Good morning. My name is Lori, and I will be your conference operator today. At this time, I would like to welcome everyone to the L Brands First Quarter 2014 Earnings Call. [Operator Instructions] I will now turn the call over to Ms. Amie Preston, Chief Investor Relations Officer for L Brands. Please go ahead. .

Thank you, and good morning, everyone, and welcome to L Brands' first quarter earnings conference call for the period ending Saturday, May 3, 2014..

As a matter of formality, I need to remind you that any forward-looking statements we may make today are subject to our Safe Harbor statements found in our SEC filings. Our first quarter earnings release and related financial information are available on our website, lb.com.

Also available on our website is an investor presentation, which we will be referring to during this call. This call be is being taped and can be replayed by dialing (1) 866-NEWSLTD. You can also listen to an audio replay from our website..

Stuart Burgdoerfer, EVP and CFO; Sharen Turney, CEO, Victoria's Secret; Nick Coe, CEO, Bath & Body Works; and Martin Waters, President of International, are all joining us today. After our prepared remarks, we will be available to take your questions for as long as time permits. .

We need to end the call today at 10:00 to get to a Board meeting. [Operator Instructions] Thanks, and I'll turn the call over to Stuart. .

Thanks, Amie, and good morning, everyone. Our first quarter results were good in what was a challenging retail environment. Total sales increased 5%, comps increased 2% on top of the 3% increase last year, and operating income dollars increased 8% and EPS grew 10%.

Importantly, we delivered 5% sales growth while holding merchandise margins relatively flat. We effectively managed promotions in the quarter and reduced inventories, ending the quarter at up 6% per square foot, down from 9% at the beginning of the quarter..

The gross margin rate declined by 40 basis points to 41.1%, driven roughly equally by a slight decline in the merchandise margin rate and buying and occupancy deleverage. The slight decline in the merchandise margin rate was in line with our expectations..

SG&A expenses were well managed, increasing by 2.5% in total and leveraging by 80 basis points. The operating income dollar increase of 8% was driven by growth in all 3 of our major business segments, and our operating income rate improved by 40 basis points..

Earnings per share increased 10% to a record $0.53. .

Turning to the balance sheet on Page 6. Retail inventories per square foot at cost ended the quarter up 6% versus last year. We're very comfortable with our inventory position. They are clean and in good shape. We repurchased 781,000 shares of stock in the first quarter for $42.1 million.

At quarter-end, we had $133.6 million remaining under our current $250 million repurchase program..

Turning to Page 8 of the presentation. Our forecast for 2014 reflects actions we are taking to grow our business. Growth in Victoria's Secret real estate increased store selling payroll, driven by our efforts to improve the customer experience and investments in international expansion.

These actions will drive sales growth but will result in near-term expense pressure, particularly in buying and occupancy and store selling costs..

Occupancy costs are estimated to increase by approximately 7% this year.

This increase is driven by increased rent for incremental square footage for new and remodeled stores in the United States, Canada and the U.K.; increased accelerated appreciation for stores that we are remodeling before the end of the lease term; and increased appreciation related to the new and remodeled stores that were opened over the last several years..

Also, in order to increase our focus on our faster-growing, more profitable product lines, we are exiting certain noncore apparel categories in Victoria's Secret Direct and Makeup in our Beauty business. Sharen will discuss the strategic intent of these actions in her comments..

We plan to sell-through the remaining inventory of non-go forward merchandise through the remainder of the year. We currently expect that total Apparel sales will decline by about $130 million in 2014, a portion of which will be offset by growth in other categories. And Makeup sales will decline by about $25 million..

Our updated earnings guidance includes an estimate of the negative impact of exiting these businesses of between $0.10 and $0.12 per share for the year..

For the second quarter, we expect earnings per share of between $0.57 and $0.62 against last year's $0.61 result. Higher interest expense and a higher projected tax rate are negatively impacting the second quarter by about $0.02..

Our second quarter earnings forecast reflects a low single-digit comp increase. We expect the second quarter gross margin rate to be down to last year, driven by a decline in the merchandise margin rate and occupancy expense pressure.

We expect that merchandise margins will decline by more than the first quarter as a result of the apparel and Makeup exits..

We expect the second quarter SG&A rate to decrease versus last year, driven by our continued focus on expense management. We expect to end the second quarter with inventory per square foot roughly flat to last year. .

