Blue Apron Holdings, Inc.
Q1 2019 Earnings Call Transcript

Published: 30 Apr 2019

[Operator:]

Ladies and gentlemen, good morning and welcome to the Blue Apron Holdings First Quarter 2019 Earnings Conference Call and Webcast. This call is being recorded. Following the conclusion of today's remarks, the Blue Apron team will be taking your questions. With that, I'd now like to turn the call over to Louise Ward, Senior Director of Corporate Affairs. Ms. Ward, please go ahead.

[Louise Ward:]

Good morning, everyone, and thank you for joining us. On this morning's call, we have Linda Findley Kozlowski, Chief Executive Officer of Blue Apron; and Tim Bensley, Chief Financial Officer. Various remarks that we make during this call about the company's future expectations, plans and prospects constitute forward-looking statements for the purpose of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by those forward-looking statements as a result of very important risks and other factors, including those described in our earnings release and the company's SEC filings. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update these statements. During this call, we will be referencing to non-GAAP measures, which are not prepared in accordance with Generally Accepted Accounting Principles. You are encouraged to refer to the earnings release and SEC filings, where we have described these measures in more detail, and to review the reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures. In addition, reconciliations of certain forward-looking non-GAAP measures referred to during this call are on our Investor Relations website, located at investors.blueapron.com, under Events & Presentations. With that, I would now like to turn the call over to Linda Findley Kozlowski, Blue Apron's CEO. Linda?

[Linda Findley Kozlowski:]

Thanks, Louise, and good morning, everyone. I'm thrilled to be speaking with you today as the CEO of Blue Apron. I want to provide a few brief remarks before handing the call over to Tim, who will walk through our Q1 performance and outlook for the remainder of 2019. I'm honored and excited to be Blue Apron's new CEO. I have long admired Blue Apron for its pioneering leadership in new category, its loved and trusted brand, and its high quality products, which I have gotten to know very well as one of Blue Apron's loyal customers over the last three years. I spent the last three weeks, getting immersed, connecting with our employees, customers, partners and other stakeholders, and identifying opportunities to drive the business. I'm enjoying, exploring all of the new and different ways that we can integrate into our customer's lives, whether it's new products, new eating occasions, new channels or a new understanding of what cooking means to people. Three key observations so far. First, the foundation of our business today is strong, thanks to the hard work and dedication of Blue Apron's employees. It's energizing to join the organization at such an important point in the company's history. We have some critical milestones under our belts, including our most efficient operational performance to date, positive cash flow and the achievement of profitability on an adjusted EBITDA basis. While there is more work to do, I'm encouraged by the progress made in these foundational areas and I expect they will provide important efficiencies for the long term. Second, I'm pleased with the work the company has done to date in thoroughly understanding the needs and behaviors of our highest affinity customers. We're deliberately prioritizing this valuable segment and focusing on the most efficient channels to reach them. From my experience, I believe that narrowing our focus to our highest impact opportunities in the business is an important foundational step and critical as we build our growth strategy in the coming weeks and months. Third, the company is rooted in a distinct culture, guided by a worthy and inspired mission. Like me, many of our employees came to the company having been loyal customers. They are passionate about our brand and products, excited by the significant opportunities ahead of us and are moving forward to capitalize on them with a sense of urgency. In summary, my priorities coming into the organization are twofold, establish a differentiated customer-centric strategy and build off the foundation that I believe is now in place to return the business to growth. I believe there are significant opportunities ahead for Blue Apron, including untapped attractive growth prospects. Fundamentally, we are a company that delivers experiences. Convenience is one element of our value proposition, but our real differentiators are our brand, which stands for culinary authority and our high quality products which feel discovery and connection. We need to double down on these differentiated experiences by reaffirming our authority in this space, taking advantage of our inherent brand strength and continuing to optimize our product portfolio. These will pave the way for future growth. I'm looking forward to working with the team to move Blue Apron into its next stage and will expand on the actions we'll be taking in accordance with these priorities in the coming few months. I'll now turn the call over to Tim to talk through the Q1 progress and our quarterly financial results.

