Q3 2022 American Outdoor Brands Inc Earnings Call
Okay.
Good day, everyone and welcome to American Outdoor brands, Inc. Third quarter fiscal 2022 financial results conference call.
This call is being recorded.
At this time I would like to turn the call over to Liz Sharp Vice President of Investor Relations for some information about today's call.
Thank you and good afternoon, our comments today may contain predictions estimates and other forward looking statements. Our use of words like anticipate project estimate expect intend should indeed.
Kate suggest believe and other similar expressions is intended to identify those forward looking statements forward. Looking statements also include statements regarding our product development focus objectives strategies and vision, our strategic evolution, our market share and market demand for product.
And inventory conditions related to our products and in our industry in general.
And growth opportunities and trends.
Our forward looking statements represent our current judgment about the future and they are subject to various risks and uncertainties risk factors and other considerations that could cause our actual results to be materially different are described in our securities filings you can find those documents as well as a replay of today's call on our website.
At a O P dot com.
Today's call contains time sensitive information that is accurate only as of this time and we assume no obligation to update any forward looking statements.
Our actual results could differ materially from our statements today.
I have a few important items to note about our comments on today's call first we reference certain non-GAAP financial measures are non-GAAP results exclude amortization of acquired intangible assets stock compensation transition costs, COVID-19 expenses technology implementation.
Related party interest income other costs and the tax effect related to all of those adjustments.
The reconciliations of GAAP financial measures to non-GAAP financial measures, whether or not they are discussed on today's call can be found in our filings as well as today's earnings press release, which are posted on our website.
Also when we reference EPS, we're always referencing fully diluted EPS.
Joining us on today's call is Brian Murphy, President and CEO , and Andy former CFO and with that I will turn the call over to Brian .
Okay.
Thanks, Liz and thanks, everyone for joining us today I'm excited to bring you up to date on our recent achievements which include progress in a number of key areas that are the focus of our shareholder value creation strategy.
Panic growth M&A and returning capital to shareholders.
First we have grown our company organically by 62% on a two year basis, driven by our Doc in a box strategy.
Second we are announcing our entry into the $7 billion outdoor cooking market with our acquisition of Gorilla grills.
And third we returned capital to shareholders by completing the share buyback that our board approved in December .
Now, let's dig into the details for.
Over the past two years, many consumers have discovered for the first time or rediscovered a passion for outdoor lifestyle activities as.
As well as for shooting sports and personal protection.
This new larger base of consumer participation has helped drive significant growth in our business over the past two years and should fuel our future growth as well.
During the third quarter net sales of products and our outdoor lifestyle category, which consists of products primarily related to hunting fishing camping and rugged outdoor activities grew by more than 80% versus the pre pandemic third quarter of fiscal 2020.
And net sales of products in our shooting sports category, which includes shooting accessories and products related to personal protection grew by approximately 45% versus the third quarter of fiscal 2020.
We believe that some of the gains experienced by us and throughout the industry over the past two years were propelled by the pandemic.
<unk> and outsize growth last year.
As a result total net sales in our third quarter declined approximately 15%.
As we lapped very strong growth of more than 90% in the comparable period last year.
The decline was driven by lower net sales of products within our shooting sports category, particularly those products related to personal protection, but were partially offset by growth of products and our outdoor lifestyle category.
We moved quickly to adjust to this change in the in the post pandemic environment and worked closely with our firearm related OEM customers and retailers as they address the shift in consumer firearm purchasing activity.
That shift is reflected in recent nicks background checks and it became visible in our incoming Pos data, which reversed course in mid December and took a sudden downward turn.
Despite year over year declines in next this market has delivered tremendous growth over the past two years, creating opportunities for our business.
As the pandemic began 14 million firearm owners have entered the market, creating we believe our new large and long term consumer base for our products and our shooting sports category.
Before highlighting some of the progress we've made on our strategic growth initiatives. This quarter I want to provide a bit more background on how we talk about our business.
We have added as a discussion of our products in two categories shooting sports and outdoor lifestyle.
And explain why.
Shooting sports category includes our shooting sports accessories and products related to personal protection.
These products to be most correlated with the actual purchase of a firearm even though it's important to note we do not make firearms.
The outdoor lifestyle category includes our products related to hunting fishing camping and diverse outdoor activities.
