Hello, and welcome to the W.W. Grainger First Quarter 2023 Earnings Conference Call and Webcast. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Kyle Bland, Vice President, Investor Relations. Please go ahead, Kyle.

Good morning. Welcome to Grainger's First Quarter 2023 Earnings Call. With me are D.G. Macpherson, Chairman and CEO; and Dee Merriwether, Senior Vice President and CFO. As a reminder, some of our comments today may include forward-looking statements. Actual results may differ materially as a result of various risks and uncertainties, including those detailed in our SEC filings. Reconciliations of any non-GAAP financial measures with their corresponding GAAP measures are found in the tables at the end of this presentation and in our Q1 earnings release, both of which are available on our IR website. This morning's call will focus on our first quarter 2023 results, which are consistent on both a reported and adjusted basis for all periods presented. We will also share results related to MonotaRO. Please remember that MonotaRO was a public company and filed Japanese GAAP which differs from US GAAP and is reported in our results one month in arrears. As a result, the numbers disclosed will differ somewhat from MonotaRO's public statements. Now I'll turn it over to D.G.

Thanks, Kyle. Good morning, and thank you for joining us. Today, I'll provide an overview of our first quarter performance and then pass it to Dee to walk through the financials in detail. Grainger started 2023 focused on what matters most: providing our customers with the products and services they need through exceptional service. We remain closely embedded with our customers, finding ways to help them manage their inventory, reduce costs, achieve their ESG objectives, and successfully run their operations. Two weeks ago, I had the opportunity to visit with several customers in the manufacturing space in one of my favorite Midwest cities. I heard very clearly how well our teams have served them in the last few years, giving us a great opportunity to grow with these customers in the future. We win when we serve our customers exceptionally well, and my interactions with our teams and customers this quarter have been a great example of how we are winning each day. Many customers, especially those in the industrial space, continue to see solid end market demand for their products. However, we do see some customers with more consumer-facing exposure heading into a softer demand cycle. No matter what economic uncertainties our customers are facing, we remain committed to our overall focus of helping our customers keep their operations running and their people safe. This consistent approach and relentless focus on the customer rallies our team and fuels our results. As you can see, we again delivered a strong quarter of performance to start the year as demand remains resilient and as we continue to execute well. We are making progress on our strategic growth engines in our high-touch model as we further our merchandising efforts, continue to make smart marketing investments, expand our inventory management capabilities for customers and build out tools to better equip our sellers. The Enlist assortment business continues to execute their strategy as they add SKUs at Zoro, expand with enterprise customers at MonotaRO and at a healthy clip of new registered users each quarter. Our momentum is further supported by our world-class supply chain and distribution network, which benefited from an uptick in product availability as supplier lead times improved. This resulted in a sharp improvement in our service metrics to near pre-pandemic levels, faster than we had anticipated at the start of the year. With this swift improvement, we were able to meaningfully decrease frictional costs within the network by reducing average shipping distance and minimizing handling costs, all while delivering a higher percentage of orders complete and next-day. This improvement is a reminder of just how much unusual and extraordinary activity we did to get products to customers through the pandemic and subsequent availability challenges. The return to more normal supply chain performance is great news for our customers and our supply chain team. The progress made across all these fronts helped drive great financial results for the first quarter, where we finished with sales growth of 12.2% and 14.5% on a daily constant currency basis. Results again were driven by solid performance in both segments, most notably within the High Touch Solutions segment, which outpaced the broader MRO market by approximately 750 basis points in the US. Total company operating margins were 16.6%, an increase of 200 basis points over the prior year period on improved gross margin performance due primarily to the supply chain efficiencies just discussed. Combined with our strong top-line growth, we delivered EPS of $9.61 per share and a strong ROIC of 45.6%. During the quarter, we produced record operating cash flow of $454 million, with free cash flow of $356 million, and we returned a combined $229 million to Grainger shareholders through dividends and share repurchases. And yesterday, we were pleased to announce a $1.86 quarterly dividend, which represents an 8% increase. This marks our 52nd year of consecutive dividend increases, a track record that we are proud of. Finally, based on the strong start to the year and continued support of trends at April, we are raising our full year 2023 guidance, which Steve will outline in just a bit. With that, I'll turn it over to Dee to take us through more detail on the quarter.

