Q3 2019 Earnings Call
This time all participants are in all within our newly married.
Following the presentation, we will conduct a question and answer session and instructions will be given at that time.
I'd like to remind everyone, but this conference call. It seem recorded today that shape November 7th 2019, <unk> am eastern time and will be available for replay.
Ill now turn the conference I Love to Mr., Tim The light interim Chief Financial Officer. Please go ahead so.
Good morning, everyone by now you should have access to our earnings announcement released earlier. This morning, which is available on our website at www Carol's Dot com under the Investor Relations section.
Before we begin I remarks, I'd like to remind everyone that our discussion will include forward looking statements, which may consist of comments regarding our strategies intentions guidance or plans. These statements are not guarantees of future performance and therefore undue reliance should not be placed on them. We also referred you to our filings with the FCC.
For more details, especially the risks that could impact our business and results.
During today's call, we will just discuss certain non-GAAP measures that we believe can be useful in evaluating our performance. The presentation. Now this additional information should not be considered in isolation or as a substitute for results prepared in accordance with generally accepted accounting principles.
A reconciliation to comparable generally accepted accounting <unk> principal measures is available with our earnings release.
With that I will now turn the call over to chairman and CEO of Carrols restaurant Group, Dan Ackroyd Dino.
Thanks, Tim and good morning, everyone. Let me begin by expressing our deep sadness over the September passing a Paul Flanders, who served as our CFO for over two decades. He was a dear friend and colleague and the certainly sorely missed by the entire carols team.
We extend our deepest sympathies to his family during this difficult time.
We have commenced a search for a new permanent CFO , but in the meantime were thankful that Jim Malone has been able to step in on an interim basis until a permanent replacement can be identified and appointed.
Jim as a seasoned professional with over four decades, finance and accounting experience and served as our own controller for 20 years in the past two months, we have experienced a seamless transition as he temporarily rejoined the company.
With that let's discuss the quarter.
Total restaurant sales grew by more than 34% compared to the year result period to 402 million, mainly because of the Cambridge merger and was completed in the second quarter.
Which contributed nearly 72 million a restaurant sales to our topline as well as other smaller acquisitions completed over the past year.
We also generated a robust 4.5% increase in comparable restaurant sales due to the effectiveness of Burger King's marketing strategy during the third quarter with a gain consisting of both mix and traffic increases on a two year basis comparable restaurant sales grew 6.1%. We're further encouraged that the sales momentum we experienced.
Third quarter has continued through October as well.
However, restaurant level EBITDA rose only modestly to 43 million from 41.6 million and restaurant level EBITDA margin decreased 330 basis points due to 10.7% or good to 10.7%.
Adjusted EBITDA decreased $800000 to 25.6 million and adjusted EBITDA margin declined 250 basis points to 6.4% finally, our adjusted net loss was nine cents per diluted share compared to adjusted net income of nine cents per diluted share in the prior quarter.
As referenced in the press release, our results were negatively impacted by combining sales discounts with respect to separate whopper value meal promotions between June 30 in August 26, which resulted in significant additional sales discounts in our restaurants relative to those experienced in the Burger King franchise system and reduced restaurant sales by approach.
Maxim only $8.3 million on reduced adjusted EBITDA by $7.3 million.
Adjusting for the excess sales discounts are comparable same store sales would have increased approximately 7.4% and our adjusted EBITDA would have been approximately 32.9 million in the third quarter.
This issue also negatively impacted our restaurant sales in June and on a year to date basis reduced our restaurant sales by approximately $12.4 million on adjusted EBITDA by approximately $10.9 million.
I'll give more detail on the stack promotion later in my remarks, but we'll first comment on the most significant factors affecting our core topline performance in the third quarter.
Beginning with comparable restaurant sales the impossible Whopper launch in August was undoubtedly the biggest product news of the third quarter. The impossible Whopper was not only additive to average check but also appears to have it attracted new gas into our restaurants across all demographics and ages from our observation. These guest included many millennials.
In Gen customers, who appreciate its messaging around sustainability.
And last users, including older customers, who are not visited us in a while but came back because of the impossible whopper.
We're also encouraged by the products healthy rates of repurchase and are therefore optimistic that overtime Burger King can meaningfully build on the success that this plant based platform has shown so far in 2019, and we expect will continue to show through the remainder of this year and beyond.
