Arko Corp.ARKONASDAQ
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Operator: Greetings, and welcome to the Arko Corp. Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Ashleigh McDermott, Vice President, Financial Reporting. Please go ahead.
Ashleigh McDermott: Thank you. Good afternoon, and welcome to Arko's Third Quarter 2025 Earnings Conference Call and Webcast. On today's call are Arie Kotler, Chairman, President and Chief Executive Officer; and Jordan Mann, Interim Chief Financial Officer and Senior Vice President of Corporate Strategy, Capital Markets and Investor Relations. Our earnings press release and quarterly report on Form 10-Q for the third quarter of 2025 as filed with the SEC are available on Arko's website at www.arkocorp.com. During our call today, unless otherwise stated, management will compare results to the same period in 2024. Before we begin, please note that all third quarter 2025 financial information is unaudited. During this call, management may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please review the forward-looking and cautionary statements section at the end of our third quarter 2025 earnings release for various factors that could cause actual results to differ materially from forward-looking statements made during our call today. Any forward-looking statements made during this call reflect our current views with respect to future events, and Arko is under no obligation to update or revise forward-looking statements made on this call, whether as a result of new information, future events or otherwise, except as required by law. On this call, management will share operating results on both a GAAP and a non-GAAP basis. Descriptions of those non-GAAP financial measures that we use, such as adjusted EBITDA and reconciliations of these measures to our results as reported in accordance with GAAP are detailed in our earnings release or in our quarterly report on Form 10-Q for the quarter ended September 30, 2025. Additionally, management will share profit measures for our individual business segments along with fuel contribution, which is calculated as fuel revenue less fuel costs and exclude intercompany charges by our subsidiary, GPMP. And now I would like to turn the call over to Arie.
Arie Kotler: Thank you, Ashleigh, and thank you all for joining. Our team delivered a strong quarter of execution, staying disciplined and focusing on what we can control. Stepping back, we're operating in an environment where consumers are still feeling stress as reflected in consumer sentiment data throughout this year. This has resulted in more deliberate shopping behavior, greater price sensitivity and increased reliance on loyalty-driven offers. These dynamics are consistent with what we're hearing across the industry, and they're shaping how we approach promotions and value across our business. It's important to recognize that consumer behavior is not uniform across our footprint. We're seeing healthier trends in the Northeast, Southeast and Mid-Atlantic, while in the Midwest and other select markets remain under pressure, reflecting broader regional differences in household budgets and fuel demand. Industry feedback suggests these patterns are consistent across the channel, particularly in rural markets where store traffic remains under pressure. Despite these headwinds, we are executing on our controllable to ensure our long-term opportunities remain intact. Our same-store sales, excluding cigarettes for the quarter, was nearly flat, representing the best comp performance we've seen in the last 18 months. We continue to believe Arko's transformation plan will make our business stronger, more efficient and better aligned with consumer trends. Now, I will provide an update on the core elements of our transformation plan, beginning with dealerization. Dealerization continued to be one of the most meaningful drivers of our plan. Since the middle of 2024, we've converted approximately 350 stores as of September 30, 2025, with an aggregate of approximately 185 additional sites committed for future conversion, which are currently under a letter of intent or contract or have been converted since the end of the quarter. The early performance from locations that transitioned 6 or more months ago continues to meet our expectations and validates the benefits of this approach, both in reduced overhead and improved operating efficiency. Beyond these initial stores dealerized or under letter of intent or contract, we see an additional opportunity to round out our dealerization strategy in 2026 with a meaningful number of conversions to come. As we have stated before, once fully scaled, we expect this program to deliver a cumulative annualized operating income benefit of more than $20 million before G&A. As our dealerization efforts continue, we have identified more than $10 million in expected annual structural G&A savings with the opportunity for additional upside. As we continue to execute the dealerization program, we expect the benefits will increase and be fully reflected in our financial performance and free cash flow generation moving forward, particularly given the savings from maintenance CapEx. Dealerization remain central to how we plan to drive more consistent returns and long-term value creation for shareholders. Our Fueling America's Future campaign and fas REWARDS loyalty platform continue to play a central role in deepening customer relationships and driving engagement in our retail stores. These programs not only help us stay relevant with consumers who are seeking more value in every trip they drive incrementally and provide a valuable lever, which we believe can improve same-store sales performance over time. Average daily loyalty enrollment for our fas REWARDS program grew 