Roots Corp

TSX:ROOT

Earnings Call Transcript 2022-Q2

[Operator]

Good morning. My name is Sylvie and I will be your conference operator today. At this time, I would like to welcome everyone to the Roots Fiscal 2021 Second Quarter Conference Call. [Operator Instructions] On the call today, we have Meghan Roach, Chief Executive Officer; Mona Kennedy, Chief Financial Officer; and Kristen Davies, Head of Investor Relations for Roots. Before the call begins, the company would like to remind listeners that the call, including the Q&A portion, may include forward-looking statements about current and future plans, expectations and intentions, results, levels of activities, performance, goals or achievements or any other future events or developments. This information is based on management's reasonable assumption and beliefs in light of information currently available to Roots, and its listeners are cautioned not to place undue reliance on such information. Each forward-looking statement is subject to risks and uncertainty that could cause actual results to differ materially from those projected. The company refers listeners to its fiscal 2021 second quarter management discussion and analysis and/or its annual information form dated April 7, 2021, for a summary of the significant assumptions underlying forward-looking statements and certain risks and factors that could affect the company's future performance and ability to deliver on these statements. Roots undertakes no obligation to update or revise any forward-looking statements made on this call.The fiscal 2021 second quarter earnings release, the related financial statements and the management's discussions and analysis are available on SEDAR as well as on the Roots Investor Relations website at www.investors.roots.com. Finally, please also note that all figures discussed on this conference call are in Canadian dollars, unless otherwise stated.Thank you. Ms. Davies, you may begin your conference.

[Kristen Davies, Head of Investor Relations]

Thank you, operator. Good morning, everyone, and thank you for joining us. Meghan Roach, our Chief Executive Officer, will discuss our fiscal 2021 second quarter operational performance as well as our strategic outlook for the fiscal year. Then, she will turn the call over to Mona Kennedy, our Chief Financial Officer, who will discuss our financials in greater detail. After that, we will open up the call for questions. Meghan?

[Meghan Roach, CEO, President & Director]

