Rollins [ROL] Conference call transcript for 2022 q4
2023-02-16 11:54:04
Fiscal: 2022 q4
Operator: Greetings, and welcome to the Rollins Inc. Fourth Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Joe Calabrese. Thank you. You may begin.
Joe Calabrese: Thank you. By now, you should have all received a copy of the press release. However, if anyone is missing a copy, and would like to receive one, please contact our office at 212-827-3746, and we'll send you a release and make sure you're on the company's distribution list. There will be a replay of the call, which will begin one hour after the call and run for one week. The replay can be accessed by dialing 201-612-7415 with the passcode 13735127. Additionally, the call is being webcast at www.rollins.com and a replay will be available for 180 days. The company is also offering investors, a supporting slide presentation which can be found on Rollins' website at www.rollins.com. We will be following that slide presentation on our call this morning, and encourage you to view that with us. On the line with me today and speaking Jerry Gahlhoff Jr. President and Chief Executive Officer; John Wilson, Vice Chairman; Kenneth Krause, Executive Vice President, Chief Financial Officer and Treasurer; and Julie Bimmerman, Group Vice President Finance and Investor Relations. Management will make some opening remarks, and then we'll open the line for your questions. John, would you like to begin?
John Wilson: Yes. Thank you, Joe, and good morning. We appreciate all of you joining us for our fourth quarter 2022 earnings call. Julie will read our forward-looking statement disclaimer and then we'll begin.
Julie Bimmerman: Our earnings release discusses our business outlook and contain certain forward-looking statements. These particular forward-looking statements and all other statements that have been made on this call, excluding historical facts are subject to a number of risks and uncertainties and actual results may differ materially from any statement we make today. Please refer to yesterday's press release, and our SEC filings, including the Risk Factors section of our Form 10-K for the year ended December 31, 2021 for more information and the risk factors that could cause actual results to differ.
John Wilson: Thank you, Julie. I'm pleased to report that, Rollins closed out last year with continued strong revenue growth and solid financial performance. In the fourth quarter, we report revenue improved 10.2% to $661 million, and net income improvement of 26.1% to $84 million. For all of 2022, we achieved revenue growth of more than 11%, with net income improving as well. Jerry and Ken will provide greater detail, but all credit goes to our tremendous team, who continue to overcome many obstacles. As we begin 2023, the company remains well positioned to deliver on our long-term business objectives. Now, let me turn the call over to Jerry.
Jerry Gahlhoff: Thank you, John, and thank you all for joining our call today. Let me begin by saying that, we're extremely pleased with our fourth quarter and full year results, and I'm also equally proud of the hard-working men and women of our company that continue to drive our growth through great customer service. I'd like to provide my comments on our 2022 fourth quarter performance. Ken will then address the financials in more detail in a moment. Reflecting solid execution of our operating strategies, Rollins delivered another strong performance in the fourth quarter, highlighted by total revenue growth of over 10% in the fourth quarter, and over 11% for the full year. Operationally, we have strong momentum in our markets. The company remains well positioned to achieve our long-term objectives, and we're seeing solid levels of growth in the business. As many of you are aware, Rollins has a long-standing company-wide focus on personal safety. Complementing our existing guidelines and protocols we continue to implement new initiatives designed to empower our employees and enable an accountable, safety-driven culture. First training remains crucial for keeping our customers out of harm's way. Second, we're updating incentive metrics and our compensation programs to emphasize safety down to the branch level. A branch manager's bonus plan will now have stronger ties to safety metrics for their operation. We're also working on a new employee-level program to incentivize the highest levels of safe-driving behaviors. We began to pilot this program later this year â or we plan to pilot this program later this year for our 10000-plus drivers at Rollins. We believe these initiatives will help ensure our workforce returns home to their family, safely each and every day. Looking closer at the financial results and the growth we delivered. Organic growth came in at 6.9% compared with 7.8% for the full year. While still strong, we realized slower growth in the residential sector. While market data indicates this to be consistent across the industry, we started 2023 with strong residential revenue performance in January. While a month is not a long-term trend it was good to see solid demand to start the year. We also continue to succeed in our other service lines particularly within our termite and ancillary, which grew 15.4% year-over-year. Rollins remains very well-positioned to drive ancillary growth within this business. We've taken on