37% in the quarter and 43% from the beginning of the promotion compared to the average daily loyalty enrollment prior to the campaign. During the quarter, we saw continued fas REWARDS members growth, adding nearly 35,000 new enrollees to reach approximately 2.4 million total enrolled members at quarter end. Our enrolled customers spend approximately $110 per month or 53% more compared to nonmembers and pump-to-store conversion is at 55% of visit year-to-date for enrolled members. This engagement metrics reinforce the value of the program and highlight the behavior differences that make fas REWARDS a key contributor to in-store performance. As consumers remain increasingly value conscious, our loyalty program meets their demand for everyday savings and convenience while reinforcing Arko's relevance at the pump and in-store. Fueling America's Future remain an ongoing part of our value strategy into 2026. While we've seen continued growth in loyalty engagement, we also recognize that total program penetration is still developing, creating a runway for future growth. To build on this momentum, we plan to launch a new version of our app by the end of first quarter of 2026. This platform will introduce enhanced technology and new benefits, including improved reporting, personalization, gamification and geofencing capabilities, just to name a few, that we expect will deepen customer engagement and drive incremental traffic. Our investments in other tobacco products and refreshed back bar layout also continue to drive positive results. Our OTP basket grew by approximately 16% compared to the same quarter last year. OTP same-store sales were up 6.6% as compared to the same quarter of last year, along with a margin rate increase of more than 300 basis points. Our redesigned back bars deliver better product visibility and more modern presentation and stronger promotions. This initiative is a key highlight in our merchandising strategy. It's driving incremental traffic, higher margins and improved category mix while allowing us to compete more effectively in a value-conscious environment. During the quarter, we made steady progress on our store remodel program. Our first remodel location reopened earlier this year. One additional location opened in early August 2025 and a third location is planned for the fourth quarter of 2025 with several more that are moving through permitting and construction phases and are planned to open in the first half of 2026. While only 2 of our new format stores are complete and operating, we are pleased with the results thus far. The growth we are experiencing by category in these stores has been as planned and has continued to improve. These new format stores are built around a food-forward model that emphasize old, grab-and-go breakfast, lunch and snacking, bakery, pizza and an expanded dispensed hot, cold and frozen beverages assortment, all supported by improved layout and a better overall customer experience. Turning to our new-to-industry stores. We continue to expand our presence through select and targeted opportunities. We opened a Dunkin' store and 2 new-to-industry stores so far this year and have begun working on 3 more NTI stores, of which 2 are targeted to open in the fourth quarter of 2025. Our latest NTI location in Kingston, North Carolina exceeded our plan for the quarter with food and beverage contributing 23% of merchandise sales, which is multiples higher than the food and beverage contribution of our same-store network. These investments are focused on high-traffic, high-visibility sites where we can introduce the full Arko offering from fresh food to fuel and loyalty-driven promotions supported by a modern, scalable design. Turning to fuel performance. Our results reflected broader industry demand trends this quarter. Our disciplined pricing strategy and network optimization drove strong per gallon margin performance, allowing us to deliver solid fuel contribution even as gallons modestly declined. The quarter ended with same-store gallons trend better than Q2, with September performance improving from August. Our approach remains consistent, prioritize profitability over volume and leverage our scale to capture opportunity when market conditions allow. As the dealerization rollout continues, we're also seeing the benefits of our more diversified and stable fuel contribution base across our retail, wholesale and fleet fueling channels. Our wholesale and fleet fueling businesses remain strong contributors and key growth engines for Arko. Dealerization-driven site conversion has expanded our wholesale footprint, driving mid- to high single-digit growth in wholesale fuel contribution. The fuel distribution industry is highly fragmented, providing ample opportunity for acquisition given our size and scale. In fleet fueling, disciplined customer management and pricing supported stable margins and consistent volumes even amid softer industry fuel demand. Looking ahead, we're advancing a number of new cardlock locations for 2026, reflecting the attractive recurring cash flow profile of this business and its growing role in Arko's long-term strategy. We continue to see compelling value in our common stock and repurchased approximately 935,000 shares in the third quarter. We have the flexibility to continue investing in our highest return opportunities, dealerization, remodels and strategic growth in wholesale and fleet fueling while maintaining a balanced approach to shareholder returns. Our priorities are clear; strengthening the balance sheet, execute on our transformation plan and drive sustainable long-term value creation. I will now turn the call over to Jordan to review financial results for the third quarter and discuss our outlook for the fourth quarter and full year 2025.