Importantly, impossible Whopper wasn't the only driver Burger King successful promotional messaging during the third quarter. The two for six mix and match Sandwich platform delivered a consistent performance during the quarter asked another limited time offer such as the four or five six whopper meal deal and the value segment. The full margin dollar Crespi Taco offer.
To address it proceed GAAP in the value menu noted in the second quarter.
I want to provide more detail around the nonrecurring promotional era that impacted our financial results had not been for this issue. Our results would have been much more in line with our expectations. They also would have been much more in line with what we expect to achieve in the fourth quarter and beyond given the strong momentum we've seen curious overcome September into October we discovered issue.
You in late August 2019, when comparing our significantly higher level promotional discounts relative to the rest of the Burger King franchise system and are lagging same store sales performance relative to other franchisees during the preceding 12 weeks for those of you follow carols closely you will know that we typically outperformed a burger King system, which is why are.
Formats raised a red flag when we received a comparative information for review we eliminated these excess sales discounts on August 27th which resulted in an immediate improvement sales from an immediate decline and promote and are in a immediate decline in promotional discounts. This led to improved sales and margin trends sequentially during the remain.
During the third quarter, which you can see from the encouraging and unaffected September results that we disclosed in our press release.
Note that these positive trends continued through October sell that involve September and October we are once again back to outperforming the broader U.S. Burger King system from the same store sales perspective.
Now a brief comment on popeye's, although this brand currently represents less than 5% of our sales same store sales compared to pre acquisition, Cambridge sales increased 8.2% in the third quarter driven by the successful launch of the new Chicken Sandwich, which was only featured for about two weeks in mid August before being sold out the sandwich just returned in.
In early November as a permanent menu item chain wide and the initial results are extremely favorable we're excited to grow our popeye's business through both acquisitions and new restaurant development.
Turning to other factors that affected profitability, we were challenged by higher beef cost, which rose nearly 11% year over year end by labor cost pressures as our average rate increased approximately 5.5%.
Although Cambridge did not contribute materially to our overall profitability in the third quarter. The integration of the Cambridge restaurants is progressing very well in is proceeding on schedule. We've applied the same carols integration playbook that we developed and honed over the last decade, we are adding labor and training, which leads to improved guest satisfaction and accelerated same store sales and.
We are installing our point of sale and back office backhaul, how systems at the Cambridge, Burger King restaurants, which should improve cost of sales due to the reduced staffed and food waste. We will be finished with a rollout by mid November the current performance at the Cambridge restaurants is not a reflection of any shift in our business model fundamentals and is simply a reflection of the investments required.
To drive long term results, we realize it will take some time to see the full benefit of the acquisition flow through to our financial results and we do not expect that will be evident until next year. However, we are confident based on our experience in our prior track record that we can improve the sales and overall financial performance of these restaurants, so that they contribute meaning.
Fleet to our overall growth and profitability by realizing these improvements we believe we can drive meaningful value creation from that Cambridge restaurants, as we have with so many acquisitions in the past.
On the M&A front.
We continue to pursue a capital allocation strategy to drive long term shareholder value and have a compelling pipeline of acquisition targets at both Burger King and popeye's that we expect to close in the coming months.
As a reminder, we have a 25 million dollar share repurchase authorization in place, reflecting the board's continued confidence in our strategy and value creation potential.
During the third quarter, we repurchased $2 million of our common stock in open market transactions, Although we believe that the Carol stock price does not reflect the fair value of our business. We have many competing high return options for capital allocation allocation and our disciplined and balancing all of them, while also maintaining sufficient liquidity and approved level.
Leverage at an approximately four times net debt to EBITDA with a covenant Lite term loan. We believe we are well capitalized to pursue our growth goals and we'll continue to evaluate all capital allocation decisions rigorously to compound shareholder value at attractive rates of return with that let me turn the call over to Jim to review our financials in further detail.
Well an update our annual guidance.
Thanks, Dan restaurant sales for the third quarter increased 34.2% over the prior year period to.
To $398.4 million, including $71.6 million in restaurant sales from the Cambridge acquisition.
Parable restaurant sales for our core Burger King restaurants, which excludes Cambridge and other restaurants acquired in the past 12 months increased 5% consisting of a 2.3% increase in average check and a 2.2% increase in customer traffic.
Average check increase reflected menu price increases of 1.2% in the quarter note that the efficacy discounts relative to our whopper value of meals that Dan mentioned negatively impacted our same store sales by approximately 290 basis points during the third quarter and adjusting for the impact of that issue where comparable rest.
