Dine Brands Global - Earnings Call - Q3 2016

Transcript

Speaker 0

Welcome to the Q3 twenty sixteen Dine Equity Earnings Conference Call. My name is John, and I'll be your operator for today's call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. Please note the conference is being recorded.

And I will now turn the call over to Ken Dipti.

Speaker 1

Good morning, and welcome to Dyne Equity's third quarter twenty sixteen conference call. I'm joined by Julie Stewart, Chairman and CEO Tom Emery, CFO and Greg Calvin, Corporate Controller. Before I turn the call over to Julie and Tom, please remember our Safe Harbor regarding forward looking information. During the call, management may discuss information that is forward looking and involves known and unknown risks, uncertainties and other factors, which may cause the actual results to be different than those expressed or implied. We call the team to evaluate such forward looking information in the context of these factors, which are detailed in today's press release and 10 Q filing.

The forward looking statements are as of today and assumes no obligation to update or supplement these statements. You may also refer to certain non GAAP financial measures, which are described in our press release and also available on Gynet Group's Investor Relations website. I'll now turn the

Speaker 2

call over to Julia.

Speaker 3

Thanks, Ken, and good morning, everyone, and thank you for joining us today. I'll provide a business overview, and then I'll turn the call over to Tom for a recap of the financial results. We continued to deliver year over year growth in adjusted EPS and generated strong adjusted free cash flow despite ongoing challenges. Additionally, we continue to return the majority of our adjusted free cash flow to shareholders. In fact, we once again declared an increase in our quarterly dividend raising it by 5.4% to $0.97 per common share from $0.92 effective with the next payment on January 6.

We remain very confident in our two iconic brands, our brand strategies and franchise partners around the world. We have the best teams we've ever had in place at both Dine Equity and the brand. We picked up the pace of innovation at both brands and we're taking the necessary steps to ensure their success. To this end, I'm pleased to say that we've completed the consolidation of our restaurant support centers. This plan has promoted greater cooperation, collaboration and communication across the organization.

The move has also enabled our team members to more effectively share ideas on how to make our brands more distinctive and relevant, which is just what we need right now. This is a very challenging time for our industry. Today, are very sensitive to value stemming from tighter budgets. In addition, slower growth in disposable personal income has influenced how much they spend on dining out. The already challenged restaurant industry has been hit with slowing overall economic growth and the gap between the cost of dining at home compared to dining out.

The result has been a high level of promotional activity in the marketplace competing for consumer attention. But we're taking action to meet these challenges and emerge even stronger. At the heart of the steps we're taking is the continued strong collaboration with our IHOP and Applebee's franchisees. During our two successful franchise conferences in September, we laid out our plans to further differentiate ourselves from the competition and continually evolve at a fast pace. At the conclusion of both conferences, we aligned on the hard work needed from all parties to drive the brands forward.

I'd like to thank all of our IHOP and Applebee's franchisees for their continued commitment and determination. Additionally, congratulations to the recipients of the Franchisee of the Year award at both brands, well deserved. Now I'll go into detail on each brand, starting with Applebee's. Clearly, we're disappointed with Applebee's 5.2% decline in comp sales for the third quarter. Returning the brand to positive and sustainable sales and traffic is our top priority at Dine Equity.

Due to the environment and the emphasis being placed on value by consumers, it is essential that we reinforce our value proposition. And remember, value is not just about the price, but it's about what our guests pay for and receive across all dimensions of the guest experience. We believe that the need for stronger value messaging is a core factor impacting Applebee's, but we are in the process of validating the best approach to use. We're also investing in the work necessary to create a more relevant Applebee's, particularly as it relates to our food as well as improving the guest experience. We are the largest casual dining chain in the industry, and this means we must continue to innovate beyond value, differentiate and evolve the brand in ways our guests expect us to.

This is absolutely critical. Building platform, which is part of our broader and bolder plan, we're laying the groundwork for growth by focusing on the key elements of our long term strategy. And let me briefly provide some color on each of our four key initiatives. I'll start with operations. This is a greater focus for us.