Thank you, Kristen. Good morning, everyone, and thank you for joining us.We are very pleased with our second quarter results. Our profitable growth demonstrates the desirability of our brand, our loyal customer base, strong fundamentals and the work of an incredible team. Throughout the quarter, we continued to successfully adapt to the ongoing disruptions in our industry caused by COVID-19. Driven by DTC sales gains, we delivered overall sales growth despite our stores in Ontario, our largest market, being closed for approximately 15% longer than in Q2 last year. In addition, our ongoing efforts to drive operational cost efficiencies, specifically as it relates to gross margin and SG&A generating improvements year-over-year and relative to Q2 2019 when all of our stores were open. During the quarter, we continued to benefit from our omnichannel capabilities. With more stores reopening as we move throughout the quarter, we achieved healthy year-over-year store sales gains. In Ontario specifically when stores reopened, we saw significant year-over-year improvement that more than offset the temporary increase in store closures in that region.As stores continue to be an important connection point with our loyal customers, we also opened 5 pop-ups in the quarter, bringing the total number to 11. These capital-light stores are proven to be low-risk, high-reward approaches to showcasing key products and collections, capturing [indiscernible] and testing new markets and store formats. Consistent with our expectations, the increase in store activity resulted in moderated demand online. However, e-commerce remains above pre-pandemic level and online continues to be an important channel for attracting new customers into the brand.Turning briefly to our international channels. While we continued to see volatility in Taiwan as they work through the impacts of multi waves of COVID-19, we remain confident in the brand strength in that region. In China, we have relaunched our digital platform. And in the U.S., we continue to be pleased with the progress of our digital platform and remain confident in the long-term growth potential in that market. From a product perspective, we continue to generate excitement with new and existing customers with collaboration. In July, we came together with a fellow iconic Canadian brand Tim Hortons. We created a limited-edition leather key fob, which resembled Tim Hortons coffee cup. It was made at our China leather factory. We also collaborated with Canadian artist, Jason Logan and The Toronto Ink Company on a limited edition collection of one-of-a-kind natural ink, hand-dyed premium sweatshirt. These programs [indiscernible] within days of launching and the Jason Logan sweatshirt was priced at a meaningful premium to other sweatshirts in our site.Our product excitement has continued beyond the quarter. We recently released in collaboration with The Weeknd and Japanese artist Mr. and our capsule collection and celebration of the relaunch of MuchMusic on Tiktok dropped exclusively online at roots.com earlier this week.However, one of the most exciting launches this year was officially announced this morning, the One Collection. With a focus on removing boundaries and encouraging individual expression, one of the new fleece collections which advises our journey towards the future of Roots which is gender-free fit and offered in extended sizing and contains sustainable materials. It reflects an ongoing brand commitment that extends across all aspects of our business and the changes to come as we continue to evolve our product range and in-store experience. One is about creating pieces that inspire inner confidence and individuality, and it is designed for customers to focus on a fit that expresses their personal style, not size. We worked with real people, not only models, to develop an entirely new size chart. The new size chart runs from 1 to 8, which is a more conventional sizing would align to women's extra small to 4XL and to men's double extra small to 3XL. We [ invited ] over 50 people from both inside and outside the company, trying multiple sizes to ensure we perfected our new sizing chart at every step. The One marketing campaign features a vibrant and diverse cast of all sizes, ethnicities and gender identity. We've also worked to create a fit-focused and size-integrated shopping experience in our stores and online.One is about our commitment to investing in sustainable materials also. We've curated the entire fleece lines from adults to kids from 80% organic cotton and 20% recycled fibers. I applaud everyone who's been involved in bringing this vision to life. It has been a significant undertaking, and it's an important step forward in making the Roots shopping experience more inclusive. We also see many long-term growth opportunities for us in these areas.As I discussed in previous quarters, to having a positive impact within our communities is an important focus for the entire team at Roots. It's an integral part of who we are as a brand today and is fundamental to where we're going. I'm incredibly proud of the direct support we continue to provide many well-deserving organizations. In the second quarter, we donated a portion of sales to our made-in-Canada fabric masks and select collaboration items to Youthline, a Youthline organization that affirms and supports the experiences of the LGBTQ2S+ views across Ontario. We also donated 13,000 of our made-in-Canada masks to First Nations in Manitoba and Ontario in partnership with Save the Children's National Reconciliation Program.In addition, we continue to make progress in our diversity, equality, equity and inclusive initiatives across our organization. These are efforts informed by responses and feedback from Roots team members across North America. The newest developments in this area include the launch of our DDI platform Together at Roots and the creation of a new role appointing the company's first-ever diversity, equality, equity, inclusion specialist. We've also become an important partner with Canada's leading diversity inclusion organization, the Canadian Centre for Diversity and Inclusion. These are all meaningful steps in our diversity, equality, equity, and inclusion journey and one we believe will further accelerate our progress.As we look through the remainder of the fiscal year, our near-term operating environment remains fluid. We are navigating the recent surge in the Delta variant, industry-wide supplies headwinds, including closures in countries [indiscernible] and delays due to port congestion and demand for transportation. However, we continue to run the business in a manner needed to successfully adapt and mitigate these impacts when possible. In early 2020, we outlined the major strategic pillars in the areas of brand, channel, product and operational excellence that we deemed important to running the business and returning it to profitable growth. We've made significant progress against these pillars over the last 18 months, and we are happy with the strong foundation we've built. As we look to the future of Roots and ways we can drive lasting growth, our focus will remain on the following: establishing Roots as a brand beloved by customers globally, which means continuing to invest in building beautiful products, creating brand level of exciting partnerships, limited edition drops and brand additive collaboration, further investing in sustainable materials, programs and processes, taking a customer-centric and a customer-informed approach to all that we do and continue to extend our geographic reach, first and foremost, by establishing a more meaningful presence in the U.S. and China through a digital-led expansion.Our second area of focus is maintaining our strong position as an omnichannel brand. Over the last 1.5 years, we've proven our ability to support additional penetration that has far exceeded our historical levels. While we expect e-commerce to continue to normalize at somewhat lower levels once we've exited the pandemic, we still expect it to be elevated and remain a more meaningful portion of our business going forward. As such, we've dedicated more investments to enhancing our omnichannel capabilities in areas such as [ more enhancements in our ] website, extending our shipping options and improving customer order management.Our third area of focus is continued operational excellence. We will continue to focus on operational efficiency, repositioning our price value occasion with a reduction in promotional depth and breadth and managing costs to further strengthen profitability and free cash flow generation. We will also continue to pursue profitable growth opportunities by making investment decisions anchored on the return on investment in each initiative. We've made significant progress over the last 18 months. And while we continue to navigate through some uncertainties, our focus remains on maximizing the success of the business over the long term. With the high quality, comfort and versatility of our products, we also continue to be well positioned to capitalize on the ongoing [indiscernible].With that, I'll turn the call to Mona to discuss our financial results in greater detail. Mona?

