Avis Budget Group, Inc.
Q1 2014 Earnings Call Transcript

Published: 8 May 2014

[Operator:]

Good morning, and welcome to the Avis Budget Group First Quarter Earnings Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the meeting over to Mr. Neal Goldner, Vice President of Investor Relations. Please go ahead, sir.

[Neal H. Goldner:]

Thank you, Kimberly. Good morning, everyone, and thank you for joining us. On the call with me are Ron Nelson, our Chairman and Chief Executive Officer; and David Wyshner, our Senior Executive Vice President and Chief Financial Officer. Before we discuss our first quarter results, I would like to remind everyone that the company will be discussing forward-looking information that involves risks, uncertainties and assumptions that could cause actual results to differ materially from the forward-looking information. Important risks, assumptions and other factors that could cause future results to differ materially from those expressed in the forward-looking statements are specified in the company's earnings release and other periodic filings with the SEC, which are available on the Investor Relations section of our website at avisbudgetgroup.com. We have also provided slides to accompany this morning's conference call, which can be accessed on our website as well. Our comments will also focus on our results excluding certain items and other non-GAAP financial measures that are reconciled to our GAAP numbers in our press release and in the earnings call presentation. I'd like to -- now I'd like to turn the call over to Avis Budget Group's Chairman and Chief Executive Officer, Ron Nelson.

[Ronald L. Nelson:]

Thanks, Neal. And good morning. There were a lot of good things to feel good about in our first quarter

[David B. Wyshner:]

