Rush Enterprises, Inc. (NASDAQ:RUSHA) Q3 2023 Earnings Call Transcript

Rush Enterprises, Inc. (NASDAQ:RUSHA) Q3 2023 Earnings Call Transcript October 25, 2023

Operator: Good day, and thank you for standing by. Welcome to the Rush Enterprises, Incorporated. Third Quarter 2023 Earnings Results Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Rusty Rush, Chairman, President and Chief Executive Officer. Please go ahead, sir.

Rusty Rush: Good morning, and welcome to our third quarter 2023 earnings release conference call. On the call are Mike McRoberts, Chief Operating Officer; Steve Keller, Chief Financial Officer; Jay Hazelwood, Vice President and Controller; and Michael Goldstone, Senior Vice President, General Counsel and Corporate Secretary. Now Steve will say a few words regarding forward-looking statements.

Steve Keller: Certain statements we will make today are considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Because these statements include risks and uncertainties, our actual results may differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, those discussed in our annual report on Form 10-K for the year ended December 31, 2022 and in our other filings with the Securities and Exchange Commission.

Rusty Rush: As indicated in our news release, we achieved third quarter revenues of $2 billion and net income of $80.3 million or $0.96 per diluted share. We are proud to declare a cash dividend of $0.17 per common share. In the third quarter, we achieved strong financial results due to revenue growth from our expanded service technician workforce, our support of large national accounts and ongoing pent-up demand for new Class 8 and Class 4-7 trucks, following a limited new truck production in the past few years. Though our largest customer segment, the over-the-road customers, are being negatively affected by high interest rates, low freight rates and other economic factors, ongoing focus on our strategic initiatives helped us partially offset these challenges and achieved strong financial results in the third quarter.

In the aftermarket, our parts, service and body shop revenues were $643.6 million, up 3.5% for our absorption rate was 132.8. Through our aftermarket revenue has slowed – growth has slowed compared to previous quarters. The diversity of our customer base, our technician workforce and focus on large national accounts fueled our strong aftermarket results this quarter. Looking ahead, we believe aftermarket growth will continue to moderate through the rest of this year, and we are closely monitoring consumer spending and other economic conditions, which could impact parts and service demand. In the fourth quarter, we believe customer demand for aftermarket services will remain steady and that our aftermarket results will be similar to the third quarter, with slight adjustments caused by normal seasonal softness and fewer working days in the quarter.

Turning to truck sales. We sold 4,326 new Class 8 trucks in the quarter, guiding for 6.1% of the US market and 2.1% in the Canadian market. Low freight rates continue to affect smaller operators, but strong pent-up demand continues due to limited to truck production over the past few years. While there’s still new truck supply issues causing us to still be on allocation from our OEMs, new truck production continued to improve in the third quarter, resulting in significantly shorter lead times for new tucks. ACT Research forecast US truck sales, Class A truck sales to be 278,000 in 2023, up 7.2% compared to 20.2%. We believe pent-up demand for Class 8 trucks will last through the fourth quarter and then our fourth quarter Class 8 truck performance will align with our third quarter results.

Our Class 4-7 new truck sales reached 3,244 units in the third quarter, accounting for 4.8% of the US market and 2.3% of the Canadian market. We experienced solid demand from a variety of market segments. And those truck manufacturers are loading more resources to medium-duty trucks. Production remains limited and unmet demand in the market remains. ACT Research forecast Class – US Class 4-7 for retail sales to be 253,000 units in 2023, up 8.5% from 2022. We are closely watching consumer spending and other economic factors, which could impact our new Class 4-7 units, but continued pent-up demand with significantly signed, we expect our fourth quarter results will align with our third quarter results. Our used truck sales reached 1,797 units in the third quarter, up 1.9% year-over-year.

New truck production, soft freight rates, tight credit conditions led to continued weak demand in our industry in the third quarter, used truck values to continue to decline at an accelerated rate, though the rate of decline is slow and values appear to be normalizing. With new truck production continuing to increase with freight rates not expected to improve significantly in the fourth quarter. We expect used truck demand will remain low to the end of this year. We plan to maintain our inventory at lower than normal levels and believe we are well positioned to navigate these challenging market conditions. We expect that our fourth quarter used truck results will be consistent again with our third quarter. As we look ahead, we believe pent-up demand for Class 8 trucks will substantially be satisfied by the end of the fourth quarter, and that new truck production has continued to improve.

