Day, and welcome to the Rollins Inc. 2nd Quarter 2017 Earnings Conference Call. Today's conference is being recorded. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will be given at that time.
I would now like to introduce your host for today's call, Marilyn Meek. Ms. Meek, you may begin.
Thank you. By now, you should have all received a copy of the press release. However, if anyone is missing a copy and would like to receive 1, please contact our office at 212-827-3746, and we will send you a release and make sure you are on the company's distribution list. There will be a replay of the call, which will begin 1 hour after the call and run for 1 week. The replay can be accessed by dialing 1-eight eighty eight-two zero three-eleven twelve with the passcode 4,118,006.
Additionally, the call is being webcast at www.viavid.com and a replay will be available for 90 days. On the line with me today and presenting are Gary Rollins, Rollins' Vice Chairman and Chief Executive Officer John Wilson, Rollins' President and Chief Operating Officer and Eddie Dorson, Vice President, Chief Financial Officer and Treasurer. Management will make some opening remarks and then we'll open up the line for your questions. Gary, would you like to begin?
Yes. Thank you, Marilyn, and good morning. We appreciate all of you joining us for our Q2 2017 conference call. Eddie will read our forward looking statement and disclaimer and then we'll begin.
Our earnings release discusses our business outlook and contains certain forward looking statements. These particular forward looking statements and all other statements that have been made on this call, excluding historical facts, are subject to a number of risks and uncertainties, and actual risks may differ materially from any statement we make today. Please refer to today's press release and our SEC filings, including the Risk Factors section of our Form 10 ks for the year ended December 31, 2016 for more information and the risk factors that could cause actual results to differ. Thank you, Eddie.
We were pleased to have posted record results for the quarter as well as our 45th consecutive quarter of improved revenues and profits. For the quarter, revenues grew 5.5% to $433,600,000 compared to $411,100,000 for the same period last year. Net income before taxes rose 11.9 percent to $86,100,000 compared to $77,000,000 for the Q2 of 2016. Net income rose 12.4 percent to $53,700,000 or $0.25 per diluted share compared to 47,800,000 dollars or $0.22 per diluted share for the same quarter last year. In the second quarter, all of our business lines experienced good growth with residential up 5.9%, commercial pest control grew 5.1% and termite and ancillary rose 6.1%.
Revenues for the 1st 6 months grew 5.9 percent to $808,000,000 compared to $763,900,000 for the same period last year. Net income increased 17.9 percent to 93,900,000 dollars with EPS of $0.43 per diluted share compared to $79,700,000 or $0.36 per diluted share. While John and Eddie will provide greater detail in a moment, I want to personally express how pleased we were to have announced yesterday our acquisition of Northwest Exterminating Inc. We have long admired Northwest, their management team and accomplishments and believe that they'll be an exceptional addition to Rollins. Founded by the Phillips family in 1951 and headquartered on the outskirts of Atlanta in Marietta, Georgia, Northwest has been servicing the Southeast, Georgia, Tennessee, Alabama, North Carolina and South Carolina for over 65 years.
We look forward to working with the Phillips family and the Northwest team. During the quarter, we were also pleased to have expanded Orkin's presence internationally by adding 6 new franchises in Central America, South America and Southeast Asia. These franchises are located in Nicaragua, Lima, Peru, Sao Paulo and Rio de Janeiro, Brazil and in Jakarta, Indonesia. We now have 76 franchises located around the world building our Orkin brand. The new franchises will offer commercial and residential pest control as well as termite services where appropriate.
The franchisees will receive their initial training at our award winning training center here in Atlanta and they will receive ongoing training at their home location. As a people business, we believe the ability to advance employees within our organization is important to the continued success of our company. In early May, we were therefore pleased to announce that Beth Chandler, Vice President, General Counsel, has now assumed oversight for the Rollo's internal audit department. Coinciding with this, Beth will also be serving on our executive steering committee. Beth joined Rollins in 2013 as General Counsel and her role was later expanded to include the risk management group.
And as I mentioned, we're now adding the internal audit group to her responsibilities. This alignment provides stronger coordination between risk, legal and audit, all with the focus of improving our fiduciary compliance. Congratulations are in order for Beth, and we look forward to her future contributions. I'll now turn the call over to John.
