Lifetime Brands Inc
NASDAQ:LCUT
US |
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
|
US |
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
|
US |
Bank of America Corp
NYSE:BAC
|
Banking
|
|
US |
Mastercard Inc
NYSE:MA
|
Technology
|
|
US |
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
|
US |
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
|
US |
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
|
US |
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
|
US |
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
|
US |
Visa Inc
NYSE:V
|
Technology
|
|
CN |
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
|
US |
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
|
US |
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
|
US |
Coca-Cola Co
NYSE:KO
|
Beverages
|
|
US |
Walmart Inc
NYSE:WMT
|
Retail
|
|
US |
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
5.29
11.61
|
Price Target |
|
We'll email you a reminder when the closing price reaches USD.
Choose the stock you wish to monitor with a price alert.
Johnson & Johnson
NYSE:JNJ
|
US | |
Berkshire Hathaway Inc
NYSE:BRK.A
|
US | |
Bank of America Corp
NYSE:BAC
|
US | |
Mastercard Inc
NYSE:MA
|
US | |
UnitedHealth Group Inc
NYSE:UNH
|
US | |
Exxon Mobil Corp
NYSE:XOM
|
US | |
Pfizer Inc
NYSE:PFE
|
US | |
Palantir Technologies Inc
NYSE:PLTR
|
US | |
Nike Inc
NYSE:NKE
|
US | |
Visa Inc
NYSE:V
|
US | |
Alibaba Group Holding Ltd
NYSE:BABA
|
CN | |
3M Co
NYSE:MMM
|
US | |
JPMorgan Chase & Co
NYSE:JPM
|
US | |
Coca-Cola Co
NYSE:KO
|
US | |
Walmart Inc
NYSE:WMT
|
US | |
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
Good morning, ladies and gentlemen, and welcome to the Lifetime Brands First Quarter 2024 Earnings Conference Call. [Operator Instructions] I would like to introduce your host for today's conference, Karli King. Ms. King, please go ahead.
Thank you. Good morning, and thank you for joining Lifetime Brands' First Quarter 2024 Earnings Call. With us today from management are Rob Kay, Chief Executive Officer; and Larry Winoker, Chief Financial Officer.
Before we begin the call, I'd like to remind you that our remarks this morning may contain forward-looking statements that relate to the future performance of the company and these statements are intended to qualify for the safe harbor protection from liability established by the Private Securities Litigation Reform Act. Any such statements are not guarantees of future performance and factors that could influence our results are highlighted in today's press release and other factors are contained in our filings with the Securities and Exchange Commission. Such statements are based upon information available to the company as of the date hereof and are subject to change for future developments.
Except as required by law, the company does not undertake any obligation to update such statements. Our remarks this morning and in today's press release also contain non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Included in such release is a reconciliation of these non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP.
With that introduction, I'd like to turn the call over to Rob Kay. Please go ahead, Rob.
Thank you. Good morning, everyone, and thank you for joining us today. I am pleased to report a solid start to fiscal year 2024, delivering first quarter results that were in line with our expectations and came in above the broader market. Our performance this quarter is a direct testament to the work we have done in the last few years to ensure we are well positioned to compete and gain share, notwithstanding market conditions.
As we look ahead to the rest of the fiscal year, we are confident in our ability to continue driving operational excellence advancing our strategic growth initiatives and investing in our business to drive value for our shareholders. We delivered $142.2 million in net sales this quarter, a decrease of 2.2% year-over-year. This slight decrease reflects both economic headwinds and the impact of inventory rationalization efforts among select retailers, which I will elaborate on later in my remarks.
It is worth noting that third-party market data, which we track reported a decline of approximately 3.5% in point-of-sale revenues, indicating that Lifetime's top line performance exceeded the broader market across our categories. Despite these macro pressures, we delivered strong bottom line growth driven by gross margin of 40.5% for the quarter, exceeding expectations and surpassing that of our first quarter last year. This was a result of benefits from favorable product mix, new product introduction, and stability in our supply chain. Further, our margin expansion and increased profitability despite challenges in the underlying markets. underscores our continued focus on disciplined expense management as we balance investment in growth with delivering financial results.
