Q3 2020 Regis Corp Earnings Call
Ladies and gentlemen, thank you for standing by welcome to the richest Corporation's second quarter fiscal 2020 earnings call. My name is scale and I want to your conference facilitator today.
This time or purchase Oh, no less than optimal following management's presentation. We will conduct a question then on sufficient.
If you would like to watch the question trying to time piece Press Star one on your push wasn't pitiful.
If you wish to withdraw your question Keith first off too.
As a reminder, gets cold is being recorded for the back and when you bought it up by approximately twice PM central time today.
Now I'll turn the conference over to be selection, maybe can you find that piece color.
Thank you Daniel good morning, everyone and thanks for joining.
On the called me today, the accused Miller.
Our Chief Executive Officer persons up for our executive Vice President Chief Financial Officer.
Eric Bakken.
Never franchise.
And then either up or general counsel.
Before turning the call Auvi Q there are few housekeeping items, Georgia.
First.
Our earnings release and today's conference call.
Include forward looking statement.
In the meeting other private Securities Litigation Reform Act.
Fine.
Forward looking statements are not guarantee the performance.
And by their nature are subject to inherent risks and uncertainties.
It could cause actual results could differ materially.
Such forward looking statement.
Please refer to the company's current earnings release.
Recent I can see filings, including our most everything came through.
At June Thirtyth, two dozen making 10-K.
For more information on these risks and uncertainties. The company undertakes no obligation to update our order by any forward looking statements to reflect events or circumstances that may arise. After they are the school.
Second this morning conference call must be considered in conjunction with the earnings release, you should this morning, and actually there's actually two filing.
Including our most recent thinking.
On today's call you'll be discussing non gap.
Adjusted financial results.
Exclude the impact of surgeon.
This event.
Another discrete item.
These non-GAAP financial measures are provided can facilitate meaningful year over year comparison.
But you're not be considered superior to.
Or is it substitute for our GAAP financial measure.
And should be read in conjunction with definition that you're sort of curious.
A reconciliation of these non-GAAP financial measures.
The most directly comparable GAAP.
Financial measures.
Have you found in this morning's really.
Which is available on our website.
You W. W that we get script dot com.
Backslash Investor Relations.
With that I'll now turn the call over to Q.
Thank you does and good day.
Although a lot has changed in the world and in our business. That's her last earnings call.
We remain committed to a strategy.
Strategy that we believe.
Enhance shareholder value.
I expect reach to become a company with significant long term potential English weekend.
All be proud Dan.
A multiyear strategy is built around completing a refreshed franchising plan to transition our company owned Shlonsky capital like model.
While positioning the company for sustainable growth in units sales and profit.
The key elements of our strategy are unchanged and equally.
Converting company owns launch two franchise for that's we reported today approximately 74% for portfolio that's already been franchise.
Transforming the business with technology, particularly customer facing technology.
So on management systems and digital training.
Well, eliminating non central bomb strategic DNA.
In January we eliminated approximately 19 million in annualized DNA calls.
And we do intend to do more to rationalize your cost when the time its right to do so.
We've been upgrading stylish recruiting and training with an emphasis that's I guess I jumped on digital training.
You can restructuring our portfolio in order to focus on five core branch the fat bikes.
We expect to create the appreciation and especially in their markets.
And we've been revised watching all merchandise business, focusing on and brands like decide line and Washington.
Well, although our core strategy has not changed.
Yes.
So with gently adapted our slot operations for the new normal what's an intense focus on safety.
In March this year, various state and local government mandates, resulting from the government Nike have done a.
Forced us to close to five right.
Substantial majority of our franchise and company owned Swatch.
These closures significantly impacted our fiscal third quarter results and we'll continue to negatively impact our results in the fiscal fourth quarter.
I asked the majority of our salons and base, our franchise portfolio and copper young portfolio.
The main closed during the balance sheet April one day.
Now to mitigate the negative impacts of these salon closures you may recall that we took immediate action, including takes training program.
Wage reductions.
And aggressive management of their purchasing a payable cycles.
