The Singing Machine Company, Inc.

Good day, everyone, and welcome to today's singing machine second quarter earnings call. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and 1 on your touchtone phone. Please note this call is being recorded. I will be standing by should you need any assistance. It is now my pleasure to turn today's program over to Brendan Hopkins.

Hi, good afternoon, everyone, and thank you for taking the time to join us. We have a quick safe harbor, and we'll get to it. Except for historical information contained herein, the statements in this conference call are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. With that said, I'd like to turn the call over to Gary Atkinson, CEO of The Singing Machine Company.

Thank you, Brendan. Good afternoon, everybody. This is Gary Atkinson. I'm the CEO of The Singing Machine. I have also with me this afternoon Lionel Marquis, company CFO, and Bernardo Melo, VP of Global Sales and Marketing. I do want to thank everybody for taking the time this afternoon to listen in as we give more detail on the status of our second quarter. For those that haven't seen, the numbers came out this morning. We're released in our second quarter 10Q. Obviously, this was a great quarter for Singing Machine. We're very, very pleased and happy to be back on track. We were successful in a couple of different areas, first one being we were able to grow top-line sales during the quarter as well as the year-to-date six-month period. We were successful in expanding our margin and also reducing expenses, and all of those things contributed to a strong bottom line this quarter. I'm going to be turning the call over to Lionel, who's going to give us a deeper dive into the second quarter financials. And after that, we're going to turn the call over to Bernardo, who's going to give us an update on sales. So with that, I'll turn it over to you, Lionel.

Okay, thanks, Gary. Good afternoon, everybody. I would like to report the earnings for second quarter. I actually had a strong quarter here and I'd like to get some of the highlights of it right now. Net sales for the quarter, we were up about $3.1 million at $23,187,000 versus $20,082,000. Year-to-date, up again, $26,511 versus $24,891 year-to-date to $1.6 million pickup. The Carpool Karaoke product contributed approximately $1.1 million quarter-to-date and $0.9 million or almost a million dollars year-to-date to those increases. And also, if you recall or may not recall, last year we had a damaged goods incident with Walmart that hurt our sales by $1.5 million, and that we don't have a repeat performance of. Thank you very much. So that helped us in terms of beating our sales for last year at the same quarter, as well as year-to-date. For the quarter, the internet demand for our product is strong, at about a half a million increase in that category. And year to date, when you're looking at carpool karaoke and no damaged goods from last year, those two were offset by we didn't do any business with JCPenney or minimal business with JCPenney this year as compared to last year. So that 2.4 million from carpool and no damaged goods was offset with and no business with or little business with JCPenney. Gross profit margin, $16 million, $16.4 million versus $14.4 million. It's about a $2 million increase. Carpool Karaoke contributed approximately $600,000 to that. No damaged goods incident, that was another $300,000. And the rest of that was primarily due to not only the increase in sales, but also a pickup in gross profit margins. Year-to-date, $7,959,000 versus $6,630,000, a pickup of $1.3 million. Same situation there. Half a million dollars related to Carpool Karaoke, no damaged goods for $300,000, and the sales increase and increase in gross profit margin was the reason for the increase there. Our gross profit margin percentage was 29% versus 28.1% or 0.9%. margin pickup. Most of that was due to Carpool Karaoke, which carries a significantly higher margin yield than the rest of our normal product. Year to date, 30% gross profit margin versus 26.6. That's a 3.4 point pickup in margin. And again, Carpool Karaoke had a lot of contribution to that, and also the mix of products sold had a lot to do with the difference in the increase in the gross profit margin. From general administrative expenses, we're talking about $1,842,000 versus $2,335,000. That's a $393,000 decrease. We had, some of you may recall last year, we had bought some special accounts receivable insurance for JCPenney And $135,000, since we didn't do business with JCPenney this year, we didn't need to change. We didn't need to repeat that. And there was out-of-pocket damage for the damaged goods. The out-of-pocket costs were approximately $219,000. So those two things, on top of the fact that we traveled, that we saved quite a bit on travel and entertainment due to not participating in shows. Shows got canceled, and obviously we've been staying close to home. It's the same thing year-to-date. General administrative was $3.2 million versus $3.6 million. We're down by $401,000. Same reasons, the insurance of $135,000 for JCPenney, $219,000 of out-of-pocket damage, and some substantial savings on travel and entertainment. Selling expenses, it's $2.3 million in the prior year, in the current year, versus $2.8 $5 million in the current year. It's about $111,000 difference. We had a lot less marketing, about $300,000, $400,000 less in marketing for the rollout of the carpool karaoke product, which we spent quite a bit on last year. And because it has taken off this year, that was offset substantially by royalties going out for the carpool karaoke. It's the same reasons for the Year to date, decrease 2.9 million versus 3.1 million, about $200,000 difference, and the same reason as the quarter to date. Income from operations, $2.4 million versus $859,000 last quarter. That's a 1.5, almost a $1.6 million increase. Year to date, $1.7 million versus a $243,000 loss. last year, year to date, and that's about a $1.9 million pickup. Other income. You'll notice there's a lot of other income below the line of operations. It has to do with all of the damaged goods issues that we had last year. We had a recovery from our insurance company. We also had a pickup of about $390,000 from the manufacturer that caused the damage. So we picked up approximately $936,000 this quarter and almost $1.5 million in recovery year to date. Other expenses of note, interest has gone up because we did lose our deal with PNC Bank and had to take another financing route It's costing us a little more in interest this year, so there's about a $95,000 difference. Quarter-to-date is about $125,000 year-to-date of additional interest and amortization on deferred financing costs. Net income, $2.4 million quarter-to-date versus $624,000 last year, pickup of $1.8 million. And year-to-date is $2.201 versus a loss of $245,000 last year. That's a $2,446,000 in net income. Just one more item of note, we're experiencing very, very strong demand for karaoke. And at the end of the year, we ended up pretty heavy in inventory. We're probably about $2.5 million to $3 million in excess inventory. We're happy to report, and half of that was the carpool karaoke. We're happy to report that the demand for karaoke has been extraordinarily strong. And just to give you an example, at this point, This year versus last year in inventory, we have currently or at the end of September, we had approximately $8.2 million in inventory versus the inventory in the prior year of $15.1 million. So that's about a $7 million decrease in inventory. Not all of that is due to the sale, but a lot of it is the excess inventory going away and the excess demand that we had. So we should end up the year pretty light on inventory after everything is done. and we'll let the salesperson talk about what's going on in the market and what's driving some of this. And that's my report. Thanks.