Jordan Mann: Thank you, Arie. Good afternoon, everyone. Before I begin, I'd like to note that this is my first earnings call as Interim CFO. I'm grateful for the opportunity to step into this role and continue working closely with Arie and our leadership team. Now turning to third quarter 2025 results. Adjusted EBITDA was $75.2 million for the quarter, slightly above the midpoint of our guidance. This compares to $78.8 million in the year ago period, with the decrease caused primarily by softer retail performance. At the segment level, our retail segment contributed operating income of approximately $77.5 million compared to $85.1 million in the year ago period. Same-store merchandise sales, excluding cigarettes, were down 0.9% versus the year ago period, while total same-store merchandise sales were down 2.2%. Both showed sequential improvement from the second quarter. Same-store merchandise margin rate was up approximately 60 basis points versus the prior year. Same-store fuel contribution was down approximately $1.3 million for the quarter with a 4.7% decline in gallons, partially offset by an increase of $0.015 per gallon of fuel margin. Same-store fuel margin was $0.438 per gallon for the quarter. Same-store operating expenses were up approximately 1.8% for the quarter. Turning to our wholesale segment. Operating income was $24.1 million for the quarter versus $20.3 million in the year ago period. Fuel margin was $0.096 per gallon, in line with the year ago period. Gallons were up approximately 7.5% to the year ago period, driven by approximately 24.5 million incremental gallons from retail sites converted to dealers since the middle of 2024. Excluding channel optimization, gallons were down approximately 2.7% at comparable wholesale sites. We continue to be pleased with the impact of our channel optimization program, which has driven approximately $6.5 million in incremental operating income before G&A for the first 9 months of 2025. For our fleet fueling segment, operating income was $12.2 million for the quarter versus $12.6 million for the year ago period, with total gallons down 1.6% as compared to the prior year period. Fuel margin for the quarter was $0.458 per gallon, up from $0.435 per gallon in the prior year period. Total company general and administrative expenses for the quarter was $40 million versus $38.6 million for the year ago period. The year-over-year increase in G&A was driven by a $1.7 million increase in share-based compensation expense. As we continue the dealerization of our company-operated stores, we expect to see the favorable impact on our G&A moving forward. Net interest and other financial expenses for the quarter were $20.1 million compared to $23.6 million in the year ago period, with the decrease primarily related to lower average interest rates in the third quarter of 2025 and a decrease in fair value adjustments primarily related to our warrants. Net income for the quarter was $13.5 million compared to net income of $9.7 million for the year ago period. Please reference our press release for a detailed reconciliation of net income to adjusted EBITDA. Turning to the balance sheet. Excluding lease-related financing liabilities, we ended the third quarter with $911.6 million in long-term debt. We maintained substantial liquidity of approximately $890 million, including approximately $307 million in cash on hand at quarter end, along with remaining availability on our lines of credit. Total capital expenditures for the quarter were $24.9 million. Looking at our guidance. For our fourth quarter, we expect adjusted EBITDA to be in the range of $50 million to $60 million. This guidance is based on the following key segment assumptions. First, for our retail segment. We expect our Q4 2025 average retail store count to be approximately 1,150 sites. On a per store average basis, we expect merchandise sales to be up low to mid-single digits, reflecting the higher productivity of our retained stores versus the year ago period, partially offset by same-store merchandise sales performance, which is positioned down low to mid-single digits. Again, on a per store average basis, we expect gallons to be up mid-single digits, reflecting the higher productivity of retained stores versus the year ago period, partially offset by same-store gallon performance, which is positioned down mid-single digits. We are modeling total retail fuel margin in the range of $0.425 to $0.445 per gallon. For our wholesale segment, we expect mid-teens operating income growth driven by our ongoing channel optimization work. For our fleet fueling segment, we expect operating income growth to be down mid- to high single digits, driven by gallons roughly in line with the prior year on a lower cents per gallon compared to the elevated environment last year. Turning to the full year. We are updating our adjusted EBITDA guidance to a range of $233 million to $243 million. This updated range reflects our performance year-to-date. With that, I'll hand it back to Arie for closing remarks. Arie?
