Q3 2020 Lazydays Holdings Inc Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the Lazy days Holdings Inc. third quarter 2020 financial results conference call at.
At this time all participants are in a listen only mode.
After the speaker presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone.
Please be advised that todays conference is being recorded.
If you require any further assistance please press star zero.
I would now like to hand, the conference over to your speaker today, Debbie Harrell. Thank you and please go ahead.
Thank you good.
Morning, and thank you for joining us for our third quarter 2020 financial results Conference call I'm, Debbie Harrell corporate controller at lazy days.
We issued the Companys earnings press release. This morning, a copy of the earnings release is available under the events and presentations section of the Investor Relations page of our website and has been furnished as an exhibit to our current report on form 8-K with the SEC.
With me on the call today are Mr., Bill Marine our chairman and Chief Executive Officer, and Mr., Nick Thomas Our Chief Financial Officer.
As a reminder, please note that some of the information that you will hear today. During our discussion may consist of forward looking statements, including without limitation statements regarding unit sale revenue gross margins operating expenses stock based compensation expense taxes product mix shift in geographic expansion.
Actual results or trends for future periods could differ materially from the forward looking statements as a result of many factors.
For additional information please refer to the risk factors discussed in the form 8-K filed with the FCC on November 4th 2020.
We will also discuss non-GAAP measures of financial performance that we believe are useful for understanding the company's results, including EBITDA and adjusted EBITDA.
Please refer to our earnings press release for reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures.
For the three months ended September 32020, and 2019, the financial information presented represents the operating results of Lazy days Holdings Inc. now it is my pleasure to introduce Nick Thomas shot who will provide an overview of the 2023rd quarter financials.
Thanks, Debbie please.
Please note that unless stated otherwise Q3 2020 results comparison to prior year Q3 2019.
Total revenues across all lines of business for the third quarter were $215.7 billion up 57.3 million or 36% versus prior year.
Revenue from the sale of recreational vehicles, or RV was $194.6 million for the quarter up 55.7 billion or 40%.
New RV sales revenue was $130.3 million up 43.5 billion or 50%.
In pre owned sales revenue was 64.2 million up 12.2 million or 23%.
Looking at our RV unit sales, excluding wholesale units total unit sales for 2595.
731 units or 38% new.
New vehicle unit sales were 16, 45 up 397 or 32%.
Pre owned vehicle unit sales, excluding wholesale units were up 950 or 263 units 38%.
Average selling price for new vehicles for the quarter was $76900 up $7800 or 11% versus prior year.
The average selling price of pre owned vehicles was $62900 down $2600 or 4%.
These lower pre owned Asps reflects a shift in mix for the quarter towards Towables and lower pricing.
Revenues from our other channels consist of sales of parts accessories and related service financings and insurance or ethanol revenue as well as camp ground and other miscellaneous revenue.
In total revenue from these other lines of business was $21.1 billion up $1.6 million or 8% compared to 2019.
The increase was driven by a half an eye revenue increase of $1.8 million or 20% to $11.1 million at a parts and service revenue increase of 8.7 million or 8% to 9.5 million.
These increases were partially offset by a point $9 billion decrease in camp ground rental and miscellaneous revenue and includes the impact of our rental business being phased out in 2019.
Total Q3 gross profit excluding the impact of non cash last in first out or LIFO adjustment was $47.9 million.
$16.5 million or 53% versus 2019.
Gross margin, excluding LIFO adjustments increased between the two periods coming in at 22.2% versus 19.9% in 2019.
With the change attributable to improved RV sales margin and mix of business.
Non cash LIFO adjustments had a net favorable swing improving gross profit by an additional $2.3 million compared to the prior year, so including LIFO adjustment gross profit for the quarter was $49.3 million up $18.8 million or 62% versus 2019.
At June eight for the quarter, which excludes transaction costs stock based compensation and depreciation and amortization was $28.6 million up 3 million compared to prior year.
This increase is attributable to the additional overhead expenses associated with the villagers dealership was acquired in August 2019.
Our new service center here in Houston that we started it up in mid February.
The Phoenix dealership, we acquired in May 2020, and increase performance wages, driven by our strong sales and profit performance for the quarter.
Partially offset by overhead cost reductions of company. So from the second quarter of 2020.