It is important to understand that this distinction between shooting sports and outdoor lifestyle is by products not by brand.
Leila brand typically will belong to one category or the other that's not always the case.
Some brands represent products that fall into both categories such as our licensed MMP products, which include both gun cases shooting sports and knives outdoor lifestyle.
In addition, some of our brands are expanding their product offering into new markets, such as our Wheeler brand, which includes precision tools used by Armours shooting sports.
Now that we are now marketing to operators outdoor lifestyle.
So you might ask why we're sorting our products this way.
The answer is that we believe these categories represent unique markets, which are two very different sizes.
We believe the market for outdoor lifestyle products is significantly larger than the market for our shooting sports products.
Second we believe growth in each category. This fueled by different drivers are shooting sports product sales tend to be driven by consumer firearm ownership, which can be more susceptible to macro events.
Our outdoor lifestyle product sales tend to be driven by longer term trends such as increased participation in the outdoors as well as our focus on active and healthy living.
Growth in both categories remains our focus.
Historically, the bulk of our revenue has come from sales of our shooting sports products, but over time.
Our outdoor lifestyle product sales had been delivering impressive growth.
In fact in the third quarter, our outdoor lifestyle products delivered record revenue and became more than 50% of our net sales.
A milestone we want to build upon as we continued to execute a number of exciting initiatives that support our long term growth.
Growth.
Both organic and through acquisitions as an important part of our long term strategic plan.
Our dock and unlock process continues to fuel innovation and support our plan to deliver a compound annual growth of 8% to 10% over the next four to five years.
Yeah.
During the third quarter, we returned to in person Tradeshows, giving us the opportunity to show customers, a number of new and upcoming products, including the clay Moore, a truly innovative clay target launch or that was a tremendous hit at shot show.
The claim or as a direct result of our Doc in a box strategy, which identified that Caldwell our brand that eliminates the variables that make you Miss.
Had permission to play in shotgun sports.
Clay Moore is unlike any other product in the market.
This put operator device provides all of the benefits of an electric clay thrower without requiring a battery.
The clay Moore as our first meaningful product introduction into shotguns sports, representing a new and exciting opportunity for us.
Our popular Crimson trace products were also at shot show.
Where we were honored to receive the American Rifleman Golden Bullseye Award for optic of the year for our Crimson trace brush line scope launched in 2021.
In the third quarter, we also introduced new products from meet your maker or direct to consumer organically developed brand of meat processing equipment that has delivered trailing 12 month sales growth of over 215%.
New products for meat include two new grinders, and a foot pedal accessories, all engineered to serve the year round processing needs of hunters anglers butchers.
And chefs.
Many of our new products reflect our intent to continue growing our outdoor lifestyle category, while sharpening our focus in shooting sports on areas that represent large long term and more stable markets, such as shotgun sports targets and scopes.
I've just highlighted our achievements on the organic component of our strategic growth plan. So let me update you on our plan to grow through acquisitions we.
We have long stated our desire to supplement organic growth with acquisitions that fit our strict criteria.
Which require a target to one bead dock and a market friendly.
To offer our runway for future growth three serve large addressable markets for have low complexity and five further diversify our supply chain.
After carefully searching for acquisitions that meet those criteria I am pleased to share an exciting development and an important milestone for our company today.
Today, we announced that we will acquire gorilla grills, a michigan based direct to consumer provider of high quality grills smokers and accessories for $27 million in cash or.
Or approximately $24 million after factoring in the future tax benefit resulting from the asset purchase.
<unk> is a clear strategic fit for American outdoor brands that provides us immediate access to the $7 billion U S barbecue grill market.
With an estimated $9 million grills sold in the U S. Each year. The grille market has benefited from recent trends towards our outdoor cooking and provides plenty of runway for future growth.
Founded in 2015 Gorilla has generated net sales growth of over 161% in the past two years with a compound annual growth rate of about 50% over the past five years and calendar 2021 net sales of over $15 million.
Along the way Gorilla has developed an impressive strong brand authenticity among our loyal consumer base and has done so with a concentrated portfolio of innovative products.
By plugging gorilla into our adventure brand name and employing our dock and unlock strategy, we see great opportunities to broaden its product offering.
We also believe gorilla is very complementary with our other brands in our portfolio such as meet your maker.
