Q1 2024 Superior Group of Companies Inc Earnings Call

Operator: Good afternoon, everyone. Welcome to the Superior Group of Companies' first quarter 2024 conference call. With us today are Michael Benstock, Chief Executive Officer, and Mike Koempel, Chief Financial Officer. As a reminder, this conference call is being recorded. This call may contain forward-looking statements regarding the company's plans, initiatives, and strategies and the anticipated financial performance of the company, including, but not limited to, sales and profitability. Such statements are based upon management's current expectations, projections, estimates, and assumptions.

Good afternoon, everyone welcome to the superior group of companies first quarter 'twenty 'twenty four conference call.

Operator: Words such as expect, believe, anticipate, think, outlook, hope, and variations of such words and similar expressions identify such forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties that may cause future results to differ materially from those suggested by the forward-looking statement. Such risks and uncertainties are further disclosed in the company's periodic filings with the Securities and Exchange Commission, including, but not limited to, the company's most recent annual report on Form 10-K and the quarterly reports on Form 10-Q.

Operator: Shareholders, potential investors, and other readers are urged to consider these factors carefully in evaluating the forward-looking statements made herein and are cautioned not to place undue reliance on such forward-looking statements. The company does not undertake to update the forward-looking statements contained herein, except as required by law.

Operator: With us today are Michael Benstock, Chief Executive Officer, and Mike Campbell, Chief Financial Officer.

Operator: As a reminder, this conference call is being recorded.

Operator: This call may contain forward looking statements regarding the company's plans initiatives and strategies and the anticipated financial performance of the company, including but not limited to sales and profitability such statements are based upon management's current expectations projections estimates and assumptions.

Operator: Words, such as expect believe anticipate think outlook hope and variations of such words and similar expressions identify such forward looking statements.

Operator: Forward looking statements involve known and unknown risks and uncertainties that may cause future results to differ materially from those suggested by the forward looking statements such risks and uncertainties are further disclosed in the company's periodic filings with the Securities and Exchange Commission, including but not limited to the company's most recent.

Operator: <unk> annual report on Form 10-K, and quarterly reports on Form 10-Q.

Operator: Shareholders potential investors and other readers are urged to consider these factors carefully in evaluating the forward looking statements made herein and are cautioned not to place undue reliance on such forward looking statements. The company does not undertake to update the forward looking statements contained herein, except as required by law.

Operator: And now I'll turn the call over to Michael Benstock. Please go ahead.

Michael L. Benstock: Thank you, operator, and welcome everyone to our Q1 call. I'll begin with our first quarter highlights, including revenue and profitability growth and our improving financial position. I'll then walk us through each of our three business segments, discussing the recent improvement in market conditions and our strategies to maintain our momentum throughout 2024. I'll then hand the call over to Mike for additional detail on quarterly results and our more favorable outlook for 2024. At the end of the call, we'll be happy to take your questions.

Speaker Change: Thank you operator, and welcome everyone to our Q1 call I'll begin with our first quarter highlights, including our revenue and profitability growth.

Michael L. Benstock: Our improving financial position I'll, then walk us through each of our three business segments discussing the recent improvement in market conditions, and our strategies to maintain our momentum.

Michael L. Benstock: 2024.

Michael L. Benstock: I'll, then hand, the call over to Mike for additional detail on quarterly results and our more favorable outlook for 2024 at the end of the call will be happy to take your questions.

Michael L. Benstock: We had a strong start to 2024 with year-over-year improvements across the entire business. For the first quarter, we generated consolidated revenues of $139 million, reflecting a 6% year-over-year increase. Our EBITDA climbed 40% over the prior-year quarter to $9.6 million. We generated 24 cents of diluted EPS, up sharply from 6 cents a year ago.

Mike: We had a strong start to 2024 with year over year improvements across the entire business for the first quarter, we generated consolidated revenues of $139 million, reflecting a 6% year over year increase our EBITDA climbed 40% over the prior year quarter to <unk>.

Michael L. Benstock: $9 $6 million, we generated 24 cents of diluted EPS up sharply from six cents a year ago.

Michael L. Benstock: On top of the improved operating results, we enhanced our financial position by generating solid operating cash flow that enabled us to further reduce our net debt and improve our net leverage ratio. This enhanced financial flexibility ensures that we can continue to make prudent investments to further grow our business organically while also capitalizing on any market dislocations that could produce attractive M&A opportunities. Turning to market conditions, I'm pleased to say that so far in 2024, we've seen continued improvement in the end markets we serve. Our clients are generally increasing their spending.

Michael L. Benstock: On top of the improved operating results, we enhanced our financial position by generating solid operating cash flow that enabled us to further reduce our net debt and improve our net leverage ratio.

Michael L. Benstock: This enhanced financial flexibility ensures we can continue to make prudent investments.

Michael L. Benstock: Further grow our business organically, while also capitalizing on any market dislocations that could produce attractive M&A opportunities.

Michael L. Benstock: Turning to market conditions, I'm pleased to say that so far in 2024.

Michael L. Benstock: We've seen continued improvement in the end markets we serve.

Michael L. Benstock: Our clients are generally increasing their spending.

Michael L. Benstock: For now, we remain cautiously optimistic about the durability of underlying demand in each segment, but even more important for our shareholders to understand is the reality that we operate in huge markets and have a very small but growing share. Our success will be determined by remaining laser focused on new customer acquisition and our continued strong customer retention. To accomplish our goals, we're also investing in people and technology in our very attractive business. We are optimistic about the markets in which we operate, confident in our own ability to execute, and therefore excited about the future. Let's have a look at how each of our businesses performed during the quarter.

Speaker Change: Now we remain cautiously optimistic on the durability of underlying demand in each segment, but even more important for our shareholders to understand is the reality that we operate in huge markets and have a very small but growing share. Our success will be determined by remaining laser focused on new <unk>.

Michael L. Benstock: Customer acquisition, and our continued strong customer retention to accomplish our goals. We're also investing in people and technology and are very attractive businesses.

Michael L. Benstock: We are optimistic about the markets in which we operate confident and our own ability to execute and therefore excited about the future.

Michael L. Benstock: Let's have a look at how each of our businesses performed during the quarter.

Michael L. Benstock: Starting with healthcare apparel, we grew top-line revenues by 4% year-over-year and EBITDA grew by 68%, mainly driven by improved gross margin. Demand strength has improved since last year, and opportunities continue to be discovered. As I've outlined on recent calls, last year we kicked off rebranding efforts under the Wink trademark and are now entering year two of our direct-to-consumer effort. Simultaneously, last year's launch of our B2B website is adding efficiency to the wholesale process while we further fortify our relationships with other digital channels.

