Q1 2021 Flexsteel Industries Inc Earnings Call
Good morning.
Welcome to the Flexsteel industries first quarter fiscal year 2021 earnings conference call.
All participants will be in listen only mode.
Did you need assistance. Please signal a conference specialist by pressing Star then zero on your telephone keypad.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad.
All your question. Please press Star then two please.
This event is being recorded.
I would now like to turn the conference over to Eric Schmidt, Chief Financial Officer, and Chief Operating Officer Flexsteel Industries. Please go ahead.
Thank you and welcome today's call to discuss Flexsteel industries first quarter fiscal year 2021 financial results our earnings release, which we issued after March.
Good close yesterday Monday October 26 is available on the Investor Relations section of our website Www Dot Flexsteel dotcom under news and events.
I'm here today with Jerry did Murray, President and Chief Executive Officer on today's call. We will provide prepared remarks, and then we will open up the call to your questions before we begin I would like to remind you that the comments on today's call will include forward looking statements, which can be identified by the use of words such as estimate.
Anticipate expect and similar phrases.
Forward looking statements by their nature involve estimates projections goals forecasts and assumptions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward looking statements such.
Such risks and uncertainties include but are not limited to those that are described in our most recent annual report on form 10-K as updated by our subsequent quarterly reports on form 10-Q, and other SEC filings as applicable. These forward looking statements speak only as of the date of this conference call into.
Not be relied upon as predictions of future events. Additionally, we may refer to non-GAAP measures, which are intended to supplement but not substitute for the most directly comparable GAAP measures. The press release available on the website contains the financial and other quantitative information to be discussed today as well as the record.
Affiliations of GAAP to non-GAAP measures and with that I will turn the call over to Gerry Detmer Jerry.
Good morning, and thank you for joining us today. The Cobi 19 pandemic continues to adversely impact the global economy in many aspects of our business operations.
First I would like to thank all our flexsteel employees for their dedication to our company and commitment to taking care of our customers and each other during these unprecedented times.
I'm proud of our team and how they have responded to this difficult and dynamic environment.
In response to COVID-19, we accelerated many strategic decision, it's a bold actions to transform our company over the past six months.
While many of these decisions were difficult they were necessary and have made the company much stronger and better positioned for long term profitable growth.
We exited several non core product line to sharpen our focus I'm competing in markets, where we feel we are advantaged.
We significantly reduce operational complexity by rationalizing our product offering to what is most relevant to today's consumers and we aggressively reduce structural costs and optimize our network footprint to become nimbler better serve our customers and expedite I returned to profitability.
Well, we are in an organization dedicated to continuous improvement and there is still much work to be done I feel we have achieved a major milestone in our transformational journey and now have a solid foundation for the future growth, which is reflected in the strength of our first quarter performance, most notably double.
Digit organic growth and returned to operating margins, which are near historical peak levels.
While we reported net sales were up 5% in the first quarter more importantly, our organic sales growth was 18% when excluding the impact of the vehicle seating and hospitality product lines, we exited last year. This.
The sales strength was broad based spanning both the flexsteel in Homesale brands, all our sales channels and geographic regions and nearly all our product categories.
From a macro view point the industry has seen a surge in demand for our household furniture since June as consumers spend more time at home and ship discretionary spending from traveling entertainment to home goods, no one including myself anticipated the enormity of the rebound in consumer spending on for.
Nature when retailers began re opening their stores in late May and early June.
Our restructuring efforts have made us more agile and we've been able to capitalize on this positive shift in consumer spending for furniture sold both through retail and E Commerce channel.
Retail home furnishing sales were up 15% and ecommerce sales grew almost 40% during the quarter orders in retail home furnishings were even stronger than shipments was 60% year over year order growth in the quarter order demand was consistently robust through.
All three months in the period in October orders appear to be sustaining that same strain as month to date orders are up roughly 60%.
As a result, our backlog ended the first quarter, Eddie historical record high of $89 million.
To support our customers and the strength of the backlog.
We added several new production lines in the first quarter at both of our North American manufacturing facility, we intend to build additional capacity in calendar year 2021.
As we do this we.
We continue to adhere to strict social distancing guidelines in sanitation best practices to protect the well being of our valued employees.
We're also working Feverously with our global supply partners to secure additional capacity and built inventory to support continued strong consumer demand.
