AGCO Corp
NYSE:AGCO
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AGCO Corp
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Good morning. My name is Amy and I will be your conference operator today. At this time, I would like to welcome everyone to the AGCO 2019 Third Quarter Earnings Release Conference Call. As a reminder, this call is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]
Thank you. I would now like to turn the call over to Greg Peterson, Head of Investor Relations.
Thanks Amy and good morning. Welcome to those of you joining us for our third quarter 2019 earnings conference call. This morning, we'll refer to a slide presentation that's posted on our website at www.agcocorp.com. We'll use non-GAAP measures in that slide presentation and we reconcile those to GAAP measures in the appendix of that presentation.
We'll also make forward-looking statements this morning including demand, product development, and capital expenditure plans and the timing of those plans; acquisition expansion and modernization plans and our expectations with respect to the costs and benefits of those plans and the timing of those benefits. We'll also talk about production levels, share repurchases, dividend rates, and our future revenue price levels, earnings, cash flow, tax rates, and other financial metrics.
We wish to caution you that these statements are predictions and that actual results and events may differ materially. We refer you to the periodic reports that we file from time-to-time with the Securities and Exchange Commission including the company's Form 10-K for the year ended December 31st, 2018.
This document discusses important factors that could cause the actual results to differ materially from those contained in our forward-looking statements. We disclaim any obligation to update any forward-looking statements except as required by law. A replay of this call will be available later today on our corporate website.
On the call with me this morning are Martin Richenhagen, our Chairman, President, and Chief Executive Officer; Andy Beck, our Chief Financial Officer; and Eric Hansotia, our Chief Operating Officer.
And with that, Martin, please go ahead. I think we've lost Martin on the call. Sorry about that.
He's line is just showing connected and moderated.
Okay. Well, let me take over here and I'll do the prepared comments myself. Sorry for that. We'll get Martin back on the line.
We appreciate your interest in AGCO and we'll begin the remarks on slide three where you'll find a summary of our third quarter year-to-date results. AGCO produced solid results in the quarter despite continuing challenging market conditions. Price increases as well as cost control initiatives and productivity improvement efforts allowed us to offset the impact of lower sales and production volumes in the third quarter.
Our weak results in South America reflected the challenging industry environment including interruptions in the government-subsidized finance program in Brazil, weak macroeconomic conditions in Argentina, low levels of production, as well as higher material costs associated with new Tier 3 technology tractors. We're aggressively addressing these costs in order to improve our current results.
We're continuing to invest in initiatives that will drive long-term benefits and raise the efficiency of our factories, improve our service levels, and strengthen our product offerings. We're also continuing to return cash to shareholders. In the first nine months of 2019, we completed $100 million in stock repurchases demonstrating continued optimism in our long-term results.
Slide four details industry retail sales by regions for the first three quarters of 2019. In North America, industry retail tractor sales were flat in the first nine months in that 2019 compared to last year with higher sales of smaller equipment, offset by lower sales of high horsepower tractors and combines. The prospects of lower yields and the uncertainty regarding the outcome of trade negotiations are both contributing to weak demand in a large farm sector. We expect North American industry retail tractor sales to be relatively flat in 2019 as compared to last year.
Conditions remain supportive of the dairy sector in Western Europe and industry retail sales increased modestly in the first nine months of 2019. First half growth was partially offset by weakening market demand throughout the third quarter. For the full year of 2019, industry demand in Western Europe is expected to be flat compared to 2018.
Industry retail sales in South America decreased during the first nine months of 2019. The benefits of improved grain production in Brazil and Argentina were offset by interruptions in the government-subsidized finance program in Brazil and low levels of demand in Argentina. For the full year of 2019, industry demand in South America is expected to decline compared to 2018.
AGCO's 2019 schedule for factory production hours is shown on slide five. Total company production was down approximately 3% for the third quarter versus the same period in 2018. Compared to the prior year, production was lower in North and South America and higher in Europe. For the full year of 2019, we're targeting a production decrease of approximately 1%.
And finally, our September order board for tractors is relatively flat in North America and down in Europe and South America compared to a year ago. Moving on to the next slide.
Steve?
Martin? Okay. Thank you.
Yes. So, I think I'm connected now. Thank you very much for doing a wonderful presentation.
Thank you, Martin. I'll -- we'll continue with the prepared remarks and you'll be ready for questions.