After the beginning of this week approximately 68% of our portfolio House reopened that's a combination of both our franchise and company on swaps.
We are relaunching, our salon safely, but at a brisk pace and we expect to reopen roughly 81% a bar salons why did you end of June this month.
As we reopened salons, the health and safety of our customers and stylists.
Has been a continuous to be our highest priority.
As we previously reported a cross functional leaders team.
Led by Eric Block and then also included a number of our franchisees.
Worked with infectious disease specialist at the University of Minnesota Medical School.
To ensure that the health and safety of our customers and spotless wouldn't be at the forefront.
Of our slot reopening plans.
These positions provided recommendations on the proper PPG and additional safety measures said, it's been communicated.
Well the company's entire slot portfolio in order to help educate prepare the company's franchise partner so stylus for operating salons safety.
With the safety and puts us in a cope with my team environment.
Moreover, in a manner consistent with our company values.
James Challenge on the arc team and merchandise, including pre Oscar.
Proactively and pass it to be very significant amount of capital.
Personal protective equipment required to safely reopened our salons.
In retrospect that proved to be a very good decision you're ranges.
Our new internal slogan is safety first unfair socket, which I think.
Emphasizes the company's focus on the moral imperative and doing the right thing of course, it's never wrong to do the right thing.
Despite the hibernation period caused by the can damage.
We continue to make meaningful progress in all areas of our strategy and remain committed to our transformation to a fully franchised capital light model.
On an ambitious timetable.
During the quarter, we sold 375 company owned salons and transferred the salons to our asset light franchise portfolio.
But the ended the quarter as we reported approximately 74% of our Salon portfolio has been franchise.
We've also previously reported that we expected to substantially complete our refranchising, but again that this calendar year in 2020.
Given the hibernation of our business during the pandemic.
This goal maybe somewhat delayed.
But.
Frankly, I'm still optimistic we will substantially complete transformation on an ambitious timetable.
Our team is doing great work, despite the challenges of a pandemic.
In May Carstensen, our finance team working with advisors that Guggenheim.
Successfully amended our credit facility.
Expires in March of 2023.
We believe the of none none of our 295 million our revolving credit facility.
Give us the flexibility of debt capacity to manage the business through our strategic transformation.
As well as they all going generate the ongoing uncertainty that's generated by the Coke 19 pandemic.
I think we're in great shape as it relates to that.
Do amendment and our balance sheet.
As we previously said they've done this capital like excuse me covenant like.
And being covenant lite, meaning if we were able to remove all prior financial covenants, including the net leverage ratio in fixed charge coverage ratio.
And we only added a minimum liquidity covenant that we are.
Comfortable with.
Additionally, the minister glass, the company's lenders security and the company's assets.
In closing I want to thank our franchisees in the choices for her many contributions to our business. During this extraordinary period the company's nearly 100 your history.
Also I want to recognize the University of Minnesota as medical school like last year support during this tragic and done Nick.
I'm also grateful to each one of you for your continued interest and support.
I'll now turn the call over from person to take you through the numbers persons.
Thanks, you and good morning, everyone.
You mentioned the last few months have done after that.
We are committed more than ever to our strategy and we continue to be pleased with the results of our restructuring and the cadence of arbitration process given the major disruption of the covered 19 pandemic.
We reported this morning on a consolidated basis third quarter revenues of 153.8 million, which represented a decrease of 104.6 million or 40.5% versus the prior year.
Year over year revenue decline was driven primarily by the conversion and that 1581 company that's a lot.
For the company franchise portfolio over the past 12 month, and the closure of 200 and eat nonperforming flight I've watched the majority where cash flow and they get up and not essential to our future claims.
Late March we made the decision to refund of friendship.
Moving onto our franchise partners approximately $15 million.
Previously collected cooperative advertising on contribution.
Many of our franchisees are able to and have taken advantage of the government program, which will help them because we.
We want it provides an immediate cash relief I refunding previously collected.
Hi.