Michael L. Benstock: With health care apparel, we grew top line revenues by 4% year over year and EBITDA grew by 68%, mainly driven by improved gross margins demand strength has improved since last year and opportunities continue to be uncovered.

Michael L. Benstock: As I've outlined on recent calls last year, we kicked off rebranding efforts under the wing trademark and they're now entering year two of our direct to consumer efforts.

Michael L. Benstock: Simultaneously last year's launch of our B to B website is adding efficiency to the wholesale process, while we further fortify our relationships with other digital channels.

Michael L. Benstock: All in all, we are seeing improved market conditions for healthcare apparel. This is a large, resilient, and rapidly expanding addressable market. And we're looking to grow our market share well beyond the more than two million caregivers who already wear our brands to work every day. Next up is our branded product segment, which generated 6% revenue growth during the first quarter as compared to the year-ago quarter, along with 32% year-over-year growth in EBITDA driven by continued gross margin improvement.

Michael L. Benstock: All in all we are seeing improved market conditions to health care apparel. This is a large resilient and rapidly expanding addressable market and we're looking to grow our market share well beyond the more than 2 million caregivers, who already where our brands to work every day.

Michael L. Benstock: Next up is our branded product segment, which generated 6% revenue growth during the first quarter as compared to the year ago quarter, along with 32% year over year growth in EBITDA driven by continued gross margin improvement the demand environment has been improving continuing the positive trajectory we first.

Michael L. Benstock: The demand environment has been improving, continuing the positive trajectory we first noticed last summer. Our key to success for branded products emphasizes strong customer retention, growing our share of wallet, driving greater RFT activity, and increasing our sales rep recruitment. This is a $24 billion and growing market, and we intend to continue expanding our market share, currently at less than 2%. Rounding out our business segment discussion, contact centers grew revenue 7% over the prior year quarter and EBITDA by 5% from last year.

Michael L. Benstock: Noticed last summer.

Michael L. Benstock: Our key to success for branded products emphasize as strong customer retention and growing our share of wallet driving greater RFP activity and increasing our sales rep recruiting.

Michael L. Benstock: This is a $24 billion and growing market and we intend to continue expanding our market share currently at less than 2%.

Michael L. Benstock: Rounding out our business segment discussion contact centers grew revenue, 7% over the prior year quarter, and EBITDA up 5% from last year.

Michael L. Benstock: As we've indicated on prior calls, we are now beginning to anniversary the higher labor and talent costs that have been with us since early 2023, along with our move over the past year to raise prices, which should bring stronger margins going forward. Demand drivers remain solid, and our pipeline of new business remains strong. Our focus is on increasing seats with existing customers, continuing to build our pipeline of new customers, and leveraging the very latest technology to enhance efficiency. With that, I'm going to hand the call over to Mike for a closer look at our first quarter performance, along with our stronger outlook for 2024. Mike, go ahead. Thank you.

Michael L. Benstock: As we've indicated on prior calls we're now beginning to anniversary the higher labor and talent costs that had been with us since early 'twenty two 'twenty three along with our move over the past year to raise prices, which should bring stronger margins going forward.

Mike: Demand drivers remained solid and our pipeline of new business remains strong.

Michael L. Benstock: Our focus is on increasing seats with existing customers continuing to build our pipeline of new customers and leveraging the very latest technology to enhance efficiency with that I'm going to hand, the call over to Mike for a closer look at our first quarter performance, along with our stronger outlook for 'twenty 'twenty four Mike.

Mike: Go ahead.

Michael Koempel: Thank you, Michael. We generated solid first-quarter results with quarterly revenue of $139 million, up 6% versus the year-ago quarter. All three of our business segments grew, with branded products up 6% to $87 million, healthcare apparel up 4% to $29 million, and contact centers up 7% to $24 million. This was profitable growth as well, with our consolidated growth margin of 380 basis points over the prior year reaching nearly 40%. All three of our segments demonstrated improved gross margins versus the prior year quarter, particularly our branded products and healthcare apparel segments.

Mike: Michael we generated solid first quarter results with quarterly revenue of $139 million up 6% versus the year ago quarter. All three of our business segments grew with branded products up 6% to $87 million health care apparel up 4% to 29.

Michael Koempel: Yeah.

Michael Koempel: And contact centers up 7%.

Michael Koempel: $224 million.

Michael Koempel: This was profitable growth as well with our consolidated gross margin up 380 basis points over the prior year, reaching nearly 40%.

Michael Koempel: All three of our segments demonstrated improved gross margin versus the prior year quarter, particularly our branded products and health care apparel segments.

Michael Koempel: Branded products was up 480 basis points, continuing the trend of year-over-year margin rate improvement and reflecting favorable pricing and lower supply chain costs. Healthcare apparel was up 350 basis points, primarily driven by lower costs, including improved manufacturing efficiencies in our Haiti facilities, improved market conditions, and higher margin sales from our direct-to-consumer channel that launched in the second quarter of last year.

Michael Koempel: Branded products was up 480 basis points, continuing the trend of year over year margin rate improvement and reflecting favorable pricing and lower supply chain costs.

Michael Koempel: Health care apparel was up 350 basis points, primarily driven by lower costs, including improved manufacturing efficiencies and our Haiti facility improved market conditions and higher margin sales from our direct to consumer channel that launched in the second quarter of last year.

Michael Koempel: Our first quarter SG&A was $49 million, flat sequentially from the fourth quarter, but up from $43 million a year earlier. As a percent of sales relative to the year earlier quarter, SG&A was up about two percentage points to 35%. This was primarily driven by increased employee-related costs, an increased charge to recognize the fair value of written foot options, and lapping the benefit of a reduction in acquisition contingent liabilities from the first quarter of last year.

Michael Koempel: Our first quarter SG&A was 49 billion flat sequentially from the fourth quarter, but up from $43 million a year earlier.

Michael Koempel: Percent of sales relative to the year earlier quarter SG&A was up about two percentage points to 35%.

Michael Koempel: This was primarily driven by increased employee related costs.

Michael Koempel: And increased charge to recognize the fair value on written put options and lapping the benefit of a reduction in acquisition contingent liabilities from the first quarter of last year.