Thank you, Lionel. Great numbers. I appreciate the report on that. So at this point, we're going to turn it over to Bernardo, who will give us some of the success stories that we've seen through the second quarter and talk a little bit about what we're seeing right now in the market as we enter our peak holiday season. So I'll turn it over to you, Bernardo.

Yeah, thanks, Dan. Yeah, I'll go over some of the numbers, you know, some of the numbers that I've covered throughout a few of the calls this year. So I'll focus a little bit more on sell-through now that we're getting some good sell-through numbers and we're well into the season. And I'll start out with Amazon, who, you know, for years we thought that they would be the one that would benefit the most from the closing from Toys R Us or some of the things that we were doing. And there was slow starting to pick up some of that. But this year, the sales have really taken off on Amazon. So I first want to focus on the Prime Day success that we had this year. We promoted the carpool karaoke on the Prime Day. Amazon gave us excellent location on their page. They also performed a QVC type video online. with interaction with the product and two people discussing it. And they had an online ticker for the product. And they bought into it about 16,000 pieces in for the Prime Day deal, which we capped it. And, you know, we thought that that would take almost a day to go through those numbers. It sold through in less than two weeks. In less than two hours. So a lot of people were excited about that. We got a lot of compliments from the Amazon upper management team as one of the more successful non-Amazon branded products online. And it did so well that they just bought into it and they're going to run the same promo now during Cyber Monday. So please be on the lookout for that. um you'll see the timeline has yet to be announced but we'll have another similar program on cyber monday um and they've already bought into the inventory for that so we're really excited so just just to let you know in a year-to-date uh sell-through already is 140 increase from last year so we are well on our way to hitting what that number was that we thought a few years back would be. And we're really excited that Amazon is getting behind our brand, not only with the carpool karaoke, but also the residual effects that it has on Sing Machine because then people click on the Sing Machine brand and all of our products are good. You know, just to give you an example, you know, we received – close to a million dollars in order this week from, uh, from Amazon and, and that was above and beyond forecast. So, I mean, we, we are struggling a little bit to fulfill some, some of those orders because of lack of inventory, um, uh, due to a lot of the demands, but you know, we're, we're, we are shipping everything that we have, um, available to them because they're just exceeding those numbers. Um, same thing, same thing we're experienced to walmart.com. As you guys know, Walmart.com and Walmart now are complete omni-channel. So our Walmart store team is the one that we deal with also on .com. And we rolled out the Black Friday this year a lot sooner. Walmart did about three or four different tiers of Black Friday instead of doing it all. On the weekend of Thanksgiving, they started putting the promos out beginning November week one. And we were part of the November week one program. And already we've seen some incredible numbers. Interesting of note, that has put our Walmart.com numbers 170% increase from last year, year to date. And also, we're seeing a lot of people buying the product and picking it up in store or shipping it from stores. So we no longer have to sort of carry the burden of doing drop ship at our warehouses. A lot of that stuff is going right out of the Walmart stores or people are picking it up in the stores because of the system that they have there. So that's been really positive for us. So we continue to see the success there on Walmart.com. During our conversations with them, they've admitted that they probably ordered 70,000 pieces less than they should have on the inline product. And that was just because at the beginning of the year, they thought they were going to be conservative, but the demand has continued. And, you know, one of the comments from the buying team there was they would not make that mistake next year. Obviously, they see the success continue to go with SIG machines so