Good morning, ladies and gentlemen. Welcome to Group 1 Automotive's 2022 third quarter financial results conference call. Please be advised that this call is being recorded. I'd now like to turn the call over to Mr. Pete DeLongchamps, Group 1's Senior Vice President of Manufacturer Relations, Financial Services, and Public Affairs. Please go ahead, Mr. DeLongchamps.
Thank you, Anthony, and good morning, everyone, and welcome to today's call. The earnings release we issued this morning and a related slide presentation that include reconciliations related to the adjusted results will be referred to on this call for comparison purposes have been posted to the Group 1 website. Before we begin, I'd like to make some brief remarks about forward-looking statements and the use of non-GAAP financial measures.
Except for historical information mentioned during the conference call, statements made by management of Group 1 Automotive are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve both known and unknown risks and uncertainties, which may cause the company's actual results in future periods to differ materially from forecasted results.
Those risks include, but are not limited to, risks associated with pricing, volume, inventory supply due to increased customer demand and reduced manufacturer production levels due to component shortages, conditions of markets and adverse developments in the global economy, as well as a public health crisis related to COVID-19 virus and resulting impacts on demand for new and used vehicles and related services.
Those and other risks are described in the company's filings with the Securities and Exchange Commission. In addition, certain non-GAAP financial measures, as defined under SEC rules, may be discussed on this call. As required by applicable SEC rules, the company provides reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on its website.
Participating with me today on the call, Earl Hesterberg, our Chief Executive Officer, Daryl Kenningham, President and Chief Operating Officer, and Daniel McHenry, Senior Vice President and Chief Financial Officer. I'd like to now hand the call over to Earl.
Thank you, Pete, and good morning, everyone. I'm pleased to report that for the quarter, Group 1 generated adjusted net income of $188 million from continuing operations. This equates to adjusted earnings per share of $12 per diluted share, an increase of 27% over the prior year, and ties the previous quarter for our all-time best quarterly earnings per share result. Our adjusted results exclude non-core items totaling $9 million of after-tax gains, which primarily resulted from the sale of a dealership franchise and real estate during the quarter.
These results were largely due to continued strong new vehicle margins that were able to more than offset weak supply, continued double-digit same-store growth in our after-sales business, significant contributions from our recent acquisitions, and record profitability from our U.K. region. One of the challenges we faced in the U.S.
In the quarter was a decline in industry used vehicle price levels. This required quick action by our team to rapidly sell through our existing inventory so we could restock at latest market price levels. This action enabled us to slightly increase sales in a market which declined double digits. However, our used vehicle margins declined sequentially from roughly $1,900 a unit in the second quarter to roughly $1,600 in the third quarter.
Our ongoing used vehicle stocking level of approximately 30-day supply enables us to react very quickly to market changes of this nature. Consumer demand in the U.K. remains steady and new vehicle availability is still constrained. Our new vehicle order bank remains at nearly 17,000 units, which is consistent with the end of June and represents more than a six-month backlog based on our 2022 sales pace.
As a reminder, our U.K. business mix is predominantly luxury brands, and those consumers are more resilient during times of economic uncertainty. We continue to believe that pent-up demand built over the past several years due to both Brexit and the very strict pandemic lockdowns will help drive strong U.K. vehicle demand well into 2023. We're also seeing continued strength in the state of Texas.
The market once again collectively outperformed our total U.S. same-store growth in new vehicle sales, used vehicle sales, after sales, and net profitability. Texas demographic trends continue to be a positive tailwind for the company due to population growth, reasonable cost of living, low taxes, and a friendly business environment.
We believe our geographic exposure is both a near-term and longer-term advantage for our company and shareholders. Finally, our company-wide after-sales performance continues to be a key profit driver. We delivered over 10% consolidated same-store gross profit growth on a local currency basis, which is even more impressive given the tough double-digit growth comps from last year's consolidated results. Our after-sales initiatives and recruiting efforts continue to drive outsized growth in this segment. To provide some color on our U.S. second quarter performance, I'll now turn the call over to Daryl Kenningham.
Thank you, Earl, and good morning, everyone. As of September the thirtieth, we had 5,000 U.S. new vehicle units in stock. That represents a 15-day supply, a slight increase from June. Inventory increases mainly in our domestic brands as import brands remain very constrained. As a reminder, 30% of our U.S. business is Toyota and Lexus, which continues to be very tight at a combined five-day supply.