While demand trends have certainly been a pleasant tailwind to the business in the near term there are a multitude of headwinds related to supply delays disruption in price increases that we are currently navigate it at the same time.
First global supply availability may.
Most offshore furniture suppliers reduced capacity at the beginning of the COVID-19 pandemic as their orders decline or cancel.
Despite these best efforts to quickly ramp up U.S. furniture demand continues to significantly outpace global supply capacity.
Closed borders due to the Kobin 18 have further exaggerated the situation as many offshore suppliers do not have access to the workers outside of their home countries.
Which are needed to ramp up capacity faster.
The downstream supply chain for materials like leather and components is also stressed given heightened demand, which has further extended lead times for some globally source items.
We anticipate the supply demand imbalance to linger through mid 2021, but are working diligently with our offshore suppliers to secure required capacity.
Ocean container availability.
Shouldn't vessel capacity was reduced early in the pandemic and has not been brought back to pre COVID-19 levels yet.
With a sharp rebound in U.S. consumer spending across multiple categories demand for imported products has surged and spot rates for ocean containers have more than doubled with no line of sight to returning to normal levels near term.
Third material inflation, we are seeing significant price increases in key raw material categories plywood has seen massive price increases due to strong housing demand home improvement spending in furniture demand. We're also seeing double digit increases in fall recent hurricanes in the Gulf region have.
Disrupted petroleum based supply chain, including the production of T. I, which is a major component of foam used in all our seating inflationary pressures in packaging and other materials are also starting to bubble up.
Fourth labor shortages and wage inflation.
By relatively high unemployment the market for both skilled labor use in upholstery manufacturing and warehousing labor remains tight as.
As a result, we have increased hourly wage rates this quarter across multiple manufacturing and distribution facilities to improve hiring effectiveness and worker retention.
Fifth and lastly, uncertainty in global trade relations.
When tariffs were imposed on imported furniture guidance from China. The change was highly disruptive and costly to the global furniture supply chain Flexsteel like many furniture companies pivoted quickly to reduce its exposure to China by reallocating production to other Asian countries, most notably Vietnam.
The U.S. trade Representatives office recently announced that it was investigating Vietnam for currency manipulation and exporting wood products contain illegally harvested timber into the U.S.
The investigation confirmed these allegations to be true and the U.S. subsequently impose the sanctions or punitive measures on Vietnam, you will have a similar disruptive and costly impact to the U.S. furniture industry as China tariffs Howard.
Our team is responding to these challenges as working multiple plans to mitigate and manage these headwinds wherever possible to ensure that we can continue supporting our customers and do so profitably.
In summary, I'm pleased with our performance to start the fiscal year I feel we are competing well are managing short term headwinds effectively and can continue delivering strong sales growth and financial results going forward.
Now I'll turn the call over to Derek to discuss our financial and operating results and I'll be back with some closing comments on what we see ahead.
Thank you Gerry and good morning, everyone first.
First quarter, net sales were $105.2 million up $4.9 million or 5% compared to $100.3 million in the prior year period the.
The drivers of the increase in sales was twofold first growth in home furnishings products sold through retail stores of $11.4 million or 15% and second growth in products sold through E commerce of $4.6 million or 40%, partially offset by decline of.
$11.1 million due to the exit of our vehicle and hospitality product lines. During the fourth quarter of fiscal 2020 as Gerry previously noted excluding our exited product lines, our organic net net sales growth was 18% compared to the prior year quarter.
From a profit perspective, we reported a fiscal first quarter net income of $3.9 million or 49 cents per diluted share that compared to a net income of $9.6 million or one dollar and 17 cents per diluted share in the prior year quarter the repo.
Net income included a 1.4 million dollar pre tax restructuring expense and an approximately $700000 gain from the sale of one of our Harrison, Arkansas facilities and an additional 2.1 million dollar tax expense due to the re measurement of deferred.
Taxes and recording of a full valuation allowance on deferred tax assets.
Excluding these three items the first quarter non-GAAP adjusted net income was $6.3 million or 80 cents per diluted share as compared to a non-GAAP adjusted net income of approximately $0 or zero cents per diluted share in the first quarter last year. Please see the non-GAAP disclosure.
Also included in the earnings release for a detailed reconciliation of GAAP to non-GAAP adjusted net income.
