Apex Global Brands Inc
Q4 2019 Earnings Call Transcript

Published: 23 Apr 2019

[Operator:]

Greetings, and welcome to the Cherokee Global Brand Fourth Quarter and Full Year 2019 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Kimberly Esterkin, Director of Investor Relations. Thank you. You may begin.

[Kimberly Esterkin:]

Thank you, and good afternoon. Speaking today will be the Company's Chief Executive Officer, Henry Stupp; and Chief Financial Officer, Steve Brink. Before I hand the call over to management, please note that on this call, certain information presented contains forward-looking statements. Forward-looking statements are neither a prediction nor a guarantee of future events or circumstances, and are based on currently available market, operating, financial and competitive information and assumptions. Our actual results could differ in a material manner from those expressed in such forward-looking statements for any reasons, including those listed in the Company's SEC filings. The Company assumes no obligation to update any such forward-looking statements. Please also note that past performance is not a guarantee of future results. Further, this conference call includes a discussion of non-GAAP financial measures as the term is defined in Regulation-G. The most directly comparable GAAP financial measures and information reconciling these non-GAAP financial measures to the Company's financial results prepared in accordance with GAAP are included in the earnings press release, which is posted on the Company's website at cherokeeglobalbrands.com. And with that, I'll hand the call over to Cherokee's Chief Executive Officer, Henry Stupp.

[Henry Stupp:]

Thank you Kim, and good morning everyone. We appreciate your participation on today's call. With the close of our fiscal year, Cherokee Global Brands enters a new chapter with a business that is once again primed for growth and more diversified than ever before. As we combined the strength of our 360 degree capabilities platform and our portfolio of high equity brands, the results reflect the flexibility and relevance that we bring to our licensing partners. We have never been better positioned to deliver on our pledge to think like a retailer, even as retailers' strategies diverge significantly from the past in order to establish new and diversified revenue streams. We entered fiscal 2019 with several ambitious goals. First restructuring and realign our business operations to harness the combined power of our multi-brand model and brand building platform. Second, convert remaining indirect sales to licensing sales. Third, short up our financial and liquidity position. Fourth, divest our non-core assets and fifth, position our own brands for growth while fully leveraging our brand building expertise to the benefit of our retail and licensing partners. Despite a challenging retail environment, we made considerable progress against these goals which I look forward to sharing in greater detail with you today. We successfully navigated the industry and company headwinds to meet our goals, broadened our customer base, and introduced new revenue streams that leverages our platform of capabilities for years to come. Our ability to diversify our portfolio across geographies, customers, categories and consumer touch points along with our relentless focus on driving profitable growth led to 150% improvement in adjusted EBITDA, while our SG&A declined 42% for the fiscal year. Our resolve to focus on both improving our bottom line performance and stabilizing our financial position is coming to fruition. And I am pleased to report that our annual report will include an unqualified audit opinion on our financial stake. That is our financial statements for this year will not include the going concern qualification that was included in last year's audit opinion. From an operational standpoint, our diversified brand portfolio coupled with our 360 degree platform of capabilities continues to distinguish us in the marketplace. Our subsequent shift from a solely a direct to retail