Around sales would have increased 7.4% in the third quarter and would have outperformed the broader Burger King North America's system.
Which had a 5% comp sales increased by approximately 240 basis points.
Adjusted EBITDA declined $800000 in the quarter to $25.6 million from $25.6 million in the third quarter last year as Dan mentioned, the excess sales discounts on or whopper value meal has reduced adjusted EBITDA by approximately $7.3 million in the third quarter and reduced adjust.
Good EBITDA margin by approximately 180 basis points in the third quarter.
We have a made investments in training labor as Dan mentioned for the Cambridge Burger King restaurants, as part of the integration to I restaurants systems, which we believe will enhance restaurant level margins in the future.
Restaurant level EBITDA increased 1.4 million to 43 point to 43 million in the quarter from.
From 41.6 million the third quarter last year restaurant level EBITDA margin was 10.7% of restaurant sales and decreased 330 basis points.
The impact for the S. Excess sales guest counts also reduced restaurant level EBITDA margin by 180 basis points in the third quarter.
Turning to other cost line items cost to sales excluding the Cambridge.
Six convenience stores increased a 190 basis points as a percentage of restaurant sales compared to the prior year period, which primarily reflected higher commodity costs, including a 10 point and 10.7% increase in beef cost ground beef averaged 220, a pound in the third quarter compared to 100.
The one that 100 $1.97 per pound in the third quarter last year.
Restaurant labor expense increased in the third quarter 77 basis points as a percentage of restaurant sales compared to the prior quarter due primarily to the 5%.
Increase in our arledge average hourly rate that in our Burger King restaurants.
Rest rent expense increased 46 basis points in the third quarter as a percentage of total revenues compared to the prior year period due to the high rents as a percentage of sales acquired in 2019, and the elimination of deferred gain amortization on sale leaseback transactions.
This year as a result, the new lease accounting standard.
Other operating expenses increased 42 basis points in the third quarter as a percentage of total revenues compared to the prior year due to higher repair and maintenance expenses.
General and administrative expenses were 21.4 million in the third quarter of 2019, including 2.2 million in Cambridge acquisition costs.
And the integration costs compared to 17.6 million in the prior year period, which included $800000.
The acquisition costs and integration cost.
Excluding these costs in both periods general and administrative expenses declined 102 basis points to 4.6% as a percentage of total revenues.
Our net loss was 6.8 million in the third quarter or 15 cents per diluted share compared to net income of 3.6 million or eight cents per diluted share in the prior period. The net loss for the third quarter 2019 included a half million dollars of impairment charges.
And other lease charges and 2.8 million of acquisition and integration costs.
Net income for the period included 2 million for the prior year quarter included $200000 of impairment costs.
Charges and $800000 of acquisition expenses.
Excluding these charges adjusted net loss in the third quarter was 3.9 million or nine cents per diluted share compared to adjusted net income of 4.2 million or nine cents per diluted share.
As a reminder of some as a summary of these adjustments in arriving at adjusted net loss are detailed in the tables accompanying this mornings release.
Total capital expenditures were 54.3 million in the third quarter of 19 compared to 20 97.4 million.
In the first nine months at the end of the third quarter, our cash balances were $2.6 million and total long term debt and finance lease liabilities were 486, and a half million dollars with regard to liquidity. We ended the third quarter with.
With these 2.6 $9 in cash and at the end of the third quarter, we add available under our revolving credit facility 53.9 million. Our net leverage ratio was approximately four times can salad EBIT consolidated EBITDA as defined in our senior credit facility.
Lastly, as we've announced during our last call our board authorized at $25 million stock repurchase program, which we can use at our discretion to provide a tangible return of capital and support the long term enhancement of value to shareholders.
To that and we repurchased this and open market transactions, a little over 283000 share.
Shares of our our stock for approximately $2 million during the third quarter, which was at an average purchase price of seven hours and 10 cents per share.
Turning now to our 2019 guidance, we are revising certain items, while maintaining others. These estimates as glued any other potential acquisitions that we may complete in 2019.
Total restaurant sales are still expected to be 1.44 billion to 1.47 billion, including approximately $200 million of total revenues for Cambridge.
For approximately eight months of results in 2019.
Comparable restaurant sales are still expected to increase 2% to 3% for the year commodity costs are still expected to increase 3% to 4% with beef costs, increasing 7% to 9% in for the year General administrative expenses are still expected to be 68 to 72 million, which excludes stock comp and.