Gross margin as a percent of net sales in the first quarter was 21.7% versus a reported 17.2% in the prior year quarter. The 450 basis point improvement in gross margin was primarily due to structural cost reductions operational efficiencies and fixed cost leverage on her.
Higher sales volume during the first quarter as compared to the prior year quarter, given the strength in demand, we had minimal price discounting and promotional activities, which further bolstered gross margins in the quarter.
Selling general and administrative or FG, and H expenses declined $3.3 million to $14.2 million compared to $17.5 million in the prior year quarter.
SGN as a percent of net sales in the quarter was 13.5% compared with 17.4% in the prior year quarter.
The improvements in ATSI in a dollar spend and as a percentage of net sales were attributable to a reduction in salaries and wages due to cost cutting measures that began last quarter due to COVID-19, coupled with decreased spending in selling and travel expenses.
Turning to income taxes during the quarter, we reported a tax expense of $4.1 million or an effective rate of 51.3% compared to a tax expense of $3.2 million in the prior year quarter or an effective tax rate of 25.2%.
The higher effective tax rate during the quarter was primarily due to an additional $2.1 million adjustment to revalue certain deferred tax assets, resulting from improved fiscal year 2021 taxable income projections. These.
These certain deferred tax assets are either no longer expected to be realized or will be realized at the current statutory rate of 21% versus the 35% rate in prior years.
The effective tax rate for the remaining nine months of the fiscal year ending June Thirtyth 2021 is expected to be in the range of 25% to 26%.
Now moving on to the balance sheet, which remains very strong we ended the quarter with a healthy cash balance of $36.5 million and no outstanding balance on our new $25 million line of credit, which was signed in August and matures on August 28 2022.
Our working capital defined as current assets minus current liabilities at September Thirtyth, 2020 was $127.8 million compared to $128.4 million at June Thirtyth 2020.
The slight decline in working capital was due to a decrease in cash of $11.7 million, primarily related to share repurchases up $9 million in an increase in trade accounts payable of $1.1 million, partially offset by a $5.2 million increase in inventory and a $7.6 million in.
Crease in trade receivables related to higher sales.
Capital expenditures for the three months ended September Thirtyth 2020 were approximately $400000.
During fiscal 2021, we anticipate spending 3 million to $4 million for capital expenditures and believe we have adequate working capital to meet these requirements.
I would like to provide a quick update on restructuring during the first quarter the company incurred $1.4 million of restructuring expense, primarily for facility closures professional fees and employee termination costs.
We anticipate a total restructuring expenses for the fiscal year 2021 of roughly $2.5 million.
We also sold one of our facilities in Harrison, Arkansas for approximately $700000, resulting in a gain of the same amount we.
We currently have our locations in Dubuque, Iowa, Lancaster, Pennsylvania, Starkville, Mississippi, and one more facility in Harrison, Arkansas listed for sale.
Looking forward, we project net sales for the second quarter between 110, and $120 million, assuming no disruptions to our supply chain, resulting from either extended manufacturing shutdowns related to cope in 19 or shipment delays from global suppliers.
Gross margins are expected in the range of 20% to 21% slightly lower than the first quarter as the positive impact of our continued margin improvement initiatives will be overshadowed by the various cost increases, which Jerry noted earlier related to ocean container surcharges material inflation, notably on.
Plywood foam and many sourced finished goods domestic wage increases and higher tariff expenses related to a temporary increase in China source goods price.
Pricing actions, which the company announced to the market. This week to offset part of these cost increases will be effective November threerd on new orders for all soft seating products.
Given current order to shipment lead times, we expect that orders with new pricing would likely not ship until the third quarter and as such we expect our pricing actions to have minimal financial impact in the second quarter.
SGN eight spending is expected to increase sequentially quarter over quarter due to growth related investments and higher commissions from increased sales as a percent of net sales SGN is expected to range between 13.5% to 14% for the second quarter.
While the deep cost reductions taken in response to COVID-19 were appropriate at the time to preserve cash and navigate the company through an extended period of economic uncertainty, we need to make strategic SG any investments in the coming quarters to both support the current level of sales demand and pursue longer term growth opportunities.
Adjusted operating income defined as operating income, excluding restructuring expenses and gains losses from asset sales.
Expected to be between 6.5% and 7.5% as a percent of net sales for the second quarter.