For the full year, we are projecting positive low single-digit comps. Total sales growth will be about 2 points higher than comps due to growth in square footage in our International business. We expect our full year gross margin rate to be down slightly and the SG&A rate to be about flat to last year.

Nonoperating expenses for the year are projected to be about $315 million, consisting principally of interest expense. Before any discrete items, our tax rate will be approximately 38%..

We are forecasting weighted average shares of about 297 million in the second quarter and the full year. Assuming all of these inputs, we expect earnings per share for the full year 2014 to be between $3 and $3.15 per share. Higher interest expense, shares outstanding and tax rate are negatively impacting our full year earnings by about $0.07.

As mentioned earlier, the exit of noncore apparel and Makeup is negatively impacting EPS by about $0.10 to $0.12. Excluding these factors, earnings per share growth implied by our guidance is from 4% to 9%..

We are projecting 2014 CapEx of about $750 million. As you know, about 70% [ph] of our CapEx budget is for real estate and stores. The remainder relates to investments in technology, logistics and facilities.

As detailed on Page 9 of the presentation, Victoria's Secret square footage in North America will increase by just over 5% this year, driven by expansions of existing VS stores and the opening of 32 new PINK stores and 20 new VS stores. The total company square footage will increase by about 3.5%..

Turning to liquidity. We expect 2014 operating cash flow of $1.35 billion to $1.45 billion and free cash flow of about $600 million to $700 million. We remain committed to returning excess cash to shareholders through a combination of share repurchases and dividends. .

Our free cash flow and cash position, along with additional availability under our revolving credit facility, result in very strong liquidity, which is more than sufficient to fund our working capital, capital expenditures, dividends and any other foreseeable needs. .

Thanks. And now I'll turn the discussion over to Sharen. .

Think you, Stuart, and good morning, everyone. Our first quarter results are detailed on Page 11 of your presentation material. The Victoria's Secret segment grew both sales and operating income versus last year.

Total sales increased 4% to last year, and comparable store sales increased 2% on top of 3% last year, with operating income increasing $14 million or 5%. .

Customers responded favorable to our assortments, particularly the newness in our bra category with our first quarter core bra launches and strong growth from our Sport bra offering. Our panty and PINK apparel categories also had solid growth. .

In order to increase our focus on our fastest-growing, most profitable businesses, we are exiting some of our noncore apparel categories in Direct, as well as Victoria's Secret Makeup.

This will reduce our annual Direct apparel business from roughly $485 million in sales in 2013 to between $200 million and $220 million in 2015, with this year being a transition year. The exit of our Victoria's Secret Makeup business will impact our business by about $45 million on an annual basis..

This is an exciting, long-term opportunity for Victoria's Secret. As our omni-channel categories are our most profitable, aligning offerings across the channels not only allows us to better focus on our core but also provides a seamless customer experience. .

In the stores channel, first quarter sales increased 5% and comps were up 2%. Our growth in sales came from both Lingerie and PINK, with strong growth in bras. We were excited about our launches and continued to see solid performance in Sport bras. We also saw strengths in panties and PINK.

Beauty sales declined, primarily driven by less promotional activity in Body Care within the quarter..

Our store channel merchandise rate increased during the quarter, with gains across Lingerie, PINK and Beauty. Operating income dollars and rate increased during the quarter as higher merchandise margins and leverage in SG&A more than offset growth in buying and occupancy from our investments in real estate..

In the Direct channel, first quarter sales were flat to last year as a high single-digit increase in Lingerie, PINK and Sport was offset by a high single-digit decline in apparel. The merchandise margin rate was down to last year, primarily due to the higher promotional activity in the apparel business..

Expenses were about flat to last year, so the decline in merchandise margin resulted in a decline in operating income. As we transition to the second quarter, we will continue to focus on newness and are looking forward to our upcoming bra launches, which have tested well.

We continue to be pleased with the results of our real estate and other store investments that are improving the customer experience..

While select category exits and continued investments in real estate will put pressure on our results, we are confident in our core categories of bras, panties, fragrance and PINK. Our inventories are well positioned, and we remain focused on increasing our agility in order to optimize our business..

Thanks. And now I'll turn the discussion over to Nick. .