Thank you, Gary. I too want to say how pleased we are to welcome Northwest Exterminating to the Rollins family of brands. The company has an excellent reputation and provides residential and commercial services, including eco friendly pest control and termite control solutions, wildlife services for animal control and removal and mosquito and bed bug services in each of the 5 states in which they operate. For their fiscal year ended 2016, Northwest recorded revenues of over $50,000,000 The company has 23 locations and 500 plus team members serving approximately 120,000 customers. Their revenue and customer base will significantly increase our market share in the Southeast.
As Gary stated earlier, Northwest is a company we have been attracted to for a long time. Their people, their culture and their commitment to quality service are all attributes that we value when we look for the right company to add to our team. As we have successfully done in the past, our plan is to support their impressive results, while sharing best practices with one another. Northwest will be identifying areas of synergy that they can leverage by being part of Rollins. The addition of Northwest fits our strategic model and profile for acquiring leading regional pest control companies that will strengthen our company.
We know that in the highly competitive service industry, a company's positive culture helps create the environment for customer and employee retention. When you get the culture right, like Northwest obviously has, their team members drive customer loyalty and subsequently provides exceptional organic growth. Simply put, a company like Northwest is an ideal fit for Rollins and aligns perfectly with our long term business philosophy and strategy. As demonstrated in the past, Rollins has long distinguished itself acquisition wise by retaining key management, which helps us improve the overall business. Northwest Exterminating is no exception.
The Phillips family with its second and third generations of family members, Steve, Stephen and Stanford Phillips, along with their impressive and highly tenured management team will continue to lead the Northwest operations. We are delighted to have them and all their employees as part of the Rollins Group of leading pest control brands. People and people development are paramount to the future of our company. Rollins leadership is fully cognizant of this and we have set this as a top priority for our organization. Last quarter, I talked about our employee onboarding process.
In future quarters, I'm going to talk more about this as well as our employee development initiatives. We will be investing a lot of time and energy in these areas to ensure that we attract and retain the best employees possible across all areas of our business. I will now turn the call back over to Eddie.
Thank you, John. Growing our business and the Rollins brand is always exciting for our company. When we look back over the acquisitions through the years, each time we have grown our top line revenue, customer count, net income and expanded our margins. We believe with Northwest that pattern will continue in a very positive way. I would also like to add my welcome to the team members at Northwest.
When our family first moved to Atlanta 4 years ago, it was Northwest that knocked on our door and provided excellent pest control and termite services. The only sad thing for my family about my move to Rollins was having to part ways with our Northwest Pest Technician. But as a side note, my wife does now love her Orchid Technician, so it worked out okay. I know firsthand that they are a quality company and how incredible their team members are at serving the customer. While growing the business this way is exciting, our bread and butter is still our consistent recurring organic growth that John mentioned and is a great area that Northwest has done extremely well.
For the quarter, all of our service lines showed balanced improvement and key to the quarter included strong organic growth, continued margin expansion tied to BOSS and virtual route management and an ongoing positive tax impact due to accounting standards update ASU 20 sixteen-nine related to our stock based compensation. Looking at the numbers, the company reported 2nd quarter revenues of 433,600,000 dollars an increase of 5.5 percent over the prior year's 2nd quarter revenues of 411,100,000 dollars For the quarter, income before income taxes increased 11.9 percent to 86,100,000 dollars Net income increased 12.4 percent to $53,700,000 with earnings per share up 13.6 percent to $0.25 versus $0.22 per diluted share last year in the 2nd quarter. Our revenue for the 1st 6 months was $808,800,000 and that's a 5.9% growth rate. That number is directly in line with our 2016 full year growth rate. Income before taxes was up 143,400,000 dollars up 11.9 percent and net income was $94,000,000 an increase of 17.9%.
As a reminder, our Q1 net income was positively impacted by the stock based compensation tax changes. Earnings per share were $0.43 compared to $0.36 last year, up 19.4%. Operations has absorbed the increased summer demand extremely well. Let's take a look through the revenue by service line for the Q2. Our total revenue increase of 5.5% included 0.6% from acquisitions and the remaining 4.9% was organic growth.
This organic growth rate is the best Q2 growth rate in 5 years. In total, residential pest control, which made up 42% of our revenue, was up 5.9%. Commercial pest control, which made up 39% of our revenue, was up 5.1% and termite and ancillary services, which made up approximately 19% of our revenue was up 6.1%. The lapping of Murray Pest Control in Australia had a slight impact on the overall growth rate. The total revenue less acquisitions was up 4.9%.
