Monro, Inc.
Q1 2015 Earnings Call Transcript

Published: 23 Jul 2015

[Operator:]

Good morning, ladies and gentlemen, and welcome to Monro Muffler Brake’s Earnings Conference Call for the First Quarter of Fiscal 2016. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, ladies and gentlemen, this conference call is being recorded and may not be reproduced in whole or in part without permission from the company. I would now like to introduce Ms. Effie Veres of FTI Consulting. Please go ahead.

[Effie Veres:]

Thank you. Hello, everyone and thank you for joining us on this morning’s call. I would just like to remind you that on this morning’s call, management may reiterate forward-looking statements made in today’s release. In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, I would like to call your attention to the risks and uncertainties related to these statements, which are more fully described in the press release and the company’s filings with the Securities and Exchange Commission. These risks and uncertainties include but are not necessarily limited to uncertainties affecting retail generally such as consumer confidence and demand for auto repair, risks relating to leverage and debt service, including sensitivity to fluctuations in interest rates, dependence on and competition within the primary markets in which the company stores are located and the need for and costs associated with store renovations and other capital expenditures. The company undertakes no obligation to release publicly any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The inclusion of any statement in this call does not constitute an admission by Monro or any other person that the events or circumstances described in such statements are material. Joining us for this morning’s call from management are John Van Heel, President and Chief Executive Officer; Cathy D’Amico, Chief Financial Officer and Rob Gross, Executive Chairman. With these formalities out of the way, I’d like to turn the call over to John Van Heel. John, you may begin.

[John Van Heel:]

