MillerKnoll Inc

NASDAQ:MLKN

Earnings Call Transcript 2024-Q4

[Operator]

Good evening, and welcome to MillerKnoll's Quarterly Earnings Conference Call. As a reminder, this call is being recorded.

I would now like to introduce your host for today's conference, Chief Financial Officer, Jeff Stutz. Please go ahead.

[Jeff Stutz, executive]

Thank you. Good evening, and welcome to our fourth quarter fiscal 2024 conference call. I'm joined by Andy Owen, Chief Executive Officer. Also available during the Q&A session are John Michael, President of Americas Contract; and Debbie Propst, President of Global Retail.

Before I turn the call over to Andy, please remember our safe harbor regarding forward-looking information. During the call, management may discuss information that is forward-looking and involves known and unknown risks, uncertainties and other factors that may cause the actual results to be different than those expressed or implied.

Please evaluate the forward-looking information in the context of these factors, which are detailed in today's press release. The forward-looking statements are as of today, and we assume no obligation to update or supplement these statements.

We may also refer to certain non-GAAP financial metrics, which are reconciled and described in our press release posted on our Investor Relations website at millerknoll.com.

And with that, it's my pleasure to turn the call over to Andy.

[Andrea Owen, executive]

Thanks, Jeff, and thanks, everyone, for joining us tonight. MillerKnoll wrapped up fiscal year 2024 with a strong finish. Throughout the year, we anticipated business improvement in the back half, and we shared the actions we took to align our operating costs with the economic environment to boost demand across contract in retail and to future proof our business. I'm proud to report that by leveraging the scale of our collective of brands and our diversified business channels and global operations. Our team delivered significant earnings per share and margin growth in the fourth quarter.

In addition, we delivered consolidated organic order growth of 2.9% for the quarter. Right now, the demand environment for contract and key markets are heading in a positive direction, and we've put ourselves in a strong position to benefit from this shift. We've adjusted our business to remain agile and productive, and we see healthy levels of activity across our business as a result. We're optimistic that a strong quarter and an improving market will contribute to our momentum for the upcoming year.

I'd like to share a few highlights about the work underway, and then Jeff will provide a closer look at our financials and our outlook.

We [indiscernible] fiscal year 2025 with several events around the globe this month, including the Design Days in NeoCon in Chicago and 3 days of designing Copenhagen. At our Fulton Market Chicago showroom, design enthusiasts are thrilled to experience our second nature sustainability and test lab exhibits. Both immersive experiences underscored our design DNA and our commitment to sustainability and the rigorous process that we put our products through to ensure both innovation and quality are always present.

In Copenhagen, our flagship HAY house was packed with customers shopping new collaborations, including a fun partnership with Japanese sportswear brand ASICS. And we hosted several events [indiscernible] showroom, showcasing the brand's approach to creating intentional spaces both indoors and outdoors.

Traffic at NeoCon is back close to pre-COVID levels and appointments at our showrooms during Design Days were up year-over-year. More importantly, conversations with customers have shifted. They've moved from the theoretical return-to-office ideas to specific project needs. And with that, we believe there is opportunity. We're well positioned through our design with impact programs to solve these needs. In the year ahead we'll invest in MillerKnoll showrooms digital platforms and enhanced tools to fuel our contract business and support our MillerKnoll dealers.

We're finding new ways to bring our collective of brands together in both our dealer showrooms and our own showrooms. This fall, we'll open newly enhanced MillerKnoll spaces in London, New York and Los Angeles that spotlight our leadership in designing sustainability.

We're also ramping up product launches to deliver unique solutions to our customers. This month, we launched over 30 new products at Design Day, capturing industry awards for Knoll's Tugendhat and Morrison Hannah chairs, Knoll's Cove Collection for private offices and NaughtOne's Percy chair. In addition, Herman Miller refreshed the versatile Vantum Gaming Chair with ergonomic enhancement and showcase the new Mirra 2 task chair with a lower carbon footprint.

And at 3 day of design, Muuto introduced a new outdoor collections Settle and HAY introduced new ancillary seating, [indiscernible], coffee tables cabinets and lighting.

