Q4 2019 Earnings Call

[music].

Greetings and welcome to the I'm Mediabrands fourth quarter 2019 earnings call. At this time, all participants are in listen only mode.

A question and answer session Buffalo the formal presentation, if anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Reminder, this conference is being recorded.

I'd now like to turn the conference over to your host Mr., Tim Peterman, Chief Executive Officer for I'd Mediabrands thinking you may begin.

Good morning, everyone and thank you for joining this is Tim Peterman Mediabrands CEO before I go into my prepared remarks, I would like to cover a few housekeeping items.

We issued our Q4 earnings release earlier this morning, as well as a release regarding the signing of definitive agreements for our recent $4 million equity financing transaction.

If you do not have a copy of these you may access it through the news section of our IR website at <unk> Mediabrands dotcom.

These releases are also exhibits to form eight Ks, which were filed this morning and can be accessed through our website.

I would also like to remind everyone that this call will be available for replay through April 29, starting at 11 30 am eastern today.

A webcast replay will also be available via the link provided in todays press release.

As well as on the Investor Relations section of our website.

Some of the statements that we make during this call are considered forward looking and are subject to significant risks and uncertainties.

These statements reflect our expectations about future operating and financial performance and speak only as of today's date.

We undertake no obligation to update or revise these forward looking statement for any reason.

We believe the expectations reflected in our forward looking statements are reasonable, but give no assurance such expectations or any of our forward looking statement will prove to be correct for additional information. Please refer to the safe Harbor statement in today's earnings release, and our SEC filings.

Finally, we will make references to non-GAAP measures on this call such as adjusted EBITDA. The information required to be disclosed about these measures, including reconciliations to the most comparable GAAP measures are included within our earnings release.

These housekeeping items now complete.

First and foremost in terms of the covert 19 situation and these uncertain and stressful time I.

Hi media continues to be focused on taking every necessary step to keep its employees.

Centers customers guest and their families safe.

We're also focused on continuing to provide our customers with the products and services. They love and we feel very fortunate as a company to remain operational and relevant as we continue to build value for our shareholders. There are many important updates I would like to cover today from our Q4 viewership successes.

Our Q4 challenging revenue performance.

Our strategic acquisitions afloat left interactive and GW.

To our timely strengthening of our liquidity, resulting from the $4 million equity financing transaction announced today, so let's get started.

In Q4, our customers enjoyed a new innovative program in calendar that included strong performances from our biggest brands like Indictor watches consult beauty and health Mackenzie child's home, Victoria with jewelry, Waterford and Isoboost beauty.

We also debuted strong premieres in the quarter like cabbage Bros. Closet Bear Creek cattle Stakes Green M.D. beauty houses Gasperis, Bath and body and new weekly fashion static shows fashion talks and wake up in style.

With these vibrant collections of brands products and guest and not to mention our amazing host like other halt and catch the Klepfer shopping skew was able to achieve a milestone in Q4 that it had not been able to accomplish in the previous five years.

In November shopping HQ is finally able to flatten its five year plus monthly decline in viewership. This achievement was also driven by shopping skews introduction of a static program in calendar. The first time ever for network, what I mean by static is that static shows will air with the same host.

At the same time each week. This is important because it provides our customers a reliable and predictable schedule. So they can form viewing habits.

Also allows our marketing teams the ability to promote actual dates and times.

And this business the television retailing, although viewership is not the same as revenue viewership is an early indicator for future revenue opportunity because customers in this industry tuned in and watch for awhile before they actually start to buy from a Q4 revenue perspective. It was a fixed report card although in Nova.

Remember, we did achieve strong viewership success critical for future quarters and in December we successfully reversed a five year plus decline and the watch categories 12 month customer file by offering a higher percentage of lower price point watches to capture new customers.

We still faced revenue pressures related to the consequences of a company's reduced merchandise planning that occurred in Q1 of 2019 for longer lead businesses.

Home and fashion as we successfully accomplished in both Q2 and Q3 to overcome this inherited one year merchandising challenge, we created a Q4 airtime plan to compensate for the lack of seasonal home and fashion products.

Revolved around increasing the airtime in consumer electronics or C and beauty to fill the vacant fashion and home airtime.

And see this Q4 substitution plant did not work as well as we had planned because several key CE vendors insisted on payment terms, we could not accommodate.