Our operations platform is gaining traction, but more work needs to be done. To change perceptions of

Speaker 2

the brand, delivering a consistent guest experience is vital. We're collaborating with our franchisees to provide best practices in the areas of staffing and retention to build high performance teams. We're also aggressively simplifying kitchen operations through strategic deletion of menu items and working on ongoing simplification to reduce complexity. Another aspect of our plan is to

Speaker 3

grow profitable sales by building our bar and beverage business and evaluating opportunities in off premise channels. Think of these as revitalized Carside to go and delivery. Regarding brand relevance, as I mentioned earlier, we're taking a deeper dive to better understand when and why our core guests visit Applebee's. Secondly, you will see us extend offers and take an approach that is based on more effectively meeting our guests' expectations for value and innovation. And lastly, you can expect us to focus on continually evolving our quality food and beverages while consistently providing personalized service to fulfill our every guest, every time service promise.

Turning to technology. Today's consumers use technology more than ever to help make a decision on where to dine as well as to engage with the brands they love. The industry is evolving at a fast pace and so must we. We have opportunities to create additional channels and add to the convenience of accessing Applebee's. One way is to expand and further enable Meals To Go.

We see this providing an additional sales channel for our restaurants and expanding our guest pool. We are in active discussions with several third party providers to offer Applebee's delivery to our guests, and we're getting ready to alpha test with three franchisees. Lastly, development. Given current conditions, Applebee's domestic restaurant development has slowed. In the interim, we're doing the heavy lifting necessary such that when the franchisees accelerate their development, we're going to move forward with a new restaurant prototype and small format design.

Now let's turn to IHOP. After thirteen consecutive quarters of positive comp sales, IHOP's third quarter comps were essentially flat compared to one of the strongest quarters that we've ever had in over a decade. We are not satisfied with the results, which reflect that IHOP is not immune to the current environment. Alongside our franchisees, we are dedicated to maintaining and building IHOP's momentum through a committed focus on innovation and development. Ongoing brand innovation has been a central part of our approach to take IHOP to the next level and build sales momentum.

To this end, we have initiatives that are scheduled for beta testing next year and we'll come back to you with a progress update in 2017. Additionally, we launched an innovative e learning training platform several months ago called DinePlate, which has yielded positive benefits to franchisees, such as a consistent training experience regardless of the franchisee. This helps to deliver an elevated guest experience across the system. We've received positive feedback from both franchisees and team members on this new interactive tool, which includes enhanced training on suggested selling. The rollout was completed last month to hourly employees at all of our IHOP locations, and now we have nearly 99% of franchisees on the system and approximately 80,000 users.

The knowledge gained has enabled us to start launching Dine Plate seamlessly to our Applebee's franchisees shortly. Turning to the remodel program and development. We know that the atmosphere in our restaurants is just as relevant to our guests as the service. The IHOP remodel, which is currently being rolled out, provides our restaurants with a fresh new look and feel that we believe will elevate the dining experience and differentiate us from our competitors. Our franchisees have completed nearly 200 remodels year to date and we expect to have nearly 300 completed by the 2016.

The cost of the remodel ranges from approximately $100,000 to $175,000 depending on the extent of the package. We are optimistic about the early traction we're seeing from the remodel. Additionally, the new restaurant image is appealing strongly to guests. Based on our proprietary consumer research, the feedback was very positive with high scores received for likely to recommend, intent to revisit and satisfaction. And regarding development, we know this rejuvenates the brand and keeps it relevant.

I'm pleased to say that we are tracking in line with our projections. So let's switch gears to talk about another important part of our growth strategy, international expansion. Based on the five year plan, we believe we can double our international footprint to over 500 restaurants. We are confident we'll achieve this target given that the new prototypes for each brand are being embraced by our international franchisees at a rapid pace. Our future looks bright with nearly 80% of our franchise partners now developing restaurants and over 200 obligations in place.

My sincere thanks to both our international team and franchise partners who have driven some of the strongest growth we've ever had since forming Dine Equity in 02/2008. Lastly, let's briefly turn to capital allocation. As you saw in our press release issued today, we increased our quarterly cash dividend, reflecting the confidence we have in our 99% franchise business model to sustain strong and stable adjusted free cash flow. We remain committed to returning a majority of adjusted free cash flow to shareholders through the combination of quarterly cash dividends and share repurchases. Since we announced our plans to return cash to shareholders in the 2013, we've returned a combined total of over $390,000,000 And with that, I'll turn the call over to Tom to review the third quarter's financial results.

Tom?