Thanks, DG. I'd like to echo DG's sentiment – execution on our growth strategy and improved service from a return to more normal supply chain performance helped drive excellent results in the quarter. Starting on slide 7, you can see the high-level results, including strong sales growth of 14.5% in daily constant currency, driven by double-digit growth locally in both segments. Although year-over-year growth rates decelerated as we moved through the quarter on tougher comps, daily sales dollars remained strong and were reasonably in line with historical sequential growth trend. Total company operating margin was up 200 basis points as expanded gross margins in both segments dropped to the bottom line. SG&A margin was flat year-over-year as investments in headcount, marketing, and technology were offset by revenue growth. In total, we delivered diluted EPS in the quarter of $9.61, up 36% versus the first quarter of 2022. Diving into segment level details: for the first quarter, we continued to see strong results within our Hi-tech segment with daily sales of 14.5%, fueled by revenue growth in all geographies. Customer demand was generally in line with expectations for the quarter and continues to remain resilient as a whole despite certain areas of softness. In the US, we are seeing broad-based strength across most of the manufacturing with contractors and government customers to name a few. Retail and warehousing are slowing the most, but still up high single digits. In Canada, the economy remains stable, and we are seeing good results across most end markets with Canadian daily sales up 11% in local currency. For this segment, GP margin finished the quarter at 42.4%, up 195 basis points versus the prior year. This expansion was largely driven by freight and supply chain efficiencies as well as product mix favorability. As DG mentioned, improved product availability and shorter supplier lead times drove improved stocking positions in our DCs. This availability improvement resulted in more efficient shipping routes, which helped reduce freight expense and lower our handling costs. Freight expense was further aided by a one-time adjustment, which drove 20 basis points of improvement in the period. Product mix was also a tailwind and partially due to improved product availability and partially from lapping the pandemic fuel spike in safety sales from last year's Omicron variant. For the quarter, price cost per ad was neutral and trended largely as anticipated as price/cost favorability we captured in 2022 began to unwind and offset the structural timing benefit we typically see as we passed price early in the first quarter each year. At the operating margin line, we saw improvement of 215 basis points year-over-year. The strong gross margin in the quarter was fully aided by 20 basis points of SG&A leverage as marketing and headcount investments were more than offset by revenue growth. Overall, it was a very strong quarter for the High-Tech Solutions North American segment. Looking at market outgrowth on Slide 9, we estimate that the US MRO market grew between 7% and 8%, indicating that we achieved roughly 750 basis points of outgrowth in the quarter. As we continue to build strong partnerships and make progress with our growth engines, our customers continue to turn to Grainger to help them solve their MRO challenges. Coupled with our supply chain service advantage, we continue to have a high degree of confidence in delivering against our goal to consistently outgrow the US MRO market by 400 to 500 basis points in any economic cycle. Moving to the endless assortment segment, sales increased 3.8% or 14% on a daily constant currency basis, which adjusts for the impact of the depreciated Japanese Yen. So, US was up 13.5%, while MonotaRO achieved 12% growth in local currency. While Zoro generated solid growth, they are off to a slower start than anticipated predominantly due to non-core B2C business, which was down in the mid-teens year-over-year. For small B2B customers who make up a majority of the world's businesses, we were up nicely in the first quarter but are softening a bit in April given Zoro's more diversified end market customer mix outside of the industrial economy. At MonotaRO, sales were impacted by adverse weather as well as slower return to work patterns with the New Year holiday following midweek. Sales have ramped back over the last several weeks, and we expect results to be more in line with our expectations for the balance of the year. From a profitability perspective, gross margin for this segment expanded 140 basis points versus the prior year due to strong price realization and continued freight efficiencies across both businesses as well as favorable business unit mix for the segment. Operating margins expanded by 15 basis points year-over-year to 8.1% primarily due to gross margin favorability offsetting investments in marketing and headcount to drive customer acquisition and assortment expansion. On slide 11, we continue to see positive results with our key endless assortment operating metrics. Total registered users are tracking nicely with Zoro and MonotaRO combined up 16% over the prior year. On the right, we show the continued growth of Zoro SKU portfolio, which grew by 900,000 SKUs in Q1 and stands at around $12 million in total. We are well on our way to achieving an annual goal of 2 million SKU additions in 2023. Now looking forward to the rest of the year, given the unexpected sharp improvement in profitability and continued resilient demand environment, we are updating our total company guidance for 2023. In our revised outlook, we are holding top line expectations with daily sales expected to be up 7% to 11% for the total company. This reflects solid Q1 performance in high touch offsetting a slightly slower start across endless assortment with expected softness to continue for the balance of the year at Zoro. High Touch is trending slightly higher than originally expected on a similar 1% to 5% total US MRO market outlook, with continued strong share gains. And this assortment is trending slightly lower, however, we expect daily sales for this segment to be up low double digits, which is a couple of hundred basis points higher when translated to constant currency. Note that April sales growth for the total company is holding firm with month-to-date sales up 10% year-over-year or nearly 11% in daily constant currency. The larger changes to our guide come on the profitability side. More improved product availability and the resulting step change in service levels are driving better freight dynamics, lower handling costs, and improved product mix. With this, we are raising our gross margin range to 39.1% to 39.4%, up 70 to 100 basis points year-over-year. While we still expect to be price/cost negative over the next few quarters as we unwind prior year favorability, the supply chain improvement is flowing through our P&L much faster than anticipated and is fueling the predominance of our revised outlook. The increase in gross margin largely flows through to the operating margin improvement and resulting EPS, which we now expect to be between $34.25 and $36.75, nearly a 20% increase year-over-year at the midpoint. We have updated our supplemental guidance, which can be found in the appendix and includes revised segment margins, improved operating cash flow outlook, and increased expectations for share repurchases for the year. Our execution has put us on a great path. We are serving customers well—we're remaining focused on the things that matter and are positioned to continue to take share. I exit the quarter very confident in our ability to continue to deliver on our commitment to shareholders. With that, I'll turn it back to DG for some closing remarks.