We will continue to monitor economic factors, which are impacting our customers, especially over-the-road carriers. While we expect typical seasonal softness in the fourth quarter, we believe our financial results will align with the third quarter results and we will close the year strong. As always, it is important for me to thank our employees for their great work every day and for staying focused on our company’s long-term strategic initiatives, while providing superior service to our customers. With that, I’ll take your questions.

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Q&A Session

Operator: Thank you. [Operator Instructions] Our first question comes from the line of Andrew Obin with Bank of America. Your line is now open.

Andrew Obin: Hey Rusty, how are you? Rusty and Steve team, how are you?

Rusty Rush: Very good. Thank you, Andrew.

Andrew Obin: So first question is, I think Traton was saying today that they think they’re starting to start sales of the new S13 engine and expect to ship on quarter Navistar units in ’24. So does this have any impact on your sort of profitability in the Navistar franchise going forward? And can you also remind us how you’re positioned on the Cummins engines outside of your vertically integrated model on PACCAR? Thank you.

Rusty Rush: You bet. Well, the S13, we’re excited about it. We know that Volkswagen is excited about it and Navistar is excited about it. We’re going to start a little slower than what we anticipated with the engine getting it here. We were hoping to get a few more this year than what we’ve gotten. But we’re excited, and we’ll be showing up in 2024. That said, when it comes to profitability. Remember, typically, the most important thing that you derive, we’re excited with what we believe will be a great performance of it. It’s the long-term parts profitability that goes with it because it makes — parts become more [indiscernible] to that brand. So we would expect that over time to definitely have an effect in the profitability of the overall of the Navistar franchises. I’m thinking about trying to understand your Cummins question. Obviously…

Andrew Obin: Just what’s happening with Cummins and what’s your position? What’s your relationship with Cummins comments, just remind us.

Rusty Rush: Sure. Well, our Cummins relationship is great. From an engine perspective, we’re the largest distributor of Cummins engines, considering their two largest customers PACCAR and Navistar, were the largest dealer — we’re the largest Navistar dealer, right? So we’re probably the largest retail dealer in the world, I would guess, when it comes to retail delivery. We also have a very strong relationship across the board. It’s much deeper than just that. Remember, we’ve got our JV, our joint venture, which is — we call it CCFT, Cummins Clean Fuel Technologies as with them on the natural gas fuel system side, because we both believe they bought 50% share in that here January 1 of 2022 and we have accelerated our investments is what we prepare for what we believe a big opportunity for that market share to increase from what it’s always stayed around 2%.

We think over the next two to three years that that share can increase 7% 8% 9% as the — especially the truckload side the over-the-road long haul side has to wrestle with all the pressures — the environmental pressures that we’re dealing with. Right now fuel cell is still ways away. Hydrogens are ways away. And I don’t believe electric is a ways away when it comes to meeting the needs of a 400 or 500-mile haul on a daily basis. None of those are set up for that right now. So we believe they’re bringing over their new 15-liter engine. And we do believe that the other that partnership is going to be doing really well for us really as we get into 2025, 2026 starting to accelerate 2024 but in 2025, 2026 and getting to 2027, we believe we’ve got a lot of opportunity around that from a fuel system side.

So as I said it’s a very broad relationship with them. And we’re excited to have that relationship and forward to continue to working with them like we have always.

Andrew Obin: Thank you. And just a follow-up question on, your saying that Q4 is roughly going to be in line with Q3. And I hate to be asked a question about next year. But how sustainable is the quarterly pace? We know that you’re sort of telegraphing that new unit sales are going to be down, but you have your own dynamic and then the aftermarket. How sustainable is the earnings power, I don’t know let’s call it around $0.90 going forward? Thank you.

Rusty Rush: Well, how about if I stay off of a number Andrew as always. I’m not going to change that. But let me talk a little more broadly, a little more in depth about what I see in the fourth quarter and how we view next year. As I said in the release in Q4, we expect it to be similar, very similar to Q3. When I say that there’s going to be puts and takes, right? It’s different. There’s seasonality involved but there’s puts and there’s takes. We think when it all washes out from a return perspective, what you see it won’t be exactly the same but the results should end up around the same based on what we’ve got falling into October. We know how October is running and fairly flat, but sequentially. So that gives you some outlook, what you should be delivering from a truck sales perspective.

