J.T. Rieck - Flowers Foods, Inc. Allen L. Shiver - Flowers Foods, Inc. R. Steve Kinsey - Flowers Foods, Inc..

Farha Aslam - Stephens, Inc. Brett Hundley - The Vertical Group Akshay Jagdale - Jefferies LLC William B. Chappell - SunTrust Robinson Humphrey, Inc. Timothy S. Ramey - Pivotal Research Group LLC Amit Sharma - BMO Capital Markets (United States) Brian P. Holland - Consumer Edge Research LLC.

Welcome to the Flowers Foods Third Quarter 2017 Earnings Call and Webcast. My name is Ellen, and I will 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 that this conference is being recorded. I will now turn the call over to J.T.

Rieck, Vice President, Investor Relations and Treasurer. Mr. Rieck, you may begin..

Thank you, Ellen, and good morning, everyone. Our third quarter results were released yesterday evening, and you'll find the earnings release on the Flowers Foods' website. You can find the slide presentation that supports our discussion for today posted on the Conference Call page in the Investors Center at flowersfoods.com.

Our 10-Q was filed with the SEC yesterday evening as well. Before we begin, please be aware that our presentation today may include forward-looking statements about our company's performance. Although we believe those statements to be reasonable, they are subject to risks and uncertainties that could cause actual results to differ materially.

In addition to matters we'll discuss during the call, important factors relating to Flowers Foods business are fully detailed in our SEC filings. Now, let's get started. Participating on the call today, we have Allen Shiver, Flowers Foods President and Chief Executive Officer; and Steve Kinsey, our Executive Vice President and Chief Financial Officer.

Allen, I'll turn the call over to you..

Thank you, J.T., and good morning, everyone. As you saw in our press release, we are pleased with the results in the third quarter on both the top and the bottom lines. We made solid progress with our strategic priorities under Project Centennial.

Momentum is building and the team is fully engaged in our initiatives to reduce costs and drive sustainable sales growth. We continue to work with urgency to execute on critical projects that position the company for long-term success.

To summarize the third quarter, excluding the divestiture, sales were up 2.1%, and adjusted earnings per share was $0.23, which is an improvement of $0.02 per share over the prior year third quarter. The fresh packaged breads category increased 50 basis points in dollars and was down 80 basis points in units.

During the third quarter, Flowers competitive position in the category improved to a 15.8% share, this marks three consecutive quarters of share growth. Nature's Own and Wonder drove share gains in the white and the soft variety loaf segments, while Dave's Killer Bread gained share in the specialty premium and breakfast segments.

Continued growth in expansion markets also supported our share gains. The cake category increased 1.2% in dollars. Our raw data shows our sales declining in the quarter, but the fact is our overall cake sales grew due to solid gains in the untracked vending channel.

The overall competitive environment is consistent with recent quarters, consumer demand remained soft in certain segments, notably private label and non-organic loaf breads. The promotional environment varies market to market.

That said, we believe our growth potential in underdeveloped product segments and geographies provides a counterbalance to broader category softness. Dave's Killer Bread is driving our top line growth with more than offsetting soft demand in other segments of the category.

As you know, DKB is the number one organic bread brand and is benefiting from the growing consumer demand for fresh organic foods. Last quarter, I noted the introduction of DKB bagels and cinnamon raisin bread into the breakfast category.

Consumer response has been very positive and we're pleased with the share gains we've made in the breakfast segment since the launch. As DKB becomes more well-known nationally, there is a tremendous upside.

On the West Coast, where DKB has been in the market the longest, sales velocity is almost double the markets where the brand has recently been introduced. We lapped the roll out of DKB across our direct store distribution network last quarter.

In the year since that roll out, distribution continues to expand into new stores and average unit volumes per store for DKB continue to increase. I'm proud of how our team has grown Dave's Killer Bread since we acquired the brand in 2015. It's a great example of how meaningful brand differentiation and strong marketing can drive sales.

Now that we are strengthening our brand building capabilities, we will be able to drive innovation and invest additional marketing dollars behind DKB and our other high potential brands, Nature's Own, Wonder, Cobblestone and Tastykake. Reinvigorating our core brands will keep them relevant for the next generation of families.

Of course, fueling these investments in innovation and marketing are the actions that we're taking to reduce cost and become a more effective company. We are on track with our cost savings targets for fiscal 2017 and 2018 and the margin initiatives we've implemented so far this year are bearing fruit.