the responsibility to educate homeowners on termite prevention and treatment along with other ancillary offerings. And from the customer perspective these service offerings are from a trusted partner. We remain focused on driving revenue growth from cross-selling activities across our large and growing customer base. Our team continues to do a tremendous job here. Our commercial line has also presented a strong year for us with 10.3% growth over the prior year. The sales teams continue to perform very well on both locally sold and national account sales efforts across all our commercial brands. We're seeing strong results in this area with solid performance with customers in the retail, restaurant and office building segments. Across all the service lines I just discussed, a key driver of growth is pricing. During 2022 in light of the ongoing inflationary challenges, we brought forward our annual price increase program to earlier in the year. In 2023, we are bringing this forward even earlier. Most of these price increases will be initiated beginning in early March and some were already implemented in January. Furthermore, our non-Orkin brands are ramping up their focus on pricing the value of our services. Additionally, all our brands are increasing their rate cards. We expect the inflationary environment to persist into 2023 and are focused on managing the price/cost equation. Acquisitions remain a major focus as we start 2023. During 2022 we successfully completed 31 acquisitions representing a total of $119 million invested. This compares with 39 acquisitions and $146 million invested in 2021. While we successfully completed four acquisitions during the fourth quarter we proactively remain on the sidelines during the last few months of 2022 and turned our attention to 2023 deals in our pipeline. We're very optimistic about what's in store for the New Year as leveraging strategic acquisitions remains a focus of our growth strategy. Next, we remain committed to investing in our business to drive efficiency. As part of this we continue to leverage technology by adding a number of new applications to our portfolio of brands. For example, building off our successes with routing and scheduling technology at Orkin and Western Pest Services, we're rolling out routing and scheduling technology initiatives at Clark and HomeTeam. Each of these brands are making meaningful progress at improving efficiency. Clark expects to be at full utilization by the end of this quarter and is very excited about the results to-date. Robert Baker Clark's President went so far as to comment that this initiative is proving to be the best thing for Clark in many years. HomeTeam should complete their implementation and be at full utilization by the end of the second quarter. Both brands have seen an improvement in their on-time delivery metrics since implementation started. In addition to enabling us to reach our customers in a more efficient and productive manner, we found these initiatives can meaningfully reduce both our overall mileage between service visits and drive time for the technician. Not only does this lower our fuel requirements it also has a direct impact on our labor costs. With that, I look forward to answering your questions in a few moments. However, before I turn the call over to Ken I want to emphasize that our team at Rollins had a successful year in 2022 and we are confident in our ability to continue driving growth and improving profitability in our business. I'll now turn the call over to Ken.
Kenneth Krause: Thank you, Jerry and good morning, everyone. We had a strong quarter and finish to the year. Let me start with a few highlights. First, revenue growth was healthy with total revenue growing approximately 10% in the quarter and 11% for the full year. Acquisitions drove 3% of revenue growth in the quarter and for the year. We continue to see tremendous opportunities that will enable us to continue to drive growth through acquisition in the quarters and years to come. Second, quarterly adjusted EBITDA margins were a healthy 22.1%, up approximately 180 basis points versus the same period a year ago. We saw strong results throughout the income statement. GAAP earnings per share were $0.17, up from $0.14 in the same period a year ago. It was good to see the strong growth in earnings on the healthy revenue growth. And last but not least, quarterly free cash flow was very healthy with operating cash flow growing over 20% versus the same period a year ago. We finished off another strong year with free cash flow growing over 16%. Let's look at the quarterly results in more detail. Quarterly revenue was $661 million, up just over 10% on a reported basis. Currencies reduced quarterly revenue growth by 70 basis points on the stronger dollar notably versus the Canadian dollar, the Australian dollar and the British pound. Quarterly revenues were strong and it was good to see healthy growth across all of our service lines. Turning to profitability. Gross profit was 50.5% of revenue in the quarter, up 10 basis points from the same quarter a year ago. We saw a good performance on gross profit as pricing more than offset inflationary pressures. Pricing remains at the top of our agenda and we are evaluating opportunities to implement further price increases in the first quarter of 2023. For the year, we saw elevated costs