Viad Corp
Q3 2013 Earnings Call Transcript

Published: 25 Oct 2013

[Operator:]

Welcome to the Viad Corporation Third Quarter Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. Now, I will turn the meeting over to Mr. Joe Diaz. Sir, you may begin.

[Joe Diaz:]

Thank you. Good morning, and thank all of you for participating in the Viad Corp third quarter 2013 earnings conference call. I would like to remind everyone that certain statements made during this call, which are not historical facts, may constitute forward-looking statements. Additional information concerning business and other risk factors that could cause actual results to materially differ from those in the forward-looking statements can be found in Viad's annual and quarterly reports filed with the SEC. During today's call, we will refer to the earnings press release, which is available on the Viad website at www.viad.com. Today, you will hear from Paul Dykstra, Viad's Chairman, President and CEO; and Ellen Ingersoll, Viad's Chief Financial Officer. Additionally, Steve Moster, President of Viad's Marketing & Events Group; and Michael Hannan, President of Viad's Travel & Recreation Group, will be available for comment during the question-and-answer session at the end of the call. With that, I'd like to turn the call over to Paul Dykstra. Paul?

[Paul B. Dykstra:]

Thanks, Joe, and thanks to all of you for participating in today's call. We appreciate your continued interest and support of the company. I'm pleased to report that our third quarter income before other items of $0.69 per share was better than our prior guidance, reflecting stronger-than-expected performance from our Travel & Recreation Group and in-line performance from our Marketing & Events Group. Consolidated revenue for the quarter was $236.5 million with operating income of $24.6 million. As expected, year-over-year results were impacted by significant negative show rotation in our Marketing & Events group of about $70 million in revenue during the quarter but the team worked diligently to minimize the impact of the lower revenues on operating results and posted solid results for the quarter. Travel & Recreation Group also turned in a very good performance, with all 3 of its business units posting higher revenue and operating income as compared to the 2012 third quarter. Now, I'll cover some highlights for each business group before turning the call over to Ellen, who will discuss our financial results in more detail. Marketing & Events Group maintained a strong focus on sales and marketing activities to retain existing business and generate new business and on improving U.S. profit margins through a more efficient service delivery network and rigorous labor management. As I have previously indicated, we set a goal to increase the operating margin of our Marketing & Events Group, 2% in 2012 to 2.5% in 2013. In order to deliver this 50-basis point margin improvement in a down rotation year, a lot of things needed to turn out right for us. While not everything has gone our way this year, it's important to recognize that confronting challenges are part and parcel of running a business and it's our job to stay in the batter's box and not be afraid to swing the bat. It's how you respond to those challenges that defines what an organization is all about. While we've taken a few strikes this year, we've also hit a fair number of doubles and triples that has positioned us for improved operating results this year and beyond. We expect to be able to deliver on our 2.5% operating margin goal this year, with continued improvement in 2014 and beyond. I am proud of the team for maintaining a diligent focus on our key initiatives throughout the year to make this happen. As it relates to business development, we successfully secured renewals with a number of our larger customers in the U.S. and internationally and, in several cases, the renewal contracts included additional business from those customers. We recently reached an agreement to extend our partnership with the Advanstar, a leading event and marketing services business focused on the fashion, licensing, life sciences and power sports industries. For a number of years, we have produced Advanstar's MAGIC Marketplace event in Las Vegas. This event takes place twice each year, with each occurrence connecting more than 5,000 fashion brands with over 65,000 visitors around the world, across exhibit space that exceeds 1 million square feet. We've also produced Advanstar's ENK events in New York and its brand licensing show in the U.K. With this renewal, Avanstar is also awarding us additional business beginning in 2014, including its project show and its U.S. brand licensing show, 2 nice competitive takeaways. Our ability to bring creative solutions and innovative ideas to Advanstar's events was key to this win. We also extended our contract with ICSC, the premier global trade association of the shopping center industry to produce its events through 2017. And we picked up ICSC's Florida and Texas events, which were previously produced by a competitor. Another major show organizer, Penton Media, has renewed GES as its official services provider through 2018. GES has partnered with Penton for more than 25 years and the new contract covers 10 shows, including Natural Products Expo, West & East WasteExpo and LDI. Penton portfolio leverages GES's innovative suite of technology tools, sustainable products to deliver leading-edge solutions that make their events meaningful and valuable for their exhibitors. On the corporate accounts side, Boehringer Ingelheim, a leading international pharmaceuticals company, extended its master services agreement with GES. This agreement now runs through 2016 and includes most of the U.S., and international business for Boehringer's oncology group. We also continue to win and renew business internationally. PennWell Corporation, a leading international exhibition organizer, selected GES to deliver contracting services for all of its events in the Middle East for the next 2 years. The shows in the contract include Avionics International and the offshore Middle East 2015 Expo, among others. This award expands our share in the growing Middle East market. With the addition of PennWell's events, GES will now deliver more than 50 shows a year in the United Arab Emirates. GES also secured a 4-year extension with i2i Events Group, a leading global events company, to provide a broad scope of services, infrastructure and logistics in the U.K. The scope of the contract over the next 4 years is likely to be