Thank you, Sharen, and good morning, everyone. At Bath & Body Works, we were able to grow sales and earnings versus our record performance last year. We were pleased with the results, and we remain committed and focused on the fundamentals we do well and recognize that we must keep getting better to win. .

our Signature Collection product line, the soap and sanitizer business and our home fragrance assortment. All performed at or above the total company comp during the quarter. We were pleased with the results of our soap relaunch during the quarter, which featured new formulation and packaging..

Improvements in our conversion rates and growth in our average unit retails during the quarter were partially offset by challenging traffic levels. Total sales for the 13-week quarter were $582 million, up 4% or up $21 million to last year. For the quarter, our operating income was $80 million, up 9% from last year.

Operating income as a percentage of sales was 14% in the quarter and was up 60 basis points to last year..

Gross margin rate in the quarter was up to last year, driven by leverage in buying and occupancy. SG&A expenses also leveraged versus last year. We finished the quarter with inventory levels up slightly to last year and in line with expectations. .

We were pleased with the performance of BBW Direct channel during the quarter. Total sales were up 18%, and operating income grew significantly versus last year. .

Looking ahead to the second quarter. We will continue to introduce newness and innovation in both form and fragrance. We began the month on Mother's Day and transitioned into a perfect summer theme, featuring new and seasonal fragrances across the 3 key categories.

We're excited about our assortment, but we will continue to manage expense and inventory conservatively..

Our overall focus continues to be about building the brand, getting faster and better understanding and satisfying our customer needs while providing them with world-class in-store experience.

In addition to focusing on products and fragrance launches, we will continue to test and read results of new product offerings and promotional strategies while maintaining flexibility in our inventory to read -- to react quickly to our customers' preferences. .

With that, I'll turn the discussion over to Martin Waters. .

Thanks, Nick, and good morning, everyone. As you know, beginning with this quarter, we are reporting the results of our Victoria's Secret and Bath & Body Works International businesses in a separate segment for the first time. My comments this morning will relate to that segment. .

We made a lot of progress in the first quarter. Sales increased by 76% to $71 million, and operating income advanced to $15.5 million. The operating income rate increased to 21.9%.

You will recall that when talking about revenue in this segment, we're including a combination of some wholly owned stores, where we report retail sales, but the larger component is revenue from our franchise businesses. .

The good news is that sales and operating income growth was achieved across all of our formats. At Victoria's Secret International, we continue to be pleased with performance of our full assortment stores.

In the U.K., our London flagship store on Bond Street goes from strength to strength, and we've recently begun construction to expand into the adjacent space. We opened another 2 stores in the U.K. in the first quarter, bringing us to a total of 6 mall locations in addition to Bond Street. We'll be opening another 4 stores this year in the U.K. .

Elsewhere in the world, we opened another 2 stores under our partnership with Alshaya, bringing the total to 6. These stores continue to do very well, and we'll be opening another 6 to 8 this year across the Middle East and Turkey. .

Our Victoria's Secret Beauty and Accessories business continues to progress well, and we ended the quarter with 209 stores open and are on schedule for about 300 by the end of 2014. We're also on track to open VSBA stores in China at the end of this year..

In Bath & Body Works International, we are now up to 59 stores outside of North America, all franchised. And we continue to be very pleased with performance of this business, and we'll open another 15 to 25 stores this year..

So that's an update on International. And with that, I'll say thank you and turn it back over to Amie. .

Thanks, Martin. At this time, we'd be happy to take your questions. [Operator Instructions] Lori, I'm going to turn it back over to you. .

[Operator Instructions] Your first question comes from the line of Matt McClintock of Barclays. .

Sharen, I was just wondering if you could talk a little bit more about Victoria's Secret's Sport. We've seen some very impressive presentations in some of your stores during our checks. And I just wanted to get more of your vision for future growth in that category this year, next year, going forward.

And then maybe can you talk more about upcoming product launches, innovations and compare that to the product that you had last year. .

Thank you, Matt. We're very excited about our Sport business. And as you know, we rolled Sport bras to all stores in the fall season, and it has continued to exceed our expectation. We only have our full assortment in about 80 stores right now from a Sport perspective.

We think that there's a huge opportunity, not only in the store channel but as well as in the Direct channel. We continue to incubate ideas in these full assortment stores and continue to be pleased and really exceeded our -- and exceeding our expectations. The only thing that gets in our way of growth right now is just real estate.