licensing model to one that encompasses wholesale and retail licensing partners allows us to grow our own brands while also creating and developing brands and products for others. We are meeting our customers evolving needs, and I am confident that Cherokee Global Brand diversification and flexibility positions us for long term growth, increase profitability and further stability going forward. We continue to leverage and build upon our 360 degree platform of capabilities and we are positioned to build brands for specific retailers and develop existing brands that are already meaningful to our partners. We flex this capability on a limited basis in the past and are accelerating our efforts based on demand and market development. We are uniquely positioned to deepen our relationships with retailers as private brands emerge as a key differentiator and as retailers seek to build equity for their existing brand alongside the strength of recognized national brand. Through our brand development platform, we will continue to introduce new revenue streams and create immersive relationships with new and existing retail partners without taking on inventory risk. Our partners will benefit because we enable them to deliver more product and introduce new categories faster and better than ever before. Our unique 360 degree platform combines product design and development, brand marketing and media outreach and growth strategies and tactics. And we believe that this positions us as a full circle differentiated resource for our retail and wholesale licensee. Turning to our brand portfolio. We are at a defining moment in the evolution of our company. In recent years we've become a fundamentally different company that extends well beyond our Cherokee Brand. Through our strategic acquisitions, we've realized our vision to evolve from a mono brand license work that is being limited to legacy direct to retail relationships to a true house of differentiated brands each serving a unique consumer niche. With that as a backdrop, we're excited to announce that we will be transitioning our corporate name from Cherokee Global Brands to Apex Global Brands in the coming months to reflect this more expansive vision and fully unlock the value of our multi-brand model. Apex marks the culmination of our portfolio and platform synergy and embodies our partners aspirations to elevate and diversify their assortment. Leveraging the Apex platform, our own brands will go on to new categories and markets without limitation. And our retail partners and licensees will expand their global reach and relevance by taking full advantage of our platform. The universal drivers for the retail business for the future will continue to be vision agility and scale. And the Apex platform and portfolio unites these pillars into a single purpose one that continues to drive everything that we do to always think like a retailer and to evolve alongside our licensing partners. So it's with great excitement that I'm formalizing these plans that following our annual shareholder meeting in June, Cherokee Global Brands will be rebranded as Apex Global Brands. Our name change will be the first of a three stage corporate rebranding plan that will include a new corporate brand identity, an updated corporate website, and revised communication materials that will promote the brands we own, the brands we create, and the brands we develop for others. We will keep you updated on our progress over the coming months and look forward to debuting as Apex this June. We are optimistic about our future plans and are confident that the significant actions we've taken over the past year positioned us for meaningful growth and profitability in the years ahead. As Apex Global Brands we will more fully convey who we are, how we operate and the comprehensive value we deliver and provide to our licensees, business partners, employees and of course our shareholders. Before discussing our brands further, I'd like to hand the call over to Steve Brink our CFO to review our fourth quarter and fiscal 2019 results. Steve?