Michael Koempel: In terms of EBITDA, we generated $9.6 million during the first quarter, 40% above the prior year's $6.9 million. All three of our businesses contributed to this strong EBITDA performance. With branded products up 32% to $9.9 million, healthcare apparel up 68% to $2.6 million, and contact centers up 5% to $2.9 million, despite the higher labor costs, we've yet to fully anniversary. Our interest expense for the first quarter was $1.8 million, which improved by $800,000 from the year-ago quarter, driven by our efforts to significantly reduce debt over the past year.

Michael Koempel: In terms of EBITDA, we generated $9 $6 million during the first quarter, 40% above the prior year's $6 $9 billion.

Michael Koempel: All three of our businesses contributed to this strong EBITDA performance with branded products up 32% to $9 $9 million.

Michael Koempel: <unk> care apparel up 68% to $2 $6 million and contact centers up 5% to $2.9 billion. Despite the higher labor costs, we've yet to fully anniversary.

Michael Koempel: Our interest expense for the first quarter was $1 $8 million, which improved by $800000 from a year ago quarter, driven by our efforts to significantly reduce debt over the past year.

Michael Koempel: Our first quarter net income was $3.9 million, or $0.24 per diluted share, not only up slightly on a sequential basis but up significantly from $900,000, or $0.06 per diluted share, in the year-ago quarter. The improved result was driven by increased sales and gross margin rate improvement across all of our sectors. Shifting to the balance sheet, we've continued to make improvements with cash and cash equivalents of $22 million, up from $20 million in the fourth quarter, and debt outstanding lower by an additional $4 million during the quarter following the significant reduction in 2023.

Michael Koempel: Our first quarter net income was $3 $9 million or 24 cents per diluted share not only up slightly on a sequential basis, but up significantly from $900000 or <unk> <unk> per diluted share and a year ago quarter.

Michael Koempel: The improved result was driven by the increased sales and gross margin rate improvement across all of our segments gifting.

Michael Koempel: Shifting to the balance sheet, we've continued to make improvements with cash and cash equivalents of $22 million up from $20 million in the fourth quarter and debt outstanding lower by an additional $4 million during the quarter. Following the significant reduction in 2023.

Michael Koempel: Additionally, we generated approximately $9 million of operating cash flow during the quarter on top of significant operating cash flow generation last year. Based on lower debt outstanding, combined with improved profitability, our net leverage ratio ended the quarter at 1.6 times trailing 12-month covenant EBITDA, a substantial improvement from 3.8 times a year ago.

Michael Koempel: Additionally, we generated approximately $9 million of operating cash flow during the quarter on top of significant operating cash flow generation last year.

Michael Koempel: Based on lower debt outstanding combined with improved profitability, our net leverage ratio ended the quarter at one six times trailing 12 month Covenant EBITDA, a substantial improvement from three eight times a year ago.

Operator: Turning to our updated full year 2024 outlook, we remain cautiously optimistic on the demand environment continuing to slowly improve and on our own ability to push prices when possible. We're raising and tightening our 2024 revenue range to $563 million to $570 million versus the prior range provided in March of $558 million to $568 million and up from 2023 revenues of $543 million. In addition... We're raising and tightening our full-year earnings per diluted share outlook to a new range of $0.73 to $0.79, which reflects our updated sales guidance and better-than-expected gross margin performance, partially offset by incremental stock compensation expense from the May issuance of performance-based stock awards.

Michael Koempel: Turning to our updated full year 2024 outlook, we remain cautiously optimistic on the demand environment, continuing to slowly improve and on our own ability to push pricing when possible.

Operator: We're raising and tightening our 2024 revenue range to $563 million to $570 million versus the prior range provided in March AR $558 million to $568 million and up from 2023 revenues of 540 <unk>.

Operator: $3 million.

Operator: In addition.

Operator: We're raising and tightening our full year earnings per diluted share outlook to a new range of 73 to 79 cents.

Operator: Which reflects our updated sales guidance and better than expected gross margin performance.

Operator: The offset by incremental stock compensation expense from the May issuance a performance based stock awards.

Operator: Our updated outlook is up significantly from the prior range of 61 to 68 cents and reflects meaningful improvement over 2023 54 cents. Despite the estimated incremental noncash stock compensation expense of <unk>.

Operator: From a quarterly progression standpoint, we expect a more balanced performance throughout the year as compared to 2023 heavily backend weighted results with that operator, Michael and I would be happy to take questions. If you could please open the lines.

Operator: Our updated outlook is up significantly from the prior range of $0.61 to $0.68 and reflects meaningful improvement over 2023's $0.54 despite the estimated incremental non-cash stock compensation expense of $0.04. From a quarterly progression standpoint, we expect a more balanced performance throughout the year as compared to 2023's heavily back-end weighted results. With that, Operator, Michael and I would be happy to take questions. If you could please open the line, we will now begin the question and answer session.

Speaker Change: We will now begin the question and answer session.

Operator: To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question today comes from Jim Sidoti with Sidoti and Company. Please go ahead.

Operator: To ask a question you May press Star then one on your telephone keypad.

Operator: If you were using a speakerphone please pick up your handset before pressing the keys.

Speaker Change: To withdraw your question. Please press Star then two.

Jim Sidoti: At this time, we will pause momentarily to assemble our roster.

Operator: Our first question today comes from Jim Sidoti with Sidoti <unk> Company. Please go ahead.

Jim Sidoti: Hi. Good morning. Good afternoon. Thanks for taking the questions. I hope everyone's well there. You know, you had growth in all three businesses, but the one that really struck me was Branded Products. Was that more attributable to better pricing or better volume, or can you give us some sense of how pricing affects it?

Jim Sidoti: Hi, Good morning, good afternoon, and thanks for taking the questions I Hope hope everyone's well there.

Jim Sidoti: You had growth in all three businesses, but the one that really stood out to me was branded products.

Jim Sidoti: Was that more attributable to better pricing better volume or can you give us some sense on how pricing affected that.

Michael L. Benstock: It's a mix. It's certainly pricing-affected, but we're still in a pretty competitive environment. So, you know, it's not just that we don't have the freedom to price to the extent we'd love to.

Jim Sidoti: It's a mix certainly pricing affect it but we're still in a pretty competitive environment.

Michael L. Benstock: So yeah. It's a it's not just you know we don't have you.

Michael L. Benstock: You know freedom to price.

Michael L. Benstock: To the extent, we'd love to.

Michael L. Benstock: But it's definitely a mix of new customers. As we've added more salespeople, which you know has been one of our goals, they've brought new customers to us as well. So it's really, it's a good mix.