the largest events services contract ever signed in the U.K. These are but a few examples of the great job being done by our sales and marketing team to extend our relationships with current customers and to win new business that bolsters our market share. Our intense business development efforts, coupled with superior customer service and leading-edge technology are the catalysts that are attracting new business, both domestically and internationally. We are pleased with the progress that is being achieved. On the expense side of the ledger, we continue to make measurable progress. During the third quarter, we continue to rationalize our service delivery network to increase efficiency and lower cost. During the quarter, we sold our New Jersey facility that housed our Northeast operations for $12.7 million. We will relocate to a more efficient leased facility in the same market during the fourth quarter. Also during the third quarter, we relocated our Baltimore, Washington D.C. area operations into a more efficient facility in that market. From 2008 to 2012, we reduced our U.S. facility footprint by nearly 1/3 and realized a net reduction in annual U.S. facility cost of almost $7 million. We expect the changes made in the service delivery network to benefit 2013 U.S. segment operating income by more than $4 million, as compared to 2012. Excluding the onetime gain in related move cost, the ongoing annualized run rate savings are closer to $600,000 in comparing this year to 2012. Much has been accomplished in our U.S. margin improvement initiatives to this point, and we will continue to strategically target areas of improvement. With the final phases of the East Coast network changes underway, our focus has shifted to our West Coast operations. Additionally, we continue to put into place tools and training to help our operations and account managers more effectively manage our labor. We'll continue to improve our cost structure and remain committed to increasing the operating margins of the Marketing & Events business to their historical levels. As it relates to our touring exhibitions, Harry Potter, The Exhibition just completed a record-breaking run in Tokyo, where more than 420,000 visitors experienced the exhibition. Based on its ongoing success, we reached an agreement with Warner Bros., to extend its original 5-year tour by another 3 years. Additionally on September 28, we opened our new Earth Explorers exhibition, which was created in partnership with National Geographic. It is currently on display at the Science Center of Iowa. Earth Explorers is the third new touring exhibition that we launched this year. The other 2 include Alien Worlds and Androids, which is currently on display at the Rochester Museum and Science Center in New York; and Camp Ice Age, which finished its premiere run at the Mall of America in Minneapolis. Let me now transition over to the Travel & Recreation Group. Travel & Recreation Group posted strong results for the quarter that exceeded our prior guidance. The momentum that we experienced in the second quarter, prior to the massive flooding in Alberta, picked up steam again during the third quarter. All 3 of our operating units, Brewster, Alaska Denali Travel and Glacier Park reported increased revenue and operating income as compared to the third quarter of 2012. These improvements were driven by greater visitation to our attractions and higher occupancy rates at most of our lodges and hotels. Brewster recovered nicely from the flooding that occurred in late June and delivered solid growth across the majority of its lines of business. I'm also happy to report the construction of Brewster's new Glacier Skywalk attraction is now essentially complete and the breathtaking visitor experience that we had envisioned is coming to life. We began offering tours for the media and travel industry professionals earlier this month and the feedback has been very positive. We believe that the Glacier Skywalk will soon take its place among the leading iconic attractions in North America. At Glacier Park, we're on pace for a record year. RevPAR for the third quarter was up across all properties, both in-park and out-of-the-park. And we continue to experience significant year-over-year growth at Grouse Mountain Lodge, resulting from our refreshed efforts. As Ellen will discuss in more detail shortly, we had a slower than expected start with Grouse post acquisition that the renovations we completed earlier this year, combined with our sales and marketing efforts, are paying off with strong revenue growth and profit margins. The St. Mary Lodge, which was our other acquisition within the Glacier Park business unit, is also performing well and is meeting the expectations we set forth at the time of purchase. St. Mary is ideally situated at the eastern end of the iconic Going-to-the-Sun Road, which is one of the main attractions within Glacier National Park. In addition to Grouse Mountain Lodge and St. Mary Lodge, we also own 3 other properties adjacent to Glacier National Park, mainly Glacier Park Lodge, which is located near the Amtrak station on the east side of the park, the Prince of Wales Hotel, which is situated on a Canadian side of the park, with awesome views overlooking Waterton Lake, and the Stewart Motel, which is an in-holding within Glacier National Park, adjacent to the Lake McDonald Lodge. As you may know, Glacier Park also operates 5 properties within Glacier National Park under a concession contract with the U.S. National Park Service. In mid-August, we announced that our term as a concessionaire will expire at the end of 2013. We greatly appreciate the opportunity to have worked with the U.S. National Park Service to provide an exceptional experience to Glacier National Park visitors. And although we would've preferred to retain the concession operations as part of our Travel & Recreation portfolio, this disappointment is mitigated by the fact that we will receive cash payments of approximately $30 million when our contract expires. These payments to be made by the National Park Service and the new concessionaire should be received in January 2014. Ellen will provide some additional detail regarding our revised outlook for the Glacier Park business unit as a result of the contract expiration. With that, I'll turn the call over to Ellen for a more detailed review of our financial results and guidance. After Ellen's prepared remarks, I will provide some additional updates, including an update on our strategic review. We'll then open up the call for your questions. Ellen?

