the current year, which resulted in greater than 50% of our own production being sold by the end of our fiscal third quarter.
As a result, in the current fiscal year, we've been able to accelerate working capital reductions into the third quarter that we typically do not achieve until the end of our fiscal year.
Capital expenditures were $25.3 million for the 9 months ended July 31, 2024, compared to $47 million last year, and were attributed to avocado and blueberry farming-related investments in Latin America as well as construction costs associated with expanding capacity at our U.K. distribution facility.
During this fiscal year, the International Farming segment also began construction at a pack house in Guatemala.
Our projected CapEx budget for fiscal 2024 remains unchanged in the range of $40 million to $45 million. These figures reflect a continued step-down in capital spend over the last few years after a period of heavy investments in distribution capacity and farm development.
We remain committed to driving free cash flow as a means toward maintaining a healthy capital structure while continuing to support our ongoing farming investments and facility improvement projects.
We are proud to have generated close to $30 million of free cash flow through the 9 months ended July 31, 2024, and we feel confident that our business will generate meaningful free cash flow for the full fiscal year. Debt paydown remains our near-term priority, and we expect to continue to strengthen our balance sheet during our fiscal fourth quarter.
In regards to our near-term outlook on the fundamental drivers of our operations, we are providing some context around our expectations for industry conditions to help inform your modeling assumptions.
Beginning with avocados, industry volumes are expected to be flat to slightly lower in the fiscal 2024 fourth quarter versus the prior year period as we continue to feel the impact of the smaller Peruvian crop.
With the conclusion of the California and Peru harvest seasons, we will transition to a Mexico-centric source model during the latter part of the quarter. Sales of exportable avocado production from our own farms is expected to be slightly below the fiscal third quarter 2024 volume of approximately 25 million pounds and significantly lower than the approximately 60 million pounds sold in the prior year period.
From a pricing perspective, we anticipate prices to decrease on a sequential basis but remain approximately 15% higher than the $1.39 per pound average experienced in the fourth quarter of fiscal 2023. We believe that higher price points at comparable volume levels are a sign of continued strength in demand.
The blueberries harvest season improve will begin to ramp up during our fiscal fourth quarter. We expect to see meaningful volume increases from our own farms, but the impact on revenue will likely be offset by lower average sales prices.
The lower prices are expected to impact segment-adjusted EBITDA during the quarter as compared to the previous year when supply constraints led to abnormally high sales prices.
We are very proud of the progress we've made this year. We have been able to showcase our industry leadership amid dynamic conditions while also demonstrating strong financial execution with our powerful free cash flow generation. We look forward to continuing to execute our growth strategy and building on our momentum to drive value for our shareholders.
That concludes our prepared remarks. Operator, now over to you. Please open the call to Q&A.
[Operator Instructions] Our first question is coming from Ben Klieve from Lake Street Capital Markets.
Congratulations on a really excellent quarter from top to bottom here. First question, a couple related to your upcoming Peruvian harvest in the avocado side.
I'm wondering that the volume that you talked about today, it seems like a real reiteration of your expectations from 3 months ago. But I'm wondering if you can comment on how much or all your expectations from Peru have evolved over the last 3 months as harvest is approaching?
And then also if you can comment on fruit size and quality of that crop because I'm just curious to the extent to what harvest is able to be taken, are we going to be able to get this really strong market pricing?
Well, we're done harvesting for the season. I think the main reason, we had some extreme heat down there, we had estimated about 42,000 tons prior, well, obviously, before the fruit was ready, but it was on the tree. And we experienced some tremendous heat waves through the area due to El Niño.
I think we ended up with, I don't know what percent, it was substantially lower than the 42,000 tons, but the prices were much higher. So, it offset it a little bit. But going forward, it looks like El Niño has moved offshore and the trees look a lot healthier going forward.
And I'll kind of build on that as well. I think when we spoke 3 months ago, we had a pretty good sense as to what volumes for this year were going to look like. I think we could get an accurate picture of what was on the tree and we had a pretty good feel for what the size curve would look like. And I think it pretty much came through the way we expected in the fourth quarter, in the third and fourth quarter.
I would say that the pricing did hold up a little bit better than we expected. We had a smaller size curve, and I think that's what concerned us a little bit about what the average selling prices may come to, but there was just such a lack of fruit at times during the period that the pricing remained high regardless.
