Gary Maier Selwyn H. Joffe - Chairman, Chief Executive Officer and President David Lee - Chief Financial Officer.

Steven L. Dyer - Craig-Hallum Capital Group LLC, Research Division Philip Shen - Roth Capital Partners, LLC, Research Division Bhakti Pavani Jacob Muller.

Good day, ladies and gentlemen, and welcome to the Motorcar Parts of America's Fiscal 2014 Second Quarter Results Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the conference over to Gary Maier. Sir, you may begin..

Thank you -- thank you, Shannon. And thanks, everyone, for joining us for today's second quarter fiscal 2014 call.

Before we begin and I turn the call over to Selwyn Joffe, Chairman, President and Chief Executive Officer; and David Lee, the company's Chief Financial Officer; I'd like to remind everyone of the Safe Harbor statement included in today's press release.

Private Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward-looking statements, including statements made during the course of today's conference call. Such forward-looking statements are based on the company's current expectations and beliefs concerning future developments and their potential effects on the company.

There can be no assurance that future developments affecting the company will be those anticipated by the company. Actual results may differ from those projected in these forward-looking statements.

These forward-looking statements involve significant risks and uncertainties, some of which are beyond the control of the company and are subject to change based upon various factors. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

For a more detailed discussion of some of the ongoing risks and uncertainties of the company's business, I refer you to the company's various filings with the Securities and Exchange Commission. And with that, I'd like to begin the call and turn it over to Selwyn..

Okay. Thanks, Gary. I appreciate everyone joining us today for our fiscal second quarter call. We're off to an excellent start for the second half of fiscal 2014, with rotating electrical products remaining strong and our wheel hub assembly business is ramping up nicely.

As I noted last quarter, my belief is that the macroeconomic conditions of our economy, along with the aging of the car fleet, will continue to provide strong demand for our products. The latest data from Polk shows the average age of vehicles has increased to 11.4 years.

In addition, as the number of cars in the 12-plus-year-old category grow, the replacement rates for these vehicles goes up significantly.

In a recent presentation, Anthony Pratt, the Vice President of Forecasting for Polk, stated that on average, vehicles now have an extended life of 2 additional years and that on average, consumers will buy 4 fewer cars over their lifetime. This means that the average age of light vehicles will continue to increase and will be the long-term trend.

Our industry is focused on aging vehicle repairs and as such, we believe the outlook is strong and stable. The decline in repair rate due to the short-term trough of vehicles between 4 to 7 years should be offset by the increased repair rate of those that are 11-plus years old.

Our customer base remained stable and is performing quite well on the categories we supply. The size of the aftermarket parts business is estimated to be more than $86 billion, with the rotating electrical segment estimated at $1.4 billion.

Our market share in rotating electrical is approximately 25%, and we are well-positioned to grow the share in both the do-it-yourself and the do-it-for-me markets by leveraging our distribution strengths and our reputation for top-notch products and award-winning customer service.

We supply more than 20,000 stores, and all of our customers are gaining share in the professional installer market with their brands, which bodes well for us. We see pricing pressure in the marketplace and as a result, we intend to continue to adjust our operating model to compensate for this margin pressure.

We believe that despite pricing pressures today, in the future, some inflation in pricing is necessary to sustain supply and quality levels. In the meantime, we are making appropriate moves to keep updating our operating model to be able to maintain our operating margins and have a structure to continue enhancing market share.

Also, we recently launched our wheel hub and bearing product line. This category represents a $1.2 billion market in North America. This is a fast-growing and evolving category for a number of significant reasons. First, the wheel hub assembly contains the antilock braking mechanisms.

This technology has become more mainstream on vehicles during the last decade, and these vehicles are reaching prime replacement age for wheel hubs. Secondly, more recently, antilock braking technology is being applied to the rear wheels, which should enhance the category growth rate.

This category has similar failure rate characteristics as rotating electrical. As cars age, failure rates grow significantly. Industry research indicates that this category will grow at a 7% annual compound growth rate, as the car population with antilock brakes grows and ages.

We expect disproportionately better growth rates, closer to the mid-teens, as we see the non-OE brands like ours growing share significantly. While it is our policy not to report on specific customer wins, I will tell you that market reception for our program in wheel hubs is quite encouraging.

