Q1 2024 MTY Food Group Inc Earnings Call
Operator: Good morning, ladies and gentlemen. Thank you for standing by.
Good morning, ladies and gentlemen, thank you for standing by.
Operator: Welcome to the MTY Food Group Inc. First Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question and answer session. To join the question queue, you may press star then 1 on your telephone keypad.
Welcome to Yum T Wisely, Inc. First quarter 2024 earnings conference call.
At this time, all participants are in listen only mode.
Following the presentation, we will conduct a question and answer session.
The question Keith You May Press Star then one on your telephone keypad.
Operator: Should you need assistance during the conference call, you may signal an operator by pressing star then zero. Before turning the meeting over to management, please be advised that this conference call will contain forward-looking statements and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. I would like to remind everyone that this conference call is being recorded today, Friday, April 12, 2024. I would now like to turn the call over to Eric Lefebvre, Chief Executive Officer. Please go ahead, sir.
Should you need assistance during the conference call and you May signal, an operator, but press Star then zero.
Benjamin: Before turning the meeting over to Benjamin Goodbye. This conference call will contain statements that are forward looking and subject to a number of risks and it's real.
Benjamin: G that could cause actual results to differ materially.
Operator: It was anticipated I would like to remind everyone that this conference call is being recorded today Friday April 12 2024.
Benjamin Goodbye: I would now like to turn the call over to check their favorite Chief Executive Officer. Please go ahead Sir.
Speaker Change: Thank you.
Eric Lefebvre: Thank you. Good morning, everyone.
Speaker Change: Good morning, everyone. Thank you for joining us for <unk> first quarter conference call for fiscal 2020 for the press release and MD&A with complete financial statements and related notes were issued earlier. This morning and are available on our website as well as on SEDAR.
Eric Lefebvre: Thank you for joining us for MTY's first quarter conference call for Fiscal 2024. The press release and MD&A with complete financial statements and related notes were issued earlier this morning and are available on our website as well as on Facebook. During the call, we will be referring to forward-looking statements and to certain numbers that are non-IFRS measures. You can refer to our MD&A for more details.
Speaker Change: During the call, we will be referring to forward looking statements and certain numbers that are non <unk> measures you can refer to our MD&A for more details I'd also remind you that all figures presented on today's call are in Canadian dollars unless otherwise stated.
Eric Lefebvre: I also remind you that all figures presented on today's call are in Canadian dollars unless otherwise stated. Following two years of strong system sales growth amid a challenging economic environment, first quarter results were adversely affected by extreme weather, primarily in January and the first two weeks of February. Extreme cold temperatures throughout most of North America caused significant downward pressure on our system sales, especially for the frozen treats portion of our QSR restaurants, while poorly timed snowstorms affected sales in the northeast portion of our portfolio. MTY's performance was more or less aligned with industry data for casual dining restaurants. However, our QSR restaurants lack the industry, mainly as a result of the significant weight of our frozen treats brands in our portfolio, as well as to the material impact on Papa Murphy's sales of the decrease in government funding of the Supplemental Nutrition Assistance Program.
Speaker Change: Following two years of strong system sales growth amid a challenging economic environment first quarter results were adversely affected by extreme weather primarily in January and the first two weeks of February.
Speaker Change: Extreme cold temperatures throughout most of North America.
Speaker Change: Significant downward pressure on our system sales, especially to the frozen treats portion of art USR restaurants, while poorly timed snow storms affected sales in the northeast portion of our portfolio.
Speaker Change: If you watch performance was more or less aligned with the industry data for casual dining restaurants.
Over <unk> of our restaurants lagged the industry, mainly as a result of the significant weight of our frozen treats brands in our portfolio as well as to be a material impact on Papa Murphy's sales the decrease in government funding the supplemental nutrition assistance program.
Eric Lefebvre: More specifically, EBT sales represented 14.69% of system sales for the brand last year, compared to 8.75% this year. Canada and the U.S. reported same-store sales decreases of 2.7% and 3.6%, respectively, while the international region was down 7.4% compared to the first quarter of 2020. Consistent with what I just described, the decrease in same-store sales is primarily attributable to extreme weather patterns in certain regions during the quarter, which compounded the impact of uncertain economic conditions and sluggish consumer spending. The first quarter has historically been a challenging period for both new store openings and control of store closures, as the months of January and February tend to be the most difficult for our industry. Despite that seasonal reality, our network once again came within a few locations of breaking even in terms of openings versus closures in the quarter.
Speaker Change: More specifically <unk> sales represented $14, 69% of system sales for the brand last year compared to $8, 75% this year.
Speaker Change: Canada and the U S reported same store sales decreases of two 7% and three 6% respectively. While the international region was down seven 4% compared to the first quarter of 2023.
Speaker Change: Consistent with what I just described the decrease in same store sales is primarily attributable to extreme weather patterns.
Speaker Change: In certain regions during the quarter, which compounded the impact of uncertain economic conditions and sluggish consumer spending.
The first quarter has historically been a challenging period for both new store openings and control of store closures at the months of January and February tend to be the most difficult for our industry.
Speaker Change: Might that seasonal the reality right now to work once again came within a few locations of breaking even in terms of openings versus closures in the quarter during.
Eric Lefebvre: During the first quarter of 2024, we opened 75 locations and closed 79 others for a net decrease of four. Although we are not pleased with falling short of our objective to be net store positive, we are encouraged by the trends we are seeing. We ended the first quarter with a total of 7,112 locations, of which 97% were franchised or under operator agreements, and 3% were corporate owned. The geographical split of MTY's locations remains stable year over year at 58% based in the U.S., 35% in Canada, and 7% internationally. In terms of financial results, the lower sales volume did affect the EBITDA for the franchising and corporate location segment negatively, as Rene will explain in a minute.
Speaker Change: During the first quarter of 2024, we opened 75 locations and closed 79, others for a net decrease of four.
Speaker Change: Although we are not pleased with falling short of our objective to be net store positive. We are encouraged by the trends we are seeing.
Speaker Change: We ended the first quarter with a total of 7112 locations of which 97% were franchised or under operator agreements and 3% or corporate owned.
Speaker Change: The geographical split of empty wide locations remained stable year over year at 58% based in the U S, 35% in Canada and 7% International.
Speaker Change: In terms of financial results, the lower sales volume did affect the EBITDA or the franchising and corporate locations segment negatively.