During the quarter, improved manufacturing efficiencies drove gross margins while disciplined spending across the company helped lower overhead cost as a percentage of sales. As we discussed at our September Investor Briefing in New York, we are making progress transitioning to our new organizational structure.

This new structure is designed to maximize sales of our national brands by being more responsive to consumers and take full advantage of our broad scale. We've completed the voluntary separation program and the costs associated with this are included in this quarter.

It's important to remember that these costs are part of our transition to a leaner more effective company. Our new Chief Marketing Officer, Debo Mukherjee is now on-board. His team is charged with accurately and effectively aligning our brands with today's consumer preferences.

With Debo and his team, we intend to better identify, prioritize and bring to market innovation that differentiates our brands. Looking to 2018, I'm excited about the pipeline coming together for new product innovation, and the incremental marketing spend we have prioritized to support that brand growth.

We're focusing on bringing products to market with clear points of difference and consumer appeal. I'm also pleased to report that our initiatives to improve execution in the marketplace are on track as well. The streamlined brand assortment I mentioned on the last call has now been introduced into the market.

With this rationalization effort, we significantly reduced the complexity of our supply chain by reducing the number of branded bread SKUs by 30% versus last year.

As we expected, sales in these segments have dipped slightly in these initial weeks, but we expect the bottom line to benefit due to better manufacturing efficiencies and improved execution in the marketplace. All told, we've accomplished a great deal and I'm proud of our team's good work this quarter, but there's still more to be done.

We are making substantial progress and momentum is building as we reorganize the company, reduce costs, and make investments to improve the underlying earnings potential of the business. There is no doubt that we are taking the right steps to position Flowers for continued growth and build shareholder value over the long term.

Now, I'll ask Steve, to review the financials..

Thank you, Allen, and good morning everyone. As Allen stated, operational performance in the third quarter was strong with top line growth and margin expansion. However, as we discussed at our Investor Briefing back in September, the quarter was impacted by several charges that affect overall comparability.

While significant, we believe these charges do allow us to lower our cost structure going forward and turn our focus to growing our highest potential brands, as we continue to execute on the initiatives outlined under Project Centennial.

I'll start by addressing the items affecting comparability during the quarter, then I will touch on key operating highlights, our cash flows, and finally the outlook for the remainder of fiscal 2017. We recognized approximately $100.5 million of restructuring and related impairment charges in the quarter.

Approximately $70 million of this amount were noncash trademark and asset impairments. The focus on SKU rationalization in our highest potential brands resulted in the trademark impairment of certain brands.

The remaining roughly $31 million of the restructuring charges were connected with the voluntary separation incentive program, the closure of the snack cake facility and to a lesser degree, other immaterial reorganizational cost. We expect to pay approximately 25%, the VSIP cost of fiscal 2017 and the remainder in fiscal 2018.

We continue to execute on our pension risk mitigation strategy related to our frozen defined benefit plan. As a result, we recognize the non-cash pension settlement loss of $3 million in the quarter.

Unrelated to this pension plan settlement loss, during the quarter certain employees voted to withdraw from the multi-employer pension plan and as a result we incurred net withdrawal cost of $18.3 million.

During the quarter, we also reached an agreement to settle one of our distributor lawsuits for $4.25 million and finally Project Centennial consulting cost in the quarter were at $7.1 million. Now turning to the third quarter operating results.

Total third quarter consolidated revenue increased 1.5%, adjusting for the mix manufacturing business we divested earlier in the year, sales increased 2.1% this quarter compared to the prior year quarter. The consolidated top line increase was driven primarily by growth in the DSD segment.

We estimate consumer purchases resulting from the hurricane increased sales relative to the prior year quarter by approximately $7 million, or 80 basis points of the increase, again primarily driven in the DSD segment.

DSD segment revenue was up 2.4% in the third quarter, driven by strong sales of Dave's Killer Bread partially offset by lower sales of branded buns and rolls. The impact of the hurricanes in the quarter is estimated to be approximately 90 basis points of this increase.

The Warehouse segment was up 50 basis points in the third quarter excluding the mix manufacturing business. The majority of this increase was driven by higher sales in our Warehouse store branded business and higher snack cakes sales in the vending channel.