We are proud that our product fill rates are excellent, with the ability to offer 24-hour turnaround on almost all SKUs. As we announced this morning, sales for the quarter increased 14.8% to $66.2 million from the same period a year ago, and net sales for the 6-month period increased 11.5% to $116.4 million on a year-over-year basis.

It is worth noting that despite a strong inventory build by one of our major customers in the prior year second quarter, we were still able to achieve sales growth of approximately 1% in our rotating electrical product line. Our adjusted earnings per share also held up nicely, exceeding expectations.

I'm also extremely happy with the newly refinanced debt package that we announced this morning. While we decided to keep debt levels constant, we were able to reduce our term loan interest rate by almost 4% and reduce our revolver expense by 0.5 point to a very attractive rate of approximately 3%.

In all, we expect to save approximately $4 million in interest expense annually. Most exciting about this refinancing is our ability to repurchase stock of up to $10 million and that the low-cost revolver was increased by PNC Bank from $20 million to $30 million.

In addition, they, PNC, were able to offer greater flexibility in our borrowing base calculation, to more effectively enable our collateral availability. Last but not least, there's no prepayment penalty on refinancing this facility after January of 2015.

While there were prepayment premiums associated with this refinancing, we believe the new arrangement provides the company with greater financial flexibility to achieve our strategic growth plans, as well as providing us with a flexibility to repurchase stock, as I mentioned.

In addition, we have the option to pay down the term loan in the next 120 days by $10 million without any fees, which would further enhance our net effective borrowing cost. We're happy with our new agreement and are pleased that our existing lenders were able to step up so quickly.

In a few minutes, David will discuss our GAAP and adjusted EBITDA results for the quarter and 6 month period, which reflect the impact of the company's previous discontinued subsidiary. Our liquidity remains strong, especially in light of the tax refunds and credits of $38 million that we have started to receive.

David will now discuss our financials, including more details on the refinancing..

a $2.5 million non-cash mark-to-market loss substantially related to warrant valuation, $1.1 million of expenses related to discontinued subsidiaries and $700,000 of wheel hub start-up cost. We will now review the financial results for the second quarter.

Net sales increased by $8.5 million or 14.8% to $66.2 million for the fiscal second quarter, compared with net sales of $57.7 million for the prior period a year earlier. The increase in net sales was due primarily to sales of wheel hub assemblies and wheel hub bearings of $8.1 million for the second quarter, which we began selling in June of 2013.

Adjusted for $700,000 of startup costs, wheel hub net sales were $8.8 million for the second quarter.

The gross profit percentage decreased to 29.8% from 34.9% during the 3 months ended September 30, 2013, primarily due to lower gross margins for the wheel hub product line and less than normal cost of manufacturing resulting in higher gross margin during the prior year second quarter.

General and administrative expenses increased $4.3 million to $8.7 million for the second quarter compared with $4.4 million for the prior year second quarter.

Second quarter G&A expenses include $2.5 million of increased noncash loss recorded due to the change in the fair value of our warrants, a loss of $100,000 recorded due to the change in the value of the forward foreign currency exchange contracts, subsequent to entering into the contracts, compared with a gain of $431,000 recorded during the prior year 3 months ended September 30, 2012, which represent the change of $531,000, and approximately $771,000 of expenses including legal and professional fees and other costs related to discontinued subsidiaries.

I will summarize the effects of these expenses on the results of operations later on in the conference call when I review the adjusted results, as shown on the earnings press release from this morning.

Sales and marketing expenses increased $419,000 compared with the prior year second quarter, primarily due to increased commissions and expenses from incremental sales.

Operating income for the fiscal 2014 second quarter was $12.9 million compared with $13.3 million a year ago, adjusted to exclude discontinued subsidiaries expenses and other costs previously explained.

EBITDA for the second quarter was $13.6 million, adjusted for various items as previously explained and depreciation and amortization expense was $683,000 for the second quarter.

Interest expense was $4.7 million for the second quarter compared with $3.1 million for the prior year second quarter, primarily due to PIK interest income of $1.3 million recorded for the prior year second quarter.

We will discuss the new credit facility later on in the call, but in summary, the interest rate on our bank debt decreased approximately 4% from 10.5% on a prior term loan to a new blended rate of approximately 6.4% at closing.

