Q3 2020 Duluth Holdings Inc Earnings Call
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Good morning, and welcome to the Duluth Holdings third quarter 2020 conference call.
All participants will be in listen only mode should you need assistance.
He's sitting on what conference specialist by pressing the star key followed by zero. After todays presentation, there will be an opportunity to ask questions. Please note. This event is being recorded I would now like to turn the conference over to Donnie case of Investor Relations. Please go ahead.
Thank you and welcome to today's call to discuss Duluth, Trading's third quarter financial results our earnings release, which we issued this morning is available on our Investor Relations website at IR Duluth trading Dotcom under press releases I am here today, with Steve Schlack, Chief Executive Officer, and Dave Loretta Chief Finance.
Oh officer on today's call management will provide prepared remarks, and then we will open the call to your questions.
Well again I was I train mind, 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 risks and uncertainties include but are not limited to those that are described in our most recent annual report on form 10-K, and other SEC filings as applicable.
These forward looking statements speak only as of the day of this conference call and should not be relied upon as predictions of future events and with that I will turn the call over to Steve <unk>, Chief Executive Officer of Duluth trading Steve.
Good morning, everyone.
And thank you for joining todays call.
I am pleased to report that net sales for the third quarter grew 13% to $136 million on largely driven by a 40% growth in direct sales year over year.
Our ecommerce business continued to grow at the same pace as the second quarter.
With 15 million site business up 30% to last year.
All 65 of our retail stores were opened during the quarter.
Sales in the stores declined just 16% year over year, which was the best store performance, we've seen since the pandemic began.
Throughout this year COVID-19 has unfortunately remained unpredictable challenge in the retail landscape.
It test it has tested the agility and resolve of our entire organization.
I'm very proud of our team's efforts in delivering the best customer experience regardless of the challenges.
Right now the recent surge in the virus caseload is creating new concerns around holiday shopping.
Beyond the usual apprehension of all retailers experience.
That said, we've done everything within our control to be prepared for peak season.
We are fully staffed across all our operations to handle the early shopping that is being driven by pre season promotional activity our inventory levels are in good shape.
And we're fortunate to have customer centric technologies in place like buy online pickup at store.
In fact, the pandemic has really accelerated the adoption of BOPUS, which handled over 33000 orders in the third quarter and.
And we expect that order level my triple in the fourth quarter.
This quarter we are.
We also added text messaging for curbside pickup.
To further ensure and easy and safe retail shopping experience for our customers.
So far our early Black Friday sale event was effective at pulling some business forward with direct sales on November increasing 30%.
Regarding retail all of our stores were closed on Thanksgiving and store traffic on Black Friday was below what we initially anticipated.
Theres still a lot of distractions out there the.
The researchers have co bid is a concern regarding in store shopping and it also clouds the OCC the outlook for consumer spending.
We know that delivery providers are working around the clock to handle increased volume and shipping deadlines. Even so research research indicates that 47% of consumers are more interested in shopping online than last year, which puts added pressure on the delivery network.
Well. These are good questions marks are outside our control we have been busy looking beyond this very different holiday season.
During the quarter, we launched two new brands in early October we introduced our new entry level workwear from in 40 grip.
And in late October we launched best made which is a premium offering with design focus hard goods and apparel.
With Alaska hard gear 40 grip and now best made we are building a portfolio of distinct brands within the Duluth trading ecosystem.
We are both enthusiastic and confident that we can apply or a winning formula of innovative solutions based products memorable storytelling and strong customer relationships to build out the next phase of our direct to consumer platform.
In doing so it is important to know that our process is very deliberate and totally connected to the Duluth brand reputation for quality products that support hands on work active hobbies and the modern self reliant lifestyle.
Our goal is to expand brand recognition with a wider and younger audience.
As well as offering an extended range of options across the good better best price categories.
Fortunately, we also started to pivot toward digital marketing, even before the pandemic and now are rapidly scaling up the learning curve on.
Our investments in digital tactics continue to drive sales and strong new customer growth, which was more than 20% in the third quarter.
We will continue to expand our testing and learning in this space and expect that our new customer data tools will realize additional efficiencies in our overall marketing program.
Finally, I want to wish you on your families a wonderful and safe holiday seasons.
I'm grateful to our team that has worked so hard for our customers and the greater community.