Michael L. Benstock: But it's definitely a mix of new customers as we've had it on more salespeople, which you know has been one of our goals they brought new customers to us as well. So it's really it's a good mix.

Michael L. Benstock: I wouldn't say that we've been able to from quarter to quarter raise prices substantially we last year on some of the AD hoc business we did.

Michael L. Benstock: I wouldn't say that we've been able to, from quarter to quarter, raise prices substantially. Last year, you know, on some of the ad hoc business we did, which we do on a regular basis, we were able to price those appropriately for the opportunity. But a lot of our business is contract business, too, so that gave us no opportunity to raise prices. And I think, Jim, there's still some favorable mix as well, both from a product as well as customer standpoint, where, in addition to some pricing, we're also seeing, again, favorability from a cost standpoint, some of which we started to realize in the back half of last year.

Michael L. Benstock: Which we do on a regular basis, we are able to price those appropriately for the opportunity with a lot of our business is contract business too that's that gave us no opportunity to raise prices. So that was all a new business or more business from existing customers.

Michael L. Benstock: And I think Jim also there.

Michael L. Benstock: So theres still some favorable mix as well both from a product as well as customer standpoint, where in addition to some pricing. We're also seeing against favorability from from a cost standpoint, some of which we started to realize in the back half of last year.

Michael L. Benstock: Okay, and how about for the call centers? Have you been able to hang on, you know, hold the price increases that you put in place there? Yeah.

Michael L. Benstock: Okay, and how about for the call centers.

Michael L. Benstock: Have you have you been able to hang on you'll hold the price increases that you put through there.

Michael L. Benstock: Yeah, we did put through the price increases. You know, we spoke about that, I think, on last February's calls.

Speaker Change: Yeah, we did put through the price increases we spoke about that I think on last February.

Jim Sidoti: February is calls.

Michael L. Benstock: And we implemented price increases, which were primarily effective beginning in the second quarter of last year. So we're starting to anniversary some of those costs going forward. And, you know, we should see some improvement accordingly. But yeah, whatever little bit of pushback we had, we certainly were to explain through the inflationary environment we were in from a labor standpoint, as well as the fact that our metrics were getting stronger and stronger with some of the technology we were employing, which actually helped bring down their costs overall.

Michael L. Benstock: And we implemented price increases, which were primarily effective beginning in the second quarter of last year. So we're starting to anniversary some of those costs going forward.

Michael L. Benstock: And Oh, we should see some improvement accordingly.

Michael L. Benstock: But yeah, there, we've whatever little bit of pushback, we have we certainly were to explain why that's true.

Michael L. Benstock: The inflationary environment, we were in from a labor standpoint, as well as the fact that our metrics are.

Michael L. Benstock: We're getting stronger and stronger with some of the technology, we're employing which which actually helped bring down their costs overall.

Michael L. Benstock: Okay, and then, you know, the balance sheet has made a lot of progress over the past 12 months. You know, you know, well under two times. It has been a while since you've done a deal. You know, how active are you on that front, and are there a lot of opportunities out there right now?

Speaker Change: Okay and then.

Michael L. Benstock: The balance sheet as it may.

Michael L. Benstock: A lot of progress over the past 12 months.

Michael L. Benstock: Leverage ratio well under two times.

Michael L. Benstock: It has been a little while since you've since you've done a deal.

Michael L. Benstock: How active are you on.

Michael L. Benstock: That front and are there a lot of opportunities out there right now.

Michael L. Benstock: There are a lot of opportunities, and we are very open to looking at them. We haven't found anything that excites us very much yet.

Michael L. Benstock: There's a lot of opportunities. We are we are very open to look at them. We haven't found anything that excites us very much yet.

Michael L. Benstock: We had.

Michael L. Benstock: You know, we're really focused on organic growth right now and trying not to distract ourselves from what we believe is a pretty ripe environment in each of the markets that we serve. You know, whenever we get into these tough economic environments, whereas the macro environment has been for the last year or so with a lot of uncertainty, our competition tends to get weaker, and we tend to get more aggressive. So we're behaving very aggressively in the market to try to, you know, accelerate our organic growth and not be distracted by acquisitions.

Michael L. Benstock: We're really focused on organic growth right now I'm trying not to distract ourselves from what we believe is a pretty ripe environment are in each of the markets that we serve.

Michael L. Benstock: Whenever we get into these tough.

Michael L. Benstock: Economic environment, whereas as the macro environment has been for the last year or so with a lot of uncertainty our competition tends to get weaker and we tend to get more aggressive so were behaving very aggressively in the market to try to.

Michael L. Benstock: Accelerate our organic growth.

Michael L. Benstock: And and not be distracted by acquisitions, but there will be acquisitions in the future. We certainly have had the the horsepower to do it.

Michael L. Benstock: But there will be acquisitions in the future. We certainly have the horsepower to do it and the dry powder to do it, but we're just going to wait until we find the right ones. There are plenty of them out there in each of our verticals.

Michael L. Benstock: But and the dry powder to do it but we're just going to wait until we find the right ones, there's plenty of them out there in each of our verticals.

Michael L. Benstock: It really was a stellar quarter in terms of sales, in terms of DPS and pre-cash flow. You said the year would be more even this year. I would imagine that you're not going to have four quarters like this. Are you anticipating a pickup in CapEx spending or any other? Anything else that would affect the rest of the year?

Michael L. Benstock: Okay.

Michael L. Benstock: Really was a stellar quarter in terms of our sales are in terms of EPS and free cash flow.

Michael L. Benstock: You said the year would be more even this year I mean, but are there.

Michael L. Benstock: I would imagine that youre not going to have four quarters like this or are you anticipating a pickup in capex spending or any other.

Michael L. Benstock: Anything else that would.

Michael L. Benstock: Effective the rest of the year.

Michael Koempel: From a CapEx standpoint, we would expect to pick up in CapEx, Jim. I mean, if you look at the quarter, you know, we had low capital spending for the quarter. We still expect to spend more this year than we did last year. You know, we consciously pulled back last year. So, you'll see a pickup on that just based on the timing of projects here, Q2, from the second quarter, you know, through the balance of the year.

Michael L. Benstock: But from a Capex standpoint, we are we would expect to pick up in CAC Capex, Jim I mean, if you look at the quarter, we had the low capital spending for the quarter, we still expect to see.

Michael Koempel: To spend more this year than we did last year, we consciously pulled back.

Michael Koempel: Last year, so you'll see a pick up on that just based on the timing of projects here Q2 through for the second quarter through the balance of the year.