Thanks, Effie. Good morning and thank you for joining us on today’s call. We are pleased that you are with us to discuss our first quarter and fiscal 2016 performance. I’ll start today with a review of our results, key initiatives and outlook for fiscal 2016. I’ll then turn the call over to Cathy D’Amico, our Chief Financial Officer, who will provide additional details on our financial results. Despite the choppy environment in the first quarter, our team’s consistent execution of our proven strategy and initiatives allowed us to deliver net income growth of 11%. While first quarter comparable store sales of negative 0.04% were below our guidance of flat, our continued focus on margin improvement and effective cost control combined with the out-performance of our recent acquisitions enabled us to achieve record earnings per share of $0.57 the midpoint of our guidance range. These results demonstrate that our business model is working. However, as I said in May, while we have expanded our operating margin and increased earnings and the bottom line remains more important than the top line we are working to combine these improvements with higher comparable store sales to consistently achieve the level of sales and earnings growth that I expect of our company. Our net call I describe the set of initiatives they help drive traffic in sales these initiatives are being led in March part by our new Senior VP of Consumer Branding and Digital Marketing. We are shifting our marketing spent to more efficient digital advertising thereby driving more customers into our stores and to our website as a similar overall marketing spend. These customers will find more robust website capability including improvements to our online appointment tire search and customer review process. In addition to this website enhancement we are increasing the collection of customer emails, which allow us to more effectively and efficiently communicate with our customers and drive higher conversion. Also for our local commercial customers we recently launched a new online tire ordering system, which provide them with better visibility into tire pricing and inventory, while increasing convenience, delivery speed in tire sales. In addition to our digital initiating we continue to focus on the building block of our traffic oil changes. On top of Monro’s everyday low price, we also offer promotion such as free service checks and wiper blades, these are low cost to Monro, but high value to customer allowing us to drive, increase visits to our stores, where we can build trust with those customers and capture sales and needed maintenance, tires and repairs, while most of these initiatives are still early in our implementation. I believe that these high in focus is already having a positive impact on our traffic in sales which will increase as we move forward this year. As I said in May, I am tired of being cautiously optimistic about the consumer. Now, let’s turn to the quarters result. During the quarter service category such as alignment and brakes were up 8% and flat respectively. On top of high single digit percent increases in the prior year. Tire sales were flat with 3% higher average retail pricing offset by decline entire units. After a slow start to the first quarter overall traffic and sales improved in May and June and that just slightly positive comparable store sales in both month. Our results in July improve with positive traffic, tire units and oil changes driving comparable store sales up approximately 2% month to date. Additionally comparable store tire sales from May, June and July are positive representing the first consecutive month increases in this category since fiscal 2014. While I’m encouraged by the comp store sales trend, I am not satisfied with the 2% increase. We are highly focused on generating positive, profitable sales above that level. Importantly, the effective management of our retail tire pricing combine with our ability to leverage our increasing scale and flexible supply chain allowed us to continue to increase our tire margin. In the first quarter our gross profit dollars collected for tire were higher than any quarter in fiscal 2015. This is very impactful given that every $1 increase in gross profit for tire is worth 0.05 of EPS while every 1% increase in tire unit is worth 2.5 of EPS. Gross margins for the quarter increased by 80 basis points to 42.2% a result of both lower materials cost as a percentage of sales and strong payroll management. This improvement in gross margin is particularly impressive given be re-lapping the substantial increase in gross margin we delivered in the first quarter of last year and the fact that this year’s quarter sales mix shift slightly to the lower margin entire category. Total operating expenses as a percent of sales delivered by 10 basis points year-over-year as a result of the layering of operational expenses from newly acquired stores largely offset by focused cost control. Despite the choppy environment, we achieved another quarter of strong profit growth with first quarter operating income of 14% year-over-year and operating margin expansion of 70 basis points to 14.2%. For the quarter net income was 18.8 million and increased of 11% versus last year or $0.57 in earnings per share net of $0.01 of due diligent cost. Now I’d like to discuss our growth strategy. In fiscal 2015, we acquired 81 locations representing approximately 85 million or 10% growth in annualized sales. As a result we entered this fiscal year with greater economies of scale that are benefiting us today as well as positioning the company to deliver strong earnings growth over the next several years. Continuing this solid acquisition growth we are pleased to announce that we close on an acquisition of four stores in Massachusetts earlier this month and have also signed a definitive agreement to acquire 27 stores in Central New York and Pennsylvania which is expected to be completed by in mid-August. The 27 store chain will be re-branded as Mr. Tire stores allowing the company to fill in existing market where we currently operate Monro break entire locations. This acquisition significantly increases Monro market share in this markets and it’s a great demonstration of the advantages of Monro’s two brands strategy. The four [indiscernible] stores will be operated as Monro break entire location further extending our brands in this important market. These transactions have approximately 31 million in annualized sales with the sales mix of 60% service and 40% tires. Although these acquisitions are expected to be slightly dilutive to earnings per share in the second quitter we expect them to be break-even in fiscal 2016 as we expect cost synergies to be realized an accelerated rates due primarily to our ability to leverage existing distribution in these markets. In April, we completed the previously announced acquisition of the Car-X brand a chain of 146 franchise locations operating in 10 states. Three of which are new states for Monro in fiscal 2016 we continue to expect that Car-X will be slightly accretive to earnings per share adding approximately 2 million in EBITDA. Including the Car-X