Q2 2020 Earnings Call
Excuse me everyone. Thank you for holding understanding by waiting patiently. This conference call will begin in approximately two minutes again. This conference call will begin at approximately two minutes. Thank you for your patience in holding.
[music].
My name is Brittney and I will be your conference facilitator today.
Time, all participants are any listen only mode. Following management's presentation, we will conduct a question and answer session. If he would like to ask a question. During this time. Please press star one on your push button telephone if you wish to withdraw your question. Please press star too.
As a reminder, this call is being recorded for playback and will be available by approximately 12 PM central time today.
I'll now turn the conference call over to best Mcshane, a VP finance. Please go ahead.
Thank you Brittany good morning, everyone and thank you all for joining us on a call me today. We if you saw here, our chief Executive Officer persons out from our executive Vice President and Chief Financial Officer, Eric Bakken President of franchise segment, and then enter Watson our general counsel.
Before turning the call or make you a few housekeeping items I'd like to address.
Burst yesterday's earnings release, and today's conference call.
Forward looking statement, but then the meeting other private security Litigation Reform Act of 1995.
Forward looking statements are not guarantees are performing.
By their nature.
Our subject to inherent risks and uncertainties that could cause actual results to differ materially from such forward looking statements. Please refer to the company's current earnings release.
The reason I T SEC filings, including our most recent 10-Q and June 32019 10-K.
For more information on these risks and uncertainties.
The company undertakes no obligation to update or revise any forward looking statements to reflect events or circumstances that may arise. After the date of this call.
Second.
This morning conference call must be considered in conjunction with <unk> earnings release, we issued yesterday and our previous as easy filings.
Including our most recent 10-K.
On today's call.
I'll be discussing non gap.
As adjusted financials, all that exclude the impact of certain business event.
In other discrete items.
These non-GAAP financial measures.
Biden to facilitate meaningful year over year comparison.
But should not be considered superior to or just sucky substitute bar, our GAAP financial measures.
And should be right in conjunction with GAAP financial measures for the period.
A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in yesterdays release.
Which is available on our website.
At Www Dot Regis car.
Hi, Backslash Investor Relations.
That I will now turn the call over Q.
Thank you Beth and good morning, everyone.
Our guiding principle at region.
Generate long term value for shareholders and key stakeholders.
In that regard I was honored to be asked the chair or companies Board of directors. In addition to my continuing role.
President and Chief Executive Officer.
I believe that assuming the chairmans role will help ensure continuity of leadership.
Hi phase transformational strategy.
During a period of ongoing change.
The second quarter does represent an important milestone where we gained greater clarity into the end date.
Portfolio transformation.
Based on our year to date results.
Pipeline of potential transactions, we now believe that our transition to a fully franchised business.
I will be substantially complete.
By the end of this calendar year.
This improved visibility into the cadence of our portfolio transition transition.
Enabled us to begin meaningful reductions.
Cost structure answer will initiate other plants, we have for the business, including reengineering our capital structure.
So that it will be appropriate for a fully franchised.
Capital like gross platform.
We're pleased to report this quarter that we continue to make meaningful progress in our ongoing strategic transformation.
Good capital light.
Hi, Great franchise company.
In August 2019, we estimated that it would take US 18 to 24 much.
Peter conversion into a fully franchise portfolio.
However, due to the success we've had in the first half of fiscal year 2020.
Oh, yes, we expect that we will substantially complete those conversion.
What earlier days than we originally anticipated.
In the first half of fiscal 2020, we have converted 988 salons to franchise owners.
Line of sight to the sale of approximately 900 position slots.
This means that net of closing roughly 350 to 500 underperforming salons.
Which typically occurs at lease expiration.
We have approximately 50% other remaining company owned salon portfolio in the pipeline.
Various stages of transition.
As of December 31st nearly 70% of our portfolio is now franchised and you may recall that when I began my tenure as CEO in April of 2017.
Our salon portfolio was roughly 28% franchised.
And 72% company so by any measure.
Very significant progress in our portfolio transformation.
As I mentioned, our transition to a fully franchise model has been occurring at a rapid pace and as a result, we had been thoughtful and intentional in our plans to begin more aggressive expense reductions.
In January we announced actions that will reduce DNA by approximately $19 million.
On an annualized basis.
As we consider the magnitude of these plans DNA reductions, we decided to schedule our actions at the beginning of the third quarter.
And of course, we recognized that scheduling the execution of these gionee reductions in January.
Would dilute our second quarter results.