Michael Koempel: You know, in terms of the cadence for the year, you know, if you look back to last year, 75% of our earnings were in Q3 and Q4. So, what we're saying is we'll be more balanced than we were last year, but there'll still be some seasonality, if you will, that we've seen in some of our businesses in future quarters. I think also, I'm going to jump.

Michael Koempel: In terms of in terms of the cadence for the year.

Michael Koempel: Yeah. If you look back to last year, 75% of our earnings were in Q3 and Q4 so.

Michael Koempel: What we're saying is it will be more balanced than we were last year, but there'll still be some.

Michael Koempel: Seasonality, if you will that we've seen in some of the and some of our businesses in future quarters.

Michael L. Benstock: I think also, I'm going to jump in and just say. You know, we're in an election year, and weird things sometimes happen in the quarters prior to an election. It's a major distraction for a lot of people, a lot of companies, and uncertainty. And, you know, as this election gets more heated, it's probably going to be a little bit more distracting than most elections, I would imagine.

Speaker Change: I think also I'm going to jump in and just say no.

Michael L. Benstock: We're in a we're in an election year and weird things happen, sometimes in the quarters prior to an election.

Michael L. Benstock: It's a major distraction for a lot of people a lot of companies and uncertainty.

Michael L. Benstock: And you know as this election gets more heated.

Michael L. Benstock: It's probably gonna be a little bit more distracting than most elections.

Michael L. Benstock: I would imagine.

Operator: And so, you know, we're couching the year a little bit and being certain that we're putting out guidance that we feel very comfortable with being able to hit. So, it's going to be a good year. I'm glad we've smoothed it out a little bit where we don't have, we're not going to have that, as Mike said, 75% of our earnings happen in the second half of the year. It's more likely to be a lot more balanced.

Michael L. Benstock: And so you know we're we're we're couching the year a little bit.

Operator: Being certain that where we're putting out guidance that we feel very comfortable in being able to hit so.

Operator: It's going to be a good year I'm glad we smoothed it out a little bit where we don't have we're not going to have that that.

Operator: As Mike said, 75% of our earnings happened in the second half of the year.

Operator: More likely to be a lot more balanced.

Speaker Change: Okay alright, thank you.

Operator: The next question is from Kevin Steinke with Barrington Research. Please go ahead.

Operator: The next question is from Kevin Stankey with Barrington Research. Please go ahead.

Kevin Mark Steinke: Good afternoon, and congratulations on the strong start to the year. I'm just wondering...

Kevin Mark Steinke: Hey, good afternoon, and congratulations on the strong start to the year.

Kevin Mark Steinke: I'm just wondering.

Michael Koempel: Wondering what is trending, may be a little bit better than expected thus far in the year that enabled you to increase the guidance just one quarter into 2024.

Kevin Mark Steinke: Wondering what is.

Kevin Mark Steinke: It has trended.

Michael Koempel: Maybe a little bit better a little bit better than expected, thus far in the year that.

Michael Koempel: Enabled you to.

Kevin Mark Steinke: Kris the guidance.

Michael Koempel: One quarter into the 2024.

Michael Koempel: I think, Kevin, as you've seen in previous quarters, we've grown margin; our margin rate has improved in the third quarter, again, in the fourth quarter. So I think getting another quarter of margin growth where we're really seeing that growth across all three of our segments has been, you know, obviously a real positive for us. Seeing some momentum in the healthcare side of our business, both in terms of sales growth again, as well as seeing margin benefits.

Speaker Change: Alright, I think Kevin.

Michael Koempel: <unk> seen in previous quarters we've.

Michael Koempel: We've grown our margin our margin rate has improved.

Michael Koempel: Proved in the third quarter again, the fourth quarter. So I think getting another quarter of margin growth, where we're really seeing that growth across all three of our segments has been obviously a real positive for us.

Michael Koempel: King so meant some momentum in the health care side of our business both both in terms of sales growth again.

Michael Koempel: As well as seeing margin benefits. So we're seeing the benefit of cleaner inventories as I mentioned in our prepared remarks, starting to see some margin benefit from our direct to consumer business is that's starting to to to grow. So I think we're seeing <unk>.

Michael Koempel: So we're seeing the benefit of cleaner inventories, as I mentioned in our prepared remarks, and starting to see some margin benefit from our direct-to-consumer businesses that are starting to grow. So I think we're seeing, you know, continued signs of momentum that obviously translated into strong results in the first quarter, which we believe will lead to stronger results for the year.

Michael Koempel: <unk> signs of momentum.

Michael Koempel: That obviously translated into strong results in the first first quarter.

Michael Koempel: We believe will lead to stronger results for the year yeah.

Michael L. Benstock: Yeah, and, you know, since Mike didn't mention contact centers, contact centers had some tough comps for the quarter and didn't quite grow as we had expected. But part of that was a timing issue.

Speaker Change: Yes, it's Mike didn't mentioned contact centers contact centers had some tough.

Michael L. Benstock: Tough comps for the quarter end.

Speaker Change: It didn't.

Speaker Change: Quite grow as we had expected but part of that it was a timing issue I think youre going to see greater growth from our contact center business going forward are already in second quarter, we know that our growth is going to be better.

Michael L. Benstock: I think you're going to see greater growth from our contact center business going forward already in the second quarter. We know that our growth is going to be better than what we were able to show in the first quarter. So we're optimistic about that business as well. And getting back to the cadence we've spoken about of, you know, high teens to low, I'm sorry, high single digits, low teen growth, and, you know, high teens, even though there is a margin.

Michael L. Benstock: What we were able to show in first quarter. So we're optimistic about that business as well.

Michael L. Benstock: And getting back to the cadence we've spoken about.

Michael L. Benstock: High teens to low I'm, sorry high single digit to low teens growth and and high teens EBITDA margin.

Speaker Change: Okay great.

Kevin Mark Steinke: Okay, great. And you spoke there about the continued strength in gross margin, and the improvement in gross margin really stood out in both branded products and health care apparel. And it sounds, would you say like there's some sustainability to these gross margin levels going forward? Or, you know, I think I asked a similar question last quarter, but how are you thinking about that for the remainder of this year?

Michael L. Benstock: And you spoke there to the the continued strength in gross margin and the improvement in gross margin really you know.

Kevin Mark Steinke: Fit out in both branded products and health care apparel.

Kevin Mark Steinke: And it sounds you would you say like there is some sustainability to these gross margin levels going forward or.