SGT as a percentage of gross profit improved from 83.7% in Q3 2019 down to 58% in 2020.
Amortization of stock based compensation was down $1.1 million versus prior year, and depreciation and amortization were approximately flat down 0.0 $3 million.
Net income for the third quarter was $11.6 million more than five times Q3, 2019 net loss of $2.5 million.
Earnings per share improved from 55 cents from a loss of 41 cents per share in Q3 2019.
This $14.1 million improvement in net income was primarily driven by the favorable increase in the net of our increased gross profit and as DNA expense discussed above.
Lower amortization of stock based compensation as well as point $6 million reduction in interest expense driven by mainly or reduce floor plan interest.
Adjusted EBITDA was $19 million for the quarter up 13.7 million versus prior year. This at the new quarterly EBITDA record for lazy days exceeding the record we just set last quarter of $14.9 billion.
Adjusted EBITDA margin increased by 540 basis points to 8.7%.
Please refer to our earnings release for a table, which includes a reconciliation of net income to adjusted EBITDA.
Now turning to our September thirtyth balance sheet, and our financial position, we had cash on hand at the end of the quarter of $81.7 million and net working capital of $39 million.
With cash of $50.2 million compared to December 31, 2019.
This increase in cash includes the impact of cash provided by a $6 million mortgage on the New service Center and property years use infection, Texas, we have self funded.
$4.9 million provided by the first quarter consummation of a sale leaseback of property, where we have self funded for the Greenfield there in Nashville, Tennessee.
And 8.7 million provided by Paycheck protection program loans, we have taken out in the second quarter of 2020.
It also includes the cash outflow for the cash acquisition of our Phoenix dealership locations, which we closed on in May 2020.
As of September Thirtyth 2020, the company had declared a cash payment of series a preferred dividends of $11 million, which are included in dividends payable on the accompanying balance sheet for the period ended September Thirtyth 2020.
This dividend was paid on October seven 2020.
Dividends on the series a preferred stock a crew and our payable quarterly in arrears at an initial rate of 8%.
Accrued and unpaid dividends until paid for in cash accrue at the applicable 8% dividend rate, plus 2% or 10% annual rate.
This october 7th payment pays down the company's accrued dividend balance in full.
As of September Thirtyth, 2020, we had approximately $71.5 million in inventory consisting of $50.6 million in new vehicles $19.1 million in pre owned vehicles and approximately $4 billion in parts inventory less LIFO reserves of $2.2 million.
Total inventory was down approximately $89 million compared to the same time prior year, reflecting the strong recent demand weve experience and the manufacturers temporary suspension of production in response to cope in 19.
As of September Thirtyth 2020, we had $13.5 billion of term loans outstanding $59.2 million gross notes payable on our floor plan facility.
$6.1 million on the Houston, and T. mortgage and no borrowings under our $5 billion revolving credit facility.
We also had approximately 5.7 million outstanding on notes payable related to acquisition and 8.7 million borrowed under Paycheck protection program loans.
This concludes my summary of the results. Thanks for your time and I'll now turn the call over to Bill morning.
Thanks, Nick and thank you everyone for joining us today good morning.
Nothing short of a great quarter is there is no other way to describe it. It's it's the best quarter, we todays has ever had and and just a fantastic quarter. So I want to start by thanking the lazy days employees.
The the volume increases that we've experienced recently and their dedication and effort to support the those increases to meet this unprecedented unprecedented demand is nothing short of remarkable.
They're a truly a very unique and wonderful group of.
Equal and we're fortunate to have them.
Supporting all of our efforts so great job to everyone who works.
With us as lazy days.
We have and continue to experience very strong demand for RBS.
We believe the strong demand is primarily related to the lifestyle changes caused by the pandemic and the limited options people have to enjoy vacation and leisure activities that allow for social for this.
In addition inventory continues to be tight.
Right inventory likely causes us to Miss some sales, but has a very positive impact on our margins demand.
Demand continued to be strong and inventory continued to be limited in October.
Our inventory position is beginning to improve and we expect it to continue to improve through the end of the year.
Demand also remains strong and although our inventory levels are improving they are still well below where we would like them to be.
OEM production levels continued to recover from the impact of the pandemic and we expect OEM production to continue to improve through the rest of the year.
We are hopeful that inventory levels will begin to normalize sometime.