[Mona Kennedy, Chief Financial Officer]

Thanks, Meghan, and good morning, everyone.During the second quarter, despite continued headwinds and uncertainty as a result of mandated store closures and operating limitations, we delivered sales growth, gross margin expansion and improved profitability. Our Q2 results continued to demonstrate excitement for our brand, the loyalty of our customer base, the benefits of our omnichannel capabilities and our continued success in driving operational and cost efficiencies.Looking at our financial results in greater detail. Total sales in the second quarter were $38.9 million, up 1.8% from $38.2 million last year, driven by DTC sales growth. For the quarter, DTC sales were $30.4 million, a 6.6% improvement over $28.5 million last year, which, as Meghan noted, we achieved despite being closed for longer in Ontario, our largest market. Ontario stores were closed for approximately 60% of the quarter compared to approximately 45% of Q2 2020. E-commerce sales continued to play an important role in the quarter. And while they moderated with the increase in store activity, we still delivered significant growth over pre-pandemic levels.On the partners and other front, sales were $8.5 million, down from $9.7 million last year. This was primarily the result of 2 factors: an unfavorable foreign exchange impact on wholesale sales to our operating partner in Taiwan and a shift in the timing of Taiwan wholesale orders in Q1 2021, which I have mentioned on our last call. We had another quarter of strong gross margin improvement as a result of our continued promotional discipline as well as in-quarter decisions to further adjust our planned promotions, given the positive customer response and strong core price selling we were seeing. At 63.4%, our DTC gross margin for the second quarter improved 120 basis points over the 62.2% we recorded last year and 710 basis points over the 56.3% we recorded in Q2 2019.As we have discussed with you in previous quarters, we have quite intentionally walked away from the frequency of promotional activity as well as the breadth and depth the brands have seen in the past. While this strategy likely places some downward pressure on sales over the short term, we're confident it is the right approach. If you go back to 2019, there was a tremendous amount of promotional discounting to drive the top line, but margins were slowly eroding. We will continue to refine and fine-tune our current strategy, especially in light of uncertain operating environment. However, we strongly believe this approach is a better way for us to continue to build our brand and maintain brand equity over the long term.We continued to manage our expenses tightly while closely monitoring our top line performance. We recorded $21.8 million in selling, general and administrative expenses for Q2 2021 compared to $21.4 million last year. We recorded higher costs related to investments in talent and marketing in the quarter. However, they were effectively offset by rent savings. Our Q2 SG&A also reflects a decrease in government subsidies year-over-year as expected. We recorded $3.6 million in government rents and wage subsidies, down from $4.4 million in Q2 of 2020.Reflecting our sales growth, gross margin expansion, cost management and the benefit of government subsidies that helped offset the impact of store closures in the quarter, we recorded an adjusted EBITDA of $2.9 million, a $1.8 million improvement over the $1.1 million we recorded in Q2 2020.Now, turning to inventory. We're happy with our current inventory balance, which was $47.5 million at the end of the quarter. This is down from $58.6 million a year ago, primarily as a result of delivery delays and the fact that we are now starting to sell through some of our pack-and-hold inventory from last year. As Meghan mentioned earlier and we discussed last quarter, we, like our peers, continue to face supply chain disruptions. However, since last quarter, the situation has worsened industry-wide. As a result, we have taken further actions to mitigate the impact on our business. We continue to strategically manage our inventory and promotions and will make in-quarter decisions as necessary around planned promotional activities. We are also using air freight for key seasonal programs. While we will likely see an impact on margins, largely in the fourth quarter, we believe bringing the inventory in as quickly as we can is the most prudent course of action right now. We're also leveraging our pack-and-hold inventory to bridge delays as needed. The situation is dynamic and we continue to monitor it closely. We're working diligently to manage the business for the best profitable outcome, especially as we move into our busy holiday season.At quarter end, we had outstanding revolver credit facility borrowings of $17.5 million and had net cash of $8.4 million, with net debt of $77.1 million, down from $101.3 million in Q2 2020.Overall, we're pleased with our Q2 results. While we continue to face COVID-19 driven challenges in Q3, primarily on the supply chain side, we remain confident in our ability to deliver on the areas of the business within our control. We are a stronger business and an even more resilient and agile team than we were 18 months ago. Even more importantly, through all of the work we have done, we are well positioned to keep building on nearly 50 years of brand strength and maximize the long-term success of the business.With that, operator, please open the line to questions.

