Build-A-Bear Workshop, Inc.
Q4 2023 Earnings Call Transcript

Published: 14 Mar 2024

[Operator:]

Greetings. Welcome to the Build-A-Bear Workshop Fourth Quarter 2023 Earnings Call. At this time all participants are in a listen-only mode. A question and answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host Gary Schnierow, Vice President of Investment Relations and Corporate Finance. You may begin.

[Gary Schnierow:]

Good morning. Thank you for joining us. With me today are Sharon Price John, CEO; and Voin Todorovic, CFO. For today's call, Sharon will begin with a discussion of our fourth quarter and full year performance and update the progress we've made on our key priorities. After, Voin will review the financials in more detail and provide our guidance. We will then open the call to take your questions. Members of the media, who may be on our call today, should contact us after this conference call with your questions. Please note the call is being recorded and broadcast live via the Internet. The earnings release is available on the Investor Relations portion of our corporate website. A replay of both our call and webcast will be available later today on the IR site. I will remind everyone that forward-looking statements are inherently subject to risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors, including those set forth in the Risk Factors section of the company's annual report on Form 10-K. We undertake no obligation to revise any forward-looking statements unless required by law. Also during this call, we may discuss non-GAAP financial measures, which adjust our GAAP results to eliminate the impact of certain items, which management believes can be useful in evaluating the company's performance. The presentation of non-GAAP financial measures should not be considered in isolation or a substitute for results prepared in accordance with GAAP. If non-GAAP measures are presented, you will find information regarding these non-GAAP financial measures and a reconciliation in the company's earnings release. And now I would like to turn the call over to Sharon.

[Sharon Price John:]

Thank you, Gary. Good morning and thanks for joining us for Build-A-Bear's fourth quarter and fiscal 2023 earnings call. We are pleased to again report record results as we continue to execute against our strategy, which is focused on the evolution of our business model to profitably leverage the power of the Build-A-Bear brand. Fiscal 2023 represents the third year in a row of record results for Build-A-Bear. In keeping with this trend and as reflected in our guidance in this morning's press release, we expect to deliver a fourth consecutive record breaking year in fiscal 2024. Now to recap 2023. Specifically for the fourth quarter revenues increased nearly 3% to over $149 million and we delivered pre-tax income of more than $26 million. While these numbers were within the previously provided guidance range we would like to note that the results were softer than originally planned due to a combination of e-commerce disruption and some overall fourth quarter economic challenges accentuated by severe January weather. Voin will provide some more insights on that impact in his remarks. Turning the page to full year fiscal 2023 results, revenues increased nearly 4% to a record $486 million and pre-tax income increased 7% to over $66 million also a record for the company. As noted we attribute these 2023 results as well as Build-A-Bear's meaningful expansion and profitable growth over the past few years to the ongoing successful execution of our strategy and the evolution of our business model, which I will highlight in a moment. But first to better understand the progress we have made as a comparison, fiscal 2023's $486 million in total revenue is up 44% from the $338 million generated in fiscal 2019, the last pre-pandemic year. Additionally, this revenue has delivered a significantly improved level of profitability. The $148 million revenue increase over the past four years generated an incremental $65 million in pre-tax income and we have driven this financial improvement across all three of our business segments. As a reminder, our strategy is to deliver long-term profitable growth and is grounded in our most valuable asset, the power of the Build-A-Bear brand. In summary, the company's strategic initiatives are

[Voin Todorovic:]

