Earnings Call Transcript - BATRA Q4 2022

Operator, Operator

Welcome to the Liberty Media 2022 Year-end Conference Call. This conference will be recorded today, March 1. I would now like to turn the call over to Shane Kleinstein, Vice President, Investor Relations. Please go ahead.

Shane Kleinstein, Vice President, Investor Relations

Thank you. Good morning. Before we begin, we'd like to remind everyone that this call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in Liberty Media's most recent Form 10-K filed with the SEC. These forward-looking statements speak only as of the date of this call, and Liberty Media expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in Liberty Media's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. On today's call, we will discuss certain non-GAAP financial measures for Liberty Media and SiriusXM including adjusted OIBDA and adjusted EBITDA. The required definitions and reconciliations for Liberty Media and SiriusXM scheduled 1 through 3 can be found at the end of the earnings press release issued today, which is available on Liberty's website. Now I'd like to introduce Greg Maffei, Liberty President and CEO.

Gregory Maffei, President and CEO

Thank you, Shane, and good morning to all of you. Today speaking on the call, we will also have Formula One's President and CEO, Stefano Domenicali and Liberty's Chief Accounting and Principal Financial Officer, Brian Wendling. First, let me start with an update on the split-off of the Braves and the creation of Liberty Live Tracker. We filed the amended S-4 and we still expect completion in the second quarter. Let me turn to Liberty SiriusXM. We expect we will have a simplified structure following the recapitalization of LSXM and the creation of Liberty Live Tracker, and we are focused on rationalizing this structure in the near term. Looking at SiriusXM, the underlying asset reported strong fourth quarter results with record high ARPU and EBITDA and record low churn. Management did give more cautious forward-looking commentary given multiple headwinds we're experiencing here in the early part of 2023. The top of the funnel in terms of new subscribers is still pressured as the SAAR has dropped from about $17 million in 2019 to something like $13.5 million last year. The ad market remains soft, especially in the first half of 2023, and we are seeing moderating marketing spend ahead of the fourth quarter app revamp. Plus we've had some cash impacts. We expect peak satellite CapEx in 2023, and we are now a taxpayer, something which previously we had not been. We do expect these incremental satellite CapEx to moderate in 2024 with nearly no incremental satellite CapEx by the end of 2027. We are also stepping up some tech investments for long-term success. We are building improvements around commerce and identity to reduce friction, and the new app will have more personalization as it has within 360L. We do expect these negative trends in the ad market and the SAAR to turn, and we have a resilient business model with meaningful free cash flow, so we still remain optimistic about our longer-term prospects. Turning to Live Nation. We continue to see incredible demand. 2022 attendance was up 24% over 2019. We are at an all-time high for concert attendance despite many markets still being closed during part of the year. We've seen especially strong international markets with 70% of net new tickets sold in 2022 being to international clients and we expect another record year of demand in 2023. Ticket sales in 2023 are up 20% versus the same time last year. And last year, we also benefited from 20 million tickets that were rescheduled from prior periods due to COVID. Formula One Group. Right into the 2022 year. Attendance records were set, we were up 36% over 2019. Our fan base is increasingly diverse with new fans being younger, and the share of females within the fan base 40% larger than the share in the established fan base. That's been the new fan base. The U.S. is especially strong. One in three fans globally started following F1 in the last four years. In the U.S., it's even higher at one in two. This is a result of many efforts and most of them related to our efforts to drive the access to our drivers across all channels, not only Drive to Survive, but the driver preference on social pages, coverage in larger publications, late-night comedy appearances on people like Jimmy Kimmel. And it's interesting to note, for example, look at our Instagram followers and comparing GOAT, Lewis Hamilton has 31.5 million versus Tom Brady at 13.6 million. F1 is clearly getting into the mentality of America. And looking at the younger talent, Leclerc has almost 10 million and Luka Doncic is at 8 million. Again, we're doing pretty well. We will have three U.S. races in 2023, the second year of Miami, capitalizing on the first year success with several improvements around hospitality and security. We expect the sporting world to be super excited as we are for the inaugural Las Vegas GP. F1 Las Vegas social media garnered over 170 million impressions and over 5 million engagements since September of 2022. And we launched LVGP TikTok last weekend. The first post had over 35,000 views in the first 24 hours. Let me turn to the Braves. We reiterate that we believe the split-off will better highlight the value of the Braves. We grew baseball revenue in 2022 even though we had experienced less postseason gains, capitalizing on the tailwinds from our 2021 World Series win. We had year-over-year growth across ticket sales, sponsorship, concessions and retail. We sold 3.1 million tickets and led Major League Baseball with 94% of our inventory being sold. Demand for the season and single-ticket games remains high for the 2023 season. Bleacher Report called the Braves front office the number one in Major League Baseball for the 2023 season, and we tend to agree. We were happy to extend manager Brian Snitker through 2025. And GM Alex Anthopoulos invested smartly in the offseason, adding to the already core talent we have by locking them up in multiyear deals. This team is built on young talent and is positioned for long-term success and we very much look forward to the opener on March 30.