Speaker 2

Thanks, Julia. Good morning, everyone. I'll provide a brief summary of the third quarter's financial results starting with the income statement. Adjusted EPS in the third quarter was $1.46 compared to $1.43 in the same quarter of twenty fifteen. The increase was mainly due to lower weighted average shares outstanding, lower income taxes and a decline in G and A mainly driven by significantly lower incentive compensation costs compared to the 2015.

These items were partially offset by lower gross profit. The year over year decrease in gross profit was mainly driven by a 5.2% decline in Applebee's comps and incremental investments to test additional Applebee's marketing programs, which we discussed with you last quarter. Development by IHOP franchisees over the last twelve months and favorability in dry mix partially offset these factors. Switching gears to G and A. G and A for the 2016 declined by $5,600,000 to $36,000,000 compared to the same period last year, mainly due to significantly lower nonrecurring costs associated with our restaurant port center consolidation and more incentive compensation accruals due to the comp sales performance of both brands in the first nine months of the year.

Regarding our tax rate, the tax provision in the 2016 was lower compared to the same period last year due to favorable foreign return to provision adjustments that lowered the effective rate and an unfavorable adjustment to tax reserves recorded in the 2015 that raised the effective rate for that quarter. Turning to the cash flow statement. Cash flows from operating activities were approximately $62,000,000 for the 2016 compared to $71,000,000 for the same period last year. The decrease in cash from ops was mainly due to net changes in working capital, which used cash of approximately $36,000,000 in the first nine months of 2016 compared to cash used of $28,000,000 in the same period of 2015. The unfavorable variance in working capital was mainly due to less cash collected from gift card receivables.

The decrease in cash from ops and the decline in receipts from notes and equipment contracts receivable were partially offset by favorability in CapEx, resulting in adjusted free cash flow of approximately $66,000,000 for the first nine months of 2016 compared to nearly $76,000,000 for the comparable period of 2015. Now for a brief recap on returning cash to shareholders. In the third quarter, we returned a total of approximately $27,000,000 to shareholders, which included $17,000,000 in cash dividends and $10,000,000 to repurchase roughly 130,000 shares of our common stock. Regarding our quarterly cash dividend, I'm pleased to say that we increased the dividend by 5.4%, reflecting our commitment to return the majority of adjusted free cash flow to shareholders as well as the ability of our business model to generate strong and stable free cash flow. Turning to our performance guidance for fiscal twenty sixteen, I would like to highlight a few revisions, but please see our press release for details on complete guidance.

We now expect Applebee's comps to range between negative 4% and negative 5%. The previous range was between negative 3% and negative 4.5. We still expect IHOP comps to range between positive 0.5% and positive 2%, low end of the range is most likely. Given that these lower comp sales in Q3, we now expect segment profit range to range between $340,000,000 and $345,000,000 compared to the previous range of $342,000,000 to $352,000,000 For the full year, we now expect G and A to range between $150,000,000 and $154,000,000 reflecting an improvement from the previous range of between 154,000,000 and $158,000,000 This includes a total of approximately $4,000,000 of non recurring costs related to our restaurant support center consolidation. I'd like to highlight that these costs do not have an impact on adjusted EPS.

And with that, I'll now turn the call back over to Julia for her closing comments. Thanks.

Speaker 3

Thanks, Tom. To summarize, we again delivered growth in adjusted EPS despite a difficult environment and soft comp sales. We also continued to generate strong adjusted free cash flow. We completed the consolidation of our headquarters and were enthusiastic about having the teams for both brands under one roof. And at both brands, we're adapting to a challenging environment by relentlessly reinforcing our value proposition and having an even sharper focus on operations to continuously improve the guest experience.

We're acting on our comprehensive plan to restore positive comp sales and traffic at Applebee's and we're executing against our strategy at IHOP to build on the brand's momentum. We're taking action to drive positive and sustainable sales and traffic with a renewed focus on value. Lastly, our business model is more scalable than ever, and we continue to thoughtfully explore a strategic acquisition to leverage our shared services platform and superior franchise partners. In closing, we're motivated to meet and adapt to industry challenges. We're building a solid foundation for future growth and we will continue to return cash to shareholders through dividends and share repurchases.

And now, Tom and I would be pleased to answer your questions. Operator?

Speaker 0

Thank you. We will now begin the question and answer session. And our first question is from Michael Gallo from C. L. King.

Speaker 4

Good morning.

Speaker 1

Morning.