Thank you, Sharon, and good morning, everyone. It’s good to speak with you again today to share our results for our fiscal fourth quarter and full year of 2023. Before I touch on our financials from the past year, I want to recap a few highlights. First, we are pleased that we delivered our third consecutive year of record results as we grew across all segments, expanded gross profit margin and increased pre-tax income versus last year. In addition, earlier today, we announced our 2024 outlook, reflecting expectations for another record year. Also, as the result of our solid business performance and strong cash flow generation over the past three years, we have paid two special dividends and repurchased more than 1 million shares of common stock, returning over $90 million to shareholders. To put this in perspective, this return of capital to shareholders represents approximately 30% of our current enterprise value. On top of this, our Board has approved the initiation of a $0.20 per share quarterly dividend, showing confidence in the company’s ability to sustain profitable growth based on our long-term strategic plans. Now moving to our financial results, starting with a more detailed review of the fourth quarter that reflects one extra week compared to the prior year. Total revenues were $149.3 million, up 2.9% year-over-year. Net retail sales increased 1.5% year-over-year with a positive contribution from stores due to the extra week and an 8.8% decline in e-commerce demand. Store sales were particularly impacted by a two-week stretch of bad weather in January when we experienced over 250 days of store closures. Our traffic was up, but we saw a decline in dollars per transactions for the quarter. Commercial revenue, which primarily represents wholesale sales to our partner operators and international franchise revenue rose a combined 31.1% versus the prior year. Gross margin was 56.4%, an improvement of 140 basis points compared to last year. Benefiting from merchandise margin expansion reflective of lower freight cost and leverage of distribution costs. SG&A expenses were $58.5 million or 39.2% of total revenues compared to 36.9% of total revenues in the 2022 fourth quarter. The 230 basis point increase in SG&A was driven by an increase in marketing expenses, higher wages due to inflation, the addition of talent and other investments to support future growth. Even though, SG&A was higher with growth in gross profit dollars, we delivered $26.2 million of pre-tax income, nearly flat to last year. EPS increased 12.9%. On an adjusted basis, EPS decreased 3.6% as our tax rate increased from 22% to over 27% as we remove the benefit of the release of a tax valuation allowance. Now moving to highlight a few of our full year results. For fiscal 2023, total revenues were $486.1 million, up 3.9% year-over-year, which included the extra week in the fourth quarter. Net retail sales increased 2.2% year-over-year and were up close to 70 basis points excluding the extra week. For the year, our store traffic again outpaced reported national retail traffic. Our transaction growth was positive for the year, while dollars per transactions were down low single digits. E-commerce demand was down 5.8% for the year and our commercial and international revenue rose a combined 37.7%. Pre-tax income grew 7.1% to $66.3 million for the year. Higher gross profit dollars more than offset the increase in SG&A and led to pre-tax margin expansion of 40 basis points to 13.6% of total revenues. Excluding the benefit of the 53rd week, pre-tax income grew approximately 3%. Earnings per share was $3.65 per diluted share, a 15.9% increase aided by a lower share count in a decrease in the tax rate due to the release of valuation allowance. On an adjusted basis, EPS was $3.42, an increase of 8.6%. With respect to the balance sheet. At year end, we had cash and cash equivalents of $44.3 million, an increase of $2.1 million compared to year end 2022. This was after returning $42.4 million to shareholders through a special dividend payment and share repurchases during the year. Inventory at year end was $63.5 million, declining $7 million or 9.9% from the end of the last year. We remain comfortable with the level and composition of our inventory. Turning to the outlook. The full details of our guidance are included in our press release, but I will highlight a few key metrics compared to fiscal 2023, excluding the impact of the 53rd week. We currently expect total revenue to grow on a mid-single-digit basis. This growth is partially driven by the addition of at least 50 net new experience locations, with the majority coming through partner operated expansion both internationally and domestically. Our revenue growth will be back half weighted as we add locations as well as due to a more favorable fourth quarter comparison. In addition, the timing of shipments and the opening of partner-operated locations may create some differences compared to last year. We note that commercial revenue has a particularly difficult first quarter comparison, but with our expectation that partner-operated stores will be the majority of new store openings this year, we still expect strong growth in this segment on a full year basis. Pre-tax income to grow in the mid-single-digit range on a full year basis, but we expect to have unfavorable timing of marketing expenses in the first quarter of the year, as we launch our new comprehensive brand campaign, the stuff you love, and continue the integration and evolution of our digital transformation strategies to optimize customer lifetime value. Our outlook also reflects increased freight costs caused by conflict in the Middle East and ongoing wage and inflationary pressures and increased depreciation expense. In closing, I would like to thank all our store and warehouse associates as well as corporate team members for contributing to our record results, which has positioned us for our fourth consecutive record breaking year in 2024. This concludes our prepared remarks and we will now turn the call back over to the operator for questions. Operator?

[Operator:]

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Eric Beder with SCC Research. Please proceed with your question.

[Eric Beder:]

Good morning.

[Voin Todorovic:]

Good morning.