Speaker Change: And as Renee will explain in a minute.
Eric Lefebvre: The retail segment was also under pressure in the first quarter, resulting in our normalized adjusted EBITDA reaching $59.5 million, down 7% from $64 million last year. However, despite system sales in EBITDA being slightly lower than last year in the first quarter, MTY generated the highest operating cash flows in the company's history at $54.2 million. For their part, free cash flows net of lease payments more than doubled to $36.9 million in Q1. Strong cash flow generation enabled debt repayments of $34.6 million in the quarter, bringing total repayments to $103.5 million over the last decade. Given the high interest rate environment, we believe debt repayments are a good use of the cash we generate as we reduce the burden of interest payments and build a treasure chest for future opportunities.
Speaker Change: The retail segment was also under pressure in the first quarter.
Speaker Change: Nothing in our normalized adjusted EBITDA, reaching $59 $5 million down 7% from $64 million last year.
Speaker Change: Despite system sales and EBITDA being slightly lower than last year in the first quarter <unk> generated the highest operating cash flows in the company's history.
$54 $2 million.
Speaker Change: For their part free cash flows net of lease payments more than doubled to $36 $9 million in Q1 2024.
Speaker Change: Strong cash flow generation enabled debt repayments of $34 $6 million in the quarter, bringing total repayments to $103 $5 million in the last 12 months.
Speaker Change: Given the high interest rate environment, we believe that repayments are a good use of our cash and the cash we generate as we reduce the burden of interest payments and build a treasure chest for future opportunities.
Eric Lefebvre: As announced in January, we also raised our quarterly dividend payment to $0.28 per share for the quarter and repurchased $3.6 million worth of shares under our normal course issuer bid, rewarding shareholders who support our long-term value creation strategy. Our share buybacks are done in a systematic way, keeping in mind the limitations imposed on MTY by its credit agreement, which limits annual distributions to shareholders to $50 million. This amount includes both dividends and share buybacks. I will now turn the call over to Rene, who will discuss MTY's financial results in greater detail.
Speaker Change: As announced in January we also raised our quarterly dividend payment to <unk> 28 per share for the quarter and repurchased $3 $6 million worth of shares under our normal course normal course issuer bid.
Speaker Change: Awarding shareholders, who support our long term value creation strategy.
Speaker Change: Our share buybacks are done in a systematic way keeping in mind the limitations imposed on M. P Y Bay, its credit agreement, which limits annual distributions to shareholders to $50 million.
Speaker Change: Amount includes both dividends and share buybacks.
Speaker Change: And I'll now turn the call over to Renee will discuss MTA wise financial results in greater detail.
Rene: Thank you, Eric. Good morning, everyone.
Renee: Thank you Eric and good morning, everyone as mentioned by Eric normalized adjusted EBITDA, which excludes acquisition related expenses and a S. A P project implementation costs amounted to $59 5 million in the first quarter of 'twenty 'twenty four down 7% from 64 million in the first quarter of 2023.
Rene: As mentioned by Eric, normalized adjusted EBITDA, which excludes acquisition-related expenses and SAP project implementation costs, amounted to $59.5 million in the first quarter of 2024, down 7% from $64 million in the first quarter of 2023. Company revenue, meanwhile, declined 3% year-over-year to $278.6 million in the first quarter, mainly due to less-recurring revenue streams that were tightly correlated to reduced system sales. In Canada, revenue from franchise operations decreased 7% year-over-year, while food processing, distribution, and retail sales dropped 8%. Lower revenues from these divisions were partially offset by an 11% increase from corporate-owned stores due to a net increase in such locations year-over-year. In the U.S. and international segments, revenues from both franchise operations and corporate-owned stores decreased 1% year-over-year, while the retail segment dropped $7.7 million, mainly due to the determination of a retail licensing agreement. The lower revenue levels from the franchise and corporate-owned store subdivisions were mainly impacted by the decrease in recurring revenue streams, similar to Canada.
Renee: Company revenue, Meanwhile, declined 3% year over year to $278 6 million in the first quarter, mainly due to less recurring revenue stream, that's more tightly correlated to reduce the payout.
Renee: In Canada revenue from franchise operations decreased 7% year over year, while food processing distribution and retail sales dropped 8%.
Renee: Lower revenues from these subdivisions or partially offset by an 11% increase from corporate owned stores.
Renee: So a net increase in such locations year over year.
Renee: In the U S and international segment revenues from both franchise operation and corporate owned stores decreased 1% year over year, while the retail segment dropped 7.7 million, mainly due to the termination of a retail licensing agreement.
Renee: Hello, or revenue levels from the franchise and corporate on Starz subdivisions were mainly impacted by the decrease in record recurring revenue stream similar to Canada.
Rene: These were partially offset by higher sales of material and services to franchisees and greater initial fees demonstrating the strength of the company's pipeline for new openings. U.S. revenues were also positively impacted by the acquisitions of Wetzel's Pretzels and Sauce Pizza & Wine, which were finalized in December 2022. The year-over-year decrease in normalized-adjusted IVIDA was primarily driven by lower system cells in all geographies, slightly lower costs of doing business, as well as a decline in the performance of our retail segment. In terms of net income attributable to owners, it amounted to $17.3 million or $0.71 per diluted share in the first quarter of 2024, slightly lower from last year's $18.4 million or This decrease is attributable to lower year-over-year EBITDA, as well as impairment charges taken on the value of the property and equipment of a few U.S. corporate restaurant locations and one trademark in Canada.
Renee: These were partially offset by higher sales of materials and services to franchisee and greater initial phase demonstrating the strength of the company's pipeline for new openings.
Renee: U S revenues were also positively impacted by the acquisitions of Watson Pretzels and talk Pizza unwind, which were finalized in December 2022.
Renee: The year over year decrease in normalized adjusted EBITDA was primarily driven by lower system sales in all geographies.
Renee: Slightly lower cost of doing business as well as a decline in the performance of our retail segment.
Renee: In terms of net income attributable to owners it amounted to $17 3 million or <unk> 71 per diluted share in the first quarter of 2024 slightly lower from last years, $18 4 million or 75 cents per diluted share.
Renee: This decrease is attributable to the lower year over year, EBITDA as well as impairment charges taken on the value of the property and equipment of a few U S corporate restaurant location and one trademark in Canada.
