Interparfums, Inc.

Greetings and welcome to the Interparfums 2022 fourth quarter and year-end conference call and webcast. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Karen Daly, InterPerfume's investor relations representative and president and vice president at the Equity Group. Thank you. You may begin.

Thank you, Doug. On behalf of the company, I would like to note that this conference call may contain forward-looking statements which involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from projected results. These factors may be found in the company's filings with the Securities and Exchange Commission under the headings Forward-Looking Statements and Risk Factors in their most recent annual report on Form 10-K. Forward-Looking Statements speak only as of the date on which they are made, and Interperson Inc. undertakes no obligation to update the information discussed. It is now my pleasure to turn the call over to Mr. Jean Mazar, Chairman and Chief Executive Officer of Interperson Inc. Jean, you may begin.

Thank you, Karen. Good morning, everyone, and thank you for participating in today's call. I will start the ball rolling, and later you will hear from Michelle Atwood, our CFO, who has been with us now for six months. For anyone new to Interparfums, keep in mind that when we refer to our European-based operations, we are talking about our 72% owned French subsidiary called Interparfums SA. And when we refer to our US-based operation, we are talking about our wholly owned domestic subsidiaries. 2022 will always be remembered as the year we topped 1 billion in net sales. In 2022, our sales reached $1,087,000,000 to be exact, resulting in diluted EPS of $3.78, a record year marked by a 24% increase in net sales and a 38% increase in earnings per share. 2022 will also be remembered as the year Donna Karan and VTNY Fragrances joined our portfolio as the first full year producing and selling Ferragamo fragrance and also the first full year that our Italian office was operational and finally the year in which we entered into a license agreement with Lacoste. But it wasn't Easy selling. 2022 was also a year of rampant inflation, surging dollar, holdups in transportations, component shortages, and other supply chain headaches, along with China lockdown, and of course, a war in Eastern Europe. Let's move on to business by region. First, I want to focus on North America, our largest market. You may recall that for several reasons, through the first nine months of 2022, sales were up by only 4% in North America. As we reported earlier this year, we had logistic difficulties stemming from a change in shipping software, which delayed shipments. Plus, in 2021, you may recall many U.S. customers pressed us to deliver their holiday shipments in the third quarter, fearing supply chain problems. Those two factors were the main reasons why North American sales rose 140% for the first nine months of 2021. But that flip-flopped in 2022 when a large amount of holiday gift sets initially scheduled for delivery in the first quarter, didn't get shipped until the fourth quarter, making for a huge fourth quarter comeback. We booked $147 million in sales in the final quarter, resulting in a 22% increase in 2022 North American sales for the full year. Now, for the rest of the world, Sales in Western Europe and Asia rose 28% and 19% respectively. Central and South America grew sales by 24% and the Middle East by 44%. Even Eastern Europe achieved modest sales growth of 6% despite the conflict in Ukraine and sanctions on Russia. What is notable about Eastern Europe is that through the first nine months of the year, sales were down 16%, so to be 6% ahead at FIERAD is a good turn of events. With the exception of China, our travel retail business has shown remarkable resiliency. As we have stated over the course of 2022, The strength of the dollar minimized the accomplishments of our European operation, which grew sales in US dollars by 12%, but grew 20% in constant currency. For Montblanc, we launched a new flanker called Legend Red, which contributed to a 15% sales increase in dollars, but 22% increase in constant currency. Jimmy Choo welcomed the I Want You Forever Pilar and Man Aqua, both flankers, which combined with Legacy Scents produced a 23% increase in sales in dollars, but a 29% increase in constant currency. Coach fragrance sales were up 18% in dollars and 22% in constant currency as we introduced a new men's fragrance family called Open Road and wild rose for women. Our Montclair duo was on the market for a full year while in 2021, the program debuted in a limited number of outlets late in the year. Among our other new product launches was a product for fragrance for Boucheron called Saint Goulier, Sparkle for Kate Spade, and Byzance Gold for Rochasse. Now, let's discuss U.S. operations, which achieved sales growth of 58% in 2022, and we have doubled our sales versus 2019 pre-COVID. In the U.S., we launched Uomo for men and the Sister Scents for the Bellavita Fragrance family for guests, which spurred grand sales growth by 24%. With the introduction of Alibi and continued sales of brand favorites, Oscar de la Renta brand sales rose also by 24%. And Abercrombie & Fitch enlarged the authentic and away pillars with new flankers, growing sales by 28%. And Hollister welcomed Canyon and Wave brand extensions to grow the brand's fragrance franchise by 16%. As we have said, Newer brands, such as Ferragamo, were