Despite fewer new car sales in the quarter versus a year ago, our same-store used retail sales increased 2% in an industry that was down 12%. Our organic sourcing efforts continued successfully during the quarter, including 10,300 vehicles acquired from individuals through AcceleRide.
As a franchise dealer, we also have a distinct advantage over used-only operators due to our numerous organic sourcing channels available only to us, including our service drives, the lease returns, OEM closed auctions. Although the quarter presented a challenging used vehicle pricing environment, we maintained our discipline with a 31-day supply of used inventory. As Earl mentioned, this allowed us to quickly rebase our inventories at current market prices.
Our U.S. after-sales performance was outstanding once again, generating double-digit same-store gross profit growth despite facing mid-teen growth comps from a year ago. For our technician recruiting and retention efforts, we increased our same-store technician headcount by 14% versus the third quarter of 2021. Following a very strong 2021, our customer pay business generated 11% same-store revenue growth compared to a year ago, and our collision revenues increased 21%.
We foresee our after-sales business continuing to be a strength over the course of 2022 and into 2023. Our F&I business was up $174 per retail unit retailed in the quarter. We're seeing improved product penetrations nearly across the board. We continue to maintain cost discipline despite the normalization of used vehicle margins.
Our third quarter adjusted SG&A as a percentage of gross profit was 60.6%. An increase of roughly one percentage point over the first half of 2022 and down from over 70% in the pre-pandemic third quarter of 2019. Lastly, I'm happy to say that our customers continue to vote yes on AcceleRide. We sold an all-time record 7,600 vehicles through AcceleRide in the second quarter. In the third quarter, 11% of our U.S. retail sales, also an all-time record.
Just as important is that 74% of our customers used AcceleRide in their transaction in some way in the month of September. We're also looking forward to our full integration of AcceleRide with our DMS, CRM, and credit software. We continue to test it in several dealerships and expect a full rollout in the months ahead.
Our early results are very positive, and we expect this will provide faster and more transparent transactions for our customers. I will now turn the call over to our CFO, Daniel McHenry, to provide a balance sheet and liquidity review. Daniel?
Thank you, Daryl, and good morning, everyone. As of September 30, we had $21 million of cash on hand and another $218 million invested in our floor plan offset accounts, bringing total cash liquidity to $239 million. We also had $551 million available to borrow on our acquisition line, bringing total immediate available liquidity to $790 million.
Through the first nine months of 2022, we generated $730 million of adjusted operating cash flow and $647 million of free cash flow after backing out $83 million of CapEx. This capital was deployed through a combination of acquisitions, share repurchases, and dividends. This year to date, we've spent $460 million, repurchasing nearly 2.7 million shares at an average price of $171.10.
Over the last 12 months, we have repurchased 20% of our share float. Our share count as of today is approximately 14.6 million. This significant repurchase activity, in addition to the acquisition of over $2.5 billion in revenues over the last 12 months, illustrates our commitment to accretive capital allocation. Our net-adjusted leverage ratio, as defined by our U.S. syndicated credit facility, was 1.8 x at the end of September. Our strong balance sheet will continue to allow meaningful and balanced capital deployment. Finally, related to interest expense, our quarterly floor plan interest of $6.5 million was an increase of $2.2 million from the prior year due to both higher vehicle inventory holdings and interest rates.
Non-floor plan interest expense increased by $6.5 million from the prior year, primarily due to the debt raised in conjunction with the Prime acquisition. As a reminder, the majority of our debt has been fixed through interest rate swaps. As of September 30, 77% of our $2.7 billion in floor plan and other debt was fixed.
Therefore, the go-forward annual impact to EPS is only $0.32 for every 100 basis point increase in the secured overnight funding rate, or SOFR, which is the benchmark rate referenced in our floor plan and mortgage debt instruments. For additional detail regarding our financial condition, please refer to the schedules of additional information attached to the news release, as well as the investor presentation posted on our website. I will now turn the call back over to Earl.