acquisition the transactions completed and announced to date in fiscal 2016 represent approximately 35 million in annualized sales growth. Acquisitions increase Monro’s total sales in store counts and as a result raise our purchasing power with vendors. They also allow us to further leverage distribution, advertising, field management and corporate overhead costs all of which will help to drive future margin operating margin expansion. The current operating environment continues to create favorable acquisitions opportunities and we continue to expand our operating margin advantage and produce more profit than competitors. In the short term, choppy sales trends and higher costs continue to weigh on smaller dealers but importantly the long term opportunity is that owners of independent tire dealers are at or near retirement age without an internal succession option. Even when excluding this re-fiscal 2016 acquisition, we continue to have more than 10 NDAs signed, which is the highest number we ever had at any one time. Therefore, we would be surprised these acquisitions since fiscal 2016 did not exceed our goal of 10% annualized sales growth as outlined in our five-year plan. Now to the details of our outlook, for fiscal 2016 taking into account anticipated sales contribution from 2016 acquisitions, we are raising our sales guidance to range of 950 to 970 million versus our previous guidance of 935 to 955 million. This range assumes comparable stores sales of positive 1% to 3% unchanged from our initial guidance. As a reminder we closed 34 BJ’s stores in fiscal 2015 which reduced our sales base versus last year but with we have a minimal impact on earnings. Turning to our expectations for cost of goods sold, as we discussed last quarter, we continue to believe that Monro’s overall tire costs including related warehousing and logistics will be down slightly in fiscal 2016 with more of benefit realized in the back half of the year. We expect lower raw material cost increasing competition among manufacturers and our ability to shift sourcing to suppliers outside of China to more than offset any impact from the recently implemented tariffs and tires imported from China. We believe the tariff only widened our competitive cost advantage in the market as smaller dealers lack to scale and sourcing capabilities to mitigate this higher cost like Monro. Based on these assumptions we continue to expect fiscal 2016 diluted earnings per share to be in the range of 2 and $2.20 versus a $1.88 in fiscal 2015 and increase of 6% to 7% - 17% year-over-year on top of a 40% increase in the prior two years. This guidance includes $0.12 to $0.17 contribution from 2015 and 2016 acquisitions and is based on 33.1 million weighted average diluted shares outstanding. As a reminder given the lower material cost we anticipate this fiscal year, we will need a comparable store sales increase of 1% to overcome inflation versus the 2 to 2.5% increased we have required in prior years. With that said remember that every 1% in comparable store sales above that inflation hurdle generates an incremental $0.07 of EPS. The midpoint of our to 2016 earnings guidance represents operating margin expansion of 70 basis points for the fiscal year on top of the 80 basis points improvement we realized in fiscal 2015. Turning to the second quarter, July comparable store sales month-to-date are up approximately 2% and traffic, oil changes and tire units are also positive versus the same period last year. Based on these factors we expect second quarter comparable stores sales to increase 1% to 3% versus the prior year. We anticipate total sales for the second quarter to be in the range of 233 million to 237 million which reflects the comparable store sales range, the sales contribution from our fiscal 2015 and 2016 acquisitions and the closure of the BJ’s locations last year. We anticipate second quarter diluted earnings per share to be in the range of $0.54 to $.59 versus $0.50 last year. This guidance assumes slightly higher due diligence cost related to potential transactions and includes $0.02 of expense related to annual director stock option brands. Long-term trends remain favorable for our industry with nearly 250 million vehicles on the road, a record average age of those vehicles of 11.8 years old, a slowly decline in population of service base and consumers choosing do it for me service more frequently. Importantly for the first time vehicles 13 years old and older accounted for 28% of our traffic. These vehicles produce average tickets similar to our overall average demonstrating that customers continue to invest in and maintain them even as they advance in age. Our key competitive advantages are still in place including our low cost operations, superior customer service and convenience along with our store density and two brand store strategy. Our five-year plan remains unchanged and continues to calls for on average 15% annual top line growth including 10% growth through acquisitions, 3% comps and 2% increase from Greenfield stores. Our acquisitions are generally diluted to earnings in the first six months as we overcome due diligence and deal related cost, while working through initial inventory and the operational transition of these stores. With cost savings and recovery in sales, results are generally breakeven to slightly accretive year one and $0.09 to $0.12 accretive in year two and another $0.09 to $0.12 accretive in year three. Over a five-year period that should improve operating margins by approximately 300 basis points and deliver an average of 20% bottom line growth. As our results have shown our disciplined acquisition strategy is further strengthening our position in the marketplace. We expected to continue to provide meaningful value to our shareholders from many years to come. Before I hand the call over to Cathy, I want to reiterate some of the positive trend that we believe will favorably impact our bottom line in fiscal 2016; these include the positive impact to traffic and sales from our current digital and other sales initiatives. Our favorable tire pricing environment with tire inflation of 2 to 3% which represents 1% increase in overall comparable store sales and flat unit volume. Tire cost of goods that are slightly down versus fiscal 2015. Our current prices, our year-over-year benefit from the decline in oil cost net of reduce waste oil credit of approximately $1 million significant sales and earnings contribution from our fiscal 2014, 2015 and recent 2016 acquisition and additional acquisitions at attractive valuations. We are committed to combining our proven business model and execution with improved sales performance to achieve the level of sales and profit growth that we expect from our company. With that I would like to thanks each of our employee to continue to work hard, to provide superior service to our loyal customers, Monro’s strong brand and financial success is a direct result of this consistent execution which is an integral part of our companies compiling customer value proposition. Now I’d like to turn the call over to Cathy for more detailed review of our financial results. Cathy?