included for all of 2022, but only in the final quarter of 2021, and Donacaran and DKNY sales were consolidated starting in July of 2022. It now appears very clearly that the combination of Donacaran and DKNY franchise will emerge as our second largest brand within U.S. operations. Starting this year, we have taken over production from the former licensee, Estée Lauder, and have been able to build inventory and gain better control over the supply chain, which in 2022 limited sales and shipments. As our guideline implies, 2023 should be an even better year with new products and brand extensions unveiling throughout the year. 2023, not unlike 2022, will be dominated by brand extension for all of our major and midsize brands, following an exceptional new product launch schedule in 2021, which included many that were delayed from 2020. As I have said on previous calls, the advantage of flankers and extensions for a successful pillar is that we can leverage the design elements, packaging, components, photography labels, as well as advertising and promotional materials across all members of the fragrance family. And the big news we announced in December was the signing of the 15-year exclusive fragrance license agreement with Lacoste, perhaps the most widely recognized sports fashion brand globally. Effective January 1, 2024, we will take over the bronze legacy fragrance collection for men and women, and our plan calls for something new to hit the market that year. For generations, the instantly identified crocodile logo has adorned sportswear, eyewear, leather goods, home goods, watches, and of course, fragrance. In fact, I recently read that when Lacoste was founded in In 1933, it was the first brand to feature a logo on its clothing. Lacoste should rank among our largest brands, having generated 2022 sales of over $100 million. As I say on every conference call, our search for additional brands, both established and rising stars, remains a priority for the company. Another piece of good news is Richemont, the owners of Montblanc, our largest brand with sales approaching $200 million, has agreed to extend our fragrance license through December 31, 2013, adding five years to our partnership. So with a seven-year window, we are better able to plan new product launches promotion and advertising, and distribution planned well into the future. While our new ERP system is hardly a fun topic, it is vitally important to our future. I will admit that we outgrew our old system faster than we could replace it, but it was worth the wait. With component suppliers, fillers, and customers across the globe, it was quite a task to keep track of inventory real-time. Today, authorized personnel can easily access from any secure device, anywhere in the world, whatever they need, from the quantities and location of goods to the status of existing orders. They can reserve goods in the cell, and we have implemented EDI for certain large customers. A major portion of the ERP system has been deployed with additional modules in the works, including more vendor portals. This was a big investment, a big headache along the way, and many problems still to solve. But the payoff, even if viscerally in the game, will be very rewarding. I don't have to tell you that the growth of the fragrance industry has been extraordinary over the past two years, and we see no sign of a slowdown. Of all the key beauty categories, fragrance is the fastest growing, far outpacing hair care, makeup, and skin care. As a pure play in fragrance, with a diverse, well-balanced, and well-recognized portfolio of brands, plus an exceptional staff who are well positioned to continue to gain market share. We now have four brands with sales ranging from 100 to 200 million, and they have been growing annual sales by double digits. Overall, our midsize brands are performing exceptionally well as well. Among the trends working in our favor and for most of our peers, is the popularity of higher concentration products and higher-priced luxury brands. In addition, while perfume has always been and continues to be a popular gift for Mother's Day, Christmas, and Valentine's Day, in recent years, more shoppers are buying fragrance for themselves. They are building fragrance wardrobes, and they are indulging in brands that may be out of reach price-wise in clothing and jewelry. Since the pandemic, fragrance buyers have grown exponentially, and when consumers start taking interest in a category, they typically stay. While our 2023 guidance barely factors in China, perhaps kicking in late in the year, the opportunity over time is enormous. I've read estimates that only 3% of the Chinese population is wearing fragrance, but those that do are young, high-end shoppers. Doing business in China has a host of challenges beyond COVID-related restrictions, China's weaker economy and sluggish store traffic. For example, it can take 8 to 12 months to be granted today a health registration on a new fragrance product. That said, if a Chinese retail and online market opens faster, and if Chinese travel retail becomes more robust, we will need to revisit the subject of guidance. But for now, we are rightfully conservative, cautious, and comfortable with our estimates. Similarly, As the year progresses, we will have better visibility as to orders and sales that may once again call for guidance adjustments. Now, I will turn the call over to Michel for a more detailed financial review. Michel?