[Tim Bensley:]

Thanks, Linda. Speaking on behalf of our entire team, we're delighted to have Linda as our new CEO. She hit the ground running three weeks and it's been reinvigorating for our entire organization to have her on board. We look forward to benefitting from her rich and diverse experience across various critical aspects of our business on our journey back to growth. Today, I'd like to refer back to the priorities that we last discussed in January and provide an update on how we delivered against these actions in Q1. I'll provide with a summary of our financial results and an outlook for the rest of 2019. We'll then take your questions. In January, we told you that we're going to streamline our product, technology and G&A or PTG&A costs, while continuing to optimize our operations. We also said we will be honing in on the most efficient customer acquisition channels to reach high affinity consumers, leading to a reduced but higher return marketing spend. While we knew that this focus would result in lower revenue in the near term, this deliberate decision was centered on our conviction that strengthening our customer base and driving toward profitability are critical steps for building a healthy sustainable business. We're happy to report that our approach unfolded as planned. In Q1, we delivered our most efficient operational performance to date, has positive operating cash flow and free cash flow, significantly improved our net loss and achieved profitability on an adjusted EBITDA basis. Before I dive deeper into these financial results, I'd like to first highlight the strategic initiatives we laid out in November and how we executed on these in Q1 to achieve our goals. First, our operational optimization remains a positive story as we continue to gain efficiencies throughout our fulfillment center network while optimizing our cost structure. Cost of goods sold, excluding depreciation and amortization improved over the past six quarters, from 78.1% of net revenue in the third quarter of 2017 to a record best of 58.3% of net revenue in the first quarter of 2019. This is the result of continued improvements in all three of our fulfillment centers and further efficiency gains in labor, food, shipping and packaging costs from enhanced planned and process driven strategies. The strength and stability of our fulfillment center network was especially evident in the first quarter as we seamlessly launched our WW product line and effectively transferred additional volume into our Linden fulfillment center from our Arlington facility. Launching these initiatives, while also achieving our best margin performance to date, gives us confidence that we are well-positioned operationally for additional products and channel expansion down the line. Second, we're sharpening our focus on our direct-to-consumer business through our work to prioritize high affinity consumers. As we focused on the most efficient channels and methods to reach this valuable consumer segment, we're encouraged by some early improvements we are seeing in our key metrics as a result. For example, we noted on our last call that average revenue per customer and orders per customer would be key indicators of the strengthening customer base as we pursue this new focus. We are pleased to see improvements and both of these metrics on a year-over-year and quarter-over-quarter basis. In addition our customer acquisition costs were improving with expected average payback for new customers well within our goal of 12 months or less. As we said before, our deliberate decision to prioritize a narrow set of high affinity consumers is centered around our conviction that this shift will have a sustainable positive impact on the business. Another important vehicle for us to reach high affinity consumers is through strategic partnerships, particularly though they can give us access to an engaged customer base that we can onboard in a relatively efficient manner. We continue to be pleased with our WW offering and since launch have seen strong interest in the Blue Apron WW menus from both new and existing Blue Apron customers. We have additional marketing opportunities in the pipeline with WW in the coming months and look forward to generating additional awareness of the product. Based on the favorable response and interest in the Blue Apron WW Menu so far, it's clear that health conscious offering, it's compelling and valuable proposition for consumers, who are interested in cooking fresh, healthy, high-quality meals at home, while discovering new ingredients and cooking techniques through the Blue Apron experience. We will continue to explore ways to leverage our brand to tap into the growing demand for health and wellness solutions. Third, we are methodically expanding our reach through additional channels. Selling Blue Apron products to additional channels continues to be a key pillar of our strategy with significant opportunities ahead. As we know that we need to be available to consumers whenever and wherever they were thinking about meal occasions. We're pleased that our relationship with Jet continues to expand in scope. In February, we launched new Knick Knacks product on Jet, adding to the rotating selection of Blue Apron meal kits available. In the next few weeks, we will once again expand our presence on Jet platform by launching a shop, which will include an additional suite of culinary tools and marketplace items such as seasonings and spices available through same day or next day delivery across most of New York city. We continue to build on our on-demand capabilities and are excited to announce in the next couple of weeks, we were piloting a new same day on-demand service in the Bay Area. Through our own platform and digital experience, consumers in the Bay Area will be able to order meals by noon in order to receive the product at home later that day the meals we produce and ship out of our Richmond facility. While we have tested same day on-demand offerings through third-party platforms in the past, this is the first time that customers will be able to order products for the same day on-demand delivery without leaving the Blue Apron ecosystem. Consistent with our focus on finding ways that Blue Apron can evolve to better meet our customers on their terms, we were excited about the flexibility of this offering and look forward to building of the learning that come from it. Fourth, in the past year, our team is become leaner, more agile, and more focused. I am pleased to report that with Linda coming on as CEO, there is a positive buzz throughout our offices and fulfillment centers as employees are excited about the next stage of the company's history under her leadership. Turning to Blue Apron's financial performance for the first quarter, as mentioned earlier, we are pleased with our bottom line performance and outperformance of the guidance provided on our January earnings call. In the first quarter, we significantly reduced net loss by 83% year-over-year to $5.3 million, and reached an important milestone with adjusted EBITDA profit of $8.6 million compared to a year-ago adjusted EBITDA loss of $17.2 million. Quarter-over-quarter, net loss and adjusted EBITDA improved by $18.4 million and $16.4 million respectively. Our continued success on the bottom line has been driven by a number of factors including a sharpened focus through our marketing strategies, streamlined PTG&A costs and continued progress and achieving operational efficiencies across our fulfillment network, particularly in our Linden New Jersey facility. Net revenue in the first quarter this year was $141.9 million compared to $196.7 million in the prior year and $140.7 million in the fourth quarter directly reflecting the execution of our strategic initiatives announced in November. Our sharpened focus on higher performance channels an attracting and engaging a more profitable consumer has resulted in a reduced marketing spend. In the first quarter, marketing spend was 10% as a percentage of net revenue or $14.2 million, a 64% reduction compared to the prior year and a 30% reduction from the previous quarter. As we continue our approach, a focusing on high affinity consumers, the improvement of key metrics indicates a strengthening customer base. Average revenue per customer and orders per customer strengthen on a year-over-year and quarter-over-quarter basis both to the highest levels in five quarters. We remain confident that prioritizing financial rigor and quality customers is the right approach as we go to a strong profitable foundation for future growth. We saw further and margin expansion with COGS, excluding depreciation and amortization improving 750 basis points over the prior year and 250 basis points quarter-over-quarter to a record best of 58.3%. Over the last several quarters, we have repeatedly highlighted the accomplishments that our cross-functional teams have made on the operational front through enhanced planning and process driven strategies. This progress is evidenced by improvements in all of our primary operational cost categories