[Operator]

[Operator Instructions] Your first question will be from Brian Morrison at TD Securities.

[Brian Morrison, Research Analyst]

Mona, I want to go back to your question on inventory heading into the holiday season, pretty standard question. But maybe if you just elaborate on the supply chain challenges. Will you have the desired product in place? And will you have the ability to chase sales with the shift to air freight?

[Mona Kennedy, Chief Financial Officer]

Brian, the situation is pretty dynamic and we're monitoring it closely and we have a dedicated team working on it. As I discussed on the call, we're taking the best steps to mitigate it. We are continuing to strategically manage promotions. We are air freighting some product in for the holiday season to arrive in time and we're leveraging our pack-and-hold strategy that we put in place last year that is going to allow us to fill in some hole that exists. So we're working diligently on it and we're managing the business for the best possible outcomes, and we believe we will be in a good position. But you know what, it changes every day, and we're basically making the right decisions every day to ensure that we have the best holiday.

[Brian Morrison, Research Analyst]

So can you maybe just elaborate on the pack-and-hold strategy? I assume this is not seasonal merchandise from spring, but it will be current winter/fall merchandise that will be in the stores during the holiday season?

[Mona Kennedy, Chief Financial Officer]

Yes, absolutely. So if you remember last year in Q3 and Q4, we implemented a pack-and-hold strategy, where we basically packed up some product that was meant for that season that we couldn't actually sell because the stores were closed. It's products that have never seen the floor and also it's products that are core inventory. So that is the product that we're going to reintroduce back into the stores, and it's going to look new and it's going to feel new and it's really going to kind of fill the holes where we need them.

[Brian Morrison, Research Analyst]

Okay. And then turning to Ontario stores, can you maybe just touch on the traffic of the stores reopened in June and July and maybe back-to-school relative to last year?

[Mona Kennedy, Chief Financial Officer]

I can't comment on that -- oh, yes, go ahead, sorry. Go ahead, Meghan.

[Meghan Roach, CEO, President & Director]

Sorry, the joys of being on phone. So I think, Brian, we saw some really healthy traffic and some really healthy sales in our stores when they reopened, particularly in Ontario. I think we were positively surprised by the number of people that we had coming back in stores and they intend to purchase. So I think that was great. And I think from a back-to-school perspective, we don't specifically comment on that time period. But the one thing I would say is that we are continuing to really trade the business in a manner that we think is best for the longer-term growth. And so one of the things you will see is that we did reduce the discounting that we do during the back-to-school period and more this year than we had last year. We usually have a select sale around this time, and we decided to do more of a targeted sale and specific product as we [ were seeing to sell-through ] to some of the products we hadn't before.

[Brian Morrison, Research Analyst]

Okay. And then last question, and I'll turn it over. Just in terms of -- you touched on the geographic reach and your progress on the U.S. and China digital presence. What's your strategy going forward here? Do you look to mature these markets prior to further opening new markets? Or are there additional regions to target in the near term?

[Meghan Roach, CEO, President & Director]

Yes. I think -- we'll focus on, first and foremost, it's a digitally led strategy. So I think that we have a lot of potential in the U.S. and China. And those are both for us longer-term markets where we've seen bigger growth. And obviously, from an apparel perspective, the U.S. and China are obviously largest markets globally. So obviously, we do see a lot of big potential in those regions specifically. We do see other markets where we do have some interesting traction on our online presence. And so we're going to be opportunistic in terms of leveraging those markets to drive further growth. But definitely, the focus in the near-term is on the U.S. and China, and then we're going to look at the other markets, just based on how we see those things trending.

[Operator]

Next question will be from Patricia Baker at Scotiabank.