[Ellen M. Ingersoll:]

Thanks, Paul, and thanks to all of you for joining our call this morning. As I cover our third quarter results, you may want to refer to Tables 1 and 2 in the business group highlights section of our earnings press release. Our third quarter income before other items was $0.69 per share, higher than our prior guidance but lower than 2012 third quarter income before other items of $1.01 per share. The expected decline from 2012 was driven primarily by significant negative show rotation of about $70 million in revenue. Viad's consolidated revenue for the quarter was $236.5 million, as compared to $307.5 million in the 2012 quarter. Segment operating income was $24.6 million, as compared to $34.2 million in the 2012 quarter. By definition, our third quarter 2013 income before other items excludes restructuring charges of $0.02 per share and noncash impairment charges $0.14 per share. A reconciliation of income before other items to income from continuing operations can be found in Table 2 of our earnings press release. I'll discuss the impairment charges in more detail in a moment. But first, let me cover the core operating results of each business group. Our Marketing & Events Group's third quarter revenue was $156.5 million, down $73.8 million from the 2012 quarter, with an operating loss of $7.9 million as compared to income of $2.8 million in the 2012 quarter. Marketing & Events unit segment revenue for the quarter was $120.5 million, down $47.9 million from the 2012 third quarter, with an operating loss of $3.7 million as compared to a loss of $585,000 in the 2012 quarter. The declines from the 2012 quarter were primarily due to negative show rotation revenue of $57 million, partially offset by base same-show revenue growth of 5.2% and stronger revenue from our entertainment and corporate events divisions. Their relatively small change in operating results on the $47.9 million revenue drop is a result of continued cost structure improvements, as well as the benefit from the sale of our facility in New Jersey and lower performance-based incentives. As a reminder, show rotation refers to shows that occur less frequently than annually and shows that shift quarters from 1 year to the next. Our base same-show metric, which is similar to same-store metric, includes only those shows that we produce at the same city in both the current year quarter and the prior year quarter. Marketing & Events International segment revenue was $40.3 million, down $27.4 million from the 2012 quarter, with an operating loss of $4.2 million as compared to operating income of $3.4 million in the 2012 quarter. The decline in revenue was primarily driven by negative show rotation revenue of approximately $13 million and revenue earned in 2012 in support of the Summer Olympics in London. Additionally, foreign exchange rate variance had an unfavorable impact on revenue of approximately $642,000 and a favorable impact on operating income of approximately $172,000 compared to the 2012 quarter. Our Travel & Recreation Group delivered revenue growth of $2.8 million or 3.7% with a $1.2 million increase in operating income and an operating margin of 40.7%. Unfavorable foreign exchange rate variances impacted revenues and operating income by approximately $1.8 million and $812,000, respectively, compared to the 2012 quarter. Excluding the impact of exchange rate variances, Travel & Rec Group revenue was up $4.7 million or 6% and operating income was up $2 million, reflecting increases at Brewster, Glacier Park and Alaska Denali Travel. The noncash impairment charges recorded during the quarter totaled $5.4 million on a pretax basis and included the write-off of $4.5 million in goodwill at Glacier Park and $952,000 at the Marketing & Events Group, related to the write-off of the touring exhibition asset and amounts capitalized for internally developed software that is not anticipated to be put into use. The impairment charge at Glacier Park was triggered by the National Park Services' decision to award the new contract -- concession contract with Glacier National Park to another concessionaire. Glacier Park currently derives about one half of its revenues from the concession contract, which will expire at the end of this year. While we continue to develop our detailed operating and financial plans