Q1 2024 Oxford Industries Inc Earnings Call
Speaker 1: cri C ch.
Speaker 2: This session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Jevon Streicher of Invest Relations. You may begin.
Speaker 3: Thank you and good afternoon.
Speaker 3: Before we begin, I would like to remind participants that certain statements made on today's call and in the Q&A session may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not guaranteed and actual results may differ materially from those expressed or implied in the forward-looking statements. Certain factors that could call back short results of operations.
Speaker 3: or financial condition to differ are discussed in our press release issued earlier today and in documents filed by us at the SEC.
Speaker 3: including the risk factors contained in our form 10-b.
Speaker 3: We undertake no duty to update any forward-looking statements.
Speaker 3: During this call, we will be discussing certain non-GAAP financial measures. You can find a reconciliation of non-GAAP to GAAP financial measures in our press release issued earlier today, which is posted under the investor relations tab of our website at OxfordInn.com. Our
Speaker 3: And now I'd like to introduce today's call participants. With me today are Tom Chubb, Chairman and CEO , and Scott Grassmeyer, CFO and COO. Thank you for your attention. And now I'd like to turn the call over to Tom Chubb. Good afternoon, and thank you for joining us. We appreciate your interest in our company.
Speaker 4: We are pleased to be reporting a solid first quarter of fiscal 2023, which happens to be our eighth consecutive record quarter. Sales of 420 million dollars were up 19% over the prior year with 14% of the growth coming from the addition of Johnny.
Speaker 4: As always, our objective is to maximize long-term shareholder value. Our strategy is to own a portfolio of lifestyle brands that can deliver sustained profitable growth. Our purpose is to evoke happiness and our focus is to generate cash to fund organic growth in our brands, acquisition opportunities, and the return of capital to our shareholders, all while maintaining our rock-solid balance sheet.
Speaker 4: is first to focus and be crystal clear on what the brand stands for, and then deliver on that brand promise through terrific products, a balanced mix of retail, e-commerce, and the wholesale, designed to serve the customer where and how she wants to be served, and effective and efficient in attaining, retaining, and developing customers through a variety of communication channels.
Speaker 4: Nowhere did we execute on this formula better than in our Tommy Bahama brand, where growth in all channels of distribution delivered a top-line growth of 5%.
Speaker 4: A highlight of growth was that while both men's and women's grew, our women's business and our direct-to-consumer channels grew at a faster rate than our men's business.
Speaker 4: and for the quarter comprised 42% of the total as compared to 40% of the total in the first quarter of fiscal 2022.
Speaker 4: Developing our women's business in Tommy Bahama remains both a priority and a huge opportunity for us given that the women's market is roughly double the size of the men's market.
Speaker 4: A clear indication of the strength of our Tommy Bahama brand is that we were able to expand gross margin during the quarter to 66.1% from 64.6% last year.
Speaker 4: We continue to invest in the business.
Speaker 4: Nonetheless, our strong gross margin performance and sales growth allowed us to expand operating margin to 23.2% for the quarter compared to 23.1% last year. All in all, it was a very good quarter for Tommy Bahama, especially given the unseasonably cold weather on the West Coast, which includes some of the brand's largest markets and the numerous macro headwinds pressuring consumer spending.
Speaker 4: We could not be more bullish about the long-term prospects for the brand and continue to invest in its future, including plans to open three Marlin bars, one of which is in Palm Beach Gardens, scheduled to open later this month, and our first Tommy Bahama Resort.
Speaker 4: during late 2023. And our second largest brand, Lilly Pulitzer, we also had a good quarter, with sales growing 6% from $92 million last year to $97 million this year. Our direct-to-consumer channels delivered the growth.
Speaker 4: while we had a modest decline in the wholesale channel, owing, we believe, to the cautiousness of many retailers in the marketplace.
Speaker 4: We experienced some SG&A deleveraging in Lilly Pulitzer as we continued to invest in the brand, but we were able to expand gross margin during the quarter to 70.1% from 69% last year.
Speaker 4: One of the keys to our success in Lilly Pulitzer during the quarter was a change in our customer call to action strategy as compared to the first quarter of last year. In April 2022, we had one of our well-known Lilly Pulitzer flash sales comprised of resort 2021 merchandise marked down in the 60 to 70% off range. This year we did not hold a flash event.