Thank you, Dee. Before I open it up for questions, I would make just a few comments. Grainger was recently named to the Fortune 100 Best Companies to Work for list for the second year in a row. As you know, this is an exclusive recognition, one that honors companies with the best cultures, workplaces, and people. Along with this list, we have also been named to the best places to work for women and the world's most admired companies, among others. We view this recognition as an output of the work we do to create a welcoming culture and a highly motivated team. I remain confident in Grainger's ability to create tangible value, deliver a flawless experience and drive profitable growth over the long haul. And with that, we'll open the floor for questions.

Thank you. We are now conducting a question-and-answer session. Our first question today is coming from Chris Snyder from UBS.

Thank you. I wanted to ask on outgrowth in the high-touch North America business. It just continues to hold firm between 700 and 800 basis points despite improving product availability, I would imagine, among some of your smaller competitors. Can you just maybe talk about why you think that isn't compressing despite pretty broad indications that supply chains are recovering?

Sure. Thanks, Chris. Yes. We are certainly seeing supply chains improve. I do think that a lot of the work we've done through the pandemic in the last three years has helped build some stickiness with our customers. For every customer I go into, we've expanded our KeepStock operation if they are of any size. We're filling bins, we're doing more and supporting customers to make sure that they have the right inventory in the right place. And I think that's been a big part of it. We continue to see really good results from merchandising, from marketing, from KeepStock, and from our supply chain performance. All those things continue to be an advantage for us and helping us gain share.

Thanks. I appreciate that. And then on price cost, I think you mentioned that the guidance assumes price cost negative in the next few quarters on some of the give-back after running a bit ahead. Can you just maybe talk about the level of producer price increases that were kind of pushed through on you guys in February? And then just in general, any response from customers or any pushback on pricing? Thank you.

So yeah, Chris. How are you doing? I would talk about the the last part of your question, I believe, first, which was you asked about producer price push. That has, of course, become less and less over a period of time. So it's basically modest as what we have seen of late. However, as you know, in the first quarter is when we implemented some of those costs are pulled them through to our system. And so for Q1, it's traditionally a high watermark for us for price cost. And as you noted, we expect to unwind some of our price cost positivity from 2022 as a result through the next couple of quarters.

And in terms of customer response, what I would say, Chris, is that all of our effectively all of our share gain in the last three years has been on volume and not price. So we are priced competitively. And so we are not seeing unusual reactions from customers because we've maintained that competitiveness in our prices.

Thank you. Your next question is coming from Tommy Moll from Stephens. Your line is now live.

