Q2 2021 Park City Group Inc Earnings Call
Greetings and welcome to the Park City group fiscal second quarter, 'twenty 'twenty, one and earnings call. At this time, all participants are in a listen only mode.
And on an answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. A the reminder of this conference is being recorded and is now.
Now my pleasure to introduce your host Rob Fink with F. N K I R. Mr. Fink, you may begin.
Thank you operator, and good afternoon, everyone. Thank you for joining us today for Park City group's fiscal second quarter earnings call.
Hosting the call today are Randy Fields Park City group, CEO, and Chairman and John Merrill Park City Group CFO.
Before we begin I would like to remind everyone that this call could contain forward looking statements about park city group within the meaning of the private Securities Litigation Reform Act of 1995.
Forward looking statements of statements that are subject that are not subject to historical facts such forward looking statements are based on current beliefs.
Hum.
Park City group management and are subject to risks and uncertainties, which could cause actual results to differ materially from those forward looking statements such risks are fully discussed and the company's filings with the Securities and Exchange Commission.
The information set forth herein should be considered in light of such risks.
Park City group does not assume any obligation to update information contained in this conference call.
Shortly after the market closed today the company issued a press release overview of the financial resort results that will be discussed on today's call and invest.
Investors and visit the Investor Relations section of the company's website of Park City group Dot Com to access this press release.
With that said I'd now like to turn the call over to John Merrill and John The Call's yours.
Thanks, Rob and good afternoon, everyone. Today, We report financial results for the second quarter of fiscal 'twenty 'twenty, one ending on December 31.
Highlights of the quarter are as follows.
Recurring revenue growth for our SaaS business, which includes compliance and supply chain was up 7%.
The marketplace revenue grew 112%.
The growth and all three product lines, our consolidated revenue grew 7% from $4 $8 million to $5 2 million.
Sales and marketing expenses decreased 17%.
Net income increased 145% aided by a gain related to the forgiveness of on P. P. P loan cash.
Cash from operations year to date was $3 8 million and our balance sheet remains strong with $23 9 million of cash.
The bottom line is we continue to deliver a profitable diversified growing business with a strong recurring SaaS component with a modest cost structure and our marketplace business, whereby we source hard to find things for our customers.
Considering the significant challenges related to the pandemic and ongoing uncertainty I am encouraged with our results thus far for fiscal 'twenty and 'twenty one.
As we have said previously on earnings calls our software business comprised of compliance and supply chain services is now effectively all recurring in nature.
This recurring revenue more than covers our fixed cash cost, resulting in predictable profitability.
I believe we are now at scale for the software side of the bedroom, so incremental revenue either recurring or transactional largely fall for the bottom line of roughly an 80% to 85% margin.
Therefore, as the software side of the business expands we are able to support higher revenues without meaningful increases on our SG&A lines.
While the pandemic continues to extend the sales cycle for our software business. We believe there is pent up demand as things begin to normalize when this will occur and what if the new normal that is anyone's guess.
And as a reminder, we still have only a 10% penetration with our existing software customers. So farming our own customer network remains a top priority for opportunity.
And I've said before we can significantly grow our software business just by farming the existing network.
While the pandemic continues to delay decision, making on software side of the business. It has increased demand for our marketplace solution, whereby we source vet and transact business for hard to find things such as the nitrile gloves and masks gowns and just to name a few of them.
This resulted in a fluctuating amount of nonrecurring and largely unpredictable transactional marketplace revenue.
This revenue and its respective cost result on the sales mix between our software business and marketplace business, which may compress our total company gross margin, but due to our low fixed cost base. It is increasing our profitability and free cash flow.
Because we sit between buyer and seller of our margin whether it's a markup of goods for a commission of substantially less of them, we get and the software side of the business.
Gross margin on incremental revenue for our software business base is approximately 80% to 85%.
Conversely, marketplaces on average roughly five to 10 per cent.
We are focused on expanding the marketplace margin, both within and outside the traditional grocer segment.
While both the software and marketplace offerings of our business are difficult to separate from our business strategy and software suite. Our overall offering to our customers is a combination of solutions that enables customers to be compliant and have more actionable visibility into their supply chain, replacing vendors and diversifying product offerings and sourcing hard to find items.
Turning to the numbers.
Fiscal year 'twenty 'twenty, one second quarter revenue was $5 2 million up 7% from $4 8 million and the same quarter last year.
It should be noted that 410000 of onetime revenues for the software business occurred in the December 2019 quarter that did not reoccur and the same quarter of 2020.