So we — as I said we said in the release Q4 would be about the same, but there’ll be some puts and takes. Looking into next year, well you got to remember that ACT has got the Class 8 market down 22%. Now we like to believe that we can probably do a little better than that. I’m not going to get into exacts in the way of EPS with you, but we like to believe we can do better than that. We do believe, we’ll be glad to say market for us we’ll be down. We’re hoping not that dramatically. But what you’ve got to understand is they just opened up order books in September. You saw the September number. It was like 37,000 units right? People go, oh my goodness, we’ve got this big order intake. Well, I think you’ve got to dive a little deeper into it.

Remember last year September was like 54,000 or so if I remember correctly. And what’s happened is typically the manufacturers used to open their order books up earlier in the year like around July or so, right? Well when we had all the run-up in inflation from the commodity side a couple of years ago, they got burned pretty bad, right? We had all the surcharges and everything else. So what they’ve done is push out when they open up their books a couple of three months, okay? I mean, they take orders back of the day like in June to place an order and stuff like that and count it. But now they have pushed that out to September. So what you had was some pent-up demand, I think, some customers had already ordered for 2024, but they were not released by the OEMs, because they want to make — get more comfortable with the pricing, with their cost factors and not get burned like they did a couple of years ago, which they got pretty burn.

Let me tell you and that’s why you had to come in with all the surcharges, et cetera. So there really was — it wasn’t a September number. It may have been a little bit of a head fake, okay? When I say that because there was some pent-up demand maybe orders have been placed by in June and July, but we’re just not released by the manufacturer, because they didn’t want to open it up, because they were protecting their selves from maybe some sudden quick rise in commodity costs, et cetera. So when that 37,000 really wasn’t as big I think as people — solve. So, again, we’ve really only been working for September four weeks on business for next year. So it’s a little bit early to say, but I would have to believe that overall the market is going to be down.

It’s going to take a breath before — what you can remember though with the EPA laws coming in 2026 — excuse me the end of 2026 or first to 2027. We still expect 2025 or 2026 to be very robust years. And 2024 will be a year that we’ll get through it. I don’t anticipate us going backwards as far. Why? Because of the diversity of our customer base. If we were tied totally to the small carrier over the road drive freight, regional freight that type of stuff. We would be — we’d be — I would tell you my number would be closer to that or worse. Again, I don’t expect it to be the same. I expect it to be down. But given the diversity because if you remember all the money is still going to be pumped into the economy on the vocational side right from the infrastructure build.

That’s got to be spent. So — and there’s a lot of other market segments that we plan that should maintain a lot better than just the — look we’re in a freight recession. I didn’t know that. We’ve been in a freight recession. Just go check the results, check it all out. We’ve been one on for a year now. I mean, I was just with a lot of customers. Last week at ATA, it was not all beaches and clean everywhere. Well, we still expect that market hopefully sometime maybe April next year. I don’t know exactly because I probably missed the date before to pick back up, but it hasn’t yet. It’s still bobbling along. I hope it’s on the bottom. Just check out the spot rates and contract rates. People are anticipating at least not taking their still — people are still taking hits on their contract rates in that side of the business.

The small guys are still getting pushed out with the rise in fuel prices that were at 90, 120 days there. There’s just a lot. We’ve had a little bit too much supply on the long over-the-road trucks. We just have. So we’re trying to — it’s trying to be pushed out, which it will get pushed out it always does, but that is still the largest piece of the Class 8 truck business, okay? So I’ll try to reflect — I could go on and on, but I think you can get the gist of what I’m saying. Parts and service you asked about that also I would look, growth rates will slow down. Understand if you look at where we’re at now and you go, we’re only 3.5%. You got to dive in there a little deeper to really understand it. We were fairly flat at the revenue line, okay?

