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spk01: Good morning and thank you for holding. Welcome to CONSing conference call to discuss earnings for the fiscal quarter ended October 31st, 2023. The transaction with Badcock Home Furniture and more. My name is Sherry and I will be your operator today. During the presentation, all participants will be in a listen only mode. After the speaker's remarks, you will be invited to participate in the question and answer session. As a reminder, this conference call is being recorded. The company's earnings release dated December 18, 2023, was distributed yesterday evening, as well as a press release on the transaction with Badcock Home Furniture and more. Both releases can be accessed via the company's investor relations website at ir.cons.com. During today's call, management will discuss, among other financial performance measures, adjusted retail segment operating loss, Please refer to the company's earnings release that was issued today for a reconciliation of these non-GAAP measures to their most comparable GAAP measures. I must remind you that some of the statements made in this call are forward-looking statements within the meaning of federal security laws. These forward-looking statements represent the company's present expectations or beliefs concerning future events. The company questions that such statements are necessarily based on certain assumptions, which are subject to risks and uncertainties, which could cause actual results to differ materially from those indicated today. Your speakers today are Norm Miller, the company's CEO, and Tim Santo, the company's interim CFO. I would now like to turn the call over to Mr. Miller. Please go ahead.
spk02: Good morning, and thank you for joining today's call to review Kahn's transaction with Badcock Home Furniture and More and our third quarter fiscal year 2024 financial results. I am thrilled to speak with everyone today regarding Kahn's transformative transaction with Badcock. By uniting two companies, each with over 120 years of serving customers, we have created a leading home goods retailer with more than 550 retail locations across 15 states in the southern United States and generating approximately $1.85 billion in annual revenue. The transaction is a transformative opportunity for Kahn's as we believe it will accelerate our growth by combining two complementary businesses with similar product categories, payment solutions, and customer profiles while driving material cost savings, enhancing gross margins, and improving operating leverage across the combined business. As a result, we believe we can create significant value for our customers, team members, communities, and shareholders. For those of you not familiar with Badcock, the company was founded in 1904 and currently operates nearly 380 Badcock home furniture and more stores across eight southeastern states. Like Kahn's, many of Badcock's customers are multi-generational and rely on Badcock's payment solutions to help turn their house into a home. For the past two years, Mitchell Stiles has helped lead Badcock's approximately 1,000 associates as the company's president and chief operating officer. Mitchell has held a variety of positions of increased responsibility over his 20-year tenure with the company, and I look forward to working with him as a member of the Kahn's leadership team. Throughout its history, Badcock has been known as a strong regional furniture and mattress retailer, with approximately 70% of Badcock's annual sales coming from these categories. The remaining 30% of Badcock's sales are primarily appliances, electronics, and home office equipment. A critical part of Badcock's customer value proposition is the flexible financing solutions the company has provided throughout its history. Approximately 60% of Badcock's retail sales are supported by an in-house payment program called Badcock Easy Purchase. In addition, 10% of retail sales are supported by third-party financing and lease-to-own solutions while the remaining 30% of retail sales are cash purchases. Over 75% of Badcock's stores are individually owned through an independent dealer network business model, enabling entry into attractive locations with minimal capital investments. This unique model supports multiple opportunities for Badcock's 120 plus independent dealers to thrive in their local communities. We are excited to partner with these important stakeholders and help provide additional growth opportunities for Badcock's dealer network. CONS and Badcock share complementary businesses with similar histories, product categories, customer profiles, and payment solutions. Combined, we believe we can leverage the core capabilities of both CONS and Badcock to accelerate growth expand profitability, and provide our customers and team members with greater opportunities as part of a larger and more dynamic company. So with this background, I want to review the four strategic rationales of the Badcock announcement, starting with how this combination is expected to accelerate sales growth. The transaction provides a number of compelling revenue synergies that we believe will drive a multi-year growth strategy. First, we believe we can capitalize on what has made each company successful over the past 120 plus years. Badcock was founded as a furniture and mattress retailer. expanding its product categories over the years to include appliances, consumer electronics, and home office with furniture and mattress sales representing 70% of Badcock's annual sales prior to the transaction. Conversely, Kahn's was founded as an appliance retailer, expanding our product categories over the years to include consumer electronics, furniture, mattress, and home office. In fact, it was a little over 10 years ago when we started to strategically increase the size of our stores to add a more complete line of furniture and mattress products. In