In mid 2021, but we.
We are still in a wait and see mode, given the fluid nature of current demand and production.
No.
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We believe we continue to outperform the market.
Through September our unit volume is up close to 30%.
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Stat survey shows that the market is up through August approximately 6%. So we believe lazy days continues to outperform the market.
Our growth pipeline remains robust and is the most active it has been since we began our geographic expansion strategy a few years ago.
We recently closed on the acquisition of our new dealership in Elkhart, Indiana, and we expect to close on our camp land acquisition in the Chicago land area before year end.
We are very excited about the markets. These acquisitions will open up for us in Indiana, Illinois, and Michigan and.
And we believe they will generate significant future returns grew a future growth.
And returns for lazy days.
We are in the process of adding new dealer integration resources. So we can add up to eight acquired or greenfield dealerships per year.
Historically, we have that capacity to add four dealerships per year we.
We believe we will increase our capacity to add eight stores per year by Q1 2021.
In 2021, we expect to generate substantial growth from our four new stores located in Phoenix, Arizona.
Elkhart, Indiana, Chicago land in Nashville, Tennessee to.
The growth from these four stores will be in addition to planned growth from existing stores more.
Moreover, we are currently evaluating numerous acquisition opportunities and new Greenfield dealership sites around the country and expect to add many more new stores in 2021 and 2022.
As we grow grow we continue to focus on improving our ability to provide a best in class customer experience and service excellence.
We have several new initiatives in place and are investing sizable human and financial resources into people processes and technology that will help us deliver the best RV purchasing and service experience in the country to all of our wonderful customers there.
That is all for my prepared remarks, operator, please open up the line for questions.
Ladies and gentlemen, as a reminder, if you would like to ask an audio question. Please press star followed by the number one on your telephone keypad.
Your first question comes from the line of Steven Dyer.
Thanks, Good morning, guys nice work.
As has been the case all year.
I guess just in the quarter Bill are you seeing anything sort of note regionally or you've got a little bit more regional.
For the Prudence will you have you know may be back. When you first went public are you seeing anything sort of unique career I know in Florida, we're coming into a stronger time of the year weather wise.
Do the commentary around.
Not really Steve and all of our dealerships across all of our locations. We've just seen continued strong demand.
We think some of that we're generating by just finding ways to get closer to our customers, but we haven't really any differences in dealership performance seems to be things that are under our control not necessarily.
Market driven so we we don't see anything in our numbers. It indicates that one market is performing significantly different than the other.
Got it and then sort of the move more towards towards towable So for us.
Is that something that you would anticipate continuing lower price points et cetera, do you feel like thats sort of driven by colder pushing people to this lifestyle how much of that do you feel like you are sustainable.
Yes, I think I think it's sustainable certainly for the next couple of years, we believe the the new entrants to the market is definitely sustainable.
The market is the new entrants are typically looking for lower price new products or use products because they have they tend to be a little younger and looking for a little lower price point.
Let's not forget that.
The.
One of the biggest generations in the history of this country is entering retirement age.
Right now and will be for the next 10 years is a massive group of retirees also that would normally that's always been a good a good demographic for us and the industry and it's going to continue to perform well, but we do we.
We do think that.
Especially as we add more dealerships because the dealerships, we add tend to index closer to the to the industry average which Russ.
Roughly is 80% towable, 20% motor homes. So as we add more dealerships were certainly going to index, a little more of that way because the smaller dealerships in other parts of the country don't have as big a focus as maybe Florida does on on motor homes, and specifically, our Tampa dealership, having said that we are.
Still very bullish on.
On motor home Somebody's got to sell and they may not be growing as fast as towable product, but they carry very nice margins and we can turn them very quickly both new menu. So we will continue to focus on both the towable and motorhome market.
Great very helpful and then I.
Yes.
Maybe if I could ask a question on capital allocation you guys have accumulated.
Accumulated a nice chunk of cash on the balance sheet over the last few quarters for sure and you obviously have a lot of options, whether it's addressing the warrants whether it's greenfield opportunities. It sounds like you are.
Sort of increasing infrastructure to be able to do more acquisitions.
Big picture, how do you guys look at that sort of on an ongoing basis and allocating capital going forward. Thanks.
Thanks, Steve.