associated with casualty reserves up $12 million for the year with $10 million of that in the third quarter alone. We discussed these charges with you back in October and continue to focus on implementing a number of key programs that Jerry mentioned previously, that are aimed at improving in this area. Additionally, people costs, most notably medical costs, were up about $7 million for the year. We saw higher costs in this area throughout the year. This wasn't necessarily as impactful in the quarter but was something that gradually got worse throughout the year. SG&A expense in the quarter was $191 million or just under 29% of revenues, up $3 million from the prior year, but improving 230 basis points when stated as a percentage of revenue. It was good to see the improvements in SG&A as a percentage of revenue to finish the year. While lower advertising expense due to timing drove 120 basis points of the leverage, it was good to see cost control carried across a number of categories. Management of SG&A represents a key focus area of ours as we start 2023. At just under 30% of revenue, we feel there are opportunities to drive improvement. Stay tuned on this front but know we are focused on taking action that will help improve performance in this area in years to come. Looking closer at profitability. We did not have any non-GAAP adjustments to operating income or EBITDA this year. GAAP operating income was $120 million or 18.1% of revenue. Adjusted EBITDA margin was 22.1%, up a strong 180 basis points over the prior year adjusted EBITDA margin. As I indicated previously, we did not have any adjustments this year to EBITDA margin. If you recall, we adjusted the prior year quarterly EBITDA margin by the impact of the non-recurring SEC matter. As we discussed on the last call, I like to look at the business using incremental margins or meaning what percent of every additional dollar of revenue growth is converted to EBITDA. In the quarter, on an as-reported basis, we generated incremental adjusted EBITDA margins that we're approaching 40%. When you take out the lower advertising spend I mentioned previously, incremental adjusted EBITDA margins were approximately 30% for the quarter. And even with incurring the higher casualty charges in the second half, incremental adjusted EBITDA margins for the second half were approaching 30%. This is certainly good to see. Quarterly non-GAAP net income was $84 million or $0.17 in adjusted earnings per share, increasing from $0.15 per share in the same period a year ago. Turning to cash flow and the balance sheet. Quarterly free cash flow was very strong to finish the year. We generated $116 million of free cash flow on $84 million of earnings in the quarter. Free cash flow increased by over 20% in the quarter and was up a very healthy 16% for the entire year. Cash flow conversion, the percent of income that was turned into cash was well above 100% for the quarter and the full year. We made acquisitions totaling $9 million and we paid $64 million in dividends during the quarter. Debt remains negligible and debt-to-EBITDA is well below 1x on a gross level. We were in a net cash position to finish the year. Year-to-date we have made acquisitions totaling just over $119 million and paid dividends of approximately $212 million. Debt balances are down $100 million since the beginning of the year and cash is down $10 million finishing at $95 million at the end of 2022. We are actively evaluating options to refinance our credit facilities that are set to expire in April of 2024. We expect to make progress on this in the first quarter. Also during the quarter, we corrected immaterial misstatements in the financial statements. Our press release and our 10-K that we expect to file later today will include more information on these changes. But in summary these are non-cash-related items that reduced what we originally reported for earnings by an immaterial amount. By making this change historical earnings increased by $0.01 per share per year. Let me repeat we understated historical reported earnings by $0.01 per share per year. The immaterial changes are related to purchase accounting for acquisitions. The short of it is that the company allocated too much of the acquired asset value to amortizable intangible assets in the past and this adjustment corrects for this. In closing, our fourth quarter performance continues to demonstrate the strength of our business model. We remain focused on providing our customers with the best customer experience and driving growth through acquisition. Organic demand remains robust and we are very well positioned to continue to use our balance sheet to grow our business. The acquisition pipeline is very healthy and our strong cash flow and balance sheet positions us very well to invest in our business. We continue to focus on execution and driving long-term profitable growth for our shareholders. With that, I'll turn the call back over to Jerry for closing remarks. Jerry?
Jerry Gahlhoff: Thank you, Ken. We're happy to take any questions at this time.
Operator: Thank you. Our first question comes from the line of Tim Mulrooney with William Blair. Please proceed with your question.
Tim Mulrooney: Jerry, Ken, John, Julie good morning.
Jerry Gahlhoff: Good morning.
Kenneth Krause: Good morning.
Julie Bimmerman: Good morning.
John Wilson: Good morning.