that They're going to focus on fixing that for next year. But the numbers are still good. Going right over to Sam's Club, we are seeing a continued success with all of our products there. Like I mentioned before, we were up to five products this year with Sam's Club. Last year we only did three. And even through our summer, our sales views on our summer program were about 93% this year. And our main item has continued to double in sales so far. So we'll be completely clean on the Sam's Club number on most of the items. They did buy into the high-end pedestal. That has been steady. They're not doing as well as Costco is, but also Costco only carries one product. They're carrying five. So that's to be understood. Costco is doing well with the pedestal. They're exceeding the number there, and they're at 199 retail, where last year the product was 169, and we have not seen a drop in sales at all. As a matter of fact, we've seen an increase in sales, even though the price point has been higher. So that bodes well because it's a true Wi-Fi product that we've talked about before, and they've already given self-commitments for 2021 as well because they're really satisfied with how's that going. Let me see. Dropship numbers are still up over 300%. So that's been going well. Our SMC direct-to-consumer business has been up. And that's mainly triggered by carpool karaoke. We've had some influencers on TikTok go in and do videos and promote the items right on our Singing Machine website, which is full margins for us. And that business is up over 500%, mostly triggered by carpool karaoke. Like Lionel mentioned before, the margins have been great. Um, they've been triggered by, by carpool karaoke, but also we haven't, we haven't had to close our business this year. You know, um, we're, we're, we're in such a good inventory, uh, position that, that we haven't had to close out business, you know, um, even our end of life product, we've been able to sell that, uh, pretty much full margin. So that, that contributed. So for the, so for the quarter you saw. an increase in margin, actually when you net out the Walmart annual event item, that net margin could be almost even up to about 32%, 33%. So that bodes well for us because, like I said, we haven't had to close out any particular items. Um, we're still doing really well in, in, in, in Australia. Um, and, um, and, and that business has grown internationally has been slow. As you guys know, Europe has been a shutdown. So that's the, you know, international, some of the European business has slowed down for us, but, but then, you know, thankfully the U S has, has picked up on that side. Um, and lastly, uh, uh, Lionel, you mentioned that we, we didn't do business with JCPenney this year. We did do business with JCPenney. The only difference was that it was a prepaid business where they had to pay upfront for the goods. So it was, it was a fraction of what they last year's business was, but, but we are doing, we still did manage to do some business with JCPenney. They just had to prepaid for the goods before it was shipped out. But, you know, with that being said, if I missed anything, I'm sure Gary will cover it and I'll hand it over back to Gary.

Great. All right, Bernardo. Thank you so much. Great, great report. Good numbers. I want to be mindful of time so we have a chance to answer questions if anybody has any questions for us. But I also just wanted to quickly touch on Black Friday this year. Obviously, in recent years, you have seen Singing Machine heavily promoted almost at every single major retailer on Black Friday. This year, obviously, is unusual circumstances, right, with the pandemic. So a lot of retailers have sort of backpedaled a little bit away from making Black Friday such a huge event. We did participate, obviously, with Walmart in the annual event. They started running that promotion early, so they've been running that now for two weeks, and the sell-through has been very, very strong, exceeding expectations. But with the other retailers, we've pulled back a little bit from doing traditional Black Friday promotions, just knowing that this year, most of the sales are likely going to come digitally. So, I just wanted to point that out in case anybody's looking at the Black Friday circulars and not seeing singing machine heavily promoted. That was the reason why. So with that being said, I want to make sure we have time for questions. So we'll turn it over to you guys.