Speaker 4: and replace that instead with a 30% off current merchandise sale online and in-store in April .
Speaker 4: The results were spectacular as we recorded sales of about $25 million in a three-day period at a very attractive gross margin.
Speaker 4: As we move forward through the year, we will continue to evaluate the most effective ways to call our customer to action and drive continued top-line growth in a brand appropriate manner, all while generating very healthy margins.
Speaker 4: both the gross margin and operating margin level.
Speaker 4: Johnny was his or newest brand.
Speaker 4: having been added to the portfolio during the third quarter of 2022, and we are delighted to have it as part of our company. Our focus this year, the first full year that Johnny was as part of the Oxford portfolio, is to make the company a better place.
Speaker 4: is on completing its integration onto our powerful platform and enhancing the foundation for sustained profitable growth in the brand.
Speaker 4: We have completed most of the earlier stage parts of this project and are now focused primarily on leveraging our best in class existing Lily Pelletier e-commerce platform to improve the already robust Johnny Was e-commerce business, which generates about 40% of the brand sales.
Speaker 4: To be clear, Johnny was will continue to maintain its own website with its distinctive look and feel while utilizing the technical functionality and features we have developed in the Lilly Pelletzer E-Com platform.
Speaker 4: Our three smaller brands, Southern Tide, the Buford Bionic Company, and Duckhead, comprise our emerging brands group.
Speaker 4: We were pleased to post 7% year-over-year sales growth in the Emerging Brands Group.
Profitability during the quarter was suppressed by our continued investment in people marketing IT in stores and by the financial impact of the over inventory position that we discussed on last quarter's conference call. We have our arms completely around the inventory situation.
are working through it methodically, but it will be a drag on the margin of the emerging brands group during this year.
The first quarter of Fiscal 2023 was a very good quarter, but it is worth noting that it started in February , stronger than it finished in April .
Starting in late March, the consumer became noticeably more cautious in our spending. Our traffic trends remain positive, signifying increasing affinity for and interest in our brands, but conversion rates have been lower than they were last year.
We believe this is the result of consumers being more cautious in how they spend their discretionary dollars, which in turn has led to a much more promotional marketplace than it has been in recent years at this time of year.
While we are encouraged that our May sales trend was sequentially better than April , an early June business appears to be incrementally stronger. Our performance second quarter today is tracking below where we thought it would be.
when we provided our initial full year outlook in March. Based on this, along with what we now expect to be a highly promotional environment for the next few quarters, we believe it is appropriate to moderate our forecast for the year, which Scott will detail in just a moment.
While we are moderating our forecast for the year, we remain extremely bullish on our six powerful, aspirational, happy brands and on our ability to capitalize on the strength of our brands to deliver the sustained profitable growth.
drives long-term shareholder value.
while year-over-year growth will be a bit lower than previously expected.
it will still be a solid year in absolute terms and cash flow as Scott will discuss should be exceptionally strong.
Accordingly, we will continue to invest in people, marketing, IT, fulfillment capabilities, stores and food and beverage locations to set ourselves up for continued future growth in 2024 and beyond. We believe our North Shore Pillars.
our formula for delivering on those pillars, our execution of that formula, and our brand leaders, an incredible team of people, will allow us in future years to grow total portfolio sales.
mid to upper single digits annually while maintaining a 15% or greater operating margin.
I will now turn the call over to Scott for more details on the quarter and the forecast for the balance of the year. Scott? Thank you, Tom.
We are pleased to report another solid quarter in sales and earnings growth. Are operating groups executed well in an uncertain macroeconomic environment during the 1st quarter of 2023?
Both of our two largest brands, Tommy Bahama and Lilly Pulitzer, generated a mid-single-digit percentage sales increase and achieved strong operating margins in excess of 20%.
Consolidating net sales for the first quarter of fiscal 2023 were 420 million, which included 49 million of sales for Johnny Was and increases in each operating group. Growing 19% above last year's 1st quarter net sales of 353 million.
In the aggregate for Tommy Bahama, Lily Poulter, and emerging brands, we generated growth across all our full price distribution channels with increases of 2% in full price bricks and mortar.