for 2014, we currently anticipate operating income at Glacier Park to decline by $3 million to $4 million relative to 2013. As a result of our revised outlook for future revenues and profits from that business unit, we performed a preliminary impairment evaluation of goodwill, and determined that it was necessary to write off all goodwill associated with Glacier Park. Although the concession contract was clearly the triggering event for the impairment testing, performance at Grouse Mountain Lodge was also a contributing factor to the impairment charge. While the hotel is generating solid profits in its margins this year, its revenue growth has been slower than anticipated, necessitating that we push out the time line for achieving the objectives we set out at the time of acquisition. The Grouse Mountain Lodge is located in a desirable year-round resort destination that benefits from its close proximity to Glacier National Park. And as Paul discussed earlier, we are now seeing great traction on RevPAR growth, as well as a result of renovation work that began in 2012 and was completed earlier this year. Now, I'll cover some cash flow and balance sheet items for the quarter. Free cash flow was $21.8 million for the quarter, as compared to $45.2 million in the 2012 third quarter, primarily reflecting lower income and changes in working capital, as well as higher capital expenditures and dividend payments. Capital expenditures were $11.2 million for the 2013 quarter versus $5.8 million in the 2012 quarter, primarily reflecting costs associated with the construction of the Glacier Skywalk attraction. Depreciation and amortization expense was $7.4 million versus $8.6 million in the 2012 quarter and payments on our restructuring reserves were approximately $1.4 million in the 2013 quarter versus $823,000 in the 2012 quarter. The balance sheet remains strong. At September 30, 2013, Viad's cash and cash equivalents totaled $120.1 million compared to $83.1 million at the end of June. And our total debt at the end of September was $1.7 million, with a debt-to-capital ratio of 0.4%. Now I'll cover guidance for the fourth quarter and full year 2013, which reflects our best estimates based on information available at this time. Marketing & Events Group full year revenue is expected to decrease at a mid-single-digit rate compared to 2012, with low single-digit growth in U.S. same-show revenues. Show rotation is expected to have a negative -- have a net negative impact on full year revenue of about $50 million. Marketing & Events Group segment operating margins are expected to approximate 2.5%, driven by continued execution against our service delivery network and labor management initiatives, in addition to lower administrative overhead expenses. Exchange rate variances are expected to negatively impact revenue by approximately $5 million versus 2012. Travel & Recreation Group full year revenue is expected to increase by a low single-digit rate from 2012. Exchange rate variances are expected to negatively impact revenue by approximately $3 million versus 2012 and Travel & Recreation Group operating margins are expected to be in the range of 19% to 20%, as compared to 2012 margins of 19.5%. Corporate activities expense is expected to approximate $7 million. Our full year cash flow from operations is expected to approximate $20 million to $25 million. We expect full year capital expenditures to be between $40 million and $42 million, which includes an estimated $12 million for construction of the Glacier Skywalk attraction. And depreciation and amortization expense is expected to be between $28 million and $30 million. For the fourth quarter, we expect the unseasonal loss before other items to be in the range of $0.25 to $0.16 per share, as compared to the 2012 fourth quarter loss per share of $0.34. Revenue is expected to be in the range of $188 million to $200 million as compared to $202.6 million in the 2012 quarter. We expect a segment operating loss in the range of $4 million to $1.5 million, as compared to a loss of $8.4 million in the 2012 quarter. Improved operating results are expected to be driven primarily by continued cost structure improvements in the Marketing & Events Group. Additional details regarding our 2013 outlook can be found in the earnings press release. And back to you, Paul.