After all once our meet consumers have process their harvest. The next natural step is a gorilla grill that delivers that same high quality performance.
We believe there is tremendous opportunity here to leverage our E Commerce platform and brand lane teams to cultivate those relationships.
Importantly, gorilla significantly expands our direct to consumer revenue base in fact, both gorilla and meet your maker are 100% direct to consumer brands that when combined would have generated about 8% of our trailing 12 months net sales on a pro forma basis.
Sure.
Lastly, but importantly, the addition of Gorilla will drive our revenue mix further towards our outdoor lifestyle category, our key initiatives and our long term growth strategy.
We are excited to welcome gorilla grills into the American outdoor family of brands.
With a robust new product pipeline in place our portfolio of authentic outdoor brands in hand, and an energized outdoor consumer market.
We remain excited about the future and we look forward to sharing our progress as we take our brands from niche to note.
With that I'll turn it over to Andy to discuss our financial results.
Okay.
Thanks, Brian .
Net sales for Q3 were $70 1 million compared to $82 $6 million in the prior year, a decrease of 15, 2%.
Following last year's 90% record growth.
As Brian explained we are beginning to talk about our products in two distinct categories shooting sports and outdoor lifestyle.
Our decrease in total net sales for Q3 was driven entirely by a decline in sales of products in our shooting sports category.
A decline that occurred primarily in our brick and mortar channel and was consistent with the decline in nix checks for the same period.
Despite that decline we believe the shooting sports market has grown over the long term.
Adjusted Nix checks are up 32% and the trailing 12 months period compared to two years ago and that has translated to growth in our business as well.
Sales in our shooting sports category grew almost 45% over Q3 of fiscal 'twenty.
The outdoor lifestyle category, partially offset the one year decline in shooting sports with product sales growing by 7% during the third quarter.
We believe this market is also growing on a long term basis evidenced by increased participation trends in outdoor activities and we certainly benefited from that.
Our third quarter product sales in the outdoor lifestyle category have grown 81% versus two years ago.
As Brian indicated growth in our outdoor lifestyle brands is an important element in our long term strategy.
We are pleased that in Q3, the outdoor lifestyle category accounted for over 52% of total net sales, while our shooting sports category was just over 47%.
In Q3 last year that split was about 41% for outdoor lifestyle and 59% for shooting sports.
Turning now to E Commerce as you know our E. Commerce platform is a key element in our strategy to place our brands wherever consumers decided shop for them, whether online or in a physical retail store.
This approach is important in our current environment when consumers have the ability to alternate between in store shopping and online options.
Our e-commerce sales have grown over 122% in the past two years, delivering a CAGR of over 49% and demonstrating the positive impact of this strategy.
On a one year basis Q3, net sales and e-commerce decreased by two 9% as we faced a difficult comparison due to a significant onetime sale in the prior period.
That sale was to clear out slower moving inventory to make room in the channel for our Crimson trace scopes, including the New award winning brush line.
Excluding that one time sale E Commerce net sales grew by over 2% compared to the prior year.
Gross margins in the third quarter came in slightly above our expectations at 45, 8% an increase of 60 basis points from last year.
GAAP operating expenses for the quarter were 27 $4 million compared to $27 2 million in Q3 of last year.
We attended the Archery Trade Association show and shot show for the first time since 2020.
These shows were very successful and we showcased a number of exciting new products and had the opportunity to reconnect in person with customers.
As a result show related expenses have returned to our opex after their absence last year.
Also embedded in opex or cost related to our strategic initiative to stand up our own it platform and a decrease in intangible amortization and variable costs, resulting from lower sales volumes.
non-GAAP operating expenses in the quarter were $22 5 million compared to $22 $2 million in Q3 of last year.
non-GAAP operating expenses exclude intangible amortization stock compensation and certain nonrecurring expenses as they occur.
GAAP EPS for Q3 was 27 as compared with 56 last year and non-GAAP EPS for Q3 was <unk> 52, compared to 82 last year.
Our fiscal 'twenty two figures are based on our fully diluted share count of approximately $14 2 million shares.
Adjusted EBITDA for the quarter was $10 5 million at a margin of 15% compared to $15 $8 million or a margin of 19, 1% for the prior year.
Adjusted EBITDA for the first nine months of fiscal 2022 was $31 8 million or 15, 8% and was consistent with our expectations.
Now turning to the balance sheet and cash flow.