Due to the successful efforts of our Pink Buck Naked campaign, we were able to donate a $120000 for the American cancer Society.
We are also the proud sponsors of the ideal National Championships that honor the hard work and talent of trades people across our nation, who face the challenges of 2020 to make our daily lives a little easier.
With that I'll turn the call over to Dave to discuss our financials and operations.
Thanks, Steve and good morning, everyone.
As Steve mentioned, we're pleased with our third quarter performance.
We reported net sales of $136 million up 13% compared to $120 million last year.
Effective and timely brand messaging, coupled with strong product lines drove top line sales momentum during the third quarter.
As expected the holiday shopping season began early early this year kicking off in mid October.
Our second annual Big Dam birthday sale event ran September 24th through October 5th and beat last year's event overall by 5%.
We also pulled forward a key sale event into late October to finished the quarter strong and avoid the busy election week.
Within non store markets direct sales grew 37%.
On even more encouraging within store markets direct sales grew 46%, reflecting the strong brand awareness that end market stores can generate even while shopping shifts to our digital channels.
As Steve mentioned all of our stores were opened during the third quarter.
Store traffic was was lighter than last year as expected. However.
Our store sales improved throughout the quarter and ended down 16% compared to last year.
Most recently store traffic has fallen off roughly 30% to last year, coinciding with rising cobot cases, and renewed pandemic restrictions to minimize non essential activities.
Our investment in digital tactics continue to fuel sales and new customer growth during Q3.
Customer traffic through digital channels repeated the volume of the second quarter with 15 million site visits up 30% to last year.
In addition, improving conversion rates led to digital product sales growth of 42%.
Digital prospect and continued to drive significant new buyer growth and help convert our high brand awareness into a first purchase.
We leveraged social media to prospect for new customers driving a third of the sales on our site.
We also completed the first phase of our Adobe CRM initiative and began introducing targeted email campaigns at the end of the third quarter.
We've just started to leveraging the power of this tool and we've identified opportunities to generate growth in 2021.
The strong demand we experienced in the first half of the year for our functional comfortable apparel continued throughout the third quarter.
Overall, our men's business was up 12% driven by strength in the core men's categories, including underwear fire hose pants, denim and long tail teas.
Alaskan hard gear was up over 50% to last year fueled by our spring summer clearance styles.
We were also excited to launch two new brands force.
40, grit and best made in time for the holiday shopping and are very optimistic about the future potential both lines represent.
Our women's business delivered very strong growth this quarter, increasing 15% over last year, driven by comfortable basics and I know the collection.
Strength in local workwear essentials like flex fire hose and overalls continued from the spring summer with sales increasing 50% from last year.
Our plus line continues to grow and now represents 11% of the total women's apparel business.
Cold weather gear like base layers lined bottoms sweaters and outerwear is off to a strong start with cooler temps across the country.
Third quarter strong sales momentum further improved our inventory position.
Which ended the quarter up 17% compared to Q3 last year, which is more in line with our current sales trend.
Our gross margin rate declined 220 basis points year over year to 52.4%, reflecting deeper discounts on clearance goods.
However, the third quarter year over year product margin decline was much improved compared to the trend in the first half of the year, which was down 330 basis points.
We do expect the gross margin rate in Q4 will be lower than last year, but not to the same degree as the Q3 decline.
SGN a expenses for the third quarter increased 6.5% to $68.2 million compared to $64 million in the comparable period.
This included an increase of $4.1 million on selling expense and a 5.4 million increase in general and administrative expense.
Partially offset by a decrease of $5.3 million in advertising and marketing expense.
As a percentage of net sales SGN eight decreased 320 basis points to 50.3% compared to 53.5% and the third quarter last year.
The improvement was largely driven by reduced advertising spend offset by increased shipping costs to support website sales higher retail overhead costs, driven by new store growth and increased depreciation expense associated with technology investments.
Selling expenses as a percentage on net sales increased 120 basis points to 16.7% due to greater shipping cost from the higher mix of direct sales as a percentage of total sales.
In the fourth quarter, we expect this expense deleverage will continue with strains on the last mile network, adding costs and heavier staffing needed to fulfill direct orders.
Our stores, we're also continuing to support direct order volumes either through buy online pickup in store or ship from store.
General and administrative expenses as a percentage of net sales increased 140 basis points from last year to 23.4%.