Station expense and acquisition and integration costs.
We also fully we expect to fully integrate mccambridge corporate functions by the end of the year.
Our previous guidance of adjusted EBITDA of 100 to 105 million remains unchanged other than for the negative negative impact on adjusted EBITDA of 10.9 million in the second and third quarters due to the ash sales discounts discussed earlier.
We are building more restaurants in Q4 than we previously guided and as a result capital expenditures are now expected to be a 145 million to 155 million, which was previously a 120 to 100.
120 to 130 million, which this includes 55 million to $65 million for the construction of 22 to 2004, New Burger King restaurants, and nine to 11, new popeye's restaurants.
We also plan at 2019 to remodel of total.
Of 90, approximately 92, Burger King restaurants and for Popeye's restaurants.
Our caps at Capex guidance for 2019 is gross of an 8 million dollar landlord contribution related to certain 2019 remodels to be received in 2020.
Proceeds from sale leasebacks or are now expected to be approximately 44 to 48 million previously 15 to 25 million.
Finally, we expect to close up to 15, Burger King restaurants, including two restaurants that were break located in their respected trade areas.
And of which 13 I've already closed through the end of the third quarter.
That concludes our prepared remarks, so with that operator, let's go ahead and open up the lines for questions.
Thank you.
We will be conducting a question and answer session if you'd like to ask a question. Please press star one on your telephone keypad.
Information final indicate that your line is in the question Keith.
You May proceed statue if you would like Jeremy if your question from the Q.
Yes, Tim Keating speaker equipment, it may be necessary to pick up your handset before passing the stockade.
Your first question comes from Jake Bartlett with Suntrust. Please go ahead.
Thanks, I'd first like to express my condolences for pulls passing I think for the rest of the investment community I think we really appreciated. The work you did with US and he was a great Guy. So you get like my first question is just really on this excess discounting and if you can just kind of really kind of clearly explained.
What it would it was in my understanding is that it related to the 456 whopper promotion and that came with small drink and insides and you were offering any size for those but you didnt see a related boost in traffic. If you could just clarify that that understanding is right or wrong that there would be helpful.
Yes, that's pretty close Jake.
The what we typically do when we run a tool for for promotion or a two for six promotion, which doesn't include any ancillary items is we induce people to attempt to trade up to a higher of.
Quantity.
Medium or large this promotion was intended for only a value meal and our value for our eye in a valued drink to be purchased for whopper junior at $4 elaborate $5 on a double offered $6. What we did was attempt to induce people two way too I.
Trade up and what therefore happened was you end up with a double discount because we typically don't do this with the value meal, our value meals already discounted and by the way we handled issue essentially ended up with a further discount on a value meal that was already discounted. So if you had a dollar and a half discount.
Offer value meal, you will you. We gave you an additional discount on top of that so it was not a successful strategy.
It was not an accounting issue it was not a systems issue.
It was a mistake.
We screwed up and it cost us a fair amount of money and when I saw the margins and I contacted Burger King After Q2, and said wasn't a world happened here because we always outperform the system. We did some research with them some analysis with them and looked at our.
Incidence of four or five and six.
Compared to the rest of the system and essentially we were giving a discount to everybody.
And we shouldn't have and we didn't get a corresponding increase in traffic nor sales.
And you feel confident that it did it didnt boost your traffic to fuel you feel confident.
How you were able to tease out the impact.
Yes, we looked at we did it we did we analyzed at three different ways here and I had Burger King analyze it separately and our incidents of four or five and six was exactly the same as the balance of the system. So in terms of people, who actually took advantage of the of the promotion as it was intended which was to you buy it with a value.
Friant value drink, we were giving discounts to people, who otherwise didnt expect those discounts and we didn't get any additional traffic from that at all.
Got it and then I think.
I think the issue Jacob.
We spent a lot of time dealing with this convoluted into stake. The fact that a matter is it was a mistake, we screwed up the underlying business is stronger than what our numbers reflect.
And that's what we should be focused on is the fact that it was a onetime error and the underlying business is very good.
Got it I appreciate that and I think maybe to that end of it would be helpful. If you could quantify your performance.
In October .
Obviously, you already stated the strong results in September I think that was also lapping hurricane Florence, if if I'm correct, but I think we helpful. Just to hear how the trends in October have been which or maybe a little more clean.
October is also trending very strong compared to.
It's consistent with what we had expected and were higher than the balance of the system.