Beginning with our core U.S. business. We delivered solid results in the first quarter and performed well in comparison to the market and our peers. As widely reported for the quarter, end markets across our industry experienced a dip in demand leading to decrease shipping volume among retailers. One factor which contributed to our decline in shipments was a lowering of in-stock levels at certain retailers, particularly in e-commerce.
Lifetime tracked a noticeable divergence between shipments and sell-through rains with these retailers, which speaks to the continued customer and consumer receptivity to our products. We are confident that as demand returns we will see a corresponding rebound in shipment activities to normal levels. I'll now discuss our international business, where we continue to invest -- continue to focus on investing in growth and improving our performance across each of our end markets. While our investments broadly are bearing fruit and supporting share gains, the ongoing recessionary environment in the U.K. continues to put significant pressure on demand for the market. In the first quarter, we saw a substantial decline in U.K. order volume during the period, resulting from a temporary decrease in shipment volume from a major customer and sluggishness in the independent and specialty retail channels.
However, we expect volume will return to normal levels in the coming months, particularly driven by recent incremental placements at national retailers and a rebound in the e-commerce channel, which we have begun to experience. Turning to our other international markets. In Asia Pacific, we continue to realize the significant benefits of the change in our go-to-market strategy. in Australia and New Zealand, where we are consistently gaining new customers and seeing higher margins. Additionally, our markets throughout Southeastern Asia are benefiting from the infrastructure investments we've made over the last several quarters, and we are confident that the solid volume growth and pickup in sell-through rates we are seeing in those regions will continue throughout 2024.
In the European markets and predominantly in our core U.K. market after a strong start to the year, we saw a meaningful drop-off in shipments in March, driven by core retail sales across all channels and a shutdown in shipments to our largest customer, which is in the e-commerce channel, for nearly a 6-week period. This had an adverse impact for our international segment results for the quarter, which were basically flat to prior year but below our expectations. Although our international segment was not favorable in terms of contribution margin for the quarter, we remain confident this segment will produce a meaningful improvement in contribution margin for the full year. based upon the actions we have previously taken and some momentum we are starting to see in market share gains, which I will talk about in a moment.
Turning to our growth initiatives. First, let me address our progress in our foodservice business. We are continuing to gain share through our Mikasa Hospitality product line and remain on a path to deliver $30 million in revenue from our foodservice business for the fiscal year. We remain excited about the opportunity in this business, which continues to gain traction with customers and build a book of business that will serve as a solid base for this foreseeable future.
In e-commerce, our sales for the quarter were impacted by inventory rationalization efforts as safety stock levels at our largest e-commerce customer were significantly reduced leading to meaningful decreases in order volume. We believe this will be a temporary pause as sell-through data across all of our categories was strong, and we picked up share in nearly all of our categories. Accordingly, we expect to see robust performance in this channel throughout 2024. New product development is one of Lifetime's core capabilities that provides us with a competitive advantage. We remain excited about our robust product pipeline, where we have continued to invest in a challenging end market environment, which has further differentiated Lifetime for many of our competitors.
The Dolly Parton line of products we announced last year has now been introduced to our customers and is garnering significant interest. While we originally expected some shipments in the second quarter due to a change in shipment mechanics. Shipments will begin in the third quarter and at this point, will exceed our initial estimates. Further, while this line is being launched in the dollar channel, we are having meaningful conversations with other retailers about expansion across several categories. Our KitchenAid line is gaining strong traction in our international end markets notably in Continental Europe and Australia and New Zealand. As a result, there are numerous customers where we have either gained listings or expanded listings now that we have established a beachhead on shelf at these customers. We will see the benefit of this strategy this year.
Looking ahead, we are preparing to announce a new partnership that we are particularly excited about for our international geographies. We expect to launch it likely this year, but no later than next year. More to come on that front, but we believe these new product introductions and brand will translate to top line growth in our International segment in 2025. For our Swell product line, we received good reception following our brand relaunch as we sold through and out of many products, delivering sales above expectations. Notably, these shipments were exclusively online as we pursue this relaunch solely on swell.com and e-commerce platforms. We will continue to roll out this reenergized Swell product line across multiple channels and are pleased with the direction of this line.