Our international contract business is a growth vehicle, and we continue transitioning legacy Herman Miller and Knoll dealers to full MillerKnoll dealers. This quarter, we transitioned 19 dealers in 17 countries and 19 cities. In addition as we look at the full year, we added 29 new dealers in 3 countries and 13 new cities to expand our international distribution footprint. With close to 150 international MillerKnoll dealers onboarded. We've closed out the fiscal year ahead of schedule, allowing us to be even more responsive and align with our customers and clients. Through our dealer showrooms, we're expanding our physical presence in high-performing regions. This quarter, dealers opened new MillerKnoll showrooms in India, Singapore and Indonesia.

Turning to retail. We delivered organic order growth of 1% year-over-year despite the tough macroeconomic conditions our industry still faces. We're continuing to do the work to drive orders in the short term while optimizing our retail engine for significant long-term sales growth.

We maintain a strong focus on inventory management, and optimizing our product assortment by continuing to complementary -- I'm sorry, continue to expand our complementary assortment. And to capture more sales and productivity with less foot traffic, we're densifying our store space to show more of our collections. We saw huge margin improvements due to these efforts. Our adjusted gross margin in our retail business were up 640 basis points on a year-over-year basis.

We also continue to provide tools that help our retail customers build beautiful spaces and drive larger orders with fewer returns. New configurator tools on-site and design services make it easier and more rewarding to place orders that design within reach and Herman Miller stores. As we look to the future, we will invest in new stores applying the format and experiences we tested at our newest design within reach stores such as San Francisco.

In addition, negative trends in home sales are beginning to ease a bit. The National Association of Realtors reported that year-over-year declines in existing home sales are beginning to flatten. We believe there is pent-up retail demand and we are prepared to harness it.

Finally, sustainability along with innovation, is an important consideration for our customers and associates around the globe. Our work builds on a legacy of sustainable design and business practices that we have nurtured for decades. Today, it extends across our collective and encompasses hundreds of projects, big and small. As I mentioned, we showcased our sustainability efforts doing an exhibited Design Days in Chicago. We shared many of the things we're acting on. Now from incorporating our bio-based materials in our products like [indiscernible] to using more recycled content and embracing circular design. During the quarter, we were also recognized for our efforts, the gold metal rating from EcoVadis putting us in the top 5% of companies rated by EcoVadis in the past 12 months. We also received the 2024 Steel Sustainable Innovation Award for our work leveraging ocean-bound plastics to reduce waste and single-use plastic.

All of this to say, we're optimistic and focused on growth in the year ahead.

With that, I will turn it back to Jeff for a closer look at our financials.

[Jeff Stutz, executive]

Thanks, Andy. I'll start by providing an overview of our performance in the fourth quarter and some full year highlights followed by a few insights into our outlook and targets for both the first quarter and full fiscal year. For the fourth quarter, we generated adjusted diluted earnings of $0.67 per share, well above the midpoint of our guidance, driven by strong gross margin performance as well as favorable tax benefits.

At the consolidated level, net sales in the fourth quarter totaled $889 million, representing an organic decrease of 5.2% from the same quarter a year ago. New orders at the consolidated level totaled $933 million in the fourth quarter, reflecting organic growth of approximately 3% from the same quarter last year.

The improving demand indicators that we've been monitoring throughout the year were validated this quarter by a return to year-over-year order growth in the Americas Contract segment. This improved demand picture helped to drive a sequential increase of $44 million in the consolidated order backlog, which ended the period at $684 million.

Our performance at the gross margin line was a clear highlight in the numbers. On a consolidated basis, gross margin in the quarter of 39.6% improved on a year-over-year and sequential quarter basis by 250 basis points and 100 basis points respectively. These improvements were driven by price realization, and benefits from inventory management, product mix and channel performance. Our consolidated adjusted operating margin was 8.3% for the period, which is up 240 basis points year-over-year.

Turning to cash flows in the balance sheet. This quarter, we generated approximately $78 million of cash flow from operations, driven by several factors, including a meaningful reduction in working capital, primarily attributed to our inventory management efforts. We finished the fourth quarter with a net debt-to-EBITDA ratio of 2.63x, putting us comfortably under the maximum limit defined in our lender agreements.

With that, I'll now take a moment to summarize our fourth quarter performance by segment. Within our Americas Contract segment, net sales for the quarter of $417 million were down 12.2% on a reported basis, while new orders of $480 million were up 5.7% on a reported basis from the previous year, and increased sequentially 14.3% from the third quarter of this year.

