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Presentation

Malibu Boats, Inc. misses on earnings expectations. Reported EPS is $-0.93417 EPS, expectations were $-0.31.

Operator: Good morning and welcome to Malibu Boats Conference to discuss Fourth Quarter and Full Fiscal Year 2024 Results. 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] And as a remainder today’s call is being recorded. On the call today from management are Mr. Steve Menneto, Chief Executive Officer, Mr. Michael Hooks, Executive Chair; Mr. Bruce Beckman, Chief Financial Officer; and Mr. Ritchie Anderson, President. And I’ll now turn the call over to Mr. Beckman to get started. Please go ahead, sir.

Bruce Beckman: Thank you, and good morning, everyone. On the call, Michael will provide a brief update and introduce our new CEO, Steve Menneto. I will provide commentary on the business and discuss the fiscal fourth quarter and full year 2024 financials and Steve will provide an update on the new model year and near-term growth priorities. We will then open the call for questions. Our press release covering the company’s fiscal fourth quarter and full year 2024 results was issued today and a copy of that press release can be found in the Investor Relations section of the company’s website. I also want to remind everyone that management’s remarks on this call may contain certain forward-looking statements, including predictions, expectations, estimates and other information that might be considered forward-looking and that actual results could differ materially from those projected on today’s call.

You should not place undue reliance on these forward-looking statements, which speak only as of today and the company undertakes no obligation to update them for any new information or future events. Factors that might affect future results are discussed in our filings with the SEC, and we encourage you to review our SEC filings for a more detailed description of these risk factors. Please also note that we will be referring to certain non-GAAP financial measures on today’s call, such as adjusted EBITDA and adjusted EBITDA margin, adjusted fully distributed net income and adjusted fully distributed net income per share. Reconciliations of these non-GAAP financial measures to GAAP financial measures are included in our earnings release. I will now turn the call over to Michael Hooks Chair of Malibu Boats.

Michael?

Michael Hooks : Thanks, Bruce, and good morning, everyone. I would like to start the call to welcoming Steve Menneto as our new CEO. And as you know, the Board conducted a comprehensive search process, and we are thrilled to have Steve at the helm. The depth of experience and track record of success makes him an excellent fit to lead Malibu Boats through the cycle and into its next phase of growth. I also want to take this opportunity to thank the entire MBI team for their passion and dedication, particularly during this transition period. Your hard work and commitment have been instrumental in navigating this change and we are all grateful for your continued efforts. You will hear more from Steve in a few moments, but first, let me turn it back over to Bruce to walk us through the fiscal year and quarterly results.

Bruce Beckman : Thank you, Michael. As we closed out fiscal 2024, we showcased the resilience of Malibu Boats and executed on our strategic goals despite a challenging retail environment. As anticipated, our financial results during the quarter were impacted by the necessary steps we go to reduce channel inventories, including reducing production levels and increasing promotional support. As discussed on our prior call, this was our top priority during the quarter and we made significant progress, with MBI dealer inventories now aligning with historical weeks on hand level. Our dealer partners have executed well in a very competitive promotional environment and we appreciate the support. The resilience of our business model was evident in our results.

As we have discussed many times in the past, our cost structure is highly variable and we demonstrated this throughout fiscal 2024. For the year, cost of sales decreased 34%, while revenues declined 40% demonstrating our operational excellence and highly variable cost structure in line with our historical range of 80% to 90%. Our variable cost structure and focus on working capital enabled us to generate positive free cash flow during the fourth quarter. A remarkable accomplishment in the quarter where revenue was down over 50%. As a result, we were able to repay all remain debt and repurchased $10 million of stock in the quarter. The ability for MBI to execute our capital allocation priorities in the face of industry headwinds only increases our confidence in our business model as the cycle normalizes.

We continue to streamline our operations and make great strides ramping our Roan County facility in the quarter. In addition to producing Cobalt small boats, we have integrated our Malibu electronics wiring harness operation into the facility. As a result, we are able to consolidate our manufacturing footprint in Tennessee as well as move from our Alabama facility, shortening our supply chain and increasing our operational efficiencies. With the addition of the Roan County facility and continuous vertical integration efforts, we have enough capacity across all of our brands to support the next industry growth cycle and reduce our future capital expenditure levels. I would like to provide a brief update on our dealer network and the significant progress made during the quarter.