While the current environment, a very dynamic due to ongoing uncertainty related to cope in 19, the upcoming presidential election in global trade relations. We are cautiously optimistic about the remainder of the fiscal year 2021 based on current demand trends and positive outlook gathered from many of our retail partners.
Absent a significant change in consumer demand for furniture or a major setback in the global economic recovery, we anticipate adjusted operating income for the full fiscal year in the range of 7% to 8% as a percentage of net sales with expected gross margin expansion in the second half of the fiscal year.
Funding increased SGN, a investments to drive long term growth.
I will turn the call back over to Jerry to share his perspectives on our outlook.
Thanks, Derek outline we delivered solid financial performance in the quarter and have gotten back to near peak operating margins much sooner than anticipated.
The transformation plan is working with profitability be stored and plans in place to sustain that profitability. We're now pivoting to the next stage in our transformation to aggressively pursue new sources of profitable growth. We are building a comprehensive plan to achieve our growth potential.
And we'll be in a better position to share these growth plans with you in the coming quarters deliver.
Delivering growth above market will undoubtedly required new investments, which we currently intend to fund with margin expansion initiatives if possible.
As a reminder, there are several strategies, which are core to our future success and will guide our future growth plans first we are committed to being an omnichannel company, we intend to be wherever our customers and consumers want to buy furniture and to provide them a path to purchase consistent with.
How they want to buy E.
E Commerce will be a critical growth area, including direct to consumer capabilities. We have recently launched a new website for our home style brand Www Dot homestyle furniture, dotcom and began selling a limited assortment of homestyle branded furniture online.
Second we will expand our product portfolio across large relevant categories and varied price points and will effectively market. These products through powerful brand tailored to targeted consumer segments.
Third we will deliver a differentiated and valued customer experience and fourth we will expand our agile lean and resilient global supply chain as a competitive advantage with that we'll open up the call to your questions operator.
We will now begin the question and answer session last question in the press Star then one.
On your telephone keypad.
If you are using a speakerphone.
Please pick up your handset before pressing the keys.
At any time your question has been addressed and you would like to withdraw your question. Please.
Please press Star then too.
At this time, we will pause momentarily.
Assemble our roster.
First question comes from Milan Mehta of evaluate research. Please go ahead.
First off I would just like to convention in new line year excellent results.
My question is what is your segmentation for your international sourcing.
What percentage of your Omnichannel franchise.
Ship from Asia.
Could you kind of Vietnam, and Thailand, and even your Mexico regions.
Yes to today.
If you if you look at the mix of sourced product versus manufactured products in North America, roughly 60% is sourced in the other 40% is Manny.
Manufactured in North America.
Thank you.
The next question comes from Mike Hughes of SG capital. Please go ahead.
Morning, Thanks for taking my questions.
Can you just elaborate a little bit on the plywood and foam.
Price inflation to buy that all on a spot basis or is it under contract and did any of that inflation impacts the quarter you just reported.
Yes in terms of.
Ill.
A very slight impact in the current quarter.
The larger impact is going to be felt here in the second quarter and going forward.
So.
Most of our plywood buy is not under contract. So we are a bit vulnerable to whats happening in real time in those markets.
What I can tell you is I mean, we were buying board pre co bid probably in the.
$20 low $20 range, and a spike down well over 30.
We have our sourcing group is doing a good job of finding alternative sources for.
For lower cost plywood, so we're doing our best to mute that as as best as possible.
Similarly foam is the other big inflationary pressure that we're feeling.
And we're seeing roughly about 16% increase on on our foam supplies and again, we're we'll we'll we're vulnerable to the spot market on that input as well.
Okay. So the price of lumber spiked in a big way rates through the end of August and then it's kind of rolled over I know, that's probably what's different than lumber but.
Plywood prices started started to pull back as far as what you're seeing out there.
No.
No I think you know the the surge in demand around home improvement housing.
Has kind of constrain overall capacity combined with the big surgeon kind of furniture. So.
Right now there is still a supply demand imbalance.
Okay. So all your competitors are faced with the same issue so.
Just any initial commentary or feedback from your customers on the price increases I assume it's going to stick given the demand environment.
Yeah, what them. So we just got done with our our.
Our our market event in high point and.
There are there are numerous competitors in the industry that are that are taking pricing larger.
Largely due to the same factors that Jerry mentioned in his opening comments.
So the retailer certainly don't like it.
