Q2 2020 Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to the HR block second quarter earnings call.

Time, all participants are any listen only mode.

After the speaker presentation, there will be a question and answer session.

Ask a question during the session you will need to press star one on your telephone.

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I would now like to hand, the conference over to your host.

I'll be brown.

Vice President Finance and Investor Relations Sir Please go ahead.

Thank you Keith.

Good afternoon, everyone and thank you for joining us to discuss our fiscal 2022nd quarter results.

On the call today, our job Jones, our president and CEO and Tony Bowen, our Seattle.

Oh sensors press release on the Investor Relations website, it HR block Dot com.

Also on the website, you'll find a link to the webcast continue today's presentation, which will be posted after this call.

Some of the figures that will discuss today are presented on a non-GAAP basis.

We reconciled the comparable GAAP and non-GAAP figures and the schedule attached to our press release.

Before beginning our prepared remarks, I'll remind everyone that this call will include forward looking statements.

Fine and then security laws.

Such statements are based on current information and managements expectations as of this they are not guarantees of future performance.

Forward looking statements involve certain risks uncertainties assumptions that are difficult to predict.

Such our actual outcomes and results could differ materially.

You can learn more about these risks and our Form 10-K for fiscal 2019, and our other SEC filings.

<unk> block undertakes no obligation to publicly update these risk factors or forward looking statements I.

To conclude our prepared remarks, we'll have a Q an exception during June and yes, the participants limit themselves to one question what the follow up after which they may choose to jump back into the queue.

With that I'll now turn the call over to John .

Thank you Bobby good afternoon, everyone. Thanks for joining us.

We have a lot of exciting updates to cover on todays call.

I'll start by recapping, our progress against the strategic framework, we introduced you last year.

Then I'll talk about her plans for fiscal 20 in both top and small business.

This will include details about the significant progress we've made digitally enable all facets of HR block.

This work is essential to our success in both fiscal 20, and the long term as we launch innovative new products.

Modernize how we deliver expertise and care.

And ensure the best train tracks professionals in the industry can help clients in better and easier ways.

Finally, Tony will discuss a non-GAAP financial reporting change.

Second quarter results, including share repurchases in dividends enter fiscal 20 outlook.

Fiscal my team represented the first steps to modernize HR block and to position ourselves to deliver sustainable growth.

We made improvements to our business and excellent progress against our enterprise growth strategy.

We bought transparency to pricing in all our channels and we lowered prices for millions of consumers.

We leveraged AI and machine learning to make the de iwai experience faster easier and more personalized.

We introduced more new digital products than ever before which attracted consumers to our brands.

We made tremendous progress on our technology roadmap.

These combined efforts enabled us to deliver at the top end of our financial outlook.

Make record increases in or client satisfaction scores and grow overall clients and share.

This positive momentum has carried into the first half of the fiscal year.

In addition to closing the wave acquisition, which will help us accelerate our efforts in serving small business owners.

We're seeing positive results in our tax business.

We achieved return growth and share gains during the extension season, which just ended in October .

And having recently spent time other national retail meeting on certain Darrow associates and franchisees are ready to extend this momentum into the upcoming tax season.

So as we look ahead I'd like to talk about our plans for the year and how we're combining technology and our human advantage to deliver expertise in care in new and compelling ways.

In our offices teams remain focused on operational excellence to improve the quality and consistency of the experience.

A key element of this improved experience is upfront transparent pricing, which will remain a top priority.

We're also building on last year by enhancing our standard operating procedures.

And we'll continue to leverage or competitive refund advance product the drives consumer store brand.

We're also strengthening the tools that enable our cats pros to provide best in class service for our clients.

This includes digitizing Howard tax pros work and communicate with clients through a tool called work center.

This technology provides or tax pros, it's 360 degree view of the client.

Consolidating and simplifying reaping task.

And offering a portal to all the services we provide.

This year, well introduce a variety of enhancements such as an improved dashboard to streamline health tax pros manage both in office and virtual returns.

And document management that makes the process of gathering and sharing taps documents easier.

By equipping our tax grows with the right technology, we're increasing their efficiency getting the more time to provide health and inspire confidence in their clients, which will be a key to retention.

Next tax pro go represents an important product.

As we offer Mobilefirst solutions that appeal to busy young consumers, who know wage and our block, but haven't yet tried our brand.

This season marks the second year, we've offered this fully assisted digital service nationwide.