[Eric Beder:]

Few quickies here. Could you talk about what we should be thinking about in inventories going forward? You guys did an outstanding job of managing inventories last year. How should we thinking about it now with slightly rising shipping costs and some other pieces going forward here?

[Voin Todorovic:]

Thanks for the question, Eric. Definitely, inventory management has been one of our focused areas over the last several years as we managed through COVID as well as we came out of it, trying to mitigate some of the challenges as it relates to increased freight costs due to COVID related challenges. Some of those things are behind us from the COVID perspective, but at the same time, due to the nature of some of the conflicts and impact on the shipping lane, the costs are starting to creep back up again. So we do expect to have some headwinds as it relates to freight. That will also impact our inventory by the end of the year, assuming those freight costs stay at that same level. In addition to that, as we continue to grow our partner-operated business and expand store location, there is probably going to be some additional need for working capital and some more inventory and we will continue to manage that. So that is creating some timing, as again, as a reminder for everybody on the call, our shipments to our partner-operated locations are on a wholesale basis. So depending on the fulfillment and opening of these stores and replenishment to these stores, there is some timing that may be a little bit different than timing in our retail locations.

[Eric Beder:]

Great. And could you provide us kind of a thought process here in terms of how we should be thinking about the returns on these commercial and international, where these partners were going through? I know that the gross margin is a little bit lower, but what should we be thinking about in terms of the operating margin for these kind of businesses? And on a related note, how do you look at the expansion into potentially new areas for franchising and for commercial and how we should be thinking about that beyond the 50 or so that we have here?

[Voin Todorovic:]

I mean, great question. This is one of those areas of growth for the company. We believe, especially, as we think on a global basis that there is more opportunities for us to grow our international footprint. And actually yesterday, we opened our second store in Italy, in Rome. So we continue on this journey. That's part of our expectations to continue to grow these partner-operated locations is expanding new markets and more to come in the future as we continue to work with different partners across the globe. Also, this particular model is one that we like from the capital perspective and it's very asset light. Our partners are making the investments in stores, in inventory, we sell to them on a wholesale basis. As you think about the margins that we are getting, this is one of the areas where we don't get a full top line sales. So when you are thinking even about the growth that we are guiding to, that's reflecting our wholesale sales to these partners. But we are getting the high margin dollars on that business and that's helping our overall profitability and we continue to leverage our fixed overhead with some of the investments that we are making there. So we believe that this is going to be very accretive for us as we go into the future. And as we have said in the past, like, we expect that this to be a big opportunity for us. For many U.S. based companies, it's common to think that we could have as many stores outside of U.S. as we have in our domestic market.

[Eric Beder:]

Great. Thank you.

[Operator:]

Thank you. Our next question comes from the line of Michael Baker with D.A. Davidson. Please proceed with your question.

[Michael Baker:]

Hi, thank you. Couple, just I wanted to start by following up on that. These 50 partnered locations, any color on where they are, are theyexperiential type places like vacation destinations or just I presume a lot of them are outside of malls. Just sort of wondering what kind of locations we can think about for where those will be.

[Sharon Price John:]

Hi, thanks for being on the call. I'm going to start and I'll hand it over to Voin for some more color. First, I just want to be clear, we haven't specified exactly which business model all of these 50 new locations are. And just to be clear, and I know this can be a little bit confusing. It can be a corporately managed store, a commercial store or a franchise store. We're speaking strictly in the construct of where we're going to have retail locations. And the reason that important is because those are three different segments of our business model, and they all have different economics that are associated with them. So some of those 50 stores are going to be corporately managed stores, which require more capital, and some of them will be partner-operated. So in the ones that are partner-operated or they can also be corporately operated, we do actively look for tourist locations. We shared that with you guys some years ago that we had done a cohort analysis of when we were still about 20% of our stores were unprofitable, trying to triangulate where we were successful. And one of the big insights there was that we over indexed on almost every key metric in an area where we calculated that 50% or more of the sales were to people 50 or more miles away. And it didn't really matter if that was a mall, if it was Mall of America or a standing location at a beach. So they have an interesting dynamic, but we have since focused on those types of locations and again sometimes we operate those and sometimes they are partner operated, but that will be our focus on areas that we think clearly hurdle easily to some degree the metrics that we have in place to decide whether we open that location or not. I think it's important to note Voin's comment about the international opportunity that we have and to reiterate some of the comments that I made in my script about that we did have some independent research about the concept of how many additional locations we believe are up there as an opportunity for Build-A-Bear to grow even domestically.