Renee: Looking at liquidity and capital resources as mentioned by Eric We generated all time record high cashless in the operations of $54 2 million in the first quarter of 'twenty 'twenty four 'twenty.
Rene: Looking at liquidity and capital resources, as mentioned by Eric, we generated all-time record high cash flows from operations of $54.2 million in the first quarter of 2024, up $20.7 million from $33.5 million in the same period last year. The increase is mainly attributable to an improvement in non-cash working capital items, which is primarily the result of improvements in our accounts receivable collection, including the collection of a few large transactions related to insurance, gift cards, and taxes owing to the company. Excluding variations in non-cash working capital items, income taxes, interest paid, and other, we generated $59.1 million in cash flows from operations compared to $63.3 million in the same period last year.
Renee: 27 million from $33 5 million in the same period last year.
Renee: The increase was mainly attributable to an improvement in noncash working capital items, which is primarily the result of improvements in our accounts receivable collection, including the collection of a few large transactions related to insurance gift cards and taxes, owing to the company.
Renee: Excluding variations in noncash working capital items income taxes interests and other we generated $59 1 million in cash flows from operations compared to $63 3 million in the same period last year.
Renee: Free cash flow isn't at least expensive. Meanwhile, grew at 139% to $36 9 million or $1 52 per diluted share in the first quarter of 2024 compared to $15 4 million or 63 cents per diluted share in the first quarter of 2023.
Rene: Free cash flows net of least expenses meanwhile grew 139% to $36.9 million or $1.52 per diluted share in the first quarter of 2024, compared to $15.4 million or $0.63 per diluted share in the first quarter of 2023. In the first quarter of 2024, we repaid $34.6 million of long-term debt, paid $6.8 million in dividends to our shareholders, and repurchased 70,800 shares for a total consideration of $3.6 million, on top of paying $12.3 million in interest on our bank facilities. At the end of the quarter, MTY had a cash position of $50.6 million and long-term debt of $736.2 million, mainly in the form of bank facilities and promissory notes on acquisition. The revolving credit facility has an authorized amount of $900 million, of which $536.3 million USD has been drawn.
Renee: In the first quarter of 'twenty 'twenty, four we reimbursed $34 6 million of long term debt paid $6 8 million in dividends to our shareholders and repurchased 70800 shares for a total consideration of $3 6 million on top of paying $12 3 million in interest on our bank facility.
Renee: At the end of the quarter and do I had a cash position of $50 6 million and long term debt of $736 2 million, mainly in the form of bank facilities and promissory notes notes on acquisition.
Renee: Our revolving credit facility has an authorized amount of 900 million a width of which $536 3 million USD has been you're out.
Renee: Editing strategies, including three year and two year fixed interest rate swaps has provided the company with a quarterly savings of approximately one to $1 9 million on interest payments.
Rene: Hedging strategies, including three-year and two-year fixed interest rate swaps, have provided the company with a quarterly savings of approximately $1.9 million on interest payments. Following the quarter end, we successfully extended the maturity of our revolving credit facility by 17 months from March 15 to March 15, 2027, while maintaining our current interest rates stable. Finally, our NET-BET normalized adjusted EBITDA ratio stood at 2.6 times at quarter end, a sequential improvement from 2.8 times in the fourth quarter of 2023.
Renee: Following the quarter end, we successfully extended the maturity of our revolving credit facility by 17 months on March 15 to 20 to March 15, 2027, while maintaining our current interest rates stable.
Renee: Finally, our net debt to EBITDA, our net debt to normalized adjusted EBITDA ratio stood at two six times at quarter end, a sequential improvement from two eight times in the fourth quarter of 2023.
Speaker Change: And with that I. Thank you for your time and we'll now open line for questions operator.
Speaker Change: Thank you.
Speaker Change: We will now begin the question and answer session.
Speaker Change: I joined the question queue. You May Press Star then one on your telephone keypad, you will hear a tone they come out as your question if youre using a speakerphone. Please pick up your handset before pressing any key.
Operator: And with that, I thank you for your time, and we'll now open the lines for questions. Operator? Thank you. We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any key. Did we draw your question? Tarzan.
Speaker Change: To withdraw your question. Please press Star then two.
Speaker Change: We will pause for a moment that's called just joined the queue.
Speaker Change: First question comes from John's apparel of CIBC. Please go ahead.
John: Thank you good morning, I Wonder if we could start on the same store sales performance of your recently acquired brands specifically.
John Zamparo: We will pause for a moment as colleagues join us. The first question comes from John Zamparo of CIBC. Please go ahead.
Maybe you can holding's portfolio and whistles.
Eric Lefebvre: Thank you. Good morning. I wonder if we could start on the Samster sales performance of your recently acquired brand, specifically the BBQ Holdings portfolio and website.
John: Yeah.
John: Both brands and they are in Q1, where.
John: Affected similar to the rest of the network I mean, when the <unk>.
Eric Lefebvre: Yeah, both brands in Q1 were affected similarly to the rest of the network. I mean, when the severe weather started impacting the network, it's not one or two brands that started going downwards. It's all of our portfolio went down at the same time, which tends to indicate it's not something related to specific brands or something we would have done. It's more macro, but more specifically, Wetzel's.
John: The severe weather started impacting the network, it's not one or two brands that started going downwards. Its all of our portfolio went down at the same time.
John: Which tends to indicate it's not something related to specific brands or something we would have done its more macro.
John: But more specifically wetzel.
John: Mall environment our people.
Eric Lefebvre: In a small environment, people in a lot of regions were more or less sheltering-in-place because of the weather, so affected for a few weekends predominantly and also for the Disney stores for a little while, while BBQ affected very similar trends to the rest of the industry. So if you look at the industry in December, it was a little bit under, and then January was a severe dip, and BBQ followed the same pattern. So it doesn't help us, but we have more or less followed the rest of the industry.
John: For a lot of regions, where we're more or less shelter in place because of the weather. So affected for a few weekends predominantly and also for the Disney stores for a little while.
Speaker Change: Well be back to you.
Speaker Change: <unk> are very similar trends through the rest of the industry. So if you look at the industry in December.
Speaker Change: It was a little bit a little bit under and then in January it was a severe dip and be Btu, followed followed the same pattern. So.
Speaker Change: It doesn't help us, but we more or less followed the rest of the industry.
Speaker Change: Okay, understood and thinking about pricing and traffic is it fair to say that.