Speaker 4

Good morning. Just a question on Woodfire Grill. I mean, obviously, it's been out there now, call it six months. You haven't really seen traffic improve. Obviously, the industry is a big part of that.

But I was wondering if we speak to how you got to kind of balance what you're doing in terms of improving product quality, which was I think a big part of Woodfire Grill, but also still delivering value that your customers are clearly looking for right now? How you sort of dovetail those two together? And how you evolve Woodburning Woodfire and Grill in order to be a better traffic driver? Thanks.

Speaker 3

Yes, I think that's a great question. And I think there's lots of lessons learned. But I think at the core, the whole notion of Wood Fire Grill is impacting over 40% of the actual menu items in terms of pace and profile, and it's also improving the quality of the steak. Those perceptions don't happen overnight. As you know, in casual dining, not as if people are coming in four times a month.

It takes a while to enhance and change perception. And so we're comfortable and confident that the feedback we're getting in our proprietary research, we know that our consumers really do feel differently about our product quality, but that takes time. So we recognize that in the interim, as I said, we have to do a better job of communicating that value message, obviously, with our operations improvement and our brand relevance improvement, making that value proposition a much stronger communication vehicle. We have to do that work, but we know that hand cut wood fired was absolutely the right thing to do for the long term perception change. It just takes time.

Speaker 0

Our next question is from Chris O'Cull from KeyBanc.

Speaker 5

Thanks. Good morning,

Speaker 3

Good morning. On

Speaker 5

the last call, you indicated the lack of a strong value message was really the primary reason for the mid single digit comp declines. I think you guys made some adjustments this quarter, yet the relative performance to the industry deteriorated. What do you think you missed on the value message that you ran during the third quarter? Why do you think it didn't resonate?

Speaker 3

I think as I said in my prepared remarks, we've got to validate the best approach to use in terms of the stronger value messaging. And we do believe that's a core factor, but we think there's an opportunity to improve both that messaging and how it comes to life in the restaurant. And that's the work that we are currently doing. I think this whole operations piece, which I spoke of earlier, is an important piece. The consumer has very high expectations of what they want, not just in terms of consistently a great experience, but the real value for the money.

That is work we are both looking at and validating as we speak.

Speaker 5

I noticed some of your competitors were running lunch offers that were lower priced. Has Applebee's considered anything similar, a similar kind of program?

Speaker 3

We've been looking at lunch. I know it's not our number one priority. I think our number one priority is getting at this stronger value messaging and and validating it. But I think lunch is something we can do. Clearly, if we were to do a a different lunch strategy, it's gotta be a smaller menu.

It just simply can't serve all 80 some dinner items at lunch, and we recognize that. But it isn't our number one priority right now. Our number one priority is to get us back on track at dinner.

Speaker 5

Okay. And then, Tom, this year, there were some timing mismatches from the extra operating week when you project free cash flow. Are there any adjustments we should be considering for next year when projecting free cash flow?

Speaker 2

No, not that we're aware of right now. We're still working through 2017 as part of our planning process right now. So we'll be getting back about that.

Speaker 5

Okay. And then lastly, given you guys were just had your conference with Applebee's, Julie, can you talk a little bit about agreements that these guys have for renewal? I know that many of them were opening restaurants in the mid-90s and they signed twenty year agreements. Can you speak about franchise willingness to renew agreements? And have there been any renewals that's happened here recently?

Speaker 3

So what you're referring to is the big renewal push, which is in 2020, 2021, 2022. So that's a ways out. I think I've mentioned that a couple of times before. We have our ongoing normal renewals that happen in the course of the year at both brands. Nothing extraordinary or exceptional in terms of numbers.

Speaker 5

Okay. Okay, great. Thanks.

Speaker 1

And

Speaker 0

our next question is from Brian Vaccaro from Raymond James.

Speaker 6

Hi, good morning.

Speaker 3

Good morning.

Speaker 6

So I just had a I wanted to follow-up on Chris' question on lunch versus dinner. Did you see a noticeable difference in daypart trends in the third quarter that you could provide color on?

Speaker 3

No. There really weren't any major changes either by daypart or by area of the country. Nothing really that stood out.

Speaker 6

Okay. All right. Then shifting gears to the broader guest satisfaction scores. I think on the last quarter, you had mentioned a pretty meaningful improvement in guest sat at Applebee's. Did that improvement continue in the third quarter?

And where specifically are you seeing the improvement?