Based on client feedback, we've improved the product flow and simplified pricing.

We're also making it easier to connect with our tax was a key differentiator for HR block.

No one can match the level of trading quality and tenure with nearly half of our approach being members of the block team for more than 10 years.

In VR why we've included all aspects of our offerings with a focus on ease speed and personalization.

Well, we're we will maintain or challenge your mindset.

I think competitively, making sure consumers know about our award winning product.

And ensuring clients are never surprised by their price.

We're capturing client data earlier in the process in further leveraging AI and machine learning to remove questions and steps from the workflow.

This year, you'll hear us talk about how consumers can now switch into clicks, making it even easier to move from a competitor.

We've also improved our online assist product, formerly known as ask a tax bill.

This offering gives our d. I why clients on demand access to a tax pro for help with any questions. They may have.

This year, we're increasing the prominence of this brought up by highlighting our price advantage and offering it as a separate skew on our website.

Let me switch gears to talk about a digital tool for clients called my block.

Regardless of how a client engages with us whether it's in office online or through tax progel.

My block is the digital hub of our clients experience with HR block.

Through this platform clients can upload in store their tax documents.

Access prior year returns.

That appointments manage their emerald card and use our tax estimator for help with planning.

This year my block enable secure document upload.

I didn't messaging with the tax bill in greater visibility into the status of the return.

And we believe designed to work flow and streamlined or digital signature experience for clients you choose to finish their return online.

I'm pleased with where my block is today and the valuable role that will play in the future.

Let me turn now to small business.

We currently serve over 2 million small business clients in tax and are working to ensure that more small business owners understand the expertise. We can provide two new tools and a redesigned the tax prep experience.

Through wave, we continue to simplify the financial lives the small business owners.

We're excited to announce that we've opened or Apiay to third party developers to extend the functionality and reach of our tools.

We're also releasing new integrations to make it easier for small business small businesses. The truck all of their transactions from various sources in a single system.

These integrations dramatically simplified the accounting process, allowing small business owners to focus on what matters most.

And I'm pleased to announce that we've partnered with shopify for our first integration launch.

This is the significant accomplishment as it represents the first direct accounting integration and the Shopify App store.

What I just covered outlines our plans for the upcoming season and some of the ways in which we're using technology to drive value for consumers and small business owners.

By focusing on digitally enabling every aspect of our business, we're setting the company up for success for both this fiscal year and the long term.

With that I'll now hand, the call over to Tony.

Thanks, Jeff Good afternoon, everyone.

Before I get into the details of our results I'd like to discuss the key change to our non-GAAP financial reporting starting this quarter.

We're now reporting adjusted non-GAAP , EPS, which excludes amortization of intangibles related to acquisitions.

This adjustment removes amortization of intangibles related to Wade franchise by about buybacks and tax office acquisitions.

Contact approximately one third of our historical DNA expense was related to acquisitions.

We believe these adjusted results will be beneficial for investors when evaluating HR blocks operating performance.

To assist with modeling we have included quarterly historical adjusted EPS schedules in our earnings release.

Turning to our results as a reminder, we typically reported a loss during the fiscal second quarter due to the seasonality of our tax business.

Therefore second quarter results are not representative of our full year performance.

Starting with revenues, we saw year over year growth of $12 million or 8% to $161 million.

This increase was primarily due to wave, which contributed $11 million.

Additionally, in the tax business extension season results in the U.S. were strong with volume and share growth in both assisted and DIY why.

These results were partially offset by lower net average charge, an assistant which reflects the investment in price taken at the beginning of last tax season.

It does not indicate a change in our plans for the upcoming season as we continue to anticipate our net average charts to be flat to the prior year.

I'll discuss details around our revenue guidance in a few minutes.

Turning to expense total operating expenses increased $39 million or 11 cents to $404 million.

This was primarily due to wave as well as planned investments related to our technology roadmap and higher legal expenses, partially offset by lower occupancy costs.

Interest expense was $21 million, which was relatively flat to the prior year.

The changes in revenue and expenses resulted in an increase in pretax loss from continuing operations and $29 million.

GAAP loss per share increase 10 cents 93 cents.

Adjusted loss per share, which will report going forward increased seven cents to 85 cents.

Driven by the increase in pre tax loss and lower shares outstanding partially offset by an increase tax benefit due to favorable discrete items.