fiscal 2012, furniture and mattress sales accounted for 14.9% of total product sales compared to 33.8% in fiscal 2023. Going forward, we expect the furniture and mattress categories to represent approximately 47% of our combined annual revenue, and we believe the transaction with Badcock will drive further growth of these high margin categories. As a result, we believe this complementary sales mix creates opportunities to drive appliance, consumer electronics, and home office sales at Badcock, while supporting greater furniture and mattress sales at Kahn's. It also improves the customer experience by expanding the in-store and online product assortment of the combined entity. As part of our complementary product categories, we also believe we can leverage both Kahn's and Badcock's private label platforms to accelerate the growth of the combined business. As a reminder, DreamSpot is our private mattress brand that has quickly become the number one selling brand within our mattress category, while our in-house furniture brand, Villa Hill, has become our fastest-growing furniture brand. Badcock has been following a similar private label strategy for the past five years. As a result, by combining the expertise and resources of both Kahn's and Badcock, we believe we can increase our overall capabilities to develop and implement private label products across multiple categories and drive additional revenue and margin opportunities. Second, Badcock provides a network of over 310 dealer-owned stores operated by more than 120 independent and local entrepreneurs. This is a compelling structure that allows dealers to thrive in their local communities while offering lower store startup costs and faster store openings than corporate-owned stores. Badcock maintains ownership of the inventory and consigns it to the dealers. Dealers are paid a variable commission based on sales, and all credit origination and collection activities are centralized through the company's corporate office. Importantly, dealer-owned stores are typically smaller at around 17,000 square feet and are in more rural markets compared to Kahn's average store size and footprint. We believe this provides meaningful opportunities going forward as we can greatly expand the product assortment, customer service, and retail and credit capabilities of Badcock's dealer-owned network. In addition, we believe the transaction expands our long-term addressable market by allowing us to profitably enter rural and less populated areas, especially in legacy cons markets such as the state of Texas. We are thrilled to welcome Badcox dealers to cons, and I look forward to working with these committed business owners to help them grow. Leveraging Kahn's e-commerce infrastructure is the third opportunity we are pursuing to accelerate the growth of the combined company. Kahn's has experienced strong e-commerce growth and robust customer adoption since accelerating investments in our online product, value proposition, digital experience, and distribution capabilities. As a result, e-commerce sales have increased eightfold from $12.6 million for the year ended January 31st, 2020, to more than $100 million on a trailing 12-month basis at the end of the most recent quarter. Over the past 12 months, Badcock had e-commerce sales of approximately $24 million, which we believe we can meaningfully expand by leveraging Khan's digital capabilities and best-in-class logistics network. As you can see, we believe there are multiple opportunities to drive retail sales within our combined footprint while leveraging our complementary businesses, similar product categories, and customer profiles. There are also incredible opportunities to unlock revenue, cost synergies, and portfolio management efficiencies by combining Kahn's in-house credit platform and expertise with Badcock's existing financing capabilities, which is the next important strategic rationale I'd like to review today. I am confident that Kahn's credit infrastructure, combined with our full spectrum of payment options, are best-in-class solutions supporting a compelling and differentiated customer value proposition. As we look at Badcock's payment offerings, we believe there is a powerful opportunity to leverage Kahn's in-house credit platform. Near-term initiatives include leveraging our pre-qualified direct mail and credit-based marketing expertise to drive sales at Badcock. Over the coming quarters, we will also transition Badcock's existing revolving in-house credit program to Kahn's in-house term loan product, which we expect to enhance Badcox credit yield and add incremental sales as well. In addition, we believe we can provide meaningful value to Badcox customers by implementing Kahn's recently launched digital application process. This innovative program will make it easier for Badcox customers to apply for the multiple payment options we provide while limiting the impact a credit application has on a customer's credit score. Since rolling out these enhancements earlier this year, CON's fiscal 2024 nine-month application volume has increased 26%, and we believe we can replicate this performance at Badcock. We also expect Badcock to benefit from CON's 10-plus years of experience offering lease-to-own payment plans to our customers. While Badcock offers third-party lease-to-own plans, it currently represents only 3% of their sales compared to over 8% of con sales at the end of the third quarter. Given Badcock's similar product categories, customer profiles, and store locations, we believe there are material opportunities to drive lease-to-own sales at Badcock. I want to stress the importance of CONS credit expertise, infrastructure, and credit team. Not only do these resources support credit-driven revenue and cost synergies, but they also power sophisticated loan servicing, collections, and recovery capabilities. We will leverage this established platform to prudently manage