Arie Kotler: Thanks, Jordan. I'm proud of the way our team continues to execute through a challenging environment. We've maintained discipline, manage our controllable and stay focused on the long-term transformation of our business. As we look ahead, our priorities are clear; complete our dealerization program, continue driving loyalty-led engagement and execute the next phase of our growth strategy. We're entering the final quarter of the year with focus, momentum and confidence in the action we're taking to position Arko for 2026 and beyond. Operator, please open the line for questions.
Operator: [Operator Instructions] Our first question is from Bobby Griffin with Raymond James.
Robert Griffin: Jordan, congrats on the appointment. I guess, first, I wanted to talk a little bit about the store remodels. You gave out an interesting stat there about, I believe, the merchandise side of things and the foodservice popping up as a percentage of sales. What is the opportunity or what's the pathway to kind of accelerate this? When you look at 7 stores in your store base, it's pretty tiny. So how can we accelerate this? And kind of what's the time frame along that given that you're seeing some good results from the early pilots?
Arie Kotler: Sure. Well, we started with 7 stores. And as I mentioned earlier, we are already working at the moment increasing the amount of stores in the region that we're working on the 7 stores at the moment. We are seeing encouraging results, no question about it. We mentioned the foodservice. So the NTI that we opened in Kingston out of the gate just exceeded the 20% food and beverage mix target. That was our target as long as those stores perform for the first 12 months, but for some reason, this store really, really exceeded the performance. Because of that, we are working on additional stores that will come along immediately as we complete the first 7 stores. We're already working on [ benefinding ] those stores. And I'm assuming that, that's going to be probably another 20, 25 stores that will come on board immediately after the 7. But the name of the game, of course, is going to be food service, food service, food service and core categories. This is really what we are going to concentrate going into 2026.
Robert Griffin: Okay. And I want to maybe switch gears and hit on the dealerization aspect a little bit. I believe you disclosed 185 more under letters of intent and then you think there's an opportunity to continue some of this work in '26. I mean without putting a number out there of how many potential stores, I'm just curious, when you look at the book of retail stores that are not up for dealerization that you will keep when you're ultimately done with this work, what is the difference in those stores performance on a comp basis? Because investors do have concerns here about the same-store sales of the retail network. And I know there's a lot of things moving around. So if you could share anything on gallons or merchandise or even CPG of what the potential portfolio looks like versus kind of what the results we're seeing now, that would be helpful.
Arie Kotler: Yes, I cannot comment, Bobby, in particular on the stores. But what I can say is that we are targeting on stores that we actually can have economy of scale. In the script, I mentioned earlier that there are some differences between region in the country. There are like the -- if you're looking at a different region in the country, we feel that the Northeast, Southeast and Mid-Atlantic states, those are the areas that we have a lot of economy of scale. The market is being -- from the economy standpoint, from the volatility in the market, we feel that there is a lot of opportunity for us. I mean, that's the reason we started the 7 stores pilot in the Mid-Atlantic states in Virginia. And we believe that those are the stores that we're going to continue to grow in this part of the country. We're just seeing better results from a same-store sales, from gallons, from margin, core categories. I mean, we just see great results in those part of the countries, and those are the areas that we would like to invest more and get more out of them. I think the most important thing about dealerization is there's a few things that I would like to maybe reiterate on this call. We took a meaningful amount of stores. We're converting them to basically to dealer. We are increasing this segment. We have the wholesale segment and the fleet segment, but we're increasing the wholesale segment. And not only that we see also increase in EBITDA in those basically moving from retail to wholesale, the conversion to cash flow is also much higher. I just want to remind you that we spend on a store about $20,000, $25,000 for -- basically for maintenance CapEx. That's what we usually spend in roughly per year. So if you think about it, we're talking about 550 stores that we are converting from -- basically from retail to dealer, not only that we're talking about a $20 million or so in EBITDA uplift, we're also talking about spending less money on maintenance CapEx. The number I just quoted right now is probably between $15 million to $20 million just on CapEx that all of a sudden, we're not going to spend over here. And like I said, the conversion -- when you move those stores from retail to wholesale, the conversion to free cash flow is much, much higher. And I think that's something that we need to point on this call because cash flow is very important for us as we move along.