Thank you, Daniel. In 2022, we have continued our focus on high-quality external growth actions with the purchase of six dealerships that are expected to generate $740 million of annual revenues. These dealerships add to our existing scale in the Austin, Albuquerque, and Shreveport markets in the U.S. and the Southend market in the U.K.
Growing our U.S. and U.K. businesses remains our top capital allocation priority. However, our balance sheet, cash flow generation, and leverage position will continue to support a flexible capital allocation approach, which will likely include further share repurchases in addition to the 20% of our outstanding shares we have repurchased over the last year. This concludes our prepared remarks. I'll now turn the call over to the operator to begin the question and answer session. Operator?
Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. We ask that you please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. Our first question will come from Daniel Imbro with Stephens. You may now go ahead.
Yep. Hey, good morning, guys. Thanks for taking our questions. My first question I want to throw on the new side of the business. You know, obviously, days inventory is very steady. You talked about a kind of forward order book of demand here. What does that look like compared to a few months ago, if I think about how much of your inventory is maybe pre-sold here in the U.S.?
Thinking about seasonality on the new side, you know, typically GPUs step up in the fourth quarter. I'd say now is anything but normal, but how should we think about that seasonality playing out in this environment in light of the order book that you're seeing today?
Daniel, this is Daryl. I will take the US side of that, and then Earl will speak to the UK side of that question. Again, the US, start with the end first. The OEMs are optimistic about the fourth quarter with the inventories that are up a little bit, especially in certain brands. I believe we'll see some of that materialize. I really will.
Some of the supply chain issues that hurt the industry over the last year and a half or so, a lot of those are behind us. We're seeing smoother flow of vehicles, and that will impact the fourth quarter in a positive way in volume. We're still tracking at under a 12 million unit retail SAR in the US, so there's still plenty of demand.
When we look at our pre-solds in the U.S., they are about even with where they were in the second quarter. We feel like there's still plenty of demand there. In the U.K., as we mentioned in the script, we've had no material change to our new vehicle order bank, which is somewhere around 17,000 units. In the last two or three quarters, we're just retailing a little over 7,000 units per quarter. You can see that's a healthy backlog. What we're seeing in the U.K. that supports the continuation of that is a wave of new models, particularly from the luxury brands we represent, that are either plug-in hybrid or battery electric vehicles.
There's a dynamic in the U.K. market that really stimulates further new vehicle purchases because of the tax scheme that supports plug-in hybrid, battery electric or, you know, alternative fuel vehicles. A big part of the U.K. market we would call fleet in the U.S., but it's really company cars, and it's known as a user-chooser market.
The people who drive these vehicles, although their company pays for the vehicle itself, these individuals who drive it pay the tax. Over time, it's going to be more and more advantageous for them to buy new vehicles with either battery electric or plug-in hybrid technology. We're seeing that as it continues to refill our order bank.
Daryl, did I miss it? Did you mention the seasonality of GPUs? Like, you know, regular seasonality would say things improve, but obviously, it's not like production's gonna improve. So would you guys assume new GPU maybe steps down a bit in the fourth quarter, just given that comment on volume?
I haven't predicted GPUs correctly in years. Daniel, I hate to throw out a guess, but I do know this. One of the things that we believe in and we see every day is relationship with our captives. They will support a lot of business.
That makes sense. For my follow-up question, I want to ask on AcceleRide. Specifically curious, as you continue to scale it, and we see penetration jump, you see usage jump, what have you learned about the long-term cost-saving opportunities? Is it more than you thought it might be? Is it less? Just trying to understand, you know, as more of the consumer does this online, like, what does that mean for the long-term SG&A profile of the business?
Well, I believe, over time, what you see is a selling model that changes for customers and for the way we staff our stores, schedule our teams, the type of people we hire and the skill sets. I think there's definitely, historically, as a retail business, we've staffed to cover the hours that we're open.
In today's world, we're staffing more for the appointments that are set and driven through AcceleRide. You know, that has a big change on the way we will staff. We're seeing the productivity improvements are holding, that we've seen since AcceleRide, and they continue to hold even as buys start to increase. But yeah, I believe that we'll see a different staffing model moving forward.
I think it's not an overnight, it's not a light switch, but I do believe that it will evolve.