Eric Lefebvre: Okay, understood. And thinking about pricing and traffic, is it fair to say that, I know there's a lot of different puts and takes on this, but on the whole, is your network's pricing in line with CPI, would you say?
Speaker Change: There's a lot of different puts and takes this but on the whole is your networks pricing in line with CPI with you Sir.
Speaker Change: Yep.
Eric Lefebvre: Yeah, it is. Some brands have started preparing for the April increase in California, so I would say California is probably a sub-market in our portfolio where price increases are a little bit higher, but more towards the end of the quarter, maybe March. Obviously, April. For the rest of the network, prices were more or less stable, probably a little bit below CPI, I would say, on average.
Speaker Change: Hmm.
Speaker Change: Some some brands have started preparing for the April increase in California, So I would say California's probably the submarket and in our portfolio where price increases are a little bit more.
Speaker Change: So, but more and more towards at the end of the quarter, maybe March and obviously April.
Speaker Change: For the rest of the network prices were more or less stable, probably a little bit below CPI I would say on average.
Speaker Change: Got it okay, maybe we can stick with with California, I know, it's only been a couple of weeks, but I wonder what you're seeing in terms of its customer response with a b 12, 28, and can you remind us what's your mix of corporate ownership in California.
Eric Lefebvre: Got it. Okay. Maybe we can stick with California. I know it's only been a couple of weeks, but I wonder what you're seeing in terms of customer response with AB 1228, and can you remind us what your mix of corporate ownership is in California?
Speaker Change: Yeah, it's too early to tell what the consumer will how the consumer will react I think there were various brands do we we have a few brands that decided not to increase price just to wait and see and we Havent few brands, where we did increase prices between four and 8% on average we have I think one brand that's a little.
Eric Lefebvre: Yeah, it's too early to tell how the consumer will react. I think there are various brands; we have a few brands that have decided not to increase prices just to wait and see. We have a few brands where we increased prices between 4% and 8% on average. We have, I think, one brand that's a little bit higher than that because there was some catch-up to do. And we do have a few corporate stores, you know, especially for Wetzel's pretzels. We have a few. We have a few in the BBQ Holdings portfolio and a few Baja Fresh as well. Not where we have the most corporate stores, but we do have some.
Speaker Change: A bit higher than that because there was a catch up to do.
Speaker Change: And we do have a few corporate stores no, especially for Wetzel spreads holds we have a few.
A few also in the barbecue holding's portfolio and a few baja pressures as well are not where we have the most corporate stores, but we do have some.
Speaker Change: Okay. That's helpful. Thanks, and then just a couple on many of the store network. It looked like almost half of your openings in the quarter were from non traditional sites I Wonder if you could provide some color there.
John Zamparo: Okay, that's helpful. Thanks.
Eric Lefebvre: And then just a couple on the store network. It looks like almost half of your openings in the quarter were from non-traditional sites. I wonder if you could provide some color there.
Speaker Change: Yeah well.
Eric Lefebvre: Yeah, well... I'd have to look into what type of nontraditional they would be, but nontraditional can mean a lot of things. It can be a food truck or it can be an airport store, so I'd have to look into the specifics. I did not notice that trend, to be honest with you, so it's not something that's non-traditional in the sense of a coffee jug on a counter or something like that.
Speaker Change: I'd have to look into what the what type of non traditional there would be but non traditional can mean a lot of things.
It can be it can be a food drug or it can be an airport stores. So I'd have to look into the specifics.
Speaker Change: Noticed that trend to be honest with you.
Speaker Change: So it's not something that it's not non traditional in the sense of.
Speaker Change: A coffee jargon, a counter or something like that.
Speaker Change: Okay Fair enough and then just one last one I wonder if you can talk about the pipeline for openings for this year I know closures. So you don't have as much clarity on but but how are you feeling about the pipeline either relative to what you did in Q1 or for 2023.
Eric Lefebvre: Okay, fair enough. And then just one last one. I wonder if you could talk about the pipeline for openings for this year. I know closures you don't have as much clarity on, but how are you feeling about the pipeline, either relative to what you did in Q1 or for 2023?
Eric Lefebvre: Yeah, we're really happy with where the pipeline is. We have a lot of stores under construction. We have a lot of new stores coming, so pretty bullish about the future. Projects still take a little bit longer than they used to to build and finalize, but we're really happy with where the pipeline is. The teams are doing a fantastic job on that.
Speaker Change: Yeah, we're really happy with where the pipeline is we have a lot of stores under construction, we have a lot of news.
Speaker Change: The new stores coming so pretty bullish about the about the future.
Speaker Change: Projects, then they still take a little bit longer than a than they used to to build in and finalized but that really happy with where the pipeline is it seems that are doing a fantastic job on development.
Speaker Change: Okay I appreciate the color I'll pass it on thank you.
John Zamparo: Okay, I appreciate the color. I'll pass it on. Thank you.
Speaker Change: The next question comes from bushels sweetheart of National Bank.
Vishal Shreedhar: The next question comes from Vishal Shreedhar of National Bank. Please go ahead. Hi, thanks for taking my questions. In the materials, it says that management will focus on the success of existing locations and assist franchisees with sales and profitability. I'm wondering if you could unpack that for me.
Bushels Sweetheart: Please go ahead.
Bushels Sweetheart: Hi, Thanks for taking my questions and in the materials that says that's management will focus on the success of existing locations and assisting franchisees with sales and profitability.
Bushels Sweetheart: I'm wondering if you could unpack that for me.
Eric Lefebvre: Specifically, does that mean incremental investment from the MTY, and how should we perceive this focus on existing locations to manifest?
Bushels Sweetheart: Specifically does that mean incremental investment from the empty y.
Bushels Sweetheart: And how should we.
Bushels Sweetheart: Perceives that sat this focus on an existing locations to manifest.
Eric Lefebvre: No, it doesn't require more investment from MTY. It's just the way we decide to focus, where we decide to focus our energy. Obviously, we did some acquisitions maybe a year and a half ago, a year ago, and now I think the focus is more on, instead of acquiring new companies, it's more on the existing locations we have in the network. So, with what you described there is more or less the job of a franchisor; our job is to try to help our franchisees realize their goals. They invest in restaurants to make money and to earn a return, and we try to be the best we can be. We're training our staff to be the best they can be as business consultants, more than just supervisors. As you know, more than half of our people are on the field and visiting stores every day, trying to help our franchisees be the best they can be in their stores and try to satisfy guests every time they come into the store. And this is the primary focus for us at the moment.