Yes.
On slide six, we look at AGCO's regional net sales performance for the third quarter and first nine months of 2019. AGCO's sales were down 2% compared to the third quarter of 2018 excluding the negative impact of currency translation which negatively impacted sales by approximately 3%.
The Europe/Middle East segment net sales were up 3% excluding negative impact of currency translation compared to the third quarter of 2018. Sales growth in France and Scandinavia was offset by declines in the United Kingdom and in Eastern Europe.
AGCO's third quarter 2019 sales in South America decreased approximately 14% compared to the third quarter of 2018 excluding negative currency translation impacts. Weaker market demand in Brazil and other South American markets resulted in the decline.
Sales in North America decreased approximately 1% excluding favorable -- unfavorable impact of currency translation compared to the levels experienced in the third quarter of 2018. Lower sales of high horsepower tractors were partially offset by higher sales of utility and compact tractors.
Net sales in our Asia-Pacific/Africa segment decreased about 12% in the third quarter of 2019 compared to 2018 excluding the negative impacts of currency translation. Sales were lower in both Asia and Australia. Part sales were approximately $363 million for the third quarter of 2019 and we're up about 8% compared to the same period in 2018 excluding the negative impact of currency.
Moving on to slide seven, we examine AGCO's sales and margin performance. AGCO's adjusted operating margins were relatively flat in the third quarter of 2019 compared to the same period last year, despite lower levels of production in sales. Net pricing, which is pricing over material cost increases, as well as our expense reduction efforts, supported margin improvement and offset the impact of lower sales and production volumes.
Europe, Middle East margins improved 130 basis points compared to the third quarter of 2018 resulting from the benefit of pricing, higher production in the region, as well as ongoing cost control efforts. North American operating margins expanded modestly despite lower sales. Favorable pricing, material cost performance, and lower warranty costs all contributed to the higher margins.
In South America, third quarter operating results did not improve as expected, primarily due to much lower sales and production levels resulting from weaker market demand. Our focus continues on developing the supply base for our new Tier 3 technology products in order to improve the region's profitability. The forecast for the fourth quarter in South America assumes improvement in the market conditions and our results versus the third quarter of 2019. In our Asia-Pacific segment, lower sales resulted in a decline in operating income of about $6 million.
Slide eight details AGCO's grain storage and protein production equipment sales by region and product. Sales in this product group decreased about 1% excluding negative currency translation impacts in the first nine months of 2019 compared to 2018. Globally, grain and seed equipment sales grew about 4% on a constant currency basis with growth achieved in all regions except for North America.
Protein production sales decreased approximately 7% on a constant currency basis which the largest declines were in the Asia-Pacific, Africa and EME Europe, Middle East regions. The global trends towards a growing population and increased protein consumption should make our grain and protein business an attractive source of profitable growth for AGCO in the years ahead.
Slide nine looks at AGCO's investments in both capital expenditures and research and development. We're continuing to make strategic investments to refresh and expand our product line, upgrade system capabilities, and improve productivity in our factories. We intend to increase the level of engineering expense in 2019 on a constant currency basis to execute our product development plan and meet new emissions requirements in both Brazil and Europe.
Our spending plan is needed to maintain our competitiveness and to support the long-term growth of our business. On -- our 2019 capital expenditure plan reflects investment to support our new product initiatives and is projected to be higher than in 2018.
Slide 10 addresses AGCO's free cash flow which represents cash used in operating activities less capital expenditures. Our seasonal requirements for working capital are greater in the first three quarters of the year and thereby resulted in negative free cash flow in both the first nine months of 2018 and 2019. For the full year of 2019, we're targeting another year of strong free cash flow.
At the end of September 2019, our North America dealer month supply on a trailing 12-month basis was relatively flat for tractors and was improved for hay equipment and combines. Losses on sales receivables associated with our receivable financing facilities, which is included in other expense net, were approximately $10.6 million during the third quarter of 2019 compared to $6.7 million in the same period of 2018.
As we focus on return for shareholders, we expect cash distributions to continue as an important component of our long-term capital allocation plan. Over the past six years we have executed share repurchases of nearly $1.3 billion which had the -- which has had the effect of reducing our share count by over 25%. During the first nine months of 2019, we completed $100 million of share repurchases and expect cash generation to fund additional share repurchases in the fourth quarter.