Sales of organic breads under the Alpine brand continued to be a headwind during the third quarter. Consolidated adjusting operating margin was 8.5% of revenue compared to 7.7% in the third quarter last year. The 80 basis points increase was driven primarily again by the DSD segment.

Adjusted operating margin in our DSD segment was up 120 basis points as a percent of sales, driven primarily by sales increases due to improved price mix and lower production costs and administrative expenses.

Adjusted Warehouse operating margin was down 60 basis points as a percent of sales, impacted primarily by higher selling and administrative costs. Looking at our consolidated results, production cost as a percent of sales declined 90 basis points.

Improved manufacturing efficiencies and lower outside purchases of products drove the reduction in production cost as a percent of sales. Reflecting the net lower production costs and flat SD&A as a percent of sales, adjusted EBITDA margin increased 80 basis points to 12%.

GAAP earnings per share for the quarter was a loss of $0.16 due to the items affecting comparability I discussed earlier. Adjusted EPS in the quarter was $0.23 per share, or up $0.02 per share compared to the prior year quarter including approximately a $0.01 per share estimated benefit from the hurricanes.

Now turning to cash flow, operating cash flow during the quarter was $50.4 million, down $40.2 million from the prior year, primarily due to changes in hedge margin activity, income taxes receivable and higher Project Centennial consulting cost. Capital expenditures were $19.3 million in the quarter, as compared to $25.7 million a year ago.

We ended the quarter with $849 million in net debt. Our net debt to trailing 12-month adjusted EBITDA was 1.9 times. Our financial position is strong. And as of quarter end, we had approximately $670 million of available liquidity.

Looking out to the remainder of 2017, we continue to expect our sales to be in the range of flat to down 1% and our adjusted EPS to fall in the range of $0.85 to $0.90 per share. Our guidance does include approximately 50 basis point impact to sales from the divestiture of the mix manufacturing business.

As detailed in the press release, our adjusted EPS for the full year excludes a number of items affecting comparability with the total amount to net cost (14:52) of approximately $0.38 and $0.39 per share. We continue to target gross savings from Project Centennial in fiscal 2017 relative to fiscal 2016 of approximately $25 million to $30 million.

We'll provide full year fiscal 2018 guidance on our fourth quarter call in mid-February. However, as I outlined in the Investor Briefing for 2018 we are targeting gross savings from Project Centennial related to fiscal 2016 of $70 million to $80 million and we expect input cost inflation of $30 million to $40 million.

We are also planning for incremental brand investments which we expect to be recovered with incremental earnings from branded sales growth. Now, I'll pass the call back to Allen..

Thank you, Steve. Before closing, I want to take a moment to tell our team members how much their hard work and extra effort are appreciated by me, our senior leadership and the board.

It's not easy to navigate through the changes that are underway, but the Flowers team has stepped up to the challenge, while also managing to successfully take care of our customers and consumers every day. I'm not surprised by this, but I am proud of our team and I'm excited about the opportunities that are ahead of us.

Now, let's open up the line for your questions..

Thank you. We will now begin the question-and-answer session. Our first question is from Farha Aslam with Stephens..

Hi. Good morning..

Good morning, Farha..

A question on DKB.

Does that brand now have scale so that its margins are equal to the core portfolio, so as it grows, how should we think about Flowers margins going forward?.

Farha, this is Steve. So in the DKB brand, the margins have continued to improve since the acquisition and they are contributing nicely to the overall margin structure. And part of the success in DSD this quarter was the mix of higher sales of the organic business. So those margins have continually improved since we made the acquisition..

That's helpful. And then you've recently hired a new Chief Marketing Officer and a new CIO.

Any early reads on kind of programs you plan to implement given the new structure?.

We're excited to have Debo on board leading our marketing effort, and as I mentioned earlier, very excited about being able to generate significant marketing funds we can reinvest back into our business. Debo today is very busy, getting acclimated to the fresh bakery category, building a team and spending a lot of time with sales in the marketplace.

So we're excited to have Debo on board and also excited that Project Centennial is going to allow us to invest in our brands at levels that we have not done in the past..

And do you....

With regard to the CIO, there are a lot of projects related to, IT projects related to Project Centennial from an efficiency perspective. So his focus really is on driving projects with the highest returns. So we are excited about that..

And do you anticipate the savings and the marketing spend to be largely in line for 2018?.