20% in full price e-commerce, 4% in wholesale sales, and 4% in food and beverage sales.
We did have a $7 million decrease in Lily Poulter e-commerce flash sales after not anniversarying last year's Q1 flash event.
Importantly, in addition to increase sales, adjusted gross margin expanded 130 basis points over last year to 65.8%, driven by higher gross margins in both Tainanmohama and Lillipolzur. We benefited from lower freight costs where inbound freight has returned to approximately pre-pandemic levels.
We saw additional gross margin benefits from a better mix of sales, which was influenced by the addition of the higher gross margin Johnny was, and no e-commerce flash sales in the first quarter of 2023, as well as higher IMUs.
Adjusted SG&A expenses were $200 million compared to $157 million last year. This quarter included $28 million of SG&A associated with the Johnny Was business, which we did not own in the prior year period. There were also SG&A increases in our other businesses for employment costs, advertising costs, bearable expenses, and other costs.
and other expenses to fuel and support anticipated future sales growth.
Of note, we incurred 1 million dollars of SG&A costs related to the ongoing re-platforming of Johnny Wassey commerce website to Salesforce by utilizing the existing Lily Pulitzer E-commerce tech staff, which is expected to be completed this summer. For the result of all, the
This yielded 83 million dollars of adjusted operating income or a 20% operating margin compared to 77 million in 2022.
This increased operating income was partially offset by increased interest expense due to the borrowings associated with the acquisition of Johnny Wise. And higher tax expense due to an increased tax rate compared to the prior year period. Despite the higher interest and higher taxes, we achieved year over year EPS growth of 8%. To $3.78.
I'll now move on to our balance sheet, beginning with inventory. We're in a good position to deliver on our forecast for the remainder of the year with inventory set up 32% or 60 million dollars year over year on a FIFO basis, including 17 million of Johnny Was inventory.
In addition to supporting plan sales growth, inventory balances grew due to increased product costs and the addition of higher quantities of core styles that live for many seasons or even years. Looking forward, we expect year-end inventory balances to be at or below last year levels.
We used our cash, cash equivalents and short-term investments on our balance sheet last year, as well as some borrowings under our evolving credit agreement to fund our acquisition of Johnny Was. We finished the quarter with $94 million of borrowings under our evolving credit facility after having $119 million of borrowings at the beginning of the year.
Our $53 million of cash flow from operations compared to $22 million in the first quarter last year allowed us to meaningfully reduce outstanding debt by $25 million during the first quarter. We're also funding $17 million of capital expenditures and $10 million of dividends. We expect robust cash flows for the rest of the year and anticipate repaying substantially all of our outstanding borrowings by the end of the year. I now spend some time on our outlook for 2023.
For the full year, we expect nest sales to be between 1.59 billion and 1.63 billion, growth of 13 to 16 percent compared to sales of 1.41 billion in 2022.
The plan to increase themselves in the 53 week 2023 includes the benefit of the full year of Johnny Was, as well as growth in our existing brands in the low to mid single digit range, which consist of.
full-price brick and mortar and e-commerce channel growth, and generally flat wholesale.
We anticipate much more modest gross margin expansion for the full year of 2023 than we achieved in the first quarter, which was more favorably impacted by the every year freight cost reduction as freight rates continue to decrease throughout 2022.
The modest gross margin expansion will also include our expectation of a higher proportion of full price direct to consumer sales, a lower proportion of wholesale sales, and the inclusion of the higher gross margin Johnny Woods business for the full year in 2023.
These higher sales and modestly higher gross margins are expected to be partially offset by increased SG&A, which is expected to grow at a rate higher than sales in 2023, as we continue to invest in our business, including information technology spend and SG&A, in both IT people and IT infrastructure.
higher employment costs, higher advertising expenses, including more awareness driving spend, additional brick-and-mortar locations opening in 2023, and increased appreciation expense resulting from both IT spend and brick-and-mortar locations.
Considering all these, we expect that operating margin will decrease from 2022 levels to a percentage of between 14.5 and 15% of sales.
Additionally, we anticipate higher interest expense at $5 million, with about half of that interest expense incurred in the first quarter and interest expen of a million or less breacheach of the second, third and fourth quarters, as we continue to reduce our outstanding debt levels during 2023. This compares to three million of interest expense for the full year of 2022, when we had no debt outstanding until the third quarter.