We maintained a strong balance sheet at the end of Q3, which allowed us to follow through on all of our capital allocation priorities.
We ended Q3 with $22 $8 million of cash and no borrowings on our line of credit.
Cash declined by roughly $10 million during the quarter, which included $7 million in share repurchases as well as the net impact of increased inventory offset by lower accounts receivable.
We've outlined on previous calls our strategy to accelerate purchases of high volume items in order to mitigate risks in our supply chain and to support our new products.
This strategy has helped us capture demand for our shooting sports products in the past.
A category that can experience sudden shifts in Pos and order patterns like those we saw develop in the middle of our third quarter.
Those shifts were the primary driver of our inventory increase in Q3, but despite that increase we believe this is inventory that will move through the channel within a reasonable amount of time.
And the higher inventory levels allow us to be prepared for changes in demand, which can happen very quickly in that part of the business.
We believe we are well positioned to support orders in both shooting sports and outdoor lifestyle categories in the coming quarters.
Our spending for Capex and patent costs of $1 $9 million in the quarter included $1 1 million for our integration as expected.
We are now planning total capital expenditures in fiscal 'twenty, two up between 7 million and $7 5 million.
We continue to operate portions of our it environment under a transition services agreement with our former parent company as we stand up our own independent platform by August of 2022.
There are two components to our it implementation infrastructure and ERP we.
We successfully completed the infrastructure component in November and our ERP integration remains on track for go live this summer.
Our total cost estimate for the project remains at roughly $8 million over the course of fiscal 'twenty, two and 'twenty three.
Before I give you the breakdown, it's worth noting that we have shifted about $400000 of the $8 million from fiscal 'twenty to over to fiscal 'twenty three.
$200000 of this was in one time opex and the other $200000 within duplicative expenses.
In fiscal 'twenty, two we expect capex of about $3 $5 million and onetime operating expenses of about $1 4 million.
We also expect to record $1 million of duplicative expenses in fiscal 'twenty two.
These are the costs of operating both our existing and our new platforms in parallel during the system changeover period.
We will treat both the $1 $4 million and a $1 million as technology implementation costs and G&A when calculating our non-GAAP operating expenses and adjusted Ebitdas.
We ended Q3 with no outstanding bank debt and the full capacity available on our $50 million line of credit and.
In addition, we are very happy to announce that TD Bank has recently approved an amendment to our credit agreement that increases our borrowing capacity to $75 million without changing the $15 million accordion feature.
This expansion means that effectively we were able to put together the gorilla transaction with zero impact to our dry powder.
We expect to close on this amendment within the next two weeks.
Since our spinoff, we have outlined our capital allocation strategy, which is first.
To invest in organic growth.
To seek complementary acquisitions and third to return capital to shareholders.
This quarter, we clearly demonstrated progress on all three priorities.
Inorganic growth new products accounted for 28, 8% of our total net sales in Q3, and 26% of our net sales year to date.
And acquisitions, we are very excited to bring <unk> into the <unk> family of brands.
While we plan to integrate that business starting in Q4, we remain on the hunt for additional brands that fit our criteria.
We continue to see a healthy amount of M&A activity and we intend to remain disciplined in our approach.
Our increased line of credit gives us additional flexibility as we seek out opportunities.
And in returning capital to shareholders and.
In December our board authorized a share repurchase program of up to $15 million.
Leveraging the strength of our balance sheet, we bought $7 million of shares in our third quarter and have since then completed the remaining $8 million.
As a result, we have purchased nearly 6% of our outstanding shares at an average price of $17 92 per share.
Please note that based on timing of shares purchased to buyback had little effect on our share count for Q3.
In Q4, we expect our diluted share count to be roughly $13 6 million shares.
The full impact of the program will be reflected in our share count in fiscal 2023, beginning in may.
Now turning to our guidance.
As we discussed today, we plan to continue expanding the outdoor lifestyle category and as a result, we believe product sales from this category will remain above 50% of our total net sales in the long term.
That said sales of shooting sports products comprise a significant portion of our business today.
And no sales are more impacted by consumer firearm purchasing trends, which had been declining recently according to nick's background checks.
As a result, we are lowering our guidance for the balance of fiscal 2022.