Our updated 2019 outlook for the three major regional markets is captured on slide 12 and reflects a lower forecast for the South American market. Harvest in the first three quarters of 2019 in Brazil and Argentina are improved from 2018 levels. We expected to see market recovery in the third quarter. However, the interruptions in the government-supported finance program in Brazil limited sales during the first three quarters of 2019. We now expect South American industry retail sales to be down approximately 10% in 2019 compared to 2018 versus our prior forecast which was flat.
In North America, 2019 industry unit retail sales are expected to be flat compared to 2018 levels. The late harvest and lower crop production estimates as well as ongoing trade concerns are weighing on sales of large equipment. Low horsepower equipment sales which tend to be tied to more to the general economy have been more resilient and are now expected to be up modestly in 2019.
The dairy and livestock fundamentals supported improved industry demand in Western Europe during the first half of 2019. A hot dry summer and lower wheat prices contributed to weaker farmer sentiment and softer demand in the third quarter. We expect fourth quarter sale -- industry sales to be down and full year 2019 industry sales to be relatively flat in Western Europe compared to 2018.
Slide 13 highlights the assumptions underlying our 2019 outlook. The priority for 2019 continues to be managing our cost and continuing to invest in our products and business improvement opportunities. Our market forecast for the remainder of the year assumes softer demand in Europe and modest improvement in South America with a stable industry demand in North America. Our plan includes market share improvements with price increases of approximately 2% on a consolidated basis.
At current exchange rates, we expect currency translation to negatively impact sales by about 4%. In 2019, engineering expenses are expected to be up approximately $10 million on a constant currency basis compared to 2018.
Operating margins are expected to improve by approximately 100 basis points due to the benefit of our pricing productivity and purchasing initiatives. As we mentioned in our press release this morning, during the third quarter of 2019, AGCO recorded a non-cash adjustment to establish the valuation allowance against this Brazilian net deferred income tax assets of approximately $53.7 million or $0.70 per share.
In the fourth quarter of 2019, we're targeting an effective tax rate of 32% to 33% and excluding a charge we took this quarter we're now forecasting an effective tax rate between 31% and 32% for 2019. We also expect interest and other expense to be down about $10 million in 2019 after excluding debt extinguishment cost that we incurred in 2018.
Slide 14 lists our view of selected 2019 financial goals. We're projecting 2019 sales to be in the $9.3 billion range. We expect growth and operating margins to be improved in 2018. The lower sales forecast is pressuring our full year earnings target.
However, we're increasing our focus on costs and maintaining the 2019 earnings-per-share goal of approximately $5.10. We expect capital expenditures to be up approximately $25 million compared to 2018 levels and free cash flow to be in the $275 million to $300 million range.
That now concludes our prepared remarks. Operator, we're ready to take questions.
Thank you. [Operator Instructions]
Your first question is from Seth Weber of RBC Capital Markets.
Good morning. This is Emily McLaughlin on for Seth this morning.
Hey good morning Emily.
Good morning. How are you thinking about the margins in North America in the fourth quarter? I think during the 2Q, call you talked about 3Q being a little bit weaker due to costs and some product launches and mix and 4Q reversing that trend. But with 3Q little bit stronger, just wondering how some of those expenses maybe got pushed into the fourth quarter?
Little bit, but we're still expecting margin expansion in the fourth quarter in North America. We've got some new products that we're introducing in the higher horsepower range and those should help us with a good increase in sales as well as the margin expansion. We're looking for margins to be improved approximately 200 basis points over the prior year in the fourth quarter.
Great. And can you provide a little additional color for what's going on in Brazil? And why we haven't seen a rebound in industry volumes despite the resumption in the government-subsidized financing program?
I think the problem is the administration. There's a lot of questions our customers -- the farmers lack confidence. I would say overall one should see improvement because the demand is still there. The question of course is how will the administration handle the FINAME finance subsidiaries for our industry.
Okay. Thank you.
You're next question is from Ann Duignan of JPMorgan. Ann, your line is open, and you may proceed with your question.
Apologies, I was mute. This is Tom Simonitsch on for Ann. If I could just push you on Brazil, could you just comment on where AGCO's Q3 volumes ended up relative to expectations coming into the quarter? What drove the magnitude of the underperformance? And what level of confidence do you have going into 2020?