In 14 of the 15 markets formerly served by Tommy’s boat, our newly authorized dealers are up and running, selling boats and providing great service to our customers. We devote a significant amount of time and resources to find, develop and improve the performance of our dealer network and are pleased with our new deal of lineup. The speed at which we brought these dealers online showcases the strength of our premium brands and the dealers confident in Malibu to provide industry-leading innovation, quality and performance. Finally, as it relates to Tommy’s boat, we have completed our repurchase obligation with the repurchase of 19 units, far fewer than originally estimated. Lastly, before diving into the results, I would like to give you an update on our market share performance.

In Cobalt, we’ve expanded our trailing 12 month market share lead in the sterndrive segment by over 300 basis points on the strength of our industry-leading innovation. The market reaction to our model year ’24 releases, the R33 Surf and the CS series has been strong and is contributing to this year’s share gain. We have been investing in Cobalt for several years now and have grown our Cobalt sterndrive share by over 500 basis points since we acquired the brand in 2017. We have more exciting innovations coming from 2025. Pursuit is another brand that is gaining momentum. Since acquiring the Pursuit brand in 2018, we have expanded our market share by nearly 300 basis points. Our share of the 30 foot and above segment now exceeds 20% and we aim to build on our momentum in 2025 with two additional above 30 foot offerings.

We are refreshing our Maverick Boat group product line and have gained 100 basis points of market share since acquiring these brands in 2020. Our initial focus has been on refreshing the pathfinder model lineup and the results have been outstanding. Our trailing 12-month market share of the stable market segment has increased by over 500 basis points, making us the clear leader in this important segment. In 2025, we are turning our attention to the Cobia line, Pete will be sharing more details on this in a minute. In the important ski wake segment, there is no question our share in the markets formerly served by Tommy’s boat has been temporarily impacted while we refreshed our dealer presence. However, it is worth noting our share in the remaining market is holding strong at approximately 30%.

We are excited about the new dealer lineup in the former Tommy’s market. Combine this with the extensive innovations we are launching, we have confidence in our ability to regain share in 2025. Now turning to fourth quarter results. As we discussed on our last earnings call, the actions required to reduce dealer inventory levels would significantly impact our short-term results, and that is certainly the case. As expected, fiscal fourth quarter net sales decreased 57.4% to $158.7 million and unit volume decreased 59% and to 1,045 boat. The decrease in the net sales was driven primarily by lower production and higher promotional spending in support of our initiatives to reduce dealer inventory levels. This includes the 19 boats we repurchased of Tommy’s Boat.

The Malibu and Axis brands represented approximately 30.5% of unit sales. Cobalt represented 35.4% and saltwater fishing represented the remaining 34.1%. Consolidated net sales per unit increased 4% to $151,878 per unit driven primarily by favorable model mix and year-over-year price increases. Q4 gross profit decreased 87.8% to $12.5 million and gross margin percentage was 7.9%. This compares to a gross margin percentage of 27.5% in the prior year period with the expected decline in gross margin was driven by increased promotional spending across all segments, less favorable mix and fixed cost deleveraging from lower production during the quarter. Q4 selling and marketing expenses decreased 10.6% to $4.9 million. As a percentage of sales, year-over-year selling and marketing expenses increased 150 basis points to 3.1%.

Q4 general and administrative expenses of $76.3 million decreased versus last year by 56.6% or $99.4 million. As a reminder, last year’s Q4 included a $100 million legal settlement. Net loss for the quarter increased 8.6% to a loss of $19.6 million. Adjusted EBITDA for the quarter decreased 104.5% to a loss of $4.1 million and adjusted EBITDA margin decreased to negative 2.6% from positive 24.2%. Non-GAAP adjusted fully distributed net income per share decreased 113.1% to a loss of $0.39 per share. This is calculated using a normalized C corp tax rate of 24.3% and a fully distributed weighted average share count of approximately 21 million shares. For a reconciliation of adjusted EBITDA and adjusted fully distributed net income per share to GAAP metrics, please see the table in our earnings.