We estimate that net sales for fiscal 'twenty, two will be in the range of $245 million to $250 million, which at the midpoint would represent a year over year decline of 10, 6% and growth of nearly 48% over fiscal 2020.
With net sales in that range, we expect full year GAAP EPS in the range of 61 to.
To 74.
non-GAAP EPS in the range of $1 65 to.
To $1 78.
And adjusted EBITDA margins of about 14%.
For the fourth quarter, we expect gross margins to be roughly 44% slightly down sequentially from Q3, but consistent with last year. Despite a year over year net sales declined as we lapped last year's extremely strong growth of nearly 50%.
We are carefully managing our expenses and as such we expect Q4 operating expenses, both variable and fixed to be lower in terms of dollars and Q4 last year.
Lastly, we expect our effective tax rate will be approximately 25% in Q4, and our fully diluted share count for the year will be about $14 2 million shares.
With that operator, please open the call for questions from our analysts.
Certainly ladies and gentlemen, if <unk> like to ask a question at this time. Please press. The Star then the one key on your Touchtone telephone.
So looking at all from the queue you May press the pound key please standby will be compile the Q&A roster.
Now first question coming from the line of John Kernan with Cowen. Your line is now open.
Hi, This is John Cardoso on for John Kernan, I was hoping we could dive into trends by outdoor activity, you mentioned that shooting sports and personal protection ceding some softness.
But can you give us some more granularity about the consumer trends youre seeing across either other outdoor activities or end markets.
Sure John This is Brian Murphy.
So as you pointed out shooting sports and personal protection, we are seeing some <unk>.
Softening in demand actually Pos is coming up just slightly here as of late but still down relative to where they were at.
And then on the outdoor lifestyle side, which is how over referring to it is we're seeing continued strength across the board so hunting fishing camping.
Rugged outdoor which is largely our cutlery and tools.
Products, so across each of those categories, we're seeing tremendous strength right now.
Great. Thank you for that just one follow up here you mentioned some of the gains in the last two years were attributable to outsize pandemic driven consumption.
Q4, rebased or implied guide seeing any other material headwinds are drivers that we should be contemplating.
I guess, just really is Q4's adjusted level, how we should be thinking about the business on a go forward basis, given today's ongoing macro and industry trends really any color there would be appreciated. Thank you.
Yeah. This is Brian again look I'd say for Q4 kind of what we guided for the rest of the year is based on the trends, we're seeing right now in the shooting sports side.
And the trends that we're seeing an outdoor lifestyle, which we would expect to continue to grow.
But as it relates to next year, we just I think it's just too soon for us to come out and say what that looks like.
Okay understood that would be it for me thanks for taking my questions.
Our next question coming from the line of Ryan Meyers from Lake Street Capital. Your line is open.
Yeah, Hi, guys. Thanks for taking my questions first one for me. So when you look at the decline in the shooting sports business.
Was this all demand related or was there any sort of inventory sourcing problems or supply chain issues with that.
Yeah, Hey, Brian It's Brian It is.
It's mostly due to the demand side, so we feel.
As you know we have invested in our inventory we made that decision a long time ago, just given some of the supply chain constraints.
Inventory that we have the inventory that's in the channel, it's all really good inventory.
I think right now what we're seeing is especially at the dealer and distributor level is perhaps a shifting of open to buy dollars towards ammo as those 14 million new firearm owners that entered the market just hadn't had a chance to get their ammo yet because it wasn't on shelves.
Like I said I think we're seeing a.
Pos's bounce back a little bit for the shooting sports side, but yes to answer your question. It's what we're seeing on the demand side and again, partially contributed to the open to buy at the dealer and distributor level. Okay.
Okay. That's helpful. And then I was wondering if you could highlight the margin difference between shooting sports and outdoor lifestyle category.
Yes, Great question. This is Andy we.
We don't really break out the margins between the two categories.
I would say.
Overall, they're not all that much different but don't really have that detail broken out.
Okay. That's helpful. And then last one for me if I'm looking at this the right way it looks like the.
Guidance implies for the fourth quarter is kind of looking for a decline in profitability compared to the previous guidance I Wonder if you could just sort of walk us through what the puts and takes here of the RFS.
Yes. This is Andy again, so we're expecting as we talked about in the comments, we're expecting a little bit of a sequential margin decline nothing out of the ordinary if you look at last Q4, it's kind of right in line with that and then kind of offset with some savings both fixed and variable.