But they are seen pricing that's broad based because everybody in the industry is feeling the impact of the same drivers.
Okay, and then the ocean container surcharges were in the in place for the full quarter will you pay uplift were you able to recap.
Recapture those higher costs.
Yes, so we so we implemented a container surcharge or pass through to our retail customers at the beginning quarter at that point in time.
I mean, we were starting to see container rates go up about $1200.
Today in the spot rate kind of market.
I mean, we're seeing some containers that are almost $3500 more or two X what they were.
Kind of pretty cold it.
So given the sensitivity around the price increase that we just kind of took.
We have made this strategic decision that we're going to absorb.
The additional kind of container surcharge that we're feeling in the short term rather than try to pass that off to retailers and we're hopeful that once we get through the holiday season, we will start to see more capacity container capacity come on line in those rate should come down.
And your guidance of course picks and the absorption of the higher container costs.
It does okay.
Okay, and then last week.
Go ahead I'm sorry.
Which is one of the reasons that we expect our.
Gross margins to be slightly lower lower in the second quarter relative to the first quarter.
Okay, and then last.
Last two questions just on the balance sheet.
The.
Assets held for sale heard about $13 million I.
I saw that you listed the Dubuque facility for $16.5 million I assume that that's the biggest of the assets that are for sale.
I'm not sure when you put it on the market, but any initial interest in that and Thats facility.
Yes, we have had multiple.
Multiple offers several of which we felt were too low and we rejected we.
We did have.
Actually assigned ally that unfortunately sell through here this past week.
As I've stated before were going to be what we're in a good cash position and.
And we're going to be patient with that sale to make sure that we get fair market value.
And then last one the tax receivable whats the status and amount of that.
Yes, we actually received roughly eight and a half million dollars. The first week in October so immediately after quarter end.
Okay, great. Thank you very much.
Thank you.
Again, if you have a question. Please press Star then one.
Touchtone phone. Our next question comes from David Gold of.
Court along please go ahead.
Hi, there. Thanks for taking the question just wondering how much of the earnings performance. This quarter was driven in part by salary cuts that by definition aren't sustainable.
I think you can get there.
Yes, the way I would frame it up I wouldn't necessarily call it.
When when you take when you talk about salary cuts are you talking about the temporary reduction in executive salaries were you talking about.
Oh, yes, yes.
Yes, less than a half a million.
Okay.
Great and how and how quickly you think you can start working through your backlog when do we start to see that come down.
Well go ahead, yes. So this at this point do you have the backlog is very high but we're able to work it down to a few different ways of course in our ecommerce business is really we don't have much of a backlog that goes out a day or two most of our.
Sourced goods were able to ship most of those in two to three weeks after that it's a big part of it of our backlog, but the good news is were able to ship that in turn it fairly quickly sorry.
Our two north American plants that really have this 911 week lead time.
That.
Where we think we can continue to bring it down and Thats the plan, even though again as we said in our.
Comments here, a little bit ago that your orders were up 60%. So far this month, we're still seeing very robust order growth.
If we can continue to get raw material, we can continue to bring it down but we will not really see it have a huge change probably somewhere into our third quarter.
Okay.
Great. Thanks, guys.
The next question comes from JP Morgan of Global value Investment Corporation. Please go ahead.
Thank you and good morning, Jerry in your opening comments you mentioned. The addition of capacity in the near future judging from your Capex guidance I can't imagine that you are building new facilities, but can you elaborate on what that looks like.
Yeah for the most part what we're doing right now is not new facility that we're building we are looking at expanding some of our.
Facilities that really probably more from a lease standpoint or something as we go forward.
We also right now most of our expansion of band just.
Putting additional lines into both of our plants.
And is there additional capacity in your existing or how much additional capacity can your existing plants accommodate.
So we can take of probably 20% to 25% more most of that though is related to manpower so right.
Right now.
As we hire more people were able to obviously to expand open up new line, it's really not capital that the constraint right now.
And again, we don't run full second shifts in any of our facilities. We do run second shifts in both of them and Thats. Another option that we have but again, it's really more manpower constrained at this point.
And as we bring on new people, there's there's roughly a.
Three kind of four month kind of ramp up because a lot of labor in our man manufacturing facilities. It is skilled labor. So it does take time to develop a skill set to manufacture furniture.