Thanks, Ron. And good morning, everyone. Today, I'd like to discuss our first quarter results, our fleet costs, our balance sheet and our outlook. My comments will focus on our results excluding certain items. As Neal mentioned, these results are reconciled to our GAAP numbers in our press release and in the earnings call presentation on our website. This quarter marked our highest first quarter earnings per share ever, coming in at $0.16, so it's double our first quarter 2013 results, principally as a result of higher volume and increased pricing in North America, as well as positive contributions from our Zipcar and Payless acquisitions. Adjusted EBITDA grew 26% year-over-year to $117 million in the first quarter, with margins expanding 80 basis points. Currency effects were a $9 million headwind for us, while our local currency results were even stronger than our 26% EBITDA growth would suggest. The trailing 12 months adjusted EBITDA now stands at $793 million. And for those analysts who run valuation models based on EBITDA before deferred financing fees and stock-based compensation, the trailing 12 months adjusted EBITDA would be $46 million higher or $839 million. Revenue in our North American segment grew 13% in the quarter and was up 6% excluding the acquisitions of Zipcar and Payless. Total volume increased 7% in the first quarter, while pricing was up 1%. Excluding the acquisition of Payless, volume increased 4% and pricing was up 2.5% in constant currency. On Slide 14, we've laid out our North America volume and pricing metrics, with and without Payless, for your convenience. Leisure revenue increased 7%, with volume up 5% in the quarter and pricing up 2%, both excluding Payless. Commercial revenue increased 5%, including a 3% increase in volume and a 2% increase in pricing. Adjusted EBITDA in North America grew 23% year-over-year primarily due to increased pricing and higher volume, virtually offset by a 7% rise in per-unit fleet costs, which is generally consistent with our expectations for the quarter. Zipcar operations contributed $68 million of revenue, $55 million of which was in North America, with the remainder in Europe. Zipcar generated $5 million of adjusted EBITDA in the seasonally slower first quarter. We continue to realize incremental synergies at Zipcar, both through cost efficiencies and fleet sharing. The Payless acquisition, while small, is also delivering strong returns. The $50 million investment contributed $6 million to EBITDA in the quarter. Revenue in our International segment grew 7% in the first quarter, primarily due to higher rental volumes and ancillary revenues in Europe. International adjusted EBITDA was unchanged, as incremental synergy benefits and the flow-through from revenue were offset by a $9 million negative impact on EBITDA due to currency exchange rates. Our Truck Rental segment also had solid results in what is a seasonally slow quarter for this business. As you know, we announced a restructuring program in late 2012 to right-size our Truck Rental business and position it for substantially higher profitability and, over the longer run, reduce earnings volatility. We completed this restructuring last year and reported a $3 million improvement in adjusted EBITDA this quarter, despite a 14% decline in average fleet. Pricing was up 4%, with utilization increasing significantly. Moving now to fleet costs. North America per-unit fleet costs increased approximately 7% in the quarter, in line with our expectations. With fleet costs normalized in the second quarter of 2013, we still had 1 quarter remaining of difficult year-over-year comparisons, and this was it. We saw a fairly stable and healthy used car market throughout the first quarter, enabling us to dispose of more than 30,000 risk cars at prices slightly above our expectations. And we are encouraged by the strength of the wholesale market so far this year. In the first quarter, we disposed of roughly 1/4 of our risk fleet through alternative channels such as online, direct to dealer and direct to consumer, including our retail partnership with AutoNation. Our use of alternative disposition channels has increased more than 50% from the beginning of last year. And you may remember from our Investor Day that we expect these channels to provide an incremental benefit of at least $250 per car. And selling more vehicles this way can have a significant impact on fleet costs. Another area of our operations that has been vital to earnings growth has been our Performance Excellence process-improvement initiative. PEx is off to another strong start this year and is touching virtually all parts of our organization. In Zipcar, PEx is helping to review existing maintenance procedures to lower downtime and reduce the costs of maintaining a Zipcar. At Payless, PEx is replicating existing Avis Budget procedures to lower the costs to service and prepare a vehicle for rental. In Europe, PEx is driving maintenance and damage-repair efficiencies, one-way cross-border revenue optimization and standardization and efficiency improvements in our shared service center in Budapest. And in North America, PEx is helping to roll out the process changes associated with the yield management initiative which Ron discussed, as well as improving the handling of vehicles during their removal from our fleet, reducing the downtime between last rental and disposal. Across our regions, we're expecting our Performance Excellence efforts to contribute $40 million to $50 million of incremental benefits again this year. More generally, our focus on improving processes, driving efficiency and controlling costs remains intense. PEx is a key part of this focus, so are our efforts to relocate and standardize back-office functions in Europe into our shared service center in Budapest, which now has more employees than any other Avis Budget location in the world. We've also been working to streamline and strengthen our vehicle maintenance activities, which have not only reduced costs but have had the additional benefit of making us better positioned to handle vehicle recalls. The decisions that managers throughout our organization make everyday continue to be informed by our broad-based culturally-embedded emphasis on managing costs. Turning to the balance sheet. Our liquidity position remained strong, with $5.3 billion of available liquidity worldwide. We ended the quarter with $841 million of cash, no borrowings under our corporate revolver and roughly $1 billion of availability under that facility. We had unused capacity of $3.5 billion under various vehicle-backed funding programs. And our ratio of net corporate debt to LTM-adjusted EBITDA at the end of the quarter is 3.6x. We took advantage of attractive financing available to us during the quarter, completing a $275 million offering of euro-denominated senior notes due in 2021, with a yield of 4.85%. We used the proceeds from this offering to redeem a similar amount of our 8.25% senior notes in April. Given the current level of interest rates, we anticipate calling the remaining 8.25% notes no later than October of this year, which should generate substantial benefits going forward. Before I wrap up, I'd like to discuss our expectations for the remainder of this year. We expect rental days in North America to increase 4% to 6% and that pricing in North America will increase approximately 1%. Maybe some of you are wondering why we aren't changing our pricing guidance given the strong results we've achieved in the first 4 months of the year and our ongoing focus on pricing and yield management. There are a few reasons. First, the tough winter weather clearly created some incremental insurance replacement demand, which we think made the industry somewhat tighter fleeted in Q1 than we can assume it will be over the balance of the year. Second, given the short booking window in our business, we have only a tiny portion of our summer reservations booked at this point, and the summer is a critical period for us. And third, our up-1% projection includes Payless, which is going to generate a pricing headwind of at least 0.5 point this year. On the flip side, as Ron mentioned, our commercial pricing is clearly shaping up to be stronger than we had initially anticipated. The net result is that while we feel good about pricing so far this year, we've not yet decided to change our outlook. Therefore, as we announced last night, we expect our 2014 revenues to be approximately $8.4 billion to $8.6 billion, a 6% to 8% increase compared to 2013. We expect total company per-unit fleet costs to be $295 to $305 per month in 2014. In North America, per-unit fleet costs are expected to be approximately $300 to $310 or flat to up 3% compared to 2013. This implies very modest year-over-year changes for the remainder of the year. We expect adjusted EBITDA to be approximately $825 million to $900 million and our 2014 pretax income, excluding items, to be $455 million to $535 million. We expect our effective tax rate in 2014 will be approximately 38%, and our diluted share count will be between 111 million and 112 million, including the effect of repurchasing $200 million to $300 million of outstanding shares this year. Based on these expectations, we estimate that our 2014 diluted earnings per share will be $2.50 to $2.95, an increase of approximately 14% to 34% compared to 2013. We project our capital expenditures to be around $200 million this year as we continue to invest in our business, particularly our digital presence in North America and Europe, as well as yield management. We expect our cash taxes to be approximately $70 million this year. In fact, given the NOL we have on the balance sheet, our corporate interest expense, our anticipated fleet growth and existing tax laws, we don't expect to be a regular federal cash taxpayer through at least 2017, which is the extent of our current tax-planning horizon. We could be an AMT taxpayer from time-to-time over the next 4 years, which should be at a cash tax rate, after applying our NOLs, of only 2%. And finally, we continue to expect our free cash flow to be approximately $400 million this year, absent any significant timing differences. As is typical for us, most of that free cash flow will be generated between July and October. So to wrap up. We achieved higher pricing and increased volume in North America in both our commercial and leisure segments. Our International operations had several important successes despite soft economic conditions in certain countries. And 1 year after our acquisition of Zipcar, we have made significant advances in our integration and operation of that business. In the capital allocation front, we're pleased to have returned $75 million of free cash flow to our shareholders in the first quarter in the form of share repurchases. And we expect to repurchase a total of $200 million to $300 million of stock this year. And finally, we're well aware that 1 quarter, particularly the first quarter, doesn't make the year. Controlling costs, investing prudently in our business, pushing for pricing wherever we can and delivering benefits from our strategic initiatives will continue to be our focus in the months ahead. With that, Ron and I would be happy to take your questions.