the performance of the combined portfolio in a stable manner. while simultaneously pursuing significant credit-driven revenue growth opportunities. The next strategic rationale I'd like to review today is the powerful scale and platform this combination generates. Combined, we have created a leading home goods retailer with approximately $1.85 billion in revenue across more than 550 stores. Kahn's also becomes the top 20 furniture and mattress retailer in the United States based on Furniture Today's latest top 100 list. As a larger furniture and mattress retailer, we believe we will benefit from purchasing and logistics synergies helping support higher retail gross margin in the future. In addition, the combination expands our reach throughout the southeastern United States and into states like Florida and Georgia. These markets, like Texas, offer compelling demographics in our leading states for population growth and economic activity. Badcox Florida and Georgia store base alone adds over 200 locations compared to 25 cons locations in Florida and Georgia prior to the transaction. Badcock enjoys strong unaided brand awareness within Florida and Georgia that is similar to Kahn's awareness in Texas. And combined, these three states will account for 55% of our store base and approximately 60% of our combined sales. We intend to operate both brands to take advantage of the leading awareness Kahn's has in Texas and Badcock has in Florida and Georgia. In addition, we believe we can leverage Badcock's dealer model to enter smaller, more rural markets throughout our footprint. In Texas alone, there are over 75 municipalities with populations between 10,000 and 75,000 that we believe could support a dealer-owned store, a significant increase in our addressable market. The company will also have a meaningful e-commerce business with approximately $125 million of combined e-commerce sales. Supporting our digital platform is a best-in-class logistic network that is positioned to provide last-mile delivery to approximately 92% of the population that resides in the 15 states in which we operate. In addition, Khan's in-house service platform provides provides us with another compelling offering to support online and in-store customers across our combined footprint. As a result, we believe we will have an even greater e-commerce value proposition, especially across Badcock's dealer network and in their more rural markets. Our credit segment will also see the benefits of scale. As a reminder, when I first joined CONS as CEO in September 2015, we started investing heavily to create a powerful credit and collections infrastructure. I am pleased with the progress we have made as we continue to enhance our credit segment and drive stable performance. With the addition of Badcox receivables, our portfolio has grown to $1.1 billion, and I am confident we can properly manage this increase within our existing infrastructure. As we integrate Badcox receivables into CONS portfolio, we will remove costs associated with duplicative credit, underwriting and collection systems, and associated expenses. We also believe we can optimize Badcox credit programs through our innovative application process, lease to own capabilities, and our in-house financing options. The fourth and final strategic rationale of the combination with Badcock are the opportunities to significantly strengthen our financial position. Over the near term, there are two main drivers. First, we have identified over $50 million of cost savings that we expect to realize on a run rate basis in the next 18 months. Expected cost synergies include the benefits from improved procurement and logistics expenses as a larger company. In addition, we are focused on driving efficiencies across the combined organization, and we believe there are opportunities to reduce general and administrative as well as corporate and credit segment expenses. Second, the BADCOC transaction strengthens our balance sheet by adding approximately $125 million of incremental liquidity to CONS. This consists of additional collateral in the form of inventory and accounts receivable that will be added to our borrowing base. In conjunction with the transaction, we announced an amendment of our $555 million ABL facility with $400 million of such amount extended from March 2025 to December 2026. We will also continue to pursue periodic ABS transactions as we leverage our established and highly successful ABS program. This includes our most recent August 2023 ABS transaction, which was 10 times oversubscribed and reflects the extremely strong demand for our bonds, as well as our ability to access the capital market, even during challenging market conditions. As a result, we believe we can be a more frequent ABS issuer especially as our scale increases and the diversity of our receivables grow. With these actions, we have significantly improved our balance sheet, providing us with greater resources and flexibility to navigate the current economic environment and support the future growth and capital needs of our business. As you can see, BADCOC is a transformative transaction that we expect will immediately improve our financial performance while creating a platform for significant long-term value creation. Over the near term, both Kahn's and Badcock's leadership teams share a common vision to ensure successful integration while positioning the company for long-term profitable growth. We have an integration strategy in place and our team is committed on executing against this plan. We believe the bad cock transaction complements the strategic priorities we have recently been pursuing, including our efforts to better serve our core credit-constrained customers, expand our leased-own offerings, and accelerate our e-commerce business. I am pleased with the progress CONS made during the third quarter as credit applications increased 41% and e-commerce sales increased nearly 