So as you see, all of the real estate moves that we're making this year in terms of Victoria's Secret will allow us to continue to expand upon this category. I'm also pleased with the innovation that we are doing. And in fact, in about another week, we'll be launching a new Sport bra that we actually have the technology patent.

And we call it the Knockout bra, but it's also zip and click, which is just a great front closure Sport bra with lots of technology to help support and has continued in the testing to really blow everything else out of the water in terms of what we've done.

We have a full pipeline of innovation that we continue to see ideas much stronger than we did last year in the Sport bra category. So we're well positioned. We're excited about it. I feel like that we're going a little slower than I would like, primarily just to the real estate that we need to continue to push this category forward. .

That's great. Thanks, Sharen, and thanks, Matt. .

Your next question comes from the line of John Kernan of Cowen. .

Stuart, I guess, with inventory expected to be flat on a per square foot basis by the end of Q2, how conservatively do you think your gross margin guidance is in the back half of the year as you start to lap some of the easier comparisons from last year?.

Well, we're always going to work hard to hold or improve merchandise margin results in the business. Importantly, in the first quarter, we had -- I would describe it as solid results in merchandise margin rate as compared to the fourth quarter. And we'll plan the business conservatively and work hard to do better than those conservative plans.

We feel good about the inventory levels that we have now and how we'll end the spring season. So we've got conservative assumptions in the guidance, and we'll work hard to beat those assumptions. But we're feeling solid about the merchandise margin rate results in the business.

And again, an important change in the first quarter versus the fourth quarter, where merchandise margin rates were, I think, pretty solid in a challenging environment. I think we're in good shape. .

Thanks, John. .

Your next question comes from Neely Tamminga of Piper Jaffray. .

Can we just talk a little bit about the discontinued businesses? I guess, one question here for Sharen. Why specifically Makeup? I think you guys went through kind of a redesign on that one. I'm just wondering what the decision process was to kind of exit out of Makeup specifically.

And Stuart, in terms of, obviously, you guys are better aligning your talent out of the non-go forward apparel.

How are you guys thinking about saving or rather respending some of those talent dollars? And where would you rather spend them on within your organization right now?.

Neely, in terms of discontinuing the Makeup business, we didn't even have Makeup in all stores. And it's really, when you think about from an enterprise perspective, our real core is going to be in fragrance, and whether it's a fine fragrance, whether it's in the Body Care business. And the Makeup was more of an ancillary.

It's a high-maintenance business, a high-discard business, so when we think about focused, fast and frugal and focusing on our core, going into fragrance and putting all the energy there, which is a better tie-in to Lingerie, helps us to get to our end game faster and, we believe, will help us to grow the whole Beauty category even faster than we are today.

And I'm going to take the question about reinvesting the talent that we had. As we got out of the apparel business and the Makeup business, we actually have refocused those talent -- that talent into our core, whether it be in our Sport category in Direct, our Swim category, Beauty. We are underdeveloped in the Beauty category in Direct.

So we have refocused, and you'll see some of that coming to play -- into play this fall season. .

Thanks, Sharen. Thanks, Neely. .

Your next question comes from Brian Tunick of JPMorgan. .

Wondering, on the Victoria's Secret Direct changes you're making, can you maybe give us some sense of what the margin delta might be on the Swim and the Sport versus the apparel businesses you're getting out of? And what do you think the timeframe is to replace that volume over the next couple of years?.

Box [ph] share product has much higher margin characteristics than the apparel business or the Makeup business because Direct also did some Makeup business. So the margin characteristics are much higher in our core share categories.

As we think about really focusing on those core categories, we believe that we can offset the Makeup business this fall season. We believe we can offset some of the exits this fall season. And then as we go into 2015, it'll probably take us another 12 months to completely, on the conservative side, offset the exit of apparel. .

Thanks, Sharen, and thanks, Brian. .

Your next question is from Barbara Wyckoff of CLSA. .

Sharen, could you talk about the new BB -- well, it was actually new at the beginning of May, the collection with all -- have the performance with -- the collection with all of the multiple straps. It looks pretty terrific.

Can you talk about that?.

Sure. I think you're referring to the Very Sexy strappy back. And the trend right now -- yes, did really, really well. The strappy back, what we also call caging from a fashion trend, continues to be strong, and it's something that we'll continue to maximize as we go forward. .

Thanks, Barbara. .