Brian Wendling, Chief Accounting and Principal Financial Officer

Thank you, Greg, and good morning, everybody. At quarter end, Liberty SiriusXM Group had attributed cash and liquid investments of approximately $305 million, which excludes $57 million of cash held at SiriusXM. There's also a $1.3 billion of undrawn margin loan capacity at the parent level related to our SiriusXM and Live Nation margin loans. As of February 28, the value of our SiriusXM stock held at Liberty SiriusXM Group was $14.1 billion, and the value of the Live Nation interest was $5 billion. We have $2.8 billion in principal amount of debt against these holdings. Total Liberty SiriusXM Group attributed principal amount of debt is $13.1 billion which includes $9.5 billion of debt that's down at the SiriusXM level. Formula One Group had attributed cash, liquid investments and monetizable public holdings of $1.8 billion at quarter end, which includes $752 million of cash at Formula One. Total Formula One Group attributed principal amount of debt was $3 billion, and this includes $2.4 billion of debt down at the Formula 1 level, leaving $565 million at the corporate level. During the quarter, F1 refinanced its term loan and revolver at attractive rates and an extended maturity. F1 repaid $477 million of its term loan B in connection with this refinancing, using cash on hand. And at year-end, Formula One's $500 million revolver is undrawn. Formula One's leverage at the end of the year was 2.7 times. On the F1 operating business, given quarterly variability in the year-over-year race calendar, a reminder that this business is best analyzed on an annual basis. Total revenue grew 20% in 2022 with growth across all primary revenue streams. Other F1 revenue grew 63% or $180 million with approximately $110 million of the revenue growth coming from hospitality and experiences and approximately $55 million coming from increased freight. Team payments as a percent of the pre-team OIBDA as reported, was 66% in 2022, down from 68% in the prior year, benefiting from the terms of the 2021 Concorde Agreement. As a reminder, other costs of Formula One revenue are largely variable in nature and relate to both primary and other F1 revenue opportunities. Other costs increased from 20% of total revenue in 2021 to 23% of total revenue in 2022. Primarily driven by compression in freight margins with significant air charter cost inflation during the year as well as increased cost of servicing our additional hospitality offerings. SG&A as a percent of total revenue was basically in line with historical averages in 2022. As mentioned in Q3, we did have some modest increases in personnel costs due to the change in the company's LTIP from a stock to a cash-based long-term bonus program and increased headcount to support growth. Also included in SG&A in 2022 was $19 million of costs from the Las Vegas Grand Prix, mostly related to personnel and marketing initiatives. Looking at 2023, we look forward to a record '23 race calendar. The calendar will consist of 14 flyaway races compared to 12 flyaway races in 2022. As we've discussed before, flyaway races typically pay higher fees than the European races. And on Las Vegas, as previously communicated, we expect total revenue approaching $500 million. Looking at total race-specific economics, Vegas is projected to be in the top 5 of all races in year one in terms of total profit to the company. The Paddock building is progressing on schedule, and the concrete structure will be completed by the end of March. CapEx related to the Paddock building will be incurred at the formula and corporate level and track-related CapEx is expected to be incurred at the F1 OpCo level. The majority of our CapEx spend will be incurred at the corporate level, primarily because year-round activations of the Paddock building will be separate from Formula 1. We will not be providing a forward-looking allocation between F1 OpCo and Formula One corporate CapEx, but you'll be able to see it in our historical numbers as they get reported. LVGP will pay rent and other fees out of Formula 1 OpCo to the Formula One corporate for use of the building during the race period, which will show up in our financial statements as revenue at the corporate level but will eliminate in consolidation. We also expect the receipt of advanced payments primarily related to ticket sales to impact year-over-year comparability and working capital flows in the first year of the Vegas race. Nearly all LVGP revenue will be recognized in the fourth quarter when the race takes place. We'd expect grandstand and GA tickets as well as sponsorship revenue to be recognized in primary F1 revenue as race promotion and sponsorship revenue, respectively. We expect hospitality tickets will be recognized within other Formula One revenue. On cost recognition, we expect the vast majority of the race-related costs to also be recognized when the race takes place as cost of F1 revenue. So there will be some SG&A incurred throughout the first few quarters of 2023. Finally, at the Braves Group at quarter end, they had attributed cash and liquid investments of $151 million, which excludes $22 million of restricted cash. Braves Group had attributed principal amount of debt of $546 million at the end of the year. Liberty and our consolidated subsidiaries are in compliance with their debt covenants at quarter end.