Turning our attention to cash flow. We generated $4.5 million of positive free cash flow in Q4. Capital expenditures were $11.9 million in the quarter of which $3.9 million was associated with the Roan County facility, which is now complete. Now to recap our results for all of fiscal 2024. Net sales decreased 40.3% to $829.0 million and unit volumes decreased 45.4% to 5,385 units. Consolidated net sales per unit increased 9.4% to 153,953 per unit, driven by favorable model mix and inflationary year-over-year price increases, partially offset by increased deal of flooring program costs and higher promotional value. Gross profit decreased 58.1% to $147.1 million. Net income for the year decreased 152.3% to a net loss of $56.4 and adjusted EBITDA decreased 71.0% and $82.2 million for the full year.

For the year, non-GAAP adjusted fully distributed net earnings per share decreased 79.1% to $1.92 per share. For the year, our free cash flow included an approximately $55 million net cash outflow relating to last year’s legal settlement. Excluding this one-time net outflow our free cash flow for the year was approximately $34 million, inclusive of $76 million of CapEx, of which approximately $47 million was invested in our new Roan County facility. We executed our capital allocation priorities by paying off our remaining debt and returning $29.8 million to shareholders through share repurchases. Heading into fiscal year 2025, while we expect near-term market conditions to remain challenging, we are optimistic about the long-term growth potential of MDI.

Given the progress that we have made reducing our channel inventory levels, we have put ourselves in a position to realize a meaningful recovery as the market returns to growth. Despite our belief that we are positioned for growth, we will continue to take a prudent approach to ramping production levels and monitoring dealer inventory, given the macro uncertainty and pressure on dealers caused by high flowing costs. We cannot predict exactly when the retail market will return to growth, but we remain confident in the fundamentals of our business and our ability to maintain our investment in industry leading innovation, while generating strong cash flow in almost all industry environment. With the Roan County facility completed, we expect capital expenditure levels to drop between $30 million to $35 million in fiscal 2025.

This will further improve cash generation, enabling us to execute on our capital allocation priorities, while continuing to return $10 million of cash to shareholders each quarter through the end of fiscal 2025. Based on our current operating plan, our expectations for fiscal year 2025 are as follows: we anticipate a year-over-year net sales to increase at a low single-digit percentage point rate. For Q1, we expect net sales to be up sequentially but down year-over-year mid- to high 30s percentage points given a challenging year-over-year comparison. We also expect an increase in consolidated adjusted EBITDA margin ranging from 10% to 12% for the fiscal year. For Q1, we expect adjusted EBITDA margins of low single-digit as we maintain low production levels with the sequential improvement coming from lower promotional spend.

In summary, we overcame a volatile operating environment to generate sufficient cash to maintain our investments in our core business, pay off our debt and returned nearly $30 million to shareholders. We are positioned to capitalize when the market returns to growth. As we begin the fiscal year, we are managing the business prudently keeping production low and closely monitoring dealer inventory levels as we prepare for sequential improvement throughout the year. We stand ready to meet the needs of our customers and has the capacity to respond quickly and effectively when the market returns to grow. As we reflect on fiscal year 2024, our team’s dedication and agility were key to navigating a tough market and maintaining our focus on execution.

I’m excited to partner with our new CEO, Steve Menneto, whose leadership and vision will help drive us towards sustainable growth and value creation. Together, we will continue building on our competitive strength, optimize our operations and set MDI up for long-term profitable growth as we enter this next chapter with confidence and excitement. With that, I will turn it over to Steve.

Steve Menneto : Thank you, Bruce, and good morning, everyone. I’m very excited to step into the role of CEO at Malibu Boats and build on our growth trajectory in what is already a very strong foundation. Over the quarter, we achieved several milestones despite a challenging year, impacted by retail uncertainty, which positions us well for the future success as cycles normalize. As Bruce mentioned earlier, we made strong progress reducing dealer inventories to historical healthy levels. We added new dealers up to our successfully serve our freshwater customers, while maintaining our pace of innovation and our market-leading presence. Malibu has a stellar reputation for innovation, quality and performance and I’m honored to be part of its future.

Before we jump into the new model year updates, I’ll share my background, why I joined Malibu at near-term actions of our team that our team is taking to position us for success. By way of introduction, I came to Malibu Boats after nearly three decades at Polaris. More recently, I had the privilege of leading the largest business, the off-road vehicle division to significant revenue growth, nearly doubling its revenue to approximately $7 billion over the last five years. This included planning, developing and building a gold manufacturing footprint that supplies hundreds of thousands of vehicles worldwide. My journey also includes spearheaded the commercialization efforts on the on-road division, driving the launch and expansion of the Indian motorcycle business.