Good morning, and thanks for taking my questions.

Good morning.

I wanted to stick on the theme of price cost to start here. You articulated several of the drivers for the gross margin performance, high-touch specifically is what I'm talking about here in the first quarter and have clarified the price/cost dynamic as we go through the year. Is it still safe to assume though that for the full year, you could land above that 40% long-term target even if we trend toward it as the year progresses?

So thanks for the question. Obviously, we've had a really strong start to the year. And as I noted, we really feel like from a GP specifically in high touch, we're at a high watermark based upon the unwind that we're going to experience with price costs. A lot of the favorability that we experienced this quarter relates to our availability improving and some of the friction costs coming out faster and probably a little bit more pronounced than we would expect that is driving our results up. We did have a, I would say, a non-comparable freight impact of about 20 bps as you look at the outlook for the rest of the year. But other than that, we feel pretty confident in staying at this level based upon what we see right now.

Thank you. And as a follow-up, I wanted to ask about some of the weakness you identified for Zoro. It sounds like there were some non-core areas where you saw weakness but potentially also just as you rolled everything up to the full year outlook, there may have been other unfavorable factors there, at least versus your original outlook, but anything you could do to unpack what you're seeing there would be helpful. Thank you.

Yeah. So roughly 80% of Zoro's business is business to business customers that are small businesses and midsized businesses. Those, while they continue to perform pretty well in the first quarter, we are seeing sort of across everything smaller businesses and consumer-facing businesses slow down relative to certainly large and industrial-type businesses. So there's a mix here thing that's going on. And then the 20% that is not business to business, some of that came through the pandemic, as you might imagine. That has been down fairly substantially in the first quarter. So that's been a drag. Net-net, we still expect the endless assortment to be low double-digit growth, and we expect the segment to perform well during the year, but we do expect our results to be below what we expected at the beginning of the year.

Thank you. Our next question today is coming from Ryan Merkel from William Blair. Your line is now live.

Hey, everyone. Nice quarter.

Thanks, Ryan.

I wanted to start on the freight and supply chain dynamic. Can you just talk about maybe take us from November, December to today? And just talk about how you got surprised by supply chain sort of normalizing? And what sort of happened? Did everyone start to have the lead times improve at one time in the quarter?

Yeah. I think there are several things that happened, Ryan. I mean if you went back to the fourth quarter of last year, we were really solid in terms of our own distributions and our outbound freight at that point. Inbound freight was getting better and supply lead times were starting to get better, but still fairly elongated. We've seen both supplier lead times domestically and cushion freight come in faster than we expected and recover faster than we expected. Therefore, we have received a whole bunch of products into the system. And it's probably obvious when you think about it. But if you went back a year ago, there were a lot of back-ordered items. And so if a trailer, let's say, came into our Greenville D.C. with compressors or something, everywhere in the network we point to that, when it was received, and we ship it all over the country to get product to customers. Now we have that same product coming into every DC and so we're shipping shorter distances, and that's a big benefit for us at this point. The other benefit is we're not having to work overtime in our distribution centers where we were a year ago, and part of that goes into gross margin too because that's part of handling costs. Those are the benefits we're seeing. A lot of supplier lead times are still slightly extended from before the pandemic, but they are getting much, much closer, and there are fewer outliers than we expected at this time.

Got it. Okay. That's clear. And then, DG, I wanted to ask your opinion on AI. How do you think that might help Grainger? And what could the impact be on the industry?

Yeah. I mean I won't go into too much detail. Obviously, AI has been a trending topic. If you think about artificial intelligence, or intelligence, there's machine learning, which is a subset of artificial intelligence. There’s deep learning; a lot of what's been talked about lately is deep learning generative AI, which you can write up your favorite song. We have been using machine learning for a long time in things like helping us get search right and effectively, I think the challenge here is to figure out where you can drive improvements through AI from customer interactions, operations, and back office, and we have efforts going in all of those areas, and it's like any other technology to point it to the right problem. I think that's probably going to be the most important thing for us to think about as we learn more.

Your next question is coming from Jacob Levinson from Melius Research. Your line is now live.

Good morning, everyone.

Good morning.

Good morning.

DG, maybe you can just give us a sense of how things are going north of the border in Canada. And I know that, that business has been on a long journey to get back on track. But maybe if you put it in innings, what inning are you in that way?