We also expect a higher effective tax rate of approximately 25% compared to 23% in 2022, which benefited from certain favorable items such as prior year operating loss utilizations and the reversal and valuation allowances.
after considering these items.
2023 adjust CPS is expected to be between $10.80 and $11.20 versus adjust CPS of $10.88 last year with the inclusion of a full year of operating income of Johnny was being offset by lower operating income and assisting businesses.
as we invest in those businesses in 2023. And the incremental income tax it spends and interest it spends.
In the 2nd quarter of 2023, we expect sales of 415 to 435M compared to sales of 363M in the 2nd quarter of 2022.
In the second quarter of 2023, we expect higher sales, slightly lower gross margin, SG&AD leveraging, higher interest expense, but a lower effective tax rate at approximately 24%. As we expect the tax rate in the quarter to be favorably impacted by the tax benefit associated with the vesting of certain restricted share awards late in the quarter.
We expect this to result in 2nd quarter adjusted EPS of between $3.30 and $3.50.
compared to $3.61 in the second quarter of 2022. The lower year-over-year EPS expectation in the quarter is primarily driven by increased SG&A investments and interest expense.
being larger than the gross profit generated from the increased sales. Expanding on the theme of 2023 being an investment year, I'd like to briefly discuss our CapEx outlook for 2023. Capital expenditures in fiscal 2023 are expected to be approximately $90 million compared to $47 million in fiscal 2022.
As we mentioned last quarter, the planned capex increase includes spend associated with brick and mortar locations.
including build-out associated with approximately 35 locations across all brands, including three new Marlin Mores and about 10 new Johnny Was locations.
A number of these are relocations and remodels which along with a few store closures should result in a net increase of full price stores of about 25 by the end of the year with these additions being more second half weight. The spend associated with these brick and mortar locations represent about one half of the planned capital expenditure amount for
intelligence and infrastructure.
Finally, we anticipate spend associated with a multi-year project at our Lions Georgia distribution center to enhance its direct to consumer throughput capabilities for our brands. We have a very positive outlook on our cash and liquidity position as well. After generating cash flow.
from operations of 126 million in 2022, including a working capital increase of 85 million.
we expect to increase our cash flow from operations significantly to a level in excess of 200 million in 2023.
This level of positive cash flow from operations provides ample cash flow to fund all of our planned 2023 capital expenditures, payment of dividends at the current rate, and the repayment of substantially all of our outstanding debt by the end of the year. Although investments will put pressure on 2023 margins, these actions set the table well.
If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would 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 key.
Our first question comes from the line of Edward Iruma with Piper Sandler. Please proceed with your question. Hey, good afternoon, guys. Thanks for taking the questions. I guess two from me. First, I want to link back to kind of overall inventory levels and the shape of the balance of the year.
I know you said that you were going to end the year when inventory levels down year over year, but I guess kind of how should we think about when you kind of get them, you know, maybe more in line with sales growth? And then I guess specifically with the emerging brands group, is there a particular brand where the excess inventory was most pronounced? And then just as a follow up to that, in terms of the earnings estimate adjustment for the balance.
then I'll say that the inventory level in the EBG group, and Scott will elaborate on this a little more, it was the biggest piece of it was in the Buford Bonnet Company, but it was a little bit dispersed too, but as we said in the prepared remarks, we're working through it methodically, we've got arms around it, it's just.
it's going to continue to drag on profitability probably through the year. Yeah, or inventory, you know, each quarter will be, you know, closing the gap to last year and by the end of the year we expect to be lower and part of it is, I think we've discussed before, we have baked in a lot of cushion in our supply chain to do this on supply chain.
Issues were able to start cutting some of those weeks out and we also are just trying to run on leaner inventory with some of our systems. So it will be a good inventory will be a good story this year. And our cash flow will be a good story. Where, as I mentioned in the prepared remarks last year, we had quite a working capital build in this year.