Thank you. At this time, if you would like to ask a question, please press the star and 1 on your touchtone phone. You may remove yourself from the queue at any time by pressing the pound key. Once again, that is star and one to ask a question. We'll pause for a moment to allow questions to queue. And we will take our first question from Eric Nickerson with SMDM. Your line is now open.

Hi, guys. I'm not from SMDM, as you know. But good morning. Yeah, hey, I think Bernardo said a moment ago that... we, or one of you said a moment ago that we're shipping, we're pretty much selling everything that's, that's coming in from the factories. Uh, so I'm wondering, are you having to use any air freight to, uh, keep everybody supplied?

Yeah, no, we, we, um, you know, for the most part, our products don't do not make sense for air freight, right. Because of the cube size and, and, and, and, you know, we, we don't work with, with huge margins, obviously, but, um, Fortunately, we did have some inventory that we carried over from last year. that we were able to use for fulfillment. We did go a little aggressive on ordering this year. And we also have products coming in in November, week three, week four in December, which usually we don't do. And those are all due to demands that we were seeing early on that we had to go back and pull some triggers. So no on the earth rate, but... But we've tried our best to catch up as much as possible. In some cases, the demand has just far exceeded what we even expected.

Yeah, that's good. It kills your margins if you do air freight, I know. The other thing, I think you said that because of the pandemic, overseas sales have been a little slow. I presume you're talking about Europe and mostly England. Is that correct? Great Britain, is that right?

Yeah, that's correct. And also in Great Britain, we lost a major customer last year. I mean, this year called Smith's Toys, which drove a lot of the sales. You know, they decided to go directly with a factory that was, just offering prices that we just could not compete when it came to going to our distributor. And they decided to pass on the business for this year. So that caused that. But also, yeah, I mean, you know, a combination of the pandemic, a combination of Amazon flooding the market with those Chinese microphones, those things have contributed. And I think Our distributor there just sort of took the approach that if he couldn't make money on the business, then he just passed on the business.

Yeah, what I wanted to ask about that, if I recall right, our business here last spring picked up because of the pandemic because people were at home and looking for things to buy to entertain themselves. So over in Europe, it was more a situation of the demand just didn't occur anymore. that might have, if it hadn't had this extra competition come in.

Did I read that correctly? Yes, yes, because our big customer is our UK distributor, and his numbers were lower this year, and mostly it was because he ended up walking away from the Smith business that was just not going to be profitable for them. to do because they went directly to a factory.

Okay, just one more item. I was speaking with Brendan a while back about the mic, and if I remember right, he said that we do have an extra feature in there that makes the mic better that other mics don't have, and that why we get away with charging higher prices, and it's also kind of, you know, it's unique. If I have that information correct, I'm wondering, is that still the case? Do we still have the only mic that does this particular thing that nobody else does? And are we looking for that situation to change, or are the competitors going to come out with the same features so that we won't have that advantage anymore in the future?

Well, there's two things. Number one, we have a licensing deal with CBS for the carpool karaoke official branded mic. So a lot of consumers know the show, know James Coden, and they feel like when they buy this mic, it's the official show mic. So that's a competitive advantage that we have. The other thing is that the mic works with your car radio so that you can sing in the car. And that's been a feature that it's not proprietary, but that has been unique to this product. We have heard in Asia that there are competitors coming after that technology. So what we are going to do is for year number two, we're going to add some additional features. including voice, um, voice effects, some minor design, um, changes, but still we have, we have the exclusive deal for the carpool karaoke licensing brand.

Okay. Would that be correct to assume that none of this stuff is patentable? It's just something where you just kind of stay ahead of the, ahead of the game and try to stay ahead of the game. Is that it? Yes, correct. Okay. Yeah, well, great quarter, guys. I think that's all the questions I have.

Again, if you would like to ask a question, please press star and 1 on your touchstone phone. We will take our next question from Jonathan Alvarado. Your line is open.