Yes. Good question, our our cash is precious and and we we manage it.
Very closely.
Our strong focus and priority is to deploy our cash towards our highest return investments and we continually analyze.
Different uses for cash and we consider many alternatives, including some of the ones that you mentioned.
The alternative went out are always the investments with the highest shareholder return.
Currently none of the many investment opportunities, we have evaluated including stock buybacks and buying back warrants come anywhere close to the returns we can get on new or acquired dealerships.
The returns on new and acquired dealerships or are through the roof.
At present the returns we can get on new and acquired dealerships are I would say multiples higher than any other investment that we have considered.
Conditions of course will change over time.
And we'll continue to evaluate all investment opportunities.
But at this time, we don't foresee any near term change in our focus to invest most of our available cash ended new or acquired dealerships Im of course, we will also invest in people processes and technologies that enhance our customer sales or service experience with these investments are small compared to the investment and.
Growing our our dealership network, which will remain our focus for the foreseeable future.
Thats, great Thats, great color I guess lastly, just as depending on the time yesterday or earlier. This week one of your larger public competitors.
Based on the environment as you seen which increased significantly in the last 30 days is sort of consistent with what you're seeing in the comments you made about adding resources there. Thank you.
Yes, we we won't argue with that position, we feel very good and our pipeline is very robust.
That's it for me thanks, guys. Thanks, Steve.
Your next question comes from the line of Fred Wightman.
Hey, guys. Good morning in the release, you mentioned that the Oems are shipping units slightly ahead of retail demand I think that was a bit of a change versus what you said in the pre release back in mid October. So can you just dig into that a little bit more is it better shipment slower retail what sort of driving that change.
The language.
Better better shipments from the Oems Weve seen our numbers continue to go up.
What we're getting in now keep in mind, we have a big presence in the south and I think we're going to get served the first because we're coming into season across the southern us. So I think it's a priority. We are also a larger player. So we may get some some priority.
There as well, but it's coming it's because of the increase in shipments not because of any change in demand.
Thats really helpful. Then just to follow up on that I mean are you seeing or hearing anything as far as the supply chain impact on those shipments a totally fair points on your size in the geographical mix that you guys have but do you think that supply chain issues that have been a bit of an achilles' heel here for the industry could be resolved in the next few.
Some sort of drive more normalized shipments.
Yes, it's really hard for us to predict that what I can say is they continue to put out fires in solve problems that are disrupting their supply chain.
We have every confidence that our Oems will resolve those problems and continue to increase production in the coming months, but we don't have a crystal ball.
And then just one final one I think you mentioned built it to you think inventory levels could normalize some time in mid 21 can you just sort of talk about the retail and wholesale assumptions that you're including in that timeframe.
Yes. So we're we're we're continuing to expect strong demand.
Next year.
And and we're also continuing we're we're expecting to see continued increases in our shipments from from the Oems again, we don't have a crystal ball is that going to be you know may or June or is it going to be September October we don't know, but we think somewhere around the middle of the year.
We should start to get back to normal. According to the information we have today, which is always subject to change in this environment.
Perfect. Thanks, guys. Good luck. Thank you.
Your next question comes from the line of Charles Mcewen.
Good morning, guys.
So in the quarter.
Thanks, Charles Thanks.
Sure.
Just trying to understand a little bit more about capital allocation and how you guys think about.
Potentially cleaning up the capital structure, while pursuing.
Pursuing M&A because.
We're generating six and a half billion and EBITDA per line.
We had a 2 million in cash just 25 million non floor plan debt.
You know potentially a refinance coming a couple of quarters.
Good add even more cash to Brady as you get to one times.
So basically we're trading at two and a half to three times the EBITDA.
We're very excited about the M&A opportunity.
But but should we have a lot of cash just a couple of quarters.
Plenty of ammo for M&A over the next two years.
So.
Just kind of trying to understand why we're not yeah.
Trying to reduce dilution at two and a half returns easy to EBITDA.
Yes, so we we as I said before we look at capital allocation and very carefully and and when we do that we're evaluating the return we can get on that capital. So we're an unprecedented times now and yes, we've generated a lot of cash but anybody that's been around this industry.
For any amount of time, certainly 11 years and I've been around it know that it's it it's very cyclical and you don't know how long the good times will last so we our approach to that is the key to be conservative to limit the debt.