[Steve Brink:]

Thanks Henry. Good morning, everyone. Today I'll review our fiscal 2019 fourth quarter and full year financial results, our liquidity, as well as our outlook for fiscal 2020. Revenues were $6.1 million for the fourth quarter compared to $6.9 million in the prior year's fourth quarter. For the full year fiscal 2019, revenues totaled $24.4 million compared to $29.4 million the year before. These decreases are primarily due to the expiration or non renewal of several licensing agreements including our direct to retail licenses for Tony Hawk, Liz Lange and Cherokee School Uniforms, as well as our divestiture of Flip Flop shops franchise business in June 2018. These lost revenues were approximately $1.5 million in the fourth quarter and $9.5 million for the year. Note that the fourth quarter of fiscal 2018 was the last quarter we reported revenues we called on target. It's helpful to exclude these lost revenues to better understand the underlying growth of our current and new licensees. For these ongoing licenses, revenues grew 13% for the quarter and 23% for the year. Included in our Hi-Tec portfolio brands are Hi-Tec, Magnum and Interceptor. These relatives were nearly 50% of our revenues in fiscal 2019 and we have 12% for the quarter and 20% for the year. We're seeing growth for multiple licenses across several different territories and the launch of the apparel with Interbrand is also contributing. Royalties from our Cherokee Brand, where approximately 40% of our revenues in fiscal 2019. We lost revenues of the non renewal of our School Uniforms licensee and an international licensee. But this was partially offset by second quarter revenues from our new pan-European licensee. We talked about our new design services revenues stream before particularly our agreement with the major retailer in China. These revenues amounted to approximately $800,000 for the fourth quarter and $1.4 million for the full year. You can see the positive effects for the restructuring plan in our operating expenses again this quarter. Our ongoing SG&A expenses were down 56% in the fourth quarter and 42% for the full year. Despite the loss of revenues I mentioned earlier, our adjusted EBITDA grew 150% for the year largely because we were able to reduce SG&A by over $10 million this year in comparison to the year before. We eliminated redundant positions, exited unused facilities, and terminated various consulting and other contract. As I've mentioned before, our interest expense includes our cash interest payments based on LIBOR. First, amortization of deferred financing costs and in the second quarter of this past year, there was a significant non-cash charge related to refinancing our debt. Of our total interest expense for the year of $11.5 million, $6.9 million was cash and $4.6 million was non-cash. In the fourth quarter, about $1.6 million of our interest expense was cash. For the year, we generated net operating losses for tax purposes in both the United States and Europe. We're not recognizing the benefits of these NOLs in our income statement because of recent pre-tax losses in these jurisdiction. The result is that we have non-cash tax expense reflected in our income statement, which totaled $1.4 million for the year at the total tax expense of $2.7 million. Our income statements for fiscal 2019 at fiscal 2018 include operating charges for restructuring, business acquisitions and integration along with the impairment charge we recorded in the fourth quarter of fiscal 2018. These items are substantially lower in fiscal 2019 than they were in fiscal 2018 and in the second half of fiscal 2019 we do not have these large onetime items. As a result, we saw large improvement in our operating loss from $46.4 million in fiscal 2018, to an operating profit of $1.9 million at fiscal 2019. Our net loss from continuing operations also improved from a loss of $55.9 million in fiscal 2018 to a loss of $12.3 million at fiscal 2019. Excluding the onetime and non-cash items, our adjusted EBITDA was $3.1 million for the fourth quarter of fiscal 2019, an increase from a loss of $0.1 million in the fourth quarter of the previous year. For the full year, our adjusted EBITDA was $9.8 million up 150% from $3.9 million in the previous year. As I mentioned, this improvement was driven primarily by the rightsizing of our SG&A combined with the organic growth of our existing licensees and design services. Now let's review liquidity. We ended the year with $4.3 million of cash on hand. Our long term debt totaled $54.5 million net of debt issuance cost. $1.3 million of this is classified as current. Growth at the end of fiscal 2018, all of our long term debt was passed by this churn. In January 2019, our credit agreement with Gordon Brothers was amended and we borrowed an additional $5.3 million. A portion of the net proceeds was used to repay $2 million that we borrowed a month earlier from a major stockholder and two of our board members. As a result, we are no longer required to raise the $2 million of additional capital before May 4, 2019, which is previously required by our credit agreement. We appreciate this vote of confidence from Gordon Brothers, our Directors and our Shareholders. When we refinanced our previous credit facility back in 2018 August, we issued warrants to purchase 1.6 million shares of our common stock to a large stockholder and a board member as part of their exchange of approximately $1.5 million of subordinated notes and the new subordinated debt in our current capital structure with Gordon Brothers These warrants were recently exercised in cash resulting in cash proceeds to us of $200,000 in the fourth quarter fiscal 2019 and $600,000 in the first quarter fiscal 2020. Now let's turn to guidance. For fiscal 2020 which for us will end on February 1, 2020 we currently expect revenues to range from $26 million to $28.5 million and adjusted EBITDA to range from $11 million to $12.5 million. Lastly I would like to provide an update on our continuing listing on NASDAQ. We have until June 3, 2019 to regain compliance with the bid price rule. You can find more detail regarding these requirements in our 10-K we just filed this morning. We also filed our preliminary proxy last week for upcoming annual meeting in June, and one of the proposals in our proxy this year is the reverse stock split assuming this is approved by our stockholders we can increase the bid price in our stock to an acceptable level by affecting a reverse split necessary. To summarize, it's been two quarters since we announced our fiscal 2019 restructuring plan and refinanced our debt. It's gratifying to see these significant changes reflected in our improved financial results. But it's even better to observe the effectiveness of our operating platform in developing our brands and revenue streams around the world. We have an excellent group of licensees. We've already replaced a good portion of the revenues that we lost going into fiscal 2019 and our hot Cherokee and Liz Lange DTR licenses did not renew. Now we are looking forward to profitable growth as we expand revenues up this new base with less overhead. Now I’ll turn the call back to Henry.

[Henry Stupp:]