51% to a third-quarter record. I want to reiterate the importance of the BADCOC announcement as the transaction strategically benefits four critical areas of our business. First, it accelerates CONS growth opportunities. Next, it combines CONS in-house credit platform and expertise with BADCOC's existing financing capabilities. Third, it increases CONS scale and expands our presence across the southern United States. And finally, it strengthens our financial profile. The combination creates a powerful financial model and customer value proposition supported by our premium shopping experience, best-in-class payment offerings, leading e-commerce capabilities, and unique dealer network. In addition, we expect our larger scale will benefit purchasing and logistics expenses while also driving opportunities to leverage fixed costs. As a result, we believe the transaction will significantly improve our profitability in the coming quarters. By fiscal 2026, which is just two years away, we believe we can achieve annual adjusted EBITDA of between $180 million to $220 million on total annual sales between $2 billion to $2.2 billion. Finally, as you may have seen in yesterday's press release, I am pleased to share that I have officially reassumed the titles of President and CEO. This decision reflects my confidence as well as the Board's confidence in the direction CONS was headed prior to the transaction and the incredible opportunity the transaction represents for our communities, customers, employees, and shareholders. As you may remember, under my prior tenure as president and CEO, the company produced multiple record-setting years of profitable growth that I am focused on replicating as we integrate the transaction and execute against our strategic plan. I am also excited to introduce Tim Santo, Kahn's interim CFO. Tim joined Kahn's in April 2023 as the company's chief accounting officer. He brings a wealth of accounting and financial expertise and prior to joining Kahn's held executive level positions at PRA Group and GE Capital. Tim and Mitchell join a highly experienced and motivated leadership team that is committed to creating real value for our shareholders. I believe strongly that Kahn's and Badcock have the right strategy, resources, and platform to deliver on the goals we have laid out here today. Together, we will have an even greater impact on the communities we serve, and I am excited by the opportunities we have in front of us to produce long-term value for our stakeholders. So with this overview, I'll now turn the call over to Tim.
spk04: Thanks, Norm. I'm excited to join everyone on this morning's call, and even more excited by the opportunities the Badcock transaction creates for the combined company. I believe there is a clear path for cons to deliver strong financial returns over the coming years, and I look forward to updating investors on the progress we are making on future calls. Turning to our third quarter financial results, the fiscal 2024 third quarter was challenging, reflecting persistent industry headwinds primarily associated with pulled forward demand because of consumer trends and government stimulus during the COVID-19 pandemic. On a consolidated basis, total revenues were $280.1 million for the third quarter, representing a 12.8% year-over-year decline. For the third quarter, the company reported a gap net loss of $2.11 per diluted share compared to a loss of $1.04 per diluted share for the same period in fiscal year 2023. As a reminder, reconciliations of GAAP to non-GAAP financial measures are available in our third quarter earnings press release that was issued yesterday. Looking at the performance of our retail segment in more detail. Total retail revenues were $221.4 million in the third quarter. The 13.1% year-over-year decline in retail revenue was primarily driven by a 15% decline in same-store sales and partially offset by new store growth. Same-store sales during the third quarter were impacted by lower discretionary spending for home-related products following an extended period of excess consumer liquidity, which resulted in accelerated sales. For the third quarter, retail segment operating loss was $24.8 million, compared to a retail segment operating loss of $17.7 million for the same period in fiscal year 2023. The greater year-over-year retail segment operating loss was primarily due to a decrease in revenue as described above and higher SG&A costs partially offset by an improvement in retail gross margin. Turning to our third quarter credit segment performance, finance charges and other revenues declined 7.6% year-over-year to $61.5 million. primarily due to a decline in the average balance of the customer receivable portfolio. Overall credit trends remain stable, reflecting prudent underwriting strategies aimed at controlling risk during a more uncertain economic landscape. As a percent of the portfolio, the 60-day delinquency balance was 11% at October 31, 2023, compared to 12.2% at October 31, 2022. The balance of re-aged accounts as a percent of the portfolio was 18.1%, compared to 16.5% for the same period in fiscal year 2023. For the third quarter of fiscal year 2024, net charge-offs as a percent of the average portfolio balance were 13.6%, compared to 13.7% for the same period last fiscal year. The company reported a credit segment loss before taxes of $36 million in the third quarter compared to a credit segment loss of $11.8 million for the same period last fiscal year. The greater credit segment loss before taxes was primarily due to higher interest expense as well as a reduction in our credit spread which declined to 8.7% compared to 9.8% in the same period last fiscal year. With this overview, and before we open the call to questions, I want to turn the call back over to Norm to review some financial considerations related to the Badcock transaction and our high-level expectations for the fourth quarter.