Especially if you compare that to Q4 last year.
Okay. That's all I got thanks, guys.
Yes. Thank you.
And as a reminder, ladies and gentlemen to ask a question. Please press star one.
And our next question coming from the line of Scott <unk> with CL King <unk> Associates. Your line is open.
Good evening and thanks for taking my questions.
Hey, Scott.
I missed the.
Some of the breakout that you have both short shooting sports versus outdoor living could.
Could you just give that again on a two year stack for each one and maybe on a year over year, how we performed.
Yes, Scott this is Andy.
So shooting sports year over year in the quarter was down 31%.
Outdoor lifestyle was up 7% on a two year stack and again, that's kind of what we look at as a.
As a long term trend.
Using sports was up 81% outdoor lifestyle is up 62%.
Sure.
I'm sorry, Scott.
Scott, Let me backup sorry that was been total shooting sports was 45% outdoor lifestyle, 81%, so 62% total.
Okay got it.
Alright, and just tying back into your I guess your organic growth guidance I guess five years is intact.
10, I think is the number you put out there but it also.
Yes. It includes this year right, which would be close to I guess on the high end of sales down by 10% and 10%. So could you give us a bridge of how we get back to that range. I mean, obviously things have picked back up in the out year I know youre not guiding for 2023 year Budd.
Maybe just walk us through that.
That latter of how we get there again.
Sure Hey, Scott This is Bryan.
What I would tell you is let's talk about outdoor lifestyle first outdoor lifestyle is becoming a greater share of the business.
And we are seeing continued growth in outdoor lifestyle, that's going to continue to move up over time, it's also in bigger markets.
And we've been talking about like most of our dock and unlocks.
Examples that we've given over the last 18 months or so have been brands like Bubba brands like Hooey Man you know meet your maker.
So I would say they are the farthest along when it comes to the unlock phase and so we're seeing increased distribution increased number of new products getting into new bigger larger addressable markets meet your maker went from zero to I think we said $6 4 million in this most recent.
So <unk>.
We've got plans to do the same thing with gorilla.
And then on the shooting sports side, you may be asking okay. What you are seeing some softness right now what does that look like over the long term.
While there is without a doubt a higher level of participation that has entered the market.
As those people begin to go to the ranges and they get their ammunition.
<unk>.
Somewhat constrained.
They're going to need hearing an eye protection theyre going to need shooting routes are going to need gun cleaning equipment. So we have all of that to help them progress them down into that shooting sports.
<unk> lifestyle as well and we are seeing that if you look at the products that performed the best in this last quarter.
It was mostly the products that help sustain that long term shooting sports lifestyle. The pieces that really were under a little bit more pressure, where the personal protection side.
Which obviously after last year.
We didn't see as much of that.
And then and then we're also planning to ensuring sports and we teased added at shot show now that we're moving further along to that unlock phase of Doc on lock in.
Is getting into categories like shock on sports.
So we just teed up a new product called the claim or it's a fully mechanical.
Play thrower that we think is totally a game changer that people that saw it at the show, including our customers loved it.
And so we see a product like that.
Any way to get us into these more stable markets within within shooting sports and we've got other things plan there but.
That's how we get there over time once you stack those we have a plan to get there.
Got it and then last question on margins.
Adjusted EBITDA margins were looking I guess on 14 14, 5% for this year and the latest guidance.
I know you're not guiding for next year, but just trying to get a sense as we attach profitability to that 8% to 10%.
What is a normalized range that we should be thinking about not sure. If you guys had given that in the past or not but just if you.
Did just remind us.
Yes, Scott this is Andy so we're still targeting the mid to high teens, along with that 88% to 10% growth.
Okay.
That's all I have thank you.
Great. Thanks, Scott Thanks, Jeff.
Yeah.
Thank you and I'm not showing any further questions. At this time I would now like to turn the call back over to Mr. Brian Murphy for any closing remarks.
Thank you operator before we close I want to thank our employees for their contributions and their dedication to our growing family of brands.
I also wanted to thank everyone on the Ob team and the gorilla team for bringing on bringing our acquisition across the finish line great job.
For our investors. Please note that we'll be attending the Roth Conference next week in California, and hope to see some of you there.
Thank you everyone for joining us today, we look forward to speaking with you again next quarter.
Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect.
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