Daniel, it's Daniel here. I think there's one thing that I would say in addition to what Daryl said. I think it'll also help us having the integration of AcceleRide, our DMS, and CRM and credit software all in one place as well. I think that will give us further synergies once we roll that out throughout our stores.
Our next question will come from Michael Ward with Benchmark. You may now go ahead.
Thanks. Good morning, everyone. I think two areas of your business that seem to be outpacing the rest of the market are the F&I and service. Just today, I think you're saying that your technician count is actually increasing. It sounds like you're getting a lot of retention. Somehow they all seem to be connected. Can you talk about some of the things you've done, you know, over the last several years, that's building on that and what it means going forward?
Mike, this is Daryl. I'll speak to service. Pete will speak to F&I. Service, we firmly believe we have to be, philosophically, have to be available when our customers want to do business with us, so we try not to limit our schedules in our shops. We try to be open as much as possible and have as many appointment slots as available as possible.
That's different from some of our competitors. Some of our competitors will limit appointment slots. We don't like to do that at all. Second thing is we have several retention programs in place for technicians. You know, some of them are recruiting-based mentor programs. We ensure that our pay is at or above market with our technicians.
That's strategically one of the most important things we can do to be successful in after sales moving forward. What we've seen over the last few years is human capacity will drive your volume, and we can provide customers with a reason to be coming to our stores, but if we don't have people to work on the cars, that doesn't. That's where a lot of our focus and emphasis is. You know all about our four-day workweek and that scheduling process, and then we're using more and more technology to try to drive efficiency in our shops as well. Operators operate at a very high level.
Mike, on the F&I, we're very pleased as we continue to improve on our processes. You know, the fact that we increased to $174 for the quarter and $218 same store. It continues to be a process improvement, and you know, we're very pleased with how our product penetration rates have increased. We have not seen any headwinds with lending whatsoever. We're bullish moving forward on the F&I business.
As you integrate these different acquisitions, how fast can they come on to the GPI system, whether it's AcceleRide or your call center? I mean, how fast are they brought in? Are they able to see a pretty quick improvement in service or F&I?
Mike, Daryl, we try to integrate them as quickly as possible on all of our technology, on our phone systems, on AcceleRide, on everything we do. Sometimes we space that out a little bit, just depending on if the DMS has to change, because that's a huge change in a store. If the DMS has to change, we might take, say, a month or two to do that, but generally, we try to get them on as quickly as possible.
Our next question will come from John Murphy with Bank of America. You may now go ahead.
Good morning, guys. Just a first question for you, Earl. Is this the last conference call you're gonna be doing as CEO, I believe?
Yes, by popular demand, it will be the last one I'm doing. It's my seventieth and final one. Yes, John.
Well, well, congratulations, Earl, for a very long great run at Group 1 in the industry. Daryl, you've had a great run, but we expect a lot more, so congratulations to you, too. I hope that doesn't count against my question count here, but maybe.
That was the easiest question I've ever had, John.
Yeah. Well, congratulations, really. It's been a great run. On aftersales, to follow up on Mike's, you know, question. I mean, Daryl, as you think about capacity utilization, you know, how do you think about that, you know, now and where you're at and where you ultimately can go? I mean, we know that the four-day work week has been very helpful, but I mean, you know, where are you on capacity utilization and where do you think you can go in the service bays?
Well, we have stores, John, where we have 10 service bays and 17 or 18 technicians. We have other stores, one of our Toyota stores in New England I was just at a couple weeks ago, we have 29 service bays and 45 technicians. We feel like, while we may not be able to have that ratio at every store, we feel like we can definitely have more technicians than we have physical stall count.
That doesn't mean we won't invest in more brick-and-mortar for service capacity. Where we do see that need is especially in some acquisitions we do. We tend to see that the acquisitions are underbuilt in aftersales, especially for our taste, so we will invest there. We feel like there's more upside.
I would also say in the U.K., I think, Earl would tell you that we have a lot of upside in the U.K.
Yeah, this is Earl. I do think our one of our big growth opportunities in the future, which Darryl is fully aware of, and he's toured a lot of these shops with me in the U.K., is we are not yet at the same level of aftersales sophistication in the U.K. that we are in the U.S.. The brands we have there, such as Audi and BMW and Mercedes-Benz and Land Rover, will really support a lot more service business for us if we can implement some of the general concepts that we've been able to implement in the US in aftersales.