During the fourth quarter, orders improved steadily each month and funnel additions and contract activations remain positive, giving us increased confidence as we begin the new fiscal year. Fourth quarter adjusted operating margin in the Americas segment was 7.3%, which is down 280 basis points from the same quarter last year as a result of lower sales volume and the resulting impact on leverage of fixed overhead costs.

Turning to our International Contract and Specialty segment. Net sales for the quarter totaled $245 million, up 3.8% organically year-over-year, while new orders totaled $239 million and were essentially flat with last year. We remain very optimistic about the growth potential in this segment, which for most of this past year, led our business in terms of new order growth. This past quarter, we benefited from strong demand patterns in Korea, India, China and the Middle East. We also saw signs of improving demand in parts of Europe this quarter.

Our international team is making great progress improving and expanding our MillerKnoll distribution footprint. To date, over half of the global network is now able to sell the MillerKnoll collective, and we expect to transition 100% by the end of fiscal 2025.

Moving to our Global Retail segment. Net sales in the fourth quarter were $227 million, representing a decline of 7.2% year-over-year on a reported basis and up slightly on an organic basis. New orders in the quarter were $214 million, down 6% compared to the same period last year on a reported basis and up just under 1% on an organic basis. This organic demand growth stands out favorably relative to the broader retail furnishing industry data, our formula, which combines a strong digital presence with excellent in-store experiences is supporting above-industry growth. And importantly, we have a lot of runway for further investment and growth in new markets in North America and longer term nationally.

The North America housing market slowdown and reduced spending on discretionary goods continue to affect demand levels in this segment. In response, we are focusing heavily on effective inventory management and product mix optimization to drive operational efficiency. These efforts have helped us realize substantially improved gross margins compared to year-ago levels despite the challenging demand conditions. Additionally, we're enhancing brand awareness while also are prioritizing investments in our most established channels and brands in order to better leverage our scale.

For the full fiscal year, net sales were $3.6 billion, and adjusted earnings totaled $2.08 per share. We made remarkable progress this past year achieving our stated goals with respect to acquisition cost synergies and as of year-end, have achieved annualized run rate savings of $160 million, an amount well above our originally stated target. And importantly, these cost savings played an important role in helping us deliver significantly improved earnings throughout the year.

Let me conclude my prepared remarks with a few comments on our outlook for fiscal 2025. Overall, we are optimistic as we enter the new year, given the multitude of data points suggesting activity and interest in the contract elements of our business is ramping.

Traffic at recent trade shows around the globe, including the U.S., Italy and Copenhagen, has improved and is close to pre-COVID levels as Andy mentioned. In addition, we are bullish on the growth prospects of our retail segment, which we believe will benefit from eventually improvements in the housing market, coupled with our planned investments in new stores and assortment expansion. We believe these factors point to an active year ahead. And accordingly, for fiscal 2025, we expect net sales to be above fiscal year 2024 and adjusted earnings per share to be in the range of $2.10 to $2.30 per share.

As we look to the first quarter, I want to remind everyone that the seasonality of our retail business. We tend to see lighter demand in the summer months as consumers shift spending towards experiences and vacation. Taking that into consideration, we expect net sales for the first quarter to be between $872 million and $912 million, and adjusted earnings per share to be between $0.38 and $0.44.

Okay. With that overview of the numbers. I'll now turn the call over to the operator. We'll be happy to take your questions.

[Operator]

[Operator Instructions] Your first question comes from the line of Reuben Garner with the Benchmark Company.

[Reuben Garner, analyst]

Nice to see some more positive trends of that growth inflection. Andy, you referenced investments on the commercial side. I think it's the first time in a while. And I know, obviously, you're always investing, but I wondered if you could kind of elaborate into maybe dollar amounts where exactly those investments are going and what -- targeted that for growth in this coming year?

[Andrea Owen, executive]

It's a great question, Reuben. I don't know if I can clarify dollar amounts, but I'll tell you where we're focused. On the contract side, as I mentioned in my remarks, we're talking about investing in digital platforms and tools that will really help our dealers and make it easier for them to do business with us. We'll continue to invest in international contract and expanding our MillerKnoll showrooms and also expanding the global reach of the Knoll brand, which, as you know, pre-acquisition was very small in the contract market. And in the international retail front, we'll continue to build our wholesale footprint.