Given the increased pays for has been done since.
However, we want it to ensure that our actions reduced expense.
Not create an unacceptable level of risk to the stability of our company owned salons and corporate operations.
We expect to consider further DNA reduction since we draw closer to the in day to work transition.
And gain additional visibility into our path to sustainable growth.
Further we believe it is the right time to redesign our capital structure, so that our deficit ilios better suited for a company that is now 70% franchised.
We recently engaged Guggenheim Securities to help US design the optimal capital structure for what is now franchise business.
Guggenheim has an outstanding track record of success in working with large franchise or worse and assuming continued favorable market conditions. We anticipate that this process will be successful and that we will complete our replacing financing.
No later than fourth quarter.
[noise] once we've completed our financing we anticipate that we will continue to make investments to prepare the company for the base phase.
Of our multiphase transformation.
This could include additional investments on the following franchise or capabilities.
But frictionless customer facing technology, the company's new internally developed back office Salon management system, which is now in beta.
Disruptive marketing and advertising trends driven merchandise, including investments we've made in a new private label brands.
We've named Blossom, and the relaunch of Iran. Historically successful design like brands.
Ongoing investments in stylist recruiting in education and in stylists and franchise partner Education will also be considered.
We may also utilize our cash in the next 18 months to complete any remaining elements of our multiyear restructuring including.
Closing nonperforming company owned salons, when it's justified by the economics, although our operational bias is typically to manage these loss to lease expiration.
Paying down some death, we determined that it's wise to do so well supporting our ongoing gionee reductions through severance programs and if needed capital investments in Salon, Refurbishments and Remodels as we consolidated our various brands into what we have called the fab five.
And as you all know we've utilized cash to repurchase our shares and circumstances, where he believed it would be in the best interest of our shareholders.
We decided to post the pause button on share repurchases during the second quarter in order to reduce our debt levels and continue investments and the other growth initiatives.
Upon completion of our refinancing management and the board will continue to assess our capital allocation strategies.
Periodic basis, yes, we have done historically.
Despite the inherent variability and near term risk associated with our transformational strategy we remain convinced.
At a fully franchise business has the potential to generate a higher returning to its capital.
Will prove to be in the best long term interest of our shareholders and franchise constituents.
We do have a some there's a significant amount of work ahead of us in order to could substantially complete.
The portfolio transformational phase of our strategy by calendar yearend.
However.
We are determined to bring this phase two a conclusion. So that we can continue to shift our time and energy in our talent toward the organic growth phase of our strategy.
Although conditions could change we have growing confidence in our plan and our ability to successfully execute our multiphase transformation.
Our restructuring and portfolio transformational phases are each moving rapidly toward their end dates.
And we intend for read just to be well positioned for its growth phase.
Period, we expect to generate sustainable revenue and earnings in the years ahead.
[noise] with that I'll ask Kirsten suffer our.
Chief Financial officer to take us through the numbers Kirsten.
Thank you and good morning, as he mentioned, we're pleased to share significant progress in our transition to a fully franchise model.
Yesterday, we reported on a consolidated basis second quarter revenue is up 208.8 million, which represented a decrease of 65.9 million or 24% versus the prior year.
The year over year revenue decline was driven primarily by the conversion or not but not 1447 company on salons to the company's franchise portfolio over the past 12 month and the closure of 172 salons of which the majority where cash flow and I get asked and not essential to our future plans.
When targeting funds for closure I biases to exit the location at least exploration unless the economics justify a course of action to buy outs at least early headwinds in the quarter were partially offset by a 5.8 million increase and franchise revenues and 33.6 million of rent revenue recorded in connection with the new lease the county.
Got it and adopted in the first quarter, that's got 2020.
Second quarter consolidated adjusted EBITDA of 17 million was 3.6 million or 17.5% on favorable to the same period last year and was driven primarily by the elimination of the EBITDA that had been generated in the prior period from the not 1447 company on salons that have been sold and can.
Right and to the franchise portfolio over the past top Matt.
Second quarter adjusted EBITDA was also impacted by lower comp minimum wage increases and strategic investments in technology.
We believe our comps may have been impacted by fewer retail day is between thing that Thanksgiving and Christmas holiday.
The decline in adjusted EBIT that was partially offset by a 5.6 million increase and the gain associated with the sale of company on slot.
Excluding discrete items and the income from discontinued operations. The company reported decrease second quarter 2020, adjusted net income of $4.6 million or 13 cents earnings per diluted share as compared to adjusted net income of 8 million.