Robert Griffin: Yes. That makes sense. And I guess just lastly for me, Arie, in your prepared remarks, you called out the fleet card segment as an area for some new location growth in '26. Just curious if you can unpack that opportunity a little bit more. Where do you see -- like how big of white space do you see there? Is that all organic? Or is there opportunities for tuck-in M&A there again? Just curious kind of what that opportunity could look like over the next couple of years.
Arie Kotler: I'm talking about building additional sites. As you know, this -- the fleet segment, it's very, very fragmented. There is not a lot of companies like us that are operating in this arena. I think we are one of the largest one in the country. We have today 280 sites. We see a lot of opportunities in the market that we operate and outside the markets we operate. Just for your benefit, to build a cardlock, it's anywhere between $1 million to $2 million. That's the cost to build a cardlock, versus when you build a new-to-industry store, you're talking about $6 million to $8 million. The cardlock it's much, I'll call it, less expensive on one end. On the other end, it's also from an operating standpoint, I mean, it's unmanned. It's unmanned. And as you can see, we operate those -- we operate the 280 cardlocks. We enter into this in 2022. We generate a lot of cash, a lot of free cash flow from those assets. And we just see that this is another great opportunity for us to increase the amount of cardlocks that we operate. We already identified 5 going into 2026, we identified 5 and the idea is to build more into 2026. I mean, as I said, currently, we found 5 that we are actually tackling at the moment. And the same thing goes, by the way, to the wholesale segment. As you can see right now, we're spending a lot of time moving stores and figuring the best way to position our company. And wholesale continue to be also a great opportunity for us.
Operator: Our next question is from Benjamin Wood with BMO Capital Markets.
Benjamin Wood: This is Ben on behalf of Kelly Bania and BMO, and congrats, Jordan, as well. I wanted to start with the improvement on some of the organic metrics you saw sequentially. Wondering if you can help frame how much of that improvement was better store trends versus benefiting from having maybe a better performing or more efficient store base as a result of the dealerization.
Arie Kotler: Sure. I will start with some remarks, and then I will let maybe Jordan jump in if you have anything else to add. So I think the performance that you see not only that I mentioned that this quarter was probably one of our best quarter for the past 18 months from a trend standpoint. But it's not only that the sales ex cigarettes were almost flat compared to prior year. I think it's really all about the things that we did in 2025. We started with OTP. You saw what happened to OTP. OTP was basically up 6.6%, margin improvement of 300 basis points. In addition to that, we basically outperformed in many categories like candy, pack bev, for example. And those categories are the categories that are really driving the margin up. So it's not only that the performance is better, it's also that the mix that we are having over there, it's a better mix. The mix drives the margin up. And like I said, I think we started with OTP at the beginning with the back bar, then we went to Fueling America. I think the loyalty platform that we have with the Fueling America campaign that we have, we are selling right now items that actually have a high margin. And on the top of it, of course, I mentioned OTP, but OTP also drives traffic. So I think between the back bar investment and the Fueling America investment, along with loyalty, that's what really would drive the result. And I think right now, you see -- you start to see more and more and more quarter after quarter, you start to see that the results are just improving. And like I said, you see it in margin. I mean we increased margin again this quarter. And quarter after quarter, we continue to increase margin. And I think this is -- that's all because of those promotions that we are having out there.
Jordan Mann: Yes. Ben, the only thing I would add is if you look at the prepared remarks and the guide from last quarter, we talked about same-store -- underlying same-store sales and same-store gallon trends. And on an average per store basis, we were roughly in line with what we guided, which means to me, the productivity of those stores was in line with what we expected, if not a little bit better. So you are seeing the benefit from higher productive stores in that base of stores that we've retained.
Benjamin Wood: Great. That's helpful. And just as a quick follow-up on that, are you able to give any details on kind of the monthly cadence and how things are looking quarter-to-date? I know we started July off pretty strong, I believe we talked about, but how did the rest of the quarter end up as far as cadence?