[Catherine D’Amico:]

Thanks, John. Good morning everyone. Sale to the quarter increase 8.7% and $19 million, new stores which we define a stores opened or acquired after March 29, 2014 added $25.2 million including sales of $23.1 million from the fiscal 2015 acquisitions. Comparable store sales decreased for 4% and there was a decrease in sales from closed stores of approximately $6.1 million largely related to the BJ’s store closures in fiscal 2015. There were 90 selling days in both the current and prior year first quarters. At June 27, 2015 the company had 999 Company operated stores and 146 franchise locations as compared with 966 stores and one franchise location at June 28, 2014. During the quarter ended June 2015 the company added four companies operated stores and closed four. Gross profit for the quarter ended June 2015 was $99.7 million or 42.2% of sales as compared with $90 million or 41.4% of sales for the prior year quarter. The increase in gross profit for the quarter ended June 27, 2015 as percentage of sales, it’s due to several factors, including a decrease in total material cost, primarily related a decrease in oil cost. Additionally, labor cost decreased at percentage sales as compared to the prior year due to a focused on cost control. Productivity is measured by sales per man hour also improved as compared to the prior year quarter. Distribution and occupancy cost were relatively flat as percentage of sales as compared to the prior year quarters. Operating expenses for the quarter ended June 2015, increased $5.5 million and were $66.1 million or 28% of sales as compared with $60.6 million or 27.9% of sales for the quarter ended June 2014. Approximately 5.4 million of the 5.5 million of the increase in operating expenses was directly attributable to increase expenses such manage or pay advertising and supplies related to a full quarter of expenses for the fiscal 2015 acquired stores and franchises support cost related to the Car-X acquisition in 2015. Operating income for the quarter ended June 2015 of $33.6 million, increased by 14.3% as compared to operating income of approximately $29.4 million for the prior year quarter, an increase as a percentage of sales from 13.5% to 14.3%. Net interest expense for the quarter ended June 2015 at 1.4% of sales increased $1.3 million as compared to the same period last year, which was at 1% of sales. Weighted average debt outstanding for the quarter of fiscal 2015 increased by approximately $81 million is compared to the first quarter of last year. There was an increase in capital lease debt recorded in connection with the fiscal 2015 acquisitions as well as an increase in debt outstanding under our revolving credit facility to fund the purchase of the 2015 and 2016 acquisitions. The weighted average interest rate also increased by approximately 50 basis points from the prior year, largely due to adding capital leases. The effective tax rate was 38% of pre-tax income for the quarter ended June 2015, and 38.1% for the quarter ended June 2014. Net income for the current quarter of $18.8 million increased 11% over net income for the quarter ended June 2014. Earnings per share on a diluted basis of $0.57 increased 9.6% as compared to last year’s $0.52 per share. Moving on to the balance sheet, balance sheet continues to be strong. Our current ratio of 1.1

[Operator:]

Thank you. [Operator Instructions] And we’ll take our first question from Rick Nelson with Stephens.

[Richard Nelson:]

Good morning.

[John Van Heel:]

Good morning.

[Richard Nelson:]

2 to 3% pricing that you are expecting in entire category that is 3% of quarter, why you think that number is intact - is in the higher given that Chinese tire, tread if you could comment on what’s happening with the domestic tire manufacturers.

[John Van Heel:]

Sure. That 3% is what we’ve seen in our business versus last year, you know that tires are we are just finalizing and are going into a fact. So I guess you have other operator out there trying to drive - trying to drive sales in order to kind of - that’s for right now holding the market where it is on the pricing side. With regard to the domestic manufactures, we are seeing opportunities to work cost down as we move forward through the year this year. So that’s a part of the guidance that we give in terms of our overall tire cost being slightly down this year versus last.

[Catherine D’Amico:]

Yeah. I think hopefully, Rick get started than that but I like plus 3 better than minus 4 which we got last year.

[John Van Heel:]

We probably have. Yeah.

[Richard Nelson:]

You mentioned that more than 10 continue highest those up in terms of number of stores in the markets.

[John Van Heel:]

Sure they are always in our markets and that said of NDAs that we consistently talked about our - those 5 to 40 store change and they are - and all of the ones that were working with right now are within our market. So we haven’t that - it’s all very consistent in those 5 to 40 store change with regard to that number.

[Richard Nelson:]

Right. And 5 still come back to tires what the unit performance, how you think that’s keeping pace in terms of market share with the industry?

[John Van Heel:]

I think we are - we’re keeping pace it based on our pricing discipline if we are giving anything up its very small but as I said we are absolutely making more money than our competitors given all the financials that we see with the NDA. So I don’t see our sales losing shift and again I’m encouraged certainly by the fact that July being positive is certain units as well in price is certainly a good start for the rest of the year.