Thank you, Steve. As we discussed before Steve's presentation, Apex establishes a strong and relevant corporate identify that allows our brands and those of our partners to fully express their individuality and potential. Jumping into specific brand update, I’ll focus on providing highlights around our core brands starting with the Hi-Tec portfolio. The Hi-Tec portfolio which includes Hi-Tec, Magnum, Interceptor and 50 Peaks continues to gain momentum with licensing revenue growing $1.9 million to $11.6 million for fiscal 2019 a year over year increase of 20%. We are pleased to report that the most comprehensive assortment of Hi-Tec branded product in the brand's 40 plus year history is now available globally. We have maintained our authority in our core footwear business while also expanding into exciting new categories and opportunities including a broader range of apparel, footwear and accessories sold within major sporting goods and specialty retailers, an extra tough work and service program that will reach new distribution channels and now through a crossover for an apparel program that is distributed globally. The domestic introduction of Hi-Tec men's and women's apparel and accessories continued to grow as retailers and consumers embrace the extended expression of the Hi-Tec brand. Since our initial introduction at the end of the second quarter in fiscal 2019, we have expanded our retail footprint considerably. In constant with our best-in-class licensee partners, we've been able to secure placement with the majority of the nation's larger brick and mortar and e-commerce retailers. The reception for our Hi-Tec category expansion has been equally strong in Europe. To our pan-European licensees, we've already - we're already seeing expanded commitments for apparel footwear and accessory lined for all of calendar 2019. Outside of Europe, distribution of Hi-Tec branded footwear in Latin America, South Africa and Asia is growing and we look forward to exploring category expansion opportunities as we scale the brand in these regions. At year-end, our Hi-Tec branded footwear and accessories were distributed in more than 100 countries in addition to our growing e-commerce business which is taking off on a number of fronts. First, our active promotion of our Hi-Tec spring and summer collections through digital and influence marketing led to an increase in total views by 150 million in the United States alone. Clearly our social and digital media campaigns are having an impact and we will continue to bolster these efforts and parlay successes across our entire portfolio. We also continue to expand our product and category brand particularly in apparel and accessories for our Magnum brand which is one of the world's fastest growing military, technical and service industry footwear brand. We will continue to ramp up awareness and affinity for Magnum through marketing activation and category expansion. Our exclusive distribution agreement with Wal-Mart North America are driving success for our interceptor brand and here to category expansion will be a key to growth. We are in advanced discussion to expand Interceptor globally in footwear, apparel and accessories in early fiscal 2021. Turning our attention to the Cherokee Brand with sales of $9.7 million for fiscal year 2019 were are down approximately $1.4 million or 12% largely due to the non renewal or expiration of legacy partners along with our transition from direct to retail through a wholesale licensing model. As legacy relationships are replaced and business model shift, we know that a sustainable growth plan exist for the Cherokee brand domestically, but it will take time and we along with our best-in-class licensees are committed to making this happen. Today we offer a wide assortment of Cherokee men's, women's and children's products across multiple channels, retailers and licensees. Our licensees expertise and commitment to the Cherokee brand will be key to our growth strategy. And their efforts are progressing well, particularly for Cherokee kids and school uniforms. Additional licensees expansion is also underway, including a planned reintroduction of our heritage footwear apparel and accessory collections, that will be distributed at the upper tier of retail. As we depart from the legacy terms and limitations, expand distribution into new channels and gain traction with new partners. We look forward to realizing positive comps for the Cherokee brand. On the global front, we continue to identify additional licensees to build upon our European base for Cherokee, following our third quarter 2019 launch. As we think about the future of the Cherokee brand, we continue to pursue a multi-category and multi-channel approach, partnering with best-in-class licensees will made a core component of our growth strategies well pursuing tri-party licensing deals. Our sales and marketing efforts are also gaining traction with renewed interest both domestically and internationally for other brands in our portfolio including Everyday California, Liz Lange and Sideout. And lastly, I’ll review our Tony Hawk brand, which now includes our streetwear lifestyle brand called Tony Hawk Signature. For the full year 2019, Tony Hawk brand revenues totaled roughly $600,000 as compared to $5.5 million in prior-year-period. Revenues for the Tony Hawk brand continued to decline in the fourth quarter, as we finalize our transition from our legacy direct to retail model to a new wholesale licensing base. With this transition complete and our domestic and international licensees securing a solid placement, we expect positive future results and continue expansion into multiple channels and geographies. While relatively new, our core wholesale licensees are already ramping up and brand momentum is building. We continue to amplify global brand messaging for Tony Hawk through events and strategic partnerships. For example, in January launch, the Tony Hawk Signature line during Paris fashion week. Now we will explore innovative brand collaboration and engage key pacemakers and influencers that fuel the brand. But through these efforts, we are beginning to secure additional interests for the Tony Hawk brand with leading retailers throughout Europe. Separately, we’re in discussions with licensees and other territories including Asia, India, and Australia, and New Zealand. I cannot be prouder of our global change for creating these positive brand impressions across our entire portfolio every day. Fiscal 2019 was a year of transition and we are running this company for the long term. The strategic choices that we put in place this year will continue to pay off. Actions we've taken to stabilize our financial position and revitalize our business model have put us in a strong position to expand reach for the brands we own, the brands we create and the brands we develop for others well into the future. Our strategic choices when they gave the impact from non-renewals and frequent management changes at our retail partners, both of which have hindered on progress in the past. We are entering this new chapter with an operational model that is stronger and a business that is more diversified than ever before. As Apex Global Brands, we will own our brand authority by extending our current brands into new categories and markets and most importantly by forging deeper, wider relationships with our licensees. We are confident that Apex a strong portfolio and flexible platform will be a winning combination that will translate into stability, profitability and industry relevance long into the future. Thank you again for your time this morning. And for your continued support of Cherokee Global Brands. We look forward to continuing to update you on our progress in the coming quarters. And with that we will now open up the call to your questions. Operator?