Speaker 3

Yes. I would say in third quarter it was more stable. It wasn't we didn't see any kind of hockey puck hockey puck, actually, a hockey stick in the third quarter. It was pretty much level set. We know there's an opportunity there, and that's a real drive and focus for us operationally.

We can and will do better.

Speaker 6

All right. And one more on Applebee's, if I could. What's the average pricing that's running through the franchise system overall? I know it probably varies by region. But then also could you give an early read on your commodity and labor cost inflation expectation that the average franchisee could experience in 'seventeen?

Speaker 3

You're asking about the average check, is that what you're asking across the question?

Speaker 6

Yes, check or pricing. However you'd like to address it.

Speaker 3

The average check is $13.75 across the country. However, that's a little bit the coast, I think I've said this before, are substantially higher than $13.75 dollars so it's a little bit of a mix. The middle of the country is slightly under $13.75 dollars and the coasts are slightly higher. That's a little bit of the nature of the beef and the cost of labor. From a standpoint of forecasting where we are from a co op perspective, for 2017, we don't have a forecast yet, but at least preliminarily, it would be down.

It looks very good in 'sixteen and again it looks very good in 'seventeen. I'll have a final number for you on our guidance, but at least preliminarily it would be once again very favorable for the franchisees.

Speaker 6

Okay. And a similar sort of backdrop from a labor cost inflation perspective in 2017 versus 2016? Is that your sort of the early thoughts on the labor front?

Speaker 3

It really depends on the state you're in and whether or not you know, there's obviously the federal changes and there's a state changes. It varies dramatically. Right? The one thing I haven't seen a huge change in, although there's a lot of state legislation and and infighting, I'm not seeing a huge change in our still, we have eight or nine tip credit states. That looks like that stays in play.

I mean, I'm sorry, eight or nine states that do not have a tip credit. But in general, boy, that's a bit of a if nothing, it will be more aggressive, not less aggressive. I mean, labor is an ongoing issue.

Speaker 6

Sure. Sure. All right. And then just one last one for Tom. On the net working capital use of cash you called out in the quarter, did that include the $10,000,000 one time tax payment?

Speaker 7

Hi, this is Greg Calvin. Yes, it did. It's in the press release, We paid $7,000,000 of the $10,000,000 and revised the guidance for the difference of the three potentially until we settle that. All in Q3.

Speaker 6

All in Q3. All right, great. Thank And

Speaker 0

our next question is from Jon Ivankoe from JPMorgan.

Speaker 8

Hi, thank you. Just a few if I may. Julie, I think it was also to Chris' question earlier about franchise renewals from twenty years ago. My question is more around closures. One of the leading indicators of closures that we've seen in the industry in the past couple of decades is when franchisees slow down new unit expansion which is something that you've called out.

So just hoping that you can kind of help us think in the next couple of years if there's any kind of natural contraction of the system in The U. S. That may happen? And if not, if there's something that you're doing with financial incentives or what have you that could potentially prevent some closures given some recent results?

Speaker 3

Yes. No, we've run I'd say over the last four years, we've run an average of about 25 closures a year at Applebee's. That's pretty much standard. So I don't see any huge change. We run slightly less than that at IHOP.

Those are just natural, either attrition of slowing or the trade areas moved away or I don't necessarily see anything extraordinary. You in any given year, you know, you can float between twenty five and thirty five, but I just don't there's nothing in the next couple of years that's that I would see on the horizon that's dramatic. Because I said before, a lot of the renewals that that you all are talking about would be aggressive expansion of Applebee's in the 90s. Those come a call in 2020, 2021, 2022. By the way, that's the same exact scenario on the IHOP side.

There is no distinction. They both had huge development in the 90s. So that's when you'll see that changeover. And we'll certainly give you plenty of full warning as to what that looks like and what that potentially entails when we get closer. It's just too far away.

Speaker 8

And it's been I would just ask for your color just in terms of like franchisees kind of talking about their store profitability or their organization profitability. Mean, was 2016, was it like really a surprise to them in terms of what happened to comps? And just if you can speak generally or specifically, are most franchisees in a financially strong position to kind of withstand this?

Speaker 3

Yes. I think that's a sort of a I mean, that's an ongoing I think I've mentioned this before. We have a robust process for evaluating franchisee financial health. Our franchisees are smart. They're resilient business people.