In dollars DNA DNA expenses increased 5.4 million largely due to new store growth over the last 12 months higher depreciation related to technology logistics investments and a onetime credit last year related to a restricted stock forfeiture.
We opened three new stores during the third quarter in Florence, Kentucky a.
On a suburb of Cincinnati.
Orland Park, Illinois, near Chicago, and Springfield, Oregon near Eugene.
This brings our total store count to 65.
There will be no additional store openings for the remainder of the fiscal year.
But still have one plan for to open up next year.
As a percentage on net sales advertising and marketing costs decreased 580 basis points to 10.2% price.
Primarily driven by reduced catalog in TV advertising as well as cutting Billboard spend than local store markets.
Partially offset by higher digital spend.
During the fourth quarter, we plan to continue driving direct traffic with increased targeted and prospecting digital spend.
But the overall amount will be down 15% to 20% from last years Q4, due to less TV ads and fewer catalogs.
Our adjusted EBITDA for the third quarter increased $4.2 million or 57% to 11.4 million and represented 8.4% of sales and 230 basis points of EBITDA margin expansion.
For the quarter, we reported net income of 900000 or three cents per diluted share compared.
Compared to net income of 200000 or one cents in the third quarter last year.
Moving onto the balance sheet.
We ended the quarter with net working capital of $136.6 million, including $12.8 million in cash and 91.9 million outstanding on our total line of credit of $150 million.
Our cash flow initiatives have continued through the third quarter, and we expect will be free cash flow positive by year end.
Given the continued uncertainty with rising COVID-19 cases, and the impact that is having on store traffic. We are not in a position to give financial guidance for fiscal 2020.
While there while there are macroeconomic factors outside of our control.
We have made every effort to ensure peak preparedness for the most critical quarter of our fiscal year.
We are confident in our brand the strength of our omni channel model and our team's ability to provide exceptional customer service and this holiday season.
I joined Steve and wishing you all a safe and healthy holiday.
On the happy much anticipated new year.
With that we'll open the call for questions.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone for using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble current roster.
Our first question is from Jonathan Komp from Robert W. Baird. Please go ahead.
Yes, hi, Thank you good morning.
Wanted to just start off more of a near term question I know, Dave you highlighted.
It's on some of them in trends quarter to date that you are seeing but can you maybe just expand a little bit more on on the trend the crop direct and retail and any thoughts on.
Factors that might impact the balance of Q4 book, but thinking about sales as well as any shipping constraints.
And any associated costs, there if you could give a little more color.
Yes sure John.
As Steve mentioned we.
Direct business for the month on November was was pretty healthy at 30% up.
It certainly was a.
Interesting month, the first couple of weeks. We're we're much lighter direct was positive in all that period, but with the election noise.
Definitely had an impact on on the first couple of weeks on November, but we we accelerated coming out of that period and had our first global event.
Kicked off two.
Two weeks ago.
With a lot of success.
So we're pleased with how the direct business continues to trend up now on our stores.
You know they they are in the 30% range down from last year on and that's I think a reflection of just softer foot traffic hesitancy of shopping in store and so weve pivoted to a lot of our store.
Staff, helping with direct orders.
In that period of time.
Yeah.
Overall, though you know with thinking that we were able to manage the expenses.
Between store fulfillment and direct fulfillment fairly effectively.
Haven't had a significant problems with the shipping.
At this stage, we worked proactively with our shipping partners to make sure that we had ample capacity.
And haven't had any delays and pickups.
So feel good about that.
But.
You know, we're expecting it to be a pretty healthy business continuing through the next two weeks.
And I think we'll see where that translates into store versus web site, but clearly online shopping is a preferred form of shopping this year.
Yeah. That's that's really helpful. I appreciate that.
Maybe switching fits the margin I know you've had a couple of quarters now pretty encouraging margin improvement and inventory also.
Improving while that's happened so maybe just a broader context, if you cared about about kind of the progression of margin and when you think about.
Some of the areas I'm saving their gaming and sustainability going forward. If you could just talk more about.
Your your outlook from margin I mean, the ability to continue on the improvement you've seen.
Yeah beyond you know this this year and we certainly expect our gross margin or product margin to be a big contributor to operating margin expansion on <unk>.
I did articulate that we.