Speaker Change: No it doesn't require more investments from empty why.
Speaker Change: It's just the.
Speaker Change: It's just the way, we decided to focus where we decided to focus our energy on.
Speaker Change: Obviously, we we did some acquisitions, maybe a year and a half ago.
Speaker Change: A year ago, and now I think the focus is more on instead of acquiring new companies. It's more on the existing locations, we haven't and network.
Speaker Change: So.
Speaker Change: With what you described there is more or less the job of a franchise or our job is.
Speaker Change: Just to try to help our franchisees realize their goals the investing in the restaurants to make money and to earn a return and we try to be the best we can be we are training our staff to be the best we can as business consultants more than just our supervisors are as you know.
Speaker Change: More than half of our people are on the field and visiting stores every day and trying to help our franchisees be the best they can be in their stores and try to satisfy guests every time they come into the store.
Speaker Change: And this is this is the primary focus for us at the moment.
Speaker Change: I'm wondering if you could isolate the impact of.
Vishal Shreedhar: I'm wondering if you could isolate the impact of weather. I know it's an imprecise measure at best, but you do have examples of when the quarter wasn't implemented because of this unseasonable weather. So could you give us a sense of what the quarter may have looked like if it weren't for this weather event?
Speaker Change: Whether I know, it's an impressive precise measure at best but you do have.
Speaker Change: Examples of when the quarter wasn't implemented by this unseasonable weather. So could you give us a sense of what the quarter may have looked like if it wasn't for this weather events.
Eric Lefebvre: Yeah, that would be very speculative on my part. I don't necessarily feel comfortable.
Speaker Change: Yeah that would be very speculative on my part that I don't necessarily feel comfortable we we know whether it has a major impact, especially on our frozen treats category.
Vishal Shreedhar: We know weather has a major impact, especially on our frozen treats category. As you know, ice cream and smoothies are not the most popular when it's super cold or when there's a snowstorm. But it's hard to quantify exactly the impact of weather versus other macroeconomic factors versus other factors that might impact the...
Speaker Change: As you know ice cream in smoothies or not the most popular when it's super gold or we're doing when Theres a snow storm.
Speaker Change: But it's hard to quantify exactly the impact of weather versus other macroeconomic factors versus other factors that might impact the.
Speaker Change: The economy or to spending or or or preferences, so yeah, and I won't speculate as to how much exactly whether it means in the same store sales.
Vishal Shreedhar: or preferences. So yeah, I won't speculate as to how much exactly it means in the same store sales.
Speaker Change: Okay regarding capital allocation you talked about.
Vishal Shreedhar: Okay, regarding capital allocation, you talked about the priority of paying down debt. He also talked about building a treasure chest for new opportunities.
Speaker Change: Our priority is paying down debt you also talked about a dozen of treasure chest for new opportunities.
Speaker Change: You know the balance sheet is improving with the free cash flow generation. So how should we think about.
Eric Lefebvre: You know, the balance sheet is improving with the free cash flow generation, so how should we think about your priority for capital allocation? I know you bought a little bit back, but is that going to be increasingly in vogue for you, increasingly in focus, or would you prioritize acquisitions above it? If you do think about acquisitions, what kind of deals are you thinking about, QSR, corporate store, casual dining, those kinds of basic questions.
Speaker Change: Think about your priority of capital allocation.
Speaker Change: It's about our buybacks I know you bought a little bit dark but is that can be increasingly in vogue for you are increasing in focus or would you prioritize acquisitions above it.
Speaker Change: And if you do think about acquisitions kind of what kind of deals are you thinking about <unk> corporate store.
Speaker Change: Casual dining got those kinds of basic questions.
Speaker Change: Yeah in terms of acquisitions I wouldn't expect anything of significance. This year, obviously, there could always be something coming up that we can't Miss and we really want to go for it.
Eric Lefebvre: In terms of acquisitions, I wouldn't expect anything of significance this year. Obviously, there could always be something coming up that we can't miss and we really want to go for it. But at the moment, we're not contemplating anything of significance. There might be some smaller deals here and there that happen, but nothing that would significantly increase our debt level. We're not in that mode at the moment. Bye, Baxar.
Speaker Change: But at the moment, where we're not gonna ability contemplating anything of significance there might be some smaller deals here and there that that happened, but nothing that would significantly increase our debt level.
Speaker Change: So I mean, we're we're not in that mode at the moment and in terms of capital allocation buybacks are.
Eric Lefebvre: One way for us to return capital and to... acquire a business we like, acquire a business that has no execution risk, and that we believe is undervalued. So, we will continue to be systematic in our approach, at least for now. Obviously, the board can always change the strategy at any point in time, but we're limited in how much buyback we can do. As I mentioned earlier, the cap on distributions to shareholders is $50 million a year. That includes dividends and share buybacks. So, if you take out the dividends, you see that the amount we can spend on share buybacks is limited. So, the systematic way we're doing it now might not get us exactly to the ceiling, but it will get us close. So, this is the approach we choose for now. It might change in the future, but we do believe that share buybacks are a valid way to deploy capital.
Speaker Change: One way for us to return capital into.
Speaker Change: <unk> to acquire a business, we like our acquire a business that has no execution risk.
Speaker Change: And that we believe is undervalued. So we will continue to be systematic in our approach at least for now obviously the board can always change the strategy.
Speaker Change: Point in time, but no we're limited in how much buyback, we can do them as I mentioned earlier the cap on distributions to shareholders is $50 million a year.
Speaker Change: That includes dividends and share buybacks so if.
Speaker Change: If you take out the dividends, you'll see that the amounts we can spend on share buybacks is limited so the systematic way.
Speaker Change: We're doing it now we might not get us exactly to the ceiling, which will get us close.
Speaker Change: So this is the approach we chose for now that might change in the future but.
We do believe that share buybacks are a valid way to to deploy capital.
Vishal Shreedhar: Okay, and just one last question. Eric, you've been implementing a number of initiatives to improve performance at the stores, new systems, you know, marketing approaches, and digital initiatives. Maybe if you have seen the results that you wanted from some of those initiatives? And maybe you can highlight some of them that you feel are delivering results. With all these, the consumer issues and the weather issues, it's difficult to understand what's driving the underlying business. So maybe you can talk to some of your bigger initiatives and how they're delivering for you.
