Q1 2023 A.K.A. Brands Holding Corp Earnings Call

Speaker 1: And that.

Speaker 1: I I.

Speaker 2: Greetings, welcome to AKA Brands Holdings Corp. first quarter 2023 earnings conference call.

Speaker 2: At this time, all participants are in listen-only mode.

Speaker 2: A question and answer session will follow the formal presentation.

Speaker 2: If anyone should require operator assistance during the conference, please press star zero from your telephone keypad.

Speaker 2: Please note that this conference is being recorded.

Speaker 2: At this time, I'll turn the conference over to Emily Schwartz. Emily, you may now begin.

Speaker 3: Good afternoon. Thank you for joining aka brand's first quarter 2023 conference call to discuss the results releases afternoon which can be found on our website at ir.aka-brands.com.

Speaker 3: With me on the call today is Kiran Long, Interim Chief Executive Officer and Chief Financial Officer. Before we get started, I'd like to remind you of the company's safe harbor language. Management may make forward-looking statements which refer to expectations, projections, and other characterizations of future events including guidance and underlying assumptions.

Speaker 3: Board-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed. For further discussion of risks related to our business, please see our filings with the SEC. Please note, we assume no obligation to update any such board-looking statements. This call will contain non-GAAP financial measures such as adjusted EBITDA and adjusted EBITDA margin.

Speaker 3: Reconciliation of these non-GAAP measures to the most comparable GAAP measures are included in the earnings release furnished to the SEC and available on our website. The call will also contain certain numbers presented on a pro form of ASIS, which includes the impact of culture kings as if we had owned it for all periods and comparable periods described. With that, I'll turn the call over to Cron.

Speaker 4: Thanks Emily. Good afternoon everyone and thanks for joining the call today.

Speaker 4: Our first quarter results exceeded our expectations on both the top and bottom lines, driven by solid execution across the brands, and our continued focus on managing the business prudently.

Speaker 4: We've delivered net sales of 120 million compared to our original expectations of between 113 million and 116 million. We've delivered net sales of 120 million and 116 million and 116 million.

Speaker 4: Importantly, we continue to balance growth and profit, and I'm proud that we deliver 2.2 million of adjusted EBITDA, which also exceeded our original expectations.

Speaker 4: We make great progress against our strategic initiatives in the quarter, and I'm also really proud of the efficiency improvements we made to our operations.

Speaker 4: A key highlight for the quarter was their diligent approach to managing our inventory.

Speaker 4: Notably, we ended the quarter with 112 million in inventory, which is done 11% since the end of December 2022, and down 7% from the same period last year.

Speaker 4: Another highlight was that we continue to reduce our debt levels.

Speaker 4: We paid off over $11 million of debt in the first quarter and paid off another $10 million subsequent to quarter end.

Speaker 4: This brings a current debt levels down to 122 million.

Speaker 4: down from $144 million from the end of fiscal 2022. We remain focused on strengthening our balance sheets and plan to continue to pay down our debts through the remainder of the year.

Speaker 4: I want to thank our teams for their hard work and execution to deliver a strong start to the year with first quarter performance that exceeded our expectations on both the top and bottom lines.

Speaker 4: We are a laser focused on growing awareness, which ends the MLendium customers.

Speaker 4: On a trailing 12-month basis, we serve 3.6 million customers and we're confident that there is great potential for our brands to gain market share in the US and globally.

Speaker 4: We believe the key to building durable next generation brands is to be everywhere our customers are.

Speaker 4: Our brands have mastered building authentic relationships directly with customers and providing great experiences.

Speaker 4: While direct-to-consumer remains our priority and the main source of our growth, as announced last quarter, we are testing new ways to broaden our reach through select wholesale partnerships, marketplaces, and physical stores.

Speaker 4: So let me share some updates on our strategic initiatives and omni-channel tests.

Speaker 4: And then I'll go into greater detail on our financials.

Speaker 4: Starting with Princess Polly, her largest grant.

Speaker 4: Princess Bali continues to be a top teen fashion website in the US according to Piper standards taking stock with teen survey.

Speaker 4: and we're confident in the global potential for this branch.

Speaker 4: As mentioned, the munitions back at our brands, and we're particularly excited by the Union manager's holding us.

Speaker 4: As a reminder, Princess Polly used the test and reorder merchandise approach and they're able to get hundreds of new styles on their site and socials within a matter of weeks.