You know, we're going to expect our fourth quarter gross margin to still be a bit below last year, but.
But not to the near degree that we've had at year to date.
And that's reflected of the cleaner inventory positions that really help.
Manage the product gross margin.
No.
We've got a a logistics network that's now all under our control we pulled out of Threepl sales.
Over the summer were ramping up a new facility in Dubuque.
That is going to provide productivity and efficiency improvements for us going forward.
That will certainly help with with with our variable expense and be able to leverage that through through into 2021.
And and simply the fact that we we've rationalized our capex spend from fewer new stores.
We're not we're not going to see that the additive fixed costs from depreciation and and so we expect to be able to leverage that.
Into the future as well.
Advertising has been a big contributor of leverage force this year and that's been somewhat of a shift from on Nash.
National Day.
Marketing and advertising on the primarily through TV to digital and <unk> and that allows us to be more targeted and on more nimble with how we spend those dollars. So we expect that to continue as well.
Okay. That's helpful color. Thanks, Dave.
Good day.
The next question comes from Jim Duffy from Stifel. Please go ahead.
Hi, good morning, guys.
Doing well.
Good morning.
Hello, Okay, you on great execution through challenging times.
You've done a particularly nice job with the inventories in the cash flow I'm curious, how you're planning inventory receipts as you look into spring what are some of the prevailing strategies behind your your buys in the assortment planning.
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Yeah, Jim you know, we started our spring assortment planning on six months ago, and and focus it on a sales plan that we knew what's going to be more realistic without.
Some of the new stores that we had been on the pace of so it's more reflective of the sales forecast that that we have going forward.
Which means we'll be able to we'll be able to buy to those levels.
But you know we're also using the learnings from from the prior spring season too.
To adjust the categories within within the assortment with.
With an eye towards what's really working.
Our spring summer event was strong on the women's side with with garden as a key focus on.
Our mens so a lot of lot of great success with some of the warmer weather summer items that we introduced with lighter weight fabrics.
So all of that.
Learnings go into to our assortment for next year.
And you know gives us enough.
Capacity too.
Not to chase something the items are going to work really well and even even some year round items that that do well in the first half of the year we can.
Re up and and chase in the back half of the year on so it gives us more and more nimble ability to do that without the overhang of of a on a large inventory position that we spent a good part of this year working working down.
But you know were.
We're well on to adjusting our buys for fall winter right now for next year and that's being informed by success on items that were seeing sell right now.
Great and then a follow up question on the marketing efficiency really nice leverage from reduced spending from legacy media forms like catalog.
TV Billboard.
Do you guys see that.
Permanent savings or is that more circumstantial given the covert backdrop.
So we take this to be reflective of a more permanent shift to digital marketing spending.
Okay, more marketing efficiency or other dollars coming back into the model as business starts to normalize.
No I mean, we think these are these are permanent shifts we'll always have some presence on TV net that is an important aspect of our brand awareness program. So so that will be there, but not to the heavy degree that we've had in the past digital has proven to be much more.
Efficient and ER and flexible in near term. So we'll continue to learn there and it's also been a tremendous new buyer acquisition tool for us.
Through prospecting on social media.
So we can we will continue to do that catalog will also continue to have a presence.
In those specific times of year, but but we you know we've we've been reducing net for the last few years as it is.
And you know I think the of the efficiency that we're at today is a you know the big.
Big.
Improvements are largely behind US now, it's a lot of fine tuning and using our customer data tools to be to be as targeted and personalized as possible.
Because we think that that's really what's going to.
Be the big.
The big improvement for us going.
Going forward.
Okay, Great and then last one from me just on the multi branded strategy with.
40 grid to best made what are you guys seeing in terms of average selling prices are you seeing.
40 grid bring in a new consumer.
This is actually mixing average selling prices down are you seeing more units.
You know, it's pretty early on with with 40 grit and best made 40 grit certainly is designed to attract a more cost conscious younger customer and that that is what we're seeing.
Yeah, you know the average the average ticket is lower than the Duluth trading core items.
But.
Our objective is to keep that everyday low price or not.
Have to use it as a as a markdown clearance vehicle. So so we'll maintain a constant.
Margin on that.
But it's still growing and.
And we're just now starting to see a lot of the product reviews on our web site that that fuels interest as we go and we're adjusting.