Or 18 cents earnings per diluted share for the same period last year.
Year over year decrease in adjusted net income was driven primarily by the elimination of adjusted net income that had been generated in the prior year.
From salons that were sold and convert into the company's asset light franchise portfolio over the past thought might.
On a year to date basis consolidated adjusted EBITDA of 46.8 million was 1.1 million or 2.3% favorable versus the same period last year.
The year over year favorability was driven primarily by 24.7 million increase and the gain excluding noncash goodwill derecognition related to the year to date can failing conversion of 988 company owned salons to the franchise portfolio.
Excluding the impact of the gains second quarter year to date, adjusted EBITDA totaled 5.6 million, which was 23.7 million unfavorable year over year. Unlike the second quarter results. This unfavorable variance is also driven largely by the elimination of EBITDA related to the sold and transferred slot over the past.
Last 12 month.
As he noted we disclosed at the close of fiscal year 2019 that our transition to a capital light franchise model would initially have a dilutive impact on the company's adjusted EBITDA.
So this decline in our reported adjusted EBITDA was not unexpected. Nevertheless, please note that as we continue our transition we are certainly paying attention to cash from operation.
You know, we do do not provide guidance however, assuming no unexpected changes in market conditions and after adjusting for unusual and transition related items. Our objective is for our run rate trajectory to be cash flow positive in the fourth quarter as we accelerate into the end state of art transition.
Looking at the segment specific performance and starting with our franchise segment second quarter franchise royalties and fees of 29.3 million increased 6.7 million or 29.8% versus the same quite a last year driven primarily by increased franchise slot counts.
Product sales to franchisees decreased a million dollars year over year to 16.9 million driven primarily by a 6.5 million dollar decrease in products on the T.V. G, partially offset by increased French franchise line count.
Franchise same store sales was unfavorable 1.4% and we believe me I've been negatively impacted by the reduced retail days between Thanksgiving and Christmas.
As a reminder franchise same store sales are calculated in a manner that is consistent with how we calculate our same store sales in our company on the line portfolio and represents the total change in sales for salons that I've been a franchise location from more than 12 month.
As we are in this transition phase salons are leaving company on comp, but not entering franchise comps for 12 months, which adds temporary noise to same store sales comparison.
Are there as we've previously discussed our comps represent salon transaction and are not necessarily a precise representation of customer traffic and the traditional retail.
Second quarter franchise, adjusted EBITDA of 13.1 million grew approximately 4.6 million year over year, driven by growth in the franchise to align portfolio and better leverage of our cost structure, partially offset by lower margins I'm franchise products out.
[noise], we believed that the performance of our franchise portfolio may have been temporarily challenge by the operational complexity of Onboarding, new owners and transitioning salons to a more to our more experienced on ours among other factors.
What's the revenue recognition and the lease accounting guidance, we've adopted over the last two years as well as sales of merchandise TBD at cost our EBITDA margin percentage is not comparable year over year. After adjusting for the nine contributory revenue associated with AD fund revenue franchisee rent revenue and TBD product sales.
EBITDA margin was approximately 37.5%, which is approximately 4.2% favorable year over year and then is that is in line with where we would expect it to me.
Year to date franchise adjusted EBITDA of 24.9 million grew approximately 6.6 million or 36% year over year.
Now looking at the company on Salon segment second quarter revenue decreased.
I didn't 5.3 million or 45% versus the prior year 228.9 million.
This year over year decline is driven and consistent with the decrease of approximately 1598 company on salon over the past 12 month, which can be bucketed into two main category.
The conversion of 1498 company on slots to our asset light franchise platform over the course of the past 12 month of which 443 were sold during the second quarter.
And second the closure of approximately 172 company owned salons over the course of last 12 month, most of which were underperforming salons at lease expiration and as I noted earlier not essential to our future strategy.
These snack company on Salon reductions were partially offset by 51 salons that were brought.
Back from franchisees over the last year and 21, New company owned organic Salon openings. During the last 12 month, which we expect to transition to our portfolio in the month then.
Second quarter company on salons segment, adjusted EBITDA decreased 17 million year over year to 4.2 million.
Consistent with the total company consolidated results the year over year variance was driven primarily by the elimination of the adjusted EBITDA that had been generated in the prior year period from the company on salons that were sold and convert it into the franchise platform over the past 12 month.
The quarter was also impacted year over year by increases in stylus minimum wage and stylists Commission and a decline in same store sales in our company onsite Salon.