If you consider that we backfill the large portion of the one time revenue with subscription and our software revenue was up 17% year over year.
Total operating expenses increased 14% from $4 2 million and Q2 2020 to $4 7 million and Q2, 'twenty and 'twenty one.
The principal driver and the increase in total operating expenses was the increase and cost of services and product support related to higher marketplace revenue and partially offset by cost reductions and hosted software and other technology service charges.
Sales and marketing expenses decreased from $1 4 million and Q2 2020 to $1 2 million and Q2 2021.
The <unk> 17 per cent decrease was the result of lower sales travel trade shows and cost reductions, partially offset by higher commissions due to higher revenue.
Yeah.
G&A cost increased modestly from $1 1 million and Q2 2020 to $1 2 million and Q2 2021.
This was primarily the result of rising insurance costs due to the pandemic and increases and our bad debt reserve.
We believe it is prudent to increase our reserves in this uncertain time.
For the second quarter of fiscal 'twenty and 'twenty. One GAAP net income was one 6 million for 31% of revenue, whereas the 663000 or 14 per cent of revenue.
The forgiveness of our PPP loan and recognized as a one time gain on debt extinguishment was $1 1 million of this increase.
Earnings per share for the second quarter of fiscal 'twenty and 'twenty, one was <unk> <unk> per share more than double the <unk> <unk> per share and the same period of fiscal 2020.
Fiscal year 2021 year to date revenue was $10 4 million up eight 3% from the $9 6 million for the same period of fiscal 2020.
It should be noted the year to date revenue in fiscal 'twenty and 'twenty included $475000 and onetime revenue that did not occur and the same period of fiscal 2021.
As we have said previously from time to time, there will always be a small component of customers that buy and the license versus rent meaning subscription.
In fiscal 2021 year to date, one time revenue and our software business is less and 1%.
Total operating expenses for fiscal 2021 year to date was $9 4 million versus $8 9 million.
The 6% increase is largely the result of higher revenue and the associated cost of services of the increase in revenue.
Sales and marketing expenses for fiscal 'twenty and 'twenty, one year to date declined 13% from $2 9 million and fiscal 2020 to $2 5 million and fiscal 2021.
This was due largely to tell at the commuting versus in office maintenance costs, the reduction and trade shows and lower travel expenditures.
G&A costs for fiscal 2021 year to date versus fiscal 2020 were essentially flat down 1% or 24000.
While cost of benefits and insurance and reserves for bad debt have increased as a result of the pandemic, we remain committed to adjusting our cost structure and other areas to keep the cost low.
Turning now to cash flow and cash balances.
For the second fiscal quarter of fiscal year 2021, we generated cash from operations of $3 7 million compared to $2 7 million and the prior year period and increase of 37% due to increases and incremental revenue.
Total cash at December 31, 'twenty, and 'twenty was $23 9 million compared to $20 3 million at the end of fiscal year 2020.
With respect to our stock buyback program and.
As we said during the height of the Covid pandemic, we made the prudent decision to halt of our buyback program.
Not purchase any shares during either the first or second fiscal quarter of 2021.
The company has one point for $6 million remaining on its existing buyback program and given our current ability to generate cash and may consider opportunistically resuming the program at some point in fiscal 'twenty one.
Thanks, everyone for your time today at this point of pass the call over to Randy Randy.
Thanks, John.
The second quarter continued our momentum and validate the progress we've made and driving the earnings power and cash generation ability of the company all.
All three segments of our business grew highlighted by our marketplace offering.
We've now reached sufficient scale with our decreased and modest fixed cost base that we're positioned for sustainable and growing profitability.
As a company this has been and remains our focus on growing profitability and cash flow. This is how we measure ourselves and we think this is how investors should measure for us as well where in the earnings company today.
Three years ago, we signal of our strategic direction to drive the company toward higher recurring revenue, making it easier to predict and delivering structural profitability and cash flow.
We're very proud of how well and how quickly that's come about this year is and will continue to be a showcase for the validity of that direction.
Keep in mind, we report GAAP, rather than non-GAAP as most people and technology do.
Generally speaking the pandemic continues to affect our business slowing decision, making and the sales cycle for our compliance and our supply chain solutions, but at.
At the same time, it's illuminated the and increasing customer awareness of our capability to source hard to find products and marketplace.
The reality validates the strategy of having these three synergistic legs to our physical stool, we've become the industry leaders and our specialty supply chain offering and and our compliance management.