And as Tom mentioned, yeah, some of the inventory was Buford Bond and a little bit in Southern Tide and we've got, you know, we've done the mark down. So we took a little bit of more mark down in Q1, but most of the mark downs were taken last year. But as we liquidate those goods, they go through at, you know, zero to little margin. So they do push a little pressure on both.
gross and operating margins as we actually ship those goods out the door. And then on the reduction in the back half guide or what's implied within the revised overall guidance? Yeah, yeah, overall we've got, we've kind of reduced comps to from more mid single down to low single digits.
And it's just really what we've been seeing as Tom mentioned, you know, April was, you know, tough month may got a little bit better June's getting a little bit better. But we're kind of looked at that. Uh, you may June pace today and and and. Are kind of projecting out hopefully the June trend continues and I think there's some upside, but.
But the consumer is cautious. We've definitely seen them being more cautious. We are seeing them come in our stores. They're just not converting at the same rate. And I think they've bought an awful lot the last two years. And we have added a lot of customers, which is great, and they still are into our brands. But I think they've bought very robustly. served
you know, last year especially, and I think they're just being a little more cautious on their spend this year. Thanks so much. Thank you, Ed. Our next question comes from the line of Noah Zaskin with KeyBank Capital Markets. Please proceed with your question.
Hi, thanks for taking my question. Just wondering if you could provide a little bit of color on kind of the trends by brand. Uh, embedded in the 2nd quarter guidance as well as just any any color by brand on the exit rate, you know, leaving the 1st quarter and then then separately.
Was hoping you could just provide some color on Johnny was and how they performed relative to your expectations and just kind of any early ish warnings there. Thank you. Yeah, so I'll tackle a little bit of that and and then turn it over to Scott, maybe to fill in sort of the, the details on the. 2nd, quarter guide, but what I would say is, if you look back at what we said in the prepared remarks, you know, tell me Bahama really had a very good quarter.
in the first quarter, you know, all metrics up for the quarter year-over-year, growth in all channels, expanded gross margin, expanded operating margin, really good. They did suffer a bit as we referred to from the tough weather on the West Coast, but they were actually able to more than overcome that.
in the other regions of the country. And then I think in terms of just the shape of the quarter, you know, nobody was really immune from that phenomenon of it started stronger in February than it ended in the quarter, so sort of the...
A lot of it had to do with what was going on externally in terms of whether the bank failures, the highly promotional market, and all of this sort of had the consumer a little more cautious. And then as we said, April was kind of the low point. May got a little better.
Yeah, no remember, you know last year in Q2 we comped up 14% So we're going against a you know, very robust comp and we have Tommy, you know comping up a very very marginally, yeah and Lee on full price probably comping down a little bit but And then our other brands, you know kind of flattish to last year so we
numbers a little bit better than this.
And then Noah, I'll come back to your question about Johnny was, as we said in the prepared remarks, this is our first full year of owning Johnny was. We're looking at it as the baseline year where we get the foundation firmly under Johnny was and set it up for future growth. And we're doing all of that.
As we said, we've completed most of the earlier stage sort of more basic parts, if you will, of the integration. And the big focus now that we're very excited about is utilizing the Lilly Pulitzer e-commerce platform to help power the Johnny Was website. They already have a great website.
of the website, making it easier for the guests to shop, for her to find things, and for her to transact with us. So we think that'll provide, you know, a boost to an already very robust e-commerce business. Then as Scott mentioned, we're also investing...
in stores than Johnny was with about 10 new locations coming this year, which we're very excited about. And then in terms of just the overall business, it was a little less in the first quarter than we would have planned for it to be. But I think that they got hurt particularly hard by...
tougher conditions, but nothing that we are concerned about at all for the long term. It's a great brand with a great dedicated base of customers. The addressable market is much larger than we're currently reaching and we're very focused.
on reaching the broader part of the market that's available to us there. We've got great leadership and a great team there who we love working with and we continue to feel extremely positive about what Johnny was.
can do both on its own and as part of our portfolio going forward. Thank you. Our next question comes from the line of Dana Telsey with Telsey Group. Please proceed with your question. Hi. Good afternoon everyone.
As you think about the current consumer environment, and I always think of wholesale as a small part of your business, when you think about the different brands, how you're positioning the product assortment as we move forward, basics versus fashion or color or print, whatever you want to call it, core versus others.
in each of the businesses, and is that an opportunity for margin? Well, what I would say is I think that our wholesale business is very strong relative to our peer group. We're hanging in there. I think overall we're going to be flattest for
the year, which I think in this year, and Dana you follow all this very closely, I know, but I think FLAT's a great number in wholesale. We do get sales readouts from the bigger customers. We get detailed feedback on how we're doing and how we stack up against a lot of our peers.