Yes, but we could only offer of reduced product assortment for a larger amount of airtime, which produced over rotation and lower revenue productivity.

Her perspective, she is mix of airtime in Q4. This year was 13% prior Q4 was 8%.

In addition to the CE revenue pressure, we also faced revenue pressure in beauty, because our top two beauty brands had to cancel their December visits because a personal reasons.

These cancellations were close to the actual scheduled air date. So it was too late for shopping HQ to suitably planned around these holes in our calendar all in all regarding Q4 revenue I am proud of the important achievements and viewership and customer file our teams did that help position shop HQ for success in 2020.

And.

We are completing the proper Q1 merchandising planning for this holiday season in Q4 in terms of implementing our strategic plan Thats centers on building a growing portfolio of niche television networks niche advertisers and complimentary media services. Our performance was strong we launched our Bulldog shop.

The network the first television retailing network focused primarily on celebrating mens products and services.

We also completed the acquisition of float left interactive I, leading technology provider delivering over the top or what we call O T T content and TV everywhere solution to media companies seeking to reach audiences through the OTI tea and smart TV distribution models, we believe float left interactive will help.

Shop, HQ, establishing new distribution on the OTI t. platforms to help combat the cord cutting occurring and linear television. Today. In addition, we completed the acquisition of JW, an iconic 114 year old American brand offering artists and crafted accessories and apparel.

The E commerce catalogs and retail here in Minneapolis, Minnesota.

One of my immediate growth strategies is to further monetize the promotional power of its national television networks by providing owned and operated advertisers like JV him with outsized opportunities for promotional reach and revenue growth. Finally, just yesterday, we signed definitive agreements for a $4 million equity financing transaction.

Led by El Gallo, Indictor, CEO, and founder and I Media's Vice Chairman I cannot say enough about how El Gallo has helped our company from being the driving creative force behind the victim to helping our merchants find new vendors to spur growth for both shop HQ and Bulldog.

To helping finance I'd Media's growth and these uncertain times with covert 19, we felt it was important to strengthen our working capital resources regarding the balance sheet. We closed the fourth quarter with cash up 10.3 million, an additional 5.6 million of unused availability on our revolving credit facility our credit facility provides.

It's up to a 90 million dollar revolving line of credit as supported by our borrowing base and a term loan which matures in July of 2023 as at the end of our fourth quarter, We had 53.9 million outstanding on our line and 15.1 million on our term loan.

Our inventory balance at the end of the fourth quarter was 78.9 million compared to 65 point Threemillion at the end of the fourth quarter 2018.

Regarding capital expenditures during the quarter, we spent approximately 1.8 million on capital projects, primarily reflecting investment and upgrades to our web site and infrastructure.

From a tax perspective, we have approximately $380 million in federal and no wells that are available to us to offset future taxable income in terms of our outlook because of covert 19, we're not providing guidance at this time, we do believe that television retailing will be less impacted than other businesses because we.

Serve our customers without them ever leaving their homes.

In closing I would like to say that these are important time teradyne media as we continue to create measurable growth momentum while at the same time navigating through the uncertain headwinds of coverage I T.

Thank you for your time this morning, I will turn the call back over to the operator for today.

Thank you at this time will be conducting a question and answer session. If he'd like to ask a question. Please press star one on your telephone keypad, a confirmation ton will indicate your line is in the question Q.

You mean for start to if you'd like to remove your question from the Q for participants using speaker equipment. It may be necessary to pick up your handset before pressing the starkey.

Our first question comes from the line of Thomas Forte with D.A. Davidson. Please proceed with your question [noise].

Good morning, So two questions first I'd like to understand your M&A strategy in general I know that you made a couple transactions of late and then second.

I was hoping you could do kind of a compare contrast, R&D disruption caused by the krona virus outbreak versus historical disruptions for consumer televised retail historically for example, Hurricanes, where a challenge you had a distracted consumer and then in some instances you had a consumer who couldn't engage with.

Trapiche cute because her powers out so can you talk about M&A and how Corona virus outbreak is disruptive.

Similar to.

Pass disruption.

I am sure thing, let's start with the first one which is.

What I call. It the disruption and then we'll get into the M&A strategy. So on the disruptions you I take it back into two categories, one would be the physical and one would be the mental right. So in pack challenges in particular for TV retailing, you're certainly seeing physical disruption in certain markets and you're right.