[Paul B. Dykstra:]

Thanks, Ellen. Now, I'd like to provide an update on our strategic review of options to enhance shareholder value including the possible separation of our Marketing & Events, and Travel & Recreation groups. This review continues to be a top priority for our Board of Directors and management team and we have spent considerable time and effort over the past 9 months carefully evaluating options available to us to enhance shareholder value. Our approach to this review has recognized that if we are to sell or otherwise separate a part of the business, we need to be comfortable that any remaining business is either configured in a way that permits it to thrive as a stand-alone company or would otherwise be involved in a transaction that makes it part of a larger business. While we continue to work through our strategic review, we have determined at this time that we are unlikely to engage in a transaction that would require us to expend a substantial amount of the cash we have on our balance sheet. In light of this today, we announced that we will return approximately $50.8 million to shareholders through a special dividend of $2.50 per share, payable on November 14. We also intend to pay another special dividend in January of 2014 of $1.50 per share or approximately $30.5 million in the aggregate. January dividend would be funded primarily from cash we received from the National Park Service and the new concessionaire at Glacier National Park. These dividend payments are consistent with our commitment to prudently manage capital, and we continue to work with JPMorgan to carefully evaluate additional options to further enhance shareholder value, including the possible separation of the Marketing & Events and Travel & Recreation groups. Before I open the call for your questions, I'd like to thank you, once again, for participating in today's call. We covered a lot of ground today and I want to leave you with one very important message. The board and the management team of Viad are committed to enhancing shareholder value. And this is concretely evidenced by the actions announced today. The strategic review is ongoing and remains a priority. And as we continue to move forward, both businesses are operating more efficiently and are poised for future growth. Our Marketing & Events Group has strong sales momentum, having recently secured important new wins and key renewals. Next year, we will benefit from significant positive show rotation in the range of $60 million to $65 million in revenue. We will maintain our intense focus on margin improvement initiatives, and expect to deliver an operating margin of 4%. Our Travel & Recreation Group is seeing good results from our refreshed initiatives, as we make measured investments to update our high-margin assets. And next year, we will celebrate the grand opening of our much anticipated Glacier Skywalk attraction. Prospects for the business in 2014 and beyond are good, and we look forward to building on the progress of recent years. With that, let's open up the call for questions. Pat, if you could open up the question line, please?

[Operator:]

[Operator Instructions] Our first question comes from Steve Altebrando with Sidoti & Company.

[Stephen Altebrando:]

The 4% -- 4.5% gain on the Jersey facility sale, was that always contemplated in the 2.5% operating margin target?

[Paul B. Dykstra:]

We did not plan that in our original plan. We had a very aggressive plan. As you know, we started this year with a significant negative show rotation headwind. So we're starting the year down about $55 million, and that was compounded by the growover that we had from our Olympics business in 2012, as well. We set a very aggressive target to get to 2.5% for 2013. While I think we did a lot of things very, very well. We did not -- we did not hit everything out of the park that we wanted to. As a result, the sale of the business was not contemplated in the plan but was included in our 2.5% margin for 2013.

[Stephen Altebrando:]

Okay. And then in terms of target, you've previously spoken -- spoke of for 4% next year. Is that still something you're striving to achieve?

[Paul B. Dykstra:]

Yes, we are. We do benefit from -- in my comments, I said $60 million to $65 million of positive show rotation. But we also have the ongoing momentum of a number of our cost initiatives. We'll continue to optimize our service delivery network, improve our labor-to-revenue and very, very, very carefully manage our overhead.

[Stephen Altebrando:]

Okay. And then last one. If you, if possible, provide a very just broad time line of when you would expect the strategic review to be complete?

[Paul B. Dykstra:]

Well, the strategic review continues to be a top priority for our Board of Directors and management team. And we spent a considerable amount of time over the past 9 months really thoroughly and carefully evaluating our options available to us to enhance shareholder value. Now throughout the process, we've been guided by 2 important objectives in evaluating any potential transaction. Really, first of all, it's maximizing shareholder value. And we also want to ensure that we do our best to maximize the prospects of any segment of our business that may be left to stand on its own. But we continue to keep this as a top priority, for the board and for management. We have not set a specific time line, but we continue to thoroughly and carefully evaluate our opportunities to enhance shareholder value. So I just want to reiterate that it is a top priority and shareholder value is our #1 commitment.

[Operator:]

John Healy with Northcoast Research.