So, I think we were pleased with how the season progressed as we move through it. I think to Steve's point, as we look to next year, till at this point, the trees are looking better. It won't be until probably December so that we'll start to see the flowering on the trees and we'll start to get a better sense. But to Steve's point, this last year, the fruit was on the tree.
It was just with the weather it caused it to drop. So, we'll need to make sure that as long as we get better weather conditions as we move forward, we think that we can expect harvest to kind of revert back to more normalized levels.
Actually, that ranch, we have up north, which is substantially different in climate is flower and said already, and it looks pretty good. The southern ones are in process now. Things can change, but so we've got to start with something good before you end up with it.
No, I hear you loud and clear. Okay, that's all, I thought there was still some fruit at a thought on the trees down there. So, thanks for clarifying all those points.
Shifting north to California, you talked about kind of how strong that harvest is, but also that you had record share. I'm wondering if you can elaborate a bit on what drove the share increase. And any comments you guys can make from a quantitative perspective about how much your share increased overall level of share. Anything of that nature would be helpful.
Hi, Ben, this is John Pawlowski. I'll try to give some commentary here and then let Steve or Bryan chime in if necessary. I would say when you think about California this year, not only were the expected volumes at 25-30 million I think, close to 40% higher than anticipated. We can validate that versus original estimates on the crop, but we had challenges like the rest of the industry in Mexico and Peru as well.
So, when we saw that coming, the teams internally pivoted to understand what was the best situationally for our customers. And one of the things we saw immediately was trying to get more share of the California crop, especially as it was getting a little bit larger was going to be the best thing for our customers to make sure that we have the appropriate amount of supply and the right size curve because California was coming in with slightly larger pieces of fruit.
What we did then was really work with our field teams and execute as far as we could with excellence. A lot of things that Steve and team had done for years with building relationships with folks here, both in Northern California and in Southern California and understanding who owns those branches, where they typically sell, what those relationships look like and just, quite frankly, making phone calls and understanding where the fruit was and doing what we could to partner with those local growers and ensure we have the right amount for our customers.
And ultimately, we ended up with close to 30% share in the California market this year and potentially higher when all is said and done.
So, I know that's higher than we've had in the past, but proud of the teams and quite frankly, it came down to relationships and our ability to pivot quickly with what our customer needs were.
Yes. I agree completely with what John had to say. I think on top of that, some of the true, I mean, our relationships not just with any growth, but some of these large-scale growers in California.
I think that we saw big growth with many of the larger players this year, who we were very proactive with and reaching out to and kind of developing a plan to market their fruit over the course of the season. So, no, I think that it was when California is running smoothly, it's very favorable for our business.
Well, I think just one last thing, too, with having our own people on the ground in both Peru and Mexico, we knew what was down there and could see the gap or the lack of fruit coming out of there probably before most of them did. So, we got aggressive on this end and locked it up before the others did.
One last question on the balance sheet cash flow side. The cash flow is really exceptional. We knew that was moving in the right direction, but certainly faster or the improvement was more material, I think, than I certainly was expecting.
It's great to see, and I'm wondering, given the momentum here and how strong our balance sheet is today, how your thought process is evolving, if at all, towards future capital allocation? Are you looking to maybe further accelerate capital investments since you have more flexibility now? Maybe accelerated M&A? Has anything changed given how strong your performance has been? Or is your thought process unchanged?
I wouldn't say anything's changed, Ben. I think we've always kind of had the same priorities. I think we've gone through a period of time last couple of years where our earnings were weak, and we leaned into our balance sheet a bit during those periods.
So, as we've gone through a year that's been relatively strong, I think first and foremost, we wanted to get the balance sheet back in order and get the debt down.
I don't think that we ever -- well, let me take one step back. When it comes to traditional CapEx, we've been communicating a step down in that capital spend over time as we have our distribution capacity built out and we believe our farming supply needs have been met.
So, that step down has been a plan that we've had in place for years. I think we mentioned in the last call that we did accelerate some things related to blueberries because we saw the opportunity with the cash flow that have been generated within the joint venture.
But outside of that, I wouldn't say that we're going and necessarily doing anything overly aggressive compared to what we planned previously.