Stefano Domenicali, President and CEO, Formula One

Thanks, Brian. 2022 was a fantastic season on track, commercially with our partners and financially in our results. Max Verstappen's 15 wins broke records with the most wins in a single season. The Red Bull team won their first constructors' championship since 2013. And the fierce competition battle came down to the last race with Alpine and McLaren both fighting for fourth place. The feedback from the drivers made it clear that the new regulation meant that cars could race more closely, and we saw some great results on the track. This action during the season fueled our growing fan engagement. 2022 showed record attendance of Grand Prix events. We welcomed more than 5.7 million fans to race weekend, up 36% compared to 2019. Demand is continuing in 2023 with a sellout crowd expected at a number of races this season. Formula One was once again the fastest-growing major sports league on the planet in 2022 in terms of social media followers. We have 60.6 million total followers, up 23% from 2021 and saw significant growth in markets like the U.S. where social followers were up 42% versus 2021 to 4.5 million. Additionally, across f1.com and the F1 app, unique users were up 11% versus 2021 to 125 million. Cumulative TV audiences for the 2022 season was 1.54 billion, and average viewership per race was 70 million. U.S. viewership was up 36% compared to 2021 with an average of 1.2 million viewers tuning in on race days. Looking at some other markets, Italian viewership grew 22%. Australia was up 20% and German viewership grew 9%. With our newer, younger demographic, the digital share of F1 video minutes consumed grew from 16% in 2021 to 24% in 2022. As an endorsement of F1's growing global popularity, technological relevance and sustainability efforts, Ford announced the return to F1 from 2026 in a new partnership with Red Bull. Ford has a celebrated name in motorsport with a storied F1 history dating back to the 1960s, and they are the third most successful engine manufacturer in F1 history. We expect Ford's involvement as a technical engine provider to bring value not only to Red Bull but to the sport. The growing fan engagement has benefited both new and renewed commercial agreements. F1 grew revenue across all primary sources: promotion, media rights, and advertising and sponsorship. In addition, our Paddock Club hospitality product performed especially well in 2022, its first full season of operations since the onset of the pandemic. We welcomed 50,000 guests over the season with sellouts at 12 out of 19 events. In 2023, we are focused on optimizing the value of our Paddock Club by expanding the premium services we offer, continuing to enhance the guest experience and adjusting pricing. Turning to recent updates on our commercial agreements. On race promotion, we extended our race in Zandvoort from 2024 and 2025, and the '23 Dutch Grand Prix is already sold out. The promoter has focused on sustainability from travel, with 99% of general admission ticket holders in 2022 arriving by public transportation, bike, or on foot. We signed a number of large broadcast agreements throughout 2022, including renewing our partnership with Sky in major European markets and with ESPN in the U.S. More recently, we entered into a multi-year media rights agreement with BeIN Sport to exclusively broadcast F1 in 10 territories across Asia. Our FOX Sports agreement in Mexico was extended through 2025. We also renewed our partnership with Play Sports in Belgium for 2023 and 2024, and our agreement with DAZN in Japan through 2025. F1 TV continues to grow in popularity among new and heritage fans. The product is now available in 120 countries. On sponsorship, just last week, we announced the addition of Qatar Airways as a global airline partner under a multiyear agreement. They will also be the title sponsor at three races. Looking forward, there are a number of areas we continue to explore for additional sponsorship opportunities, including travel, financial services, food, beverage, telecommunications, and more. Our team is continuously building fan engagement opportunities to capitalize on our momentum. The fifth season of Drive to Survive aired on February 24. The 2023 F1 esports qualifying round is being held through May 25, and we hope to build on the strong engagement from last year when 1.3 million players