[Operator:]

[Operator Instructions] Thank you. Our first question comes from the line of Eric Beder with SCC Research. Please proceed with your question.

[Eric Beder:]

Could you talk a little bit about the SG&A savings kind of how you got to that and what should we be thinking about going forward as you start to ramp up revenue in terms of being able to leverage the SG&A side?

[Henry Stupp:]

Sure, Eric. I think - I think what you're seeing now is a reflection of the restructuring plans that are in place in the last, not just this year running before. So we're continuing to hold the line on any spending that’s not necessary and looking for ways to save. So you see those results. I think going forward I think the guidance would imply $15 million to $16 million of SG&A next year. So that's we think that a pretty low spot to begin with. So we're looking for now as we are going to build brands and build a revenue basis, opportunities to spend more in the marketing area and that's where you see that incremental growth so Middle East and in the PD area where we're supporting our licensee in China. So those are the areas where you see spending not in overhead.

[Eric Beder:]

When you look at Tony Hawk as an example and I see your do with Cherokee. You know you're bringing out a high end line. And how does that defuse itself through the rest of the piece to drive overall growth for it and how have you seen that happen?

[Steve Brink:]

We basically establish for all of our brands there, halo strategy, where we can target multiple channels of distribution. It’s a well-established paths for brands to reinvent themselves, to increase their relevant interest by digging into its heritage and its history and targeting new consumers through the release of vintage products, heritage products that over time came back into vogue. So we saw a lot of success with that starting with the Hi-Tec brand, when we reintroduced HTH 74, where we took a legacy shoe, like the Silver Shadow, we launched with Liberty of London and that allowed us to start expanding certain retailers outside of Europe and as we move through the distribution channels we start at the highest level and we allow it to trickle down to where today you know a shoe that launched at the highest level of retail has allowed us to introduce additional, additional assortments under Hi-Tec, where we could expand distribution into larger concept for Locker or Urban Outfitters. So burbling off of that success and seeing the reaction that retailers had and the acceptance of the brands, we started to introduce the same concept for those with Tony Hawk and Cherokee that we are mining best sellers from our history and we will be marketing and supporting at our retail and the intrigue and the desire from retailers to dip back into those kind of products that have that heritage that deep history is relevant and important.

[Eric Beder:]

What about some of the brands that are kind of dormant like maybe as buying out – do they – having potential for that that kind of management?

[Henry Stupp:]

Yes, we’re seeing more activity now and as a company where we are looking at the entire brand portfolio. We do see brands coming back into vogue. We are seeing a lot of retailers who are looking to bring back brands that were popular in the 70's and 80's, and so a brand like Sideout is a good example, where it had been you know idling for a number of years and now we are able to leverage our relationships with retailers or relationships with licensees, happened to the existing design infrastructure and start recruiting licensees to reintroduce in a retail. So we - our goal this year frankly is you know with the difficulties we face for the last couple of years. Our goal this year is to really maximize each brand opportunity, lever the infrastructure, spend more time on sales and marketing, which is really the focus and start driving top line revenue with a good handle on our expenses

[Eric Beder:]

Great. And last question, free cash flow, obviously we don’t ask them to go up again. What is the use of free cash flow this year, pay down debt, look at acquisitions once more, what do you think the goal here?