Yeah. With regard to marketing spend, we have said that we would be increasing our marketing spend. Today we're typically below about 1% of revenue. We are targeting 1% to 2% for 2018 and again as I said, we anticipate the benefits from the new marketing efforts to offset a majority of that cost..

The next question is from Brett Hundley with The Vertical Group..

Hello, Brett..

Hey, good morning, guys..

Good morning..

Thanks for the questions. I'm just curious what you've been seeing in the days, weeks and months here post the hurricane activity that was a slight benefit for you in Q3.

Just curious if things have kind of normalized more quickly than anticipated or if they've – what's been happening with consumer take away there?.

Brett, I think first of all, again, our team did a great job of taking care of the marketplace and our retail customers acknowledge what a great job we did during the storms, looking after their bread departments. The overall category, as I said earlier, is still relatively soft and pretty much has returned to that trend post hurricane.

But, we are seeing nice growth in certain areas like organics and that is really the fuel behind Dave's Killer Bread. So, it's really a segment by segment situation in terms of the category that is growing and not growing..

Okay. And then, Steve, are you guys still expecting around $95 million to $105 million in CapEx for the year. It implies a big Q4 number. You guys have been running below year ago CapEx numbers all year and it looks like you'll catch up quickly in Q4 if you keep that full-year number.

I just wanted to delve into that further and maybe get a little added color on kind of the projects in Q4?.

Yeah. I think the anticipation now Brett is that we would come in on the lower end of that range, maybe slightly below. Again, I would say, there's no one individual project that makes up the total of that. There is one large project in IT around trade promotion spend and that is the largest part of the capital budget this year.

But from a manufacturing operating process, again it's pretty evenly spread across the company..

Okay. And then just lastly from me, I wanted to go back into the SKU rationalization efforts that you guys have talked about and you touched on it in your prepared remarks that you've seen a little bit of a sales decline related to that. But net-net you're happy with where the bottom line could potentially come in as you optimize there.

Allen, I'm just curious, are you seeing an appropriate level of fill-in, at least.

Again, I know, you mentioned a slight sales drop following that but do you feel like you're seeing the necessary fill-in that you'd like to see and do you remain hopeful that in quarters ahead that net-net on the sales line you can actually see a neutral impact to maybe slight positive going forward?.

That is certainly our plans to see not only neutral, but by reallocating space we should see sales growth as we allocate more space to faster turning items. From one retailer to the next, they make shelf space changes at different times of the year. So this will take some time to completely flow out.

But again the whole mission here is to eliminate slower moving items and convert that space to our primary brands and the faster turning items, which will be good for us as well as our retail partners..

Next, we have Akshay Jagdale with Jefferies..

Hi, good morning..

Good morning..

I wanted to make sure I'm understanding your guidance correctly.

It looks like you've lowered your tax rate guidance to 33%, which is a whole 200 basis points, is that correct? I mean the implications of that and the interest expense being lower now relative to last quarter's expectation, is that EBIT is much lower than what you had before? And it implies 4Q EBIT that's well below where consensus is? And I'm just wondering if there is something lost in translation there?.

Yeah, we have pulled the tax rate back some, but from an EBIT perspective, I don't believe that you will see a fall off in the fourth quarter. I mean, again our guidance takes into consideration all the impact of Project Centennial that we've (24:21) talked about.

We are on-track to hit our cost savings targets and that's all captured within the guidance. The tax rate could be impacted some by the items effect and comparability as well..

Okay. I'll follow up on that offline. But I mean, at a high level, if the tax expense is lower by $14 million and the interest expense is lower by $3 million relative to your guidance, as of last quarter, but your EPS hasn't changed, that means EBIT is lower by that much, right.

That's what I'm referring, but maybe it's just a math issue that we can follow up. But my second question is on the brand impairment.

So, really what I'm asking about is, it looks like you've concluded the sort of brand investment strategy if I may, and as part of that you've now segmented into national and regional brands and that's what triggered the impairment.

So can you just delve a little bit deeper into sort of what – can you give us some sense of which brands took the impairment and what are the national brands that you're going to be focusing on, any color there would be very useful? Thank you..

Yeah. I'll address the national brands that we're obviously focused on. We mentioned earlier the Wonder brand, certainly the lead brand in the white bread segment. Nature's Own will continue to be a priority brand for our company.

Tastykake, very excited about the growth opportunities that remain in the cake category, and then of course, Dave's Killer Bread in the organic segment. So, those really are our priority brands.