I have a very strong background in distressed debt, so I understand that very well and I understand its benefits and its its risks.
So were we take a very conservative approach now as far as our investments today.
We've we've had a number of people ask us about stock buybacks and warm buybacks.
We have numerous questions about that from shareholders. We have evaluated these programs you know buyback program or a warrant Persian purchase or exchange program. We've been we've been we've evaluated them extensively and we built the model to help us fully understand the shareholder value that such a program could create.
And it's it's not that complicated to run that analysis. Our detailed analysis shows that a warrant buyback or exchange program has a relatively low single digit return to shareholders.
Comparatively the return on newer acquired dealerships is an order of magnitude higher than the return on a payback or exchange program. According to our analysis.
Given this we believe it is in the very best interest of our shareholders to invest our available cash in growing our dealer network.
We will continue to analyze and compare investment opportunities and make investment decisions based on what we believe are the highest available returns to shareholders, but right now there just isn't a can.
A investment opportunity that comes anywhere close to expanding our dealer network.
If you buy.
I hope we have a lot more cash in a year or two but we can't plan on that and we don't want to find ourselves in a position to a year or two from now where we're tight on cash because we made a low single digit investment return investment in buying warrants or buying back shares and now we can execute on this very very powerful on geographic.
Expansion strategy.
Okay. Thanks.
Again, ladies and gentlemen, if you would like to ask an audio question. Please press Star then the number one on your telephone keypad your.
Your next question comes from the line of Greg Cowan.
Hey, Bill how are you.
Fine great. Thanks.
Yes, like the second what.
What people have said that the earnings and the performance is incredible.
For the.
Third quarter, so congratulations on that.
It seems to me and I think it's clear to everyone that the business is firing on all cylinders.
And the runway is going to be quite long and.
The RV.
Expansion is not just a flash in the pan so.
I get the question that that I kind of have rate is.
Why do you guys think that.
I get the stock at not reacting more favorably.
To these amazing results and sort of what is the company going to do from an investor relations perspective to sort of bridge the valuation gap between.
Where we trade.
Yes, thats, where the two and a half times.
2021.
EBITDA versus versus our publicly traded larger peer.
Yes, so we we communicate that as best we can with our shareholders our.
Our focus really stays on the things, we can control and we can't control the market, we can't control what what investors do.
What we can control is how our business performs to some extent within whatever given what the market gives us we can perform.
We can control how we perform we can control dealerships that we owe new dealerships, we opened new dealerships, we require how we deploy our capital we fundamentally believe that if we continue to perform well the market will understand and reward us and we're not looking for a one month or a three.
Three month or six month, you know results from that.
We're we're patient we're in this for the long haul and that and we're going to continue to to focus and execute on our strategy and we have every confidence that the market will reward us.
For that performance in May not reward us as fast as we would like but I think we've proven at least in the past six months that it will reward us and we think that we will continue to reward US provided we continue to execute so thats, where and and are smart with the deployment of our capital.
And Thats, we continue to try to.
Yes, I think that the points are well taken bill.
I think one thing, though that could be a pretty sort of.
Simple.
Thank you could do is to post the investor deck.
On line.
The deck that you put out for the the road show a few weeks ago was fairly comprehensive but that was only seen by a select group of investors. So.
If you could just post that that presentation on the website for the profit public to see I think that would be incredibly helpful and disseminating the story.
So if you can just consider that that would be great. The second question I had is.
Around some of the the ancillary opportunity.
To grow the business.
As you know.
On the peer to peer.
Segment is growing incredibly fast.
Yet standalone companies such as outdoor Zee.
Which have very very high valuation either high growth.
Low Capex high margin high multiple businesses.
And and obviously camping world is rolling out a similar program.
Secondarily.
It looks like we're not really doing RV rentals anymore.
And and that business also seems to have a very ROI high ROI. So as I kind of think about the multiple on the stock right. It seems like we're being punished because we don't have as many of the high growth high margin high multiple segments of our business. So I guess like how are you thinking about those type of thing.
And so that we can devalued.
Closer to a typical deal.
Dealership.
And camping world in particular.
So I'll go back to the comments I think I made to Steve's question, we consider all investments.
Not all investments, we consider a lot of different investment opportunities. We have certainly considered those two opportunities at at great length. In fact, we were in the rental business for a number of years.