From that, residential was up 6%, commercial increased 3.6% and termite and ancillary improved by 6%. When you take a look at the quarter, taking out the impact of foreign exchange, in total, we grew 5.2%, residential grew 6.1%, commercial pest control was up 3.9% and termite improved 6.4%. While our field team performed very well this quarter, our marketing group continues to do an outstanding job creating demand and is a key reason for our strong organic growth. This month, our Chief Marketing and Strategy Officer, Kevin Smith, invited me to tag along for a meeting with Google and Silicon Valley to take a look at our current initiatives in the space of digital marketing and learn about opportunities related to demand creation moving forward. We learned a lot on the visits and while we may not be adding sand volleyball courts or nap pods to our Atlanta office anytime soon, we did get a chance for some other great takeaways as we assess the market while expanding our use of technology.
A key takeaway was our ability to continue to enhance our digital footprint with a goal of improving access for our customers with special emphasis on enriched mobile format experience. This is a great example of the bold forward thinking by our marketing team that has sustained our growth over the past several years. As we assess these technology updates, we will keep you updated. In total, gross margin improved to 52.8% for the 2nd quarter compared to 52.3% in 2016. The margin for the quarter benefited from improved efficiencies in routing and scheduling technology, which also helped us increase productivity and to lower payroll as a percent of revenue.
The gains that we experienced were partially offset by higher fuel prices and leased vehicle costs. While the cost per gallon increased, the miles driven per vehicle were down a little over 4%. We believe this is in part the result of the improved efficiency from our enhanced routing and scheduling through the virtual route management system. We expect to continue to see these benefits over time. Depreciation and amortization expenses for the 2nd quarter increased $1,200,000 to $13,500,000 an increase of 9.7%.
This percent increase will continue to subside as we lap our 2016 rollout of the BOSS initiative. Depreciation was $6,700,000 increasing $713,000 with most of that increase related to our BAW software, iPhone and printer depreciation. Amortization was $6,900,000 which increased $484,000 with amortization of intangible assets increasing due mostly to amortized contract customer contracts of the acquisitions of Murray Pest Control and Scientific Pest Control in Australia, as well as various work and acquisitions throughout the year. Sales, general and administrative expenses for the 2nd quarter increased $3,100,000 or 2.5 percent to 29.9 percent of revenues, down $9 of a percentage point from 30.8 percent for the Q2 last year. The decrease in the percent of revenue is due to lower administrative salaries as a percent of revenues, which continues to see incremental gains from the BOSS project.
As planned, the company experienced increased sales salaries, sales promotion and advertising expenses directed towards increasing sales and revenue. As for our cash position for the 6 months ended June 30, 2017, we spent over $6,000,000 on acquisitions and $50,000,000 on dividends, an increase of 14.7%. We had $11,200,000 of capital expenditures, which was down 39.1 percent from 2016, primarily from the completion of the BOSS project. Rollins ended with $194,800,000 in cash, up 54.1% from last year. Large portion of our cash balance will be used for the Northwest acquisition, but by no means would this limit our ability or appetite to continue to pursue good quality pest control and wildlife companies like Northwest as we move forward.
As you're probably aware, we hold $175,000,000 line of credit and a $75,000,000 credit sub facility that we would be willing and ready to use for the right opportunity. For many years, Rollins has been considered the acquirer of choice for many family owned companies. We feel that we are in a great position to continue to deploy capital to get the best return for our shareholders. From 2004 through 2010, the majority of our acquisition opportunity was only in the U. S.
With the purchases of Western, ISC, HomeTeam, Crane, Waltham and TruTex, all of which are still run as independent brands. By expanding our pool for M and A opportunity outside of U. S. Pest control, we've been able to continue to add quality companies to our portfolio of services in Australia and the UK. Our entry into the wildlife industry here in the U.
S. Also has provided great expansion opportunities. Let's circle back to get some further details on Northwest from a financial perspective. Northwest's historic growth rate is above our overall Rollins historic growth rate and we see that continuing by increasing prices, expanding sales of general pest to existing termite customers, continuing to grow the commercial pest services business, continuing to grow the mosquito service offering and possible geographic expansion. As stated earlier, we will run Northwest as a standalone company in our specialty brands category.