The most recent one was around hurricanes in the south and those disruptions or more difficult, but they are less or they are more short term because you can't physically access the linear television that a lot of folks.

Our not engaged and then so that it tends to be a bigger spike, but it drops down a fairly quickly with with Cove. It well what we're seeing it that certainly from if you wanted to measure up how we feel about our business model being uniquely situated if you will because we are on.

Television were not disrupted it all out we have products that move very quickly depending on what the customer one and we have a business model that delivered into their home without them ever leaving so the components of our business model certainly are well suited to navigate through.

Well it isn't it what I would call an extended physical and then extended mental situation with co. They tell the difference with cold it is that.

Physical is not a big challenge here all the people are at home. We we have a business model that situated for that where I think that you'll see impact with all TV retailing.

Is that.

It's not a snow day, everybody is not at home just wondering what what they're gonna do there's there's tension in the air and it's the uncertainty around when and how the.

The state homes will will be changed and what people are thinking about personal employment perspective, a lot of those things are on People's minds and as that that is a longer term. If we don't think it is certainly a spike say natural disaster, but it's an undercover.

Right and it didn't undercurrent that you know very similar to what we saw you know it at the time when at 911 went out in New York and it was it move it it recovered, but it is a longer term and it's not edge mccarroll at the beginning that makes sense any follow up from that but am I answering that question.

Yes, it sounds like there's multiple challenges.

It's a C overnight seeing situation causes.

Some ways there similar to other profile news events.

And then some of them are unique because it does it in any way, though give you greater confidence longer term, that's the transition to digital will accelerate and the when the economy settled.

You'll have kind of a better opportunity in that regard.

Well short term and long term I do think.

Yes, I television retelling have very strong opportunity that and and I don't think we will be as an industry. I ask you can see disrupted as much as other businesses, whether that's television advertising supported or television retailing or retailing in terms of our transition I do.

I think.

There's an article I could they will this situation accelerate direct to consumer I'm not too much digital that direct to consumer businesses, whether that it'll be the resurgence of catalogs television retailing is obviously natural digital is it's part of that as well and I do think that.

The longer term impact will be that direct to consumer will begin to I think take more share from retail and up a long term consequences of the situation.

Right and then the overnight.

M&A so as we talked about before I think that the last call. We think about M&A into lens is one we think about M&A and how we can.

Inorganically help shore up our home and fashion businesses that were not really planned for back in Q1 2019. So as we every began this turnaround in may we knew that with businesses that take nine month planning and then getting it and buying a getting in India warehouse media.

To the customer that really wasn't done as much as it should have been done I'm at the beginning of 19. So when we look at you know Q3 in Q4, the opportunities where do you sell its most active we're in those categories. So for example, it's all US do the licensing arrangement with Shaquille O'neal for.

The home that was an important part of shoring up that category because that work has been done in late 18 and 19 you also saw.

I'd be very curious in fashion with JW fashion accessory another long lead business that wasn't properly planned for and those help accelerate recover faster from an inorganic M&A perspective. So that's one land right shoring up our core product categories. The other reason.

That.

We look at it from.

How we implement our growth plans. So as you look out over a year, we're not only going to fix shop HQ, but from an investor perspective, we're also evolving into what I described as an interactive media company. So it will have a fixed shopping few but it will also have multiple.

Mitch television networks right, we just launched bulldog than what we have shopping HQ, but as it relates to M&A you sell also acquire slow left interactive when we think about our freight plan, which is very simple it's to grow a portfolio of niche television networks.

Advertisers are branded or on our air as well as niche media services. Those media services are things like we're already doing what threepl, but they're also like whats left does which is.

As a service for brands immediate companies they create a eco system R&D over the top platform and as we think about our M&A and we think about media services.

The applications and services around Oh, Gee are very important not just for our brands, but for US shopping you as a business as we know although the older customers. Our core customers are not cutting the cord it any meaningful pace today and next generation of customers those thing millennials are not.

King is much linear television and some ever really did we wanted to make sure that we are beginning to be more active in platforms that are.

More widely absorbed by the next generation customers.

Good Thanks for taking my question is done.

Yeah. Those are the two largest thanks Tom.

Thank you. Our next question comes from line of Al experiment with Craig Hallum Capital. Please proceed with your question.