Thank you, Jean, and good morning, everyone. I'm delighted to be on today's conference call, my second since joining Interparfums in September, as Jean pointed out six months ago. Before moving on to our financial results, I will again address the subject of foreign currency exchange rates, specifically the strength of the dollar against the euro throughout 2022. Over 50% of our net sales of our European operations are denominated in US dollars, while almost all its costs are incurred in Europe. That has a negative effect on our sales, but boosts our gross margins. For the fourth quarter of 2022 and full year, net sales reflect a negative 10% and 7% foreign exchange impact versus comparable periods in 2021. We also expect that these headwinds will also impact quarter one of 2023. As we reported in the final quarter of 2022, net sales were 311 million, a 47% increase from the $211 million in 2021. But at comparable foreign exchange rates, fourth quarter sales actually increased 57% from the same period in 2021. For the full year, 2022 net sales rose to $1,087,000,000, up 24% from the $880 million in 2021. While at comparable foreign exchange rates, net sales increased 30% from 2021. I will again point out that our U.S. operations where reported sales growth was 58%. Removing newly added brands like for like, 2022 sales rose 24% with basically new brands adding 38% for the year. For European-based operations, the 2022 gross margin was 68.2% up from 66.6% one year earlier with the increase attributable to several key factors. First, the net sales of our U.S.-based distribution subsidiary increased 16% in 2022 as compared to 2021, leading to favorable mix. Also, as I just noted, our gross margins benefited from the strong dollar. Finally, we enacted modest price increases last year, and all these inputs combined more than offset higher costs of materials and transportation. For U.S. operations, gross margin rose to 54.7% from 53.1% in 2021. The scaled benefits coming from our significant growth, combined with pricing actions and favorable channel and brand mix, especially with our newer designer brands, have enabled us to more than offset the impacts of inflation and thus expand gross margins by about 160 basis points in 2022. Moving on to SG&A expenses. For European operations, 2022 SG&A expenses increased 9% from 2021 and represented 48.2% of sales down from 49.4% in 2021 as we're able to leverage our scale. For US operations, SG&A expenses increased 70% from 2021 and represented 39.1% of net sales compared to 36.5% in 2021. With regard to both European and US operations, increased promotion and advertising expenditures were key contributors to the rise in SG&A as we invested to continue to build our brands. Additionally, in 2022, the US-based operations increased expenses related to staffing as we built the organization and infrastructure to support our new brands and future growth. As Jean mentioned earlier, US operations grew sales by 58% in 2022 and doubled versus 2019, which was pre-COVID. So quite a large and significant change over the last three years for this organization. While it would seem very cavalier to complain about upside surprises in sales, but that's pretty much what has happened over the past two years. Already, we've raised guidance for 2023 twice since our initial attempt in November. The issue is not modesty or conservatism, but rather visibility. So when we say our goal is to spend 21% of net sales on promotion and advertising, we mean it, and we have done it back in the pre-COVID years. In 2022, promotion and advertising aggregated to $212 million, which came to about 19.5% of net sales. Of that amount, 40% was spent in the final quarter of the year. As in past years, we do a big spend in quarter four to stimulate holiday sell-through, to diminish inventory in stores, and push stores into stocking up in quarter one of the following year. In 2021, we spent $171 million on promotion and advertising, which likewise totaled 19.5% of net sales. So strong spending, but not necessarily in line with our long-term goals. As you read in our release yesterday and in our 10K, an evaluation of Rocha's fashion trademark value was conducted by an independent expert who concluded that the brand value was $11.3 million at the end of 2022. This resulted in a $6.8 million impairment charge in the fourth quarter of 2022. So at the end of the day, our 2022 operating margin was 17.9% up from 16.8% in 2021, both of which are in our high teen sweet spot. Below the operating line, due to the sizable swings in currency rates during 2022, we went from recognizing a gain of $2.3 million on foreign currency in 2021 to a loss of 1.9 million in 2022. On a consolidated basis, Our effective income tax was 22% down from 27% in 2021, with both the U.S. and European-based operations charged a lower tax rate. In Europe, the lower rate was primarily because of the lower corporate tax rate in France, and in the U.S. the rate declined because we recognized a one-time tax benefit of $2.5 million associated with the 2021 Ferragamo acquisition, which we had discussed already in quarter three. Overall, when we count the one-time gains and losses for the year, which include impairments, one-time gains and losses, and other income expense and tax gains in Italy, they broadly neutralize themselves on an actor tax basis. A few other financial points worth mentioning. We closed the years with strong with very favorable working capital of $443 million, including approximately $256 million in cash, cash equivalents and short-term investments, and a working capital ratio of 2.3 to 1, so a very strong balance sheet. The $151 million of long-term debt relates to InterParsha S.A. headquarter acquisition, which was financed by a $120 million loan which is about $128 million, plus a $53 million four-year loan agreement for Interparfums as the acquisition of the Lacoste trademark. With regards to accounts receivable, I think you would agree that the 24% increase from year-end 2021 is quite acceptable in light of the record fourth quarter sales levels. We haven't had any real problems in terms of collections, as day sales outstanding was 64 days, up slightly from 2021-61 days, but down significantly for the 86 days we had in 2020. Inventory levels are up 46% from year-end 2021, and I know if it was up to Jean, that percentage would be larger. To repeat a point raised in our last call, we have no qualms about carrying higher inventory levels in an environment where shortages abound and transportation is often unreliable. It is better to carry more inventory than lose the sale due to a lack of goods. Our inventory doesn't go stale due to color, size, or season, protecting us from any risk of obsolescence. For the foreseeable future, we will continue to maintain oversufficiency in inventory of components and finished goods. Inventory days on hand increased to 231 days in 2022 as compared to 208 days in 2021. Turning to the outlook for the new year, we see more growth ahead, but as you can see from our guidance, the growth rate we envision for net sales should exceed that of earnings, and that is attributable to our commitment to the 21% of net sales invested in promotion and advertising. With the addition of more upscale designer brands, our gross margin, particularly for U.S.-based brands, should continue to grow. And for European operations, the average euro-dollar exchange rate has moderated, and we don't look for that to be a gross margin catalyst in 2023. Lastly, as you've probably also seen in our press release, we are pleased to increase our annual dividend by 25%, from $2 a share to $2.50 a share, which further demonstrates our confidence in our prospects for our business for both the near and the long term. Our strong financial position enables us to continue to invest in growth opportunities within our portfolio and enlarge our brand portfolio while continuing to reward our shareholders. Now, operator, please open the line for questions.