Given the near term challenges facing our franchisees we concluded that just accommodation, but he was the financial burden associated with the government Andy that hibernation Oh the franchise bonds during the pandemic.
Also contributed to the decline in revenue however, it had no impact on operating income.
These revenue headwinds in the quarter were partially offset by a 2.1 billion dollar increase for franchise royalties and fees.
And a $31.8 million Red Robin you recorded in connection with them at least accounting guidance adopted in the first quarter fiscal 2020.
Well I wouldn't normally not addressed technical accounting matters. Its important for me to comment on the 45 million dollar onetime noncash goodwill impairment charge related to our company owned for on site that we recorded during the quarter.
This was a full impairment of company all good well, it's nice that starts with highly technical in nature and does not have any economic impact on our business model.
Prior to the coordinating crisis. The company was on track to be recognized did well over several quarters as part of our ambition stretching.
The economic disruption caused by the pandemic resulted in a charge this quarter, which eliminates feature derecognition target.
Absent the goodwill impairment charge the company on goodwill would've been be recognized over the course of our transition to a franchise.
For clarity with a full impairment this quarter there won't be no further good won't be the recognition.
Third quarter consolidated adjusted EBITDA of $6 million, what's very light you might yen or 84% unfavorable to the same period last year and was driven primarily by the decrease in the gain associated with Upsale company owns a lot of 17.8 million at the elimination of the EBITDA, but have been generated in the prior year.
Or something that 1581 company owns one set of installed and converted to the franchise portfolio over the past Talbot.
Partially offset by significant reductions in DNA and marketing.
As previously discussed you should expect the gain from the sales company owns a lot to continue to diminish as we enter the later stages our transformation.
The Cobot 19 pandemic also contributed to the decline in the third quarter.
Adjusted EBITDA by approximately $8 million due to the government mandated hibernation slot caused by the Panda and a decrease in guest visits leading up to this one called closure as customers across the country began to shelter in place.
As a reminder, all of our company on pool.
Oh, it's near the end of March as did the substantial majority of our franchise.
Yes of course has continued into your following me and substantially ended revenue generation. During this period you expect your experience a much greater impact on our fourth quarter results.
Although the pandemic kinda dramatic impact on our earnings.
The opening exelons at a rapid pace.
If you mentioned approximately 68% of our portfolio has reopened and we anticipate that as we enter a new fiscal year majority of our business will be operational.
Please note that excluding discrete items and the income from discontinued operations. The company reported decrease third quarter 2020, adjusted net loss of four and a half million dollars or 12 cents per diluted share as compared to adjusted net income of 15.4 million or 37 cents per.
Hi, good share for the same period last year year over year earnings decreased in adjusted net income was driven primarily by the decrease and adjust the game can let's say on slide.
To franchisees and corresponding elimination of adjusted net income that had been generated in the prior periods combustible plot.
These decreases were offset by a decrease on adjusted tax expense due primarily to the impact as a valuation allowance.
On a year to date basis consolidated adjusted EBITDA of 52.8 million was 30.1 million or 36.3% on favorable precipitate period last year.
The change it includes a $6.9 million increase and the game, excluding nine wells <unk> non cash goodwill derecognition related to the year to date feeling conversion a company on salons to the franchise.
Excluding the impact of the game in the non cash goodwill impairment charge.
Headquartered your debate adjusted EBITDA totaled $1.9 million, which was 37 million on favorable year over year and like the third quarter results. This unfavorable variance is largely driven by the elimination of EBITDA.
Late into the fold and transfer funds over the past 12 month.
Looking at the segment specific performance, starting with a franchise segment.
Third quarter franchise royalties and fees up $8.7 million decreased 14.1 million or 61.8% versus the same quarter last year.
As I previously mentioned this decline in royalties and fees is driven primarily by the onetime restructuring of approximately $15 million. A previously collected contributions the cooperative advertising fund, which had no impact on operating results.
The decrease in advertising SaaS revenue was partially offset by an increase in Breo P. Due to an increase of franchise location.
