Shenandoah Telecommunications Co

21 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Kirk Andrews, Director of Financial Planning and Analyst for Shentel.

Good morning, and thank you for joining us. The purpose of today's call is to review Shentel's results for the first quarter of 2021. Our results were announced in a press release distributed last night, and the presentation we'll be reviewing is included on the investor page at our website, www.chentel.com. Please note that an audio replay of this call will be made available later today. The details are set forth in the press release announcing this call. With us on the call today are Chris French, President and Chief Executive Officer, Dave Heimbach, Executive Vice President and Chief Operating Officer, and Jim Volk, Senior Vice President of Finance and CFO. After our prepared remarks, we will conduct a question and answer session. As always, let me refer you to slide two of the presentation, which contains our safe harbor disclaimer, and remind you that this conference call may include forward-looking statements subject to certain risks and uncertainties. These may cause our actual results to differ materially from the statements. Therefore, we have provided a detailed discussion of various risk factors in our SEC filings, which you are encouraged to review. Your caution is not to place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements. And with that, I'll now turn the call over to Chris. Go ahead, Chris.

Thanks, Kirk. We appreciate everyone joining us this morning and hope everyone is staying healthy and safe. I'm pleased to report that we started 2021 with a strong quarter of growth in both our operational and financial results. I'd like to start with the leading indicators for our financial growth. As reflected on slide four, we added approximately 13,000 new passings in the first quarter, with total passings now just under 260,000. Our diversified last mile broadband networks grew an impressive 48,000 passings year over year. Our Glow Fiber branded fiber to the home business added 5,800 new passings including the launch of service in the Virginia markets of Salem during the first quarter and Roanoke and Lynchburg in April. We also added approximately 5,800 passings with our beam service during the quarter, with service now available in five counties in Virginia. Lastly, the completion of the acquisition of Canaan Cable on December 31st added over 1,000 homes passed to our incumbent cable network. Turning to slide five, broadband data net additions increased by over 4,200, or almost 62% from the first quarter 2020. With the tailwinds from COVID slowing, our incumbent cable net additions of 2,500 have returned to pre-COVID growth levels. However, Glowfiber and Beam now make up more than 40% of the broadband data net additions, keeping our organic penetration growth rates among the industry leaders. We believe that we have a superior value proposition relative to our competitors in all markets we serve, as reflected by the outstanding broadband data churn results across all our services. Construction pace of our edge-out network expansion and our hyper-local marketing and customer service are critical components for driving sustainable double-digit revenue growth that Jim and Dave will provide more details on later in the call. Moving to slide six, I'd like to transition now to provide a brief update on the pending sale of our wireless assets and operations. The Hart-Scott-Rodino waiting period expired on April 26th without the Department of Justice taking action, thus allowing the transaction to be consummated pending regulatory approvals from the Federal Communications Commission and the Public Service Commission of West Virginia, which we expect to secure in the next 60 to 90 days. The asset purchase agreement with T-Mobile is expected to be executed during the same timeframe, and we expect to close on the sale in early third quarter. Related to the pending wireless sale, on April 5th, we announced an organizational restructuring plan that will reduce our workforce by approximately 340 employees, or 30% of our total base. About 90% of the reductions are employees who support wireless operations and who will not automatically transfer to T-Mobile as part of the transaction. We're coordinating with T-Mobile to assist in transitioning to them as many of the affected employees as possible following the closing of the sale. We're also proactively providing career transition services and severance pay and benefits to those not hired by T-Mobile to assist with the disruption uncertainty for the affected employees and their families. The first wave of employees will exit in May, and we have recognized restructuring costs in the first quarter results for continuing and discontinued operations of approximately 600,000 and 200,000, respectively. Most of the employees impacted by the workforce reduction will exit following the closing of the sale and any required transition services. We expect to realize annualized run rate operating expense savings for continuing operations of approximately 4 million. With that, I'll now turn the call over to Jim to review the details of our financial results.