Okay. That's incredibly helpful. Just one follow-up on the F&I PVR. Can you give us a breakdown of the components of that $21.25? 'Cause I think there's a lot of concern that, you know, rates might be rising and that's gonna, you know, compress your F&I PVR or, you know, pricing might come down and that might compress F&I PVR. I mean, what are the major components of that $21.25, so that we can understand, you know, what the risk or opportunity may ultimately be there?
Sure, John. This is Pete. About a third of the business comes from origination of financing loans. The rest of it comes from product sales. It's been like that for a long time. We're very happy with the equilibrium. The key is to keep that one-third rate and the rest. The increases come from additional product penetration, and we still got some room to run.
Our next question will come from Rajat Gupta with JP Morgan. You may now go ahead.
Great. Thanks for taking the question. You know, maybe you know, just to address you know, with the economy and there's clearly a lot of uncertainty around there. You know, we've heard mixed commentary from private and public dealers around underlying demand trends.
Curious to get a take on how you're feeling about you know, the health of the consumer in general, you know, underlying demand trends into the fourth quarter, you know, maybe into next year as well. Maybe for planning purposes, if a doomsday scenario does turn out to be true and 2023 is a recessionary year, are you able to give us a sense of, or any boundaries on how we should think about the earnings power of the company?
What are the key variables that would go into those assumptions? I have a follow-up. Thanks.
This is Earl. I'll kind of take the first shot at a bit of that. We can't deny that on a broad basis, consumers are under pressure when there's inflation at this level and this type of economic turmoil. The majority of our business is with higher income people, not just necessarily with luxury brand business, which dominates in the U.K. and is a big part of our U.S. business.
When you look at the vehicles that OEMs are building and our average sale price, which is somewhere near $50,000 these days, you know, we are dealing with people who have the wherewithal to continue to buy vehicles, even though the monthly payments are some significant amount above where they were two or three years ago.
This backlog of vehicles in both markets that we operate in are generally pretty expensive vehicles. In addition, most of the used cars we sell tend to be at the higher end of the used car market, which is, let's say, three years old or younger. That's the business we're in. We're in a franchise business. Again, as Darryl mentioned, the affordability of a vehicle is generally a financing matter. These captive credit companies of our major partners are very powerful. The combination of that and the cushion between the level of supply and demand is something that's gonna give us some legs. Clearly, there's some normalization that's going to occur and has occurred.
We've seen normalization in used vehicle prices in both the U.S. and the U.K. this year, and that's why we mentioned we had to be very responsive and reactive to flush those vehicles out of our system, which we're able to do because we only have a 30-day supply. That's one of the advantages of this business model, is we can react.
Nothing in the pace of normalization has surprised us. We have been prepared for it. We'll continue to be prepared for it, and our business is flexible enough where we'll continue to react. We don't have any big trepidation about next year or anything like that. Our core businesses, such as after sales and new vehicle sales, are gonna remain strong in the near term.
Raj, it's Daniel here. There's a number of things that I would add to what Earl has to say. You know, the core of our business is our parts and service business, and if we look back to the 2008 recession, the parts and service business contracted by far less than any other element of our business.
It was kind of mid-single digits that it contracted, and I think that will set us in good stead should there be a recession in 2023. You know, as well as that, you know, we've continued to grow our company with our capital allocation, either through the share buybacks that will help towards our continued EPS as well as growing the company by nearly $3 billion in revenues over the last 18 months.
I think a combination of that will help us weather any recession.
Let me just make one more point, if I might. Both of these markets we operate in, the U.K. and the U.S. In the U.K., this is the third straight year of 1.6 million units of industry sales. This is a market that four or five years ago did 2.7 million units. Those are recession-level sales that we've operated under three straight years. The U.S. we're running at what? 13.3, 13.5. Historically, those are recession-level sales. Those. That's 2 million units below what you would normally expect, even in just kind of an average economy. You know, we have already been operating at recession-level new vehicle sales.
Got it. Maybe just before I ask this, the follow-up question, you know, also wanted to echo John's comments and, you know, congratulate both, you know, Earl and Daryl, going forward. Just on SG&A, you know, in the past, you had mentioned, 300 basis points of, you know, structural SG&A to gross reduction, versus pre-pandemic when GPUs would revert to normal.