Over time, it's our hope to establish ourselves as the go to place for hard to find items, we're making progress, but we're not there yet.
Our marketplace solutions helped our customers secure products from debt its suppliers when the others have been unable to supply and are all of the stock solution has helped customers keep better supply is on the shelf.
As the pandemic abates, and we begin to normalize and we expect to see increased demand from our traditional of recurring revenue solutions and both compliance and supply chain.
As we've said before the three legs of our stool provide a complete supply chain solution for our customers.
And enables them to source suppliers.
Net suppliers and transact all business and one integrated complementary solution I don't know of any other supply chain and vendor, which does all of this and the end.
But with our transition for onetime to recurring revenue effectively complete the impact of the this revenue mix is unlikely to materially diminish our of donor do remain profitable.
Today, we enjoy a highly visible SaaS revenue stream, which more than covers of our fixed cost and the enables consistent profitability and other words, we of the business that we call structurally profitable structurally generating cash and the most significant improvement and our balance sheet and our history. The proof is in those numbers.
And that you've now school.
And our view, we're positioned now to opportunistically resume our share repurchase and simultaneously continued to fortify our balance sheet, we don't have to choose one of the other and.
We now know we can do both.
Customers demand financial strength, and we're using it as the primary anchor and our net new business marketing and that message is definitely resonating with our prospects for.
And we're working to expand our customer relationships and our revenue per customer and we're doing that actually in two different but related ways. Let me see if I can explain.
We're trying to get our customers to take up more modules per customer and more application suites per customer.
And we go through debt.
First of all of adding additional functional modules to our existing applications and up selling those to our existing customers. We're in the process of adding terrific new functionality to each of the three components of our platform the compliance to supply chain and to marketplace. Each one of these additions.
Each one of these modules will add revenue and importantly, each of the attractive and it's alright to prospective new customers. We've already seen that in fact at the same time, we're advancing our cross selling moving at our customers across the whole platform from compliance to supply chain, the marketplace and vice versa as John puts it.
For me again, this will have the impact of increasingly driving our monthly revenue from each customer by adding incremental value frankly, the very little cost on our part.
The upselling, the new modules and as a very important way to grow our business. For example, we have two new products targeted to our tier two suppliers.
And our new active quality management system, which we call active QM S allows quality and safety teams and manufacturing and distribution operations the.
The simplified the tedious error prone manual recordkeeping processes required for critical controls and things like temperature checks swab testing sanitation pest control equipment inspections cleaning floors, etc. Initial market reaction to this new and unique offerings and very very strong from our perspective the offering.
The doubles the recruiting revenues net of customer pays us on.
Our certificate of analysis product, which helps track certification from suppliers of matches them to distributors needs is also in our new portfolio of modules.
This helped create an NDA and tracking of various elements required by retailers or distributors and provides evidence of the supply chain to ensure compliance along the entire supply chain.
Our tier twos demanded the solution like this we listen and now it's available it makes their job much easier.
Once again this offering is implemented will meaningfully increase the recurring revenue from the tier two supplier and in fact, we already have a few new wins for both of these add ons.
We have a great deal of headroom with our existing customers and we're learning to capitalize on it.
Ross selling from one of our suites to another like compliance to supply chain is obvious. It's also substantially more challenging, but we're learning and we'll continue to learn to do it.
And we've begun to see accelerating success and our cross selling efforts. We recently signed our first large compliance customer for our out of stock management offering. Additionally, more tier two hubs ready modules driving higher recurring revenue our pipeline for new tier one hubs for our supply chain offerings expanding growing.
Even in this uncertain time.
And the interim marketplaces has emerged as a critical part of our platform. The pandemic has made it harder the never defined trustworthy compliant and that did vendors shortly.
Shortages of P. P E chest freezers and the like and other items has created incremental challenges for retailers trying to compete with online retailers and to maintain their market share.
The market place to solve many of these challenges contributing significant transactional revenue to our topline this quarter the third such core during the ROE.
The result is the topline revenue growth for the fiscal year, though in future years, we're likely to be more focused frankly on growing the bottom line and just the top line as the pandemic abates and the marketplace revenue normalizes and we do however believe the marketplace actually will be profitable for the full year. We've recently added some additional tam.
On to our marketplace team to drive some recurring revenue and grow out the space with the additional capabilities the industry.
Dynamics that serve as long term secular catalyst for us have not changed and if anything they've been reinforced.
Sometimes the whole new market and appeared to open for us like complaints management of few years ago.
Recently, we've been exploring and government is it possible mark and that vein and we launched and inventory control Grant management and reconciliation platform the.