attempted to qualify. The new license program, F1RK, launched its first location in London in December, hosting over 600 F1 guests and celebrities at the official launch party, who experienced the excitement of F1 with 60 full-motion racing simulators. The second venue will open in Birmingham in the U.K. in the fourth quarter of 2023, with additional locations planned to follow. A new F1 exhibition will also launch in Madrid later this month and remain there before moving to Milan in time for the Italian Grand Prix. This is a 90-minute immersive experience guiding visitors through the past, present, and future of the sport. It's planned to visit 25 cities around the world over the next decade. We are counting down to the start of the 2023 season. Bahrain testing finished last week and with another year of improvements to the track, we are expecting even fiercer competition on the track. Ferrari and Mercedes are certainly eager for their comeback. There will be new phases on the grid with Nyck de Vries, Oscar Piastri, and a promising young American driver Logan Sargeant, as well as the return of Nico Hulkenberg. The '23 race calendar is a record for Formula One. We made the decision not to replace China on the calendar as the most economical benefit of a replacement race was not worth the logistical and sustainability considerations for F1 and our teams. There will be six Grand Prix events held in Azerbaijan, Austria, Spa, Qatar, Austin, and Brazil. The Sprint series has been successful in driving attendance and engagement across the entire weekend for our promoters and broadcast partners. The 2023 calendar will feature three races in the U.S., including taking to the streets of Las Vegas for a night race in November. We announced Heineken Silver as the title sponsor and T-Mobile as the exclusive wireless provider. The plan is to deploy an advanced 5G public network during race weekends that will power our customer app and enhance the efficiency of the fan experience. Our second wave of public ticket sales will launch soon. In spring, the world begins on resurfacing the track roads with digital plans in place to minimize disruption to the Las Vegas flow of traffic during the process. We have made a long-term investment in Las Vegas, which we expect to set us up for the race for decades to come. Finally, we made several announcements furthering our efforts in sustainability, diversity, and inclusion. F1 recently announced a global charity partnership with UNICEF to help bring quality education to the world's most vulnerable children, building on F1's long history of promoting STEM education worldwide. We also look forward to debuting F1 Academy in 2023. The series intends to maximize the potential of young female drivers to reach the highest level in motorsport, providing those currently in go-karting or other junior categories with access to the fundamental experience needed before racing in F3 and working up to Formula One. The series will consist of five teams run by current F2 and F3 teams, each entry with three cars to make up our 15-car grid. The first season will comprise 21 total races, ending as a support event at the Austin Grand Prix in October. I'm delighted that today we have announced Susie Wolff as the Managing Director of the F1 Academy. She has a wealth of experience as a driver and team principal and will provide considerable value to the project. Wrapping up 2022 and looking to 2023, I think F1 is in the strongest position it has ever been. This year, we launched a new brand campaign demonstrating F1's place in the sporting and entertainment world, giving new fans a reason to actively engage with the 2023 season and keep coming back for more. F1 is an unmissable and extraordinary spectacle and an adrenaline-fueled and intoxicating world of action, innovation, and entertainment, both on and off the track. We have the extraordinary potential of technology that comes together to make the difference between winning and being forgotten. This is not ordinary sport. This is Formula One. So full speed ahead.

Gregory Maffei, President and CEO

Thank you, Stefano, and thank you, Brian. And to our listening audience, we appreciate your continued support of and interest in Liberty Media. And with that, operator, I'd like to open the line for questions.

Operator, Operator

Our first question comes from Vijay Jayant with Evercore.