Throughout my career, I have learned the importance of innovation, customer focus and operational excellence, values that are deeply ingrained within the Malibu Boats culture today. My history of advancing high-impact opportunities meshes well with the values of Malibu Boats. And together, I’m confident we can drive aggressive growth in this fast paced dynamic consumer-facing industry. Now that I’ve been here for about a month, I’m incredibly impressed by the company’s talent and resources. As we step into the new fiscal year, my immediate focus will be on leveraging the company’s competitive strengths, particularly the — our leading market positions and robust dealer network. Our near-term strategy will be firmly rooted in our customer-centric approach, a value that I hold in high regard.

We will maintain a key eye on the retail market, adapt swiftly to the challenging market conditions and ensure our dealer partners have healthy inventory levels. Lastly, we will do all this while maintaining our industry leading product design and innovation across our premium brands. Looking ahead to model year ’25, we are excited to continue our strong commitment to new products and innovation across all brands. We completed — our completed tooling development center at Pursuit is now producing tooling for each of our MBI brands, furthering our vertically integrated efforts and speed to market. This year, we will introduce more new models across all brands than ever before. We will continue to outpace the competition on investing in new products and innovation as we continue to push the limits to drive consumer demand and market share growth as the market rebounds.

This is a true differentiator for us and solidifies our place in the market as the premier manufacturer of premium power boats, delivering on our customers’ unwavering desire for large feature-rich options across our portfolio. For Malibu, we are once again introducing four new models far more than any other competitor. This includes the all-new 25 LSV, the best-selling 25 foot towboat on the market. Next, we are making a return to the 22 foot pickle-fork segment with the all-new 22 MXZ. We have not produced a boat in this segment since 2020 and look forward to reintroducing this experience for customers in this category. Next is the all-new 24 MXZ, the largest boat in the MXZ series. We will also be introducing another ultra-premium Malibu model in the second fiscal quarter.

Last, but definitely not least, is the all-new Malibu Command Center a testament to the industry-leading innovation that our customers come to expect across our Malibu line. Malibu has again raised the bar for the next level of driver experience with the combination of our 15.8 inch and our 8 inch touch screen and a new advanced operating system. This by far the most intuitive system on the market, enabling a unique and premium sleek look and feel when you are in the cockpit. Turning to Cobalt. We will be launching four new models later this model year, each designed to offer an unparalleled on-water experience. We are also excited about the upcoming debut of our latest twin engine models, which are set to redefine what voters expect from Cobalt.

These exciting new launches will have features such as full cockpit enclosures and standard site entry, enhancing cruising comfort and onboard accessibility. In addition, our engineers have integrated cutting-edge technology into the next generation of search systems and hard tops, offering an unparalleled blend of functionality and style. These models are a true testament to our commitment to innovation and craftsmanship. At Pursuit, we introduced the reimagined OS 325 Offshore, one of our most popular models. This redesign includes twin engines along with more agronomic design with a split galley, larger cabin and comfort controls. We will be announcing another all-new boat over 30 feet later this fiscal year. Together, these new models, along with new features and other options further build upon our broad and innovative portfolio, creating enthusiasm across the product line for model year ’25.

For Maverick Boat Company, we are introducing four new models, the 265 center console, the 265 center console open, the 285 center console along with the 285 center console opened set the launch in October. These new models are reinvigorating the Cobia portfolio while providing the consumer with a high-quality and family-friendly fishing features that Cobia is known for as we continue to build on innovation and adding exciting new features. Lastly, I would like to touch on our growth outlook for fiscal year 2025. I’m truly excited about the opportunities ahead as we navigate these short-term fluctuations within the market. As Bruce mentioned, we have positioned ourselves for a strong runway for growth ahead and remain committed to our capital allocation priorities, which are — we’re going to invest in high ROI internal initiatives, pursue accretive acquisitions, data owned debt and deleverage and return capital to shareholders.

We remain committed to regularly returning cash to our shareholders while expanding our M&A pipeline. With our strong cash flow and our debt-free balance sheet, we are well prepared to pursue beneficial acquisitions when they arise. In closing, I’m excited about the path forward and want to express our deep gratitude to our customers, employees, dealers, partners and shareholders for your unwavering support. Now I will turn it over for Q&A.