Speaker Change: Okay and just one last question Eric you you've been over the last year is implementing a number of initiatives to improve performance at the stores that these systems.
Eric: Getting approaches our digital initiatives.
Eric: Maybe if have you and how do you see that the results that you wanted to.
Eric: Some of those initiatives and maybe you could highlight some of them that you feel like are delivering results with all these bad consumer issues and the weather issues, it's difficult to understand what's driving the underlying business. So maybe you can talk to some of your bigger initiatives and how they're delivering for you.
Speaker Change: Yeah for sure.
Eric Lefebvre: Yeah, for sure. Yeah, where we have been able to implement these initiatives and You know, it all starts with the collection of data and then the intelligence we can build around it and the systems we use. And I won't get into the complexity of which tools we use to collect the data and analyze it and then deploy the marketing campaigns, but where we have been able to do it successfully for brands. For example, Cold Stone is probably the best example. We do see really good results, and we can measure them.
Speaker Change: Yeah, where we haven't been able to implement these.
These initiatives and you know it all starts with with collection of data and then the intelligence, we can build around there around it and the systems we use.
Speaker Change: And that I won't get into the complexity of.
Speaker Change: Which tools, we used to collect the data and to analyze it and then to to deploy to marketing campaigns, but where are we have been able.
Speaker Change: To do it and successfully for brands for example, Goldstone is probably the Best example, we do see.
Speaker Change: Really good results and we can measure it a lot better than traditional marketing for example, if we have loyalty customers or any other customers that come to our stores we can easily.
Eric Lefebvre: a lot better than traditional marketing. For example, if we have loyalty customers or any other customers that come to our stores, we can easily track the volume and repeat business and the frequency of their visits and the average spend for each visit.
Dragged the volume and the repeat business and the frequency of their visits and the average spend.
Speaker Change: For each visit so that's been hugely successful, where we haven't been able to deploy it.
Eric Lefebvre: So, that's been hugely successful where we have been able to deploy it. We do have some more initiatives coming. We are still lagging behind in Canada when it comes to technology and data and its usage. It's one thing to have the tools to use them, but if you don't have the proper data or clean data, then you're a little bit limited in how much you can do. And that takes time. We want to collect data, and we want to accumulate a size of, a sample size, or a number of customers that's sufficient for us to really be able to deploy good marketing campaigns around it. And it takes a little bit longer; it takes time for us to assemble that data, so we're in the process of doing that. There's a lot more to come in the coming months, but we feel like a lot of the pieces of the puzzle are falling in place now. Thank you.
Do have some more initiatives coming we are lagging still in Canada.
Speaker Change: When it comes to technology and data and the usage of it.
Speaker Change: It's one thing to have the tools to use it but if you don't have the proper data or clean data than you were a little bit limited in how much you can do oh.
Speaker Change: That takes time.
Speaker Change: We we want to we want to collect data and we want to accumulate.
Speaker Change: The size of.
Speaker Change: The size of the sample size of.
Speaker Change: There are a number of customers that's sufficient for us to really be able to deploy good marketing campaigns around it.
Speaker Change: And it takes a little bit longer it takes time for us to assemble that data.
Speaker Change: So where we are in the process of doing that there's there's a lot more to come in the coming months.
Speaker Change: But yeah, we feel like a lot of the pieces of the puzzle are falling in place now.
Speaker Change: Okay. Thank you.
The next question comes from George <unk> of Scotiabank. Please go ahead.
George Doumet: The next question comes from George Doumet of Scotiabank. Please go ahead.
Eric Lefebvre: Yeah, good morning, Eric. I'd be curious to get your take on the Canadian versus the U.S. consumer, kind of, if you're seeing any notable differences there in terms of demand, perhaps.
Yeah. Good morning, Eric I'd be curious to get your take on the Canadian versus the U S consumer kind of if you're seeing any notable differences there.
George: In terms of the mine.
Yes.
George: Yeah.
Eric Lefebvre: Yeah, I think it's pretty uniform at the moment. I don't notice major variances in how Canadian or US customers behave. So, I know some people in some industries have mentioned that Canada might have been a little bit slower than the U.S. in terms of spending or vice versa, depending on the industry. In our case, I don't necessarily see a big gap between the two types or the two geographies.
George: I would say, it's pretty uniform at the moment that I don't notice major variances and how Canadian or U S coast customers behave.
George:
George: So I know some people in some industries have mentioned that our agenda might've been a little bit slower than the U S in terms of spending or vice versa, depending on the industry.
George: In our case I don't necessarily see a big gap between the two types of or the two geographies.
Eric Lefebvre: Okay, that's helpful. Can you talk a little bit about our value offering across our banners? Have we seen a tick up there? How easy can we maybe shift that mix more towards value? I guess if things continue to be soft going forward.
Speaker Change: Okay. That's helpful and can you talk a little bit about our value offerings.
Speaker Change: Across our banners have you seen a tick up there how he's he can mean any shift that mix more towards value I guess, if things continue to be soft going forward.
Eric Lefebvre: Yeah, obviously, especially in January and February, it's a little bit more important to bring these value offerings to customers. It's always the case every year.
Speaker Change: Yeah, obviously, especially in January and February it's a little bit more important to bring these value offerings to customers. It's always the case every year.
Eric Lefebvre: Right now, I'm not seeing the competition being super aggressive on value, and when I say value, I shouldn't use that word, but on pricing or discounts, but it might be coming, so we need to be prepared, but in our case, we always say that value is, Value is relative to the performance you deliver. And if you have a higher price, there's also higher expectations from the guest. And if you meet those expectations, then the value works for them. So we can have discounts and we can direct customers to certain products that might be interesting for our franchisees in terms of the food cost, but also for them in terms of the price point. But ultimately.
Speaker Change: Right now I'm not seeing the competition being super aggressive on value and when I say value or I shouldn't use that word but on pricing.
Speaker Change: Or discounts and so but it might be coming so we need to be prepared.
Speaker Change: But in our case you, we always say that that value is a value is relative to the performance you deliver and if you. If you have a higher price you. There's also a higher expectations from the guests and if you meet those expectations then the value works for them. So.
Speaker Change: We can do we can have the discounts that we can direct customers to certain products that might be interesting for our franchisees in terms of the food cost, but also for them in terms of the price point, but ultimately.