spk02: Thanks, Tim. As we integrate BADCOC and pursue our long-term strategic growth priorities, I want to review our expectations for the fourth quarter. First, it is important to consider that approximately seven weeks of BADCOC's financial results will be included in our fourth quarter. Quarter to date, CONS total sales have been trending down approximately 13%, and we expect this trend to continue through the fourth quarter. On a year-over-year basis, we expect fourth quarter consolidated revenue will benefit from approximately $58 million to $61 million of Badcock retail sales and approximately $10 million to $12 million of credit segment revenue. We remain focused on reducing SG&A but expect elevated SG&A in the fourth quarter associated with new con stores, approximately seven weeks of Badcock's SG&A expenses, and one-time expenses associated with the transaction. We are excited to integrate Badcock into CONS as the transaction immediately enhances our scale, strengthens our financial profile, and creates a powerful foundation for the future. Over the next several quarters, we are focused on accelerating sales growth by pursuing product, dealer e-commerce, and credit-driven growth strategies while simultaneously increasing gross margin and reducing our operating expenses. As a result, in two years, we expect to achieve between $2 billion and $2.2 billion in annual revenue and $180 million to $220 million in adjusted EBITDA by fiscal year 2026. We are working hard to position the company for long-term success, and I look forward to sharing the progress we are making in our future calls. Finally, I want to share my thanks and appreciation to all our team members for their continued hard work, service, and dedication. I also want to welcome Badcox employees, their dealers, vendors, and customers to the company. I look forward to working with all of you as we create significant value for our combined enterprise. So with this overview, Tim and I are happy to take your questions. Operator, please open the call up to questions.
spk01: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, it is star 1 on your telephone keypad to ask a question. Our first question is from Vincent Santek with Stevens. Please proceed.
spk03: Hey, good morning. Thanks for taking my questions and congratulations on the acquisition. It looks very transformative, very helpful. I guess first off, I was wondering if there's any help you can give us in terms of just the Badcock financials since we're trying to figure out how to think about 2024 modeling of EBITDA and so forth. Or maybe if you could give us what the performance was in 2023. Any help you could give us would be helpful. Thank you.
spk02: Yeah, we'll take that offline with you. As you know, there's not been publicly traded here for the last eight months or so, and they were reported as a subset as a public company with FRG. So, there's a lot of moving parts there with some of the sales of their portfolio that they've done transaction-wise. So, we'll talk with you offline with that, Vincent, to help you with the modeling.
spk03: Yeah, that sounds good. Yeah, I figured from my last model on Bad Cop, there's probably some changes, so I appreciate that. In terms of some of the moving pieces, the finance receivables and that funding part of the Badcock business, so I appreciate that CONS will be able to add your financing capabilities to that since I think Badcock's business funding side was sold. But if you could talk about are you acquiring Badcock's finance receivables and will everything be running on the CONS platform going forward in terms of the funding side?