[Patricia A. Baker, Analyst]

Just the promotional discipline, which has been pretty impressive. You guys have been engaged in that for a period of time now. Do you have any sense of whether -- how your customer is feeling about that? And how close they are to getting used to Roots being different from a promotional perspective and sort of recognizing the kind of the new approach at Roots?

[Mona Kennedy, Chief Financial Officer]

Patricia, it seems like -- as you kind of see in our margin performance, it seems that the customers are responding to it well. We're selling a lot more product at full price. And the depth of our promotions was going down and they still performed similarly as they did before. So I think historically, if you look at 2019, we just went too deep and too frequent with promotions. And now with having removed that, it seems that the customers are still responding to the product. So we feel like it's performing well. We're going to continue to go ahead with the same strategy in the future. As you see, we've seen a 710 basis point improvement in our margin compared to 2019, which has been fantastic. So all in all, I think it's going well. We have sacrificed some top line growth, but we believe that's the right decision for the business, and it is elevating the brand in general.

[Meghan Roach, CEO, President & Director]

And just a quick anecdote -- just to add on that, I was in a store last week, and I saw a customer who was looking at our Salt and Pepper collection and indicated they own them for quite a long period of time and asked me when they were going on sale because they're quite interested in buying them. When I told her that they weren't going on sales, she immediately went to the cashier and bought them, right? So it takes a little while to train customers again that we are not going on sale and it's been 1.5 years, but obviously, 1.5 years during the pandemic period. So I think we still have a little bit of retraining to do for the customers to understand the benefit and the fact that we're not going on sales. But as Mona mentioned, we see some great traction with it so far.

[Patricia A. Baker, Analyst]

Well, thank you very much for that anecdote and that's kind of what I was getting at because I kind of anecdotally myself have the feeling that the customer has been almost fully trained to recognize that the Roots of the past with respect to promotion is not the Roots today. And I guess the point I would make is that it's probably the combination of that promotional discipline change, but also all the interesting partnerships and stuff and limited items and the newness that you're putting in there, which is also the 2 things combined are probably having a really positive impact on elevating the brand, I would assume.

[Meghan Roach, CEO, President & Director]

Absolutely. We're seeing some great traction with our collaborations. And I think as we've seen in previous quarter and in this quarter, I mean, we did a variety of unique collaborations. So we did something that's important. We did something with The Weeknd and the Japanese artist Mr. We just launched MuchMusic. So we've done a variety of different collaborations that have attracted, I think, different consumer bases. And what's interesting about those things is we're seeing people who are part of our existing consumer base for example, also attracting a new consumer too to the brand. And so we're continuing down that path where we release promotions as well as interesting collaborations to drive demand.

[Operator]

[Operator Instructions] Your next question is from Stephen MacLeod at BMO.

[Stephen MacLeod, Analyst]

I just wanted to ask a couple of questions about the in-store performance, I guess, particularly in Ontario, but also as you've opened other regions as well. Can you just comment a little bit about what you've seen in terms of foot traffic and basket sizes, conversion trends or conversion rates or anything like that, that gives us a sense of how consumers are coming back to the store?

[Meghan Roach, CEO, President & Director]

Yes, absolutely. So we don't specifically disclose kind of each of those specific metrics. I think that -- from a high level what I can tell you is we continue to see strong AURs. The promotional discount is obviously helping us -- the lack of promotional equation is continuing to really help us in that specific area. Traffic, again, is obviously an area that we saw rebound given that our stores were closed in Ontario, specifically. Once they were reopen, obviously, big uplift in traffic overall from that perspective. So continuing to see healthy traffic, continuing to see a strong intensive purchase when our customers are in stores. And overall, just healthy sales growth from a store-based perspective, which is really positive.

[Stephen MacLeod, Analyst]

Great. And then e-commerce, I know you didn't disclose, but you sort of mentioned that e-commerce moderated a little bit from stores reopen, which would make sense, but still remains above pre-pandemic levels. In the past, you've given sort of percent of sales or percent of growth, can you talk about or give some specifics around how e-commerce performed in the quarter?