There's a lot of good signs, I would say, in Canada right now. I think we're seeing nice growth in the business, and we continue to see profitability improvements. We're probably in the fifth or sixth inning, I think, of getting to where we want to go. We are exactly on the path we expected to be on in terms of growth and profitability at this point. So the team there has done a really nice job of improving that business and working with the entire North American team to make sure that we are supporting the business and driving profitable growth. We feel pretty good about it.

Okay. Great. And just shifting gears on the balance sheet for a second. Look, we've had positive commentary from quite a few other companies about M&A valuations coming in and maybe being one of the better markets for buyers in a long time. You've obviously got an underlevered balance sheet and recall you talking about M&A for the first time quite a while back at the Investor Day in the fall. I mean, is M&A something that you see factoring in over the next months or so?

So good question. I would say, with strong cash generation, M&A is always something that can be on the table. We have a small group here that looks for opportunities mostly in the capability space for us potentially, but nothing on the horizon as of yet. If you know our history, our view is we're not looking for a roll-up of smaller distributors that don't have a go-to-market focus that matches ours, which is selling on value and service to customers. So those are a little harder to find, I would say, but we do have a team that stood up to look at opportunities, but we don't see anything significant on the horizon.

Thank you. Our next question today is coming from David Manthey from Baird. Your line is now live.

Thank you, good morning, everyone. In the past, Grainger's estimated market growth by triangulating things like GDP, industrial production, real business investment and nonfarm payrolls. And looking at those factors today, pretty much all of them are low single digits and moderating, and ISM is continuing to signal sort of further moderation. Could you remind us, as you look at 2023, how you're thinking about real MRO volume trends for the industry? I know you talked about pricing and share gain. Could you just talk about how you're thinking about the underlying market?

Sure. Just to roll up what you said a little bit, we really focus on PPI and IP as a predictor or outlook of the MRO market. Our estimates about where it stood as we put together our guide indicate volume down 3% to flat in the US and price between 4% and 5%. So that's where we were at the end of the year as we look at the latest updates of IP and PPI—they're about there. Underlying a lot of our assumptions is the MRO market growth, including price and volume of about 1% to 5%.

Great. So no change. Thank you for that. Second, a soft side question here. Congratulations on the great places to work after accolades, D.G. You've been with or worked with Grainger for, I don't know, 20 years. It seems there's been something of a cultural shift since you've been CEO. Could you assess the culture at Grainger today and how that's translating to the results you're seeing lately?

Yeah. I mean it's a really interesting question. Grainger has always had a wonderful culture, one where people really wanted to do the right thing for customers and it is a very highly ethical company. About six years ago, we went through a process to say what needed to change. We outlined a set of principles that we talk about at every meeting, every day basically, and say are we in those principles. I think the things that have probably moved the most have been making sure we're starting with the customer, making sure we're competing with urgency and making sure we're acting with intent, meaning working on the things that really matter. I think our culture historically might not have always been as focused on a few things that matter and stay on them as long as needed to make them really great. I think that's been a big focus for us as a leadership team. And I think that's probably a shift. I mean, the shift is slow, to be fair—cultures don't change overnight; so we're constantly working on it. The business I think we've been most focused on is the one that's been a little bit different from the past.

Thank you. Next question is coming from Steve Volkmann from Jefferies. Your line is now live.

Yeah. Thanks for taking the question. This one is a little bit lucy as well. But it feels like on the logistics and freight costs that there's sort of two things going on. Obviously, the cost of those things has come down, but then you're also managing it much better. I guess I'm curious if there's more opportunity as we go forward just in terms of how you manage it to continue to see some gains in that area.

Yes. I mean I think we're— I wouldn't—so managing it better is probably relative. I think we did quite an amazing job of managing through the pandemic through what was a really difficult time in the supply chain. I think it was actually extraordinary looking back, I think. But I think now it's easier to manage because we actually have the product in the right place. So we're able to let our system work the way it's intended to work. In terms of are there further opportunities, there are always further opportunities. We have an expectation that we will get better every single year from that productivity and service basis. The teams are always identifying things to work on that can improve our service to our customers and the productivity, and we'll continue to do that.

Great. And then my follow-up is just your long-term kind of EPS targets from the Analyst Day. It seems like you're already pretty much there or getting close anyway. How do you think about revisiting those targets over time?