Debt income for the second quarter, adjusted for the items explained above and discontinued subsidiaries related expenses, was $5.3 million or $0.37 per diluted share compared with $5.5 million or $0.38 per diluted share for the comparable period a year earlier.

At September 30, 2013, we had a $103.3 million term loan and approximately $23.5 million cash, resulting in net bank debt of approximately $80 million. There was availability of approximately $16 million on a $20 million revolver credit facility, reflecting approximately $4 million of outstanding letters of credit.

During the second quarter, MPA increased the term loan by $20 million and fully paid off the $20 million loan payable related to a guarantee of obligations to a certain supplier of a discontinued subsidiary.

At September 30, 2013, MPA had approximately $290 million in total assets, current assets were $100 million and current liabilities were $75 million. Cash flows provided by operations during the 3 months ended September 30, 2013, was approximately $10.7 million, which included a $7 million tax refund.

MPA expects to realize a total tax benefit of cash and credits of approximately $38 million, as a result of the losses incurred for the investment in previous subsidiaries, which has already contributed to liquidity and should further enhance liquidity.

Through September 30, 2013, approximately $17 million of the $38 million tax benefits have been realized and the remaining tax benefits will be recognized through a portion of next fiscal year 2015.

As announced this morning, we entered into an amended and restated $125 million credit facility, comprised of a $95 million term loan and $30 million revolver credit facility. The amended and restated credit facility replaces a previous $125 million credit facility comprised of $105 million term loan and a $20 million revolver facility.

Based on current LIBOR, the interest rate for the new term loan is 6.75%, down from 10.5%, consisting of a LIBOR floor of 1.5% plus a margin of 5.25%. The revolving credit facility interest rate equals approximately 3%, down from 3.5% based on LIBOR plus a margin of 2.5%.

At closing, MPA had a $95 million term loan outstanding, in addition to $10 million of borrowings on the revolver credit facility, with a blended interest rate currently of approximately 6.4%.

MPA had approximately $30 million of cash on hand at closing, resulting in net bank debt of approximately $75 million and approximately $17 million availability on the revolving line of credit.

In conjunction with entering into the amended and restated financing agreement, MPA incurred various fees and expenses, including a prepayment premium stipulated in the original loan agreement of approximately $3 million on the company's prior credit facility.

I will now walk you through the income statement exhibits in our press release distributed this morning, which we believe will make it far easier to understand the various expenses and adjustments for the second quarter ended September 30, 2013.

If you can take a moment to turn to the income statement exhibits in the press release, starting with Exhibit 1, we can begin.

So when you eliminate the effect of all expenses related to the discontinued subsidiaries and other onetime expenses as reflected on the earnings press release, diluted earnings per share was $0.37 for the 3 months ended September 30, 2013.

It's calculated by taking the reported net income from continuing operations of $2,164,000 and adjusting for returns and rebates accruals of $700,000; discontinued subsidiaries costs included in cost of goods sold of $325,000; discontinued subsidiaries legal financing severance and other cost of $841,000; FAS 123(R) share based compensation expense of $116,000 and non-cash mark-to-market loss of $2.5 million related to the changes in the fair value of warrants and forward foreign currency exchange contracts and revolving credit line interest of $464,000 related to discontinued subsidiaries.

And all of the above tax affected at a 39% tax rate. So by adjusting the above-mentioned items from the reported net income of $2,164,000, adjusted net income was $5,327,000 or $0.37 per diluted share for the 3 months ended September 30, 2013.

Additionally, at the bottom of the exhibit, there is a calculation for EBITDA for the 3 months ended September 30, 2013. Starting with reported operating income of $8,458,000 and adjusting for the items previously explained, and depreciation and amortization expense of $684,000, adjusted EBITDA is $13,614,000.

The adjusted EBITDA of $13,614,000 is also calculated by starting with adjusted net income of $5,327,000 and adding income tax expense of $3,405,000, interest expense of $4,199,000 and depreciation and amortization of $683,000.

Adjusted further for standard inventory revaluation write-downs of $204,000, adjusted EBITDA was $13.8 million for the second quarter. Exhibit 3 represents the adjusting calculations for the 6 months ended September 30, 2013, showing adjusted earnings per share of $0.59 and adjusted EBITDA of $23.4 million.