They've got experience in navigating ongoing industry headwinds. I think from time to time, we have over the last, I don't know, fifteen years, we've always seen from time to time a franchisee here or a franchisee there that's got subpar financials. But they're weathering the storm and we're working with them closely.

Speaker 8

Okay. Thank you. That's very helpful. And then there was a previous question about if there was anything unusual in the cash flow statement in 2017. But I would like to ask the question in the context of deferred tax liabilities, which actually has been a use of cash for the past couple of years.

I don't know since 2013, 2014, it's actually been a fairly significant use of cash as that account has been drawn down. Is there a reason that that may change in 'seventeen that at least will it continue to be a use of cash or could that potentially start to become neutral?

Speaker 7

This is Greg again. It shouldn't change substantially in 2017.

Speaker 2

Yes, that's the same process as it play.

Speaker 7

It's pretty fixed as to what there's tax differences between the book and the tax. A lot of that has to do with the old IHOP sales of the old business model that will continue to draw down and pay taxes on the money we collect off those notes, if you will, where we don't we recognize them for both purposes years ago. So that will continue to come down in similar amounts as it has in previous years.

Speaker 8

Thank you for the color. And then finally, could you remind us that you've had on balance sheet cash non restricted of $107,800,000 Is that all unencumbered cash? And I guess what is the unencumbered cash, if it's not that at the end of the third quarter that you could use for buyback or acquisition or dividend what have you?

Speaker 7

Well, let me say, a lot of that is Applebee's gift card

Speaker 2

Yes, money that's if the you important thing to remember is that a significant chunk of that is related to the gift cards. And advertising, yes. And then we spell out the amounts that are related to the securitization.

Speaker 8

Okay. So is there a number that you could say in terms of what the unencumbered cash is of that 107.8? Or is that an exabyte of 10 Q?

Speaker 7

A little less than half

Speaker 5

of that.

Speaker 2

Yes, I'd say it's yes. It's Okay. Basically what it's been good for.

Speaker 8

All right, thanks for that. Thank you.

Speaker 7

You bet.

Speaker 0

Our next question is from Steven Anderson from Maxim Group. Yes. Good morning. Just calling to ask about the SG and A. Was your support center consolidation not complete?

I mean, you pinpointed any opportunities for further SG and A efficiencies?

Speaker 2

We always look at SG and A on an ongoing basis. It's obviously a big priority. We want to make sure that we balance our being conservative with SG and A with investing properly business at the same time. Both of those are important considerations, but nothing dramatically significant in terms of that right now, but we're always looking for opportunities to economize.

Speaker 0

Thank you. And we have a question from Crystal Kull from KeyBanc.

Speaker 5

Thanks. I just had a couple of follow ups. I wanted to follow-up on the research process at Applebee's that you're conducting. When do you think we'll start to see changes to the sales plan based on that research?

Speaker 3

It's not necessarily research. It's a validation process. And boy, I wish I could silver bullet that, but I can't. I think the most important thing is we take the time to really validate how do we maximize our message going forward and make certain that we're meeting and exceeding consumers' expectations. So that process is going to take a while, but we'll certainly keep you updated.

Speaker 5

I mean, ballpark, do you think this is something we could see at the beginning of next year or the middle of next year?

Speaker 3

Certainly ask me the same question on our earnings call on March 1, and we'll provide you as much of an update as possible.

Speaker 5

Okay. And then do you guys have a large project plan for the fourth quarter, Tom, that would cause a meaningful acceleration in the CapEx? I think year to date, it's like $3,500,000 but the guidance is $8,000,000

Speaker 3

Well, you've got IT in there and you've

Speaker 2

got Yes. It depends on the timing when IT projects close and things like that. So we'll keep looking at that on an ongoing basis. CapEx stays in a relatively low level for our business as you know on an ongoing basis.

Speaker 5

Okay. Okay. Thanks guys.

Speaker 3

Uh-huh. And

Speaker 0

I'll turn the call back over to Julia for closing remarks.

Speaker 3

Thanks, operator, and thank you all again for joining us on the call. We're scheduled to report results for the fourth quarter and the full year of fiscal twenty sixteen on 03/01/2017, as I mentioned before. If you have any questions in the interim, I want you to feel free to call myself or Ken or Tom. Thanks much.

Speaker 0

Thank you, ladies and gentlemen. That concludes today's conference. Thank you for participating, and you may now disconnect.