And then in the retail business, our North America stores business has been very healthy. And as we see that start to track, we'll continue to invest in opening stores in both DWR and Herman Miller as well as continue to expand our assortment.

And finally the last thing I would add, Reuben, is as we look at our product assortment, we spend a lot of time the last couple of years rationalizing 2 great brands in the products we offer, but also spending time innovating and thinking about what we're going to launch. So you'll see more new products than all of our brands as we look towards the future.

[Reuben Garner, analyst]

Great. Sorry, I was on mute at the end of the first part. So Jeff, you mentioned gross margin, the performance in the quarter. Obviously, very strong. I was wondering if you could kind of talk about within that guided range you gave for this year, what kind of range you're looking at from a gross margin perspective? And if you could kind of break us down a bridge of what the pieces are because I know you've got a lot of moving parts in the last couple of years with price cost and cost out and synergy left over from the Knoll deal, if you could kind of give us an updated look of all that?

[Jeff Stutz, executive]

Yes. Reuben, I'm going to fall short. We didn't give a guide for margin for the full year. So I'm going to fall short of quantifying that. But I will highlight, I think, some of the factors that we'll be on the lookout for. And maybe I'll start with our -- the guide we did provide for the first quarter to give you an idea kind of as we move sequentially from Q4 into Q1. What we expect some of the moving parts.

But we do believe we still have some net pricing benefit to benefit from. That was a big factor in the year-over-year improvement in the fourth quarter. Our expectation is that net pricing benefit could be as much as 70 basis points of improvement sequentially moving into Q1. We've got price actions planned here for later in the summer. So I expect we will continue to see some pricing benefit roll in as we move throughout FY '25 just as a generic comment.

Also on a sequential change from Q4 to Q1, our guide does assume, I mentioned in my prepared remarks, the seasonality in the retail business. So we'll have some negative channel mix in the first quarter could be as much as 100 basis points, just simply based upon that seasonality. You've got that rotation away from retail sales in the summer months that comes at the expense of margin because it's structurally higher gross margins in that business, as you know.

So -- but I think that is partially offset by some benefit expected in freight and distribution. And as we move into Q1, a little bit of labor and overhead benefit in parts of our business where we're going to see some production levels ramp up. So that's the kind of the sequential view is -- I think generally speaking, as we move into this next fiscal year, the next big leg in terms of margin opportunity for us, I think, comes from volume pick up. So as we get unit volume improvements in our factories, we should see improved labor and overhead absorption, which will really help us. And obviously, this is always something that we're on the lookout for is pricing and discounting pressure. Obviously, we have not seen that in a significant manner thus far, but we're always on the lookout for it in the business.

And John, I don't know if there's anything specific you would add from a contract perspective that would relate to margins going forward.

[John Michael, executive]

No. I think we're -- we've got a very strategic approach to discounting and being competitive in the market. And I think we've got a good balance between day-to-day business and mid-market business as well as larger contract opportunities. So we're expecting from a margin perspective that we'll still be in a significantly positive position.

[Reuben Garner, analyst]

Okay. And one last quick one for me. Retail margin is very strong in the quarter despite what kind of continues to be a depressed environment, anything unusual from a mix standpoint or otherwise has led to that strength? Or is that a reasonable baseline kind of build off of as volume covers?

[Andrea Owen, executive]

Reuben, you're breaking up, but I think you're asking about retail margins and if there was anything unusual or what that's due to, am I correct?

[Reuben Garner, analyst]

Yes. That's right.

[Andrea Owen, executive]

I'll start and then I'll let Debbie add. I think what you're seeing in the retail margins is our real focus over the last couple of years on operational efficiency, on last mile delivery, really making sure that we have our inventory in the right place, expanding our products and making sure that we're satisfying our customer needs. I think there's a lot of infrastructural attention and execution there that is really adding up to some healthy margins. You'll also remember last year, we suffered through a little bit of overinvestment in inventory like everyone else that we had to work our way through. So that's a little bit of an elevation year-over-year, but that's not the bulk of it.

Debbie, what would you add to margins?

[Debbie Propst, executive]

Yes. I would just add that our selling tools, which we've been investing in developing over the last several quarters such as design services are helping to drive more mix into higher-margin categories like upholstery. And additionally, we've driven increased shipping revenue this year through increases in our ship freight products, which has helped offset some of those increased inbound cost that we've seen over the course of the year. So we're really pleased with margin performance. I would say this is in a baseline that we can continue to build off of.