Let me briefly touch on our supply chain. As I noted, stability in our supply chain was a contributor to the solid margin expansion we were able to deliver this quarter. To that end, we were pleased to lock in rates for our ocean freight contract at levels comparable to last year, offering us stability in this key cost packet. In Mexico, we are pleased with our continued progress bringing our plastics manufacturing facility online. The facility remains on track to reach full production capacity this year. We continue to be active in many geographies, including Mexico and across Asia. Product supply diversification will remain a priority for us moving forward as part of our continued efforts to strengthen and derisk our supply chain by moving towards sourcing 25% of our goods outside of China.
Turning now to our balance sheet. Our strong earnings and cash flows have provided us the flexibility to reduce our term loan balance by almost $100 million over the past 12 months. While maintaining historical high levels of liquidity, we are pleased to be approaching our target leverage ratio of 3x or below. Our continued focus on disciplined expense management has helped us maintain strong levels of liquidity above historical norms, which affords us ample flexibility with respect to capital allocation. We continue to view the market as favorable for strategic acquisitions and remain open to opportunities for value-enhancing acquisitions that align with our priorities. We will continue to evaluate these opportunities as they arise.
On that note, let me now turn to our financial guidance for 2024, which we issued in our release this morning. While we are closely monitoring the initial signs of pressure on retailer end market demand that we observed this quarter, our outlook reflects our confidence that we are positioned to continue executing and creating value regardless of market conditions. We have growth opportunities already in our pipeline for the year and are eager to continue bringing new products to market and gaining share across categories. Our guidance is based on our belief that we can grow our top and bottom lines through net market share expansion and diligent operational and expense management. A rebound in our end markets will be accretive to our guidance. We note that due to timing factors, the expectations built into our full year guidance is for a slight decline in the second quarter with growth in quarters 3 and 4 and for the full year.
In summary, we are operating from a position of strength as we head into the remainder of fiscal 2024. With strong momentum across our business, and the flexibility to invest in our continued growth, we are well positioned to capture opportunities as demand improves and create meaningful value for our shareholders.
With that, I'll now turn the call over to Larry to discuss financials in more detail.
Thanks, Rob. As we reported this morning, net loss for the first quarter of 2024 was an improved $6.3 million or $0.29 per diluted share compared to $8.8 million or $0.41 per diluted share in the first quarter of 2023. Adjusted net loss was $3.2 million for the first quarter of 2024 or $0.15 per diluted share as compared to $2.6 million or $0.12 per diluted share in 2023. Income from operations was $1.8 million in the first quarter of '24 as compared to a loss of $1.8 million in the '23 period.
And adjusted income from operations for the first quarter of '24 was $5.7 million compared to $3.4 million in the '23 period. Adjusted EBITDA for the trailing 12-month period ended March 31, 2024, was $59.5 million, an increase of $2.2 million from $57.3 million for full year 2023. Adjusted net loss, adjusted income from operations and adjusted EBITDA or non-GAAP financial measures, which are reconciled to our GAAP financial measure in the earnings release. Following comments are for the first quarter of 2024 and 2023, unless stated otherwise.
Consolidated sales declined by 2.2%. U.S. segment sales decreased by 2.3% to $130.5 million. As Rob commented, the key factor was lower in-stock levels at certain retailers. Within this segment, the decrease occurred in the Home Solutions and Kitchenware categories. Home Solutions decline was due to lower hydration products and tailored bath measurement products. Kitchenware decline was from kitchen tools and barware, partially offset by an increase for cutlery and boards. This segment's decrease was partially offset by an increase in the tableware category due to a new warehouse club program.
International segment sales were down 1.6% or $200,000 or $700,000 in constant U.S. dollars to $11.7 million. As Rob commented, this slight decrease was due to the ongoing recessionary environment in the U.K. and a drop-off of shipments in March of a temporary decrease in shipments to a major customer. The decrease was partially offset by higher sales in Asia. Gross margin increased to 40.5% from 37%. U.S. segment gross margin increased to 40.8% from 36.6%. The improvement was due to lower inbound freight costs and favorable product mix. International gross margin decreased to 35.9% from 42% as the prior year benefited from a very favorable currency hedge. Excluding the hedge benefit, the current quarter's gross margin improved from better product mix and lower container costs.