[Steve Brink:]

I think the - as we said before that the free cash flow you'll start to see after working capital changes in the back half of fiscal 2020. We're still working down some of the restructuring obligations down in the first half and then we will have our normal debt amortization payments of $1.3 million next year and then after that additional cash flows to use these leverage for sure.

[Operator:]

Our next question comes from the line of Dave King with Roth Capital Partners. Please proceed with your question.

[Dave King:]

I guess, first, congrats on the continued progress, especially on the expense front. First question is on revenue and the guidance there, how should we be thinking about the cadence of the growth over the next couple of quarters. I think regarding maybe 12% growth I think. At the midpoint, there will be anniversarying the Flip Flop I think in June. So how should we think about that trajectory as the year plays out?

[Steve Brink:]

Well, we're not - as you see we're not giving quarterly guidance. But I think for the most part, you'd see relatively consistent growth and with the exception of probably Q2, where - in Q2 last year, we had a big number from our new pan-European licensee for Cherokee. So comping that up would be difficult. But so other than that you see everything grow should be relatively steady.

[Dave King:]

And then in terms of by brand or business, how should we’d be thinking about the various drivers between what should be the biggest driver between Hi-Tec and Hawk kind of retailer et cetera?

[Steve Brink:]

Well, we've got brand by brand starting with Hi-Tec. The Hi-Tec portfolio, we're having a lot of success with the Magnum brand globally and that's leading to category expansion, which will start kicking in the back half of this year. We do expect before where to continue to grow our Magnum. We're seeing the same thing on Interceptor, not only on the Interceptor footwear, which is exclusively distributed by Walmart in North America, but we're now adding additional licenses for non-footwear, specifically apparel and accessories. So we do expect that brand to grow as well. And then Hi-Tec, our licensees, domestically and internationally as well as our distribution partners are all seeing growth and we're having our licensees work with our distributors. So that we could expand the product offering on a global scale. So for example, our European licensees distributing product that has been designed developed and sourced by our domestic licensees and vice versa. That' s allowing us to get more product into channels faster than ever before. So the strength of Hi-Tec was a great opportunity for us. We are still relatively in its infancy a couple of years in through a very difficult transition from operating companies to a licensing company and now that our licenses are starting to develop product and we are supporting it with some great marketing activities where we are seeing a lot of retail penetration and we are quite confident that that' s going to be a significant growth driver in the future. With Tony Hawk, we obviously had a tough transition from our former DTR partner. However, our domestic and international licenses has secured its solid placement. We are going to have a good comp from last year to this year. We are going to expect a lot of growth. We think our licensees are doing a fantastic job in designing compelling product, getting good distribution, our strength of our licenses is critical at this stage. They are motivating. They are distributing product. They are stocking inventories, so they are able to respond quickly and that' s a very positive development for us. So we do believe that Hawk will continue to grow especially as we get into closer and closer to the Olympics and we are already starting to see more and more inbound inquiries about the category the streets take category. So we think that we are on trend there and the opportunity is positive. On the Cherokee side, internationally, we are in good shape and our goal there is to introduce more categories to our existing partners. And domestically, we feel that we have made a lot of improvements by getting the right mix of licensees, several of which are doing a stellar job and opening up more accounts with great products. We’re doing more brick and mortar and more e-commerce with you know known accounts. You know the big box in the e-coms but also some new distribution channels, particularly in growing channels like Tractor Supply, Farm and Fleet where we are getting a lot of interest. We were quite pleased with the self rules of the product and the placement and now it' s just a question of making sure that we are able to grow and we think we’ve got made significant progress with our group of licensees, which we transition to a little bit over the last 18 months. So it' s looking more positive there as well.

[Dave King:]

And lastly for me on M&A Henry, how are you thinking about the environment currently. And then I guess more importantly, you know to what extent is your balance sheet, where it needs to be – provide to be on some of the acquisition funding? Thanks.

[Henry Stupp:]

Well, our number one goal this year is to really maximize the brands within the portfolio. That's where the company is primarily focused. There are opportunities that present itself every week. We do discuss and closely with Gordon Brothers who's proven to be very good partner with us. So with that said, we are primarily focused on the portfolio. But we are looking at other options possibly other acquisitions in partnership with Gordon Brother brands.

[Operator:]

Thank you. We have reached the end of the question-and answer-session and with that the conclusion of today's call. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.