So we had incredible progress towards those targets, as you can see in this quarter and then in the full year last year. But as we all are looking at the environment, the macro environment is still very fluid. It's been incredibly difficult to forecast, at least more difficult than usual. With that being said, we are doing, of course, better than our performance is better than our target, if you extrapolate our performance out. However, I would like to have a couple more data points underneath my belt and have the macro unfold a little bit more, especially with continued recession moving and predictions of a slowdown, and we will revisit those estimates at the right time.

Thank you. Our next question is coming from Pat Baumann from JPMorgan. Your line is now live.

Hi. Good morning. Thanks for taking my questions. Quickly on the April growth rate at constant currency. Is that— has that been consistent across segments? And then from a seasonality perspective, how do you feel about the progression you're seeing from March to April? Is it stable with how things normally have been, or have you seen any slowing relative to kind of the first quarter trends?

Yes. As we built the plan for this year, we knew that our comparison would get harder as the year went along because we came out of the pandemic in every month last year; we effectively got better. I'd say we're right where we expect to be right now. The 11% is seasonality-wise, is normal. The relative growth rate is only down slightly because we continue to improve through the year last year. So we're basically on what we expected to see at this point.

Got it. And in terms of Zoro, there was a leadership change there during the quarter. Curious if there's status quo as you look forward, or is there going to be any kind of shifts in kind of the way the business is run with the new leader in place?

Yes. So Masaya Suzuki, who is the CEO of MonotaRO, also leads that business, and the person reporting to him, Kevin, who's been with us for 15 years, left to take a CEO job, which was great for him. Sandy Mattison has moved in; I don't expect to see big shifts—Sandy knows the business well, and we're just continuing to push on the core initiatives and Masaya is still supporting her, and we're supporting her to make sure we can continue to improve that business and grow.

Thank you. Next question is coming from Deane Dray from RBC Capital Markets. Your line is now live.

This is Tyler Boyd on for Deane Dray. Just looking at Slide 21, it looks like was fairly broad-based across end markets. Maybe you noted a little bit of slowing maybe in consumer retail end markets. Is there anything else that you'd call out where demand is waning particularly strong?

No, I think you're hitting on it. I think that's right. I think consumer-facing businesses are slowing much more than industrial. But generally, I would say that the pattern is that industrial is doing better, while less industrial is slowing more, and then bigger companies are generally doing better, I'd say, than smaller companies are.

Great. That's it for me. Thank you.

Thank you. Your next question is coming from Katie Fleischer from KeyBanc Capital Markets. Your line is now live.

Hi. Kind of going off of the prior question, can you just talk about if you've seen any divergence between your small- and medium-sized customers versus the national accounts?

We see—with the high-touch model, we've seen pretty good growth with midsized customers and with national accounts, for sure. I would say the midsized customers are growing significantly faster than national accounts had seen a couple of years ago. So we do feel like, and we see that through the Zoro model too, where we're seeing businesses maybe not grow as fast as larger businesses. But in general, we're still seeing good growth with the high touch across both national accounts and advertised customers.

Okay. And then just for my follow-up. So one of your competitors recently talked about a slowing cadence of manufacturing activity through the month of March. I was just wondering if you've seen any sort of similar dynamic or any demand issues that you're concerned about?

I mean, well, certainly, we—in the fourth quarter, we saw low 20s growth in manufacturing. In the first quarter, we saw mid-teens growth in manufacturing. So still growing strong; a lot of this is sort of looking back at what happened with the pandemic, and we saw huge growth rates coming as we recovered and now we're sort of moderating. But we still see, I'd say, I was with some customers; I talked about in the opening. One of them was probably going to shrink a little bit this year, but that was on huge compares to the two years before. So it's not like activity is not strong. It's just less not growing as much, and the other two are going to grow. I think we're still manufacturing activity in general at this point.

Thank you. We reach the end of our question-and-answer session. I'd like to turn the floor back over to D.G. for any further closing comments.

All right. Thanks for joining us. I appreciate you know it's a busy earnings day in the world today. So thanks for taking the time. I would just finish by thanking our team for the right work they're doing to make sure that we continue to gain share, continue to serve our customers well and do it the right way. And with that, I'll say goodbye. Thanks for joining us.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.