Kevin Mark Steinke: I asked a similar question last quarter, but how are you thinking about that for you.

Kevin Mark Steinke: Later this year.

Michael Koempel: For the remainder of the year, we expect margins to still reflect improvement over last year, although not necessarily to the level of the first quarter, but I would say, Kevin, as you're looking at the balance of the year, again, we would expect to continue to reflect margin rate improvement in driving the business.

Kevin Mark Steinke: The remainder of the year, we expect margins to still reflect improvement over last year.

Michael Koempel: Not necessarily to the level of the first quarter, but I would say Kevin is you're looking at the balance of the year again, we would we would expect.

Michael Koempel: To continue to reflect margin rate improvement and driving the business.

Michael Koempel: Okay, great. And on the SG&A side, you mentioned, I think, a couple items that increased SG&A in the first quarter, and you talked in the earnings release about some investments. So, is this a reasonable run rate for SG&A for the remainder of the year, or how are you thinking about that over the next few quarters?

Kevin: Okay, great and on the SG&A SG&A side.

Michael Koempel: You know you mentioned I think a couple of items.

Michael Koempel: Increased SG&A in the first quarter and you talked in the earnings release about some investments so.

Michael Koempel: Is this a reasonable run rate for SG&A.

Michael Koempel: For the remainder of the year.

Michael Koempel: Or what how are you thinking about that over the next few quarters.

Michael Koempel: Overall, Kevin, I would say it's a reasonable proxy. We have made investments in, and continue to make investments in talent, and also, obviously, as the business improves, we're recognizing additional expenses as it relates to just associated payroll and whatnot. Some of those will be consistent. The things we called out, for example, in the fair value put option that we had an adjustment to this quarter, that obviously wouldn't repeat itself. So there could be a little bit of variability quarter to quarter, but I'd say it's a good proxy for the balance of the year.

Michael Koempel: Overall, Kevin I would say, it's a reasonable its a reasonable proxy we have made investments.

Michael Koempel: To make investments in talent.

Michael Koempel: And also obviously as the business improves.

Michael Koempel: Where we're recognizing.

Michael Koempel: Additional expenses as it relates to just associate payroll and whatnot. So some of those will be will be consistent.

Michael Koempel: The things we called out for example in the.

Michael Koempel: The fair value put option that we had an adjustment to this quarter that that obviously wouldn't wouldn't repeat itself. So there could be a little bit of variability quarter to quarter, but I'd say, it's a it's a it's a good proxy for the balance of the year.

Michael L. Benstock: Okay, and... You mentioned starting to collapse some of the higher labor costs and contact centers and you know, perhaps increasing prices there. What's your ability to increase prices or plans to increase prices over the course of the year in that business? I think it'll be less.

Michael Koempel: Okay and.

Speaker Change: You mentioned starting to.

Michael L. Benstock: Lap some of the.

Michael L. Benstock: Higher labor cost in contact centers and.

Michael L. Benstock: You know, perhaps increasing price there what what's.

Speaker Change: Your ability to increase price or plans to increase price.

Speaker Change: Over the course of the year in that business.

Michael L. Benstock: I think it'll be less frenetic than it was last year. We're not in a position to really have to raise prices dramatically to get where we want to go. We've done some small price increases already this year, but we'll continue to do them as necessary if contracts allow us to do so and where we can't gain efficiencies in some other way to create more bottom line profits for that business.

Michael L. Benstock: I think it'll be less frenetic than it was last year, we're not in a position to really have to raise prices dramatically to get where we want to go.

Michael L. Benstock: We've done some small price increases already this year, but we'll continue to do them as necessary contracts allow us to do so and where we.

Michael L. Benstock: We can't gain efficiencies and.

Michael L. Benstock: In some other way.

Michael L. Benstock: To create.

Michael L. Benstock: Create a more bottom line for that business.

Kevin Mark Steinke: Okay, thank you for taking the questions. I'll turn it back over.

Speaker Change: Okay. Thank you for taking the questions I'll turn it back over thanks.

Kevin Mark Steinke: Good.

Operator: The next question is from David Marsh with Singular Research. Please go ahead.

Kevin Mark Steinke: The next question is from David Marsh with singular research. Please go ahead.

David Marsh: Hey guys, congratulations on a really fantastic quarter. Thank you. Thank you.

David Marsh: Oh, Hey, guys, congratulations a really fantastic quarter.

David Marsh: Thank you.

Michael L. Benstock: We're feeling good about it. Yeah, I would be too, and it's a great, great print here. Yeah, you know, following up on kind of some of the earlier questions, this 40% gross margin is, You know, I was just looking back on the last few years. I don't think you guys have ever been this high. I mean, is this, is this, it sounded like you, in terms of your response to Last Caller, you maybe feel like that could come back in a little bit, but, you know, it sounds like you also may Maybe you could just provide a little bit more color there?

David Marsh: We're feeling good about it.

David Marsh: Yeah, I I wouldn't be too.

Michael L. Benstock: Great great print here.

Michael L. Benstock: Yeah.

Michael L. Benstock: Following up on kind of somebody earlier questions. I mean, this 40% gross margin is up.

Michael L. Benstock: I was just looking back last few years I don't think you guys have never been this high I mean is this is this it sounded like you're in terms of your response to the last caller.

Michael L. Benstock: Maybe you feel like that could come back in a little bit but you.

Michael L. Benstock: It sounds like you're also and they feel like.

Michael L. Benstock: He could stay in pretty close to that range, maybe you could just provide a little bit more color there.

Michael L. Benstock: If you remember on an earlier call, I don't quite recall when it was last year, we spoke about the fact we had shed some customers who had very, very low gross margins and were no longer creative. And that's helped us a great deal. Focus on, you know, the customers that are profitable. And the margin improvement. I mean, it's been kind of a buyer's market out there, you know, with a pullback from most American companies and from Asia. Asian factories are dying for work. They're all underutilized.

Michael L. Benstock: If you remember on an earlier call I don't quite recall when it was last year, we spoke about the fact, we had shed.

Michael L. Benstock: Some customers who were very very low gross margin and we're no longer accretive and that's helped us a great deal a focus on the customers that are profitable.

Michael L. Benstock: And and and the margin improvement I mean, it's been a it's been a it's been kind of a buyer's market out there you know with a with a pullback for most American companies from from Asia.

Michael L. Benstock: Asian factories are dying for where they're all under utilized so the pricing has been very good in our own factories in Haiti.