Speaker 4: In the first quarter, they launched nearly 3000 new styles and are seeing strong demand for new units, particularly in dresses, swim and more casual festival attire as spring is in full swing in the US.

Speaker 4: The brand also continues to expand their sustainable low-impact swim and inclusive sizing collections.

Speaker 4: As part of the inclusive decision collections, they're seeing high demand for petite styles, which is already outperforming expectations, and more importantly, attracting new customers to the brand.

Speaker 4: As we mentioned last quarter, Princess Polly also launched a Princess Polly logo branded collection, which nearly sold out in the first few weeks.

Speaker 4: underscoring that brand affinity and loyalty is strong. On the marketing front, Princess Polly's priority is connecting with their customers in an authentic way and showing the poor average that customers are.

Speaker 4: They continue to refine their TikTok marketing strategy, and so I'll list the follow-up account, engagement, and ROI in the first quarter.

Speaker 4: Additionally, as part of their efforts to build Brown Awareness, they had a large spring break event in Miami which was their first in-person event since 2019.

Speaker 4: During the day, the Princess Poly team drove around in a branded Jeep giving out Princess Poly merchandise and gathering social media content.

Speaker 4: And at night they held a private rooftop event for their top tier customers, influencers, and college ambassadors.

Speaker 4: Feedback to customers and influencers was overwhelmingly positive with nearly 400 influencers and over 55,000 social media engagements during the events.

Speaker 4: As mentioned, we are testing Omni-channel initiatives across all of our brands to create more touch points and broaden our reach. Through surveys and focus groups, we received feedback from Princess Polly customers that they wanted to physically experience the brand in person.

Speaker 4: to be able to touch and feel the fabric, try on items in a store, and interact with Princess Polly associates.

Speaker 4: I'm excited to announce that they have officially signed a lease for the Princess Polly store, which we expect will open in the Century City Mall in Los Angeles in the third quarter.

Speaker 4: This location is a perfect strategic fit for Princess Polly's first door, given the high volume of Gen Z and Millennials shopping the Open Air Mall daily.

Speaker 4: We look forward to the soil opening and we'll develop and share plans for future princess polystores based on the learning is from this initial story.

Speaker 4: As a note last quarter, Princess Polly also piloted their first wholesale partnership with Paxon.

The initial test, which included select Princess Polly styles online and in 15 stores, exceeded expectations with more styles selling out in just a few days. I'm excited to announce that given the success of the partnership,

We will roll out select Princess Polystyres to 35 more stores for a total of 50 packs on stores by the end of June .

This initial customer excitement gives us great confidence about Princess Polly's potential in the U.S. both through direct and to consumer and omni-channels.

Headland Pop is also exploring ways to increase brand awareness through their own marketing efforts as well as through OmniChannel opportunities.

Patel and Paul Belanche's on target marketplace in March and continues to gain traction.

As a reminder, we will carefully choose our wholesale and marketplace partners, focusing on those that can truly amplify our brand awareness and drive new customer acquisition.

Additionally, as I mentioned, Nunes is back at our brands and Petal and Pup launched more than 800 new styles on their own website in the first quarter and launched a new swim collection which is seeing strong sell-through. Petal and Pup continues to leverage learnings from Princess Polly. And we're looking forward to seeing what they can do with their new collection. Thank you.

and is also leaning into TikTok and in-person influencer events. They've grown their TikTok followers over 140% year over year. And in April , they hosted a three-day influencer trip to Palm Springs, which generated over 18 million social media impressions.

No, turning to our street wear brands.

We continue to be very pleased with the acceleration of culture kings in the U.S. since the flagship opened in Las Vegas in November .

As many of you saw, the culture king's store in Las Vegas elevates the standard for retail, with a revolutionary in-store events, including a DJ booth, hot basketball court, recording studio, secret room, and more. In the first quarter,

the Vega store hosted several large events which not only drove traffic to the store, but also generate viral hype and content for social media.

They held an exclusive event with professional UFC fighter John Jones, which was so well attended that the line to enter the store was wrapped around them all.

They also activate the store space in innovative ways, including a media worker with professional box or Kayla Plant in a custom 18 by 18 boxing ring.

A full recording studio take over and songwriting workshop with Grammy-winning artist Eric Bellinger.

An in-store life performance on the LED staircase by up and coming singer and rapper Roy Woods. And recently they partnered with Playboy on an exited featuring vintage artifacts from Playboy timed with an exclusive merchandise collaboration.