Well, the problem is 30% of our business roughly is still what we call unassigned accounts to small folks, the ones that you don’t have dedicated account salesman to — or the cash customer, those types it’s still 30% of our business. That business was almost 10%. That is caused by the slight recession, okay? Those are the — that’s the flex piece inside of everything out. The big guys are still good. They’re not making as much money, but they have a great cash position to write now. You’re big public carriers. But those folks are also a higher-margin piece of our business, right? Okay. So, fortunately, for us, we’ve had some real — done some really nice stuff around going after dedicated people, going out from national account business, that business is up quite dramatically.

So, that helps offset, but it’s at a cost too, okay? It’s not as high a margin business, is that small book business. But we’ve had a lot of success around it. And we’ll continue to focus on that because that should be a steadier piece going forward. So, we’ll just have to see how next year plays out. It’s a little bit early. But we still feel good — pretty good about our business model, but it’s going to be a tougher year. You might then think it is — okay? But I think you check what we’ve done with the company over the last few years. Let’s look at the results in the last three years. That’s all I’m going to tell you and we believe very strongly in the results going forward even with 2024 not being as good as 2023 and probably not as good as 2025 or 2026, but it’s not going to be terrible, okay?

Andrew Obin: So, the last question for me, and I think you set it up for me, and I bet you know the question I’m going to ask. You keep delivering earnings well ahead of consensus, even as things are slowing. I think if you look at the fourth quarter, your message seems you coming up — coming out versus consensus, excellent SG&A control, you’re doing everything you’re supposed to do. You know that the next year is not going to be good, you also know what 2025 and 2026 is going to look like, you know what the company is going to deliver. What’s the Board’s thinking about sort of stepping up share buyback in this environment, particularly on a day like today when stock is down 8% on very solid numbers.

Rusty Rush: Good question, right? I just finished the Board meeting, yesterday afternoon in, fact, Andrew. We look at it as a great value. We would have been doing what we’ve been doing. We stepped it up 50% this year. We’re going to return. We’ve got a pretty detail what we want to do and we would typically — we’ve said and stated, we want to return 35% to 40% in shareholder return between a combination of dividend and stock buyback. That said — free cash flow, excuse me. That said, we’re going to return 55% this year, okay? I don’t see us returning whatever that FCS is next year, I don’t see us returning much more than 55%. I think you like to build in a cushion, I want to make sure I’ve got some money in case of M&A comes along.

You know, I don’t have any great M&A right now, but I have a feeling with the downturn typically, some M&A might show up, right? And so we want to be positioned to be able to do everything. We’re not going backwards, okay. We’re going to spend the whole $150 million this year, and I would anticipate us — we’ll make that decision. We have a call by the November the 28 board of call if you want to know the truth to make that determination as we’re getting a little further on another few weeks never helps. He’s trying to look into crystal ball. So we’ve got a board call set up yesterday afternoon when they left for November 28 announced for our December 1, because that’s when we announced every year is December 1 is what our buyback will be. So stay tuned about that.

Andrew Obin: Well, you know what I feel about it. Great quarter, thanks a lot.

Rusty Rush: You bet. I know Andrew. There’s a balancing act, as I said, possibly some M&A might show up and I want to make sure I’m prepared and I don’t want to take debt. And we don’t have to, we’ve got, but we just want to be able to take care of everything we need to while still we believe it is the best investment we can make. I’m totally in agreement with you.

Operator: Thank you. [Operator Instructions] Our next question comes from the line of Justin Long with Stephens. Your line is now open.

Justin Long: Thanks, and good morning.

Rusty Rush: Well, good morning, Justin.

Justin Long: Good morning, Rusty. Well, I wanted to start with a question on customer mix, going back to some things you were saying earlier.

Rusty Rush: Sure.

Justin Long: Do you feel like the small customers that are unassigned, do you feel like the activity there has bottomed it, down 10% this quarter? And then can you share on the other side of the coin how your national accounts are performing right now just so we understand the relative trends?

Rusty Rush: Sure. No, you bet I’ll get the numbers like I said down 10%. I don’t have that answer, but if the comps are going to get easier, so I got to tell you, if you’re going to year-over-year comp, yes, they’re probably right there, okay? Sequentially, I don’t know if there might be another couple three points left in there, buddy. I don’t know that we — the market’s not totally been cleansed yet, okay? There’s still folks out there that are hauling freight for basically barely break even and can pay my fuel, okay? I mean, I heard some numbers that people were all afraid for last week when I was up there. I met with a lot of customers at ATA, and I heard some of the slashing that was going on out there. So it’s liable to continue for another six months here, okay?