[Matthew DiFrisco:]

Thank you. I just wondered, Tim, if you could clarify also just as far as the lower 2Q on the revenue side, is that in reference to year-over-year or sequential?

[Tim Bensley:]

Yeah, well, hey, Matt, first of all, thanks for the call. Yes, certainly it's going to be lower year-over-year as I just went through in the script, for sure. And I think it's probably fair to say that our revenue throughout the year will then - you can kind of use our historical seasonal trajectory as a good indication of quarter-over-quarter.

[Matthew DiFrisco:]

Okay. So 2Q is a lower seasonal quarter than 1Q obviously, historically?

[Tim Bensley:]

Yeah, Q1 has typically been our highest revenue quarter and we would expect that to continue going forward.

[Matthew DiFrisco:]

Understood. And then, I guess, just as far as the marketing expense, how should we think of that also, that's been somewhat lumpy and skewed around a little bit more of the first and fourth quarter? Is that also going to be lighter in 2Q and 3Q?

[Tim Bensley:]

One of the levers that we have to pull as we move through the go-forward quarters is just how much marketing we want to lean into. Right now, as we go into the second quarter, we're continuing to execute on the strategy of lower marketing but higher return marketing spend. So I would expect it to continue to be lower on a on a year-over-year basis, both in absolute dollars and as a percent of net revenue. Of course, as we move through the coming few months, Linda will really be leaning into the organization as we try to develop new and more specific revenue growth driving strategies. And as those strategies start coming forward, we'll start making decisions whether to lean into them more heavily. So, I'm a little bit hesitant to give you any specific guidance on the actual marketing spend. But for the time being, I would expect it to be similar trend to what we showed in Q1.

[Linda Findley Kozlowski:]

Yeah, Matt, just to jump in on that, this is - I really do see pretty big opportunities within the high affinity customers and being able to engage that segment a little bit more directly. But in doing that, we will also be prudent in our spend, making sure that we're staying within the ROIs of approximately 1 year payback, because we think that threshold is really, really important. And we are not going to be pursuing any initiatives that look at just short-term revenue opportunities at the expense of overall inefficient returns. But there is still a lot of opportunities, so we'll be evaluating quarter-by-quarter spend as we go.