Caution Kings also partnered with Rolling Load, the largest hip-hop festival in the world with a Caution Kings stage.

a limited capital collection and infestible activations.

The festival in L.A. saw over 185,000 attendees and was highly successful. We're just getting started expanding culture kings in the U.S. and we're excited by several innovative partnerships underway that will continue to amplify the brand in the U.S. and globally.

Equally northworthy is the continued success of Cludshire King's in-house design brands, which come at a higher-boss margin and make-up 7 of the top 10 brands by sales in both the Vega store and online in the US.

Culture Kings is also continuing to drive growth through their emphasis on graphites and printable license collaboration.

capitalizing and pop culture themes, player growth margins, and swift turnaround times. Some recent examples of successful collaborations with lightness properties include Harry Potter, Lord of the Rings, and Batman. With upcoming releases of Transformers to concline with the new movie, as well as WWE Classics. Thanks.

and UFC athlete print to t-shirts.

The Vegas door marked the official launch of Culture Kings in the US, and I'm pleased with the response to customers, vendors, and potential partners.

Since the launch of Pudja Kings, we've received numerous Indon vendor requests.

And they recently signed on a number of third party footwear brands, including New Balance and Crocs. And they recently secured Puma, Bugs, Clarks and Solomon.

The world to particularly encourage by the synergies between minimal and kosher kings, as minimal has become a top-flight brand of kosher kings in the US, and is leveraging kosher kings in the distribution platform to further expand their brand.

In good John Travecatal Plans Vegas event, minimal collaborator with Plans on an exclusive capsule collection which exceeded sales expectations.

We're also really excited that minimal is resonating not only with sports fans, but also with athletes themselves.

Minimum was spotted on NBA players over 100 times this year, pre and post games. And their outfits have featured on team, league and player socials.

No, I'll give you more detail on our financials before taking your questions. As mentioned for the first quarter, net sales were 120 million at the time of 19% compared to the first quarter last year which exceeded our expectations.

On a constant currency basis, net sales were down 16% compared to last year.

Total orders for the first quarter were $1.5 million, up 7% on a two-year stack, and down 17% to last year. Order volume was impacted by lower marketing spend compared to last year, as well as a challenging macro backdrop which impacted conversion.

As we increased our marketing efforts throughout the quarter and improved product munis, we saw an improvement in traffic trends.

We are pleased with the improvement but remain cautiously optimistic as a macro-backed loan remains uncertain.

Average order value of $80 was down 4% compared to the first quarter last year on a reported basis and flat in constant currency. As we accelerate the inflow of newness throughout the quarter, we are encouraged to see improvements in AOBs. We're also pleased with our industry-leading return rate.

quarter, the US accounted for 60% of net sales compared to 52% last year.

demonstrating the shift to the U.S. across our portfolio.

First-order net sales were 73 million, up 44% on a two-year stack on a poor former basis, and down 6% compared to last year, primarily due to macrofactors, including self-missing the mattress, and the highly promotional macro environment.

In Australia, net sales were 36 million, Donald 31% compared to last year, and Donald 27% on a constant currency basis.

In the first quarter, Australia accounted for 30% of net sales, down from 35% last year.

Australia remained challenging due to the macroeconomic environment and inflation ruptures.

We also continue to see an exaggerated shift of customers returning to stores post strict COVID lockdowns.

notably, Clutchicking stores significantly outperform the online business. We currently operate seven stores in Australia and look forward to opening a new store in Melbourne in the second quarter.

Turning to the rest of the world, net sales of 12 million decreased 35% from the first quarter in the prior year. Our strategic decision to shift marketing dollars from the UK and Europe to our main regions, which our prior returns, continues to negatively impact trends in these regions. Moving on to profitability. Continuity

Close margins in the first quarter were 56.9%, compared to 56.8% in the same period last year. Our real 10 basis points.

driven by improved full price selling given the increased product units.

Stunning expenses were 34 million compared to 40 million in the first quarter of 2022.

Sending expenses were 28.6% of net sales compared to 27.2% of net sales in the first quarter of 2022.

Although the rates likely increased year over year, we have made productivity improvements in our fulfillment centers and outbound shipping, but the lower sales volume offset these improvements due to the higher fixed cost delivery.

Marketing expenses were 14.8 million compared to 15.7 million in the first quarter of 2022. On a rate basis, marketing expenses were 12.3 percent of net sales compared to 10.6 percent of net sales in the first quarter of 2022.