Sure. No -- going into the third quarter, the FINAME program was reinstated and so our assumption was that that would spur a higher demand and so we expected the market actually to be up in the third quarter. What ended up happening was the market was down about 17% in the third quarter also markets outside of Brazil and other South American markets were also down. And so we just did not accomplish the sales numbers that we had anticipated and that was the primary drop in our sales versus what we had anticipated whereas -- within that South American market.
Okay. Thank you. And a point of clarification on your sales guide. I appreciate some of this will be down to rounding, but down 2% seemed to be short of $9.3 billion for the full year? Also implied Q4 guidance looks to be up mid-single-digits despite further FX headwinds and lower production hours. Are we interpreting that correctly?
Yes. So, we're looking for kind of mid-single-digit increase in sales in the fourth quarter. We're expecting again good improvement in North America where the market -- there should be some late-buying activity in North America due to the fact that farmers will have completed their harvest and also have some government aid payments that could spur some late-year buying.
We have some improvement in our European sales forecast in the fourth quarter as well. There is some impact that we think from the big trade show Agritechnica being completed and that should spur some activity late in the year as well as well as we were deficient in some -- getting some of our products out of our factories at the end of the third quarter which should help us in the fourth quarter.
But we do think our Asia-Pacific sales will be down and our South America sales will be relatively flat. We do expect that the market although down in the third, we're anticipating that the market does recover in the fourth quarter.
That's very helpful. Thank you. I'll pass it on.
Your next question is from Ashish Gupta of Stephens.
Hi, good morning, Andy, Martin, and Greg.
Good morning Ashish.
Good morning.
Good to be with you. Can you guys comment on the inventory levels? They seem a bit higher. Do you think maybe Andy it's related to what you had said that the 3Q shipments were a bit lighter than you were hoping for? And then I have a quick follow-up.
Yes, I think that's a part of it. Secondly, as you can tell the markets are attending to be a little weaker than we had earlier anticipated and we brought some of our sales forecast down. And so some of that is resulting in us producing more earlier in the year than we should have. And so now we're taking those actions or reducing our production in the back half of the year in order to get those inventories back to the level we want. So, we should have a sizable reduction in inventories in the fourth quarter and that is a key focus for the company here -- to finish the year with our inventory levels down.
Great. And then just a quick follow-up. Just in terms of the market dynamics as things have been unfolding this year do you see any risk to your margin expansion opportunities for 2020 and beyond? Most of those seems sort of not related to market conditions but more so company-specific opportunities? Thank you so much.
We're very bullish on our opportunity to continue to grow margins and we put that focus in place about this time last year and their organization responded very strongly to it aligned our incentives and goals throughout the whole organization. So, the organization is focused and aligned behind this initiative and is demonstrating -- as you can see from our results demonstrating margin improvement even in a very challenging year. We're going to go into next year with that same focus and the organization is going to have a fuller harper of initiatives going into last year than we did going into this year.
Thanks. Good luck.
Thank you.
Your next question is from Jerry Revich of Goldman Sachs.
Good morning everyone. This is Ben Burud on for Jerry.
Good morning Ben.
Morning. I was just hoping you could update us on your Precision Ag product plans. How was the Precision Planting business performed this year? And what's the magnitude of sales tailwind you expect over the next couple of years from any other smart ag products in your portfolio?
Eric can you answer this?
Yes I can. So, we're very, very happy with the addition of Precision Planting into the AGCO family. The products continue to be star performers for our customers and the business is growing faster than our original business plan when we purchased the business while also maintaining very strong margins. We've got a couple of focus areas for that business.
One is global expansion of the products that exist already and the primary market that was -- had low penetration was Europe and so we spent a lot of effort foundation building there by doing many, many test plats throughout many countries through Europe gathering the agronomic data on farmers/fields with side-by-side tests of our technology versus others to have data for farmers to show in their farming conditions in their climate in their farming practices what the advantages are. So, the global expansion is moving forward and we've invested in a very robust way to have it -- be sustainable.
And then the second engine for that business is the continued innovation of new technology. And we have a launch every year in January we call it Winter Conference and about 5,000 to 6,000 of the most progressive farmers from all over the world voluntarily come to that program to get educated on farming practices agronomy and how the new technology being innovated can help them be more productive and profitable.