Product sales to franchisees decreased $1 million year over year 15.3 million driven primarily by a 3.7 million dollar decrease in products all the PBG, partially offset by increased franchise one pound.
Franchise same store sales lung favorable 4.1, but then we believe negatively impacted by the be discussed leading up to the government mandated closure.
Third quarter franchise, adjusted EBITDA of 11.5 million.
Proximately.
$1.7 million year over year difference I can open the French Iceland portfolio, partially offset by lower margins on franchise products sales.
Performance of our franchise portfolio was also challenged by the Cobot 19 pandemic as was operational complexity of Onboarding new owners entries listening.
On to our more experience Warner's I'm on the buyback.
Year to date franchise, adjusted EBITDA of $46.4 million improved approximately 8.3 million or 29.7% year over year.
Looking now at the company on Salon segment third quarter revenue decreased 123 million plus 55.7% versus the prior year 'cause 97.9 $9.
This year over year decline is driven by a consistent with a decrease of approximately 1561 company on bonds over the past 12 month.
But you can which can be bucketed into three main categories.
The conversion of 1628 companies blonde tore asked that like franchise.
Over the parts of the past 12 month of which 375 were sold during the third quarter.
Second the closure of approximately 200 and eat company on flat over the course of the lateral.
Most of which were underperforming salons that lease exploration and as I noted earlier not essential to our future strategy.
The net.
Company on Salon reductions were partially offset by 254 salons that were bought back from franchisees over the last year and 21, New company owned organic farms. During the last 12 month, which we expect to transition to our franchise portfolio in the month ahead.
Third quarter company like one segment, adjusted EBITDA decreased $18.5 million year over year.
Negative 1.3 million consistent with the total company consolidated results the and favorable year over year variance was driven primarily by the elimination of the adjusted EBITDA.
Generated and the prior year.
Total company on salons that were sold and converted into the franchise platform over the past calls on the.
The quarter was also unfavorably I'm favorably impacted year over year by that reduced got to visit and very cold or something else. One due to the cobot 19, Panda and increases the silence minimum wage and a decline in same store sales in our company and plot pretty called the 19.
I think your do they pay for company owned pull on consolidated adjusted EBITDA of $14.5 million 51 thing on.
On favorable versus the same period last year.
Dan favorable year over year variance is driven by the elimination of the adjusted EBITDA related to the Golden transcends profitable at about 12 month.
Partially offset by minutes management initiatives to rightsize the support structure in the field of course, it's important to note that our company on Salon performance will continue to become less critical to the future trajectory of our business as we continue our conversion to a capital light franchise.
Turning now to corporate overhead third quarter adjusted EBITDA of 4.3 million decreased 14.4 million is primarily driven by the 17.8 million party kind in that game, excluding non cash goodwill de recognition and the sale of company on slot.
Partially offset by the net impact of medicines management attention to eliminate noncore and the French LG any expense and lower year over year equity compensation due to the reversal equity expense related to perform a pool.
Wonderful you're probably not.
In January based on the improved visibility into the speed of our transition we began meaningful reductions NRG any expenses by eliminating approximately 290 positions, including 15 contractors across to you I think Canada, which is expected to result in $19 million with annualized GE any expense savings.
Lastly, I wanted to point out that transition cash proceeds during the quarter, where approximately $49000. That's a lot compared to approximately 71000, plus one in the second quarter fiscal 2020.
You may recall from our previous earnings calls, we've cautioned that New York transitioning more secure sauflons this fiscal year, which could bullet that for piece first line.
The cost of converting some of these while that's part of our brand consolidation efforts along with more Mark South ambition.
Additionally, the cobot 19 penned down I talk with the temporarily suspend the vendors and process at the end of March and we've just started we started the process.
Looking out the balance sheet at the ended the quarter, we made a 183 million dollar draw on our revolving credit facility.
This drop was done to increase our cats cash position and preserve financial flexibility. Unlike the coal that 19 pandemic.
Increased our cash balance to $241 million out that's the end of March.
Two previously mentioned in May we amended our revolving credit facility that expires in March 2023.