As you might expect we're carefully monitoring our company on salons as we continue through our transition our objective is to maintain focus instability in those salons until they are been done.
On a year to date basis company on Salon consolidated adjusted EBITDA at 15.7 million was 33.2 million on favorable versus the same period last year.
The unfavorable year over year variance is driven by the elimination of the adjusted EBITDA related to the so sold and transferred salons over the past 12 months, partially offset by management initiative to rightsize the support structure in the field.
[noise] of course, it's important to note that our company on Salon performance will continue to become a less critical to the future trajectory of our business as we accelerate our conversion into franchise.
Turning now to corporate overhead second quarter adjusted EBITDA of Zero point Threemillion increased 8.8 million and is driven primarily by 15 million of net gain excluding noncash good well be recognition.
Failing conversion enough company on Salon, the net impact of management initiative to eliminate nine core non essential DNA expense.
And lower year over year incentive and equity compensation.
In January and based on the improved visibility into the speed of our transition we began meaningful reductions in our expenses.
By eliminating approximately 290 positions, including 15 kinda contractors across the U.S. in Canada, which is expected to result in approximately 19 million of annualized G.N. saving.
The company accelerates into its multiyear transformation.
We expect the removal of these DNA cost well also positively impact the company's cash from operations in the back half of fiscal 2020 and in future periods.
Lastly, I wanted to point out that vending cash proceeds during the second quarter, where approximately 71000 per slot compared to approximately 69000 per slot in the first quarter of our fiscal 2020, which is consistent quarter over quarter.
However, as we transition more signature style salon. This fiscal year, we may have lower net proceeds preslar due to the cost of converting some of these salons as part of our brand consolidation that right along with more smartstyle condition.
Looking now at the balance sheet.
At the ended the quarter, we made a decision to pay 30 million towards our outstanding debt, which decreased our cash balance to 49.8 million as of December 31st 2019.
We paid down but that's remain in compliance with the net leverage covenants that are part of our existing credit facility.
Given our successful then decision process, we have known for sometime that our existing credit facility would not be appropriate for and state franchise business and that we would need to reengineer, our credit facility to meet the opportunities inherent in our new business model. We believe we now have the visibility and facts that we need to move forward with RBC.
Financing effort.
After careful consideration we retained Guggenheim because they have a strong track record establishing capital structures for core growth oriented franchise companies. We expect a successful outcome in our refinancing efforts and to complete the process no later than the fourth quarter of this fiscal year.
Turning now to cash flow I thought it might be helpful to provide a high level reconciliation of how we see adjusted EBITDA flow through to cash from operations and our free cash flow.
When looking at the Castle statement. The thing is single largest use of cash is approximately 17 million use of working capital as we noted in the prior quarter does not use of cash is significantly impacted by cash outlay is associated with the wind down of company on salons, as we convert to fully franchise platform, including transition related payroll embedded.
Vacation payments and severance payments related to restructuring our field teams to better align with our future state.
As you noted we also invested in our new Blossom brand of our private label merchandise, which was received in December and we'll be in the spot in the spring.
We've also invested in the repackaging and re formulation of our historically successful design mine private label brands [noise].
[noise] in addition to change in working capital when reconciling the adjusted EBITDA to operating cash flow you will need to take into account. The fact that the 41.2 million not game from the conversion of our company on salons to the franchise platform are included in our net income in adjusted EBITDA, but not included in cash from operation.
As the proceeds are reported as inflows and the investing section of the castle say Matt.
I also wanted upright provide a brief update on TV gene.
At the end of December TBD transferred back to read just 207 habits, North American mall baseline, so roughly 10% of the company's portfolio.
When TBD approach read just about their financial situation in late 2019, we just determined that acquiring the salon, where we just had continuing obligations under real estate leases would provide greater control over the outcome and maximum optionality for these location.
This is always a previously considered strategy for these line.
The remaining lease liability associated with the TBD Islam's is approximately 30 million every just will operate the salons until these end date or until a new franchise owner has identified essentially we are now managing these salons and the normal course, and we'll treat the farmer TPG salons actually what any other location in our company on.
Slot portfolio.
We continue to believe the overall transaction, which was always intended to mitigate the company's lease obligation on these blonde was a financial and strategic success.
As a reminder, when we executed executed the original transaction with TPG back in October of 2017, the lease liabilities for the mall based portfolio was approximately 140 million and as noted is less than 30 million today.
With that I'd like to thank you for your continued and enter support and interest in region and we'll now turn the call back to Britney for question.