Arie Kotler: Well, I think July was very, very strong. I think August declined a little bit, and I think September start to come up. So it's really -- like I said, I think overall, the quarter was a good quarter. Unfortunately, August was a little bit lighter than July. But as I said, September started to come back a little bit better. And that's how we end up the -- like I said, that's how we end up the quarter with very, very close to flat on sales, excluding cigarettes. At the same time, you probably saw we also were able to get a higher CPG over here during this quarter. I mean our CPG is $0.023 better than prior year.
Benjamin Wood: That's great. And then, Arie, you gave a lot of color on the work you're doing to drive the gross margin expansion, and it continues to come in above at least our expectations. I just want to -- how should we think about where the upper limit is of your gross margins? And it sounds like it's all benefiting from promotions, but are you still as competitive on your pricing across the store? Just the sustainability of margins, please?
Arie Kotler: Yes. We continue to be competitive. I think the margin increase is really from the heavy promotions that we're doing with our vendors. And I can tell you that we started Fueling America with X amount of vendors. And as we start to show results and as we start to show those vendors how they can actually grab market share, more and more and more and more suppliers have decided to basically to join the program. I can tell you that going into 2026, Fueling America is going to actually to continue to be one of our top promotions. And I think that's what you see over here. It's really all of those promotions are supported 100% by our vendors. I mean they see the results, and that's why they are participating. So I think the -- we believe that this is sustainable, the improvement that you see over here. There is a lot of work put into it. I want to be very clear. This is something that our category managers and our team is working really, really hard to put those programs together. And like I said, we expanded merchandise margin in multiple consecutive quarters, and I believe this is sustainable, and we're going to just continue to improve it as we move along with those promotions.
Operator: Our next question is from Daniel Guglielmo with Capital One Securities.
Daniel Guglielmo: Just following up on the various capital spend projects, so remodeling stores, new NTI retail and new NTI cardlock. Is there one of those project types that you think offers the best returns right now? And how do you think about CapEx allocations for each into '26 and '27?
Arie Kotler: Daniel, we started with those 7 stores. And we spend -- we said on average, we spend around $1 million, $1 million, $1.1 million on those stores. We throw a lot of things into those stores to make sure that we concentrate on food service. As we move along into 2026 and as we add more stores, the idea is really to scale it moving forward so to adjust cost and scale the price, scale the cost moving forward. In addition to that, of course, our focus remains on maintaining flexibility to deploy capital towards high-return opportunities. So the 7 stores, it's not significant. But as we move along over here, we're measuring return on investment on each and every capital project. And the ones that we feel will actually provide us the best return, those are the ones that we are going to utilize. That's one of the reasons I mentioned earlier, converting over 500 stores eliminate approximately $15 million, $18 million, $20 million in maintenance CapEx. And when you have this free cash available, that can help us to invest in some of the other projects to increase our return.
Daniel Guglielmo: Great. I appreciate that. And it actually segues into my next question. So I know that the majority of the dealers that take over the converted retail stores are mom-and-pops. In this difficult consumer environment, has their appetite for taking on conversions changed at all? And then maybe you can just remind us why these dealers can take on the lower-margin properties and still make the economics work for their businesses.
Arie Kotler: I don't think it's the lower margin, by the way, Daniel. It's not in particular the lower margin. We have decided to take stores that do not meet our return on investment criteria. We have decided to take stores that are in area that we don't have maybe a large concentration. And at the end of the day, if you're looking on this industry, like I said, I'm here from 2003, 22 years, the amount of mom-and-pop stores in terms of percentage didn't really change. I mean, 20 years ago, it was, I don't know, 65%, 70% of the stores in the U.S. were mom-and-pop. And if you're looking today, it's exactly 65%, 70% stores are still mom-and-pop. Those guys are very entrepreneurial. They concentrate on 1 or 2 stores. They spend all of their time in the store. They're coming up with many ideas that they can add to the stores, which we can't. As a large company, I can't tell my guys just to sell different type of foods in different stores and different -- basically in different regions. I mean, we have to be very, very consistent. Those guys are, like I said, are very entrepreneurial, and they know how to make things better in some areas. And that's why they're very, very successful. And that's why there's still 65%, 70% of them are mom-and-pop.
Operator: There are no further questions at this time. I'd like to hand the floor back over to Arie Kotler for any closing comments.
Arie Kotler: Thank you very much, everybody, for participating this evening in our earnings call. I wish you guys all the best and happy holidays ahead of us.
Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.