Critical emergency management organizations and every state government task.
With the expansion of our marketplace solution built on the Repositrak platform naturally will streamline and automate critical supply chain processes, and we expect that it will help significantly solve the challenge of complicated and annual grant cracking and auditing the.
It's going to be and in the future are increasingly overwhelming for the state agencies. This offering could increase our presence and the government market expand our offerings and we certainly well beyond our traditional grocery space.
We have our first day customer now engaged in the pilot program. The there'll be some months before we have a good read on the opportunity that I'll start and keep you posted.
Finally, a few years ago, we launched our Tenex initiative, which was focused on increasing what we call internal efficiency and productivity. This program has wildly exceeded our goals and we're now doing more with fewer people all the while continuing to delight our customers.
On the giving an example, when we launched this initiative some years ago, we had five people and the county and servicing 800 accounts from the accounting perspective, the Tate we have a team of five people servicing 20000 accounts much of the success has come from internally developed automation and CRM tools.
Which helped drive productivity, it's intact and obsession of ours. The next step will be leveraging artificial intelligence to drive the more productivity enhancements for the company as the whole we're growing the goal is to grow efficiently and not spend all of the growth on the added costs, we preferred will be called again.
And the structural profitability.
Carefully contain costs well below a predictable recurring revenue base and fact, the ability to automate and internally is actually an important core competency of ours and it's certainly a critical element and growing our structural profitability and very very excited about what we might be uniquely be able to achieve the mis area.
It has the possibility.
If we can develop the tools that we currently envision of simultaneously driving our revenue and decrease and a related costs for some period of time into the future. So in summary, we're and an excellent position with scull of recurring revenue synergistic transactional revenue structural profitability growing cash flow and a V.
Very strong balance sheet.
The pandemic has certainly slowed some parts of our business that serves as the powerful catalyst for some of the others in other words, we're able to grow our top line, while expanding our bottom line even faster.
So with that I'd like to now open the call for questions operator.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad. The confirmation tone will indicate that your line is and the question queue. You May Press Star two of you would like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up of your handset before pressing the star keys.
One moment, please and while we poll for questions.
Thank you. Our first question comes from Ananda Baruah with loop capital. Please proceed with your question.
Hey, good afternoon, guys and happy new year and.
Glad you guys are doing well good to hear congrats on on solid results.
And.
Yes, congrats on the on the on the stock acting well as well of late and reflects performance I guess I have the few if I could.
And I guess, the first one would be.
And they're all sort of revenue related but the first one yesterday. This is probably for Jon. The you mentioned you guys are at the scale and software.
And you know sort of incrementally the rest of falls down to EPS and <unk> 85 per cent margin is that it.
What do you mean is that I guess, that's the baseline revenue dollars and John.
What's the <unk> roughly and instead of that baseline dollar should we use the balance of the quarter and then and then should we just literally think of the incremental value going forward and and that's the drop through.
Yeah, I think and we've said this on prior calls it takes about $12 million to $13 million and cash forget the accounting to run our business specifically the software business. So as we incrementally add more recurring revenue than that dollar and about 80 to 85 cents on the dollar falls.
The bottom line and that's the software some of the debt, but as we add more marketplace revenue, obviously, I sort of far lower margin call it 5% to 10 per cent.
Yeah, I got it sounds like it's 80 to 85 cents on the dollar.
After the $12 million to $13 million alright.
And just from that.
And the above the accurate.
So sort of few yeah. So if you if you look at the you know call. It the recurring software side of the business and I'll call. It 16, five or so on top of that any incremental dollar over that would fall to the bottom line and $88 85 per cent, but again, our third it's about $13 million and our base of cash calls.
Yes.
Totally got it totally got it.
And then just on the pent up demand.
And the context, you can give us that sort of indicates that to you I know timing sounds like it's the understandably like who is not not perfectly clear, but what are the indications that are pointing to the pent up demand like what what's the feedback you guys are getting in that regard.
John You want me and Randy.
And you could take that one.
Well, we're seeing more inbound inquiries, which is usually a very good sign of.
The reception to our new products has been very strong.
And for reasons that must have something to do with people and and I don't want the same normalizing because thats where of long distance and the world from that but people adjusting for the current environment.
And is creating a better selling environment, we're getting people on the phone.
On this first started to happen honestly for the first six months you had people debt.
And I had never worked from home before so just getting them to talk to you was like really that's tough.
And now I think theres been and adjustments to of the.