Thank you you in person the question and answer session will begin at this time and our first question.
Well in time from Stephanie I think with Jefferies.
Hi, This is Sebastian Burberry before stuffing wishing I'm sure a couple of questions in a couple of follow ups. If I may the fish when the comp sales performance or the system and French level any further explanation for the December quarter step down and How's the business performed a post holiday.
And the second one when the product sales to the core franchise fees were up nicely year over year.
It took about the initiative, including the rebranding and updating a few private label brands and what percentage of products sales I know private label and do you believe it's a room to advance won the on that percentage. Thanks.
Why don't I take the first part of the both questions then I'll toss it to a Eric for follow up on franchise. We you know we still have a high degree of confidence and.
I believe our franchise partners to grow their service and product sales at the Salon level.
We do believe strongly that they were impacted by the retail days that occurred between the holidays through the compressed retail base between the holidays.
Thanksgiving and Christmas. So we don't we don't have a higher.
Hi degree of.
Concern about our partner civility franchise partners ability to grow their businesses.
Hypothesis from the beginning has been the when you.
Turning these slots over to local owners who are entrepreneurial.
They cut their own capital to work.
Tend to be highly focused on growth and performance.
You know, it's also important whenever I get the condition processes is a distraction for all of US It's a distraction for the corporation.
It's a distraction for new franchisees and our legacy franchisees, who take control of salons that we're transitioning but that's you know transitional in nature.
We're coming to the instead of that and I still feel.
Very confident the ER franchise partners will grow their businesses and all the historical data that we have confirms that.
As to the.
As to the new private label brands Wasserman.
[noise] sideline design lunch, but an important part of our company for years and it's been extremely successful.
With great margins.
We re package design line and reformulated design line.
To support future growth initiatives in battery launching a.
Prior to the summer and Blossom as a brand new product line, that's been reformulated with an emphasis on.
Ah sustainability.
And so we feel.
Very.
Optimistic about both of those launches, we don't yet know what percentage of merchandise sales.
It will represent into future years, but.
Yeah, we were very well aware of the success or other retailers have had with private label, including target.
And Walmart and we were watching their results. So we we got behind this initiative in.
To support it doesn't work.
Optimistic that it will become an important part of our merchandise offering.
[noise] for franchisees and for the consumer [laughter] there if you can build on.
I used to build them all of that.
Thanks you.
So this is Eric Bakken is as it as it relates to the comps if you Peel it Peel back to layer is a little bit.
For the quarter Supercuts on the service side was still positive up 0.1% and we were negatively impacted in December for the reasons that both you and Kirsten mentioned, if you look at year to date Supercuts on the service side was up <unk>, 0.9% and then overall franchise service.
It was up <unk>, 0.3% in the year to date number. So so we saw some negative impact in December in December our service comp and franchise was off 2.5% I'm. So that really hurt our numbers. It's an important month, but you know we're confident that we'll see that the numbers bounce back is as we go forward as.
It relates to retail just one item that I would mention on the franchise side. So when we transfer stores to franchisees on the corporate side, we utilized auto replenishment. So that is all centralized here in Minneapolis, when we converted the stores to franchise. They did not have that model in place. So we've developed that now internally.
Able to provide a very similar replenishment model for our franchisees that's called auto guided ordering and the only difference is that the franchisees can decide if they want to modify what we suggest that they order. So we now have north of 500 locations on auto guided ordering and that number will grow we're making some technology enhancements to it to make it.
Work more effectively and efficiently and we expect as I said that number to grow as we go for it.
Got it and when one more if I may could you. Please retrace the bridge to 12 and a half a dozen in June a pretty salon, and how do marketing costs get accounting for the future.
And this this includes tech investments.
So so the marketing is not included in our DNA line that marketing advertising expenses are included in the site operating line no as we move to a fully franchise.
Entity platform, those marketing and advertising costs will be borne by the the AD fund.
The twelvefive as it relates to the DNA per store at some of the guidance that we have provided in the past that does include technology spend in that and that DNA <unk> five.
Got it thank you very much.
And to emphasize or a checkpoint the which was an important one the auto guy that ordering is enabling merchandise gross to technology. It essentially.
Is a lift and shift of historical capability, we had an opco that we did not yet have fully integrated and franchise.
Where they can make informed judgments or franchise partners can make informed judgments about utilizing that technology. So it's an important initiative.
And it's Eric noted we have about 500 of the franchise launch.
Enabled but we're going to continue to migrate that throughout the platform.
Got it thanks.