As a reminder, while beneficial on a four year basis, the lower share count negatively impact C. P. S in quarters in which we reported a loss.

In discontinued operations, there were no changes to accrued contingent liabilities related to sand canyon during the quarter.

For additional information on sand Canyon, please refer to disclosures in the company's reports on forms 10-K in 10-Q, another FCC filings.

Regarding capital our priorities remain unchanged at the top the lift is maintaining adequate liquidity for our operational needs to account for our seasonality.

We came into this year with a strong financial position after generating over $500 million or free cash flow in fiscal 19.

We didn't make strategic investments back into the business that we believe deliver value to our clients ultimately benefiting our shareholders.

Making prudent investments to drive sustainable growth remains a key element of our capital allocation.

Last we'll deploy excess capital to quarterly dividends and share repurchases, but.

With respect to dividends the health of our business and our outlook for the future has a lot for dividend increases over the past four years.

Over that time, our quarterly dividend has increased 30%.

Perform an annual review of the dividend after each fiscal year.

Regarding share repurchases, we remain committed to at a minimum repurchasing shares to offset dilution from equity grants.

During the second quarter, we repurchased 5.7 million shares for $137 million at an average price of $23.94.

Year to date, we have repurchased a total of 7.3 million shares for $181 million at an average price of $24.75.

Going forward, we will continue to be opportunistic and our share repurchase approach.

I'd now like to provide thoughts on our fiscal 20 outlook.

Starting with the tax industry, we expect overall return growth of about 1% with assistant volume flat to slightly up and do you got wide growing 2% to 3%.

This is consistent with the trends we've seen over the last several years.

Regarding HR block, we expect to grow both clients and market share in fiscal 20.

Richard marked the third consecutive year of improvements.

This will be driven by sustained growth in D. I Y and the continued improvement in our client trajectory in assisted as we anticipate holding market share in that category.

With respect to pricing following a year in which we reset price at our assisted business. We expect net average charter remain consistent with last year.

And you got why we will continue to price competitively as we focus on driving return volume and share gains.

Yeah wide net average charge is expected to increase slightly due to favorable mix led by online assessed.

We expect these client growth in pricing expectations, along with the addition of way to result in revenue growth of one and a half for 3.5%.

This is consistent with the outlook provided during our last two quarterly calls.

With respect to earnings we anticipate total EBITDA dollars to be slightly higher than fiscal 19, as we returned to revenue growth.

While our EBITDA loss increased in the first half, we still expect EBITDA growth for the full fiscal year.

Majority of our revenue increase and play in cost reductions that will offset ways operating losses will be achieved in the fourth quarter.

We expect these changes to result in revenue growth outpacing EBITDA growth, which will impact our margin.

Therefore, we continue to anticipate EBITDA margin of 24% to 26% in fiscal 2000.

We're updating our tax rate outlook to 19% to 21% an improvement from our original outlook of 23% to 25%.

Primarily due to favorable settlements with tax authorities during the second quarter.

Moving onto the other items on our financial outlook, we expect total depreciation and amortization of $165 million to $175 million.

All of which $70 million to $80 million will be amortization of intangibles related acquisitions.

As I mentioned earlier this amortization expense reflects both ways and other acquisitions and will be excluded from me P.S. for non-GAAP reporting.

We expect for your interest expense to be $90 million to $100 million and finally, our business continues to be capital light as and we expect capital expenditures to be slightly lower than the prior year at $70 million to $80 million.

I'm excited about the season ahead and look forward to updating you on our progress in March with that I'll now turn the call back over to John Thanks, Tony I too I'm very excited about the progress, we're making on our long term objectives and our plans for the upcoming tax season.

We're building on the successes of fiscal 19, as we continue to develop products into the will allow consumers and small business owners to interact with HR block in new and exciting ways.

I'd like to thank our associates tax pros and franchisees for their continued focus on providing expertise in care to our clients and all that are going to prepare for the upcoming season I look forward to sharing more next quarter with that we'll now open the line for questions Buddy.

As a reminder to ask a question you will need to press star one on your telephone to.

Withdraw your question press the pound.

Please standby, we compile the Q1 a roster.

Our first question comes from the line of Jeff Goldstein.

Morgan Stanley .

A question please.

Hey, Good afternoon, you mentioned your view that your assisted volumes can improve their trajectory. This year, maybe could just add a little bit more color on your conference round that specifically given you reiterated again your plans to not increase prices here.