[Operator]

Your next question comes from the line of Greg Burns with Sidoti & Company.

[Gregory Burns, analyst]

I just wanted to follow up on the margin outlook for next year. What's assumed in the guidance in terms of maybe some of the incremental growth investments you outlined earlier, Jeff, how much of a detraction from margins or maybe some of those incremental investments you're planning on making in '25 versus what you spent in '24. How much is that expected to detract from margins just because the guidance implies like maybe a little bit lower margins than I was looking for based on the revenue?

[Jeff Stutz, executive]

Yes. Actually, I might take issue with that. I think our outlook assumes some modest margin expansion in total in FY '25. And again, I'm not going to quote it because we didn't provide that in the guide. That's driven by continued growth in retail at structurally higher margins and improved unit volume efficiency rolling through our factory. Those are the big factors. I think there's maybe some incremental pricing benefit to be added yet. But if we can get some top line growth, we should see some margin expansion in this business.

[Andrea Owen, executive]

When you see the product rationalization that we've been able to do over the last 3 years and the hard work that the teams have put into making sure that we are finding efficiencies and these 2 great companies assortments as they come together, that has added up actually to quite a bit of margin as we found better ways, more efficient ways to build our products together as opposed to a part. And so part of that margin is showing up as we realize the synergies that we've put in the bank for the last 3 years.

[Gregory Burns, analyst]

Okay. That makes sense. And you talked a lot about the, I guess, the dealer initiatives you have internationally. Can you just give us maybe an update on where you are at domestically in terms of bringing the dealer network together, I'm assuming it's been completed for a while, but I'm more looking for. Do you feel like the channel is operating to its full potential yet? Is there still kind of learning curve that needs to happen to bring the dealer -- domestic dealers up to speed? Like where are you at in terms of realizing the full benefit of the integrated dealer network domestically?

[Andrea Owen, executive]

John, why don't you take that one? You're the expert here.

[John Michael, executive]

Sure. We've been really impressed with the investment that the dealers have made in terms of learning the product, positioning the product, displaying the product on their showroom floors, et cetera. I think we're -- the network is very stable. We're really well aligned. You literally can't tell who is a legacy MillerKnoll dealer versus who is a legacy Herman Miller dealer anymore. They are all MillerKnoll dealers. And they've become more comfortable with the tools to help them sell effectively.

We've had a couple of strategic consolidations in markets that are really going to strengthen our position in some key markets around the country. So I think we feel like the network is in really good shape and continuing to grow. I do, however, I think there's still upside. As they become more comfortable with the products, the lead times for projects is usually 6, 9, 12 months. So I think we'll see continued momentum from them as time goes on.

[Operator]

Your next question comes from the line of Brian Gordon with Water Tower Research.

[Brian Gordon, analyst]

Bud apologizes for not being able to make it on the call, he's traveling today. And congratulations on, especially the strong margin performance this quarter. I guess my question is, have you seen any evidence that return to work has plateaued or maybe reach an equilibrium at this point? Or do you think that there's any evidence that we could see some meaningful increases from here, both sort of in North America and internationally? And then my follow-up to that would be, when you're talking with customers, are you seeing any sort of trends in terms of like space per employee or spend per employee that's changed with hybrid work over the past couple of years?

[Andrea Owen, executive]

Thanks, Brian. As far as the trend in return to work when I -- also return to office because we've all been working the whole time. I think we're -- I don't think we're out of plateaued. I think we're still climbing like I mentioned in my prepared remarks, people are no longer sort of debating the value of being together more often than not. And are really looking at their specific projects that are in a much more decisive mode about how they want to bring their teams together. I think many people are in a hybrid world, but that hybrid world has gone from 1 to 2 days a week, to 3 to 4 days a week and sometimes full time. So I think we will still continue to see that evolve, but I think it will evolve favorably for our industry based on the research and the data that everyone is learning themselves but also seeing out there in the world about how healthy it is for us to be together and work together.

The second question, as far as base for employees, I think it really depends on the business and the purpose and what that business is trying to do. I would say on average, and John, I'll ask you to add into this. We're not seeing space decline as much as we thought it would. We're certainly seeing people reevaluate their space. But as they add in more collaborative workspaces and think about how they want to work in a hybrid environment, we're not seeing it really contract.