[Operator:]

[Operator Instructions] Our first question comes from Chris Agnew of MKM Partners.

[Christopher Agnew:]

Thank you for the color on why you weren't changing the pricing guidance, but can I ask on one of the things you mentioned there, that you can't rely on industry fleet levels being as tight through the summer. Is there any particular reason why you're -- you would think that industry fleet levels are going to be loose through the summer? Is there anything in particular you're seeing?

[Ronald L. Nelson:]

No, I don't think there is, Chris. As a matter of fact, industry fleet levels through April and even into May have actually been fairly tight. I just think that the winter was so harsh and there was so much insurance replacement volume that more than likely got generated, I just think it's an abundance of caution to do that. I think one of the underpinnings of that view is the fact that volume at the auctions was actually fairly light in the first quarter, and I think people were holding onto fleet for that incremental demand. But no, there's nothing specific on the horizon. It's just being cautious.

[Christopher Agnew:]

And a follow-up. With -- on fleet costs, with better program vehicle deals this year, you've got stronger Manheim or used-vehicle index. I know it's only a proxy. And then you've got more vehicles selling through alternate channels, and David mentioned that there's a benefit there. I guess I may be a little surprised fleet costs aren't trending lower. So maybe to ask it this way

[David B. Wyshner:]

Chris, certainly some of the things you mentioned, such as selling cars through alternative disposition channels, we had counted on and factored into our guidance. So I wouldn't see that necessarily changing the -- or having an impact that changes what we expect for the year. I think the favorability we've seen in the Manheim Index and a little bit of favorability we experienced in the first quarter certainly have the potential if they continue to move us down closer to the lower end of the range rather than the higher end. I don't know yet that they could actually move us below the low end.

[Operator:]

Our next question comes from John Healy of Northcoast Research.

[John M. Healy:]

Ron, I wanted to ask for a little bit more color on the corporate market. Really encouraging to see the progress there, and I appreciate the color on the trends and in terms of the flipping versus leisure and some of the growth in the SMB market, but I was hoping to get more color on the contractual side of the market with the larger accounts. Are you seeing much difference there in terms of the competition? And I know you guys have tried to pull back from some of that competition and kind of lead the industry that way, but curious to know if you're seeing any more discipline amongst the big contracts that come up for renewal.