And we are excited about the new launches that will be coming out again this year. The pipeline is full and that business is not only doing well for itself, but we're bringing that culture into the rest of AGCO to help us continue to accelerate our efforts on Precision Ag.
Got it. And North America was nice to see margin expansion despite a production cut. Can you bridge for us the performance a little bit more granularity than what you mentioned earlier? How much better were margins any benefit from the new product lineup more granularity on price cost et cetera would be great?
Sure. There are a number of areas that we performed better than we expected in the third quarter in North America. First of all, our sales were higher and some of that was part sales and so that certainly is a margin driver so that helped us. Our material cost performance was better than anticipated.
And then our programming cost for marketing and sales programs were less expensive than we had anticipated. So, there are a number of things that drove those -- that margin improvement. And as we said we expect to have a good solid fourth quarter as well. So, we have the new product introductions in the fourth quarter that should help continue to drive our performance.
Great. Thank you.
Your next question is from Jamie Cook of Credit Suisse.
Hi good morning. I guess two questions. One Martin your comfort level what's sort of a channel inventory out there and based on what you see today? How you think about sort of industry outlook for 2020 in the different markets?
And then my second question is on South American margins potentially for next year. Assuming markets stay in South America at these levels how do we think about sort of the margin improvement that we can get as you just fixed some of the supply chain issues that you've been having over there? Thank you.
Hi Jaime, as usual you know exactly that we don't want to answer questions for the next year, but you still ask them which is fine. I can handle this. So, let's talk about the inventory levels. To be honest it's nothing exceptional. So, we faced this problem pretty much on a regular basis and we're very good in managing these. So, when demand is slowing down of course we have certain needs to catch up and that's the process we're in right now.
Factory inventories in the area of components and materials for the production I think are pretty much in line. Our finished good inventory is I think another major problem. Now, we need to also make sure that we have our distribution to manage their inventories which we are doing. We don't typically load dealers with products they don't -- they have hard times to sell it or they sell by -- with big discounts. So, we try to avoid that.
When it comes to South America I'm slightly optimistic for next year because Brazil is not doing so well for quite some years now in a row and I think one should expect and turn around rather soon and what we hear from the market is positive. The good thing is we have a great new team in charge in Brazil. We have very capable and very motivated and loyal people.
And Eric, the new COO also does help them in order to make sure that they do the right things. Everything we are doing we just relate it to internal improvements; cost management, engineering, projects, localization of bigger products, and so on is pretty much on schedule.
Thank you. And just any way to--
And the -- basically the precise forecast for 2020 you can expect somewhere around December when we come to New York.
Okay. Thank you. I'll get back in queue.
[Operator Instructions]
Your next question is from Chad Dillard of Deutsche Bank.
Hi, good morning everyone.
Good morning Chad.
So, can you talk about your comfort level with European dealer inventories? Perhaps you could talk a little bit about just how to think about inventory as a percentage of next 12-month sales where they are today versus more normalized levels?
We have seen most probably best distribution network in our industry in Europe with most of our dealers -- or I would say all of our dealers being exclusive with our brands. We have a very close relationship and we basically are introducing new artificial intelligence in order to help dealers to become even more efficient which includes also a tool which allows customers to specify their tractor virtually like you know that one in the automotive industry. So, we'll be the first to have that.
And so therefore we have first of all transparency. We know what's going on. And second our dealers in Europe are most probably the most professional in the world and therefore I'm not too concerned about inventories in Europe.
That varies of course by country. So, there are certain countries which bear more risk like the U.K. because nobody knows exactly when and how the Brexit come in. We do the very best in order to be prepared, but there might be surprises. But, in general, I think we're in good shape.
Got it. And then I think you'd mentioned that you are seeing some tailwinds from just better comps in terms of materials. How should we think about that cadence as we go into 2020? And then also just thinking about the rent level of engineering spend as we kind of look towards the next 12 months?
In terms of--
Andy?
Yes sure. In terms of material cost we've seen steel prices come down particularly in North America stayed relatively flat in Europe throughout the year and you are still going up in South America. So, I would say our performance from that standpoint continues to improve throughout the year as those pressures have lessened.
And so looking in the next year again we'll be more focused on that when we talk about it in December. But right now the steel prices seem fairly stable but we're going to be looking for the -- and focusing on our forecast when we get into our 2020 budget as we're working on that right now.