Through the first quarter, we ramped up our marketing investments in line with the increased municent and the assortment, which drove more sessions, traffic and conversion. We are fully leveraging our flexible marketing models to achieve the highest returns and market expense.

We continue to refine and further develop our marketing muscle across the portfolio to attract new customers and enhance our relationships with existing customers.

General and administrative expenses were $25.9 billion compared to $24.8 billion in the first quarter of 2022.

On a rate basis, GNA expenses were 21.5% of net sales compared to 16.7% of net sales in the first quarter of 2022.

The change in array basis was driven by net sales delivery.

We delivered adjusted EBITDA of 2.2 million, which I see their expectations when we gave our guidance at the beginning of the year.

This compares the 10.7 million in the first quarter last year. Adjusted EBITDA margin for the first quarter of 2023 was 1.8% compared to 7.2% in the same period last year.

Net loss was 9.6 million or 7 cents per share in the first quarter of 2023 compared to net income with 1.5 million or 1 cents per share in the same period last year. Turning to the balance sheet, we ended the quarter with 30 million in cash and cash equivalent and 132 million in debt.

At the end of the first quarter, we had total liquidity of approximately $50 million.

As I mentioned earlier, I'm pleased that we paid down $11.4 million of debt in the first quarter and subsequent to the quarter end, we made additional payments of $10 million. And your total debt pay down to more than $21 million here today.

The teams have been hard at work managing the imagery and we're very pleased with the improvement.

Inventory at the end of the quarter was 112 million compared to 121 million at the end of the first quarter of 2022. Total inventory dollars were down 7% and units were down 14% compared to last year.

We feed confidence in the composition, in units and quality of our inventory, and we expect to see continue to quench with the client's inventory dollars and units in fiscal 2023 on a constant currency basis.

Touching on cash flow, in the quarter we used 3 million of net cash which compared to 15 million in the first quarter of 2022. The reduction in cash use was primarily driven by more prudent inventory management. Turning to our outlook, as we look at the remainder of 2023 and beyond,

We're excited by our brand's growth initiatives and the channel expansion opportunities to drive heightened awareness.

That said, we continue to manage the business prudently and will balance growth and profitability. We are controlling the controller boats and we continue to find efficiencies in our operations.

Improve or inventory position, reduce or dead, and effectively strengthen our balance sheet. Overall, we are adjusting our guidance to reflect or stronger than anticipated first quarter.

We now expect to deliver between 575 million and 605 million in net sales and between 36 and 38 million in IGA.

We still anticipate that the first half of the year would be more challenging from a sales comparison perspective due to our strong performance in the first half of last year, and we anticipate comps easing in the back half. For the second quarter, we expect to deliver net sales between 137 and 140 million.

and adjust the EBITDA in the range of 5.5 and 6 million. To give more color on the middle of the P&L, we expect those margin and marketing rates in the second quarter to be similar to the rates in the second quarter last year.

And we anticipate setting expenses to improve on a rate basis due to the operational efficiencies we've been working on in the business.

Before I take your questions, I want to let you know that Jill continues to work through her medical issues, but she's doing well and appreciates everyone's well wishes.

To conclude, our goal forward priorities are clear. We're head-down executing on our growth strategies and exploring new ways to broaden our reach.

We will continue to operate the flexibility and discipline, taking the necessary steps to strengthen our financial foundation and reinvest in our business.

We're optimistic about the future of our brands and business model and remain committed to delivering both growth and profit over the long term.

Now we'll open it up for questions.

Thank you. At this time, we'll be conducting a question and answer session.

If you'd like to ask a question today, please press star one from your telephone keypad, and a confirmation tone will indicate that your line is in the question queue. You may press star two if you'd like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we pull for questions. Once again, that's star one. Thank you.

Thank you, and our first question today is from the line of Oliver Chen with TD Cowan. Please receive your questions.

Thank you. This is Joan Allen for all of the things we're taking our question. Just curious, you know, what gives you confidence about the second half rebound in terms of sales growth and considering, you know, all regions in the US and Australia, how that was sort of trend. And then also, if you can comment on the current promotional environment across regions and or you're going off to see the sameín he stops so do you consider that more. So please practice slowly.

and if you are sort of happy with your current inventory position as well. Thank you so much.