[Ronald L. Nelson:]

No, I think we've seen the most progress, John, in mid market. I think those are accounts where we're better able to control pricing. And we've certainly seen an improvement in all of our mid-market accounts in terms of the percentage that are renewing at equal or higher rates. As a matter of fact, in April, 100% of the accounts that we renewed were all at equal or higher rates. So I don't think that'll persist throughout the year, but as I think we've said over the last couple of quarters, 50% were higher, then 60% were higher in the first quarter. I think the number is 65% were higher or equal. So it's slower progress, one -- quarter-by-quarter, month-by-month. And I think a lot of what you got to think about is that a lot of these contracts are layered in. So you could have some contracts that we entered into 2 or 3 years ago that are now coming up for bid. And the market level is just different. And so even though you're negotiating a lower price, it could well be a market level that's higher than the price. But even -- it could be a price that's lower than what you originally entered into even though it may well be higher than the current market level by some modest amount. Look, I think -- in general, I think the competition is always going to be there for the very large accounts. I think a lot of what we saw in the first quarter and what we're forecasting in terms of our at least 1% in commercial is going to be a function of keeping leisure rates high, keeping flipping low and changing the mix and focus of our business. We're going to continue to push for rate gains in our very large accounts, but I can't tell you that we've made some significant improvement in the real large accounts. But overall, the large accounts are probably 1/4 to 1/3 of our commercial book. The biggest gain to be had here is in mid market and small business.

[John M. Healy:]

Okay. Now that's extremely helpful. And I wanted to ask a little bit about the European business. I wanted to get a little bit more color. It sounds like you're feeling good about maybe where the market's heading in general. But a little bit more color just in terms of how it feels competitively in Europe. I know there's been some commentary that some things might be going on in some of your larger competitors there. But just some flavor how fleets feel over there and just how some of the smaller players seem to be kind of either growing their fleets or maybe they're retrenching from the market. Just what's happening on competition in Europe?

[Ronald L. Nelson:]

I think, when you look at the European business on a constant currency basis and you focus primarily on Avis, because it's significantly larger than Budget at this juncture, you have to conclude that fleets are generally in pretty good sync with demand because, on a constant currency basis, our total revenue per day is up modestly in Avis and we've been able to grow volume modestly in Avis. It's a pretty good proxy for, I think, the market. Budget is obviously a different story because you're starting with a different base. I think the only thing that has really given us a little surprise is Germany is the strongest economy, and while volumes were generally flattish in Germany and up everywhere else, pricing was down a couple of points in Germany. And it's not clear whether it's a German -- a fleet issue in Germany or whether there's just decreased demand that's driving lower pricing. I think we're all sort of working hard to understand what it is we can do to turn that around. Germany is an important market for us, but where we make all of our money is really in the summer months in Italy, Spain and France. So we're not horribly concerned about it, but we do want to figure it out and make sure we make the right moves with our fleet and with our pricing there to optimize what economic activity is there.

[Operator:]

Our next question comes from Brian Johnson of Barclays.

[Brian Arthur Johnson:]

Ron and David, you had a chart on Slide 16 I find interesting, albeit it's just for trucks. It talked about revenue per vehicle. If you look at that on domestic, it was -- looked like it was up 5% in revenue per vehicle. That's a metric that balances rev per day with utilization. So I guess, more broadly, how are you thinking -- obviously, there was the one-way issue, but how do you think about utilization as a metric? How do you think about the interplay between utilization and pricing? And then kind of as you kind of roll out all these kind of new initiatives and technologies, is that the metric you're targeting, or is it still kind of pricing and volume?

[David B. Wyshner:]

Brian, thanks. I think you're right in how you describe revenue per vehicle, as it clearly takes into account both pricing and utilization. I think the direction you're headed in is the right one. Most of the improvement we've seen in revenue per vehicle is driven by the pricing growth that we've had. But utilization was strong in the first quarter, and your suspicion is spot on. Our yield management activities, we think, are helping both pricing and utilization, and so it really does show up in revenue per vehicle. And in particular, we think the yield management activities are helping to drive additional volume during the weekly shoulders, during the weekends and in shoulder periods, particularly on the Budget side, and so we are getting some additional utilization as a result. And when we look back at the first quarter and the vehicle recalls that we had, the fact that we achieved improved utilization in the quarter is something we feel very good about. And as you suggested and as I've said, a big part of that was driven by the yield management initiative, which is helping generate some volume when otherwise cars might have sat. The last point I'd make is one we've made before, and that is that we like utilization, other things equal, but it is not our sole focus. We are -- we continue to invest in premium and, in some cases, luxury fleets that typically has below-average utilization but higher revenue per vehicle and higher profitability. And as a result, we're trying to be very careful never to focus solely on utilization but rather on the role that it plays in the broader calculus of maximizing profitability.