[Meghan Roach, CEO, President & Director]

Yes. So I think we talked about in previous calls how we view ourselves as omnichannel retailer, right? And I think I was pretty transparent and upfront in previous calls about the fact that we expected to see some moderation in the e-commerce business when stores reopen just given the massive store base we do have across Canada and how we're really trying to build ourselves into a seamless omnichannel retailer and brand where people can shop with us whatever way they want.So we're -- on a go-forward basis, we're really not going to be disclosing e-commerce specifically because we think they [ relate ] from each other. And so from that perspective, we're focused on the overall DTC growth. And that's what we saw. When our stores reopened, we saw shifting between the 2 channels. We saw customers continue to shop both channels, but we did see some customers who shifted back into that physical retail channel. And I think as we mentioned in previous calls, one of the things we did last year was do a survey of our consumers to ask them about their in-store expectation and experiences. And the thing they consistently came back was a significant portion of our customers wanted to go into our stores to touch and feel our products and also a number of customers in and around 30%, 35% only really shopped in the physical store environment. So again, we think that's one of the reasons we're seeing the healthy return to store growth. And e-commerce continues to bring new customers. And as we had mentioned, it continues to be a higher percentage of overall sales compared to pre-pandemic levels and us versus pre-pandemic levels, but definitely saw some moderation in the quarter as we saw our stores open.

[Stephen MacLeod, Analyst]

Right, okay. That makes sense. And then maybe just finally, in terms of SG&A, the SG&A was sort of held tight in the quarter, just given the stores being closed, continue to be closed. Can you talk about how you expect that to trend sort of in the back end of the year as you see more stores reopen where you sit today with all stores open but one?

[Mona Kennedy, Chief Financial Officer]

We're managing our SG&A tightly. We're focusing on areas where we need to invest for the returns that we expect. As you would have seen in our commentary, our SG&A was higher in marketing and then more investment in the areas that we need to. So as you think about kind of Q3 and Q4, I think what you need to keep in mind is that, yes, stores are going to reopen. So obviously, labor is going to be higher, particularly in Q4. In Q3, all the stores last year were open. So you didn't see too much of an impact there. But in Q4, you will have to see labor going up.I think the other thing that you need to keep in mind is rent. So rent expense was down this quarter. But as we go into Q2 of -- Q3, you'll remember that last year, we had really big abatements that hit us in Q3. So we won't be experiencing those at the same level in Q3. And then I guess, lastly, I should say the subsidies. So the subsidies, as you know, are ending on October 23, soon. Obviously, the rate is going down, and it's also based on revenue decline. So I would expect that to be a lot lower in Q3 and then nonexistent in Q4. And then the rent subsidy, I would expect to be lower in Q3 as well, given that our stores are now open, and the biggest portion of that subsidy is related to store closures.

[Operator]

Next question will be from Matthew Lee at Canaccord.

[Matthew James Lee, Associate Analyst of Telecom and Media]

Most of my questions have already been asked. But just in terms of the stores, given that [Technical Difficulty], do you foresee any type of significant renovations required, especially given the transition of the brand?

[Mona Kennedy, Chief Financial Officer]

I think we've commented on this previously. From a renovation perspective, our stores are well invested. They look -- they're in good shape. But we continue to look at them and ensure that they're in the shape of the customers need them to be, right? So our business is omnichannel. We need to make sure that the stores are fulfilling the needs of the customer. From an investment perspective, as you see over the past 1.5 years, we've been doing pop-ups that are very low in capital and allow us to test different models. And then based on these different models, we may make different decisions next year and in future years in terms of the format of the stores. But in general, I wouldn't expect substantial investments in that area that are not coming with the appropriate bottom line returns.

[Matthew James Lee, Associate Analyst of Telecom and Media]

Right. And then can you maybe elaborate a little bit on the modifications you've made with the deal with your Taiwanese partner?

[Meghan Roach, CEO, President & Director]

Yes, absolutely. We have a long-term partner in Taiwan. We've been there for over 15 years, and we're continuing to partner with them going forward. They've been fantastic partners for us. It's a great relationship. And so it's really just modifications to financial terms to kind of just reflect the way we're operating with them. So more specifically focused on wholesale margins as opposed to our royalty plus [indiscernible]. So we continue to expect to see that going forward.

[Operator]

Thank you. And at this time, ladies, we have no other questions. Please proceed.

[Meghan Roach, CEO, President & Director]

Thank you, operator. Well, that concludes our call for today. We appreciate all of you coming to the call, and we look forward to speaking to you in the third quarter. Stay safe and stay healthy.

[Operator]

Thank you. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines. Have a good weekend.