[Matthew DiFrisco:]

Excellent. Thank you, Linda. Welcome aboard also. I guess, could you give us sort of a - last question, just big picture here. How much - how would you size up the on-demand opportunity, especially since now you're putting it on your website, compared to sort of the subscription model? Do you have any studies that tell you the size of the on-demand market for your products compared to the subscription model to your product?

[Tim Bensley:]

Matt, as you know, we've been at there and done a little bit of testing. So we have some ideas about that. But this is the first time that we're going to actually be out there offering the same day on-demand model to our ecosystem. Now, we're going to a pretty big geography with pretty much all of the Bay Area, so we're going to learn more about that. So I'm a little hesitant right now to say how big that could be. But I think that will be one of our key initiatives in over the coming few months. Hopefully, we'll be able to get back to you with more, how successful that is and how quickly we're going to be able to expand it. Linda, you want to jump on?

[Linda Findley Kozlowski:]

Yeah, I think one of the exciting things that we have seen in data though is that we know that this is something that's actually complementary to the existing subscription offering. It's not necessarily an either or. A lot of our subscription customers have asked for supplementary ability to do on-demand. So we think it actually helps drive the entire business forward, not necessarily split it in two different directions.

[Matthew DiFrisco:]

But it would be a premium price point?

[Tim Bensley:]

We're going through the pricing scenarios right now as we roll it out. There are a lot of different components to it. Right now, our anticipation is that we'll be at a slight premium to our overall subscription offering.

[Matthew DiFrisco:]

Thank you.

[Operator:]

The next question will come from Youssef Squali of SunTrust. Please go ahead.

[Youssef Squali:]

Great. Thank you very much. A couple of questions. Linda, congratulations on the new assignment. On the, I guess, just overall strategy, can you maybe expand or help us gauge any major strategy differences in the way you see the business and how you're planning on managing it versus your predecessor? How do you particularly balance the return to growth and profitability? And then, in terms of the same day announcement, just maybe help us understand a bit. I know that you can't really necessarily speak to the unit economics there, because you haven't launched it yet. But maybe just help us understand sort of the - some of the logistical details, who does the delivery, the cost of delivery, and anything else that you can share. Thanks.

[Linda Findley Kozlowski:]

So I'll just jump in for some strategy and then turn it over to Tim to talk about Blue Apron on-demand. Obviously, I've been in the position for three weeks. So it's a little too early to talk about any specific differences. But what I do see, particularly through some of the high affinity customer work that's already been done. Is - there's actually quite a bit of opportunity to build off of the foundation that's already been set with adjusted EBITDA, profitability and really the fundamental aspects of operations in the company. And I sort of see three different areas that are really right for development and change based on what our high affinity customers want. One is really looking at product portfolio, we know that people want to engage more deeply with us, and so how can we use that information to do that. Second is really the marketing tools, there's still a lot of opportunities there to sort of improve and gauge more effectively with our customers. And then third even getting deeper into things like the ingredient sourcing looking at the user flow and experience and understanding how people want to engage both from a digital and a physical product strategy perspective, all of those are areas of opportunity. So I'll back in - within the coming few months to talk more deeply about where we might be thinking from a growth strategy, but we are moving quickly and the opportunities are really there for the taking. Now, I'll turn it over to Tim.

[Tim Bensley:]

Hey, Youssef, I'm assuming that your question about unit economics is specifically about the on-demand test on the West Coast? Or…

[Youssef Squali:]

Yes. Yes. Exactly.

[Tim Bensley:]

Yeah. Okay. So we're pretty excited about it. I'll give you a couple of reasons. First of all, clearly, it's right in the wheelhouse of our overall strategy to try to do find new ways to get to consumers, basically on their terms. And this is the first time that we're going to do this completely within the Blue Apron ecosystem, so you'll actually be able to go into the Blue Apron site, order it without involving a third-party at all. I'd give you just a tiny bit about how it works, then I'll talk to you about most exciting part, which is [favors and unit economics] [ph]. So going to our own platform, consumers and the entire Bay Area will be able to pretty much select up to two meals from the entire two-person signature offering, so essentially the same two-person menus that are available on a subscription basis. If they order by noon, they're going to get it delivered to their home between 4 and 6 pm, so it's a true opportunity for them to order for that evening dinner on-demand same day. Probably the most important thing and the purpose of your question, I think, is that we actually right away from the start, have expected to be at least margin neutral and eventually have the opportunity depending again back to the pricing question either be margin accretive to us. So unlike some of the other tests we've done, this is one that right out of the box in the pilot we're going to be generating positive EBITDA and adjusted EBITDA basis, we're going to be delivering positive profitability on each box that we shift. Again, we're starting it in a pretty big geography in the Bay Area shift that to Richmond, and then we're working on plan depending on what we learn to see how quickly we can expand and how we can both extend the offering and expand the geography. So overall, it's pretty exciting for us.

[Youssef Squali:]

Who is going to be doing the actual physical delivery on that?

[Tim Bensley:]

Yeah. We have a local third-party delivery - local third-party logistics company that's doing the delivery. They're also delivering some of our core boxes in the Bay Area, so it's someone that we're now familiar with.

[Youssef Squali:]

Okay. All right. That's helpful. And lastly, I guess, as I look at the P&L and the way the revenues have come down throughout 2008 - 2018 looks like by the Q4 2019 the cost become pretty relatively easy since it seems like they - your revenues even troughed on a sequential basis Q4 into Q1? How confident are you? Or what kind of confidence do you have that you can actually show flat to potentially even some low-single-digit growth in Q4 this year?

[Tim Bensley:]

Yes. We are not going to guide to Q4 - Q3 or Q4 revenue at this point. We're going to stick with the - for the full year, we still expect to be down overall in revenue and customer account. I think one of the key points to answer your question is going to be the specific growth strategies that we come up with working with Linda over the coming few months. As soon as we basically have a more solid idea about what those specifics are and how we're going to invest against them, we'll be able to come back and talk about at what point we'll actually see that inflection point back to growth.

[Youssef Squali:]

Okay. Sounds good. Thank you so much.

[Operator:]

The next question will come from Shweta Khajuria of RBC Capital Markets. Please go ahead.

[Shweta Khajuria:]

Great. Thanks for taking my question. How do you get visibility into the customer base that it can't stabilize? Meaning, at what point do you start thinking about you want to grow the customer base after focusing on the high affinity customers today? And then second is could you give a little bit more of an update on your partnership with Jet on meal kits as well as on Knick Knacks, please? Thank you.

[Tim Bensley:]

Yeah. Absolutely. Maybe I'll take the first part of that, and then I'll pass it on to Linda to talk about Jet and how that's going. Yeah, I mean, the basic strategy that we have as we've talked about is for us to really focusing in our best customers or high affinity customers and that's what we've been doing. And the second part of that is purposefully avoiding putting marketing spend out there to attract customers that are not going to be high affinity customer. So that's been the crux of our downturn on revenue on customer count. The point at which we actually have all the strategies in place, we both - that we think we can both have lower churn of our existing customer base, because of some of the growth initiatives and product initiatives put out there as well as really refined strategies about how to continue to retract additional high affinity customers. That's part of the specific strategies that I was just referring to in the last question that Linda and the team is really doubling down on now and starting to think about. So the point at which we think that that customer base will stabilize and will start to grow, we'll be back to you in the coming few months. I'll say that as you said in the last couple of calls, one of the things to watch - continue to watch is also revenue per customer and orders per customer and those numbers will actually start to turn positive, as they have in the last couple of quarters before the actual customer count starts to turn positive. So we're at least encouraged that, that's happening already and we are starting to see an improvement in both of those metrics.

[Linda Findley Kozlowski:]

Yeah. I just want to echo what Tim said on that. I think, what we are seeing already is increased acquisition efficiency and better quality customers coming in, and I'm really impressed with how that's impacting some of those early metrics that really indicate the potential from - potential for growth and the foundation for building a strong new strategy based off of what we've been looking at. On the Jet front, Jet's been a great partner for us and we're actually really great performer on their site, so that's been extremely positive. We're really pleased with the performance to date. We had a rotation of about 6 meal kits and 4 Knick Knacks. Where we're actually looking to expand now is in the few weeks we're going to be opening a Blue Apron shop that actually gives a more holistic view of all the offerings available through same day and next day across New York City. So that's sort of our next step to drive a little bit more of a branded experience where people can see a much more complete view of what's available. So for us, this is really an important part about thinking about how we align our brand and culinary offerings with strategic partners. And it's part of our methodical sort of channel expansion strategy that we can continue to build on and learn as we develop and think about broadening that in the future.