[Richard Nelson:]

Thanks for the color and good luck.

[John Van Heel:]

Thank you.

[Catherine D’Amico:]

Thank you.

[Operator:]

We will take our next question from James Albertine with Stifel.

[James Albertine:]

Great thank you for the taking the question and good morning. I just want to ask you mentioned the NDAs are all within your existing markets. But can you may be shared some light on how many the NDA is are in some of the newer markets like the Florida or Southeastern part of the U.S. and maybe highlight a little bit of the distribution drag you are still experiencing as you have that gap sort of between Atlanta and Annapolis?

[John Van Heel:]

So the first part of your question there are a fair number that are in newer markets I am not going to be specific about that but it’s a good chunk of the opportunity that we have which again for us is very encouraging giving the density and opportunity in those markets and the fact that it will help balance our geography some. So that I am very encourage by the opportunities in those new markets. I am sorry the second part of your question.

[James Albertine:]

Well, just understanding it sounds like if that’s the case then the distribution cost through the drag from having the gap between the mid-Atlantic region and it sounds like you still seeding off of the disease instead of your legacy markets not the Southeast and new DC is what I understand right?

[John Van Heel:]

No we don’t and as I said in the past I view us making the investment in a new DC when we had triple digit stores down in that area of the country. And so the when we talk about the synergies that we get obviously we are not getting all of the distribution synergies right now with in those markets that is incorporated within our guidance that we’ve given on the acquisition this year. And I think you can - you can see the importance of that in the fact that for the stores that we are buying the 31 stores that we just announced with this release - on this release that those will be breakeven this year after basically six months of operations because which is ahead of what we usually experienced because they are still close here within our market. So when we hit the triple digit number of stores down in the Atlanta, Georgia, Florida markets, I think you’ll see us putting in a getting all of the distribution synergies right now with in those markets... DC to get the additional accretiveness there.

[Catherine D’Amico:]

Yeah Jamie, what’s the drag you are talking about, I remember operating margins up 70 bps, so it’s not [indiscernible] right now?

[James Albertine:]

Well I was just going to say it’s all the more impress in your comp leverage point is as low as it is with that drag. So I was more of an optimistic been [ph] as anything on the question. If I may just ask a housekeeping gentlemen, and Cathy April, May and June monthly comp if you can provide it and then maybe an update on some of your opportunities. It sounds like clicks are improving and you got some good traction in your digital front to the extent that you can instead of [indiscernible] on where you are there on the digital effort, that would be great? Thanks.

[Catherine D’Amico:]

So the comps by months were down 1.8% in April and up 20 basis points in May and up 20% in June. And with regard to the sales initiatives and the digital initiatives we are still early in the push there what I’m most encouraged by is the fact that as I said just tighten the focus on our overcoming consumer and anything else in the external marketplace is that additional focus I think is helping us right now and I’m very encourage by the early results we seen out of the website enhancement, the appointments and we’ll comment on that as those become more fully implemented later in the year.

[James Albertine:]

Very good thanks again and best of luck in the back half.

[Catherine D’Amico:]

Thank you.

[John Van Heel:]

Thanks Jeremy.

[Operator:]

And we will take our next question from Bret Jordan with Jefferies.

[Bret Jordan:]

Hi, good morning guys.

[John Van Heel:]

Good morning.

[Catherine D’Amico:]

Good morning.

[Bret Jordan:]

On the supply chain question, what number of stores are you not currently distributing to over the thousand, I guess how many are you having to out buy and do you have a feeling sort of what the store level productivity of a distance store versus a soft distributed store is?

[John Van Heel:]

Yeah, look well, the store that are down Florida, Georgia number 6 - in the low 60, 62 or 63 so those are the stores that we’re primarily talking about. Now don’t forget we do have a certain amount of product shift directly fund manufacture, directly to the stores and we are getting some parts down there right now. We are just taking some different shipping approaches which are raising our cost there and we would expect that to be what we would say later on and setting up the DC down there.

[Bret Jordan:]

Okay. I...

[John Van Heel:]

Go ahead.

[Bret Jordan:]

No you go ahead.