Some of our marketing tactics around that but it will be.
It is a it will what will be a slightly lower price point.
On average ticket size than a than the core Duluth goods, but.
But we're expecting that we're going to see some volume three.
Through that through that category as it gains more more traction and more awareness.
That's made is more of the higher higher ticket fewer items, but the premium and again you know that still very new we haven't really introduced any of the new products, yet that we want to bring to the brand that will start coming next year.
And.
We'll give our higher end customers something to aspire to and.
On a little premium level as well.
Great. That's all I had thank you guys.
Thank you.
Again, if you have a question. Please press Star then one from.
Next question is from Dillon card in from William Blair. Please go ahead.
Yes, thank you very much.
Dave I, just want to clarify two points on the model when you're talking about gross margins for the fourth quarter.
Sequential improvement are you are you expecting kind of promotional activity at least the depth of it to improve relative.
Relative to where your inventory levels, our associates should see kind of a success a sequential improvement.
And then on the advertising costs as per.
10% or so low double digits kind of the new level that you anticipate being able to hold even in a more normalized environment.
Yeah I'm in start with the advertising, we do think a low double digits is what we'll be able to hold to you know that.
Going forward, so that that that is.
The the the assumption for us on the.
On the gross margin, what we're going to see in a in the fourth quarter is you know a level that's comparable to.
Comparable to the third quarter and in terms of its gross margin rate.
But you know that's still going to be down a bit from a from last year and going forward were expecting that to to start to improve in the in the first quarter and 2021 with the inventories as clean as as they will have been in a in a while so.
Yeah, that's that's what we're looking at.
Great.
And then maybe for both of you just on the sort of the portfolio approach here.
Just kind of curious sort of your thinking as far as rolling on some of these brands directly on to the Duluth platform is there an opportunity longer talk longer term to kind of incubate and maybe spin some of these off how you think about their presence in stores.
And just given kind of the environment that we're in.
It's something where you can maybe add a couple of more tuck ins to kind of sort of further the strategy just would be curious what your thinking around all day.
Yeah, Yeah dealing we definitely think that our portfolio approach can sustain you know more sub brands and you know we're not actively.
Out there looking for them, but.
But when they come our way or or we do see something that might be attractive, we'll certainly consider it needs to fit the criteria of you know within the overall Duluth umbrella brand.
Position, but but if it's you know, allowing us to extend into a different demographic.
Or or or category that that we think is complementary and can.
Drive some some additional business for existing customers then.
We're going on we're going to look at that you know, we haven't really thought about spin offs or being heavy transaction oriented business and on so far what we've got with the Alaskan hard gear you know our development of 40 grit, our purchase of the best made brand.
We're committed to those going forward and you.
You know, we don't we don't necessarily see that the.
Would need to leave but where we could see growth is if there's a store formats that might make sense for those brands on their own and that I would say that's a ways away. We don't have anything on the drawing board, but that's certainly a a longer term strategic potential as these gains some on some scale and.
And really can stand on their own and this is the first phase of having him stand on their own is just you know a presence on our website as a separate tab. So so that that's that's going to be the big Big learning for us as we nurture these brands.
Yeah, and that's more what I meant.
Yeah.
[noise], Yeah, and I guess, maybe to that kind of same vein debt.
The new customers that you are seeing kind of and I think you called this out last quarter as well would you attribute I know you're getting some more innovation on the sort of core Duluth side as well, but would you attribute some of that at least to these newer.
Brands as well and then I was just curious I know, we're kind of early days here, but have you seen kind of a sticking it to that new customer on.
Maybe sort of coming back to purchase or on holiday or anything that kind of gives you some comfort.
As sort of the acquisition that Youve seen in this environment depending on.
Mhm, Yeah from that you know new buyer.
Sticking as we're seeing that or is that it continues to play out like we have in the past and so the surge of of new acquisition. This year.
Does give us confidence that that they're going to be you know retain at at at least the same level, if not better than we've had in the past part of our confidence in the ability to do that is having a tools that will allow us personalized outreach to those those first time.
On buyers and make him a second time buyer.
In the past, we haven't really been able to do that.
Very effectively at all and so with with with our new CRM.
Model that is a major you know benefit that net we'll able to to see some higher retention rates.
From this new buyer group.
So yeah.