Michael L. Benstock: So the pricing has been very good. In our own factories in Haiti, we've seen great efficiency gains and really operating them in a much, I would say, much more profitable manner for the company with less variances and so on to standard costs. So, you know, all in all, I mean, it's all come together. We've got a good pricing environment with our customers. We've got a good costing environment with our vendors, and our own factories are doing very well, and that's allowing us to invest in a lot of talent in the business. And that talent, obviously, is to create even more efficiency within the business.

Michael L. Benstock: We've seen great efficiency gains.

Michael L. Benstock: And really operating them in a much a I'd say a much more profitable manner to the company with less variances and so on to standard cost. So all in all I mean, it's all come together.

Michael L. Benstock: Got a good pricing environment with our customers, we've got a good costing environment with our vendors and.

Michael L. Benstock: In our own factories are doing very well and that's allowing us to to invest in a lot of talent in the business and the talent, obviously used to even create more efficiency within the business. So we're feeling good about where our margins are at.

Michael L. Benstock: So we're feeling good about where our margins are at. Slight pullback? It could go either way. I wouldn't necessarily bank on it pulling back. It could just as easily be a little bit higher, not much, than it currently is.

Michael L. Benstock: Slight pullback it could go it could go either way.

Michael L. Benstock: I wouldn't necessarily bank on it pulling back on it.

Michael L. Benstock: Just as easily be even a little bit higher not much.

Michael L. Benstock: Currently is.

David Marsh: That's great, great color, really helpful. You know, the other thing I think that you guys should definitely be commended for is, you know, the inventory reduction you guys have been able to achieve in the last 12 months, like you know, about 30 million dollars to a 24% reduction. You know, I know last year you guys had talked about feeling as though the inventory was a little bit above where you wanted it to be. Would you say that you're kind of where you want it to be now, or do you think you could still perhaps whittle a little more away on?

Speaker Change: That's that's great great color really helpful.

David Marsh: Yeah. The other thing I think that you guys should definitely be commended for is you know the.

David Marsh: Inventory reduction you guys have been able to achieve over the last 12 months.

David Marsh: It looks like about $30 million towards 24% reduction.

David Marsh: I know last year, you guys had talked about feeling because of inventory was a little bit above where you wanted it to be or would you say that you're kind of where you want it to be now or do you think you could still perhaps with a little more away on that.

Michael Koempel: Yeah, Dave, we talked last year about setting the goal for ourselves by the end of the fiscal year to right-size inventories. And as you said, we made significant progress.

Speaker Change: Yeah, David last year, we talked about setting the goal for ourselves by the end of the fiscal year <unk>.

Dave: To right size inventories and as you said, we've made significant progress and and so we by the end of of 2023, we were able to achieve our goal of getting inventories more in line.

Michael Koempel: And so, by the end of 2023, we were able to achieve our goal of getting inventories more in line. As we look forward, as we're looking to fuel the business, you know, I see us making certain investments in inventory to support sales. So going, I'd say, a little bit more on the offense in some cases, as opposed to, you know, pulling back on inventory. But, you know, we feel good about where we are.

Michael Koempel: As we look forward as.

Michael Koempel: And as we're as we're looking to fuel the business, Yeah, I I see us, making certain investments in inventory to support our sales so going I'd say, a little bit more on the offense in some cases as opposed to.

Michael Koempel: Pulling back on inventory, but we.

Michael Koempel: And I think we'll be focusing on, you know, inventory turns going forward, and obviously, going forward, keeping that in line with the demand curve. So, you know, again, as we look ahead and look at the trend of the business, we'll make investments and continue to make investments in inventory, but again, overall, feel good about the position we're in. Yeah, it's also, I'm just going to add a couple of lines to that.

Michael Koempel: We feel good about where we are.

Michael Koempel: And I think we will we will be focusing on inventory turns going forward and obviously going forward keeping that in line with the demand curve. So.

Michael Koempel: You know it's again as we look ahead and look at the trend of the business.

Michael Koempel: Investments and continue to make investments in inventory, but again overall feel good about the position. We're in it's also I'm just going to add a couple of science to that there is particularly in the health care side of our business, which carries a lot of our inventory.

Speaker Change: Our pain last year was in and working really hard to reduce that.

Michael L. Benstock: There's, particularly in the healthcare side of our business, which carries a lot of our inventory and was most of our pain last year, and we're working really hard to reduce that. But there's an awful lot of turmoil in that business right now. To us, the competitive landscape is getting smaller. We've had major competitors file bankruptcy. We've had turnover of CEOs in multiple businesses that compete with us and that are really just still trying to figure out, you know, what they're going to do.

Speaker Change: But theres an awful lot of turmoil in that business right now are positive to us the competitive landscape is getting smaller.

Michael L. Benstock: We've had a major competitors file bankruptcy, we've had turnover of Ceos.

Michael L. Benstock: In multiple businesses that compete with us and that are really just still trying to figure out what theyre going to do I think theres, an opportunity for us to take greater market share.

Michael L. Benstock: I think there's an opportunity for us to take greater market share, and so we're going to respond to that as necessary on as timely a basis as we can. And that could include not only being aggressive from a sales standpoint but having to support a slightly higher level of inventory than we are currently. Dave, I'll just add one more thing.

Michael L. Benstock: So we're going to we're going to respond to that as necessary.

Michael L. Benstock: As timely a basis as we can and that could include.

Michael L. Benstock: Not only being aggressive from a sales standpoint, but having to support.

Michael L. Benstock: A.

Michael L. Benstock: Slightly higher level of inventory than we're currently.

Speaker Change: And Dave I'll, just add one more thing and that would be again this would apply to the health care business I think as we move forward.

Michael Koempel: And that would be, again, this would apply to the healthcare business. I think as we move forward, the mix of the inventory is better as well. So we're introducing new products into our offering from our new design team. So, you know, we're excited about not just the fact that the inventory is leaner, but also that the mix is with newly developed products entering the market.

Michael Koempel: The mix of the inventory is better as well so we're introducing we're introducing.

Michael Koempel: New product into.

Michael Koempel: Into.

Michael Koempel: Into.

Michael Koempel: Our our offering from our new design team. So we're excited about not just the fact that the inventories leaner, but also that the mix is with newly developed product entering the market.

Michael Koempel: Yeah.

Speaker Change: Got it got it that's helpful.