You bet.
Our next question comes from Laura Champine with capital.
Thanks for taking my questions say it strikes us that you paid down debt in the corner, although the goal with the with Guggenheim Mr. raise debt where their EBITDA covenants that were at risk of being violated is that is that why you paid down debt in the quarter.
It it wasn't well or are already test with Google pay more choose our intent with Guggenheim us not to raise the but it's a replacement facility, we will scale that facility.
But we put in place for the franchise business.
The Pryor facility, what I suspect wouldn't if you do the comparative analysis would be larger than what we will need going forward.
We looked at some of the.
Covenants that were in the existing historical facility and we knew that some of the net leverage ratios.
I would not could not be supported by the future franchise business, but we lora, we've known thus far.
Months, maybe a year, we just one at the time our entry into the debt markets at the right moment.
And as you well know that debt markets are.
Robust today, there's a lot of money out there to put to work and so we.
We feel.
Good that Weve selected the right moment in time, when we have the visibility we made.
So to make informed judgments, we could have proceeded down this path earlier.
But we didnt have all the visibility or facts when needed so.
The simple way to think about it is we had a an old facility that was designed for a different time in a different company.
And it just simply just not structured correctly for the future state of the business. So it's it's time to make that transition to.
Understood.
With the shortened calendar can you look back to the last time, we had that same calendar and tell us how much that impacted comp then because it's just tough to parse out what's going on with disruption versus the calendar in in December.
Oh I'll take the first Okay. Go ahead curse is not the answer is yes, we do have we did actually go back.
And Christ back through the history and then that's a good question Lora because we we.
It doesn't happen very often.
But it it's always academically interesting until it happens to you.
But it did happen and I'll, let person to answer your question. We did go back and look.
Yes, I'll just add a little bit to that we didn't go back to the last time that there was that shortened period between Thanksgiving and Christmas.
We did see the same same impact you know, we're not able to quantify that with certainty. So I don't want to share that publicly but what I can share is that we have seen some nice improvement. The January com, you know where in the early days the February and we hope we you know we see that continue.
But it appears to us that that hair cut that.
Haircut or color that occurred before the Thanksgiving holiday, we picked up in early January at some point in January.
Got it.
And then lastly, if it's if you hadnt more of a hair cut but you're still would have comped negatively.
How do you get comfort that your investments in Tech working said the relationship with Google. It's it's been <unk> long enough I would think for it to have an impact you've had the group in Silicon Valley for a while so how do you get comfort that those tech investments are the right thing to do with the comp bomb getting.
Worse not better.
[noise] Lawrence you May remember when we started down the path a technology investments the.
The board was.
Quite focused on generating the appropriate return on those investments.
To help govern the process, we went out and recruited a world class.
Director securing their gabelli.
If you've had a chance to look at or bio she is.
Extraordinarily gifted.
And the technology space.
And so we we convened detect committee the board on a quarterly basis to make certain that we are.
Utilizing our shareholders' money and a good way and we continue to feel.
Good about the technology investments, we're making when you think about it break it into three buckets.
Bucket, one is the Manchin, which is open salon, which essentially.
So us access to.
Users of Facebook Messenger, Alexa and Google.
For all the Google search functions.
But.
It's really important Laura is the is the investments that we've made.
Yeah.
And our back office Salon support capability.
That.
Program is in beta.
And as you think about that back office support capabilities thinking about it was a fee generating capability.
Oh that will begin to migrate this year.
And calendar year and asked to the third components.
Technology.
If this publicly disclosed on prior calls that we know we need to make an ERP conversion.
At some point in the process and we're looking at various options in that regard as well Oh, we need to bring resistant to the modern age on our back office technology functionality and we're beginning to think about that as well.
And we've we've talked about that in the prior calls and we intend to do it so.
Three basic functions.
Back office technology.
Yeah Swans back office technology for corporate.
And the Badging capability with Opus one.
Got it thank you.
This concludes the Q and a portion of the call I'll now turn the conference back to Q.
Well thanks, everyone for your attendance today. We appreciate your continued support and interest in Regis and look forward to speaking with you again next quarter. Thank you everyone. Good day.
Thank you ladies and gentlemen, this concludes our conference call for today, if you wish to access the replay for this presentation. You may do so by visiting richest Corp, Dot Com, India Investor Relations section of the website or by dialing 1888 Tuesday Rose 3111 to act.
That's code eight to seven four or 513. Thank you for all for participating and have a nice day all parties may now disconnect.
[music].