Great. Thanks, very much for taking my question and I I, certainly hope that everyone in the media brand family is doing well during the during these tough time, you know a couple of things I wanted to ask about.

It's just the viewership obviously that has been challenging for a number of years now it certainly sounds like that had started to get better.

Fourth quarter.

You talked about what what's been driving that I mean, it sounds like the static programming.

Maybe a little bit more predictable for or your shoppers and your viewers to find you I mean, how have those trends continue to show improvement since November when you started to see that that curve flattening so to speak it and that just didn't in more recent bond with with everything going on with co bid and with the law.

To Cook with Jack I'm curious, if you've seen a good response to viewership and be shocked programming had launched it if that has been bringing in new users in New York add as you'd Hogan and if you're seeing some of those New York stick around Washington, or the other programming on shopping skew.

Well I like slow thanks for that that question I believe it or are there were four question to navigate it but it really is around.

How has viewership how are we making progress on your shipping what does that mean for 2020 and what does it mean for our revenue model. So let's take a step back and say that yet viewership. If you look at over the last three four or five even.

Can go back seven eight years with shopping HQ, I'd say or.

As an industry TV retailing, probably four or five years ago began to really populate it.

Ah program in calendar with more static shows very similar to what entertainment networks have been doing Cindy.

Very beginning you build your viewership for that we one hour time, one data time and you have to find your way based on competition to begin to take market share in the great thing about our our business shopping skew in TV retailing called a 14 billion dollar oligopoly, there's there's not a lot.

A lot of competition out there because it has such big gating factors around these and so.

We take quite a bit of money annually and so we had the opportunity to take share. When we can do a couple of things really better than we have in the past. The first thing is to be able to be consistent for the customer. So they know when their favorite host when their favorite show and brand it on it.

[laughter] Fascinatingly simple thing to say.

But if it's amazing that we have never really done that in south HQ. So the first thing that we did in May when we came when I came back is to say, okay, let's begin to test it and as we tested more and more static shows we quickly realized that yeah actually.

Does work just like we thought it would and it does work just like it works and really every other entertainment and he will be telling for them. So in Q4, we began to launch more and more of these shows and.

Year over year, we saw the viewership growth. So in Q1 at this year, we really started to ramp it up and it's again showing success and it so the program in calendar being fixed or static is one area having brands that are irrelevant.

Is the second and we certainly had great launches with new Cheeriest brands or customers that were curious about our brands, but it was also the tonnage is done by our core brands. The ones that are with it every day and making those shows more interesting whether its jewelry beauty health watches.

Those core brands, we've really worked on the recipe avanir execution and I think that recipe improvement starting in early October through December really engage the customer better because if you go back you know I used to run a network called USA network and everybody would talk about our original programming and how.

It was amazing and how that drove all the ratings, but what what folks really didn't grad plus is that [laughter] Walker, Texas Ranger running four times a day was really the trying to get the ratings and so it's your bread and butter that makes it different from a rating perspective and so it's our core brands that are really performing that are making a difference why there.

Were shipped it is growing.

Okay. That's a that's definitely helpful. Thank you there for that for that and then.

Also about the financing arrangement that was that was announced.

This morning, I think you'd mentioned in the prepared remarks than in the press release on some some issues with vendor financing that impacted the fourth quarter of you just the this new financing help you with wrapping up some of that that Russia, or if you could just walk us through a little bit of Oh, you know the transaction there.

Flexibility that will give you.

Sure. It lets talk about Q4, and then we'll talk about the financing. So they are somewhat unrelated but in the same family [laughter], which is our top priority in 2020 is growing our free cash flow and improving our working capital and that's done to a variety of different thing certainly this.

Private equity or this is private investment from AOL.

We'll talk about the second was very helpful. Better inventory management also very helpful. All of the elements of working capital, including profitability or what what make a company like our successful but lets go back to Q4.

The only family of business that we operate in its good that doesn't it has very big national brands that are that we are not critical for their.

Development is really consumer electronics, our value proposition to customers with consumer electronics and why we do it every holiday season is because of our value pay it is a distinct competitive advantage in the marketplace and our consumers come to our air and they they like the way we can explain the.

The product they like the way, we can educate them and they really like our value pay as a as a way for them to engage and buy from us.

And so that's a very good thing from a consumer perspective from a vendor perspective, it's a little different from the vendor perspective. These very big companies are now today.