Your next question is from Oliver Chen of Citigroup. .

Regarding the international side, for Martin and Stuart, as you think about capital allocation here and the wholly-owned store opportunity, what are the factors from which you would look at to even further accelerate that? And what kind of catalyst or risk or opportunity points are you guys considering when you think about that versus domestic?.

Yes. So I'll take that first, Oliver. Thanks for the question. So we continue to be super excited about the opportunity to develop the Victoria's business, both in full assortment stores and in VSBA stores. All of the VSBA stores are franchised, so there is no capital constraint there.

The rate-determining stats for how fast we go is just the availability of real estate and building and selling organization. I think in the full assortment business, the U.K., in addition to Canada, is the only market where we use our own capital. And our default position is to make this a low-capital model.

And where we can find franchise partners who are able to run the business in the way that we want them to run it, then that would be our first choice. And in the next couple of years, we've penned down a significant amount of growth with Alshaya, in particular, across the Middle East and Turkey. .

Thanks, Martin, and thanks, Oliver. .

Your next question is from Kimberly Greenberger of Morgan Stanley. .

My question is for Sharen. Sharen, you mentioned in your prepared remarks you're looking to deliver a seamless customer experience between online and in stores. And that was some of the thinking behind the exit of these businesses.

Can we assume that this is one step in a multistep process to eventually roll out your e-commerce platform internationally? And if you have any sort of update on the timing or the outlook of that, that would be really helpful. .

Kim, I think that is a great question. Yes, I think by us making sure that we can focus on the few categories, it gives us the opportunity to excel, going forward, into a bigger International business. It makes it a lot more simple, and it gives us the opportunity to stay focused, fast and frugal. And I would say that we want to get through 2014.

And then as we think about it as we go forward in 2015, we will come back to you with a better layout of our strategy from an international perspective. .

Thanks, Sharen, and thanks, Kimberly. .

Your next question is from Janet Kloppenburg of JJK Research. .

My one question is for Sharen. It's -- I think the apparel business experienced a rebound in the first quarter, Sharen, after maybe a little bit of underperformance in the fourth quarter. I was wondering if you could talk about the strategy related to that and how it looks going forward. .

Our peak apparel business has bounced back very nicely coming in from the holiday. And I really attribute to the fact that we have a lot of agility and with all of the speed models that we have put into play. I'm very excited about those assortments, not only from an apparel category perspective but what's happening as well as in the bra and panties.

So we have a very balanced assortment when we think about the intimate business as well as the apparel category. We feel very strong about the things that we've tested for back-to-school. As you know, as we come into August and September are big moments for PINK. And last year, that's when we stubbed our toe.

So we are very optimistic as we go forward into that timeframe. .

Thanks, Janet. .

Your next question is from Roxanne Meyer of UBS. .

My question is on La Senza. I just was curious to get an update on the game plan for revitalizing that business and what your plans are there. .

Sure. I'll take that, Roxanne. So yes, La Senza continues to be a bit of a challenge for us, not helped by some headwinds in the last quarter specifically related to Canadian retail environment, which has been tough, and also foreign exchange rates, which have gone against us somewhat.

But that said, we continue to be very positive about and optimistic about the positioning of La Senza. The team's working incredibly hard to fix it. We'll stay the course, and we hope to have good news soon. .

Thanks a lot, Roxanne. .

Your next question is from John Morris of BMO Capital Markets. .

Question for Stuart on the cost of the discontinued businesses in VS Direct. How did that cost, in terms of how it came out, compare to what your original expectations would've been? We were thinking maybe it was a little bit higher.

But also, how -- are you seeing how it flows through Q2 through Q4? Any kind of guide -- modeling guidance there? Given the guidance on Q2, it almost looks like your Q2 was actually still in pretty good shape, even taking into account some of the cost associated with that discontinuation. .

So in terms, John, of how it breaks in 2014, we'd see, between the Direct apparel and the VS Makeup, a couple cents, $0.02 in the second quarter and the balance in the fall spread pretty -- with a little more skew to Q4 than Q3. So a couple cents in Q2 and the balance in the fall, with a little more weight in the fourth quarter.

And in terms of a view versus original expectation, I mean, the fact is these are decisions that were made within the first quarter. So we developed a view that's in prep for this call. That's [indiscernible]. .

All right. Thanks, John. .