And it's really, really good. And it's one of the things that we take a lot of comfort in a year that's, you know, not as strong as we would like overall. We've had a couple of just, you know, extraordinarily strong years. And so while we're still going to be up and it's still going to be a very solid.
year, it's not like last year was, but when we look at our total business, all channels of distribution, we look at wholesale and how well we're performing on the floor where we're going head to head, you know, rounder to rounder.
against some of our peers and we just look great from that perspective. In terms of the assortment and how they buy it, different retailers buy it very differently. I was just going through last week with our head of wholesale and Tommy Bahama, we went by.
customer by customer and you sort of recap how they just come in and place their buys and you know everybody's got a different job that they want to do on their floor and you know we provide a lot of partnership with them on and help on that and of course we're looking to maximize both.
their margin first because it's got to work for them and our margin. So I would say given the strength of our performance there, I do think we can incrementally boost their margin and our margin over time, but we don't totally direct that of course. It's a partnership with them.
than prior years or what are you looking for in terms of that cadence?
Well, last year we did the little flash sale in April , then we did the big one at the end of the summer, and the big one in early January . As we mentioned in the prepared remarks, we're going to mix it up a little bit this year, keep the consumer surprised and delighted, as we like to say.
That absolutely worked in April , whereas I mentioned last year, we did a flash sale of resort 21 merchandise in the seven million dollars in one or two days, I can't remember exactly. But that was at sort of 60, 70 off.
This year we did a 30 off of the current merchandise into $25 million in three days. And Dana, you being you, I know how good you are at retail math. And when you start at the kind of I am used.
We do. A 30 off sale, you can still come out with just a fantastic great margin, and we did. So we love that. So as we look at the back half of the year, we're looking to be creative about how we do it, because we think the customer really likes that. She likes being surprised and delighted. She loved the.
Yeah, we will. We will mix things up and we'll do something in Q2 with Lily, but we haven't announced exactly what that will be. But we do have baked into our projection on doing something in Q2.
Thank you. Thank you, Dana. And our next question comes from the line of Paul, as well as with Citigroup. Please proceed with your question.
Thanks. It's Tracy Cogan filling in for Paul. First, I had a clarification on your inventory comments. I think when you were talking about your inventory by brand, you mentioned having too much of some of the emerging brands inventory. I was just wondering, Tomi and Lily, I'm not sure if I heard whether you feel comfortable with your inventory levels there.
and where you expect those brands inventory levels to trend for the year. And then I have a follow-up. Thanks. Yeah, we do feel comfortable with their inventories. We think they're very appropriate. We do have a little bit more core-oriented at Tommy's, so we brought a little bit of that in earlier. And as I mentioned earlier, we did have – we were bringing goods earlier for supply chain reasons, and we're starting to wean off of that..
wanted to double check on that. And then I was wondering what you guys think about whether your consumer is telling you maybe they're more price sensitive and showing some price resistance to prior price increases. I'm not sure based on what you saw in one queue versus what you're seeing quarter to date what you think on the price resistance. Thanks.
First of all, Tracy, I don't think we've got a whole lot more pricing flowing through at this point. I think that's mostly in. I can't say there's no more, but I think that's mostly in. Secondly, on the price resistance, I really don't think we're seeing that. I think one thing we do is benchmark closely against our peers, and we really feel if anything
to me tells me there's not any serious price resistance out there. I think it's more about just being generally cautious about, you know, spending money. Another thing, and this was in the prepared remarks, that you might not have...
increases there and our restaurant business is really, really strong. So I think it's more about they bought a lot of stuff over the last couple of years. They're being slightly more cautious and more judicious, if you will, about when they're actually pulling the credit.
call back over to Tom Chubb for a close remark.
Thank you, Shmiley, and thank you all for your interest in our company. We look forward to talking to you again next quarter, and I hope all of you have a great summer until then. And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Thank you all for your interest in our company. We look forward to talking to you again next quarter and I hope all of you have a great summer until then. This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.