Hey, Jeff It's Jeff Jones, Thanks to the question.

As Tony mentioned in his prepared remarks.

We've been on a trajectory year over year of improving our performance in the assisted business.

As you May know last year, you made a conscious decision about eliminating free easy, which we knew would cost is quiet.

Let's set that aside we know we kept pace with the industry.

So we take a step back and think about all the things we continue to do this year.

Year to of upfront transparent pricing.

All the work we're doing on operational excellence in standard operating procedures.

Continuing to build on the marketing effectiveness that we started last year and into this year.

To be honest up the culture and excitement with the field and franchise organization.

Yeah, we think about retention, obviously, we already have up a high retention market about 73% and I'm eager to see how our client satisfaction scores from last year might translate into retention this year.

But you put all that together and we feel really good about the plans we have in place to continue on that trajectory and as Tony said.

Our goal is ultimate growth in this year, we expect to maintain share in the category.

Okay that was helpful. And then <unk> expenses were a little bit higher than we were expecting this quarter and it seems to be centered on a step up in the other wages line item. So is there anything one time to call out there or somewhere else and is there any change to how you're thinking about the expense base for the remainder of the here.

Yeah. Thanks, Jeff This is Tony.

Yeah, there was a several items and other I mean, a lot of the wage expenses related to some of their variable cost show up. Another we also have some legal expenses that occurred during the quarter that are showing up another there's a number of moving parts, but as I said in my opening comments. When you look at the full year, we expect to a fair amount a benefit to occur during our fourth quarter and.

Not only will you know the vast majority of our revenue growth occurred during that quarter well, we have some identified expense roll off that that will also hit that will allow us to grow EBITDA during that quarter grow EBITDA for the full year and hit the overall guidance about that I outlined.

Was there anything on the other wages line items, specifically, though.

Uh huh.

Nothing more than one from yeah.

Yeah, I mean, we've got build wages, which obviously picks up you know the vast majority of our field network in the in the U.S. as well some of our international business as.

Wave wages that we picked up during the quarter would be showing up in other wages that would probably be a significant portion of that increase as well as being on the investments, we're making their technology Road map.

In the hiring additional I T professionals would also show up in that line item.

Okay. Thank you.

Thanks, Jeff.

Thank you. My next question comes from Hamster, Missouri Jefferies. Your line is open.

Yeah, Hi, this is Ryan filling in for Hamzah I. Just a quick question do you think are there any value variables in the upcoming tax year that maybe the market, even considering that could impact returns positively or negatively.

Yeah. Ryan This is Jeff Jones, you know last year was obviously unique year with the government shut down the delayed season, which turned into extensions.

We look back over history, a growth rate, it's why we see the industry. This year kind of returning back to about 1%. There's nothing that we know of at this point that would impact that number.

Obviously, not trying to predict what the government may or may not do but there's nothing that's on our radar at this point that that we see impacting that growth for our upcoming season.

Great. Thanks.

Thank you.

Thank you. Your next question comes from currency MISO of North Coast Research. Your line is open.

Hey, Jeff in Tony.

Just wanted to ask you a little bit about the marketing budget, especially because you have wave now and.

Maybe what the anticipation is if you if you're going to maintain kind of marketing budget, where it is and just take some and added to wave or do you expect overall marketing budget to increase and increase both attack side and for wave.

Hey car to still be pulled apart a little bit overall, our marketing budget for the year is reflected in our guidance and what we are absolutely focused on is send effectiveness.

Thank you May remember last year I talked a lot about the changes we were making in performance marketing et cetera. We saw great results there that will continue.

With respect to away he.

At the highest level, we think weight has an incredible value proposition.

And they have been able to grow effectively really do that re proposition.

Relying primarily on SPL.

They have started to experiment with SBM marketing and are really at the beginning of learning that's effectiveness added to their mix.

We think there's a lot opportunity to grow awareness and you'll see us taken steps this year.

Things like Shopify integration help.

We're now co merchandising them on HR blocks website.

We are now emailing qualified HR block clients about ways.

<unk> will be E mailing qualified wave clients about HR block.

So inside the installed base, we think theres a lot of opportunity that doesn't rely on a lot of incremental investment and that's where we're focused for fiscal flooding.

And then just.

One last question, Jeff maybe the growth in waves customers.

Dan rather than you.