U.S. distribution expenses as a percentage of goods shipped from its warehouses were 10.5% in both quarters. The significant inventory reduction during '23 resulted in second order benefits of more efficient labor utilization and lower facility expenses in the current quarter. These benefits were offset by a temporary surcharge rate on domestic shipments.
International segment distribution expenses as a percentage of goods shipped from its warehouses was 23.6% versus 24%. The improvement is due to lower outbound freight rates obtained from a new carrier. Selling, general and administrative expenses increased by 4.2% to $39.5 million. The U.S. segment expenses increased by $1.5 million to $30.8 million. As a percentage of net sales, expenses increased to 23.6% from 21.9%. The increase was driven by inflationary factors and mostly affecting employee expenses the largest component of SG&A. Other increases included legal expenses and expenses related to the start-up of the company's manufacturing operations in Mexico. Allowances for bad debt declines as last year included a charge-off for [indiscernible] and beyond. International SG&A expense increased by $600,000 to $4.2 million as a percentage of net sales increased to 35.9% and 30%. As in the U.S., the increase was driven by inflationary factors and mostly affected by employee expenses.
In addition, the current quarter reflects an unfavorable impact of foreign currency translation. Unallocated corporate expenses decreased by $500,000 to $4.5 million due to lower professional expenses. Interest expense, excluding a mark-to-market adjustment for swaps, increased by $300,000 due to higher interest rates on our variable rate debt partially offset by lower average borrowings. For income taxes for the current quarter, the tax provision rate differs from the federal statutory impact rate primarily due to equity-based awards where the book expense exceeded the tax deduction and foreign losses for which no tax benefit was recognized.
The effective tax rate for the prior year's quarter differs from the federal statutory rate primarily due to state and local tax as well as the impact of nondeductible expenses and [indiscernible] losses for which no tax benefit is recognized. Related to our 24.7% interest in Grupo Vasconia, the passive investment, we recorded a loss of $2.1 million. Our investment in Grupo Vasconia is now fully written off. On April 29 of this year, [indiscernible] only shareholders approved a resolution to a reorganization process in accordance with the law of commercial bankruptcy in Mexico.
We will evaluate the impact of this on our accounting for the investment, noting that a loss of significant influence over a Grupo Vasconia may result in a noncash loss of $14.2 million that will be reclassified from the statement of other comprehensive loss to the statement of operations.
Turning to our balance sheet, continue to be quite strong. As of March 31, '24, our liquidity was approximately $125 million, which included cash plus availability under our credit facility and receivable purchase agreement. This is achieved, notwithstanding the reduction of the term loan by $96 million over the past 12 months plus $9.5 million of term loan original issued discount and fees. At quarter end, our debt to adjusted EBITDA leverage ratio was 3.3x versus 3.4x at year-end '23 and significantly improved from 4.4x at March 31, 2023.
Finally, as discussed in the release, we are issuing financial guidance for the full year of 2024 as follows: net sales of $690 million to $730 million, adjusted income from operations of $49 million to $54 million; adjusted net income of $15 million to $17 million and adjusted EBITDA of $57.5 million to $62.5 million.
This concludes our prepared comments. Operator, please open the line for questions.
[Operator Instructions] Our first question comes from Anthony Lebiedzinski Sidoti & Company.
So first, in regards to your first quarter commentary in the International segment. So it sounds like there was a big drop off there in March. As far as the core U.S. segment were the sales kind of more even by month? Or did you see any substantial variations and just wondering about how the quarter flowed.
Unrelated, but we did see a softer March and a stronger start of the year. in the U.S. markets as well. But the U.K. business, while the U.K. market is sluggish, as we talked about, they were beating and having a very strong January and February, but then primarily driven by being shut down by their largest customer, no shipments, had a very bad March and that put them into the slight decline.