Vijay Jayant, Analyst

Greg, regarding the Braves and the upcoming hot spin and recapitalization of Liberty Live, you've mentioned the need to rationalize the structure of Liberty Sirius. Could you discuss the possibility of a hot spin of Liberty Sirius after the reattribution? Are there any limitations to consider? Back when you executed the Liberty Entertainment spin-off, you handled a hot spin prior to discussing the combination with DIRECTV. Is a similar approach feasible from both a structural and tax efficiency standpoint? Additionally, Stefano, I believe you have ten global sponsors. You mentioned more opportunities across various verticals. Is there further potential for adding global sponsors, or have we reached a limit? Lastly, I've noticed that logistics costs are being handled by the teams but have increased. I’m curious if the inflation impacts are being conveyed to the teams and if we can expect this trend to persist or if it was just a temporary situation.

Gregory Maffei, President and CEO

Okay. I'll start, Vijay. That was so long ago. The questions I almost got lost, but thank you. So look, we have lots of things we could do, including a spin of Sirius. But I think there are probably discussions to be had with the SiriusXM independent Board members about the best structure moving forward if we were to do something. But all elements are on the table. All options are on the table. And as we said, we're looking at those with renewed vigor, and we believe we're much better set to execute on any of those post the Liberty Live reattribution and the Braves spin.

Stefano Domenicali, President and CEO, Formula One

Yes. Thanks, Vijay, for the question. I'll start with the second. This logistics cost is true last year it was a combined factor that we had to pay for that and included the teams. But I would say the first signal that we see already this year is going in the right direction regarding these logistics costs being reduced. And in that respect, there is also the other element that we are trying to be even more efficient to ensure that things are done in the proper way. And this is very important to share that. And on the other side, with regard to the partners, of course, we want to keep the exclusivity as a main value, and we don't want to set a final number on that. It's important that we give the right value to the global partner but also to the other verticals that are coming into the equation because we never had such a strong pipeline. So it's up to us really to make sure that everyone has the right visibility and value for what is the investment related to us.

Operator, Operator

Our next question is from Ben Swinburne with Morgan Stanley.

Benjamin Swinburne, Analyst

Two Formula 1 questions. I guess, first for Greg or Stefano, whoever wants to take it or certainly both. It's pretty clear, and I think Stefano made this point last year that the value of the teams has significantly increased, especially from where you bought the business years ago. But I don't know if I have a clear idea of sort of how that benefits F1, the company and ultimately, shareholders. I think it does, but I'd love to get your perspective. And in particular, given the award of asking the first Concorde Agreement question for 2026, but does this allow or enable or support your ability to sort of continue on this path of operating leverage into the new agreement because of the amount of value creation at the team level? So that's, I guess, the maybe more interesting question. And then I'm going to try, I know, Brian, you guys don't like to give guidance, but I just wanted to take another stab at the G&A commentary because we're getting a lot of questions on that this morning, $80 million OpCo in Q4. Is there a way for us to think about how sort of recurring that level of G&A is as you move into '23? I know you mentioned marketing. And I guess when you guys talk about a top 5 economic race for Vegas, are you including these incremental G&A costs that are happening outside of the quarter? That's it.

Gregory Maffei, President and CEO

So Stefano, I'm happy to take a cut and let you lead the other way. One of the things we at Formula One, with Liberty's help, have been trying to do is build a mentality that I'll credit the NFL for, which is that we all benefit when everyone benefits. Yes, the teams compete fiercely on Sunday, but on Monday, we need to think about growing the entire ecosystem. It’s critical for us to have healthy teams to maintain a healthy league, and it’s important that even the teams at the back of the grid see a prospect of making money so that we can also profit. They have experienced significant increases in their value, and we have seen substantial growth in ours as well, but we are focused on the long term. That doesn't mean we won't have disagreements with the teams about the distribution of resources, but our aim is to foster a mentality where as you gain, we gain, and that we are in this for the long haul. I believe we will have a strong position in the next Concorde Agreement, not using force but presenting a united front, showing that we are here to grow the value, and that your team's value can grow significantly too.

Stefano Domenicali, President and CEO, Formula One

No, I totally agree, Greg. If I may add just two considerations. Something financially means also the strength of the entire system to invest with also the strategy to engage more with fans and partners that will have a direct effect on the growth and the strength of the business itself. And we don't have to forget that not many years ago, the teams were suffering and we, as F1, were there to support them financially. And this is something that we don't have to forget. That's why we really believe that the more value we give to the team, the more value will go back to the system and to the entire business.