Okay. As you think about wage and material costs rising is there any mechanism or strategy that you are currently employing or will employ to hedge against those costs.
Mhm.
So our.
Single largest way that we're going to mitigate some of those inflationary increases through the price increase that we're passing through to retailers.
We announced yesterday, which will be effective November onest.
In terms of other means of of offsetting that.
As Jerry noted, we increased labor rates across many of our facilities.
We believe in the long term that will improve not only our recruiting efforts, but workforce retention.
Which should have an intangible benefit around improved quality customer service and productivity.
So we believe that part of that investment we will get a return from in terms of the inflationary items of the material inflationary items. There are there's really no mechanism or derivatives out there in the market two to protect against those specific items.
So our our only really controllable way of offsetting those is to find alternative sources.
Or to do kind of value engineering and reduce our Ics.
Content.
Or permissible.
Okay.
Finally, given your.
Desire to expand.
Take the company to the next phase of growth.
Are you considering acquisitions and if so I'll give a pipeline built and what criteria might you be using to identify potential targets.
So acquisitions are absolutely on the table on what I will tell you and I think I've mentioned this before we're going to be very disciplined in terms of what we go after.
Our criteria are twofold, one is it a strategic fit in other words does it align and accelerate our long term strategic plan and then the second determinant is does it create value for our shareholders.
So in terms of strategic fit.
For an acquisition to be attractive to us it would need.
Give us exposure into.
New products, new markets, New business models that we currently don't have a confidence.
What we will not do is go out and do acquisitions just to put higher sales numbers.
On the board.
So again, if it has strategic fit if it brings us new capabilities, our access to new products and new markets.
That's what we would consider.
Great. Thank you for taking my questions and congratulations on the good quarter.
Thank you.
The next question comes from John Nature of clinical please go ahead.
Hi, good morning, Thanks for taking my question.
I was just curious on the.
40% increase.
Commerce.
What was that exactly was that.
Buy online pickup in store or was it by online ship.
Okay, what was that and how do you see that unfolding going forward.
A majority of that is online orders that we get that are shipped out of our distribution centers directly to the business or to the folks home.
Okay, so when either to the home or to the shore.
Where would you say business you mean customer business.
Yeah. It really is three fold, it's to the to a customer's workspace workplace to their home and we also do have what's called the brick and click where we actually have send product to our retailers and then they in turn delivered out two to the end user.
Okay.
Maybe.
Got it maybe.
Maybe I'll give you just a little bit more color and context, so as as we define our ecommerce business. There are three sub channels that we want to go to market in.
One is through large E tailers Amazon the wayfarers, which is a good part of our business today.
The second kind of sub channel is.
Being a third party in marketplaces, which we're dabbling in.
The third one is whats Jerry mentioned, which has brick and click so our brick and mortar retailers, who have an ecommerce capability selling through their platforms and then the fourth sub channel is direct to consumer so selling our own product online and shipping it direct to consumer and as I think Jerry mentioned in his statements.
We recently launched a new site for our home.
Homestyle as furniture, dotcom, and we are starting to sell direct to consumer today.
Yes, I've looked at that that's that's a good sign.
The other question is in terms of the new products or products you are considering.
Generally speaking what are you thinking about there.
So we're going to continue to go into a lot of the same categories were in but we're also going to be expanding out more into areas like.
Outdoor patio furniture, we have a very large market, obviously and in our E commerce business in kitchen cart, we'll continue to do our upholstered products, both our seating products.
Rooms et cetera.
For the most part we will stay in that furniture strain and just expand that out more to differ.
Bobby lifestyles different price points things like that.
Well, what about accessories is of interest to you.
You know, we look as accessories I think we have to stay where we are advantaged and where we have core competencies and thats something we could look at but.
But that would be something thats farther out right now it really doesn't hit into our core competency right now.
Okay.
Good thanks for taking my questions and congratulations great.
All right. Thank you for your question.
This concludes our question and answer session I would like to turn the conference back over to Gerry Dittmer for any closing remarks.
Great. Thank you very much I appreciate everyone participating in today's call and for your questions.
Our restructuring is complete we are close to our historical peaks in sales and profit.
The transformation of our core processes will continue as we also pivot to our growth initiatives going forward. We will continue to be transparent going forward and give you our best view at that time, we look forward to updating you all on our next call stay healthy safe in saying and thanks again for participating today.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
[music].