And the zoom and station of the supermarket industry.
So two of certain extent, it's not quite business as normal because people are still struggling to keep things in stock. There's if you were of supermarket chain, you've got to worry about your frontline workers.
You've got to worry about gloves masks and cleaning it I mean running of retail business today is exquisitely difficult.
So in the midst of all of that we are seeing more interest.
And where we suspect that that will begin to.
Show up and our P&L late in this fiscal year, which is would be June may June or early in the next one or both of those July August.
It just feels very good to us at the moment and it.
Interestingly, we have several of the we call them tier ones and the largest accounts and our pipeline.
And are starting to.
Roll out and get more aggressive about what we can do for them. So it just feels good at the moment.
That's awesome.
And just with regards the you guys of the 10% penetration of and I'm going to call you install base and thank you said your software and cloud customers and in this year and you're gonna be a big focus on increasing that penetration is there anything that you can well and is there anything that you guys are our disc.
Deciding to do a bit differently. The press that penetration or is the matter of sort of just yeah, you're doing the right things just keep doing what you're doing the penetration is going to come naturally.
Well I think.
I want to be careful how I characterize this because it'll sound a bit more negative and it might otherwise.
We are.
Extremely good and taking care of our customers at servicing our customers.
And that requires both good work on our part and excellent communication on the part of our.
The people and our business that manage the accounts clearly and our lack of turnover on our customers' success reflects that.
But what we haven't been very good at historically is asking the customer literally as simple as we've done. This for you shouldn't we do more Oh I didn't even though you guys did that.
So I would say that we've not been very good historically.
Beyond the I'm going to call it servicing of our accounts and we've been fabulous at that so we're beginning to create more sales and it's not just the incentive but sales environment for our people better support from them better marketing et cetera.
And it's not a it's sort of quick fix it's a slowly changing the culture to a more sales oriented culture, and where a year ago as we got started on this.
We did it and fits and starts and and sadly.
The world went to sleep because of Covid.
But at the beginning to wake up and our people are getting better that are more excited about it because they are learning new skills and.
And I think the that change positions us really well.
We've had a number of competitive wins, where are the pieces pieces of art.
Of our business that others have customers have come to us because of the failures with other customers and our financial strength has really been of competitive advantage.
So I. Thank all of the pieces the already in place I'm not satisfied with how well we're doing it I am satisfied with how we're approaching it and I would expect the pace of.
To begin picking up I'm going to guess honestly, though it's at least another year until we're at a pace that I'm pleased.
Pleased with.
Got it Randy that that's Super helpful. And then just my last one that dovetails into my last one.
I always enjoy getting updates on on every corner of how how you. How you guys are viewing the revenue growth potential longer term of the of the recurring business and.
You know I think right now and I didn't check my notes, but I believe it's north of 10% of the tempered that plots or something like that and that ballpark and the last time I asked the guys. Yes, yes is that still the case and so really as you can get and if you can get meaningful installed base penetration what would that have.
And the potential the move higher over time.
Well two of certain extent, our service mentality and the need to really wrap ourselves around our customers.
Creates a constraint it's not just bring them in a way on Bam and thank you ma'am and move on and it's nothing like that its very intense.
Consequently.
I still believe for the next year or to the the recurring revenue growth is going to fall somewhere in the bracket of 10 type of perhaps 20 per cent per year.
Over time as we do what we talked about today add more easily upgraded modules and get better at cross selling.
Given the scale of the white space and our customers.
There really isn't the reason that not only is that achievable, but yeah. It possibly possibly could go higher and the reason that that would be acceptable to us is that if it's more revenue from the same customers.
It doesn't mean that we're spreading and increasingly and service group over the customer set so I got it yeah. It is the answer to your question is we really do feel good about where we are the key.
For the quarter. It may vary from that but we can't see why you know 10 to 20 per cent a year and remember what that does to our bottom line, it's pretty highly leveraged not debt.
Debt sense bidding and and operational sense, the bottom line and cash generation should be exquisite.
So as I say, we feel very good about where we are this is gonna be of a very good year.
That's really helpful I'll cede the floor and thanks so much.
Thanks Amanda.
Thank you. Our next question comes from Tavis Robinson with D. A Davidson. Please proceed with your question.
Thanks, so much and congrats on a great quarter and first off on your new products offering one and extension of the marketplace and the other of the compliant how should we think about there and potential financial impact during the next 12 months and Additionally, what's the backstory on your effort with FEMA How'd, you took care of that opportunity and I have a follow up after that.