The successful and then that provides relief for the maximum consolidated net.
Leverage covenant and minimum fixed charge coverage ratio covenant.
In Arkansas pulled on different process, we have known for sometime but our existing credit facility would not be adultery had foreign and state franchise business.
And that we need to reengineer credit facility beneath the opportunities inherent in our new business.
We're very pleased with them your credit facility turns and appreciate the support of our bank Syndicate.
We believe the Hillman network provides a long term flexibility we need to see our strategy through to completion and I need a lot could successfully navigate the uncertainties caused.
Yeah.
In summary, our third and fourth quarters have proven to be unprecedented.
In our history. However, despite the hibernation of our business, we successfully amended our credit facility.
Continued forward momentum of our condition strategy. They continue to believe that we will complete our transformation and be well positioned to generate long term shareholder value.
With that I'd like to thank you for your continued support and interest in region.
And I'll turn the call back together for question.
Yeah.
Thank you you increased and the question answer session will now begin.
She would like to ask a question. Please press star one she would like to withdraw your question Pete first half two.
First question is coming from a Steph Wissink from Jefferies. Please go ahead. Your line is open.
Thank you good morning, everyone, Oh, I'm, sorry, I have a couple of questions for you and then click spend like while [laughter] I know you don't typically like to give comps by month, but I think it would be difficult so plus scopes the business coming through January February into the downturn in March.
And then being down April may and than what you've seen so far in the recovery in June as your salons have reopened if you're willing to just give us even contextually some shape of the comp performance that'd be helpful.
Sure stuff and I think what else do just at a high level substituted here for Eric It's still such early days.
The reopening cycle, where you're right. We are reluctant to say more than we should say.
Thank you Eric can give you some pretty good flavor of what we're seeing as.
Franchise, a shadow speed company on for a long until the reopening schedule.
So Eric what else you talk about what we're seeing what's in the franchise business 'cause that'll give you some good insight into the conceptual.
Patterns were seeing stuff.
Sure. Thanks, you touched up a good question and I think it is helpful to understand all I'll take both parts of your question.
The first park as it relates to the quarter. If you looked at January and February we were performing very well on the French outside.
You bet are of course, but we were up.
2.4% in service and 1.5% in total.
And for Supercuts, we were up 3.3% in service in 2.7% total so that's for January February across.
Franchise business.
In March we were down 19, which supports push garden number down to a negative for.
So that that stuff I think clarifies what happened in order and what we've seen no started opening opening salons.
The franchise side and vehicle 24th in Georgia, and Oklahoma were first two stage. Some and then we'd been opening you'll ever since and though we have north of 4000 put it drives Swans open.
And well work starting just to get to the point, where we have a meaningful number of Swans I've been opened more than 30 days. She can start to gauge what's happening with the hooked up cycle. So I'll give you a high level kind of view of what we've seen I'm starting out that you wouldn't be open in states, where we did a nice job opening it seems we could in most instead.
So as we were very well prepared or franchisees to terrific work here and so we would see pent up demand for the first week I mean very busy you'll pull on.
No no additional capacity et cetera, and then once you've got first and best for seven days you see that demand starts start to subside and so we see that so it would go up significantly then back down and what we're seeing now as I mentioned since we had a meaningful numbers for the past that 30 degrees and.
Getting it didn't work at cycle, we're seeing it come back up again.
Which is very good news you know we knew we would get the first visit what we are what we set out to do whatever safety culture is to make sure that our customers wholesale Andr Salus say center salons and wanted to make sure. Obviously, they said that they would come back or future visits and we're seeing that.
The number so I won't give you the specific numbers that I can tell you. That's generally the way it's been working and of course, we're dealing with issues in the salons and doing good work with capacity constraints that we have so you're on the Swan stuff that you had six stations yet so we got each side.
Social distancing were generally closing one of those stations in each side. So we're going from six to four and that can be okay. On a Monday Tuesday, Wednesday, maybe a little bit on Thursday, as you're getting into the busier times and berbizier salons that capacity constraint on revenues, even with increased hours. So we've been working creatively to free up.