Tim Mulrooney: Just a couple of quick ones for me. So your SG&A as a percentage of sales, it was below 29% in the fourth quarter and it's been coming down every year by a couple of call it 10, 20, 30 sometimes 40 basis points every year. But the fourth quarter below 29% that was below what most folks were anticipating and what we'd typically see from you guys. Are there deliberate cost savings programs happening here, or is it primarily just the leverage that you would expect to get on higher volumes and the savings from advertising expense? What I'm trying to get at is, there was a surprise here at the level of cost savings that you had and you had a nice EBITDA beat primarily because of it. Is it fair to expect to see continued leverage on your fixed costs like this as we move through 2023, or would you expect maybe them to come up a little bit as you layer investments back in the business? Thank you.
Kenneth Krause: Thanks for the question, Tim. This is Ken. I'll take this question. But I would agree with you. We had really good performance in the fourth quarter with respect to our cost control programs and SG&A. As I'd indicated in my prepared commentary, we had an advertising benefit of about $7 million. So that's about 120 basis points of the improvement. However, we certainly continue to look at a number of opportunities to continue to improve our cost structure going forward. We certainly did leverage it with the higher growth rates that we were able to deliver in the quarter, but we also are very actively evaluating and continue to contemplate cost changes and cost reduction measures across our business.
Jerry Gahlhoff : Yes, Tim, this is Jerry. Since Ken's been here it's one of the hot topics on his radar screen is our SG&A and how can we get better and how can we improve and Ken has challenged us and brought that equation to the table. And as you know we're always looking to get better. And so we're -- and Ken's finding some ways to help us do that.
Tim Mulrooney: Ken's cracking the whip?
Jerry Gahlhoff : Yes.
Tim Mulrooney: Okay. Thanks Jerry, and thanks Ken. One more just a question on pricing. I mean it sounds like you're pulling forward the pricing increases even earlier this year which was surprising. But how should we think about that level of pricing increase? I know it was higher than historical levels last year, which makes sense. But with the consumer outlook may be a little bit murkier as we turn the corner into 2023 I'm curious how you're thinking about the level of pricing this year. Do you expect it to be more in line with the historical average, or still above that historical average level? Thank you.
Jerry Gahlhoff : So, Tim this is Jerry. So on the -- really on the Orkin side, we are looking to very similar levels to what we did in prior year, where we've actually gotten more aggressive in our other brands than we were at prior year. So if anything on the whole the net result of that is what we expect is better performance out of pricing going forward in 2023.
Tim Mulrooney: Got it. Thank you.
Operator: Thank you. Our next question comes from the line of Ashish Sabadra with RBC Capital Markets. Please proceed with your question.
Ashish Sabadra: Thanks for taking my question. So my first question is on the residential side. You talked about some pretty good improvement in January. I was just wondering if you can talk about what's really driving it. Is it driven by better execution? Can you talk about how you're better using technology and other tools to improve the residential growth in 2023? Thanks.
Jerry Gahlhoff : We -- you got to keep in mind that as we wound down 2022 November, December, we reduced marketing -- some of our marketing spend or advertising spend in the back half of the year and so that softened the end of the fourth quarter of last year. And we began turning our advertising and marketing efforts back on in January. Across the board, I think, we had pretty good weather. We had a pretty good business environment. We had a lot less of the impact of COVID than we did the prior year in January. It was just an overall better environment not necessarily something about technology or anything along those lines. It was just an overall better environment that helped with demand. I don't know John you have anything to add to that?
John Wilson: Only maybe staffing. We were better staffed and a better staff position. Part of that's related to COVID.
Jerry Gahlhoff : Post-COVID, yes.
John Wilson: We were really racked with people out sick with COVID in January a year ago. And so this year we were better positioned to handle the opportunity that we had.
Ashish Sabadra: That's great. And then maybe just a broader question on organic growth. If we look at over the last three years organic growth has improved materially compared to the pre-pandemic level. And so as we look into 2023, but also with the mid-term not looking from a guidance perspective but just as we think about the organic growth trajectory, should we think about it more being in line with the recent history particularly the organic growth being more in line with the recent history? Thanks.
Jerry Gahlhoff : As you know, Ashish, we don't provide guidance. However, we do -- when we do look at our business I think we all know that this is a very attractive market with attractive growth opportunities. And if you look at the business over the long-term and eliminating some of the fluctuations and volatility that you saw during COVID and recovery from COVID, this market has the opportunity to continue to grow at that mid to high single digits. So we feel confident in our ability to continue to grow our business over the long term at that mid to high single-digit sort of growth rate all the while continuing to be very active on the acquisition front.