Okay, thanks, Joanne. You know, I think first, as we kind of, you know, think about the back half, you know, I think really, you know, we're happy that we kind of did a little bit better than we expected in Q1, and particularly happy to see, you know, the US up 44% on a two-year stack.

and really see, you know, it's good to see customers again, really engaging with the brands. Yeah, I think as we think about the back half, we're, you know, we're very focused on just execution, balance, and growth, and profit, and making progress on those growth initiatives that we've talked about, you know, our two guidance and back half guidance.

Q2 certainly contemplates what we're seeing going on at the moment with customers. I think, you know, I suppose looking forward to getting into the back half where comms are going to be at ease for us slightly relative to last year.

And I just, on a regional basis, I think we continue to see that, you know, bookable region is quite different, you know, with Gladnode, the US is 60% of the overall business. And I think as we went through the quarter, we did see promotional activity there less in some loss. And that, you know, came as we got into more newness of inventory.

and so kind of looking for that progress to continue. I think in Australia it's obviously more challenging and we see that in the results. I think the consumer there is pressured with inflation and interest rates and the kind of dramatic shift back to stores. You know, we do see that we have very similar performance to the concept that we look at in the region.

Yeah, thanks. You know, it's for us, I think it's really great to see that inventory is done 7% year over year and 11% in units and kind of really good progress there and being able to do that and hold margins flat year over year. I think really is a testament to the color of the test and repeat model that we have.

I think we still see promotions elevated, certainly elevated from where they were last year. I think they sequentially have eased since Q4, but we are expecting them to remain elevated as we head into as we go through Q2. And that's why I think we expect our margins to be pretty close margin to be pretty flat.

and we're pulling for you. I guess first, we've had some companies report a better trend quarter to date or current five weeks with March having maybe seen a trough. I guess I know you've talked about some better response than Eunice, but I was wondering if you could give a little bit of color on the intra-quarter cadence and exit trajectory. And then second, as you explore some of these alternative channels for Princess Polly, if it's wholesale.

with the store opening, I guess kind of in the medium term, what percentage sales do you think they will account for, or are you still at this point, really much in test? Thank you. Thank you.

Thanks Ed. Yeah, so as we think about trends going through the quarter, I think, you know, certainly start of the quarter, as we talked about in Alaska, really that heightened promotional activity that was there in Q4 continued in through the first half of the quarter.

I think as we saw that easing, we were also making really good progress on just the newness of inventory, particularly across the women's brands. And with that we were able to spend into more marketing. We did see our comps get better as we spent into that additional marketing.

And I think really coming from more traffic, we're certainly seeing that conversion is still challenged as we go through the first four months of the year. And I would say what we're seeing in the first part of Q2 is pretty similar trends to what we saw towards the end of Q2.

Really, I think for us, we're really happy that we are predominantly a direct consumer business, you know, and a direct consumer business that consistently and as always, generated EBITDA, you know, back no generating cash, which is great. And we are looking for that part of our business to be continues to be our main focus and our main...

and ultimately increase the total addressable market for each of these brands and that's why we're doing these Army tests.

I think near term, we don't have any set percentage ed on what we're looking to get. I would have any of these channels. I would say all of the brands are doing tests on different on the channel opportunities and initiatives. In the last couple of months, we're learning a lot, we're continuing to learn. I think we're going to take those.

Obviously, we need to have first-princessed polystore, which we're looking forward to that opening EQ3, but we'll continue to push on those initiatives as we go through the year. Thank you.

The next question is from the line of Alice Shout with Bank of America. Please see a few questions. Hi, thank you for taking my question. Can you please elaborate on just the growth margin puts and takes throughout the year and just wanted to clarify was that flat growth margin guidance for two cues specifically?

And then, you know, just wanted to confirm this for the fiscal year, you're still expecting about 100 basis points of improvement as we labbed some of the freight cost and product mix impacts. Thank you.

Right, yes, thanks, Alice. Maybe I'll take those backwards. Yeah, I think over the year we're expecting it to be about 100 basis points of improvement. And we see that coming in the back half of the year. And what we saw on Q1 is that we were flat year over year on Gross Margin.

and look really pleased that we were able to do that while bringing down our inventory as I talked about and doing it in a time when it was a heightened promotional environment year over year. I think we're expecting the same in Q2 that we will be flat in gross margins year over year and for us that's the promotional environment that we're seeing today will continue and we'll really lean in, continue to lean in to that personal piece.

That's super helpful. Thank you. And then secondly, I was curious to hear more about the target launch. You talked a bit about the PACS on risk curious what percent of assortment are available on both wholesale partners and throughout the year, are you planning to make more larger percentages of the assortment available?