And in the rental business is hard it does not.
Get returns anywhere close.
To the returns we're getting on acquired.
Or or Greenfield dealerships.
It's a best case kind of a low double digit.
Return on capital on the rental business. So we have evaluated those there the return targets did not meet our hurdle, especially given the.
The the other investment opportunities that we have and we determine that that's just not the best deployment of our of our capital if that changes sometime down the road because we don't have other API.
Opportunities to invest in.
We will certainly look at those and invest in those if they if they are the best opportunity, we have and they meet our hurdle rate.
But at this point in time.
Neither one of them does in the rental business, we what we don't want to do is react to.
A.
Potentially shorter term trend in the market and build infrastructure too.
To support that we're not going to we're not we don't want to chase opportunities that may not be long term, we're in the business of selling serve.
Service seen selling financing and servicing or video that's our core business and.
We have a fundamental belief that a focused management team.
Thanks stays focused on their fundamental business will drive the ultimately best results and if we distract ourselves chasing things that aren't our core business.
In the end right now rentals are not our core business.
And we will distract ourselves from capturing the highest return on our core business.
So I think a rentals don't meet the hurdle rate and they are not even close to the return we can get deploying that capital elsewhere and B, we're very careful about distracting this management.
Okay, and just and just one last question best incredibly helpful.
I guess like if you know if.
If you continue to go on the path of of of of buying dealerships opening greenfields and kind of staying focused as you.
As you're laying out here and we're generating tons.
The cash every month and.
And the business continues to boom.
But for whatever reason the market just does not want to give us a real multiple.
Kind of at what point is it management and I get the board can start thinking about sort of.
Broader strategic alternatives to recognize value because I mean, clearly bill you notice with with having your private equity background and distressed debt background that this franchise that we're building with its national scale.
And scope is worth multiples of where the stock is trading today to private equity buyers, who could lever this thing up.
And pay almost nothing for interest and generate massive amounts of of of a.
Free cash on a levered basis, so I get like this is the strategy. If it works that's great but at some point you know.
The stock has to work too and if you don't want to buy the warrants you don't want to buy the stock that that's your decision obviously is being CEO, but at the same time right like the stock kind of neat.
Needs to work at some point and you've been the CEO for you know I think three or four years now and the company has been public for quite a long time and.
The performance of the stock has been okay, but it has but its still dramatically undervalued, where it would trade in the private markets, which maybe 30 40 $50 a share today so.
We're all in this for the long term, but I guess I'm just wondering what your thoughts are on sort of how you think about.
Strategic alternatives review.
If if if the stock Doesnt end up working kind of how we all want it to look out over the next sort of six months as as you say.
Well six months is a very short timeframe and our our horizon is much longer than that and and all of our board and we think the majority of our shareholders have a much.
The longer term view than that and like I said before we're not going to be in patient.
To rush to try and capture value I can tell you that your your opinion on the private equity market and the valuation of this business in this industry is wrong.
I was.
I have very direct experience I've been chairman of this company for 11 years, while it was private equity owned we.
I joined as CEO in 2016, so it will be four years in December and we went public two years ago, which really isn't that long ago, and I think we have a much longer term view than apparently you do and we think valuation will take care of itself. If we get years down the road and we still can't seem to get what.
We think is a fair market value for the company of course, we will consider other alternatives, but given the opportunity that's in front of us and the value. We think were created now and it wasn't that long ago. The you know the original shareholders two years ago paid $8.75 for the and I'm one of them.
For the shares of lazy days, I think they've gotten the doubled their money in two years or close to it. So I think they've gotten an okay return.
In two years on that money, so I wouldn't say, it's okay, I'd say, it's pretty good.
In that time frame so.
We think we can continue to do to do better and we will certainly work hard to do it but I.
I don't think we're going to be considering strategic alternatives in six months that would be a mistake and anyway. So while I got to say on that.
Thank you appreciate it sort of technical much time.
There are no further questions at this time.
Great well. Thank you everyone. We're really excited about what's going on right now and we thank you for your support.
And we'll look forward to talking to you next quarter.
Great great.
The rest of your week. Thank you.
Ladies and gentlemen, this does conclude today's conference call you may now disconnect your lines.
Hello.
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Yes.
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