Okay, well, let me answer and.
Let me try and give you and intelligent answer to that starting with the more difficult piece of the the government.
We did some government work and our last fiscal year.
It's not like dealing with the private sector.
It's quite different again, we need to learn more about that and get more proficient at it.
And as a result of that work, we stumbled into a couple of other interesting opportunities one of which we've we've seized on and initiated the pilot. The pilot is with the state of emergency management group of the director of debt Management Group has made the decision to you.
Use our technology.
I would think so far of the way they've laid out the requirements that we should be.
Successful over the next six months.
And helping them.
And if that happens going from state to state will just become part of our sales process and and we're already learning the mechanisms for doing that.
It's simply too early to see.
And what the outcome would be with any degree of certitude, but.
We're bringing it up because we are we periodically do these new things, we did compliance that turned out pretty good.
We did marketplace, that's turning out to be very very good and now we're going to try some government activity the kind of combine those two activities. So we shall see but we do feel good about it at the moment.
On the new.
Modules are par.
Of our business, we are increasingly going to be modular rising what we do so that we can as we develop new functionality and it's usually customer driven typically a customer will come to us and say.
And and I'm not exaggerating. This is true they will say, we love working with you guys. We wish you could do this because this is a problem that we're having and we would love. It if you could solve that problem.
So we typically then take a look at the problem assess it.
Side, how it can fit into our platform and then we go off and do it it's rarely more than a few months of development timeline for us to bring a new module of the market. We then typically start with the customer that asked about the problem. We then go to a couple of others and at that point, that's been product type.
And just if you will and should be Sellable. So this is a somewhat different approach than we've taken before and and I guess and away.
I'm just.
Trying to keep everyone on the bus and.
And in the know historically, we've just sort of included everything we are the the the everything platform and now what we're saying is that our customers are going to begin to pay for the additional functionality as we deliver it we think that gives them.
More on literally investment of what we're doing and obviously it has the salutary impact of increasing our revenue.
I think the both of these new products have the potential in the next fiscal year not the one we're in but next year to.
And to make a significant contribution so we feel good about the direction and Theres a lot of work going on internally in terms of this modular innovation of our platform.
But.
And this space will be talking more about it over the next year or two was that two indirect of us.
No no that makes and that makes sense yeah for.
And a follow up I was wondering if you could talk about the current level of distraction and the food retail and lab level like when it comes to your core of decision maker and how they may or may not be affecting your sales cycle. Like for instance, can you quantify what this is doing that sales cycle, yeah, yeah, I can't quantify it but it's all cash.
Really good question, but let me give you a couple of examples. These are absolute examples within the last 30 days.
We will call to speak to and remember we sell quite high inside of an organization. So what we're calling on our customers. It's typically somebody and the C suite or very close to the C suite.
On several occasions that I'm aware of here's what we were told.
Oh.
He's not in to take your call. He's in the stores working because we are short staff.
So yeah, it's not clear when he'll be able to get back to you literally there's such a shortage of of and and remember the the horrible position.
The grocery store workers are put in and.
And they stand all day long and ensure they have masks and gloves, but.
Zillions of people going in and out they're exposed to the virus.
If it's not an easy thing so the absentee rate the sickness rate is higher than anybody would like which puts pressure on these companies to get as many people and the field and the stores as they can at it I've never seen it like this before.
So it does impact and the and if the question is quantification, it's not years it's months.
And now as this the situation seems to be normal of I got I hate to use that word, but whatever the word should be as that's beginning.
We're seeing it's easier to get some phone calls and whatnot. It just we internally we refer to it as people are able to now move their attention to other things.
The the industry as a whole is very thin managerial Lee.
It's always been that way because it's the low margin business.
Consequently, they can't handle five or six or 10 things of the time, it's it's sequential so right now it's staffing the stores stocking and the stores et cetera and.
Overtime.
It's been it's been getting better and we feel good about that.
And it's not where it was before the pandemic.
And maybe a third of the way back is probably the best way to put it.
Great. Thanks, so much for taking my question and.
Of course.
Yeah.
Thank you there are no further questions at this time I would like to turn the floor back over to Randy fields for any closing comments.
Not much to say I think we've given you a pretty good indication that the the.
The year is going to be an excellent year, we are continuing and our focus on our balance sheet and as we mentioned we feel of.
Increasingly good about the position that we're in.
Rob.
Thing else that we need to cover off on the are we there.
It sounds like we're there.
Thank you all talk to you soon and thanks, everyone.
This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation of a wonderful evening.