[Brian Arthur Johnson:]

Right, because I guess premium would do well, I assume, on revenue per available car.

[David B. Wyshner:]

That's right.

[Brian Arthur Johnson:]

And just kind of related to that, it sounds like the benefit you're getting now is from, as you said, filling the shoulder periods. As you kind of go forward, I mean, to what extent is your focus on revenue per vehicle changing the way you might think about the size of the fleet and tuning the fleet size through the quarter?

[David B. Wyshner:]

Sure. And just to be clear, I'd say the utilization benefit is what's coming through on the weekends, or the yield management benefits is impacting utilization on the weekends. We think it's impacting price favorably during the week and during peak periods, and that's all part of the double benefit we'd look to get from this. As we think -- when -- as you look at our yield management initiative, what we've done so far is really pricing automation. And that's the first phase of a multiphase project, and that's having significant benefits, but the next phase is a greater integration of demand forecasting, fleet planning and pricing in order to be able to adjust those various levers more interactively and more optimally, more surgically than we have in the past. And so what I think you'll see over the next year or so is that the feedback mechanisms into tweaking of the fleet, for us, will become more sophisticated over the next year to 18 months, allowing us to do some more of the things that you're alluding to.

[Brian Arthur Johnson:]

And I guess, final question, same topic. Where do you think the rest of the industry is on total industry supply in either using kind of blunt tools to make sure that the fleet is right-sized or are these more finer-grained technology tools? There has been one competitor who's been talking a fair amount about excess fleet in their system for a bit, with less visibility into their current [ph]. So just overall, where you think it is. And then kind of as people kind of buy the same sort of rights to the same code, rights to the same technology, do you see room for that to improve?

[David B. Wyshner:]

On the yield optimization, yield management front, we feel good about where we are competitively and how we're using the information we have to manage our fleet. I think the work we're doing, which has required a lot of thinking and building of algorithms, as well as management tools to -- and processes to implement them, positions us to be ahead of the curve relative to our competitors and in the future. But I'm not privy to all the things they may be doing to work on yield management.

[Brian Arthur Johnson:]

Well, I guess the question is, did you see an improvement in fleet tightness across the industry beyond your own fleet and what you're doing?

[David B. Wyshner:]

I think it's hard to tell what will happen going forward. And clearly, in the first quarter, I think each of our competitors was working through a different issue. One of them, both actually, probably having some incremental insurance replacement demand, and then one working through a fleet integration issue as well.

[Operator:]

Our next question comes from Adam Jonas of Morgan Stanley.

[Adam Jonas:]

Just a follow-up on the tech question. Can you give us a sense of kind of where your tech spending is in either absolute terms or percentage of sales? Or how much is already done for where you're going to need to go as you transition to -- from legacy systems like Wizard to open architecture and things you've just talked about and roll out connected car to larger parts of the fleet?

[David B. Wyshner:]

Sure, Adam. I think, as we think about our technology spending, it's an area of focus for us and we're investing more there than we ever have before. And I think it takes a variety of different types of spending. First, we've been investing in the digital area, our mobile capabilities, whether it's our apps or our websites. And we've been doing that both in North America and Europe, and that's an important focus for us. We continue to do incremental spending to build additional capabilities here or there through our core systems. We're investing fairly significantly to increase the longer-term nimbleness and agility that we have with our systems, including some very significant work on Wizard to make it more agile, to allow us to be more agile to implement changes more quickly and at less cost. And that's a multiyear initiative for us. And I think we're continuing to look at customer-facing elements of our technology because we consider that to be very important. Our customers expect us to be -- to provide good, solid, reliable, helpful technology to them. And I think we've got a number of things that work very well, but we also have other areas that don't work as well as we'd like, and we see opportunities to improve the customer experience with our spending there. So as we look at our aggregate $200 million of capital spending this year, nearly half of that in, one form or another, relates to technology.

[Adam Jonas:]

And is that, going forward, going to grow in line with sales, or greater than sales, so that you get a yield on it and try to compensate for that?