I think M&A, it's always out there. We're always evaluating opportunities when they come across our table. It's not something that we've participated in aggressively in the past. But I think that we're always open-minded to how we can invest to complement the business that we have in place today.
So, I wouldn't say that the cash position alone changes our feelings about what we're going to do. I think we're going to continue doing the same things we've been doing. It's just nice to have a bigger pile of cash to do it with right now.
The next question is coming from Gerry Sweeney from ROTH Capital Partners.
I have one question, but it's actually a couple of different parts. So, looking at margins, obviously, we had some cost savings initiatives. I think last year, you highlighted you're in growth mode for a bunch of years, and there was some opportunity to fine-tune operations.
As we look at this year, margins up, part of it price, part of it sounds like cost savings initiatives. But just curious if you could give us a little bit longer-term view on -- are there more options out there or things that you can still continue to fine-tune? How do we look at that on a go-forward basis?
Maybe I'll take the first crack at it and I'll let Steve and John supplement. I think most of the margin improvement that we saw during the third quarter, Gerry, was driven by performance within the Marketing segment.
I think even with the cost-cutting initiatives we had in place with farming, we did not see margin improvement this year, and that's because of the weakness in volume in production off the farms.
I think if we had not done those cost savings initiatives, we could have been in a much worse spot than we ultimately were. But at the end of the day, our EBITDA was $4.9 million in Q3 last year. It was $4.6 million in Q3 this year from the farming segment, and that was on volumes that were dramatically lower, both for the quarter and projected for the season as a whole.
So, I think we're very pleased with what we were able to achieve and I think it sets a good baseline as we move forward. As the trees recover and the crops grow in Peru, we're going to be building off a much lower cost base per acre, per hectare, per unit than what we've had previously.
So, I think we're in a good spot. I don't know if there's deeper cuts to be made than what we've already done within the farms. But I think we've level set it and put us in a position that as we grow going forward, hopefully, we can keep those costs under control and that would be true, I would say, of both the avocado and the blueberry farming.
I think on the marketing side, I think it had more to do with -- while some of it was leveraging investments that we've made, I think very astute management of the buy sell throughout the quarter as we moved through different countries of origin, probably had more to do with the success than cost savings initiatives. And that was really the driver of the quarterly results, in my opinion.
But I think it highlights I think some of the things we were able to accomplish that we believe we can still build on as we move forward. But, yes, I just think that we were really pleased with the results that we were able to generate.
And keep in mind, I think when we have multiple countries of origins available to us and during the third quarter, we had California, we had Peru, we had Mexico. That gives us the most flexibility in terms of meeting our customers' needs and generally enables us to manage margin a little bit better than when we're constrained to a single or more limited countries of origin to get supply.
I would add a little bit of color there, this is John. It's been 1.5 quarter for me, watching the team and having responsibility for the sales and marketing side, the operational side from a logistics perspective here in the U.S. and then our procurement team as well and we're looking at what they've been able to accomplish.
Q3 was outstanding. Q2 was great as well. And it's a result, as Bryan mentioned, of a lot of good collaboration work, new processes and tools internally to help that team come together and make really quick, agile decisions, as Steve mentioned earlier in his comments.
And when you think about what we're doing on the mango side and the growth that we're experiencing there, I get even more excited than when I started in April about what the sales and marketing growth opportunities are at the company, right?
So, when we think about the future and we think about what we've been able to accomplish from a sales and marketing perspective, not just this quarter, but what the team has been building up to the runway from a sales and marketing growth perspective, I think, is in a really good spot.
I think the infrastructure that Steve and team built over the years has room in it, has runway in it for us to continue to put more product through that network. And the team has proven that they can execute well even in uncertain conditions.
The farming investments that the team has made over the years are all in a great spot in regards to what they can produce. And so, it's a matter of letting some of those kinks get worked out. And what we see as we look at the next couple of years is really, I think, impressive and my focus is going to continue to be growth, and I think we can really get there together as a team.
I'll just summarize it. But the farming thing looks good. It appears to be back. Things can change overnight, as you know. But as of right now, they look good. And, as John mentioned, this mango deal is fitting very well considering we're leveraging the assets we already have and the demand on the fresh ripen mango is surprising. Lots of opportunity ahead.
We have reached the end of our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.
Thank you very much for your interest in Mission Produce and we look forward to speaking with you again soon.
Thank you. That does conclude today's teleconference. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.