Thank you. Ladies and gentlemen, at this time, we will be conducting a question and answer session. If you'd like to ask your question, you may press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Linda Bolton-Weiser with DA Davidson. Please proceed with your question.

Yes, hello. Congratulations. I remember when you were much smaller than a billion dollars, so congrats on reaching that.

Thank you.

So can you maybe just update us on what you're seeing in China since the market has reopened? Are you seeing an uptick in store traffic? And also, S.J. Lauder had mentioned some excess inventory in the Hainan region. I guess that's in travel retail. Are you experiencing that or is that more of a skin care situation?

Yes, I can try to answer that. For us, the start of China is quite slow. Of course, because of Chinese New Year, we saw a lot of people traveling and a lot of traffic in the stores. But I have still some reservations of when China is going to be really opening. It's quite slow. And on the top of that, I think it was said in my remarks, there have been some changes in the importation of fragrances and cosmetics in China and it's becoming more and more complicated and longer to process. So any new products that we want to sell in China, the registration could take anywhere from six to 12 months. So that's why we are quite conservative in our business in China. If we see at the end of the first quarter or beginning of the second quarter, then things open up faster. of course, we'll let you know and we'll revisit. But right now, especially in the last 30 to 45 days, it has been quite slow. Now, Hainan, yes, is reopened. We don't have issues of inventory per se. That's what I can tell you now.

Okay. Thank you. Thank you. Thank you, Linda. Can I ask you, is there any way to quantify how much in sales shifted from the third quarter to the fourth quarter?

Yeah, we said it was about $10 million.

$10 million?

Yeah.

Okay.

In quarter three.

Okay. And then what are you seeing in terms of the component shortages? Is that improving at all or is it still a challenge?