Operator: [Operator Instructions] And the first question comes from Craig Kennison with Baird.

Craig Kennison : Steve, I’m curious as you’ve had conversations with dealers in this channel, how you would compare that dynamic with what you’ve experienced in power sports and what you can say to investors who are concerned that inventory bubbles tend to creep up in these industries and create a really difficult investment environment?

Steve Menneto : Over the last month, I’ve been able to get out to a few dealers as well as attend the Pursuit dealer meeting. And there’s — there are some similarities to both industries and there’s some other things that are not similar. Of course, the price points on the units here are a lot higher. The velocity is a little slower. So you have to really pay attention to get the inventories right. We’ve been focused on that, as Bruce alluded to over the last quarter and we’ll continue to keep that in our sites is to get — continue to match the inventory to the retail the best we can.

Craig Kennison : And I’m wondering with respect to 2025, the fiscal guidance you offered, what’s the retail assumption embedded in that? And where do you expect inventory to be at the end of fiscal 2025 relative to fiscal 2024?

Bruce Beckman : In terms of the market growth, we expect that the headwinds will continue for a while longer. We’re expecting mid-single-digit down market in our guidance. We’re also hearing from our dealers as well as our floor plan finance partners that the dealers are going to want to take the dealer inventories below historical just because of the high flooring costs that they’re experiencing. And so, we’re expecting dealer inventories to contract below this 15% — or off down by 15%.

Craig Kennison : And then just, I guess, with your — how do you reconcile that with guidance, anticipating sales growth? Is that a mix or price dynamic? It sounds like you would expect units to be down.

Bruce Beckman : So we expect units will be flattish, I would say and we’re seeing — we’re expecting lower promotional spend next year. So we expect to get a little bit of that as well as from some product base and share. We’re on a multi-year trend of gain share and we expect gain market share.

Craig Kennison : And I’m sorry to keep monopolizing this. I didn’t intend to do that. But I’m maybe confused if you’re saying retail is going to be down and dealers are going to have less inventory, how do you ship more units?

Bruce Beckman : Well, again, this year, we had a huge destock this year, our stocking or our wholesale shipments were far below our retail on.

Operator: And the next question is from Joe Altobello with Raymond James.

Joe Altobello : Steve, congrats and welcome aboard. So I just wanted to follow up on Craig’s question in terms of the guidance, maybe the cadence. Obviously, Q1 is going to be a bit of a challenge here, but it sounds like you expect to return to growth later in the year. Are you guys assuming that the demand environment does improve in the spring, you’re assuming — or is the growth really coming from just lapping easier compares as we progress throughout the year?

Bruce Beckman : It’s really, Joe, we have our most difficult comp in Q1 versus last year. Last year, production was still elevated in Q1. And we’ve been conscious to keep our production level low here throughout the summer. We don’t want to refill a channel that we just spend all that time and effort lowering. So we have a reactive capacity to support the market if this drives us to the good. And so we’re being cautious here as we start the year.

Joe Altobello : Just a follow-up on the acquisition strategy. Obviously, given where your balance sheet is, as you mentioned, you’ve got plenty of dry powder here. You’ve talked about pontoons in the past. Is that still top of mind? Or are there other categories you might be looking into at this point?

Steve Menneto : Joe, we had previously mentioned that we finished in the pontoon sector. And then we’re also looking at other ones that make sense to fit our portfolio. And as those arise, we’ll entertain them.

Operator: And the next question comes from Noah Zatzkin with KeyBanc Capital Markets.

Noah Zatzkin : We’ve heard a lot from dealers, just concerns around affordability. So I was just wondering if you could kind of talk through kind of some of the new products that you mentioned rolling out for model year ’25. And just any thoughts around addressing maybe some affordability concerns here.

Bruce Beckman : Well, yes, affordability is certainly issue based in the industry. We have addressed that over the years by being trying to be more efficient and keep our pricing lower than our competitors and in particular, in the segue segment. We — our prices are generally $20,000 to $30,000 a unit lower than the competition. We also have been focused on in driving efficiencies in our cost structure to minimize our pricing actions for 2025, and we’ve taken very modest pricing on — in aggregate. And in some of our product lines, we’ve actually held up flat or taken them down slightly.