Yeah. So at this stage, we're not really guiding on customers, but I will say that the top of the funnel remains very healthy for ways.

No. They grew revenues this quarter about 40%.

You know as we said last last quarter, you know for years now they've been growing 40 plus percent on the revenue line. They did that against this quarter. It was a little softer than we would have like based on the mix of pain site, but overall, you'll feel very very good about the health of the business the way they're thinking about.

Serving small business owners in the simplicity of their products and the way, they're thinking about the product road map, you know and what's to come.

Thank you very much I appreciate it.

Thanks, sorry.

Thank you. Your next question comes from Henry Chen of BMO. Your line is open.

Hey, good afternoon.

Thanks for taking my question I, just wanted to ask about some of the operational excellence.

That you've been doing I know you reiterated margins for next year, but just curious you know excluding that a cost impact from waived the the underlying margin trend and sort of where you.

You know, where you're targeting and achieving any potential through operating efficiencies that that could you know.

Impact margins going forward.

And that sort of came back with wave. Thanks.

Yeah as I shared in my opening comments.

You know all of the wave operating loss will be offset with other cost reductions as well revenue growth, which will allow us to grow EBITDA dollars for the year.

Well I also said that that the revenue line will grow a little bit fashion, the EBITDA line, which will cause a slight contraction EBITDA margin, we feel really good that EBITDA dollars are going to improve and a year that we did a really strategic acquisition.

For a company is currently operating a loss that we know overtime it will be accretive to HR block, we talk about operational execution, it's not only.

Focusing on the piano, but also in our offices in a number that changes, we're making there and how we serve clients.

Oh, we staff our offices.

All of the you know all the way that we lead and manage our offices all those changes that we've really focused on to make sure that every claims getting the best experience possible and that's been a lot of our focus over the last year and frankly is resulting in an improvement in NPS scores in client satisfaction scores that that Jeff mentioned should result in you know retention improvement over the long term.

Got it okay, and any sort of.

Hi thoughts on on.

Just sort of fixed cost base.

You know, whether it's real estate or any other.

Otherwise it.

You sort of thinking about that.

Yeah, I mean, you know we try to make a lot of those decisions on a year by year basis, I mean, we've been.

Focused on.

Growing obviously the last couple of years, we'd get a number of changes last year and resetting our baseline resetting margin levels optimizing our footprint.

Resetting price and you know now we're focused on how do we how do we take that new base and grow both in the assisted side de Iwai and now three wave, which should result in improved EBITDA dollars overtime and as those EBITDA dollars no improve.

That's really the main focus of of of what we're focused on over the next few years got it okay. Thanks, so much.

Thank you.

Thank you. Your next question comes from Scott Schneeberger of Oppenheimer. Please go ahead.

Thanks very much.

Jeff could we could we started on the the technology Road map. Its clearly you have one I'd love to get a progress update I'm on the on the outside we don't really know that road map you have that it. So could you just a kind of summarize where you are along the along the path what's been accomplished.

It's yet to go and is it trending financially I guess now on the cost side as you'd expect it in an area are you starting to see benefits.

Yeah, It's got to great great question, and and I'm, sorry that that feels opaque to you. So the the technology roadmap that we talked about you know a year or so ago has a lot of different dimensions. You know I think at the at the top is what we refer to as the omni channel packs engine or attack flat.

Warm.

That's a major initiatives to move from three engine. So one engine.

That is a multi year effort.

It's an effort that the company had attempted in the path.

And we are on track with that initiative.

The team has found some great breakthroughs and the omni channel packs engine is on track.

The second piece a major piece of the road map is cloud migration.

Obviously this is a place where given the seasonality of our business and given resiliency I think there's a lot of benefit of cloud just too is a multi year move from our datacenters to the cloud that.

Road map is also on track.

The other ones speak more to things like data architecture, a information security and those are less about a defined number of years in just a continued focus on improving them really nothing to report there they are super important priorities, but they're less of a roadmap.

So what I can report today is or initiatives are on track.

They are going to take several years to complete.

When they are complete we expect to see a run rate benefit and cost reduction and also greater ability to serve clients. So I feel really good about the intent of why we launched them and I'm happy to say, they're on track, but they do still have a couple of years to go.

Excellent thanks to the color there for my for my my follow up I'd like to asked two questions. If I could just sneak them in there there's somewhat separate.