As we look to make margin improvements, a guiding principle when assessing our cost saving synergy is to 1st and foremost consider what is best for our new team members and their customers. We always want to make sure we are making things better. With this in mind, we will evaluate opportunities in our back office support, utilizing Rollins' purchasing advantage on materials and supplies, and where appropriate using Rollins' negotiated rates for vehicles and telephones just to name a few. As is the case in most pest control acquisitions, there were little tangible assets that will be acquired from Northwest. From an accounting perspective, the majority of what we book will be goodwill and customer contracts.
As a result, we will record an annual non cash charge of approximately $5,000,000 in amortization and interest expense. This will minimize our accretion in 2017, but we feel that it will add between a $0.005 and a $0.01 in 2018. Last night, the Board of Directors declared a regular cash dividend of $0.115 per share that will be paid on September 11, 2017 to stockholders of record at the close of business August 10, 2017. The cash dividend is a 15% increase over the prior year. We are pacing to have the 15th consecutive year that the board has increased our dividend by a minimum of 12%.
Our continued organic growth coupled with our profit improvement and this excellent new partnership with Northwest have us well positioned for an excellent 2017. I'll now turn the call back over to Gary. Thank you, Eddie.
Well, we'll be happy to answer any questions that you might have at this time.
Thank And our first question comes from Joe Fox from KeyBanc Capital Markets. Please go ahead.
Hey, good morning, gentlemen.
Good morning, Joe.
So thanks for giving some color on Northwest. I appreciate that. Obviously, this was a sizable deal. I was hoping maybe you could put some additional parameters around the transaction, maybe in terms of margin profile, multiple paid? And then I don't know if you can give any color on what the breakdown would be between commercial, residential and termite or just a comparison if it's heavier or lighter relative to your current book of business?
Yes, Joe. So from a competitive perspective, we're not going to give a lot of details of the deal. This is a sizable acquisition. In the press release, it talked about their 20 16 reported revenues of over $50,000,000 So this is our largest deal that we've done since HomeTeam. Their growth rates, as I mentioned in my prepared remarks, are better than our overall Rollins historic growth rate.
Margins are going to help us overall. When you take a look at the business, the business is structured a lot like the home team business. They have Northwest has excellent relationships with a lot of builders, which has really enabled them to really have a foothold in the residential and the termite areas of the business. So I think from a structure perspective, you're going to see a little bit more weight in those areas, which have been very positive for us from the home team perspective.
Got it. And I guess with the business operating separately, aside from just back office and probably some procurement savings that you guys could pick up, can you just talk to maybe how you plan to leverage Northwest?
I think the fact that there are great brands in the Southeast. Their growth rates again have been significantly better than our overall growth rate. So adding them to the Rollins brand of families is going to be an excellent opportunity. From a tax perspective, it's a positive for us. The structure of the deal was done in a very tax effective manner, which is going to enable us to amortize the intangibles over a period of time from a tax perspective.
So the financial side is going to be positive. And it's another brand in the Rollins family of brands that's going to continue to help us grow.
Last one for me, kind of changing gears. I just want to dig into the 43% incremental EBIT margin in 2Q. Can you maybe just help us understand how much of that incremental margin tailwind came from your traditional price volume improvement that you saw in the quarter, whereas how much of the benefit maybe came from the BOSS tailwinds?
Well, I think the BOSS tailwinds continue to improve. I think every quarter we're seeing improvements that are coming from the routing and scheduling, which is the tag on to BOS. We're seeing improvements in the area of retention in certain pockets that have been on the longest, which of course is helping on the revenue side. So pricing continues to be consistent. We think good consistent pricing over the last now probably 7 years.
So I think that's a help for us. But I think the BOSS project overall, as we had said that we felt as though it would, we'll continue to pick up steam and we'll continue to see the benefits from that.
I guess maybe just to I don't want to hold you to something here, but I mean obviously at 80 basis points of margin expansion actually I'm sorry 120 basis points of margin expansion year over year. I mean was that 50% price volume, 50% BOSS?
I don't have that breakdown. It would be 50% loss. Yes.
Where you're going to see the benefit in BOSS is in your fleet costs, in your payroll and really the capacity. What we'll be able to do is the service technician will be able to take on more accounts because you'll be better organized, but it's going to be a slow situation. Just the nature of our business is that you're not going to go in and have your productivity go up 25% in 6 months or anything like that, but we're pleased with what we see. And I think at this stage, are about where we expected to be at this point.
Understood. Thanks guys. Nice quarter.
Thank you.