The other question was about engineering costs. Still again working on our engineering budgets for next year. I wouldn't expect a significant change in the level of engineering expense as compared to this year.
What I would like to point out is you should check our margin improvements. While the margins of our peers all went down our margins went up. So, we outperformed our competition and that is because of an excellent team being fully dedicated on a project called Margin 10. So, that means we still are in the process of doing our homework and you will like what you see also in the future.
Your next question is from Courtney Yakavonis of Morgan Stanley.
Hi thanks. Just wondering if you can give us a little bit more color on the Asia Pacific weakness. It sounded like it was predominantly driven by the GSI protein side? But just any additional color and especially giving your outlook for sales to also be negative in the fourth quarter in that division? Have you kind of seen them stabilize? Or do you think we could still see some continuation?
And also how much of it is being driven by concerns about AFF? And if you can also just comment on the margins as well? Those held up pretty well despite the decline, so how we should be thinking about margins in that segment for the year? Thanks.
It would be very positive when it comes to margins as I told you.
Yes, Courtney, you're right in terms of the concentration of that business number one in China and most of that Chinese business is in fact protein production side of GSi. And the African swine flu has had a significant impact in the way that the business typically flows in that region is the third and fourth quarters have been heavier for their sales.
So, you saw some of that in the third quarter and you will see more of the softer sales in the fourth quarter. And we do though expect based on Eric's comments around focused on cost we do expect to see our margins up a little bit in the fourth quarter despite modestly softer sales. So, look for the full year margins in that region to be kind of in the low to mid-6s which implies somewhere close to 9% as our margins in the fourth quarter.
Thanks. And then I think you also lowered your pricing to the low end of the prior guidance for the year. Just curious what regions are being most impacted by that change or where you might not be getting as much pricing as you originally anticipated?
Right. So, it was -- we went from -- we were seeing 2% to 2.5% and now we're seeing 2% and probably its right around that 2%. There was -- really pretty much all regions are just a little bit less than what we thought. The biggest area are the region that had the biggest reduction was in South America. And that -- based on where the market is down versus our original expectations are being up more in the third quarter was the real driver. So, everywhere but most significantly in South America.
Okay, great. Thank you.
Your final question is from Stanley Elliott of Stifel.
Hey good morning everyone. Thank you guys for fitting me in. A quick question. With all the new products you guys have coming out in North America can you talk to kind of some of the changes you made at the distribution level? Kind of how you are feeling now about the new dealer base especially with more of the production-class products within the portfolio moving forward?
Hey good question Stanley. We've actively got a two-pronged attack in North America. Over the last few years, we've been really accelerating our focus on the compact utility equipment and going after the customer -- we call rural lifestyle customer. And so we've added somewhere between 20 and 25 dealers each year that are focused on that segment typically closer to their urban settings and having a footprint that's more catered to that segment. And we've seen nice share growth and happy with how that business has developed.
But to the heart of your question is on the large ag production ag category where we've made a few changes. One is we've changed the contract structure where we've been able to put in more accountability into the contract for performance.
And then second we've been able to -- we're bringing in the Fendt brand in North America and selecting our best and brightest dealers of the area. So, there is no prequalification. Just because you are an AGCO dealer you don't get qualified on the new products.
You have to step your game up to a higher level in terms of all aspects of the larger ag experience to be able to qualify for that opportunity. And we really like the response we're getting from all of our dealers and in turn our customers as they move into this new chapter of our large ag business in North America. We think the combination of stepping up the game in our dealers and bring in these new products is exactly what our customers are expecting from AGCO and that's where we're focused on delivering.
Perfect. And then Greg I apologize if you had mentioned it but on the prior question about kind of the opportunities on protein production I understand why you have the headwinds now. Can you talk about may be some timeframes when you should start to see that business accelerate as other countries start to kind of modernize some of their protein production to more westernized standards?
[Indiscernible] maybe next year.
Next year? Great guys. Thank you very much. Appreciate the time.
All right. Thanks Stanley.
I'll turn the call back over to Mr. Peterson for closing remarks.
Thanks Amy. We want to thank everyone for your participation today and encourage you to get back with us with your follow-up questions. Thanks and have a great day.
Thank you for participating in today's teleconference. At this time, you may all disconnect.