[John M. Healy:]

Paul, I wanted to ask a little bit about some of the show wins that you've had on the Marketing & Events Group. If you kind of look at the wins you've brought together in 2013 and you compare it to maybe the loss of the Consumer Electronics Show, how do you feel that those 2 items kind of net against each other, as we think about a headwind or maybe potentially a tailwind or a neutral effect the next year?

[Paul B. Dykstra:]

We've worked very hard to replace the lost revenue from the CES contract. The Avanstar win is a very big win and it does include some incremental shows from that win. Same with the ICSC win and several others. Overseas, we've had some very, very good wins in renewing some key pieces of business. And similarly, to the U.S., those overseas wins have often included some new shows that we did previously -- that we didn't previously do. So we're very excited about that. I think we have some good momentum on the show sales side. I guess, I'll ask Steve, if you want to add anything to that comment?

[Steven W. Moster:]

Sure, John. John, I think that the way to think about it is, obviously, we have some sales win momentum behind us and the goal is to continue to get doubles and triples here in order to completely offset the CEA loss.

[John M. Healy:]

Where we stand today, are we kind of near a maybe breakeven level between those 2 items?

[Paul B. Dykstra:]

No, I think we've still got a little ways to go to replacing that but we're working very hard and I think the sales pipeline looks good and we're going to continue our aggressive business development efforts.

[John M. Healy:]

Okay, great. And then I wanted to ask a CapEx question. As you look out to next year, I know we went through some periods where you guys have ramped up a little bit for the Discovery Walk and then now with the concession contract not being in the business. But do you have a preliminary view of kind of the goalposts of where CapEx might be for next year?

[Ellen M. Ingersoll:]

Well, we're rolling that out right now, John. On the GES side, it'll be pretty consistent to this year and last year, which was about $15 million. On the Travel & Rec side, you're right. We won't have the Glacier Skywalk in next year, which was a total of -- about $12 million? About $12 million this year. We will, however, have some refresh projects within Travel & Rec within the hotels and other items, and IT items. So we're rolling that up right now. I don't anticipate it to be as high as this year because of the Glacier Skywalk. But that's currently in process.

[Operator:]

[Operator Instructions] Our next question comes from Luisa Lau with Singular Research.

[Luisa Lau:]

Can you talk a bit more about your strategic initiatives for your efficiency improvements on your West Coast facilities, along with any anticipating timeframe you have there? As well as, Steve, talk a little bit about what initiatives maybe on the international marketing front, given what appears to be some nice improved business there going forward?

[Paul B. Dykstra:]

Sure. Steve, can you take that one, please?

[Steven W. Moster:]

Sure. So our efforts on the West coast is similar to what we've done on the East Coast is to really maximize the efficiency of our individual facilities in each of the cities. And we're under a strategic review right now of what that means to the West Coast. We've had significant progress on the East Coast and we expect that, over the next couple of years, with a lot of effort in 2014, we'll be able to do the same -- have the same impact on the West Coast. In terms of the International business, as you noted, we've had some strong wins internationally as well. We continue to look for new opportunities and new markets to serve in that area.

[Luisa Lau:]

So then for the, I guess, with respect to the West Coast and the 4% margin goal, should we not anticipate too much coming from the West Coast at this point for 2014?

[Steven W. Moster:]

I think that the goal of 4% is driven a lot by the cost initiatives we've done, which is labor management, which impacts the entire business across the U.S. and internationally. There will be some impact from the West Coast service delivery network. But then also, the positive show rotation that we have coming into 2014. That is a factor but there are other factors.

[Paul B. Dykstra:]

I think, for 2014, we won't benefit a lot but we will benefit some. But we will really start to see benefits then beyond that.

[Luisa Lau:]

Okay, great. And then a question for Ellen. Can you just repeat the 2 factors that counted for the write-off within the Marketing & Events business? You mentioned the touring exhibition and there was something else?

[Ellen M. Ingersoll:]

Yes. It was an internally developed software project that was deemed that we would not be able to use it in the business.

[Operator:]

And at this time, I am showing nothing further.

[Paul B. Dykstra:]

Okay. We'll wrap up then. I thank you very much for participating on today's call and we look forward to talking with you again at the conclusion of the current quarter. Have a great day, and a great weekend. Thank you.

[Operator:]

Thank you for your participation. You may disconnect at this time.