Capacity Universal on things like moving the front desk onto the form of the Swan, adding affordable station and even if you can get one more station in Bad example, one or two no. That's very helpful. So stuff that's what we've been seeing ill stop there.
[noise] Carson, that's what kind of true to say.
I think it's also true to say as a person to close loans or not and that number right and the same store. So definitely right. So that the decline that you see and huh.
In March and you know people starting to shelter in place we still have the upon opened once upon called US Oh offer included in that.
Yeah, that's franchisee, calling in there for a fair amount of time and so when when we are moving through March you're right person Youre exactly right.
The the books transactions and the traffic.
Okay and dramatically, even though they kept some of those forms open so.
They are open for just a few hours and still going to talk about purposes.
Okay pits and that's what I'm looking for quite a technicality sort of Salon closes. It falls out of account base thing when you report your June quarter comps.
Well the months on April and May reflect.
The euro so long.
Eric You mentioned a few opening in the latter part of April so.
Okay, just help us scopes from a technicality perspective, when you report a fully loaded comp in the June quarter unadjusted comp how should we be modeling the June quarter.
Yeah, I think that's not the tricky one you know and in terms of of the comp.
You know, it's it's been it's hard for us to focus on model on on a cost cases, because we've had gone to college for a majority of the corridor. So we can take that offline in terms of modeling how we want to do that how you want to do that going forward.
That sounds what happened in April and May angles bond include doesn't occur.
Okay. That's helpful I'm going to see really quick one just on the share dislocation clearly the independent chains and the independent salons are filling a significant amount of pressure that you can just help us maybe he would think through share opportunities for your franchise network in terms of those local.
So long visit.
And Eric So you just remind us what are you seeing any price increases across the menu or any sort of charges being added to the tickets to cover some of these incremental coke and related expenses.
So.
Steve It's cute.
Stuff as to the first part of your question.
I think I think you've heard me say that the.
Kogas trend doesn't like.
Yes, the tragic thing for the country.
Yes.
Very difficult for probably but I've been consistent in saying now for.
Several years to.
But the recession would be very good Regis.
I said that coming in the door in 2017, but.
The recession, particularly your child for like recession.
I would enable us to recruit more stylish the truck production employees.
I wouldn't bring significant pressure to bear.
Independent so operators.
I'm, sorry to up the recession chain.
That's a consequence of coated.
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Frankly from a competitive standpoint, I'm delighted because here because I think it would bring significant pressure to bear on small mom and pop up shops.
And I believe that.
Many customers, who wouldn't move up market.
Higher priced well services will come back into the value chain.
But calls there you know somebody family should later on or economic pressure and rather than go too far in Barber shop.
50 Bucks for aircraft that are going to come back to supercuts and get a better haircut.
For a much lower price so.
Colin 19 pandemic terrible recession, good news and I feel good about it.
Pressure on the competition.
I believe it will drive customers back into our salons devalue salons.
I think those kind of like hiring stylus a lot of future spending over the last few years asked to pricing.
Broadly speaking.
I don't think any consumer facing business today.
It is in a position.
So we're.
They can't adjust pricing I think the cost more to run businesses safely and the coven environment.
And I think all businesses that are.
Consumer facing.
Our.
Yeah, Hey, circumstance, where they've gotta would just pricing for the new normal where we're certainly.
Doing that in our business in both company owned salons.
And.
They are and I spent on although we don't control the pricing in our franchise segment, we don't want to.
I understand it goes a lot of the franchisees have done a site. So what are your in the restaurant business.
On a bar.
Oh, you, rather hotel or your rough hair salons.
Cost more to do some of things we're doing today.
And my point of view is it's wise.
Just pricing for the new normal.
We've done that and or club nail salons surcharges.
And our franchisees or adjusting and using several different mechanisms. Yes, we all continue to learn more.
Oh, well and what it cost operate.
What the volumes you're gonna be.
I think price increases or at least.
My point of view I think are enough.