Understood. Okay. And then, Rob, in terms of your commentary about the second quarter sales being down, is that mostly because of the Dolly Parton merchandise shifting from April until the sort of third or [ fourth ] quarter? Or is there anything else driving that?
It's really not related to that, Anthony. While we initially expected to ship start shipping Dolly in the second quarter, it wasn't substantial. It's just that we're going to ship nothing or maybe $100,000 or we expect it to ship maybe $0.5 million or so. So it is just timing and it's informational. It's the reason for decline is just seasonality and how the business rolled in last year versus this year in terms of different programs. So it's just timing of how last year played out versus this year, so the comps are different quarter-to-quarter. And that's why you'll see that drop off and then pick up. not related to the Dolly Parton launch.
Okay. And then certainly, it was nice to see the gross margin improving here in the quarter. How sustainable is that improvement do you think going forward?
That's -- that was timing, having to do with how we recognize in inventory, the savings that hit the first quarter. We don't -- that's not going to be maintained for the balance of the year.
[indiscernible].
Excuse me, Anthony, you talked about the gross margin, right? The comment about gross margin.
That's correct. Yes. Yes, I was talking about the gross margin.
So it will be -- it should be better because we had this big pickup in this first quarter. So it should be better than last year, but it's not going to be sustained at that level for the remainder of the year.
Year-over-year, they'll be higher, right? And as we talked to we've locked in things. but we're not going to see an increasing trend.
Right. Don't expect 40% for the full year.
Okay. That's should clarify that. And then lastly, before I pass it on.
That's reflected in our guidance -- and that's reflected in our guidance.
Of course, right. Right. So I guess my last question before I pass it on to others. So you talked about the potential acquisitions. It's just wondering how strong is your appetite for that? And then in terms of valuation multiples, what are you seeing out there in the marketplace now?
It's -- our appetite is strong, but as we've done -- as you've seen us do, do we'll maintain discipline, right? So there's a lot we could have been announcing to the public for a while now, but we just maintained discipline and we're not willing to do something less we're confident in it. We have seen valuations being much more attractive than they've been for over a decade, particularly for strategic because financials are less competitive in this market. Cost of debt is higher, and the availability of debt is lower, so they have to put in more equity, therefore, valuations are down for them. And that's helped the whole market and given an edge to strategics. So we are interested the availability of product is out there. In many cases, again, an advantage for a strategic is you need people who can add value and not on a stand-alone basis. So we are active. We are looking, but we'll maintain our discipline.
Our next question comes from Brian McNamara from Canaccord Genuity.
I guess my first one, as we look at the guidance applies a pickup of growth on the top line this year, which kind of investors have been waiting for after, I guess, Q2. Like when we look at H2 forward, should we kind of return to more consistent predictive top line growth from your perspective? And kind of how should that look like?
Yes, Brian, as we talked about, there's still not tremendous visibility, and we're not assuming big growth in the end markets and have not factored that into our guidance. If that happens, that's accretive. This is driven by stuff that we have in the pipeline. So new product introduction and new launches and gaining share is what is driving our growth in the second half. .
Okay. And then on -- it's probably a broader question, but your stock is [ period ] about 9,000 shares since the market opened on an earnings day. So like Larry, you've been pretty vocal about your view that the stock is not are valued, but does it make sense to be a public company? I know it's a big question here, but investors can't buy it because it have liquidity. So I'm just curious how you guys think about that in terms of getting the value that you work hard to and that you think you deserve?
Yes. We do think there's an intrinsic value gap, and management and the Board will assess different paths to realize that value. But we do recognize that gap that needs to be addressed. .
And then my last 1 is, I guess, what products do you have out in the marketplace right now that have been surprises both pleasant and maybe not so good. And kind of what's your relative hit or miss rate in a typical year in terms of new product launches?