Exhibits 2 and 4 represents the adjusting calculations for the prior-year 3 and 6 months ended September 30, 2012. I will now turn the call back to Selwyn.

Thank you, David. Going forward, we will continue to focus on growing our business and working with our customers to grow their businesses through superior product quality and customer service. We will also continue to look for new product opportunities.

Cause of staying on the road longer and that translates into opportunities for Motorcar Parts of America and our customers who sell nondiscretionary automotive parts for their estimated 240 million vehicles on the road today.

In short, we are excited about the number of vehicles on the road, the age of the vehicle population and our strong customer relationships. Our business continues to be strong, demand for our products over the last 6 months of this year continues to look encouraging. We appreciate your support, and we'll now open up the call to questions..

[Operator Instructions] Our first question is from Steve Dyer of Craig-Hallum..

Just wondering, as you look at the base business, if -- certainly a surprising quarter there coming off of a tough comp.

What drove the -- is there a particular customer or segment that you can point to, to drill that growth?.

Well, I think -- no, all of our major customers are continuing to grow. I mean, we're seeing some very strong demand across the board. I think coverage, inventory coverage, is becoming certainly the biggest focus for the industry in our categories right now.

And I think we had a great quarter based on that and really our demand for the next 6 months looks very positive as well..

So is -- kind of given that, is inventory on the store shelves at a good level in your view? I mean, there wasn't any pull forward or anything like that?.

No. I think -- well, again, I think the coverage is key, and our large customers are recognizing that. When that car goes down, the consumer needs a part there and then. And so, we're seeing demand.

I think the other side of it is, is that POS sales at our customers are strong, and I think as we see a little bit of an increase in the economy and some of the workforce that's been unemployed starts to get jobs and need their vehicles and can't defer maintenance anymore, you see a pickup in repairs.

And so, I think the inventory build is a result of the demand for the product. We don't see -- currently don't see inventory build that's not turning. So from our own internal perspective, the metrics look very strong for rotating electrical. For both, quite frankly, but we're addressing rotating electrical..

Yes. Great.

Just looking forward, are there opportunities, in your view, to take market share in any other segments or with any customers in rotating electrical going forward? Or how should we think about the market share shift over the next 6 to 12 months?.

We expect to gain market share. Our momentum is positive. I mean, it's always obviously unknown and unpredictable, but we do a great job for our customers. We've had some gains, and we certainly hope that will continue. I mean, our focus internally is to make sure our customers compete more effectively than our competitors' customers..

Got it. Sticking with that side of the business, you had mentioned some pricing pressure that you're seeing.

Is that something that you expect to be reflected in gross margins over the near-term? Or is that something you think you can mitigate?.

Well, I think we'll see -- we may see some pressure on gross margins. But I will tell you that we, continuously -- we have a continuous improvement program. And so while we know there's always margin pressure, we continue to work our operating metric and our operating model to be more and more efficient, take more waste out of the system.

So I think near-term, there will be some pricing pressure and there is pricing pressures, which is nothing new, but continues on. Longer-term, I think it's going to be critical that there'll be -- I believe there will be some price inflation. I think it will be good for everybody.

I think the consumer today is getting an excellent deal and perhaps too good of a deal. So we'll see how things unfold in the future..

Got it. The wheel hub business came out of the chute very strong.

Do you expect that to be, that initial contract anyway, fairly linear or too hard to say?.

I'm not sure what you mean by linear, but....

Well, from a quarter-to-quarter standpoint, we certainly know that the size of the award, but it certainly came out pretty strong..

Yes. I think we could be stronger. I think we'll see a little bit of a dip because we were ramping up and certainly some inventory build was -- others benefit from some of the inventory build before we got this business. We think it's a fairly seasonal business, so we think the March quarter will be stronger. The third quarter maybe a little lighter.

But, overall, we're seeing great register sales, and that's -- at the end of the day, those register sales are going to convert into our sales and we're also pretty optimistic about the reception to our launch of the product into the rest of the marketplace. So while there's nothing definitive to report there, it certainly seems very positive..

Great.

Last question, I may have missed this, when is the exact -- the close of the debt refi, is that today, yesterday?.

It closed -- when did it close there?.

November 6..

November 6..

November 6, so a little over a half of a quarter of benefit?.