spk02: Yeah, so over the past year, Badcock has sold off a significant part of their receivables. However, we are bringing over about $100 million of their receivables. We will continue to service in a servicer agreement the existing securitized that have been securitized privately, their existing portfolio. So it's about $100 million of receivables that are coming over that we will manage going forward. And then obviously we will be funding that. Ultimately we will be moving them from once we get them integrated into the cons underwriting platform and the cons in-house financing, which is a different product than what they currently operate on. Badcock currently operates with a revolving credit product. and we will move them to the CONS installment loan product. But that's going to take a number of months from an IT standpoint in order to get that fully integrated. Ultimately, when we're able to do that, it will create, it will give us the opportunity to increase their yield, number one. And then number two, it also, it will be a, our installment product, as you know, Vincent, is a 36-month product versus the revolving credit is much shorter in duration. which is why in the investor deck that we published this morning, you can see their average ticket is about 30 percent less than our average ticket, in large part because of the type of credit product that we think we have real opportunity with the installment product to lower the monthly payment options for the Badcock customer that ultimately will drive more sales and more options for the Badcock customer as well.
spk03: Okay, perfect. Thank you. Um, and then the next question. So great to hear all of the funding actions you're taking with, um, with the, the ABS and ABL and so forth. Um, maybe if you could sum it up, like what are the, what's your ability to originate? How much is that expanding and how much capability can you give to bad talk, uh, for growth from the, uh, your, your funding actions and the ability for you to fund.
spk02: Yeah, so as you know, Vincent, we've been a regular since I joined the company in 2015 is when we started doing ABS transactions, and we've done either one or two of them regularly and been successful, as I mentioned in my comments, at the ABS market. Our intention is that we will, you know, our ABL and file alone that we have gives us ample credit to be able to continue to not only fund the growth we expect from our business, but Badcock as well. We will begin securitizing the Badcock loans going forward in the future when they become on our platform. And our expectation is instead of doing one to two ABS transactions a year, we'll be more in the range of three to four, but confident that that will not be a filter or something that will prevent us from accelerating our growth with the structure that we have in place.
spk03: Perfect. Thank you. And then the last one from me, I mean, just taking a step back, and if you can talk about the consumer, the state of the consumer, you know, last quarter and what you're seeing so far this quarter in terms of, you know, their spending, their credit during the holidays. And if there are any differences also between, like, when we think about a cons consumer versus a bad cop consumer. Thank you.
spk02: Sure, Vincent. So, first, I'll answer the last question. First, the consumers are very, very similar. When you look at demographically, you know, the cash-constrained, customer-worthy customer in bad cop is similar to our customer, which is why this transaction – from a transformative standpoint and a strategic rationale standpoint, makes so much sense. We carry the same products. It's a similar customer. We're in similar geography. We have a very similar business model that's fueled and driven by the in-house financing. So in almost every single box, when you compare the two companies, the similarities are shocking. So that's number one. Number two, as far as the health of the consumer, you know, as you well know, if you look at delinquencies on car loans, on credit cards, personal loans, delinquencies are continuing to be pressured. They're at 12-, 13-year highs from a macro standpoint. We have seen that as well in cons, pressure from a delinquency standpoint, which has caused us to tighten cons financing in the last, three to four months by about 850 basis points, being conservative there to ensure that we keep the portfolio in a stable place, even if it costs us a little bit in sales in the short run. Having said that, we did see improvement from quarter two to quarter three, slight improvement from same-store sales down 15.4 to down 15.0. I will say in the month of November, our same-store sales were improved even more. So we saw the consumer respond more. They were down 12.9% in the month of November, which from a same-store sales and a total sales standpoint, at about down 10%, which is the best performance we've seen in about 18 months for the month of November. So we're encouraged by that. But I will tell you with inflation still being persistent, I'm still concerned over the next six months to nine months with the consumers. So we're going to be taking a cautious approach, but we believe with our in-house financing and the benefits we have from a synergy standpoint with the two businesses, especially with the untapped opportunity in Badcock, that we have an opportunity to grow the combined business.
spk03: Great. Okay. It's great to hear about that steady same-store sale improvement over the past couple of quarters, and great to hear about the transaction. Thanks very much.
spk02: Thanks, Vincent.
spk01: There are no further questions at this time. I would like to hand the conference back over to management for closing comments.
spk02: Thank you. I would like to, again, acknowledge all of the, both the CONS employees for all their hard work and dedication here. over this past quarter. I'd also like to welcome once again the Badcock employees, the dealers. We're so excited to have you alongside us here in the CONS organization. We look forward to working with you, and we look forward to sharing with investors as the excitement builds here and sharing our exciting integration results in future quarters. Thanks, everybody. Happy holidays.
spk01: Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.
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