Hi, nice quarter. Have there been any supply chain issues, or are you able to create all your new inventory?

No, there's definitely been supply chain issues. There's delays coming out of China. There's a lot of issues due to the pandemic. There's a lot of delays at the port. Sometimes we have goods that are scheduled to be picked up, let's say, today at 8 o'clock in the morning, and they can't get them out the port, so then we have to wait three days, which means we have to change orders for the following week But the one thing I would tell you is that retailers surprisingly have been amazing. They have worked with everyone this year to change orders without penalties. Walmart just announced that they're not going to issue any chargebacks from November week three all the way through Christmas because everyone is in the same boat. Everyone's having challenges with the port. You know, we recently had a vessel that got diverted to Tacoma that delayed goes by three weeks. So everybody's aware. You know, we've been sending out a memo about a month ago to all the retailers, and the response to us was that, hey, we're all in the same boat. So everybody's still scrambling. And, yeah, there has been some issues, but I'm happy to report that. Retailers have been extremely flexible with us and with all vendors, and they have worked on changing orders if there's delays.

The other thing, too, is I touched base with the warehouse late last week, both Gary and I did, and according to the director there, the port is catching up. I mean, they had some substantial issues a few weeks back, but they are definitely catching up. and our containers are coming in. So we might have lost a week or two in some cases, but certainly the stuff is coming. It appears to be at this point anyway, they're catching up and it's coming in based on what we had hoped.

Great. Is there any drop-off in carpool karaoke sales or are they steady?

No, they're steady. They're steady. Just last week, we sold 2,500 pieces at Amazon. where, you know, it used to be in the 50s and less than 100. So, yeah, no, they're steady. Everybody's seeing nicer numbers. We just bought in some additional inventory that we thought we were going to have all the way through February, and we already sold out again. So, I mean, it's a significant number. It's not a slight number. So, yeah, we're seeing the numbers are steady. And what we're hoping is for 2021 to move a lot of the online success and continue that and bring it back into brick and mortar because some of the brick and mortar placement was lost. So now most of it has been success, which is fine. But we're looking to take that online success in 2021 and bring it back to brick and mortar.

Are there any new products? in the works?

We have, yeah. We definitely have some new products in the works. We are trying to capitalize on the Wi-Fi product that was a success, and we're designing a line of that. Yeah, we're working on a few products. To TJ, yeah, we should have a nice assortment of products to be relaunched for summer or fall of 2021. Thanks.

And once again, if you would like to ask a question, please press the star and one on your touchtone phone. We'll take our next question from Zachary Greco. Your line is now open. Zachary, we cannot hear you. Please check the mute function on your phone. Your line is now open for your question.

Thank you. How are you, everyone? Great earnings. Pleasure to hear. My one question is going to be, how much do you think, you know, at-home, let's say COVID sales, you know, you know, say helped this quarter? Do you look at it as kind of not being affected? Do you think it helped you immensely or you know just going forward on a go-forward basis you know how do you look at that do you think it's you know definitely helping you a lot or is it kind of stagnant or it doesn't um that was my question yeah and and that's a good question you know we we have seen the demand increase uh since covet um you know we since since about march uh we started seeing

some really good numbers. Um, and, and those numbers were good for spring summer. Um, and now we're, now that we're getting into the holiday season, you know, we're seeing our, our, our regular holiday push, but there's, there's a couple that's also, um, uh, a different effect, uh, above and beyond, um, COVID, um, that there is that, that cycle that goes through every so, so, uh, that we go through every so often with, within the music department. So like, Musical instruments have a steady wave that go up and down, and every few years you start seeing that spike. And we are seeing that spike in musical instruments, and that usually means a residual effect into karaoke, which means that parents are promoting maybe not as much video games, but just learning instruments and things like that. So I believe it's a combination of both. But the pandemic has definitely helped out the demand here in the United States, yes.

Got it. Thank you.

And we will take our next question from Jason Hirschman. Your line is now open.

Hi. Great course, guys. And I'm sorry I missed the first few minutes of the call. So I apologize if you covered this already. But I was hoping you can give a little bit more detail on some of the maybe some relationships that you're hopefully building and some marketing that you're doing on TikTok since it is so effective. What are you really doing to sort of capitalize on some of these great promoters to really build out your brand and sustain Carpool Karaoke, Mike, and some other aspects of your business?