Yes..

Our next question is from Philip Shen of Roth Capital..

I'd like to start off on wheel hub.

Can you give us a general update on the next potential customer, in particular, we're trying to get a sense for the potential size of the revenues and even timing as well?.

Again, we're working on all fronts to gain customers. I can't give you any insight as to when or where or what or how big that may or may not be. All I can tell you is that our revenue guidance of $45 million on wheel hubs, we still believe in very strongly. And hopefully, we will be able to beat that.

But at this point, that's pretty much as much as I've got..

Okay. That's fair, Selwyn.

And in terms of -- can you talk to us about your priorities for free cash flow? How would you prioritize paying down debt versus buying back stock, investing in the business, acquisitions, what's your general thinking on that?.

Well, I mean, that's obviously a lot of components to that. But I would say, number 1 is to make sure our business is financially stable and that we have more than adequate liquidity to support our existing business, which we feel very comfortable with. We also have a number of new product ideas cooking, which we're very, very excited about.

So we need to make sure we have the right capital allocation in place for that. And outside of that, then repayment to our shareholders will become a priority. So we have -- the great thing about our new financial arrangement is we have that ability to manage all 3 of those..

Great. That's really helpful. I'd like to explore the product ideas. I know it might be tough to share details.

Do you have a sense for the amount of investment that might be required? Will it be likely a distribution-type agreement, where there's likely little CapEx upfront? Any color on the new product ideas?.

I think at this point it's a little early, Phil, just to -- I don't want to get ahead of myself. I mean, we're excited. We have -- we do have some good ones. We think that there's going to be some nice upside opportunity. And I just think we need to wait a while until we're ready to go public with that..

Okay. Again that's fair. One last one and then I'll jump back in queue.

How do you expect OpEx to trend as we go through the rest of this year and into the next calendar year?.

So operating expenses should increase a little bit in the successive quarters, third into fourth quarter and should increase slightly because of the new product line..

And is that due to wheel hubs or the new product developments that we were just talking about, David?.

Due to wheel hubs..

Our next question is from Bhakti Pavani of B. Riley & Co..

I'm calling in for Jimmy Baker. Okay.

If I correctly heard the revenues from the new wheel assemblies for the quarter was $8.1 million, would that be correct?.

$8.8 million adjusted, because we had $700,000 of start up costs that were hit to the revenue number..

Okay.

And could you maybe provide the gross margins for the rotating electrical business, especially for the wheel hub assemblies for the client?.

Yes. At this point now, we're reporting consolidated, so the guidance I would offer you is that, on a combined basis, and this all depends on the mix going forward, but on a combined basis, we think the low side will be 27.5%. We think that the high side will be around 30%.

I think obviously, we landed on the high side of that for this quarter and we would hope to maintain that. But we're being cautious in terms of how much revenue growth may come from the hub business..

Okay. Although, Currently, we believe there's one customer for the wheel hub assembly product line.

What are your expectations for additional customers?.

We're optimistic that we'll have a number of new customers..

Okay. Also, could you provide, in addition additional customers, any other expectations for that particular line for the second half, of how do you see to pick it up or maybe you have anything else on the marketing side that you may be trying..

Bhakti, I'm sorry, it faded out a little bit. I don't know why the call faded a little on my side.

Can you repeat the question for me?.

Yes.

In addition, about -- from the additional customers point, what are your expectations for the wheel hub assembly product line for the second half, from the marketing standpoint?.

Yes. We expect it to be strong. Again, we're sticking to our guidance of $45 million of revenue right now, on sort of a 12 month run rate. Hopefully, we'll do better than that, but we -- again, we're new at rolling the products just being launched and being made available to other customers. Again, the outlook looks positive.

But at this point, we're sticking with the $45 million revenue outlook for these 12 months..

Okay. And last question, on the -- I know this Roth guy asked about the anticipated use of future cash flow.

Just wanted to get a sense of how should we expect the capital structure to roll from here?.

That's a good question. I think for now, we have a fairly stable structure. I'm not sure we have plenty of liquidity to pursue all the initiatives that we're interested in. We have a lot of growth organically, we believe, within our organization. We have a lot of opportunity with existing products and potential new products.