Kenneth Krause: We have no intention to take the foot off the gas and slow it down. So our goal is always to try to get better and maintain or beat those rates year-over-year. So that's our aim. We're going to keep going.
Ashish Sabadra: That's great. And congrats on a solid quarter. Thank you.
Jerry Gahlhoff: Thank you.
Operator: Our next question comes from the line of Stephanie Moore with Jefferies. Please proceed with your question.
Hans Hoffman: Hi. This is Hans on for Stephanie. Congrats on the strong quarter. Just wanted to dig in a bit more on the resi business in Q4. Obviously, realize a bit slower growth there and in your prepared remarks you kind of referenced it's kind of been consistent across the industry. I just wondered if you could talk about some of those trends in the industry more broadly? Thanks.
Jerry Gahlhoff: The main data point that we look at is we can get information from for example, search engines like Google, where they can report â they report to us the volume of category searches. So for example, the number of people searching for the category or words like pest control. And those were down â I think Julie, I think â I remember the number was in the 15% range is what we heard across the industry. The category search was down around the 15% mark. So that seems â it appears to be across the board. And those are data that we get from companies like Google.
Hans Hoffman: Got it. That's helpful. Thanks. And then just maybe I want to dig in a bit more on sort of cost inflation. Could you talk a bit about what you're seeing â where you're seeing cost inflation a bit more sticky in your business and then maybe where it's moderating a bit? And then just kind of your ability to price in excess of cost inflation given some of the pull forward in pricing for 2023?
Kenneth Krause: Yes certainly. When we look at the business, there's two or three broad buckets of costs. There's people, there's materials and then there's fleet. And when we look at the business, we started to see gradual improvement in fleet as we move throughout the year. The pressures that we felt earlier in the year when oil was much higher than where it is currently, started to abate as we went throughout the year. The one point that was good to see for us as we finished the year was actually improvements in materials and supplies. And so the second category of costs that I spoke about materials and supplies was certainly â it was helpful to see some improvement as a percentage of sales to close the year out in that area. And last but certainly not least, our people costs, we continue to manage that very closely. It's a challenging market. Our focus is on hiring the best and the brightest, retaining and providing the tools that will continue to drive that high level of engagement across our workforce that in turn results in that high level of customer service that we're known for. And so we're continuing to manage the inflationary pressures. And that's part of the reason why Jerry spoke about our intent and desire to pull forward the pricing. We're trying to stay ahead of the inflationary cycle that we're all feeling and trying to pass along that price and price our â the value of the services that we're providing to our customers.
Jerry Gahlhoff: And Ken, while the fleet is â we're seeing some improvement largely driven by fuel. Where we haven't seen any relief is in repairs and maintenance. The cost of replacing just a single tire remains sky high. Basic service on a vehicle is â continues to climb. And we've just got no relief there. That's one element within fleet. But as Ken said, on the M&S side, we've got those margins back in line. Our teams have fought to help us do that in the procurement side. Those have seemed to have come back to normalized levels. So that's good news for us.
Hans Hoffman: Very helpful. Thank you.
Operator: Thank you. Our next question comes from the line of Oliver Davies with Redburn. Please proceed with your question.
Oliver Davies: Hi, guys. Thanks for taking the question. Just firstly, just what are you seeing in terms of the international markets that you operate in? And is growth kind of higher or lower out in those markets than it is in the US?
Kenneth Krause: Those markets continue to be very attractive for us. We continue to grow our business. And in fact last year we made significant acquisitions in the UK market. We build out our platform of businesses and services that we're providing in the UK because we view that as a very attractive market. We'll continue to deploy capital internationally, but I have to remind you also that the US is our largest market it's our fastest growing market and it's highly fragmented. So it provides us tremendous amount of growth opportunities as we go forward. So we're pretty bullish, we're pretty optimistic and we feel like we've got a great growth plan that spans the globe.
Oliver Davies: Okay. Thanks. And then I guess on the termite side, I'm assuming a decent amount of that grows from ancillary sales. So what are you seeing on just the termite business?