Yeah, that's a good question. You know, and Lionel has shown it on some of the numbers online. that marketing has gone down. I mean, we, we've, we've done a total shift, shift on, on, on our marketing expense. And, and it wasn't because any of, any of us are geniuses or anything. I mean, it was just a budgetary reason that we were trying to cut expenses. And out of that, you know, what was born was, you know, really the influencer on TikTok leading the charge of, on the, you know, on the Carpool Karaoke mania and things like that. So now we've, you know, we have a gentleman by Chris Pacheco who runs, you know, a lot of the marketing and product. Him and his team have reached out to a lot of the influencers on TikTok and they've been receptive and it's not expensive. I mean, we've also looked at a service called Refersion, which is You could hire recent marketing grads and obtain their services for as small as like $200, $250. And for that, they'll give us polls. They'll go on and make sure that the users are engaged in our pages. And, you know, we've seen our TikTok page grow substantially. We've seen the engagement on Instagram, on Facebook, and on TikTok increase. And it's been for a fraction of the cost in our marketing. So now that we've seen this model work, once we, you know, once our cash improves and if our sales improve, we could reinvest in that. I think we'll we'll reach out on a larger scale. Right now we have just some key influencers that we're working with to help us out, and it's worked out for us.

Bernardo, let me just, one follow-up. Are you seeing this as mostly, like in TikTok, these influencers, are they mostly U.S.-based, or are you also maybe reaching out to some in other markets, whether it's U.K. or wherever, to try and also build some kind of international influence I guess, present or influencer?

Yeah, you know, it's a great question. You know, right now, unfortunately, it's mostly U.S. You know, in Australia, we have worked with our Australian distributor there to do some influencers. They have a good presence on Instagram as well. But, you know, it hasn't been the same. But I think once we're seeing true and true here what's working in the U.S., you know, then we'll start reaching out to see if they have similar programs in the U.K. and in Copenhagen and in some of the other regions that we're doing really well. But our U.K. distributor, his marketing team also has been in the past very savvy with influencers and things like that. So unfortunately, we have seen most of the success here in the U.S., but I'm sure that we could use that same model internationally eventually.

Okay. Well, thank you very much. I appreciate the answer. Sure.

And we will take our final question from Eric Nickerson. Your line is open.

Yeah, I did think of one more thing. finance question. I remember you guys said you took out a PPP loan last spring. If I'm right about that, can you tell me how much was it and has it been forgiven and taken into income yet?

The answer to that is it's still on the books. It was $445,000. We spent it in the way that it was supposed to be spent and we expect it to be forgiven The banks have to submit our expenses and our documents as proof, but the government keeps on changing the rules in terms of how they want the banks to report and who they want to report it on. Right now, companies like ours who took less than a million dollars, it should be a pretty simple thing to submit the things and just get forgiveness. But there's been a delay. I don't know why. In fact, I asked the question this morning because it's up to the bank. They have to submit the stuff and they have everything. And they said patience. You know, the rules keep changing on how we're supposed to do it. But, yeah, the expectation is that it will get forgiven. It's not been taken off the books yet, so I'm expecting that to be another pickup before the end of this fiscal year. But, you know, it is the government. It's a government-run program, so... Sometimes things take patience, I guess.

I understand they're looking for fraud around the country, so that may be what's slowing it down. So anyway, it's just cash on the balance sheet, but it hasn't had any income effect yet. That would be next year then sometime, if that gets forgiven then. Am I right?

Well, since our fiscal year is 331... I mean, I'm hopeful that by 331 this thing is taken care of, I mean, so that we could report it in this fiscal year, like to get everything clean and cleaned up on the balance sheet before the end of the fiscal year.

So that would be fully taxable income then, right, when it's forgiven?

Yeah, the answer to that is yes.

Okay. Yeah, that's all I have. Again, a great quarter, guys. Thanks very much.

And we have no further questions at this time. I will turn the program back over to our presenters for any additional or closing remarks.

Okay. Well, again, great questions, everybody. I want to thank you all for taking the time this afternoon to talk with us about our second quarter earnings. We may have to actually move all these calls to the afternoon. It seems everybody's awake this quarter, so that's great. And we'll look forward to talking with everybody in February when we come out with our third quarter earnings. All right, take care. Thank you.