Yes, I do like.
Oh, good good stuff sorry, that's his daughter.
I got disconnected. So I missed most of that's all very great because I don't want to be redundant, but yeah on the French outside virtually all franchisees are taking price.
And then we will likely take more as we go forward, obviously I'm sure. He mentioned that costs are going up service times have increased and so so you won't see us you'll see franchisees anymore questions would go for.
Okay, and lastly, just you're going to Steve I think you're going to see the same thing to stuff in restaurants.
You know everybody doesn't have to do.
Sorry go ahead.
Yeah I just wanted to just tidy up a housekeeping can you remember that you typically get better or just the percentage of your remaining opco salons that are under alkali I know you cause given designing cycle, but any update on the progress around some of those conversations.
You know we've we've we've had a number questions about that along the way.
Passed if we had a substantial majority.
Our company own salons in various stages of negotiation.
At the time, we entered hibernation.
And.
And by substantial number I mean, the great majority and.
The majority of those were actually younger written agreement.
So we're working back through that list to make certain that we can close on those deals and move them into the franchise sector.
Hi, Eric and I.
You know we've had such a terrific track record in this area, there's it's interesting stuff to.
Hurt land work.
Well a lot of our corporate developments left in south and recruits you franchise. He said something interesting to me a few weeks ago. He said that during the period that for 2008 and nine.
During the last in the great recession period after the great recession, which one of the best times to be in franchise recruiting.
So many corporate people who lost their jobs.
As a result.
Well the great recession decided they wanted to keep paying their own businesses and control there definitely so.
They have a different point of view all of it speaks of its too, but I think I still I'm really I feel confident but we're going to get the stone and.
That will move through the portfolio and the timing will be on about what we originally fall where we felt we get it done. This calendar year. We makes you may slip a little bit, but I don't think it's gonna be much and.
Eric you can address that because if you like.
Sure no that's not that's spot on feeling good about me stayed very close to the folks that we had a agreements lift to buy stores all through closures et cetera, and continue to stay close to them and we're making good progress. It does take a little more time now that you get them transferred one of the things that lenders.
Requiring in many instances that we opened the swans first prior to transfer so we're going through that right now, but we're optimistic that you know not only when we get through the ones that we have agreements on but in a smaller number where we don't have agreements were making progress in those negotiations as well.
Not as you know simple is it was a back in February but Ah, but we're confident he said that we'll get things through and we were still recruiting owners as he mentioned that and we're pleased with where that's going as well.
[noise] stuff a good way to say answers I don't lose any sleep refinancing, we franchising I'm not losing sleep on that I'm, not losing any sleep on DNA reductions.
No for.
Two years, we needed to address that and we will and.
The if you asked me what keeps me awake at night, it's just the lack of visibility we're gonna have to.
No wait and see what this you know get a little more experience in the kogan environment and.
See how the salons looking though volumes looking like any other.
Those listed has variable expenses.
In cost will adjust accordingly, there you know the new normal.
Isn't a catastrophic circumstance that just means you live gesture huge gesture business for the.
The reality of the business you have and.
Not the first I'll discuss policemen tusks almost 100 years, if we can suck survived the great depression in World War, two and the the many other recessions that this company has gone through we'll get through this too we just got a wait and see what the number given the visibility that works well just just like we have so many other times.
Hi, great. Thanks, Congrats for the information.
You bet stuff you.
[noise] discounted stipulated portion of the cold I wouldn't know tend to come trends back to get you.
[noise] well, thanks, everyone and we appreciate your ongoing support and interest in.
She got speed and stay safe and please.
Leave your homes and they'll get your hair cut at a reach us Salon near you. Thank you everybody bye bye.
Ladies and gentlemen, this concludes todays conference call. So today, if you wish to access the replay for this presentation. You may do so maybe you can grow just copy dot com and be Investor Relations section of the website all by dialing in 18882 or 3111.
To access code 1.51 bite treat oh to eat. Thank you also participating and I have a nice day all parties may now disconnect.
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And.
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