Next question comes from Joan Tong from Sidoti. Please go ahead.
Good morning. Congratulations on signing Northwest and the Rollins family. And I do have a question regarding the brand specifically, the Northwest brand. Can you just give us a little bit color? It seems like they are on the high end side in terms of pricing, the brand identity and strength.
Is it very similar to your Orkin brand?
Yes. I'll let John kind of help with that. He's really been been directly involved with this. But I'll tell you in the Southeast area here and as I mentioned with my personal story in the Southeast area here, they're very strong. If you take a look at the Atlanta area north of here and then up into the other states that we talked about in the Tennessee and Alabama and some into North Carolina, It's a regional brand that is extremely well known.
They've grown well over time and continue to expand their footprint
as they've gone through time? Yes, Joan, thank you for the question. Northwest is a company we've admired a long time. I've known the Phillips, both Steve, the father and his 2 sons. They have an excellent reputation for great customer service, tremendous tenure in their staff.
So they have a really, really good brand in the markets they operate. They are probably most similar to HomeTeam and that they leverage relationships with builders and in the markets that they are in, they are very good competitors with them, maybe compete less so with Orkin, but good business, very solid, great leadership, tremendous team and but
they have a more of
a residential mix and termite mix than Orkin does. Yes.
And Joan, just from a recognition perspective here, we have the Orkin Diamond that's recognized. Their recognition is from a pesky mouse that is kind of their spokesperson as far as their advertising and marketing concern, which has been extremely effective, I know in the areas here in the Southeast. So they're very well known from a recognition perspective and I think that's helped them with that. And of course the quality of service that they provided has been extraordinary through time.
Okay. Got it. Got it. And then historically, you guys have very disciplined with the valuation metrics when it comes to acquisitions. So I know that for competitive purposes, you can't really disclose a whole lot of information, but just want to make sure that is the valuation is within your sort of like historical discipline, the way we think about it?
Yes, it is, Joan. I mean, we're on the higher end, of course, we're a great quality company that we have here, but we're absolutely within the areas that we would normally be from an acquisition perspective.
Okay. Got it. Got it. And then how about on the margin expansion side, Joe asked a question regarding seeing the margin expansion pretty nicely showing up in your numbers. Obviously better than last quarter, like it seems like it might have been like fuel cost is less of a drag.
Can you just talk a little bit about like the puts and takes there? And what is the fuel cost increase year over year is negative impacting the 40% if there's any?
Yes. The fuel cost did impact the quarter. It was less than Q1. I don't have Joan that number in front of me. I can't get that for you.
Our miles that we reduced improved in Q2 than comparing it to Q1. So I think we're seeing continuing to see those incremental benefits from BOS and from the virtual route management piece. We're continuing to see it on the salary side. The portion of our salaries that we see are reducing in our overall non op functions continues to incrementally improve and we know that a piece of that is from some of the technology that we've been able to put in place. We talked in previous quarters about being able to use the technology of BOS on things like termite billing.
Those types of things were being manually done in the past and now they're being done using the technology through the BOS system. And each time that our IT team has been able to identify and our operations have been able to implement that, we're getting those incremental benefits. And I think we're just seeing the accumulation of that as we're going through time. I mean, adding on these new items and then also seeing the accumulation of those as we're moving forward in time. So miles per gallon definitely helps, but then the payroll piece has
been a substantial help as well.
Good, good, good. And then finally, I'll jump back in the queue. Is the digital marketing that you guys highlighted during your prepared remarks, any color like what specifically you're looking at and maybe the timing to like maybe invest a little bit more. You guys have already been like very proactive on that front. I just want to make sure that like are we talking about like the next 6 months or is it more like a 2018 event that you might have another step up perhaps in the technology spending?
We're actively evaluating everything with the customer experience perspective, both existing customers as well as customer acquisition. So before we get to a point where we're ready to move forward with any substantial dollars at all, we will absolutely share that information with you. But I feel confident we're down some good path both with specifically the marketing side, taking a look at the mobile enriched format as well as the items having to do with the strategy of the customer experience and the technology that would go around that.
Okay. Thank you.
You're welcome. Thanks. Our next question comes from Jamie Clement from Macquarie. Please go ahead.