Asking for payment terms, where you're paying it cash advance you're paying it upon delivery and our business model doesn't really work that way our business model works on what are what are standard terms in the industry and so as we moved into Q3 and even given the they request from these larger CE vendors for those payment terms.

We we had to make the decision that we would not be able to provide the assortment.

That we intended to provide based on us not being able to perform at that at that payment terms. So we had to pull back on the on the strength of our assortment and go with the items that.

We're more normal for our industry and so that was that created pressure for us in Q4, because they already had the depend on the consumer electronics industry, because as we talked about on the earlier question. We knew going into Q4, we were short on the home in fashion seasonally appropriate price.

And we were able to very easily navigate around that in Q2 in Q3, because consumer electronics, what is not a very big category, except in Q4, and so that's why it was a bit more dangerous to with the plan that we that we had to exercise, but it was the plan. We the plan we had at our house.

And we navigate navigated through the best we could but that's why you saw the the unusual dip in Q4 and you saw us navigated around the beginning challenge we had when we inherited that and why we performed much better in Q2 Q3, because it just wasn't something that was seasonally I'm a big deal.

So when you get to the Q4 solution around E. Around this payment terms then you can sit today and the announcement, we made with the 4 million dollar equity infusion first and foremost out you know allo Invicta continue to as I said in my prepared remarks.

To build value for us as a company so not only in driving a great vendor of ours, which isn't Victor but also as we know al has been involved as vice chairman and helping secure other brands in other categories and fashion and beauty and others. So with that equity investment, it's really about where we are today and if you look at.

Across the spectrum and the uncertainty of covert 19, I think companies or are really taking a very sober look at their balance sheets and make sure that no matter, how well you how well prepared you are for a surprise you want to make sure you had the balance sheet to move through something like that and so we thought it was the right.

Time to to bringing this this equity to make sure that we from a working capital perspective have the gunpowder to move through this.

At this kind of uncertainty.

Great well that makes a lot of Ben. Thank you for your answers then and again I wished wish all the best view in the whole I'm media brand family this year.

Thanks, Alex.

Thank you, ladies and gentlemen, as a reminder, if you'd like to join the question could you. Please press star one on your telephone keypad.

Our next question comes from line of Mark Argento with Lake Street Capital markets. Please proceed with your question.

Good morning, Tim.

Talk a little bit about cost structure.

<unk>.

Streamlined cost structure.

Those are more opportunity to take some additional costs.

Hey, Mark how are yet.

Absolutely.

You think about cost structure and you think about.

Creating a necessity right. So I like to think about things as we move through this turnaround I call. It internally that a white sheet of paper. So when you ask are there more costs are more efficiencies to to be done there.

There aren't any cost efficiencies to be done it we're continuing to do business as norm on continuing to repeat what we've done historically, but just like with the programming calendar and moving that to a static calendar the idea and the strategy from a consumer product proposition.

Was why we did that because it is driving viewership. However, also from a cost per se, but perspective. It also requires tremendously less.

In car.

To.

The cost associated with chasing every minute of every day and surprising the customer.

Is it was like a double double pick up not only are you are you improving your relevancy to the customer but from a cost perspective, and if its infrastructure perspective, you don't need as many you don't need as much cost in order to do that really well. So we take that white sheet of paper with everything we're doing.

And we are finding that out of creative necessity. When you do that process you have absolutely no no connections to what the muscle memory was in the organization, but more about how does the customer experience improve we are finding and continue to find ways that improve the customer experience and.

Reduce our cost the driver, though always has to be how do you improve the experience for the customer how do you improve the that revenue opportunity and with the white sheet of paper that has at least from our management teams perspective always yielded lower cost.

Got it.

The.

Yeah. It was kind of the seasonality of the business in the working.

Working capital needs, how do you.

Need to do some additional capital.

To get through peak holiday next year.

What how are you looking at things right now.

Yeah.

Uh huh.

[noise] a great question. It's the one that we think about as we as we plan to business. So the first the first headline is is that this business is a category by category business.

And the the way this business has to be fixed is by growing the customer file and that.

So you have to grow the customer file the only way to do that is to engage your base and to bring in new and so as we think about working capital with that being the lens that we're looking at a true we look at each of the businesses and we decide how best to engage the customer keep the ones, we have how best to grow revenue because working.