Noah Zatzkin : And just so I’m clear, for the model year ’25, like it’s kind of a low to mid-single-digit price increase as typical or how should we kind of think about that?

Bruce Beckman : I’d say lower than typical. I’d say it’s been in the low-single-digit.

Operator: And the next question comes from Mike Albanese with the Benchmark Company.

Mike Albanese : Steve, welcome and congratulations. Most of my questions answered at this point, but just a quick one as it relates to Tommy’s. I think you said you completed and I want to confirm the repurchase of 19 units, which was far fewer than previous estimates. And can you just kind of refresh our memory here on what the original estimates were.

Bruce Beckman : So we issued an 8-K back a few months back in the dollar amount of the repurchase would be $5.2 million. And the repurchase that we executed, I think was around $2.5 million, so a little less than half both in terms of dollar amount and units of what we were expecting at least initially. And I think they have moved through more units than we have anticipated and that that’s encouraging to us actually.

Operator: And the next question comes from Fred Wightman with Wolfe Research.

Fred Wightman : Just to come back to the dealer inventories. I think last quarter you said you felt like they were four weeks too high. I’m wondering if you could just give us an update on maybe where that stands versus target.

Bruce Beckman : So we said there were four to five weeks high coming into the quarter, and we exited the quarter in line with historical trends. We made up a lot of ground in the fourth quarter. What we said earlier, I’m not sure if you caught it, but we do expect that dealers will continue to be looking to take their inventories level historical to ’25, so we’re expecting them to take their dealer inventories down, roughly 15% kind of mid-teen-ish percent, and that’s implied in our guidance.

Fred Wightman : And then just on the 4Q results, the sales were sort of in line with implied guide, but it looks like EBITDA was maybe a little bit light on the margin side. Was the delta just more promo than you had sort of factored in or expected? Or was it something else?

Bruce Beckman : No. That’s what it was. And yes, we were below our guidance range, but only slightly as and our revenue team came right in the middle of the range.

Fred Wightman : And then I guess, just strategically, if we do start to see rate cuts, I know you guys mentioned that you’re expecting the market challenges to persist near-term, but how quickly do you think that consumers would start to respond to potential rate cuts? Is it immediately? Is it going to take a couple of cuts in a couple of quarters? How quickly do you think that will show up on the consumer side?

Steve Menneto : Fred, we were going to ask you few questions seriously, we know it’s going to be a positive for the long-term, deciphering the inflection point is going to be a challenge. And we’re sitting here back in January talking with excitement about pending rate cuts and here we are. So we’re hopeful. We think they will be beneficial the exact inflection point pretty hard to call. You probably have better than we do.

Operator: And the next question comes from Jamie Katz Morningstar.

Jaime Katz : I guess my first question is on this normalized industry environment slide. And while we have some time to get there, I think historically, it’s been such that even in a difficult environment, the EBITDA margins that would be generated are probably higher than what we’re seeing in fiscal 2025. So I guess, what kind of macro fundamentals and maybe top line fundamentals do we need to get back to that sort of mid-teen EBITDA margin? And if you can walk us back how you get there, that would be really helpful.

Bruce Beckman : In the past when we talked about that 15% EBITDA, it’s been off of a down 25% to down 30% revenue picture off of ‘20 — fiscal year ’23 base. So it gets you roughly in that $1 billion revenue range. And so the difference between our guide — the midpoint of our guidance that and that dollar amount is the revenue logs roughly $150 million. So the leverage between that point and our guide is really what’s despite the difference.

Jaime Katz : And then as we think about consumer behavior, has there been any different trend on cash versus finance purchases or anything like that, that you guys have been seeing?

Bruce Beckman : We haven’t seen a change in that. And we’re not surprised that we have given that rates have yet to move, but we expect that to rebalance once the rates come down and not to bring those credit buyers back in.

Jaime Katz : And then lastly, I guess it would be interesting to hear since the rhetoric out of the Fed is that rate cuts are coming. Has there been sort of an incremental pause as consumers wait for those to come in the last maybe month or two relative to what we saw before?

Steve Menneto : I don’t think so. I mean I think our retail activity — we’ve been fairly pleased with it here through the summer. So I don’t see a pullback from that.

Operator: Thank you. I’m not showing any further questions at this time. This concludes today’s conference call. Thank you for participating, and you may now disconnect.