[John Van Heel:]

I was just going to say that when we talk about the synergies that we get 100 to 150 basis points and distribution so we are not getting that right now and there is proud we have 200 basis points of the just straight cost savings that we are not getting right now as well.

[Bret Jordan:]

Okay great. Okay thanks. And then on Massachusetts acquisition what chain do you buy?

[John Van Heel:]

It’s called Windsor Tire [ph].

[Bret Jordan:]

Okay not direct tire?

[John Van Heel:]

No.

[Bret Jordan:]

And then one last question did you take a price increase in April and anything because April and September was still your increase months?

[Catherine D’Amico:]

Yes we took a service price increase actually before April of about 1.5% and we recently take some tire pricing as well up slightly.

[Bret Jordan:]

Okay. And my final question alignment comp was up so high what was happening there I mean usually that correlate the tire sales but it seem to outperform?

[John Van Heel:]

Yeah I think when you look at their comp that was up 8 on top of being up I believe 9 last year. So 3 May it was a tough winter that hasn’t impact and we are doing a better job I think on that in the store and as you compress that maybe with the break category I think you come back to the consumer and I still see the consumer differing some of those larger purchases during the quarter certainly earlier in the quarter like brakes or tires and we see that potentially improving into July and I am hopeful that the consumer as a piece of this is getting better and we’ll finally get more of those needed repairs done, which will certainly even better for our accounts going forward.

[Bret Jordan:]

Thank you.

[Operator:]

And we will take our next question from Michael Montani with Evercore ISI.

[Michael Montani:]

Good morning. Thanks for taking my questions. I wanted to ask about what traffic and ticket were for the quarter.

[John Van Heel:]

Sure. Traffic for the quarter was down 1 and ticket was up 60 basis points.

[Michael Montani:]

Okay. I was just going to say in terms of the tire unit side of the equation, I think you said there was a 3% price increase, was that 3% ticket or was there also an offset from trade down?

[John Van Heel:]

No, the mix of tires was relatively flat in the quarter between what we talked about as direct in for and branded so it was overall just the ticket.

[Michael Montani:]

Got it. Okay. And then just the follow-up on margins if I could the full year guidance as you mentioned implied 70 bips of operating margin and expansion, but then those initiatives that seems to be building especially if you think about the tire side you know was cost save. So can you just help me to understand really what the key offsets are to the asset might present greater margin expansion into the back half for the year?

[John Van Heel:]

Well that’s 70 basis points and top of the 80 from 80 basis points improvement from last year. And I think it’s you might look at it as some conservators from our side where you know again I am pleased that we are starting to show some progress on the sales front. But I am not that’s not where we need to be. So I’m trying to make sure that we put out numbers that we believe we can hit our conservative. So we’re certainly update that as we put more time behind us with positive comps and positive margin.

[Michael Montani:]

Great. And just lastly when you guys think about your consumer what was seen year-to-date you know 3.5% increase in miles driven probably 1.5% increase in miles driven for vehicle attending [indiscernible] I mean those are the best numbers we have seen in years. So what kind of pent up demand are you seeing and any kind of qualitative comment you can make et cetera as we have in July?

[John Van Heel:]

Sure. In terms of miles driven I think we consistently help to view that miles driven are not necessarily in any short period the key drivers, I am still the consumer is the other piece of that and I would just back to my thoughts on alignment as a category versus breaks and perhaps tires. Is that I think consumers are still spending only one when they absolutely have to and holding backs on. So I really I we still see pent up demand and I just don’t think that miles driven you are going to tie that and so closely. For us obviously the broader trend in terms of cars getting older has always been much more important to our business and we see that helping a business the other piece of it to me is the consumer and when they just decreased that deferral cycle and that’s what I expect that help our comps when that occurs.

[Michael Montani:]

Thank you and good luck.

[John Van Heel:]

Thank you.

[Operator:]

And there no additional questions at this time I will turn the call back to John for any additional and closing remarks.

[John Van Heel:]

Thank you all for your time this morning. I am looking forward to reporting on the positive impacts of our focus on sales and traffic and contributions from the acquisition opportunities that we are acting on. Our business model should produce another year of double digit EPS growth on top of the 40% increase over the last two year. We appreciate your continued support and the efforts of our employees that work hard to take care of our customer every day. Thanks again and have a great day.

[Operator:]

That does conclude today’s conference. Thank you for your participation.