Capital efficiency is not just about profitability, it's about inventory management, it's about how many times you turn that inventory, it's about vendors, but what are the the elements of how you guys are working together and so as we think about 2020, we had stress test.

The the business from a sourcing perspective from a revenue perspective at a cost perspective, and we feel good about our balance sheet and where it is today and with the equity we just raised to move through that and execute our plan in 2020 and that is as we talked about before with a few surprises that we just don't know it's the great.

Mike Tyson everybody had the plan until they get punched in the face and that's what we are that's how we view it so our balance sheet is equipped for those surprises but.

But so so when you get to the core of your answer which is a category by category.

We look at each one of them and say Okay. For example, as we talked about our shop HQ business being a niche business there as a category that we have never really done well in that we as as as a business have tried to do well in for probably five years, it's weaker.

<unk> home sought to bed Lenin's, it's a lot of different things that previous administrations have tried to do well that because that's what QVC and HSN do so well at and so you know last fall call. It in the at the beginning of Q4, we looked at that category and we looked at our thesis and said listen we are a niche television net.

We're not trying to be all things to all people. So from a working capital perspective, we actually eliminated the home soft category, we're not trying to buy inventory in there that continues to grow we're not trying to then by inventory that burns off at cost below below what we paid for it because that's not what we do well.

So.

As a category by category, we look at the working capital requirements, we look at how well we do it we look at the vendors that we had when we look at how our customers react to it and so 2020 is about being very focused.

On building businesses, attracting customers, but doing it with working capital within our means and and we make decisions and trade offs every day, but it's always about the customer so homes off didnt have the customer base didnt have the inventory a profile that we like Didnt, we acquired a lot of working capital.

So we move that out so that's what you're going to see from us as we move through at any surprises that we might incur along the way, we'll make those kinds of decisions.

Got it thanks to them appreciate the color.

Yep.

Thank you Mark.

Thank you. Our next question is as follows from the line of Thomas Forte with D.A. Davidson. Please proceed with your question.

Great. So Tim you sort of talked about my one of my follow up questions, but first off I want to know internally how are your measuring the performance of Bulldog.

And then second I wanted to ask more I guess, if the industry level. However, given the current situation with distracted consumer and economic challenges.

The industry level, how do you think about the opportunity for the health and wellness category.

For the home category, then for the apparel category.

Thanks, Tom So two questions one on the Bulldog and one on just product assortment.

As it relates to I imagine, you're saying to the current situation with co that are more broadly correct.

Yeah, because I think that theres elements of health and wellness that are well suited to shop, HQ being able to explain to the consumer the benefits of a product that consumer that's very interested in health and wellness given some of the challenges on the beauty front I see both opportunity and challenges to the extent that are more.

Individuals are working remotely meaning working at home therefore, they may or may not be leaning into beauty, but yes things of that nature.

Yes, so for let's let's talk about that so first on Bulldog Bulldog has.

Obviously, a very important component of our agenda, which is how do we double down on the strength of what we do well a choppy HQ you've heard us talk about that unlike any agent center QVC, 25% of our customers. Our mail that is why we moved into launching Bulldog shopping that work because that strength, we have with the vendors that we have.

Like Invicta, we can do that a better than than anybody else from a from it existing asset perspective. So we measure success on Bulldog on how we feel the recipe and the connection we're making with the products that we're selling in the programming we did delay given the currency.

Relation with co that we've pushed back the the growth of the distribution into the more the Q3 Q4 phase because we did not feel is the appropriate time to ramp up dramatically on the distribution because of the current situation. So what we're doing today's we're making sure that that what I called before the honor.

Our execution or the recipe is done in a way that is much is for the male customer and that we're finding the right products for the male customer whether that.

Oil and and collectibles or whether that tools and here around what is the on your execution that best suit that and so we're finding all sorts of successes and things were not doing as well as we need to be Unbilled dog and so we're using that extra time that.

We have now with before we go more broadly with it to make sure we get that recipe right Bulldog is a long term strategy for us. It doesn't involve just linear television. It involves search engine marketing is it involves.

Distribution with in other services like regional sports networks, but the concept of the male customer and how best to give him a shopping list that he can.

Knocked down or that has a a female can knock on behalf of for male is what we're focused on there and the definition of success.