So that means you’re going to keep flushing some out. But I would expect the year-over-year comps with that market to be around the same, sequentially it may have a little bit more knowing that it wasn’t as bad at Q1 and Q2 last year, right? Okay. So it depends on how you want me to talk about it. But I would suggest that it’ll stay similar on a year-over-year basis, I guess, would be what I would tell you, because it got worse as the year went along. When it comes to the national account business, we’re really proud of the efforts because we put in a lot of dedicated people and spent some money on that. That’s all inside our G&A and focused on it because our ability to grow that piece of our business is directly tied with the second most valuable piece of this company.

My people are always first, first and foremost. But the second piece is my map. My map is bigger, our map is bigger than anybody else’s map. And when you can provide consistency of service, and I can take you to interview many people, many large companies that we can do that with, when you can provide that consistency, your opportunities to me are endless. I mean, they’re not endless, but they sure feel like it for us. We’ve got plenty of conquests out there that we don’t do business with, or a large national accounts. So, this consolidation has continued around this industry for years and will continue. And that ability to go out and capture some folks, and I’m not going to get into any name and names on an earnings call, but we know there’s still plenty of opportunity.

I sat in meetings with folks last week, almost begging us to come over and do business with them in some way. Regardless of whether their business is up or down, I can’t change the environment. But what I can do is provide a different solution. Understanding your competition and differentiating yourself is what it’s all about. And we know that, with that kind of growth, we grew 19%. I’m talking about being down 10%, but it’s a little, it’s in a lower margin, but it’s still really good business, right. And the other piece you’ve got to keep into account is our service business. We expect our service business to be up next year. We may take a hit in some parts of business, but we expect our service business to grow. Why? Because we brought 150 technicians this year, many of them mobile.

We have a goal to get to the last one. Could be asked me a year ago we were 500 and something were 650. Now, we’ve got a goal to get to a 1,000, okay. And those kind of demand — the demand for that type of thing is out there. Plus — it’s just providing an array of services on a consistent basis on a larger map. That doesn’t mean our competition is great. I’m sure we’re all listening right now. But at the same time, they’ll listen to the replay and that’s good. But we try to differentiate by having a larger map and being able to tie it all together, regardless of brand. There’s still a lot of non-proprietary. It’s not all vertical, right? It’s not all proprietary. So, and we’re able to take care of folks. So that’s really the best definition I can give you.

We got a lot of runway left in there. Whether the market goes up or the market goes down, we think we can grow it consistently on a year-over-year quarterly basis. We don’t look for that to change either, okay, as we go forward.

Justin Long: Got it. That’s helpful and you mentioned earlier the ACT numbers for next year have continued to trend lower and now they’re expecting a 22% decline in Class A truck sales. If that plays out, if reality is pretty close to that, how should we think about your ability to grow parts and service? Do you feel like you can still grow it? And if so, any thoughts on the order of magnitude?

Rusty Rush: Sure. You know, I think — our year-over-year comps will start to get a little better because when we get into Q2 and Q3, because it’s flattened out some this year, right? Remember, when I was speaking earlier, that shift in the small guy who’s got more margin in him towards that national account? Yeah. That made it a little tougher. You can see it — you can see it in the numbers and parts of service profit. We expected that we do expect it to be a little better next quarter. We think Q3 was like a trough, we hope. But I would tell you it would have some effect. There’s no question, but we think we can overcome that or at least maintain. We’re not going to have like, first quarter of this year we had 17% growth rate.

We’re not going to do that next year. We were 3.5 in Q3 and we’re probably going to bobble around that in Q4. And I would expect that probably to continue in Q1 with the same dynamics that we’re dealing right now. Q3 will probably have the same type of dynamics. I do not see, I’m hoping I do not have my brain, I’m not — I can’t guarantee the future because it’s a pretty volatile at times out there, but I don’t see as any big huge market decline based on what I’m watching right now. We think we can overcome what obstacles are out there with a less truck sales, get a little less internal work got it. But we really believe in our growth strategy around our service arena and around our dedication to the larger – larger customers. Will it have an effect?