[Voin Todorovic:]

Yes. And as we continue to look at some of these locations clearly what we have said in the past that we over indexed in tourist locations and as we grow definitely around the world especially as – with a couple of these stores that reopen in continental Europe, there are going to be some more of these tourist destinations and malls. And we – as we are working with our partners that are going to be opening majority of these locations, we want to be in best places that are going to drive traffic and really present our brand in the best possible way. And so – and 100 of these – 100% of these sales are going to be profitable for us, so we are very happy that we can do some of these things in an asset light model as we continue on the journey to expand our brand globally.

[Michael Baker:]

Yes, yes, makes sense. Clearly, a positive develop – positive ideas. Two follow-ups. One, I'm always just curious can you talk about Bear Cave type sales versus birthday parties or those types of products. And then you had said, ticket per transaction down. Is that – do you think that's an economic issue people sort of spending a little bit less each time they come in? Or just wondering if there's any color as to why ticket – what's going on with ticket per transaction? Thank you.

[Sharon Price John:]

On the Bear Cave comment, we don't breakdown the sales of the different specific areas particularly on our website. So Bear Cave is a micro site inside of buildabear.com that has an age gate that's focused on the older consumer. And as you might – as some of you might have noticed, we get a lot of press about some of the products that we offer in Bear Cave, We were actually on the cover of The Wall Street Journal around Valentine's Day with one of our devil bears, but they're very cute and it's – it – and we do a robust business. And most importantly about that business is it's a consumer that's outside the core – our core consumer base. These are adult purchases, often adult to adult gifting, and it fits right into our broader strategy of appealing to a multi-generational audience. On the birthday business, we've often shared that sales associated with birthdays whether it's a Birthday Treat Bear all the way to a party inside of one of our stores is about a third of our total business. Now, we love the birthday business and we created that Birthday Treat Bear which is a bear where you can come in and pay your age for in the month of your birthday and we use that as our number one acquisition tool for our core consumer. You have to be in the loyalty program to participate in the birthday treat program. And so that really builds our first party data and allows us to communicate again as I noted in the creation of this ecosystem to drive lifetime value. It gives us that direct communication of that consumer and to re-engage with them for other opportunities inclusive of the next birthday that their child may be hopefully wanting to participate at Build-A-Bear. If they come in on the Birthday Treat Bear, we would clearly encourage maybe a party the next year. So it's a great acquisition tool for us. And we still have although we've done a great job. I think we have a tremendous opportunity to keep stretching out that lifetime value with that strong acquisition tool.

[Voin Todorovic:]

And to add a little bit more color on your question about changes in dollars per transaction, I'll start first as I mentioned in our prepared remarks that our traffic was up on a full year basis, so we continue to execute on our initiatives to continue to drive traffic to stores and we are very pleased that we continue to outpace national traffic quarter-after-quarter, year-after-year. As customers are coming to our stores, there is some softness when we are and we said that our dollar per transaction is down. There are a couple of things that are impacted definitely. We believe there is some impact that external from the macro environment as you guys are reading about the reports from the overall toy industry and how it's been challenging in the Q4 in particular, our performance and some of those changes are probably better and less impacted compared to the rest of the industry. But at the same time, there are a couple other internal things that are shifting and one of those things as what Sharon just talked about the Birthday Bear and it's like our number one acquisition program. And as we are getting the new guests into the program, that the transaction value of those particular guests when they come in and interact first time with the brand it's slower than our average transaction and that has been the increasing component of our business. So that's also impacting our overall decline in dollar per transaction. But we are still pleased that we continue to drive traffic that people are coming to our stores and that they are spending their money and their discretionary income in our locations. And so we will continue to work on areas to create excellent experiences for them and continue to drive our top line growth.

[Michael Baker:]

Thank you. I appreciate the color.

[Operator:]

Thank you. Our next question comes from the line of Greg Gibas with Northland Securities. Please proceed with your question.

[Greg Gibas:]

Hey, good morning. Thanks for taking the questions. Curious how owned store comp sales performed if you back out that extra week in Q4?

[Voin Todorovic:]

Well, clearly what we said in Q4, we had $149 million in total revenue. That was 3.9% growth year-over-year. The impact of the 53rd week was about $7 million. So our sales were down overall. We also said that our web demand was down about 8.8%. So even though we were overall down, the impact – even though we don't talk about the same-store sales, but the retail sales, is smaller impact than what was on the web demand.

[Sharon Price John:]

And just for clarity, when you say owned stores, you are talking about our corporately managed stores. All of that data is based on our corporately managed stores. We're not including partner-operated or franchise stores in that particular data.

[Greg Gibas:]

Okay, perfect. Thanks for clarifying.

[Sharon Price John:]

Yes.

[Greg Gibas:]

And curious if we kind of ex-out either the additional 50 stores at least, curious what your kind of implied comp store sales growth is in the 2024 outlook?

[Voin Todorovic:]

So we are expecting to grow, as I mentioned in the remarks, if we adjust for one extra week, we expect to grow in mid single digit range year-over-year. A lot of that growth is going to be coming from these additional net 50 new locations. Again, that may be back half weighted as we continue to add stores and our partners open them. So that's portion of that growth. In addition to that, we expect our e-com business to recover with the digital transformation that's in place, as well as we would expect improvement in our base business as well.

[Greg Gibas:]

Okay, fair enough. And really nice to see the anticipation of an acceleration in new store sales from, I think, it was 37 in 2023 going to at least 50 as expected. And I know you previously – just kind of a follow-up, but you previously said you are not really specifically breaking down, but it would be curious if you could talk about maybe the rough mix on, I guess first, corporate versus partner-operated and franchise. Maybe like the rough breakdown, is it like fifty-fifty and then also international versus domestic? Given your commentary on a lot of opportunity internationally, just curious what maybe rough breakdown would be international versus domestic for those new stores?

[Voin Todorovic:]

That's what we have shared, that we expect majority of these locations to be partner-operated of the opening. So that’s going to be definitely more than 50%, like we are not providing the specific color on some of those. Again, some of this also depends on the timing and flexibility and openings, again, as we are opening these locations, some of this is outside of our direct control and there are supply chain challenges and impacts, but we feel good about the overall number that we are guiding and how that's going to open and where it's going to open. It's still in works. From the partner-operated perspective, a big portion of that we would expect to be in international markets, as we continue to expand in those. So again, just because of all those reasons that I highlighted a second ago, I don't want to break some of those numbers in more detail, but we also expect our international franchise business to have some opportunities, and we are planning to expand internationally. So it's, again, beginning of the journey in some of those markets now that we are behind COVID and we are opening, as we mentioned, we have first two stores in continental Europe in many years. So, we are excited about that. And they are going to continue to open throughout the year, and we will be providing more context as we have more information to share.

[Greg Gibas:]

Okay, great. I guess appreciate that.

[Sharon Price John:]

The one thing that I would add to that is clearly that 50 stores for us it's a pretty long pipeline, and we're planning years out beyond that as well, without providing any specific detail on that. But as one was saying, particularly in partner-operated and even in corporately managed, these are leases that we're working with, with other partners. It's not a unilateral decision on which store or what kind of format it is. And even in some partner locations, sometimes we end up running a corporately operated store. So that's why we're being not as crystal as we probably could be. It's because sometimes it's down to the last portion of the negotiation on what form the store, actually, takes. And yes, and Voin mentioned we just opened in Rome, but you might recall on the last earnings release we discussed the excitement and the positive reaction in the Italian market when we opened in Milan. So that opened just yesterday, but we're quite hopeful we'll see the same sort of impact.

[Greg Gibas:]

Great. That's helpful. Thank you.

[Operator:]

Thank you. Our next question comes from the line of Steve Silver with Argus Research. Please proceed with your question.

[Steve Silver:]

Good morning. Thanks, operator. And thanks for taking the questions. And congratulations on the new dividend policy, the underlying confidence in the business that must have helped inform that decision. I appreciate the color on the positive impact that the Merry Mission movie had across all the various touch points across the business. I am just curious as to whether there were any surprises or any unexpected lessons that you learned going through that process that you expect to now be able to leverage in future content projects.

[Sharon Price John:]

Well, there is always things that we learn, particularly with a new initiative, when we – that was our first, as I mentioned, theatrical animated feature, and we made the decision to do that with Merry Mission because we had already enjoyed multiple years of success with these characters and the marketing of the storyline and already had an app, and we had a real sense of that this would be something that we would hope would resonate with guests. Additionally, because, and I mentioned it in the call the power of the Build-A-Bear brand, we were able to secure a talent level that would typically, I would think not be that normal for a “specialty retailer creating a film.” So from Chevy Chase to Julia Michaels, it was a – it’s a really fun adventure for moms and kids alike. So we went into this with eyes wide open in terms of looking at it like we do so much of our content creation as a primary marketing tool, something to make it a center point of what we do, a reason to communicate and spread it across everything that we do to create a comprehensive impact on the guest. And so from what we learned, well, we didn’t expect that we would have a theatrical release that was not part of a thought process. But we were able to create a partnership with Cinemark early on for exclusive theatrical release in October and early November. And that was an interesting – we’ve never been a theatrical marketer before. So that was an interesting process for us. And we were pleased that people were willing to come out to theaters and see our film. And we believe that we could actually next year, because what we’re trying to create, and I believe we have created is an evergreen concept that we don’t have to reinvent the marketing for the holidays every year. If you think about the longevity of holiday films that are targeted to kids, we will have a Merry Mission tradition marketing campaign next Christmas. And each year, I would hope that we would learn something and improve. And I expect that look [ph] to be the case next year as we look through our marketing programs, look through our communications, look through our content, and as well as the media plan on how we can elevate not just the Merry Mission program, which we shared was up significantly, but to raise the water level of everything that we do.

[Steve Silver:]

Great. I appreciate the color and congratulations again.

[Voin Todorovic:]

Thank you.

[Operator:]

Thank you. Our next question comes from the line of David Kanen with Kanen Wealth Management. Please proceed with your question.

[David Kanen:]

Good morning, guys. Thanks for taking my questions. The first one is in the guide for 2024 mid-single digit growth. What is – it looks like if I back into it, you’re expecting same-store sales to decline for the year. Can you give me an approximation on that? Or please correct me if I’m wrong and you expect it to grow.

[Voin Todorovic:]

I just think I answered that question just a minute ago, but I’ll go again through this exercise. So as we talked about the mid-single digit growth year-over-year in our guidance, that’s compared on an adjusted 52-week basis 22. And we expect our growth to come from the store base as well as from our e-comm base. In addition to that, we would expect to see growth from our base business as well. We haven’t quantified that growth and that number, but we expect to grow that portion of the business as well.

[David Kanen:]

Okay. And then on e-commerce, I know it was down and the comparisons were more difficult. Do you expect in 2024 e-commerce to resume growth? And if so, is it similar to the overall guidance of mid-single digit?

[Voin Todorovic:]

We haven’t specified specifically for e-comm, but again based on some of the challenges we have seen in 2023, we believe that that particular segment with all the digital transformation initiatives that we have in place should be growing at a faster pace than some of the other initiatives.

[David Kanen:]

Okay. So are you thus far in 2024, have you seen the trends reverse to positive in e-commerce?

[Voin Todorovic:]

Yes, we have.

[David Kanen:]

Okay. Great. And then final question, I’m not sure if this is meaningful or not, but this new product, SKOOSHERZ, what’s that – I know there’s a lawsuit there and a claim that you’ve infringed upon them, but is it a meaningful product? I know it just launched. Was it a significant contributor to the quarter or it’s essentially de minimis. And therefore, even if you lose that, it’s not going to affect results. Any color you can provide there is appreciated.

[Sharon Price John:]

Well, first, I’d just like to note that Build-A-Bear is a 25-year upstanding intellectual property holder. And we understand intellectual property law and that SKOOSHERZ is based on many of our preexisting animals. And we are excited about the concept. But to your – more specifically to your question, clearly, we just launched it, so currently, it would be immaterial, which is why we didn’t mention in any of our comments today.

[David Kanen:]

Thanks for clarifying that. Good luck, guys.

[Voin Todorovic:]

Thank you.

[Operator:]

Thank you. And we have reached the end of the question-and-answer session. I’ll now turn the call over to Sharon John for closing remarks.

[Sharon Price John:]

Thank you for your time today, and we look forward to speaking to you at our first quarter call. Have a nice day.

[Operator:]

And this concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.