From a monetary perspective is not yet in evidenced because of the delay in distribution. So that's the answer on Bulldog to do that squarely address your question.

Yes. Thank you.

Okay. So then on product.

Yes.

First.

We are uniquely.

Even even more so us than our competitors uniquely positioned to be able to move very quickly to change what is on our shelf. So we have an amazing talent Terry do grow with the brand consult and we have a an amazing vendor.

With consult that George automotive, but in the business for quite some time. So we have navigated to make sure that we have the health products and the beauty products that are most relevant today.

For our customers and it is when you have someone who has an on air Trust carries a a world renowned dr. He also has is well known from the audience is from his other shows that he has on and so it's very trusted on our platform and on television more broadly so.

He is bringing in an awful lot of new customers as he educate folks.

What is the best.

Type of Ingestible in this day and age to keep yourself healthy what are the best.

Kind of we have a certain type of cleaning solution that he is in surgery that we've been providing the customers that they continue to kill for hours for example in the current environment. So that that's one.

Element that from the health, whether its injectables or from a planning solution perspective, we have great brand and Terry being our best around how we address the consumer need, particularly in this environment, but on the one side you have that on the other you have really what is working.

Today, and what customers really want today is the notion I described before which is not so much digital but direct to consumer. So food. For example, we are we relaunched our three hour weekly sizzle.

You know that is on Sundays that is designed to be every week about the kitchen solutions for the kitchen.

A what I call. The one two punch around what we're doing for a customer for food, which is very has grown dramatically over the last 60 days.

So fiddle of course is a static show, but the big hit that we've had and the big thing that customers that really responded to and I don't I don't mean that I'd like to on the note, but the big thing would be Shaquille. She killed a show that we launched in March really has because of.

Customer demand has actually splintered into two different shows rights, we have a Wednesday night show that is cooking learning to cook with Shaquille and so the customer participate on.

Yep products that he has recipes that he does but it's really shaquille with learning to hook with these different items and the customer. It is taking that journey with him and that is a or something that has worked really well from a ratings perspective, and it's coming along from a revenue productivity perspective, but as a result of.

Everybody staying home these last call it 60 days.

The and what has worked really well it is learning to Cook with Shack is all the food and the different assortment of food and so on Friday night now we have a we just launched a show with Shaquille. Okay. It's really eating was shaquille I did this broad assortment of different types of food and and just really sitting down and talking we should keep.

Alan why he likes this kind of food and how he discovered this particular, Brandon and it's that journey of discovering different kinds of food and eat and just the social aspect of that you know we have shaquille with his family and you know you've got people running in and out kits running at it out and you know it's just a.

I'm much more related will experience and they are two different customers and so what we're finding is that there's a dedicated need for food and there's a dedicated need for health and beauty and in terms of organizing your home that is also started the peak and we've actually addressed that wasn't static shows as well so.

To your question about what are the categories.

That would be given becoming more popular those would be the ones that I would describe is becoming more popular today and and and we haven't really strong.

What I would call experts with Shaquille in food, that's what I have another expert with.

We have what we call Battle Creek, we have a chef that were that were launched will and he has done really well in that resonated with our audience, but then on the health side. We're just as I talked about before we're relying on the strength of our core brands our trusted personalities.

Well with ice are also very trusted we have started to show a weekly show with her where she is actually just educating the customer on the different types of beauty <unk> home. Jennifer Stallone is doing the same thing very trusted brand, where they're talking about how do you take care of yourself from the beauty perspective at.

Home and and Jennifer is right there with it her home right and she's talking about what she would do it how she would do it and it's really this is.

Kurt curator distressing curator that is that that relationship is becoming even more important and in my view over the last 60 days and that's how we're responding to it is having our our trusted folks in their home talking to the customer which is where they are today exclusively at their home and so that I hopefully that addresses.

Your question.

Yes, Thank you Tim.

Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Mr. peterman for any final comment.

[noise]. This I just want to thank everybody again for their time. This morning their interest in our company we are.

Excited as I said about our momentum in the little things. We're doing every day. We are obviously I'm aware of the you know the cautionary lens as it relates to code at 19 in the situations there and so as I said before our top priority in 2020 is improving our free cash flow and improving our.

Working capital the way, we are going to do that is by growing our customer file, which then improve.

The prospects of all the other elements that we've talked about.

Well, thank you and well talk soon.

Thank you. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.