Brian Wendling, Chief Accounting and Principal Financial Officer

And Ben, on the SG&A piece, I'll talk about it from the full-year basis first. But you've seen an increase, obviously related to the Las Vegas Grand Prix, that's $19 million. That was elevated in the fourth quarter because we had our launch event and marketing activities around initial ticket sales. We also talked about the LTIP moving from stock compensation expense to a more personnel expense, that's in there now. You won't see that increase, so it's in the base. And then there's other one-time items in there. There's higher legal and professional fees associated with a couple of different matters, including an ERP implementation and a few other one-time items that are affecting SG&A. So on your question about whether SG&A is included in our statement on the top 5 race, it most definitely is.

Operator, Operator

Next question is from Barton Crockett with Rosenblatt Securities.

Barton Crockett, Analyst

I would like to get your thoughts, Greg, on the current surge in acquisitions of sports teams at high prices. Specifically, I'm referring to discussions about Manchester United, Milwaukee Bucks, Phoenix Suns, Washington Commanders, and Denver Broncos. The prices being quoted seem significantly higher than the values cited by sources like Forbes or Sportico. I'm curious if you have any insights on the reasons behind this trend and whether you think it could extend to baseball. Additionally, do you think these developments could be impacted by issues related to local TV rights and the risks they pose to a key revenue source?

Gregory Maffei, President and CEO

I have a few thoughts. I don't have any particularly unique insights on the value of sports teams. There has been a lot of discussion about them being trophy assets, and with their limited availability, they have proven to be a solid source of value. The increasing global popularity means greater global interest and potential investor interest. While I acknowledge these points, it's challenging for me to determine which factors play the most significant role. This certainly applies to the Atlanta Braves, which are the longest continuously operating franchise in the United States. Their successful history and narrative make them an exemplary franchise. Though there are changes on the horizon within the ecosystem, I feel optimistic about those changes for several reasons. It’s likely we will see net revenue declines across all of baseball due to the decrease in regional sports networks, especially in the short term as some contracts conclude. While there may be operations that mitigate this, it seems more probable than not. However, regarding our position, I am quite confident in it. Additionally, the financial stability of the Braves enhances my confidence in that regard as well.

Operator, Operator

Our next question comes from Stephen Laszczyk with Goldman Sachs.

Stephen Laszczyk, Analyst

Maybe for Greg on F1. I think you said that roughly one-third of the fan started following F1 over the last few years, and that certainly makes sense with looking at the attendance increases. But maybe looking ahead, could you talk a little bit more about your confidence in converting the fans that have come into this sport, maybe because of Drive to Survive or social media over the last few years into lifelong fans in the sport? And maybe more broadly, what do you see is the next most important levers to driving fan growth from here?

Gregory Maffei, President and CEO

Well, I'll comment, but I also want Stefano to add. Look, we are very focused on sustaining the growth and interest in F1 in many, many ways. That's with new innovations on the track, ensuring more competitive racing with new innovations around the weekend like the Sprint races. Lots of ways to grow fan interest on the track. Lots of ways to grow fan interest in some of the things we do off the track and exposing the drivers. Drive to Survive was obviously a key part, but not the only one. I think we're helping and the teams are helping create what will be a very exciting movie next year with Brad Pitt and the directors of Top Gun: Maverick and producers of Top Gun: Maverick, all of which we think will be another thing to sustain growth.

Stefano Domenicali, President and CEO, Formula One

The Las Vegas race is going to be a massive noise maker for our sport. And it'll open up our sport to many people who previously were not aware. While there are 16 and 17-year-olds who are crazed and get up every Sunday morning to watch, there are many people who really do not follow Formula One. It will be hard to miss Formula One after Las Vegas. It will be loud, and we will get a lot of attention. So we're not only thinking about things which are current, but we're thinking about things for the long term to try and sustain that interest, convert that interest into long-term fans. And I think we have a lot on the plate and many more in front of us that we're working on to do that.

Operator, Operator

Next question.

Gregory Maffei, President and CEO

So operator, I think we are done. So to our listening audience, thank you for your interest in and for our support for Liberty Media. We hope to speak with you next quarter, if not sooner. And I think operator, we can end the line there.

Operator, Operator

Thank you. This concludes today's conference. We thank you for your time. You may now disconnect your lines.