So we're seeing at least 60% of their assortment, which is obviously quite a bit smaller than Polly, on target. And it went up in probably mid-February. We are seeing nice progress as we've kind of gone through the last three or four months with it. And we're, as we learn, kind of improving the experience that customers have there.

adding reviews, adding size charts, just kind of basic block and tackling stuff. I think we are seeing that it is introducing these brands to different customers, and we are able to clearly see that. And we also see that different parts of the assortment is doing – has a different –

We're still very much in test mode, and we'll update you again next quarter as we learn more. That's great to hear. Thank you.

Thank you. As a reminder, if you'd like to ask a question today, you may press star 1 from your telephone keypad.

The next question is from the line of Dana Telsey, Telsey Group. Please proceed with your question. Hi, good afternoon, and also please extend our thoughts of getting well quickly to Jill. As you think about the active customer count, it looks like the active customer count from the fourth quarter to the first quarter changed to the negative. What did you see there? What did you see by by brand? How?

Thanks Dana. Yeah, on active customers, we saw a decline of about 5% year over year and sequentially from Q4. And just as a reminder, that's a trailing 12-month number. And as we expected, I think pulling back by 25% on volume of marketing dollars, Q4, is

in Q4 certainly impacted our active customer count. And we saw that as we kind of went through the Q1 as well. It was certainly more impacted early in the quarter. I think as we saw newness return into the brand, marketing effectiveness improved and we were able to increase our marketing dollars.

year and starting to see them kind of return to the historic repeat rates that we have seen. We're still on new customer counts and I think that's based on what we're seeing on on tax and in the market that's very much understandable. I think we expect to be down on active customers.

and probably as we go through Q2 and Q3 of this year, and we'll expect that kind of positive in Q4. But look, I think that's partly why we are looking at these other omni-channel initiatives as well. We wanna get these brands, you know, introduce them to, continue to introduce new customers to the brand, build awareness, and ultimately increase that time. And then Dana, on promotions, oh sorry, just an active play brand, and...

I would say pretty much so the same percentage impact across the brands. So no huge difference on a regional basis as well as in the US. Although I would say kind of, Kojikings in the US is did see positive active customer growth and that really coming from us, you know, opening the store in Vegas in November and just that really is having a positive impact across the US. And then just promotions by region.

Really similar across the regions, you know, I would say just that heightened promotion activity is certainly there in the quarter, easing as we went through the quarter. I would say we probably saw, we see customers reacting more to promotions in Australia, and then we see in the U.S. there a little bit more senseless for those.

Thank you. I just wanted to follow up. Debt pay down, how are you thinking of debt pay down for the balance of the year?

Yeah, thanks Dana. You know, I'm glad to be talking about that we're paying down the debt and that we've paid down 21 million so far a year to date. Look, we're going to continue to manage the business prudently, strengthen the balance sheets and, you know, bringing down our inventory dollars sequentially and bringing down our debt dollars sequentially.

quarter over quarter as we go through the year is the focus for us and important for us. You know, we don't have any set number there, but we're just going to keep making progress as we go through the year. Thank you. Our next question is from the line of Ike Bauharchow with Wells Fargo. Please proceed with your question. Hello everyone, this is Jesse Silberson on for Ike. Can you just refresh your screen?

us on the composition of the 120 million or so and current outstanding debt and what covenant, if any, are associated with the transits. Thank you. Sure. Thanks, Jesse. Yeah, so within that debt, and it was 130 million at the end of the quarter, within there, there's 30 million of Revolver.

We pay down an additional 10 million in net revolve or post end of quarter and then there's 104 million of term debt. Covenants are, we've got a three and a half X from a leverage perspective and about one point

to five from a fixed charge coverage, with obviously some addbacks for one off stuff, we're well within all of our debt compliance governance and feeding good shape over all about the death and we look to continue to bring that down as we go through the year.

from a fixed charge coverage, you know, with obviously some addbacks for one off stuff, you know, we're well within all over debt compliance covenants and you know, feeding good shape over all about the debt and we look to continue to bring that down as we go through the year. Great. Thank you very much.

At this time, we've reached the end of the question and answer session. I'll turn the call back over to Karen Long for closing remarks. Thank you all for joining. We really appreciate your participation. Thank you for the well wishes for Jill. I know she's on the call listening today. We talk to her quite often. Thank you. Good to hear from you all and thanks. This will conclude today's conference.

We disconnect your lines at this time. Thank you for your participation.