It's not to say that other brands are not important, but those are the brands that will be getting the marketing support and hopefully generating growth as we move forward. Steve, I'll let you address the brands that we have written down..

Sure. Akshay, when you look at the impairment, basically three brands drove the vast majority of that. Two of the brands were actually in the organic category, so obviously Alpine, the performance there has been a little bit sluggish. And if you recall when we made the acquisition of Lepage, they have a brand called Barowsky's.

And at that point back in 2012, we were looking at Barowsky's as also an organic brand to maybe not take nationally but to use on the East Coast. But the performance of Dave's Killer Bread now in the organic category, these brands still fit within our portfolio, but the outlook for these brands is not as strong individually.

Overall, as Allen said, we're very pleased with the organic performance in total as a category and will continue to use these brands appropriately to supplement that. And then finally, Home Pride is a white bread and with the push for Wonder as a national brand, it did impact the overall value and mission we had for Home Pride.

So those three brands are primarily where the write downs took place..

Perfect. I'll get back in queue. Thank you..

Thank you..

Our next question is from Bill Chappell with SunTrust..

Thanks. Good morning..

Yeah. Good morning, Bill..

Hey, Steve just to follow back up on your commentary on the commodity cost going into next year and the headwind.

I know you've said that before a month ago or month-and-a-half ago, but any update on pricing to offset that and how should we look at that impact over 2018 in terms of it, I know you do have hedges that kind of would roll-off and so is it more back-end weighted that we'd see that impact or how should I look at that too?.

Historically, Bill, in the category you've been able to take some pricing as commodity costs have increased. So we will be working to try to pass along what we can from that perspective. Again that will be based on consumer acceptance.

The impact for the year, when you look at where we are this year from a coverage (28:52) perspective, it won't necessarily be pro-rata throughout the year, but it will be fairly evenly spread..

Okay.

And then, Allen, back to Dave's Killer Bread, I mean, I appreciate the color you gave in your prepared remarks, but can you just kind of give us an idea of how big or what's the potential and when I say that, are there markets where it's a 5% share or a 7% share or is that potential nationwide, and trying to understand as it rolls out, certainly, it's the primary driver of growth right now and into next year, but if there's any way to kind of quantify what the potential might be?.

Yeah, Bill, I would – with my marketing hat on, if I give you a number, it would probably be very aggressive, but looking at the organic category, it continues to grow every day in all segments.

Our team at Dave's Killer Bread continue to develop new ideas from new products along with different ways to communicate with the consumer that has targeted these organic items. So the opportunity to continue the sales growth I think is there, but really to speculate on what the top end and what the potential really is, that's hard to do.

But I am excited that we're in the right segment of the category with Dave's Killer Bread and the brand is growing nicely and we're going to do everything that we know how to do to put additional support behind the brand for the long term, and we feel like that's a very good investment..

Just to follow up, I mean, is there, and you might not have it in front of you, a market where it has a peak share, does it have a 5%, 10% share in some markets on the West Coast?.

Yeah. The West Coast is the most developed market for Dave's Killer Bread, but even on the West Coast we're continuing to see continued growth. I mentioned earlier that in a lot of our expansion areas that we're seeing a much faster growth for Dave's Killer Bread.

But I don't want to just give you a potential share number, I'd rather get back to you on that. But it's a very significant development in the category, the growth of organics..

Next, we have Timothy Ramey with Pivotal Research Group..

Hi, thanks very much for the question. Trying to sort through the impact on sort of ongoing corporate and it's quite possible I got the adjustments wrong, but looked like you had a very nice improvement in corporate expense. If I did the numbers right, down to $6 million-ish to $6.3 million in the quarter, ex all the items.

Number one, did I get that right? Number two is that sort of an ongoing level of corporate expense?.

Yeah, I think the $6 million is a little low, Tim, and as we work through the reorganization and when we give guidance this February, we'll update the corporate changes. But as the structure moves to the two business unit structure, there will be some impact on corporate cost.

We're not ready to talk about that today, but we'll talk about that in February..

I guess just more broadly whether the number was right or wrong. I have to assume that with a lot of the moving parts that you had in the 3Q that there would be a favorable impact at that line, is it a meaningful number, is it $1 million, couple of million dollars a quarter, is it not just something you don't want to dial in just yet..