[David B. Wyshner:]

I wouldn't be surprised if it were to grow maybe a little bit ahead of sales. The opportunities we see to invest in technology and generate a significant return are really quite good. And as long as those continue to be there, we're going to take advantage of those investments. And the one reason I'm cautious on that is that I do think the work we're doing on Wizard and our other systems actually allow us to be more efficient in the technology spending that we're doing. And so that may allow us to do more at essentially the same percentage of sales.

[Adam Jonas:]

Great. And just a follow-up on Zipcar on-airport. A very interesting initiative. And I don't know if you're in a position to kind of share. And I know -- I'm sure it's starting very small, but based on what you have running now, can you give us any more color on, say, length or revenue per rental, or rates or maybe how big this can go? And also, are these cars -- is there an agreement with the airport to pay kind of an 11%-type concession fee? Or is it just the cost of the short-term parking in the facilities that the airport is compensated for?

[Ronald L. Nelson:]

Yes, no, we do pay a concession fee on the airport rentals for Zipcar. And we're in 30 airports now. I think there's probably at least 20 more that we think we can profitably put cars there. I think, in terms of the number of cars that we're renting, it's very -- it's small, very small, compared to the number of Avis and Budget cars that we're renting. And I think the thing that has really captured all of our thinking is the fact that these cars rent for a relatively significant premium over Avis and Budget rentals. Now part of it obviously is the all-inclusive nature of insurance and gas and T&M, but part of it also is the service proposition that it offers to Zipcar members. I mean they simply get off the bus, they go right to their car. They swipe their smart card and they're off and running. And I think there's a lot of good customer experience learning that's coming out of this that's going to impact both of our brands longer term. I'd -- my sense is, and I don't know the number exactly, but the LORs for the Zipcar airport rentals are probably shorter than the LORs for Avis and Budget, probably because of the premium, but that's -- I think that answers your question.

[Operator:]

Our final question comes from Afua Ahwoi of Goldman Sachs.

[Afua Ahwoi:]

Just 2 from me. First, on the ancillary revenues, can you maybe talk about what sort of product you're seeing a lot of traction? I know, for a while, you talked about how the sort of stuff like the GPS has -- maybe reached its penetration potential, but maybe what else is driving such strong growth there? And then on the pricing, I know, sometimes, you gave maybe either a one month in color. So is there any color on what April was? And then also, how much does your new yield management system add into pricing? Or what benefit do you think you're getting from that?

[Ronald L. Nelson:]

Well, those are a lot of questions. Let me see if I can remember them. I think, on the ancillary revenue side, Afua, sort of the order of value in terms of aggregate dollars is LDW, loss damage waivers; and then GPS; and then roadside protection; and the new SiriusXM Radio product launch that we've had. I think where the real growth on a percentage basis has been, has been in the XM radio. We've now equipped something like 200,000 of our cars with factory-installed XM radios that can be activated at the counter. And the growth in that product has been fairly significant. I think, in Europe, it's a little different. I think upsells are contributing a fair amount to the ancillary revenue. They've just begun the ancillary sales training throughout some of the markets. That is giving people the tools to be able to drive ancillary revenue growth. So I think we're seeing pretty good growth across all of the products there, and I think we probably will for the next 3 or 4 years. I think, in North America, it's probably more dependent on product launches than it is new products in the -- over the course of the next couple of years.

[David B. Wyshner:]

Then on the pricing side, April was strong. And as we've said in the -- our opening comments, I think it was consistent with our first quarter trends, plus the benefit of the Easter shift. And as a result of Easter moving, which actually creates a lot of noise in the comparables, it's hard to make a lot of sense out of the overall April number, but the trends appeared to be pretty consistent. And we do believe our yield management initiative was a contributor to that, the same way it was in the first quarter.

[Ronald L. Nelson:]

So let me just -- before we close, I do -- I think it's important to reiterate what I believe are the key points from today's call. We had an excellent start to the year, with volume, pricing, margins and earnings all increasing. The used car market has been stable, enabling us to sell the cars we want at prices slightly above our expectations thus far. And the positive volume and pricing trends we experienced in the first quarter have continued into the second as we benefit from our yield management system, our continued shift in mix toward higher-yielding segments and the shift of Easter. We have a full investor calendar this month and next, and hope to see many of you during our travels. With that, I want to thank you for your time and your interest in the company.

[Operator:]

This concludes today's conference call. You may disconnect at this time.