[Shweta Khajuria:]

Thank you.

[Operator:]

[Operator Instructions] The next question will come from Michael Graham of Canaccord. Please go ahead.

[Michael Graham:]

Thank you. Just on the of a core customer, could you just maybe talk about how you define that internally? Is it tenure; is it frequency or some other measure? And can you just kind of at a high level talk about of the 550,000 that you have right now, like roughly how many of those you would consider to be core?

[Linda Findley Kozlowski:]

Sure. So first, I'll get into a little bit about what's the best customer looks like. And we've actually done quite a bit of qualitative and quantitative research on this. So it's really, really well defined and it is a combination of demographics, psychographics in a lot of different areas. But a lot of it is based on their actual behavior within the Blue Apron products and sites. So that's particularly exciting for us, because it's based on how they really engage with us. When we think about some of the habits and preferences and other things that they align to, what we've done is we've been able to break them into a group of what we consider to be our highest quality customers, which represents about 30% of our customer base. And then from there, we can start to look at psychographic profiles that will help us target more easily, understand the other properties that they're actually participating in, and really much more cleanly identify how we can actually look at those particular segments and bring them in, as well as retain them and engage them for the longer term. So again, we're already seeing evidence that this paying off in efficiency of acquisition and also quality of customers. But it is about 30% of our base and we are seeing significant improvement in demographics and psychographics.

[Tim Bensley:]

Yeah, and then just one thing to go back to our last call or actually two calls ago and went through this in some - quite a bit of detail. 30% of our newly acquired customers in every cohort tend to have the - had the tendencies of our best customers. Of course, once people are retained in the previous cohorts, 2018 and before, a much higher percentage of our retained base in 30% is in that category of customers. So I think we had a couple of questions on this last time. I want to be clear that you shouldn't expect that 70% of our current customers are not good high affinity customers that we would be shedding over time. Something more like very, very high percentage, 80%, 90% plus of our current customers are in that high affinity. But each year, each cohort coming in about 30% of those customers have been what we would consider to be acting like those best customers. Now, this year already in 2019, we're really excited about the new cohort that we brought in on this more focused marketing spend that the quality of those customers has actually been higher than in previous cohorts. So we're very encouraged by that. And I think that's one of the reasons why the mix of best customers has picked up. You see, obviously, the increase in those core customer metrics of revenue per customer and orders per customer. And even sequential quarter-over-quarter improvement in absolute orders from Q4 to Q1.

[Michael Graham:]

Okay, that's helpful. Thank you. And then, just a quick follow-up. When you think about like your value proposition to those customers, how - can you just talk about the spectrum of like convenience versus culinary experience, like do you feel like the company's product messages had that right in the past? Do you feel like you need to think that through a little bit differently going forward? Just maybe talk about the importance of convenience.

[Linda Findley Kozlowski:]

Yeah. So we do know that our customers choose us, because they care about high quality premium ingredients and then culinary driven recipes are another big aspect, as well as learning new cooking skills. So that's really, whether you're a new cook or whether you're an existing cook, you can learn something new and you can expand. And they also really like the unique ingredients that we offer in our boxes, where we are able to expand their horizons on things they may not have cooked before. And then, the other thing that they cite that's really important is the ability to cook and share with families and loved ones sort of at home. So that's something that's really important to them. Convenience is certainly a part of what they are looking forward with us, but it's on that base of the culinary authority and the experience that they look at it sort of on top of that.

[Michael Graham:]

Okay. Thank you.

[Operator:]

Ladies and gentlemen, this will conclude our question-and-answer session as we approach the conclusion of our call. I will now turn it back over to Ms. Kozlowski.

[Linda Findley Kozlowski:]

Thank you very much, and thank you, everybody, for your time today. We're looking forward to updating you on strategies and our future dialogs. Have a good day.

[Operator:]

The conference is now concluded. We thank you all for attending today's presentation. You may now disconnect your lines.