I mean, when you take out all the charges for the quarter, corporate calls were up a little over $1 million year-over-year..

Oh, still up. Okay. All right. I better circle back with J.T. and....

Okay..

...get my number tightened up there..

All right..

Sounds good. Thank you..

Thank you..

The next question is from Amit Sharma with BMO Capital Markets..

Hi. Good morning, everyone..

Yeah, good morning, Amit..

Steve, just a very quick clarification. A penny impact from hurricane on $7 million sales, is that just – we just assume very high incremental margins on it..

Yeah. Lot of that's driven by volume and the ability to run the plants efficiently as you're servicing the market..

Okay. So, okay, got it. And then, Allen, broadly speaking, so you talked about innovation, right. And a lot of focus and investment behind innovation as well next year.

If you look back and this is not DKB, it's just a new brand, but historically has innovation been enough for you to get positive price mix there, so you don't have to take as much list price increase to cover commodities or innovation is simply to hold on to the volumes that you may have in the category at that point?.

Yeah. Hi. We think about innovation really as a key component to our overall brand strategy and brand growth. Obviously, products that have attributes that consumers are looking for, those products demand a higher price. And Dave's Killer Bread is a good example of that.

But we will continue to evaluate our existing product lines and look for those attributes that consumers are looking for that we can add to our existing brands.

And, again, in terms of overall pricing in the category that will continue to be a market-by-market situation and our plans are to develop products and invest in marketing communication that positions our brands to those consumers with the right attributes that they're looking for. So I think it's really two separate issues..

Got it.

So historically innovation has allowed you to move up the price point on certain items in the traditional bread category, outside of DKB, right, is that what you're saying?.

I think our Nature's Own brand is a good example of that, it was introduced with no artificial preservatives, flavors or colors, extremely high quality and those attributes have helped us to grow that brand over many years..

The next question is from Brian Holland with Consumer Edge Research..

Thanks. Good morning, gentlemen.

A couple of quick housekeeping items if I could, can you just confirm the 33% tax rate that you spoke to, is that non-GAAP?.

No, that would be a GAAP rate..

Okay. Got it. I also want to probe on the range of outcomes here implied by you sort of holding your guidance after the Q3 beat, still pretty wide range of a nickel, given that you've one quarter left and you're about halfway in the quarter.

Can you maybe frame the range of outcomes there and why you prefer to stay where you are as opposed to maybe potentially tightening that range?.

Sure. This is Steve. When you look at the Q3 performance, very strong performance. As we said we're on track with our cost saving initiatives, feel very good about that and really know our cost structure for the remainder of the year obviously given where we are.

Allen mentioned, the SKU rationalization kicked in right at the end of the third quarter, beginning of the fourth quarter. We are seeing a little softness in the market from where we came out of the third quarter. So, really the range is driven, where you fall in the range is driven by top line.

And we feel like that the range we have out there accounts for obviously all the cost initiatives, but it does account for basically a 50 basis points decline from the SKU rationalization.

So we're just watching things to see where we are, but we feel good about the range where we sit today and I wouldn't want to speculate where we fall within the range at this point..

Okay. Fair enough. And then last housekeeping item just on the operating cash flow, so obviously that was down, you gave some of the color, the moving parts there.

How do investors get comfortable with the inflection here, and you spoke earlier about even though you're looking towards the lower end of that CapEx, I think it still implies a ramp up in Q4. How do we think about an inflection in sort of that cash flow number going back up.

I mean is that just commensurate with the timing of cost savings realization and maybe some of the upfront investments in Centennial rolling off, is it that simple.

Can you help us think about that?.

Sure, when you look at overall cash flow, I'd say looking at the year-to-date cash flow statement, I mean, it's still pretty strong on average for the company. I mean the big driver year-to-date 2017 versus 2016 again is the cash outlay for the Centennial projects.

So I think you're looking at it correctly, as those projects are funded and as we move into the new org structure and we begin to operate the business without all these added cash charges, then cash flow should return to normalcy and actually should begin to improve..

And this concludes today's question-and-answer session. I'd like to turn the call back to Allen Shiver for closing remarks..

Again, thank you very much for your time today. Our team is encouraged by the progress we're making and we're focused on delivering on the goals that we've set to achieve with our Project Centennial. Thank you for your time today and we'll look forward to visiting next quarter..

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect..