Q3 2019 Earnings Call
On the call today, it's Michael Johnson, the company's chairman and CEO .
They came out on the company's co president and Chief Strategic Officer.
Dr. John .
I will now be the company's co president and Chief Health and Nutrition Officer.
And Alex Mosquito, the company's senior Vice President Finance strategy, and Investor Relations and Eric I know the company's director Investor Relations I would now like turn the call over to Eric you know treat the Companys Safe Harbor language.
Yes. He did with these forward looking statements in our business. We encourage you to refer to todays earnings release, and our SEC filings, including our most recent annual report on Form 10-K , and quarterly report on Form 10-Q are forward looking statements are based upon information currently available to us we do not undertake any obligation to update.
Or really any revisions to any forward looking statement were to report any future events or circumstances or to reflect the occurrence of unanticipated events, except as required by law. In addition, during this call certain financial performance measures, maybe discuss that differ from comparable measures contained in our financial statements prepared in accordance with.
The U.S. generally accepted accounting principles referred to by the Securities and Exchange Commission as non-GAAP financial measures. We believe that these non-GAAP financial measures assist management and investors in evaluating our performance in preparing period to period results of operations in a more meaningful and consistent manner as discussed in greater detail in the supplemental schedule.
Sales to our earnings release.
A reconciliation of these non-GAAP measures to the most comparable GAAP financial measures is included in our earnings press release submitted to the FCC. These reconciliations together with additional supplemental information are also available at the Investor Relations section of our website Herbalife Dot com. Additionally, when management makes reference to volumes during.
This conference call, they're referring to volume points I will now turn the call over to our chairman and CEO Michael Johnson. Good afternoon, everyone. Thank you for joining us for our third quarter 29 team conference call.
Sean or press releases today.
From a great news to show this quarter now I'd like to start by congratulating two great executive and two really good friends, John I wouldn't <unk>, who will step into the role as CEO of Herbalife nutrition, and John D. Shimon will be our next president effective March Thirtyth 2020.
Subordinate are really confident that we have the right people and the white team in place to lead the company into the future.
Dr. I wouldn't always unique qualification and John D. Someones extensive experience, we're well positioned to keep our positive momentum going.
Before I go into more detail about our transition plan I'd like to provide a brief update on a record third quarter results third quarter by employing for an all time hard for our company ever reported year over year net sales growth and stepping up our top 10 countries.
We projected last quarter the trends in our China business improved in the third quarter no recovery in that market is on track.
Strategies and trying to we discussed in detail on last quarter's call are progressing we continue to expect further improving trends in the fourth quarter.
John Desimone provide an update on some of our initiatives and try to along with commentary on the other regions later in the call.
We believe this is a great moment in the history of Herbalife, we're reporting a record quarter and we're announcing the next leaders, who we know well driver business forward, we take our corporate succession planning very seriously and review our plans every year and since I stepped back into the role as CEO earlier. This year, we're thoughtfully and carefully taking our time to ensure the companies in the most keep.
Well hands as we approach our fortyth anniversary.
Board of directors and I've worked with no John and John personally and we're convinced that there are the right leaders at the right part for this job.
With an accomplished anemic background as a position public health professional business leaders, John arguing Ob Gyn bodies are companies vision values and nutrition philosophy is dedicated his life to improving People's health and has a unique understanding of the synergies in the intersection of public health and the private sector.
Since joining our company in 2016 is cheap health and Nutrition officer, John It's been an integral part of our business with an impressive list of accreditations, including an M.B.M.B.A.M.P.H. and a commitment to innovation quality insights back nutrition. He has played an important role and moving the company forward building on a reputation.
As a premier Global Nutrition company John's background has been and we'll continue to be a tremendous effort to our company. John started his career as a pediatrician before moving into public service first is the secretary of health for the state of Florida, and then as assistant Secretary built for the U.S. Department of Health and Human services, where you oversaw the centers for disease control.
Actual Institute health and the FDA among others.
Under the corporate sector in a big way overseeing the U.S. health and wellness division of the largest retailer in the world Walmart his responsibilities and comp was all pharmacy operations, including 4000 retail pharmacies as well as 2500 optical centers in hardware manufacturing labs and more than 100 in store medical clinics, you also provided insight and.
Good bikes that informed walmarts position on health reform public health advocate feed nutrition employee wellness in emergency response.
Third over like John is collaborated with our distributors and their customers to ensure we are continually innovating in the early for product development technology in field.
He has a deep and personal understanding of the opportunity we have to positively impact the health and wellness more communities on a global scale through our proven products from distributor network.
We have a unique opportunity here and are blocks interest from where we have to extremely talented individuals who are committed to the continued success with the company. So today. We're also excited to announce a John Desimone co President and Chief Strategic Officer will become President next Mark.
John is a proven leader with an extraordinarily deep knowledge of our business, having spent more than a decade and leadership positions that herbalife nutrition and each of this 12 years or does he has been responsible for the strategic function of our company and has played an integral role in our strategic direction, specifically John has been extensively involved in Korea.
Local infrastructure strategies, including technology and seemed to be bringing approximately 65% of ball product manufacturing in house and ensuring the highest product quality standards. He was also integral in working with our distributors to enhance the economical sustainability of their business, helping to improve our supervisor profitability and record high distribute.
Her retention rate.
For the eaten a half years. He served as CFO . He was responsible for all financial departments, including the County tax Treasury Investor Relations and for the company's business strategy around the world during which the company doubled in size. We're fortunate to have drawn served as our president partnering with the leadership team to continue to drive our strategy execute our long term growth plans.
And help further our mission John I'd been Ob, John D., Simone or an extraordinary team a team built to lead our company into the future for distributors employees and shareholders. This really great news, John John and I will work closely together to ensure a seamless transition as I said earlier I know them both personally and.
I'm looking forward to the visionary leadership.
Bring to herbalife nutrition in the years to come.
These are truly exciting times that herbalife nutrition my passion for our mission is stronger than ever looking forward to stay in actively involved as chairman of the board and being part of all the great things that will come in our Fortyth year and beyond now let me hand over the call to our next CEO Dr., John I'd when Ob.
Thank you Michael on behalf of the entire Herbalife nutrition community.
Want to thank Michael for his vision his leadership.
And his dedication to our company.
I look forward to continuing to work closely with him as I prepare for my new role.
My current role that's co president and Chief Health and Nutrition Officer.
The honor of working with an incredible team of trusted proven executives and I look forward to that continued leadership throughout this transition.
Together, we have developed key strategic initiatives in product.
Technology and in finding ways to strengthen our distributor difference.
These initiatives.
How to lay a solid foundation on which to grow the business for years to come.
Our business is strong and our future is bright and I look forward to continuing a positive trajectory.
The benefits of our distributors and their customers for all our employees and our shareholders.
Since I joined the company at the beginning of 2016.
The opportunity to spend time with distributors around the world and to learn firsthand, how dedicated and passionate they are about our company.
And our mission to improve People's lives.
During my transition to CEO I plan on continuing to learn from those talented distributor leaders all around the world.
Last but certainly not least.
I'm thankful to be continuing my close working relationship with John D. Simone.
In his new role as President we collaborated side by side as co presidents for almost two years.
Besides being one of the smartest people I know he's also been a trusted advisor and friend I've learned so much from him.
Our collective goal will be to provide strong visionary leadership to keep the positive momentum in our business going.
And speaking of John D., Sloane, I would now like to turn the call over to him.
I want to stop by thanking Michael for his leadership over the past 16 plus years.
As we all know Herbalife nutrition will not be the company. It is today without him.
And we are honored he's staying on as chairman of the board.
And I firmly believe this tremendous companies just getting started.
For nearly two years I've had the pleasure working alongside John as co president in that time, not only have we become friends I've learned he's a visionary whose experience in purpose is perfect for leading herbalife nutrition into the future.
I'm looking forward to continuing to work with him to grow our incredible nutrition business.
With the passion of our dedicated and talented employees and distributors, we have a great future ahead, and I'm happy to be part of these exciting times at or above like nutrition.
Turning now to the third quarter, where we achieved an all time record high volume point result, we continued to benefit from the geographic diversity, we highlighted on our last quarter's call.
As the record results were achieved despite volume in China, continuing to be impacted by 100 day review.
Excluding China volume points grew 5.2% in the quarter.
Net sales grew 6.1% in constant currency net sales grew by 8.3%.
The two year stack volume point trend improved in five six regions during the quarter.
In China, we saw more material improvement in Q3 volume trends compared to the first half of the year.
During the last three months, we announced our partnership with Tencent.
Which will help us significantly improved by digital capabilities with a focus on enabling our distributors to service more customers and sell more products.
Through this partnership we recently launched a personal E store for our service providers and sales reps on October 12.
With expanded features for our e-commerce solution, including instant pay automated product portfolio recommendations as well as live chat.
As you can tell we're very excited about the future of this initiative.
The next phase of which will be launched in the first half of 2020.
We also continue to leverage our China growth and the impact investment program on strategic initiatives for long term growth, including the partnership with the International Champions Cup Soccer tournament, which was widely publicized in China and broadcast on CCTV during the quarter.
We will continue our strategic investments in the fourth quarter with a 25 city pop up experience center, along with the brand campaign, including outdoor and online video ads.
Moving to other key markets. The U.S. business had another strong quarter with year over year volume point growth of 7%.
An acceleration.
In the year over year trend compared to Q2.
Both in the U.S. continues to be supported by product line expansion and development of enhanced technology tools to support our distributors businesses and optimize their customers experiences.
Turning to Mexico, where volume points were down 7% in the quarter local currency net sales were down only 1.5% the slight decline in local currency trends is often difficult comp from Q3 last year, which had 13% local currency net sales growth.
The Asia Pacific Region reported a 17% year over year increase in volume points. The region has set a new all time record high volume points.
Broad based growth in the region was led by India, Indonesia, Vietnam in South Korea.
All of which grew by more than 20% year over year.
India volume increased by 27% during the quarter and we added a record approximately 71000 new preferred members.
Indonesia volume was up 24% Vietnam increased 31% in Korea was up 20%.
The comps for eight that continued to get more difficult in the fourth quarter as we lap 30% year over year growth in Q4 2018.
Looking at South and Central America volume points declined, 6%, which was a meaningful improvement from the 10% decline in Q2.
The sequential improvement in trends was driven by Brazil, which we expect to continue to improve over the next couple of quarters.
Turning to any other region continued its pattern of consistent growth, which now totals 38 consecutive quarters, increasing 4% during the quarter end at the top 12 countries in EMEA grew in Q3 2019 versus Q3 2018.
And despite a slow down in the growth rate from last quarter, the two year stack growth rate accelerated during the quarter.
Volume point increases for the quarter were broad based and led by South Africa, Spain, The Russian speaking markets in Israel I.
Well now turn the call over to Alex to provide an update on the financials. Thank you John volume points for the third quarter were approximately 1.5 billion and as we previously stated this was a new record high for the company due to the strengthening U.S. dollar foreign currency exchange rates continue to be a headwind.
Third quarter net sales of 1.2 billion increased slightly by 0.1% on a reported basis compared to the third quarter in 2018.
Adjusting for foreign exchange impact net sales for the third quarter increased 2.4% over the same period 2018.
As John said earlier, excluding China local currency net sales grew 8.3% in the quarter reported net income of approximately 81.5 million or 58 cents per diluted share adjusted earnings per share of 73 cents included expenses related to the China growth program of approximately 5.8 million.
In or three cents per share.
As a result was above the high end of our guidance range of 70 cents for the third quarter.
The impact of currency fluctuations represented a year over year headwind of approximately nine cents I'm results for the third quarter.
Reported gross margin for the third quarter of 80.4% decreased by approximately 200 basis points compared to the prior year period. The decrease was primarily driven by the unfavorable impact of foreign currency fluctuations country mix and the incremental tariff in Mexico, partially offset by the favorable impact of.
Price increases note that the incremental but now discontinue tariff in Mexico will no longer be a drag on our gross profit beginning in the fourth quarter.
Third quarter, 2019 reported and adjusted SGN <unk> as a percentage of net sales were 40.2% and 38.5% respectively. Excluding China member payments adjusted SGN <unk> as a percentage of net sales was 28.9% approximately 20 basis points phase.
Trouble to the third quarter 2018.
Our third quarter reported effective tax rate was approximately 28.1% and our adjusted effective tax rate was 24.5%, which was lower than our expectations, primarily due to the favorable impact of country mix on our full year effective tax rate expectations magnified due to the year.
To date true up within the quarter now let me share updated guidance for 2019 worldwide volume point guidance for 2019 has been updated to a range of 2.1% to 3.4% growth.
Net sales guidance for the full year has also been updated we're now expecting a range of down 1.2% 2.1%.
This range is reflected on the volume point adjustments in country mix as well as approximately 330 basis points headwind from foreign currency fluctuation.
Full year reported diluted EPS is now estimated to be in a range of $2.20 to $2.40 and adjusted diluted EPS guidance is expected to be in a range of $2.56 to $2.76 full year reported an adjusted diluted.
Yes include a currency headwind of approximately 33 cents versus prior year, excluding the impact the Venezuela.
Our effective tax rate guidance decreased to 30.6% to 33.6% on a reported basis into 27, 230% on an adjusted basis.
For the fourth quarter 2019, we estimate volume point growth in a range of 0.1% to 5.6% net sales are expected to be in the range of down 0.9% to up 4.6%, which includes approximately 140 basis points of currency headwind versus the prior year.
Fourth quarter reported diluted EPS is estimated to be in a range of 41 cents to 61 cents and adjusted diluted EPS to be in a range of 48 cents to 68 cents.
Reported and adjusted diluted EPS include the projected currency headwind, a four cents compared to the fourth quarter of 2018.
Moving ahead to our initial guidance for the full year 2020.
Worldwide volume points are estimated to grow between 1% and 7% with worldwide net sales of 1% to 7% on a reported basins, which includes approximately 250 basis points that headwind due to currency.
Constant currency net sales are expected to be in a range of 3.5% to 9.5% right.
Full year 2020 guidance.
Reported diluted EPS is in a range of $2.35 to $2, an 85 cents with adjusted diluted EPS in a range of $2.55 to $3.05 reported an adjusted diluted EPS include a projected currency had when a 15 cents compared to 2019.
Adjusted EPS guidance on a constant currency basis is in a range of $2.70 to $3.20.
EPS guidance excludes the impact of any future expenses related to the China growth program share repurchases, an excess tax benefits from equity exercises during.
During the third quarter, we paid off 675 million of debt from our convertible notes in cash and are now below our target leverage ratio of approximately three times gross debt to EBITDA.
Separately S&P global ratings raised its issuer credit rating on Herbalife nutrition to double B minus from single B, plus and decide he stable outlook.
We currently have 750 million of cash on hand, and 1.5 billion and our share repurchase authorization. This concludes our prepared remarks operator, please open up the line for questions.
Yes, sure if he would like to ask a question at this time. Please press Star then the number one on your telephone keypad again that star one.
And our first question comes from Doug Blaine of Wayne Research.
Yes, hi, good afternoon, everybody and congrats Dr grade and John on your new position.
Thanks, Doug.
Starting on the outlook here.
The volume point number in the third quarter the outlook for the fourth quarter next years is spot on I mean, you mentioned, China is improving is little bit better than I thought in U.S. continues to show upside, but on the F. One it seems to be a little bit softer than I may have expected. So it's just wondering how much of that is currency.
Versus a modest spending initiatives that aren't going to be impacting margins going forward.
Hey, Doug Thanks for the question. So they are 13 cents or of adjusted Espeed about six of that is rolling through to our full year the balance of it.
Really being impacted by currency and country mix that that's making up the lions share of up to 2019 and as we go through into 2020 2020 is again being impacted by currency pretty significantly about 15 cents of currency headwind is anticipated for 22020 or so.
Again, we're in a sort of the same story that we've been now for some sometime the stronger dollar continues to get stronger and that's that's having a material impact on on the.
Okay.
So then just you know very high level other than the Mexican that anniversary Theres no real.
Bubbles going through the piano as far as spending initiatives are concerned.
No and if you look at our operating margin on a constant currency basis 2019 is going to be flat to 2018, 2020 will be flat to 2019.
So there isn't there isn't anything material to our operating margin in fact, some of that you referenced the China marketing plan change, we're absorbing that and we're managing those expenses within the normal course.
Okay. That's helpful and then sort of sticking on spending but looking at the capex number or you're coming out of the year a lot lower than you were going into the year. I think you were coming in looking for Capex in the 135 to 175 million range.
And you will be below that and then your initial 2020 outlook is 130 to one seventies back to another big number I just wanted to know is there it sounds like from the outside that you have a list of projects that you're wanting to get to and you just not getting to them is that the way to look at it or what what's really going on with Capex.
I'd say 29 team was really a year of focus so we began the year as as you know with our normal benchmark, we typically for preliminary guidance.
Hi to about 3% of our net sales and then as the year progress is in as priorities change and as the landscape change, we may focus or or spend around that number. So this year was really a focused effort on a smaller number of high priority projects, where we really had to use our resources to concentrate on those as well.
We looked at 2020 again, we go back to that place holder number and as the year progress is we'll refine that as as bandwidth or as we unfold.
Okay. Thanks, Alex.
And I should mention you may have noticed just generally that our 10-Q is not yet available I just wanted to make everyone aware that Edgar is experiencing technical difficulties, which is causing our ability and some other filers to make submission. So we're working with Edgar to get that 10-Q filed as timely.
As possible, but it may not to show up until Tomorrow morning provided you know Edgar can sort through their issues. So just a just a general fireeye.
Thank you. Our next question comes from Korea Madison of Jefferies.
Good morning, and good afternoon, sorry.
In terms of the improvement in China. We saw how are you guys progressing on building the.
The pipeline of customers I mean, with 100 days slowdown you kind of lost.
Two core cohorts essentially.
Yes. So this is John I'll take that question.
When you look at.
A new reps.
Which I think is is the pipeline that you're talking about that's what was lost during the day campaign.
We saw a sequential improvement.
Meaningful sequential improvement versus the trend from last year, but it's it's a long term game.
Happy with the trends, we're seeing in China are we expect that Q wars volume point trends will improve on Q3.
Well actually.
Grow.
In Q1 as you know that was a lot of other initiatives in China that.
We announced it was the 10 cents platform in the 10 platform, which provides an e-commerce channel basically to recap.
Our.
Sales reps and service providers, so the customers and that's a big deal and that expensive product portfolio.
And we announced 23 kick off meetings in December , which we expect to have higher and then I mean, I mean Kumar of additional attendees last year, we had a 25 city pop up going out.
Think of it isn't it's almost like an interesting club experience those on nutrition club.
The 25 city pop up experience going out in the fourth quarter. So I think you'll see.
Positive trends versus where we are today.
You need a into the future.
Okay.
Sure I realize this is.
Since you launched the store and the we chat initiative.
What has been the initial feedback from your reps out in the field.
Well anecdotally I cost is very positive we launched October 12.
With that level said this is really early but I think importantly, it solves a few issues one of the issues is the ability for.
Sales reps customers order directly from the company, which overtime makes the company ended distributors less reliant on meetings. Another thing is open for product portfolio up beyond some direct selling product. There's also a component called instant pay that goes along with that were sales reps can get paid instantly on trends.
Actions that the customers order directly from the company doesn't it's more in coming to that pockets immediately. So that's another big deal. So anecdotally. The feedback is very positive from a data standpoint, it's early.
And just lastly, a housekeeping item, there's about 5 billion of tariffs in the inventory from the Mexico that roll off.
Kind of a.
A drag in the fourth quarter that we should see from that.
No those incremental tariffs in Mexico, or now rolled out of inventory. So there should be no impact the Q4.
Thank you very much guys appreciate it.
As a reminder, she'd like to ask a question its star one on your telephone keypad.
Again that star one and your next question comes from Beth tight from Citi Research.
Hi, everyone and congratulations Dr. I couldn't Albion, so happy for you and to John as well.
Well new appointments expects thank you Beth.
Absolutely.
I'm sorry, if we could on local currency sales growth for 2020, and just thinking about the different drivers.
Hi, This is I think about elements like growth in your sports and fitness line traditional product innovation.
You know as I understand it a lot of better technology for both distributors and customers.
[noise] momentum and certain cats, and knowing you know, it's John you alluded to that sounds comps are going to get pretty tough on that.
It's like India, and Indonesia, but if things are great and pricing and maybe in other words, but.
Hi.
Because you know thinking about the bid quite I think is around 6.5% for 2021 would sort of get you're right that mid point and that sort of what might call you to the hiring to the Ranger or result in a.
In a number at the lower end at the range.
Right so.
The midpoint of our volume guidance is about 4%, which translates to a midpoint of our net sales guidance of about a on a constant currency basis about 6.5%.
So there is going to be just based on mix and volume mix, there's going to be an increase to our constant currency net sales from just.
Sheer volume mix and that primary.
Leverage from that primarily comes from China, just outpacing the growth of the rest of the portfolio. Obviously in 2009 2019.
China is coming off of a lower base. So as we go into 2020, we would anticipate the growth in China.
Probably exceeding as we continue this recovery exceeding the rest of the portfolio. So that the constant currency net sales leverage will come from that effect.
And then the currency headwind that we're anticipating is about 250 basis points. So we get to net sales performance about the same as where we are on volume growth.
Pricing is factored in there you know generally pricing.
For the most part is about 2% of benefit that we're getting quarter after quarter.
Year over year, but the currency headwinds have have far outpaced those those pricing benefits.
Perfect. Thank you might actually speaking of China, then if because that's really helpful. Though its impact.
Yes, your sales growth.
Question for.
I understand where we where we aren't sort the ring up into a traditional scenario of sales meetings in the country and Oh, So can you.
Yes in terms of them money you have that you how the use of the China Grant program, you got a little bit more again this quarter. So just curious.
And your plans for 20, Twond, how and where and how that's funny you might be long.
Sure I'll take the question on meetings.
Yeah, but attendees relative to last year October was actually around 60% of last year, which is actually a little less than we were in July in the last call, but October was the national holiday.
Many of the anniversary of the Republican.
There was very cautious on meeting so we'll see on November goes but the performance.
Our performance.
In the quarter was not based on an acceleration of meetings beyond what we announced.
Quarters.
And on the China growth Fund, we were you're correct. We did receive an additional 6 million of grants and this past quarter. So that gives us in terms of funds remaining about 200 about $110 billion remaining we spent.
Just under 6 million this quarter and we'll continue to spend of funds you know.
As as as we move on here on technology branding all the same things that we've articulated before I think you'll see a ramp up.
Next year versus.
Meaningful ramp.
Perfect. Thanks, and then a.
Couple of questions.
Oh related and I know, we hope you can clean got like TCT understanding there given.
She was Edgar but oh.
I'll say that you can share without setting in the Q.
Oh I also noted that you cited the cash balance obviously that was also with this quarterly report.
Well you know is there anything.
In terms of you've gotta be possible.
We'll be able to do any buybacks for the fourth quarter or is that likely 2020 out of that for resumption of buybacks.
Well the those it related so first I will say in the disclosure and I know you don't have the 10-Q, but there has been no material change to our EPS FCP a disclosure other than the fact that we indicated that we're continuing discussions with the regulatory bodies. So when you get that checked that but that that'll that'll be the Dell.
With that between this quarter in last quarter and.
As a result that really doesn't change the position that we are in today than where we were three months ago with respect to buyback activity.
Perfect Alright. Thank you also much.
And our next question comes from Stephanie Wissink of Jefferies.
Hi, its Sebastian by bear for stuff I'm, just a couple of questions one on Mexico.
You think too to call out here, how do you see.
The market.
Moving in the next three to six months.
Yes. Good question, obviously, the comps that pretty difficult in Mexico actually the two year stack improved in Q3 versus Q2.
Mexico as a reminder, in Q2 last year was up 4% Q3 was up nine.
Both Q2 Q3 this year was down seven the down seven is really driven by.
Less new within engagement.
Lower engagement.
Activity that that we just have to fix and we've got a lot of diminishes in Q4 and seeing slight improvement.
Already.
So I think you'll see some sequential improvement in Q4 over.
Where we are in Q3 I know, there's a lot of excitement is extravaganzas, we so a lot of people into given extravaganzas in Mexico I think the.
Yeah motion engagement at the leadership levels is strong as I've seen a long time sorry.
Second we can.
Got it thanks, and one more on North America.
Growth is still very strong.
Even against some some strong comps how how do you see this a sustainable.
Well look I think.
You just you thought to doing really well.
In the U.S. Pcs are doing really well both expanding so not just the financial metrics non financial metrics is strong.
It's built around sustainability.
So I suspect that the U.S. fields continue see strong numbers for the feature at least that's our expectation.
We definitely we had record meeting attended that their extravaganza in their various LD w.'s and so moving up the marketing class strong it's almost like the record setting. It was recognized last I looked at it so I'm all signs point to a sustainable growth.
Got it thank you.
And we have no further questions at this time I wasn't now I turn the call back to Michael Johnson for closing remarks.
Thanks, everybody appreciate being on the call for my permits.
Investment call.
It's really you seem to be in the seat.
Yep.
When I came back I label three assets as my goal in the company gets built up if succession done.
Chuck box, one we're doing pretty well this quarter, we've got more room to grow there we absolutely no. It on a day issue in China Hamstrung, that's a bit for the year the mountain the impact that it had an.
Operating income this year was pretty severe.
Difficult trade with headwinds in trade winds headwinds.
But we're finding a way to work our way out of both those scenarios very strong sales are up Chuck succession.
I don't think as a team we could have done any better.
John I wouldn't Ob and John D. Simone break their dream team inside this company the board knows it or distributors know what the employees.
So I think as an investor.
Significant investor in this company I couldn't be more please.
We introduced these two German to you today as the next generation verbal like next year, we celebrate 40 years in or Mark was founded this company with a distributor for.
Lafayette mentality.
For this company is because we ever.
Expanded it and we will continue to do so.
Congratulations gentlemen to you congratulations to all of us as shareholders, because we have right succession plan moving forward. Thank you all very much thanks for being on the call. This would be in next quarter.
Ladies and gentlemen, this does conclude today's conference call. You may now disconnect. Thank you for your participation.