Okay is it would it be stronger than than September number that you that youve disclosed.
No not in terms of same store sales, but in terms of relative relative to the balance of the system, there's still an adequate delta.
Got it and then when you look at Barclays, where you're going Jake if you look at the Q4 sales comps it's embedded in the in the annual guidance of 2% to 3%.
Got it.
Okay all right.
Yes, that's really helpful. And then just lastly, I'm just trying to understand the press release, Jake because I'm not sure I did.
I think I finally, I think of getting it I'm starting to get it no.
I appreciate is very very helpful.
Lastly for for me I wanted to just few if I can better understand the drag on margins from from the Cambridge stores.
If you could quantify that there would it would be really helpful. Theres a kind of a number you can provide as to what maybe with their margins were versus yours or we could do the math to see what kind of a drag it was but I wanted to see if I could get that answer and then also just to understand how quickly you expect the margins at those stores to improve.
In the coming quarters.
Tim can give you what the margins were and then I'll tell you what our expectation is in terms of the improvement.
Yes, the Cambridge stores from a same store sales standpoint are not performing.
Nearly as well as our legacy restaurants and that impacted the margins quite significantly.
We still have operator, we have a lot of opportunity in food costs.
And we are we will be beginning those recognizing those benefits once we complete our Pos installations, which will be done here in the next couple of weeks.
And then as mentioned in the release, we also added some labor for training, but we'll have the margin grew three that's what he's asking.
The.
He's looking up the that answer the great as far as the improvements right now Jake there's about a.
350 to 400 basis point Delta in cost of sales between the Cambridge restaurants in our legacy stores now the we have our own Pos systems, and we've been able to quantify that.
Our expectation is that half of that will be.
Corrected.
By mid 2020, and we will be on target with though the legacy restaurant cost of sales improvements by the end of the year of 2020.
Labour were already making the modifications and need to be making those things will be on target by the end of Q1, what we're really focused on us the sales increase because right now the delta between the.
The Cambridge sales on the legacy sales in terms of comp store sales is not where it needs to be and Thats, primarily an operating issue, which is why we're adding labor.
Currently to improve the restaurants, we've added management staffing and we've added team members staffing.
And.
We would expect again bye.
The.
Mid of mid 2020 that those restaurants will be in in a competitive shape.
Jake our our restaurant EBITDA contribution.
For Burger King and the Popeye's was about three point.
$2 million and at a margin.
Between 4% to 5%.
It was de Minimis Jake.
Got it thank you very much I appreciate it.
Thank you.
Thank you.
Next question comes from will Slabaugh from Stephens, Inc. Please go ahead.
Yes, thanks, guys.
I know, there's a lot of noise in the quarter, but I was wondering how you would describe the underlying momentum of the business as you work throughout the quarter and I know you mentioned on the last call. Thank you were up 1.5% or so in July but I'm, assuming there is not an adjusted number. So just curious how you would describe sort of the cadence of the quarter as we work throughout the three months.
Got stronger is the quarter went on Jake each month, but part of it is because the numbers that we were lapping last year that a little bit easier, but our sales trend is as we had expected in forecasted on our Q2 call.
And we ended Q3 at a much stronger note and we expect that Q4 will also be.
Consistent with what our expectations September benefited from the launch of the impossible Whopper, which did what we thought it was going to do and looking at.
The rest of our menu item sales appeared to be almost 100% incremental.
Great and Cambridge follow up as well how are you thinking about the earnings power of that business for 2020 and beyond today versus when the acquisition was announced Im just curious if any thoughts of change there.
No no.
No I'm still very optimistic about Cambridge, one of the things that we were impressed by was.
The fact that the we had.
Real favorable opportunities in wage rates, which we can leverage.
And we knew that the operating operating.
Metrics were not strong and that we had real opportunity to improve the operations and when you improve the operations to sales also will be strong. The one thing I think the we have learned is that it's a very value sensitive market.
And consequently, we will be focused in that area as well in terms of things that we can do to continue of value offerings.
In those.
Theres two things that it's a it's a value oriented market and it's not responding to the impossible whopper to the extent that other places are.
Probably not surprising.
Makes sense and then one more question about good on the acquisition pipeline and plans for both burgeoning and pop Art. You mentioned you add up to you you storage or a few deals rather you're hoping to close by year end I'm curious if those are all burger King's or do you have some popeye's in there just just if you could talk about the pipelines in general for both brands.