Eric Lefebvre: Whether you have a high or a low price point, if you don't meet expectations, you're still going to miss out and decrease traffic. So we really need to work on that guest experience and make sure that we meet their expectations every time.
Speaker Change: Whether you have a high or a low price point, if you don't meet expectations, you're still you're still going to miss out and decreased traffic. So we really need to work on that guest experience and make sure that we meet their expectations every time.
Speaker Change: Okay. That's helpful and good cost containment in this quarter in the franchise segment.
Eric Lefebvre: Okay, that's the top one. Good cost containment this quarter in the franchise segment. Just wondering, are there any more levers we can maybe push there, or do we need to implement the ERP to really start to see perhaps some more benefits going forward?
Speaker Change: Just wondering are there any more levers we can maybe push there or is it just or do we need to implement the ERP.
Speaker Change: To really start to see perhaps some more more benefits going forward.
George Doumet: Sorry, I missed the first part of your question, a really good one.
Speaker Change: Sorry, I missed the first part of your question really good one.
Eric Lefebvre: Cost containment, like on the French side, I think we're flat year over year, despite, I guess, inflation and wages. Just wondering if there's anything we can do more there, or do we need, I guess, the ERP to help us out?
Speaker Change: Our cost containment is like in the French cycling I think were flat year over year. Despite I guess inflation on wages just wondering if there's anything if there's anything we can do more there or do we need when we need the ERP that helped us out.
Speaker Change: No well the E. R. P will certainly help but that's the only that's only a still more than a year down. The road. There are some modules that are being implemented but the real efficiencies will come when we have the full solution in place.
Eric Lefebvre: Well, the ERP will certainly help, but that's still more than a year down the road. There are some modules that are being implemented, but the real efficiencies will come when we have the full solution in place.
Eric Lefebvre: But yeah, there is more cost containment coming. We did have some initiatives in Q1, and obviously, you haven't had much time to look at the statements, but we do have some restructuring charges in there. You will see more restructuring charges in Q2 as well. We're not announcing anything massive in terms of restructuring, but we are, once again, systematically going about trying to analyze how differently we can do things, be more efficient in our approach, and be more cost-effective. So there are a number of initiatives that are taking place right now. We're doing them one at a time instead of everything at the same time so we don't disrupt the business, but yeah, there will be more cost containment.
But yeah. There is more of a cost containment coming we did have some initiatives in Q1 and.
Speaker Change: And obviously I haven't had much time to look at the statements, but we do have some restructuring charges in there you will see more restructuring charges in Q2 as well.
Speaker Change: We're not announcing anything massive in terms of restructuring, but we are once again systematically going about tried to analyze how different how differently. We can do things how we can be.
Speaker Change: It would be more efficient in our approach and it would be more cost effective. So there are a number of initiatives that are taking place right now we're doing them one at a time instead of everything at the same time, so we don't disrupt the business, but yeah. There there will be more cost containment going forward.
George Doumet: Okay, thanks. This is one last one for me. How quickly... Can we remove this $50 million cap that you spoke about earlier? Is that something that we're planning on doing in the near term, call it, I guess, this fiscal year?
Speaker Change: Okay. Thanks, and just one last one for me how quickly.
Speaker Change: Can we remove the $60 million cost you spoke about earlier or is that something that we're planning on doing.
Speaker Change: And then you in the near term call. It like I've got this fiscal year.
Speaker Change: The the cap on the under distributions to shareholders.
Eric Lefebvre: The cap on distributions to shareholders.
Eric Lefebvre: Thank you.
Speaker Change: No we were not necessarily planning on removing at this is that this gap has existed since 2016. When we had this credit agreement. The first time. So we've had that same gap for us.
George Doumet: No, we're not necessarily planning on removing it. This cap has existed since 2016 when we had this credit agreement for the first time, so we've had that same cap for eight years now. We've just renegotiated our credit agreement, and our terms are very favorable. This is something that gives comfort to our banks and to our syndicate that we're not going to go crazy, you know, take all the business resources and distribute them to shareholders, and that we're going to be disciplined in our approach. So this is not necessarily something we're looking to change. If we do see that, obviously, we do need to change.
Speaker Change: For eight years now.
We've just renegotiated our credit agreement our terms are very favorable.
Speaker Change: This is a something.
Speaker Change: Something that gives comfort to our through our banks into our syndicate that.
Speaker Change: We're not going to go crazy and.
Speaker Change: You take all of the businesses resources and distribute to the shareholders and that's where we're going to be disciplined in our approach. So this is not necessarily something were looking to change that.
Speaker Change: We do see that we do need to change obviously.
Eric Lefebvre: Yeah.
George Doumet: You know, our banks are always supportive, and they will, I'm sure they will accommodate, but this is not something we're necessarily planning on doing at the moment. All right, great. Thanks, everybody.
Speaker Change: You know our banks are always supportive and they will I'm sure do will accommodate but this is not something we're necessarily planning on doing at the moment.
Eric Lefebvre: All right, great. Thanks, Eric, for your answers. I appreciate it.
Alright, great. Thanks, Eric for your questions and your answers.
Speaker Change: Once again, if you have a question. Please press Star then one.
Derek J. Lessard: Once again, if you have a question, please press star and then 1. The next question comes from Derek Lessard of TV Cohen. Please go ahead.
Speaker Change: The next question comes from Gerrick Lazard T D Cohen.
Speaker Change: Please go ahead.
Derek J. Lessard: Yeah, good morning, everybody. Eric, I just maybe wanted to maybe ask Vishal's question another way. Do you think that, are you able to answer whether or not the impact on the business came more from consumer spending versus the storms?
Derek J. Lessard: Yeah. Good morning, everybody I'm, Eric I, just maybe wanted to.
Speaker Change: Maybe ask Michels question another way.
Derek J. Lessard: Do you think that are you able to answer whether or not the impact on the business came more from consumer spending versus the storms.
Eric Lefebvre: Yeah, but again, this one is probably a little bit easier. We did see sales go down drastically as the weather started in January, and we did see sales rebound in the back half of February and in March. So, it tends to indicate, I think, the consumer. There might have been something in the consumer's mind in January. I don't know. Maybe it coincided with the weather, but definitely, the spending did come back up after the weather normalized. So, I would tend to say that, you know, consumer spending is It's not what it was a year ago, for sure, but it's... It's not a disaster either. I know a lot of people are talking about a lot of different things about consumer spending, but ultimately, people still want to treat themselves, and if we offer them a good guest experience, they'll come to our stores.