It has been a challenge, and it is still a challenge, especially for certain categories of plastic and certain metal pieces that are difficult to get. But as you know, we have taken the decision to multiply the source of supply. We are buying from the U.S., we are buying... We are buying also now a lot in Europe. It's still very tight. Just to give you an idea, we have to place our orders for glass one year in advance. For instance, now all our orders for glass have been placed for this year. You can imagine the difficulty to react in case of a when you need more or when you need less but like Michel said we think it's better to have more inventory than less so we are taking some position on inventory that will enable us to beat our own projection if the market continues to go Michel you want to add something

I was nothing specific to say. I mean, yes, the other thing we're seeing is we're also seeing some significant inflation on glass products, particularly the stuff that's purchased in Europe due to the increases in energy. As you know, glass is sand and energy. So we have been diversifying also our supply base to evaluate new markets where energy is less of an issue.

There is one good news, if I may. The cost of transportation is going down at a very, very fast rate. We used to pay a container from Asia to America $25,000 for a 40-foot container a year ago. Now the price is less than $3,000. So the cost of transportation is going down. cost of energy is not going up. So we should see, we could see the light at the end of the tunnel soon.

Okay, thank you. Thank you.

Our next question comes from the line of Corinne Wolfmeyer with Piper Sandler. Please proceed with your question.

Hey, good morning and congrats on a really good quarter and thank you for taking the questions. So first, could you just comment a bit on what you're seeing with your retail partners, particularly in the United States? I mean, we've been hearing from some other players that maybe there is some inventory rebalancing maybe in the department stores. So if you can provide any color on kind of like the United States state of the business. Thank you.

I didn't hear the full question I'm calling from overseas. You asked us about the inventory at our – at our retailers in the U.S.?

Yeah, the inventory positions of your retail partners in the United States.

Yeah, yeah. What I can tell you is that Christmas was very strong. Our sell-through was very, very good. So the inventory at store level is quite low. That's why we have to replenish quite strongly in the first quarter. There is no piling up of inventory at US retailers. At the contrary, I think we need more merchandise right now. Michel?

Yeah, I think if you look at the market, the US market grew about 12% last year. We obviously grew ahead What we found is I think December was, it's all relative to what we've had. I think December was at 10% versus the year of average of 12, so maybe a little bit of a slowdown. It's still a very high number, but our inventory levels in trade are actually quite low is what we're finding. All our gift sets have sold through and we're actually entering 2023 in a pretty good position.

Very helpful. Thank you. And then can you just touch a little bit more on the planned increase in marketing spend that you mentioned? Is that going to be kind of pretty balanced across the year, or are we going to see it maybe hit a little bit heavier towards the back half? How should we be thinking about the cadence of that marketing? Thank you.

Yeah, I mean, on marketing spending, I mean, at the end of the day, what you want to do, there's two parts related to your marketing spending. There's the ongoing building of the brand, the overall equity, but in most cases, what you really want to do is you want to be advertising at a moment when the shoppers are in the stores buying your products, which are going to be during your key consumption periods. The largest one, obviously, being Christmas. So as we run up, towards Christmas, it's always a very big quarter. Typically, 50% of our spending happens in that quarter. And we expect that that will be very, very much the same. And I would say during the rest of the year, it's more equally spread, even though we generally do spend a lot during Mother's Day, Father's Day, so in quarter two.

Awesome. Thank you.

Thank you.

Our next question comes from the line of Ashley Hellsgans with Jefferies. Please proceed with your question.

Hi, this is Sydney on for Ashley. I was just wondering if you could talk about expectations around durability of demand and then just any differences by region in trends that you would call out.

Durability of demand. and across the region. The demand is not slowing down. What we see in the US department stores, in European perfumeries, and what we see from NPD is continued growth of this category. Stores are giving more space to fragrance in Europe, in the U.S., in the Middle East, in Asia. We are recruiting new customers. And I would like to tell you that we think that one day it's going to slow down, but right now it's still very, very strong.