Very very positive with the fact that our new buyer file is going to be you know fueling some of the growth force.
In the coming years, where where new stores were a growth vehicle for us in the years past.
Great. Thank you very much and have a great holiday.
Thank you. Thank you.
The next question is a follow up from Jonathan Komp from Robert W. Baird. Please go ahead.
Yes, Thanks, just Doug.
For a follow up if I could.
One just on the store strategy you have seen only one lease signed per 2021 could you maybe just follow up share a little more perspective on on what you're thinking for the store strategy here and you.
Do you have any any pivots going forward.
[noise] [noise] or the store strategy was a you know started to formulate really a year and a half ago when when we really.
Started to understand the maturity curve of the stores and.
I'd say you know our focus has been getting the most out of our out of our existing stores, but understand that they do have a role to grow our market. We still think that's that's an important element to brand growth long term so physical presence in markets, where we don't have stores is still.
Ill an objective of ours.
But what we want to give ourselves the time to do now is as avail evaluate the nature or the shape the cost of the stores and and really you know the sites that we think are going to be most fruitful for for those new geography is we're going to that we're going to explore for for a physical presence.
So we're giving ourselves time right now to do that.
I'd say more more to calm down the road as we design. Some some concept of a store of a future and up and start to test. Some some on some concepts with that but you.
You know 15 stores a year at two plus million in and build out cost is you.
You know, we don't have that on on the roadmap today and.
So we're looking for other ways to to have some physical presence to complement the online presence.
Because we know that that's.
That's really what helps the brand the most.
Yeah, Great then maybe just one more broader question on operating margin given given the slower pace of retail growth along with.
The advertising savings and Dave your comments about product margin improvement from the year that had just how are you thinking about operating margin and maybe what might it take to get back to you.
Hi single day type levels are higher over time.
How are you thinking about that.
Yeah, we do certainly have ours, our sights set on operating margins that were at the levels. We previously enjoyed you know high single digit.
Operating margin a low double digit EBITDA in fact, I think longer term, we can get to mid double digit EBITDA margins give.
Given the.
The leverage that we have with the scale now with stores and logistics and systems in place.
What's going to get US there is certainly going to be some product margin expansion.
You know, we we in the past were.
In the mid 50% range.
Higher than that when you include the shipping revenue, which were not assuming we're going to get back in the future, but but more sustainable product margin. That's based on some full price selling its based on a mix of goods that are really relevant to to the season that they're in and and markdown strategies that are on.
Formed by.
By some automated systems that the versus a very manual approach today.
All of those will will lead to gross margin improvement for us.
And on top of that I think where we're going to see leverage is on some of the overhead.
And and a bit on the variable expense.
You know, where we're going to land. This year on advertising is is probably a good spot for us.
In terms of feeling enough marketing to.
Across the brands, especially some of the newer brands.
That that sometimes require a higher amount of of ad spend.
But gross margin variable expense and leveraging the fixed cost is what's going to get us back to those high operating margin levels.
Understood very helpful. Thanks again.
Yep. Thank you.
The next question from Richard Haydon from THC. Please go ahead.
Hi, just a couple of numbers questions do you have a number per cap ex fuel.
On the 21.
We haven't released that yet, but what weve talked about is it's going to be a similar level to where we are this year.
We only have one store plan for next year.
But we do have some initiatives and technology and logistics.
That will require some additional capital but.
But but should be at a comparable spend too to what were on what we're going to do this year, which is.
From 16 to 17 million in Capex.
Uh huh.
Excuse me second in the quarter on.
Just trying to reconcile the variation the GBM.
With me.
Stock based compensation hit a swing of $1.1 billion or three cents per share pretax is it included in gross profit per cost of goods sold excuse me.
Oh, no that's in the SGN a.
Yesterday, and what sort of.
They'll be should we see going forward is there was a pretty big swing for the quarter.
[noise] well that yeah.
Versus year over year.
Right Yeah the.
The normal amount is what we expense this year, what we're comparing against to last year was an unusually.
Low stock expense, because we had a forfeiture last year what are our CEO left the company and so that program that was a one time credit of about a million to last year. So that's why it looks like a big variance year over year.
[laughter].
Okay. Thank you.
Okay.
This concludes our question and answer session as well as the conference. Thank you for attending today's presentation. You may now disconnect.
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