Derek J. Lessard: Yeah.
Derek J. Lessard: Yeah.
Derek J. Lessard: Yeah, but again.
Derek J. Lessard: This one is a probably a little bit easier.
Derek J. Lessard: We did see the sales go down drastically as whether it started in January and we did see sales rebound in the back half of February and.
And then in March.
Derek J. Lessard: So it tends to indicate I think the consumer there might've been something in the consumers' mind in January I don't know, maybe it coincide with weather, but definitely to spending did come back up after the weather normalized so it would tend to say that you know.
Derek J. Lessard: No.
Derek J. Lessard: Tumor spending is.
Derek J. Lessard: It's not what it was a year ago for sure but.
Derek J. Lessard: But it's it's it's not as it's not it's not a disaster either I know a lot of people are talking about.
Derek J. Lessard: Lot of different things in consumer spending, but ultimately.
Derek J. Lessard: People still want to treat themselves and if we if we offer them a good guest experience they will come to our stores.
Derek J. Lessard: Okay, that's helpful. And maybe just more specifically, I wanted to touch on Papa Murphy's. Obviously, it's a big contributor to your numbers. Just curious about the performance there. I know you said it was impacted by SNAP, but you've put in a few or numerous initiatives over the last couple of years. Just wondering how those initiatives are playing out and sort of what you're seeing on the, I guess, competitive landscape and pizza in particular.
Speaker Change: Okay. That's helpful and maybe just more specifically I wanted to touch on Papa Murphy's obviously, it's a it's a big contributor to your to your numbers just curious about the performance. There I know you said it was impacted by by snap, but you've put in a few or numerous initiatives over the last.
Speaker Change: Couple of years, just wondering how those initiatives are playing out and sort of what you're seeing on the I guess on the competitive landscape in pizza in particular.
Speaker Change: Yeah, Yeah. There there are a lot of initiatives, there's actually a lot more coming we did make some significant changes and Papa Murphy's and and the leadership of Papa Murphy's and also on the team in general so there.
Eric Lefebvre: Yeah, yeah, there are a lot of initiatives. There are actually a lot more coming. We did make some significant changes to Papa Murphy's,
Eric Lefebvre: A number of things are coming. For the first quarter, our sales are down, but only very slightly if you exclude the EBT, so we're relatively flat with Papa Murphy's. Obviously, EBT is something we don't control.
A number of things that are coming for the first quarter. Our sales are down, but only very slightly if you exclude the E. P T.
So where were relatively flat with Papa Murphy's, obviously E B P.
Speaker Change: It's something we don't control so we need to find a solution to make that up and that's what the team is trying to do now.
Eric Lefebvre: So we need to find a solution to make that up. And that's what the team is trying to do now. But yeah, it's still really like the brand, and the product is still very relevant. We just need to, we just need to find a way to make more sales and make up for the lost sales with EBT.
Speaker Change: But yeah it's.
Speaker Change: It's still really like the brand and.
Speaker Change: And product is still very relevant and we just need to we just need to make a deal.
Speaker Change: To find a way to make more sales in there to make up for the lost sales with EBT.
Derek J. Lessard: Okay, and I guess any changes in the competitive intensity in that segment?
Speaker Change: And I guess any changes.
Speaker Change: And the competitive intensity in that segment.
Eric Lefebvre: Not really. Pizza is always very competitive. There are always various offers with different price points from our competitors. I suspect that will not change. I don't think it can necessarily intensify because it's always pretty intense. So it is what it is, and on our side, we just need to find a way to respond without necessarily going too deep into these types of discounts because, ultimately, we need our franchisees to make money.
Speaker Change: Not not really pizza is always very competitive and there's always various offers with different price points from our competitors I I suspect that will not change I don't think it doesn't necessarily intensified because it's always pretty intense.
Speaker Change: So it is what it is in our on our side, we just need to find a way to respond without necessarily going too deep into these types of discounts because ultimately we need our franchisees to make money.
Speaker Change: Okay, and maybe just one one final one for me on <unk>.
Derek J. Lessard: Okay, and maybe just one final one for me on the labor costs, but more tied to Canada, that wage as a percentage of revenue was particularly high this quarter. Just wondering if that's just wage inflation, and if there's any other market where you're seeing some inflationary wage pressures or labor shortages?
Labor costs, but more tied in Canada.
Speaker Change: That that wages as a percentage of revenue was particularly high this quarter. Just wondering if that's just wage inflation and if theres any other market, where youre seeing some inflationary wage pressures or universe shortages.
Eric Lefebvre: Yeah, I mean, sometimes there's a lot of noise in these metrics. We have more corporate stores, for example, in Canada versus last year at this time, so it does impact the amount of wages versus revenue. But no, there's not necessarily a lot of inflationary pressure on labor at the moment in Canada or in the U.S., to be honest, on wages, other obviously than minimum wage increases in California. But for the rest, it's really stabilized in terms of the availability of labor and the cost of labor. So it's still a tight environment, and it's still complicated, but it's not worse than it was before the pandemic, and it's probably going to be the same way for the next decade or so. So, yeah, I would say it's a normal labor environment at the moment.
Speaker Change: Yeah.
Speaker Change: Sometimes there's a there's a lot of noise into into these metrics. We have more corporate stores for example in Canada versus versus last year. At this time, so it does impact the amount of wages versus revenue.
Speaker Change: But no there's not necessarily a lot of inflationary pressure at the moment in Denver or in the U S to be honest on on labor and the other obviously than minimum wage increases in California.
Speaker Change: But for the rest it's it's.
Speaker Change: It's really stabilized in terms of availability of labor in terms of the cost of labor. So yeah. It's a it's still at.
Speaker Change: The type of environment, and it's still complicated but.
Speaker Change: It's it's not worse than it was before the pandemic and its probably going to be the same way for the next decade or so.
So yeah, it's a I would say, it's a normal labor environment at the moment.
Derek J. Lessard: Okay.
Derek J. Lessard: Thank you, Eric.
Eric: Okay. Thank you Eric.
Operator: This concludes the question and answer session and today's conference call. You may disconnect your line. Thank you for participating and have a pleasant day.
Speaker Change: This concludes the question answer session and today's conference call. You may disconnect. Your lines. Thank you for participating and have a pleasant day.
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