Is that still a good framework to think about? You know, you mentioned earlier that productivity is sustaining. You know, there are other back-end integrations happening around the DMS and the credit apps. You know, and some of your peers have also talked about a higher degree of permanent reduction.
I was curious to get your latest thoughts on that as well, you know, on what level of SG&A gross should be a more normalized number, when GPUs do go back to normal.
Sure. Raj, hi, this is Daniel. If you look at where we were pre-pandemic 2019, you know, as a company as a whole, we were at 74% there or thereabouts. In terms of where we are with our modeling at the moment, we don't ever see our SG&A subject to world recession or any kind of disaster going back to about 70%. As of today, it's sitting in our early 60s. You know, clearly as the margins move, it will be somewhere between 61% and 70%.
Again, if you have a question or another follow-up, please press star then one. Our next question will come from Ali Faghri with Guggenheim. You may now go ahead.
Hi, everyone. Thanks for taking my questions. So your new car GPU remained strong in the quarter, but I guess, are you seeing any signs of a more meaningful GPU compression in maybe September or October? Then I guess as part of that, what's your expectation on when new GPUs will fully normalize? One of your competitors reported last week and talked about new GPU likely to normalize by mid- to late 2023. Curious your thoughts on that and if your view differs.
Ali Faghri, this is Daryl . You know, we're seeing some a little compression. Our results show that, you know, from quarter to quarter. When it will normalize, I don't know. I think the OEMs in general have more discipline on supply. I believe that. If you know, the OEMs' results are very good as well, their earnings are very high at these kind of production levels. You know, I think they found a model that works for them as well. Hopefully the days of the distribution channels being stuffed are behind us.
Even in the brands where we see a little higher day supply today than we did in the second quarter, they're still very reasonable, you know, 20 days or something like that, rather than six or seven. That's terrific. That gives customers a little more choice and helps us satisfy a need a little quicker than we've been able to. We're pleased with that. I can't forecast, you know, what quarter it might be or what month it might be. I don't know. I do believe that the model works, and they'll continue to try to drive it this way. Daniel, let me see if I can add some color for you, at least on the U.S. part of the business.
We've mentioned several times that pre-COVID, Group 1 Automotive had 29,000 new vehicles in inventory. We have been quoting for a year that we've had less than 4,000. I think what Daryl told you today is, yeah, we do have more vehicles now. We have 5,000. We have 5,000, not 29,000. We have 35 more dealerships at the moment than we had when we had 29,000.
Maybe that gives you a frame of reference. Now, 25% of our company is Toyota and Lexus. A week ago, I spoke with the general manager of one of our biggest Toyota dealerships. Pre-COVID, this Toyota dealership had 1,000 new Toyotas on the ground at all times. I asked the person how many they had on the ground last week, and the number was seven. Seven.
I think Daryl mentioned we have a five-day supply of Toyota, and that's 25% of our company. Yes, there are some brands that will normalize more quickly than others, but we are not anywhere in the ballpark of pre-COVID-19 inventory levels.
That's really helpful color. A follow-up, if I may. On the F&I side, so clearly remain strong in the third quarter. Sounds like you aren't seeing any real headwinds yet, but maybe you can talk about how much of the improvement in F&I per unit versus 2019 is structural versus cyclical. I think maybe put another way, what's your expectation for F&I per unit into 2023 as new and used car ATP start to inevitably normalize and maybe vehicle affordability challenges cause consumers to purchase fewer insurance products?
First, I'm not sure if, you know, normalize on ATPs is gonna really happen. When you think about the price of these cars and what the customers want on these cars with technology. You know, I don't think we're gonna see headwinds there. I do think this is structural, and I think that you look at the history of our performance with F&I, it's been very solid with an increase over the last 15 years. We're, as I said earlier, we're bullish on the F&I business, and as you model, I think that you can look at the levels that we have today and feel comfortable with them.
Great. Thanks for taking my questions. Earl, congrats on the retirement and best of luck.
Thank you so much.
This concludes our question and answer session. I'd like to turn the conference back over to Earl for any closing remarks.
Thanks to everybody for joining us today. The team will look forward to updating you on our fourth-quarter earnings call in February.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.