And we have enough liquidity to support it. So at this point, I think we're comfortable we're going to generate cash. We're comfortable we have adequate liquidity to finance what our initiatives would be, barring something unusual. And so, I see relative stability in the capital structure. I mean, other than generating cash and deploying it..

[Operator Instructions] Our next question is from Jacob Muller of AYM Capital..

The second half, you mentioned, you're seeing strength here in October, November.

Is it your view that second half results or the EBIT line will be at least similar to what we experienced in the first half, with the wheel hubs going up a bit from where they are right now?.

That's a tough one to answer. I mean, I think, yes, the answer is yes. We do see some -- we do see good demand for the next 6 months. I think we need to be cautious. I don't want to get ahead of myself.

I think, in particular, when I look at -- look out and we have tremendous amount of visibility on orders in the base businesses that the fourth quarter in particular looks very strong at this point. We are working anxiously and aggressively and diligently on trying to grow the hub business.

And you never know what -- what new customer expenses may come with that. But overall, I want to be cautious and I want to be -- I don't want to come across as being overly excited, but we do feel strong about our business.

We do have some margin pressure, and we need to take some cost out of the system to compensate for that, which we're comfortable addressing. But I would say, the outlook looks good. Not to be evasive, but I think it looks good, but cautiously optimistic..

A lot has been asked already about the future growth of the company and what lines you're looking at.

Are most of the ideas that you're working on similar kind of range to wheel hub with Won Jung[ph] or that would be potential -- other areas of growth outside of that current arrangement?.

I think that the 2 models are sort of the new unit distribution model and the reman model. I mean, we certainly believe both of them have very good merit. And so, the key in deciding what financial product will be is looking at capital allocation and, certainly, traction with our customers upfront. And so, it could be either.

We have not made it and again I'm not being evasive, we just haven't made a final decision on that, but we are fortunate right now in that we do think that there are a number of opportunities to choose from. So -- and we're working through that diligently right now..

Another takeaway from today is that you guys probably will not be paying cash taxes for the next year?.

Correct..

Is that correct?.

That is correct..

Plugging that into pretty much what's being said over here, there's likely $30 million of cash generation from the current business over the next 12 months and including the $630 million that's already in the balance sheet right now after the refi, you pretty much accounted for a potential $10 million of stock purchases, $10 million pay down of debt, that leaves $40 million that seem to be a tremendous amount of cash compared to historical.

So while, obviously, you've outlined a lot of things, I mean, is that the kind of cash balance necessary to have at the company? Or is that just because of potential growth or acquisitions? I mean, what is that -- what is the use for that kind of a cash hoard?.

Okay, so I mean, obviously, we want to have flexibility in our working capital needs, so that's critical. We are dedicated to being sort of the highest fill rates in the industry. We like to target between 98% and 100% fill rates. So inventory is key right now.

We are making sure that we have, especially for our customers, so that they can see when they take us on with new product lines, that there's more than adequate liquidity to address any issues in launching a new product line. So having liquidity on our balance sheet is part of marketing, it's part of our marketing..

I guess one final item.

What's the normal interest going forward for the company?.

David, do you want to address that?.

Yes. So I'll break it down between bank debt interest and other interest. So, as explained, the term loan is $95 million and the revolver is $10 million borrowed. So the blended interest rate is approximately 6.4%, it's about $6.7 million annually.

Now the other interest, the largest component is factoring interest, along with amortization of loan fees, there's a little bit of cap lease interest and other interest. That all adds up to a little over $7 million, so you're looking at about $14 million annually, about which on average about $3.5 million per quarter. At the current debt level..

Right.

We're currently running at around $4 million or so, is that correct?.

$4 million, can you expand on that?.

Corporate quarter, I'm sorry..

Quarterly..

Yes, quarterly, we're a little bit over $4 million, about $4.2 million -- $4.1 million, $4.2 million..

Right.

And in theory, if we're going down $1 million a quarter, wouldn't that take us down to closer to $3 million or $3.2 million?.

Because of higher factoring expenses, when we ramp up our top line, many of the customers, they offer a discount receivable program. So as sales grows, our factoring interest will grow..

I'm showing no further questions at this time. I would like to turn the conference back over to management for closing remarks..

We appreciate everybody's support and we look forward to further updates in our reporting and appreciate everyone's time. Thank you for joining us..

Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day..