Yes, we think we could keep where we’ve got it by picking up in other areas that are available to us I think. So I mean is it somewhat of a headwind? Of course it is. I can’t say [indiscernible] not, it’s great, we’re going to sell less trucks, because we do a lot of internal work to – on trucks getting it ready. But we believe that probably I think in Q3 was indicative outside of truck sales, but I’m thinking that parts and service side we’ll keep pounding it out even if we’re having a shift in a little – some up, some down puts and takes. But giving – remember, our diversification is not just the over-the-road I talk about. Remember, we’re so embedded in so many other market segments that we’re committed to and that’s – if we were just – I’d be getting crushed like a lot of my customers are if I was just in the over-the-road business.

And we were just tied to that. We’d look just like this when it comes to comps year-over-year from 2022 to 2023 but we’re not and our numbers speak for themselves. We are diversified into so many other market segments.

Justin Long: Got it. And last question for me is on the used truck market. You talked about that a little bit earlier. But I was wondering if you could give a little bit more color in terms of what you’re expecting for the trend in used truck pricing as we move into year-end and early 2024?

Rusty Rush: Sure. Well, we’d probably come down same like-for-like four, five year-old trucks year-over-year, September, October let’s say around that time frame 35% in value. There may be another 10% to take out or so I’m guessing? I don’t – it’d be hard for me to see it go much more because what happens is that spread between new and used gets real – I guess too large as all of a sudden you can go by three late model trucks for the price of one new. So that eventually when I say that it yes, but whatever that spread creates a value proposition on use when it gets so low. The problem is that the used truck buyers typically the small person, right? Well they’re getting crushed. So you got to have demand too, okay? You can take price as cheap as you want.

Now that’s truck that’s spread looks really enticing. But if you don’t have demand because you don’t have any market to go lease a truck on some place, it makes it difficult. So eventually, it just takes time. So right now we’re – it’s a little bit higher. Like I said, depreciation is accelerating not as dramatically as it was but it’s still over what I would call typical depreciation by percentage on a monthly basis. So, typically you don’t see it like historically, we’re not there yet. It’s still a little accelerated. It’s that demand piece that we’re going to have to get back. So I just – I don’t see anything changing around that until we get maybe – that we saw out in the spring. And hopefully, we’ll do it seasonally, we always do a little better than once we get through winter time.

So that’s — I would hope that we would have by the time we get through that we would be on a normal depreciation cycle in say four to six months, six months from now something like that. That’s what I’m hoping, because it’s been so accelerated before. But the reason was to accelerate they got way too high when you couldn’t get new trucks, right? The money people were paying for used trucks 1.5 years and two years ago is crazy. And so we’ve had to take all of that back out as we continue to now meaning the demand with business of used, demand is down and use values still down. It’s just — it’s a little bit of a viscous cycle, but it should straighten itself out sometime second quarter next year late for second — second quarter next year to be safe conservatively.

But we’re in good shape. We’ve got this lower used truck inventory. The upside for us is probably a little less because we’re carrying less inventory. But the downside is okay, we’re trying to get our turns. It’s always about turns and your turns have to be in line with what demand is. And we feel like we’ve pretty much got our used truck inventory what we know we do. Our margins were back to typical margins in Q2 and Q3. So we’re just going to stay on top of it and be cognizant of the demand that’s out there. And we still trade for trucks every day. It’s just — we just have to make sure that we can turn them fast enough because they’re not like fine wine they don’t get better with age. So — but we’re doing a good job of dealing with it right now but it comes with a tighter controlled inventory, because demand is not — sometimes we would have inventories upwards of 2,500 units.

I got inventories of 1,300 to 1,500 right now because I don’t have the demand to turn a 2,500 unit inventory faster, just out there. But that allows us to still maintain a decent margin and we’ll monitor the market closely. And as it was to start picking up, we’ll try to increase in our used truck inventory. But again it goes back to not just pricing, not just what valuations, it goes back to demand.

Justin Long: Make sense. I’ll leave it there. Thanks for the time.

Operator: Thank you for your questions. I would now like to turn the conference back to Mr. Rush for closing remarks.

Rusty Rush: Folks we appreciate it. Thank you very much. I’d like to wish everyone a very happy holidays, and we will speak to you early to mid-February with our Q4 results. So again thank you very much.

Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.