David Marsh: Got it, got it, that's helpful. Just one last question, again, just on the balance sheet because I think that it really deserves a lot of attention and a lot of opportunity for some fanfare, if you will. You guys achieved a 40% year-over-year debt reduction from pretty elevated levels, down to $84 million. As you go forward, and you generate free cash flow, can you talk about your priorities for cash flow? Will it be continued debt reduction, perhaps a revisiting of the dividend, maybe for an increase? Or perhaps maybe share versus debt or something like that? Yeah Dave.

Speaker Change: Just one last question again, just on the balance sheet, because I think that it religious serves a lot of.

Dave: A lot of call out and you know a lot of a lot of opportunity for some some.

David Marsh: Some fanfare, if you will and you guys. It seems the 40% year over year debt reduction from you know pretty elevated levels on the $84 million.

Dave: You know as you go forward and generate free cash flow I mean could you talk about priorities for cash flow will it be continued debt reduction perhaps.

Dave: Revisiting of the dividend maybe for an increase or.

Dave: Perhaps maybe share repurchases.

Dave: Nothing of that nature.

Michael Koempel: Yeah, Dave, we'll certainly continue to, I'd say, in a way, chip away at the debt. You can see that in the first quarter, we reduced our revolver by another $3 million. So as we generate additional free cash flow, we'll continue to pay some portions of that debt down as we move forward. In terms of, you know, the other ideas you mentioned, whether that's the dividend or, you know, the previous question was around M&A, those, of course, are all things that, you know, we discuss with our board, and we'll continue to evaluate the merit of other uses of that cash as we move forward as part of our capital allocation strategy.

David Marsh: Yeah, Dave will certainly continue to I'd say in a way chip away at the debt you can see in the first quarter, we reduced our revolver by another $3 million so as we generate.

Michael Koempel: Additional free cash flow will.

Michael Koempel: We will continue to pay.

Michael Koempel: Some debt some portions of that debt down as we move forward in terms of the other ideas you mentioned as well whether that's the dividend or previous question was around M&A. Those of course are all things that we discuss with our with our board and we'll continue to evaluate.

Michael Koempel: The merit of other uses of those cash as we move forward as part of our capital capital allocation strategy.

David Marsh: Great. That's all for me. Thanks very much, guys.

Speaker Change: Great. That's all for me thanks, very much guys.

Operator: The next question is a follow-up from Kevin Steinke with Barrington Research. Please go ahead.

David Marsh: The next question is a follow up from Kevin Spanky with Barrington Research. Please go ahead.

Kevin Mark Steinke: Thank you. Yes, just one follow-up. I wanted to ask about just the improving market conditions you referenced, and specifically in branded products. You know, certainly, there is still some macroeconomic uncertainty out there and around interest rates, etc. But this may be the kind of the, you know, overall tone you're hearing from your customers, and maybe they're just becoming more comfortable operating in this sort of environment.

Kevin Mark Steinke: Thank you, yes, just one follow up I wanted to ask about.

Kevin Mark Steinke: Just the improving market conditions you reference then.

Kevin Mark Steinke: Specifically in branded products.

Kevin Mark Steinke: You know certainly you know still some macroeconomic uncertainty out there and around interest rates et cetera, but.

Kevin Mark Steinke: Just maybe the kind of the overall tone you're hearing from you.

Kevin Mark Steinke: Your customers and maybe there are they.

Kevin Mark Steinke: Would just be coming more comfortable operating in this sort of environment.

Michael L. Benstock: We're seeing some pretty positive signs, an increased spend with our clients and our prospects. However, there's still quite a bit of uncertainty due to higher interest rates and upcoming elections. Clients continue to be somewhat apprehensive, Kevin, about fully opening up their budgets due to economic and political uncertainty.

Kevin Mark Steinke: Yeah.

Kevin Mark Steinke: We're seeing some pretty positive signs.

Michael L. Benstock: And increased spend.

Michael L. Benstock: With our clients and our prospects are there's still quite a bit of uncertainty due to higher interest rates upcoming elections.

Michael L. Benstock: Yeah.

Michael L. Benstock: Clients continue to be somewhat apprehensive, Kevin about fully opening up their budgets due to the economic and political uncertainty, but let's print we've said in the past none of this is really an excuse for not growing our sales. These are.

Michael L. Benstock: But let's be clear what we've said in the past. None of this is really an excuse for not growing our sales. This is, this is a huge market, you know, a $24 billion market that we have a very, very small share of. And so we have loads of market share to take from our competition, who we believe is not. generally as well positioned as we are to do so. So we can't, we can't use, you know, customer sentiment or economics as an excuse for not growing our business. It might grow at a small, slower pace; then it wouldn't be a robust economy, but it's going to grow because we're going to continue to take the market.

Michael L. Benstock: Huge market.

Michael L. Benstock: $24 billion market.

Michael L. Benstock: That we have a very very small share and and so we have loads of market share to take.

Michael L. Benstock: From our competition and who we believe is not generally as well positioned as we are to do so so.

Michael L. Benstock: We can't we can't use customer sentiment or economics, as an excuse for not growing our bis it might grow at a smaller at a slower pace.

Michael L. Benstock: Then it wouldn't a robust economy, but it's going to grow because we're going to continue to take market share.

Kevin Mark Steinke: Okay, thank you. That's helpful commentary. I appreciate it.

Speaker Change: Okay. Thank you that's helpful commentary I appreciate it.

Michael L. Benstock: This concludes our question and answer session. I would like to turn the conference back over to Michael Benstock for any closing remarks.

Kevin Mark Steinke: This concludes our question and answer session I would like to turn the conference back over to Michael Benstock for any closing remarks.

Michael L. Benstock: Thank you, Operator. We very much appreciate everybody being with us today. 2024 is off to a strong start. Our entire team, as you can well hear in our voices, is energized about the opportunities ahead. We look forward to meeting with investors at the many upcoming conferences that we'll be attending, and we'll keep you posted on our progress as we move through the year. As a reminder, you can find our latest investor presentation, which was just completed, on our very updated website, also just completed. Stay safe. Please don't hesitate to reach out with any further questions.

Michael L. Benstock: Thank you operator.

Michael L. Benstock: Much appreciate everybody being with US today 2024 is off to a strong start.

Michael L. Benstock: Our entire team as you can well hear in our voices.

Michael L. Benstock: Energized about the opportunities ahead.

Michael L. Benstock: We look forward to meeting with investors at the many upcoming conferences that we'll be doing and we will keep you posted on our progress as we move through the year. As a reminder, you can find our latest investor presentation, which was just completed on our very updated website also just completed.

Michael L. Benstock: They say, please don't hesitate to reach out with any further questions and thank you as always for your interest in STC.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

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