Great. Thank you. Yeah. Maybe just to build on Jean, if you look at the world today, you've got really three groups. You've got Europe where typically fragrance penetration has always been very, very high, about 50%. What we're seeing there is continued strong demand, premiumization of the category, and people more increasing their usage habits as opposed to basically more penetration. A lot of the growth there is coming from I would say increased usage and premiumization. If you look at the U.S., the U.S. historically has had a much lower level of penetration, and in the U.S., we're really hitting across all cylinders. We're seeing clearly an increase in the penetration that started during COVID and continues to be strong, and that offers, I think, a very strong pipeline of new consumers entering the category. We know that when consumers enter these categories, they they build up their knowledge, they get more premium, they increase their usage. That could be a strong, I think, pipeline of growth for us going forward. Obviously, the question is when does that penetration slow down? Does it eventually get to the European levels in which case the market could still double or will that eventually slow down? That is a pretty sizable building block. The other thing we're also seeing in the U.S. is more and more people are increasing their usage. We're seeing heavier and heavier usages, people using it at different moments during the day, so also an increase in usage. And the last piece is really China and Asia generally, but China in particular where penetration is very, very low, where we are seeing, as we said at the beginning of the call, young affluent people entering the category, looking for more premium brands, more aspirational brands. And that offers, obviously, a huge growth opportunity and building block going forward.

That's super helpful. Thank you so, so much.

Our next question comes from the line of Hamed Korsan with BWS Financial. Please proceed with your question.

Hi. Just on the ad spend, Given the demand dynamics that you're experiencing, do you need to spend 21% of your sales?

I love this question. Thank you for asking, Ahmed. I think... So to answer, do we need to spend? Absolutely. Because the spend of advertising... spend on on the marketing our brand is uh our insurance for for the future this will guarantee a repeat sales going forward so yes i think it's very important to continue to span not only not only advertising but also in the point of sale also in the training beauty advisor behind the counter. All this that makes up the 21% is definitely I want to say a good spend for the present and for the future. This is why we are able to grow faster than the market.

I would just maybe build on that. It really depends if your focus is on driving short-term profits or growing your business sustainably. If your goal is to deliver short-term profits, then yes, you could reduce. But if your goal is to drive total long-term shareholder return, which is really ultimately our goal, you need to maintain the right level of spending. This is a category, remember, there's a lot of innovation. So when you innovate, you need to communicate that innovation. You need to drive trial with sampling. You need to educate the people in the stores so they can talk about the product. You need to get those products in the hands of the consumers. There is a significant amount of activity that goes behind ensuring that these products are top of mind for the consumers. Remember as well, this is a very fragmented category, which is good because it means that if you have something that is working, there's an opportunity to gain a lot of growth, which is what we've seen. But it also means that you have to be on your toes because competition is in standing still.

Understood. So given that you didn't spend as much as you would like in the 22, are you doing some sort of like a catch-up process here in the first half of 23, or do you feel comfortable with the kind of ad spend that you have planned out?

I think it's more a philosophy. This isn't just about equity. It's about having the advertising at the right moment. It's about share voice versus market share versus the market share that you're trying to achieve. We're looking for ROI. The idea is to advertise when nobody's in the store, which is kind of what's happening right now in January. Obviously, it's always a shorter month. You don't start advertising in January just because you didn't advertise in December. What it means is that as we do our long-term planning, we are planning for more spending. We wanted to make sure that that was clear as we were guiding for 2023. We weren't looking to expand our margins at this point in time. We were focusing really on growing our top line.

Okay. Just a housekeeping on the script you were saying about having better control of the supply chain shipments. Was that related to DKNY and What kind of difference have you seen so far with that comment that you just made?

I'm not sure I understood the question. Sorry.

John had said it in the scripts earlier on.

I will have to go over it again. I will answer. If you don't mind, I will look at it and will answer to you offline.

Okay, perfect. Thank you.

Thank you very much, Ahmed.

There are no further questions in the queue. I'd like to hand the call back over to Jean Medard for closing remarks.

No, I'm going to let Michel do the closing remarks, but I can say thank you to everyone for listening. Michel is going to tell you that we're going, I'm sure, to participate to certain conference soon.

Yes, yes, thanks Jean. So yes, we will be participating in the DA Davidson Conference in New York on the 21st of March, I wanted to thank Linda for inviting us. I hope we'll be able to meet you all, or some of you at least at that time. I want to thank you all for having joined the meeting this morning. If you have any questions, please contact Karen Gailey at the Equity Group. We'll be happy to help. I wanted to just close this call by thanking the IPUS team who has been working relentlessly on fixing some of our startup issues related to our ERP. It's been a huge effort. We've made tremendous progress and we're, I think, in a great place now. I want to recognize those heroes that aren't on the call today that have put in long hours to get us back on track. I wanted to thank them as well in this call. I wanted everybody to stay well also and stay safe. Thanks again for your time today.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.