We will have a few burger king's closed in this year in 2019, and we have a significant popeye's acquisition that.
We are.
In.
Negotiation with were matter of fact dealing with the contract issues as we speak and we will close on that deal in the first quarter of 2020.
So the acquisition pipeline in both brands is still quite strong.
And our expectation is that we'll be at.
130, 140, popeye's by Q2 of 2020.
And we will continue to be acquisitive in that would that brand as well as continue the new build the opportunities.
Great. Thank you.
Yep.
Thank you once again, if you wish to ask your question. Please press star one on your telephone and White FINAME stand out.
Next question comes from Brian Mcelroy with Raymond James. Please go ahead.
Thanks, and good morning, just wanted to circle back on the impossible offer obviously, a very strong product launch could you provide a little more color on how demand for the product or unit sales trended through the quarter and perhaps into October .
The impossible Whopper trend is pretty stable, we've been running it.
30 to 35 units per day.
Over the past several weeks and that continues to be the trend and as Tim indicated that it appears to be a 100% incremental because it is not.
Negatively impacted our SK use on whopper sales at all.
If you look to as Dan mentioned the.
Per store per day count vary greatly within our system, depending on the demographics, but that.
But they were averaging in the thirtys.
Okay and the the discounting issued in the promotion issue that obviously you identified did that impact both Cambridge units and the legacy units.
No just a legacy restaurants.
Okay and then.
They don't ask about the updated guidance, excluding the discounting piece I guess just can you talk about.
The Cambridge assumption that's embedded in your a 100 105 million of adjusted EBITDA does that change all versus last quarter.
I think the way to think of that would be as I mentioned before on the margins.
Slight improvement.
And in the restaurant EBITDA.
So versus your prior guide.
Do you expect a little higher margins.
On those units no out sequentially to the from the third quarter was what I was referencing.
No it's consistent with what we guided to previously.
Brian Okay, all right and then on the sale leaseback.
The change there well Dan can you elaborate a little bit on that sort of building up buying some incremental land it sounds like for future organic growth and what was up eight proceeds so far.
Let me answer the first part of that yeah that the the.
The Cambridge restaurants, there were some burger king opportunities and popeye's after opportunities that were already in the pipeline. When we did the deal and it was owned real estate. So we were able to.
Build those things in a more rapid pace in Q4, and Thats part of the sale leaseback issue.
Right now currently on in terms of sale leaseback dollars or wait what it would or would it we've gotten the bank right now.
We're expecting to close in the fourth quarter here in about 30 $539 million on sale lease backs.
In about four or five different transactions.
Some transactions.
Multiple restaurants included.
Okay.
Okay, and then I guess last one Dan you talked about the Popeye's acquisition in the early part of next year I noticed your just thinking about the balance sheet, a little bit I noted that I think was that what for close to 490.
I guess, how are you balancing the organic unit growth opportunity versus acquisitions and is there an expected sort of amendment or additional capacity you might pursue into next year to provide that funding.
Yeah, I think that was that your question is how much going to pay for this and you hit yes. We're in that were in the process currently of of looking at financing alternatives and we're in pretty good shape in terms of locking those up and our leverage will be south of four times and consequently.
We're confident that we'll be able to get the financing that we need at very favorable terms.
Okay and any color on on the multiple on the popeye's units even a range.
It will be between six and seven.
Store level EBITDA.
Yes.
Thank you.
Yep.
Thank you.
We have reached the end of the question and answer session and I'll now turn the call over to the management team for closing remarks.
Yes, I said this is Dan follow up question apologies, we do have a follow up question from Jake Bartlett at Suntrust. Please go ahead.
I snuck in there I mean, it was ending the quarter that well you just made a Jake I know so again I just want to maybe.
Pin you down on this a little bit more as is.
As a look at the fourth quarter in the guidance ranges is pretty wide. When you kind of look at the implied guidance I think it's about 1% to 5% for the fourth quarter two any anymore color on where you think youre going to fall in that range.
As I look to last a high end border.
At the high end Jake.
Okay, great. Thank you much.
Yes, as a final comment this is Dan what I would like to say is again I apologize for the confusion around this.
Discounting issue. It was it's difficult to explain and that I just want to make sure everybody understands it's not an accounting issue. It's not an add back issue. It's not a restatement issue. It was a mistake and the underlying business is very strong and I think that's what we focus on and I think thats, what our investors focus on so thank you and I will talk to you and.
February .
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