[John Michael, executive]

Yes, I would agree with that, Andy. I think as we talk to leaders of various organizations, and we ask them what problems they're trying to solve for as they're outfitting space. Number one, every time really for the last 6 to 12 months is how we're going to attract our people back into the work environment, right? As Andy said, they understand the benefits of that. And I think the balance between heads down space, collaborative space, team spaces is still sort of sorting itself out in some regards. And I think people are being cautious about making sure they have enough space because as people come in maybe 3 or 4 days a week, if everybody comes in on the same days, you still need a fair amount of space as if you were coming in 5 days a week. So I think those are the types of things that our clients are grappling with, and we're working with them every single day to help them solve for that.

[Brian Gordon, analyst]

Great. Great. I did have a second question on the retail side of the business. Have you guys broken out any sort of guidance over the longer term, like what percentage of the retail network is going to be designed within reach versus the Herman Miller stores?

[Jeff Stutz, executive]

Brian, this is Jeff. We have not broken any kind of that out in the forward guidance.

[Andrea Owen, executive]

And I see, Brian, this is still such a nascent business. When you look at the white space that we have here for both DWR and Herman Miller, we're learning every day about how big these businesses can be. And as I said before, in North America, these concepts and these brands are doing exceptionally well. So I think we're still in the exploring phases. And as I said, adding new stores, on learning as we go, but tons of white space.

[Debbie Propst, executive]

We have a design within reach in a Herman Miller switching site by site, Brian, when we add a second location for the first in a market it's almost 100% additive. So there is a different customer that we're targeting with each of those go-to-market strategies. Design within region is an important marketplace that can sell our collective of brands and so third-party modern design brands. And Herman Miller as a door to market as an opportunity to serve the customer that brand in the purest fashion, and we see them work independently and site-by-site.

[Operator]

Your next question comes from the line of Alex Fuhrman with Craig-Hallum Capital Group.

[Alex Fuhrman, analyst]

Last quarter, you talked a lot about on the contract side, having a lot of projects in your sales funnel that were pretty far along in the process but hadn't yet turned into orders. Can you talk a little bit about how that pipeline of projects looks today? And are those leads progressing through your funnel as you'd expected?

[Andrea Owen, executive]

John, do you want to take that?

[John Michael, executive]

Sure. I'd be happy to. Thanks for the question, Alex. We're still seeing a lot of activity from a funnel perspective. We mentioned last quarter that are, in our CRM, that projects marked one, but has not yet ordered, was up significantly over the prior year. It actually grew another 7% from -- sequentially from Q3 to Q4. So that activity continues. And we are starting to see it flow through, obviously, as evidenced by the order growth in Q4. It is a bit choppy still, right? Some of it stays in the funnel longer than we'd like before it hits the order platform, but the activity is still there and it's still growing.

[Alex Fuhrman, analyst]

Okay. That's really good to hear. Thank you for that. Starting on the retail, it's been obviously a tough couple of years in a row now for furniture buying. The business sounds really healthy and profitable of that weak demand. What are you expecting this year in terms of consumer demand and with the holiday season just a couple of quarters away now, is there an expectation that this is going to be another tough year for the consumer when it comes to furniture?

[Debbie Propst, executive]

Thanks for the question, Alex. This is Debbie. We're really proud of the performance we just had for Q4. I think that plus 1% organic to OI is significant, especially with the context that our global marketing spend was down 12% year-over-year. And traffic was down to our stores and our sites, given the impact of the whole furnishing market being so tough. But we're taking advantage of the traffic that we're getting and we're driving the small amount of growth we saw in Q4 with a substantially higher average order value year-over-year. And we expect to continue to use some of those capabilities that we've been developing [indiscernible] the home furnishing trend curve. And we're feeling optimistic as the home furnishings market continues to open up, and we believe it will in the back half of this year that we're ready to capitalize on that growth.

[Operator]

There are no further questions at this time. I'll turn the floor back to President and CEO, Andy Owen, for closing remarks.

[Andrea Owen, executive]

Thanks, everyone. Thank you for joining us tonight. We appreciate your continued interest in MillerKnoll, and we look forward to updating you next quarter.

[Operator]

This concludes today's call. We thank you for joining. You may now disconnect.