That's hard to answer. We launched so much and in so many different levels, some of it is just what we refer to as lipstick on the [indiscernible]. We've just taken something that we used to sell in blue, we sell white now. And there's different reasons why we're launching things. But the -- if you look at beautiful, if you look at totally white space, I should say, we launched Beautiful in multiple categories. It is growing its highly successful and grown where we already had major share at Walmart in terms of cutlery but we also launched it in tools in Walmart, where we are the #1 provider as well. It did not do so well, so we're no longer selling that, right? So you got to hit and a math, right, in that one. We're highly confident in Dolly, which is all incremental. It gets us into a new channel pretty much on pace we don't sell, which is dollar channel.
But we're very bullish on the Dolly line based upon the tremendous feedback we've gotten from everyone we speak to and demand of stuff that we're not even selling it. So that doesn't guarantee success, but we think that, again, we're very bullish. We think that will work. And there were things that we launched in the last year, which didn't -- they were much smaller, so we didn't really talk to them. Fortunately, our biggest 1 that we're launching seems to have very good traction.
Next question comes from Linda Weiser Linda from D. A. Davidson.
Yes. So I was curious in the market where the consumer is particularly weak, I guess, U.K. especially, are you thinking about making some changes to your merchandising plans, your product mix or your marketing plans, like maybe introducing more lower price point items. I know that your items are relatively low in price point anyway, but just how are you changing your plans? I mean, given sort of the sustaining consumer weakness in some regions.
Yes. Well, using -- starting with the U.K. that you talked about, the business historically was very dependent on independents and specialty, and what they call cooktop. And what we've done is to reposition what we're selling and where we're selling. So we picked up and we're doing more with Dunelm and -- next and the international retailers there. We're doing a similar strategy in Continental Europe picking up Etica and Carrefour and larger players in the major geographies.
So it's really -- the strategy is more shifted to channel that has a price implication in terms of your call points as well and what you're selling. So we had to have the right product for that. Secondarily is we've been exploiting because we didn't know we have Kitchen internationally. When we got that, we're now -- we've been selling that and we're now positioning and that's giving us a [indiscernible] because many particularly retailers and larger retailers are very interested and want the KitchenAid brand. And now that we're getting that in there, we're now selling our complete portfolio. So those are our 2 main prongs that we've implemented, which is different from how we did business in the past.
Okay. And then is on Mikasa Hospitality, is there any way of telling us roughly the sales level roughly in 2023? And then what kind of growth rate you're expecting in 2024?
So yes, our foodservice business was in the neighborhood of $20 million of which Mikasa Hospitality was a very small piece of that for 2023. It will grow fivefold in 2024 at a minimum based upon what we believe we've already achieved. That means the Mikasa Hospitality piece. The rest of the business will grow like -- and that combined will get us, we believe, close to the $30 million that we talked.
So for $30 million total in 2024?
Yes.
Okay. Great. And then...
Versus $20 million in '23, right, Linda? .
Yes, got you. Yes. Thank you. And then sorry, I missed this a little bit or I didn't understand. The Dolly Parton, you said there's a possibility of expanding it. Did you say into another retailer in the dollar channel or even beyond the dollar channel. I didn't quite catch that.
Yes. So when we launched Dolly, it's not an exclusive in the dollar channel, but we did it allowed us to get into the dollar channel. So we launched it first in the dollar channel with 1 retailer, the largest player in the dollar channel. We are in conversations to sell it in many other -- too many other customers that we traditionally do business with outside the dollar channel.
Okay. And what would be the timing of that potential expansion? Would it be not until next year 2025 or?
There might be some that ships -- likely 2025. Yes. But there's a chance of some in 2024, but it most likely 2025.
Okay. And then I was curious on the cost side, you mentioned the freight that you had contracted for that to be fairly flattish going in the next year, which is good. What are you seeing more on the commodity side just given that there's been some little increase in oil and things like that. What are you seeing in the rest of the cost base?
We have been very effective in reducing our cost of goods sold, not just in freight, and we don't see inflationary pressures on that. And in this end market environment is kind of a buyer's market and you can translate that into being more aggressive on cost.
As of right now, we don't have any raised hands. I'd now like to hand back over to Rob Kay for final remarks.
Thank you, and thank you for -- to everyone for spending your time and listening on our call, and we look forward to continued dialogue. Have a great day.
Thank you so much for attending today's call. Have a wonderful day. You may now disconnect.