As it looked like legal expenses was increase it got discuss a little bit but curious is that that free file alliance focused or other just whatever you can elaborate and then my other question. It's a quickie is.

Will you be providing a volume updates throughout the tax season, you have a large competitor in the tax base, who is not going to do it. This year. After they had been in the past. So just curious what's your what's your plan is for that thanks.

Yes, it will take him in reverse order on your second question. You know, we absolutely believe that that we should be and will be as transparent as possible with you in our business in our transformation in our initiatives and we have no plans to change how we provide updates you throughout the season that'll come.

And.

Yeah, I'll take the legal expenses, Scott, meaning that they was the driver during the quarter. We also had some wave expenses that hit we provide a lot of detail in our 10-Q, which will file later this week that talks about all of our legal matters. As you know we typically don't comment on the details of those pending a pending matter.

Thanks, Terry if I just saw this is it going to remain elevated or no on the legal front. Thank you for taken to me.

Yeah, I mean, obviously when you see a quarter bump up its probably not going to go to zero. You know you on a year over year basis, the following quarter, but we did contemplate that in our.

EBITDA margin outlook that I provider there on the call.

Great. Thanks, guys.

Thanks, guys.

Thank you. Our next question comes from George Tong of Goldman Sachs. Your line is open.

Hi, Thanks, Good afternoon, I wanted to dive deeper into the cost reductions that you're planning to make to help offset the wave operating losses now that you are further along into the year can you just elaborate a little bit more on where are these savings are coming from and if you've identified additional savings you didn't have earlier in the year and what the potential impact.

Of executing on those savings could be to say revenues and a market your performance.

Yeah. Thanks, Thanks George.

As I said, there's most of those are gonna occurred during the fourth quarter.

You will see in our release that we released before the call that our EBITDA losses up slightly for the first six months, but for the full year, we still expect EBITDA dollars to improve on a year over year basis, driven by really two factors one the growth in revenue, which as you know over 75% of our annual revenue occurred during the fourth quarter. So it's.

All about that quarter as well as some land cost reductions that have already been identified its just a matter of those rolling off which will occur during during the fourth quarter. So there's some compensation efficiencies. There are some promotional expenses in the marketing budget that will roll off.

Earlier in the earlier in the year, we already had some onetime expenses related to our footprint consolidation that occurred last year that rolled off in the first half of this year. So those are probably the three biggest drivers your question on well what else that we identified and it's obviously a.

Fluid conversation.

As we think about how the results are coming in we're off to a good start for the first half a year, but we still feel like the ranges that we provided in both revenue and EBITDA margin are on point.

Got it that's helpful and and I know you've talked about pricing for.

Assisted at links.

No again your further into the year, what's the likelihood that you will flex pricing as a lever or are you fully committed to sustaining flat pricing for this upcoming tax season, and then separately on VR why it looks like pricing is coming lower can you share some thoughts to additional thoughts on how you plan to go to market from a pricing perspective.

<unk>.

Hey, George we'll tag team on assisted.

We are fully committed to holding back flat for fiscal 20.

When we reset pricing, we do not believe we need to reset pricing further.

This is all about getting our pricing in line. So clients can see an experienced the value you know we feel really good about how our client judge that last year in the scores they gave us.

And over time once that value prop, it's clear tighter and we feel like we're back on a path to growth. We expect in hope to be able to get back to inflationary level price increases in the assisted business.

Yeah, and then as regards the DIY why you know you know George that for the last couple of years, we priced competitively.

Which is really been a key to part of our growth we want to grow awareness. We're building a great product, but pricing is a key element to it I'm not sure. He kind of my opening remarks, but we actually expected not ever charging the iwai to be up this year.

So.

Team will not be lower and we expected to be flat and the positive mix led by online assess will actually a lead to a higher overall net average charge in d. I like.

That's helpful. Just a follow up quickly on that so that the pricing increases going to be driven more by mix is that correct.

That's right I mean, it's dynamic as you know pricing changes throughout the season, whether it be first half or second half and byproduct, but we don't have any plan price reductions in DIY why.

And we believe that there's going to be positive mix led by a line at this.

Got it thank you.

Thanks George.

Thank you at this time I'd like to turn the call back over to Colby Brown for closing remarks, Sir.

Thanks again, everyone for joining us this concludes todays call.

Ladies and gentlemen, this concludes the conference call. Thank you for participating you may now disconnect.