Your next question is from Omar Saad of ISI Group. .

Just a quick question on PINK. It seems like, I think, the planned store openings this year got tweaked down a little bit from last quarter. Just wanted to get a better understanding of what's going on there.

Are there changes in real estate availability or any kind of changes in your strategy around the brand?.

Omar, thank you. I think there was a shift of 2. But there is no change in our strategy about us being aggressive with PINK. Very excited about the store -- the new store openings. I think anywhere at the end of the year, we'll probably have around 250 freestanding PINK stores between North America.

So we still see a lot of growth and opportunities within PINK. So we're pretty excited about that. But there's nothing really that's changed in terms of real estate. .

Yes, Omar, what Sharen said is right. I would guess that any changes from our previous forecast just have to do with timing and real estate changes and leases. Thanks, Omar. .

Your next question is from Simeon Siegel of Nomura Securities. .

This is actually Gene Vladimirov on for Simeon Siegel. I wanted to ask if you could talk a little bit about the composition of inventory at Victoria's Secret, and also if you're making any changes to your approach for the buy in the second half of the year. .

Thanks, Vladimir.

Sharen?.

The competition of our inventory in Victoria's Secret is actually quite healthy. I think that where we invested in the fall season was primarily in the bra category. We have come out of that very strong. We're excited about the newness, and our inventory is actually cleaner as we go into third quarter next year. We have a lot of agility.

We're continuing to focus on making sure that, every year, we use our speed models and actually recreate and reinvent our speed models. So I think as you look forward into Q3 and Q4, Victoria's Secret, across the board, will have more open-to-buy and agility than we did last year. .

Thanks, Sharen. .

Your next question is from Anna Andreeva of Oppenheimer. .

A question on International. Profitably saw a nice pickup during the quarter. Maybe talk about what drove the strength there.

How should we think about the margins in International segments in 2014? And should we expect the owned stores footprint to be profitable this year, or is it more about 2015 with bigger scale?.

Thanks, Anna.

Martin?.

Yes. So I think the best way to think about the change in the performance in International is just about new store growth, really. And if you look at Page 10 of the presentation, we'll have moved from 262 stores in the quarter to something around 400 by the end of the year.

And all of those full businesses are growing and growing at a healthy clip, driven by new store space and by comp growth in the existing stores.

As far as the profitability of the business is concerned, yes, we're not going to breakdown individual store performance, but I think you should know that we're pleased with the performance that we're making. We continue to see very good signs across all of those businesses.

Stuart, do you want to add anything?.

No, I think the only thing I would add, which has been our view on a consistent basis, is we expect the International business to have an operating income rate at or accretive to the enterprise rate, and that's what we're seeing. And we would expect that to continue for the balance of the year. .

Thanks, Anna. .

You're next question comes from the line of Jennifer Davis of Buckingham Research Group. .

Just a question on Henri Bendel. Could you talk a little bit about that? We haven't gotten an update about it in a little while, and just any kind of changes in the strategy or updates. All right. .

This is Stuart. I'll take that. So on Bendel, we're pleased with the results we're seeing in the mall-based stores. So we've got the store on Fifth Avenue, as you know, and then we've got 28 stores in better malls throughout the United States.

And those locations are growing sales at a healthy rate and are realizing meaningful improvement in their merchandise margin rates. So we're optimistic about the assortment. And we're seeing that play through in terms of the sales and margin results of the business. It's still in an early stage of development, but we're seeing good signs. .

Thanks, Stuart. .

Your next question comes from Mark Altschwager from Robert W. Baird. .

Could you just update us on the market intensification efforts and any plans to accelerate that throughout this year?.

It's Sharen. We're very pleased with the market intensification. And as you know, we have moved now into our fifth market and continue to see great results from that work, and we're continuing to learn. I think that we'll probably stay within this fifth market through the rest of 2014, and we'll add 1 new market in 2015. .

Nick?.

Yes, we continue to see very strong results in Chicago. And we've actually added a bunch more work to Chicago to continue to try and drive that. We're not, at this juncture, looking at the next one because I think we're still in pretty strong learnings mode and continue to see pretty solid results. .

Thanks, Nick, and thanks, Mark. That concludes our call. Thank you all for joining us, and have a happy Memorial Day. Bye. .

Ladies and gentlemen, this concludes today's conference call. You may now disconnect..