Kenneth Krause: We don't break out the termite business from the ancillary, so it's hard to report that. But what I would say is we continue to see demand for the termite business. A lot of people look at the non-residential -- or the residential housing market and get concerned about a slowdown in new housing starts and such. And while we are managing through the challenges associated with higher interest rates, we're seeing good growth come through that business.
Jerry Gahlhoff: And we have great performance driving the sales of our termite baiting programs to customers as well. We very good take rates on that. It's got very high customer retention and we try to make sure we bundle that with all our service offerings.
Oliver Davies: Thanks so much.
Kenneth Krause: Thank you.
Operator: Thank you. Our next question comes from the line of Brian Butler with Stifel. Please proceed with your question.
Brian Butler: Good morning. Can you hear me?
Jerry Gahlhoff: Yeah, we can.
Brian Butler: Great. Thanks for taking the questions. First one just on the organic growth. Can you provide maybe some color on how much maybe was cross-selling versus price and how that opportunity for cross-selling looks going into 2023?
Kenneth Krause: It's hard to parse it down into that level of detail. But what I can tell you is when we look at the overall growth rate of roughly 10 or so percent, you back off just over 3% of that for acquisitions so you arrive at about 7% or so of total growth. As Jerry indicated, last year we pulled the price increase forward a bit. So we actually saw a little bit more of pricing not only from pulling it forward, but because we were passing along a higher pricing -- price inflation to our customers. And so if you -- if -- we had talked previously about passing along roughly a 4% price increase, we probably realized something in the 2% to 3%. So you could see that our underlying real growth rate is in that 4% to 5% is what we estimate. And it's just an estimation, but that's what we're estimating that our underlying growth rate is without price.
Jerry Gahlhoff: And in terms of the opportunity to continue to drive cross-sell through the business at this point the upside looks endless. We have plenty of customers, but we still haven't touched to add our mosquito programs too as well as any of our -- any host of our ancillary service offerings. So when we look at the percentage of our customers with multiple services with two or more services, three or more services that percentage is still low enough that we have a long runway to continue to sell through.
John Wilson: And Jerry if I may add as it relates to cross-selling, a critical aspect of that is being well-staffed in both your sales management arena and your sales team. And currently we are well-staffed. That's why we believe that cross-selling will continue to increase. Without the staff you can't -- you're having to offer those services proactively. And so without a staff out there to do it, it just doesn't happen.
Jerry Gahlhoff: That's a good point, John. And we do continue to ramp up our sales staffing, even in our 2023 plans are to continue to ramp up our sales team volume to be able to handle, and be out there talking to our existing customers about adding services to their programs.
Brian Butler: Okay. Great. That's helpful. And then when you think about that pricing kind of pulling it forward again in 2023, how much â I mean, I think you stated it was fully offsetting inflation? So does that continue to drive those incremental margins of 30% through 2023, or is it even better than that?
Kenneth Krause: We're hopeful that â I mean, we've got a number of levers that we're pulling to continue to maintain our margin profile. Pricing is only one of them. And so we are optimistic about our ability to continue to drive margins. We're not committing to necessarily a specific margin target, but we do see an opportunity to continue to improve our margin profile over the long term.
Brian Butler: Okay. And if I could slip maybe one last one. On the M&A kind of rollover into 2023, any color on what's already embedded in there from deals that you closed in 2022?
Kenneth Krause: The only thing, I would say, there is 2022, as you know is a little bit of a light year for us with respect to acquisitions. If you go back to 2020 and 2021, we spent almost $150 million each of those years on acquisitions. This past year, we spent â just about $120 million. So you could see that the rollover may not be at or above 3% like, it has been the last couple of years, it might be slightly lower than that. But what I â what we've reiterated in our prepared comments is we are incredibly active with respect to acquisitions. And so we continue to go after and court opportunities across the country across the world. And so we continue to be very active on this front. Stay tuned on this front, because it's an area that Jerry and I are spending a lot of our time.
Brian Butler: Great. Thank you very much for taking the questions.
Kenneth Krause: Thank you.
Operator: Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to management for final comments.
Julie Bimmerman: Thank you, everyone for joining us today, and we appreciate your interest in our company. We will be filing our 10-K with the SEC later today after the close of the market, and we look forward to updating you in April on our first quarter earnings call. Thanks again.
Operator: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