Gentlemen, good morning and thanks in advance for taking my question. Good morning, Jamie. So with respect to Northwest and as their business relates to builders, I mean obviously with HomeTeam, we all think the TAX system, but in recent years it sounds like there have been a lot of successes down there in the pretreat business. Is the pretreat business with builders sufficiently geographically segmented where Northwest has an advantage over somebody like HomeTeam in the Southeast. Is that part of the attractiveness here?
How does that business exactly work?
Yes. Without going to a lot of specifics, I think your assessment of this is pretty well done. Northwest has been in this geographic area for 65 years and they've developed relationships with builders over that period of time and they provide a great quality service. So they've had a foothold with a lot of the builders in the Southeast area for a long period of time. And even when HomeTeam goes to compete against those types of relationships, honestly, it's been difficult for home team to necessarily compete in some of the markets where Northwest has had long term relationship.
And that's part of the attractiveness to this deal and to this company because of the longevity of the quality of service they provide and the longevity of those relationships. Okay.
Jamie, let me I may add. HomeTeam is a relatively new company in our industry 20 years.
Yes. Okay.
We had anniversary last year. And so Northwest has been in business for some 60 years. So HomeTeam has the tubes in the wall and they have good relationships with builders. Northwest has great people and great relationships with their builders. And while HomeTeam can't maybe have all the customers, we'll have Northwest take the rest.
How about that?
Okay.
Sure. Sure, absolutely. And a different line of question. It didn't really come up much in your prepared remarks. I think you mentioned it once or twice.
But can you talk a little bit about the mosquito business now that we're in the midst of the summer? It seems like 5, 10 years ago, maybe customers weren't necessarily convinced of the efficacy of casino of mosquito offerings out of your industry. It seems like now you all have demonstrated to customers that these services actually work. So expecting another summer of growth there?
Yes, for sure we are. And Jamie, this is an area that has always been kind of one of those add ons that we've had in the operations and we kind of sold it when there was time to sell it. Marketing and the operations grew maybe 2 years ago really decided we need to really put some more focus around this. Unfortunately, we were square in the time of the concerns on the Zika virus. So it was not something we were going to be proactive and go out and try to market and sell with the public beers that were out there.
Right. As customers reach out to us and if it makes sense at that point in time, we would talk to our customers about it. With the fears of Zika kind of subsiding some at least in the U. S, we actually ran our first ever national TV commercial, which was taking back your yard, if you haven't had a chance.
Yes, I noticed.
Yes. So that's the first time where we've done a national commercial. We've absolutely seen a positive impact from that. And a lot of our operations are squarely, squarely focused in on this opportunity. And now it's just been a matter of us being able help educate and prepare our technicians to make the ask is really what it's been.
And those pockets where they've been able to do that effectively, they've been able to see some good results. I was visiting in the St. Louis area with our South Central Division President, Mitch Smith, and they had things up on the wall a number of days in a row that they had selling Mosquito Lee, they had dollar amounts up there. So making it fun, making it interesting and making it something that's kind of front of mind. And the sell of the product is an easy sell.
If there's a need there, the product itself is an excellent, excellent product. A 95% retention rate for our mosquito customers. So once people have a need and they see the service, it's a service they really appreciate and they want to hold on to. That's kind of where we are with that and we've had good growth rates with that. We've had low teens to mid teens for our growth rate.
Low base, obviously a low base is not something we concentrated on in the past, but we feel as if this is an opportunity for us as we're moving forward in time.
Okay, great. And last one if I may for Gary. You had Western past predominantly operating in the east. Now you got Northwest predominantly operating in Southeast. What's the background of the game of Northwest Pest Control operating in the Southeast?
Any music story there?
Yes, John.
Yes, okay. John insists on answering.
I just happen to know, it was named Northwest way back in the 50s when they opened it on the Northwest side or section of Atlanta up in Marietta.
So Marietta is top county based primarily.
And it's really similar to Western because the way they got their name was that they were in Western New Jersey. Is that right? Yes. So but anyhow, they've done an excellent job with their advertising. As Danny said, they have John said, they have a mouse, very colorful drawings and artwork.
They do a lot of outdoor advertising with Outdoor and they've done a very good job promoting their brand.
Okay, terrific. Thanks so much for your time as always. Thank you.
Okay. No further questions. I'd like to thank you all for participating and being here today. We look forward to sharing our next quarter's performance with you and we'll be working diligently on the programs and really creating a beginning of a good working relationship with the Northwest people. Thank you.
And this does conclude our conference for today. Thank you for your participation. You may disconnect.