Thank you, Chris, and good morning, everyone. Please refer to slide eight to discuss our financial results for the first quarter. Broadband revenue grew 10.8 percent to 55.2 million, driven by an increase of 5.9 million, or 16 percent, in residential and SMB revenue due primarily from a 24.1 percent increase in broadband data RGUs and an increase in video ARPU of $6.28. RLEC and other revenue declined $700,000, or 15.2% to $3.7 million, primarily from fewer DSL subscribers and lower government support and intercompany phone service. Broadband-adjusted OIPADOP for the first quarter grew $1.7 million, or 8.3%, to $22.4 million from the same period a year ago. The revenue increase of $5.4 million was partially offset by $2.1 million increase in compensation expense, $900,000 in higher software and professional fees, and $500,000 in higher programming and retransmission fees. The compensation expense increase was due primarily from increased staffing to support the growth of Glow Fiber and Beam and lower capitalized labor. We passed along the increases in programming and retrans fees to our customers in January. On slide nine, Tower segment revenue grew 25.1% to $4.7 million, and adjusted OIPDA grew 40.5% to $3.2 million for the first quarter of 2021 due to 8.6% growth in tenants and 14.7% increase in the average lease rate due to amendments to the intercompany leases. Moving to slide 10. Consolidated revenues grew 12.3% to $59.7 million in the first quarter of 2021. Consolidated adjusted weight for the quarter grew 19.1% to $17.1 million. The increases were primarily due to strong broadband and tower revenue growth. Turning now to the full year 2021 outlook on slide 11, we are reaffirming our 2021 outlook. we expect consolidated revenues to be $241 to $248 million, and adjusted OIMA data range between $69 and $76 million. Please note, we expect the corporate expense savings from the restructuring that Chris discussed earlier to be back-weighted to the second half of the year. Moving to slide 12, we ended the first quarter with $689 million in debt with an effective interest rate of 2.2%, and $304 million in total liquidity. Cash-to-cash equivalents grew sequentially by $33.8 million to $229 million due to strong free cash flow of $74 million from our wireless segment that we report as discontinued operations. Continuing operations had $30 million of negative free cash flow in the first quarter, driven primarily by $25 million of CapEx and negative adjusted OIVDA for globe fiber and beam, and 13 million in working capital changes. With the pending wireless sale now expected to close in early third quarter, we are providing guidance for 2021 cash sources and uses on slide 13. Most of the cash flows have been previously disclosed, but there is one cash flow component that I'd like to highlight. We expect 110 to 120 million of pre-cash flow from discontinued operations as a source of cash. This is in addition to the previously disclosed wireless sale proceeds. This assumes we continue to own the wireless business through the second quarter and incur about $27 million in transaction and restructuring expenses at or around closing. This favorable change, along with minor updates to prior estimates, will likely result in cash at year-end ranging from $62 million to $100 million before the annual dividend normal changes in working capital, and any draws on a new credit facility. We have been working with our lenders in establishing a new credit facility to replace the current facility that will be paid in full and terminated at the closing of the wireless sale. We anticipate a $400 million facility consisting of $300 million in delayed draw term loans and $100 million in a revolving line of credit. We expect the new facility to close on the same day as the wireless sale, but do not expect to draw on the new facility until late 2021 or early 2022. And now I'll turn the call over to Dave.

Thanks, Jim, and good morning, everyone. I'll begin on slide 15, where we've outlined our three primary product offerings to serve a variety of market dynamics. In summary, our Shentel incoming cable network service both small towns and rural areas with broadband data speeds of up to one gig per second, home phone and cable TV service across roughly 210,000 homes and businesses in Virginia, West Virginia, and Maryland. Our glow fiber service targets higher density urban markets, and our new beam internet fixed wireless service targets lower density rural areas where it isn't cost effective to build cable or fiber. As Chris said at the beginning of the call, we now reach approximately 260,000 homes and businesses passed, which is an increase of nearly 48,000 from the first quarter last year. The common denominator in all of our offerings is to provide the leading high-speed Internet service available in each market we serve, combined with superior local customer service. With projected glow and beam terminal penetration rates in the low to mid-30% range and incumbent cable penetration in the mid-50% range, We expect our broadband business to have industry-leading sustainable growth as we build out our network over the next several years. Now turning to slide 16, we've depicted our rapidly evolving and expanding fiber, cable, and fixed wireless broadband footprint. This map helps illustrate the integrated nature of our broadband networks and how operating leverage will increase over time given the overlap and the adjacency of our operations and our growing footprint. Combined, our multi-pronged broadband growth strategy will more than triple HOME's path to over $730,000 in the next five years. We'll update you today on the status of our Glow Fiber and Beam Internet expansion progress through the first quarter and each quarter as we continue to progress in our market development and construction efforts across our region. Now let's focus on our operating results in the first quarter, starting on slide 17 with our incumbent cable business. Total RGUs grew an impressive 8.1% year-over-year in the first quarter to approximately 184,700 compared to roughly 170,900 in the same period in the prior year. We added roughly 3,000 net broadband data RGUs in the quarter and ended the quarter with over 101,500 broadband data RGUs, which is an exceptional 17.8% increase to the prior year period. We're also very pleased to report that our incumbent cable broadband data penetration increased from 41.7% in the first quarter last year to 48.3% this quarter on the continued strength of our new broadband data speeds, new rate card and service improvements, and in spite of waning pandemic tailwinds this quarter, which drove record sales last year. We're particularly proud of our ongoing improvements to customer lifetime value through reductions in our incumbent cable broadband data churn. Churn in the first quarter continued to improve, declining 19 basis points versus the prior year quarter to a record low of 1.29%, representing the 16th consecutive quarter of year-over-year churn improvement. Broadband data average revenue per user in the quarter increased slightly versus the prior year period to $78.12, as our new powerhouse-branded rate card leveraging an improved value proposition based on our DOCSIS 3.1 speed upgrades now comprises three-fourths of the base. Contributing to our healthy broadband data ARPU and reductions to churn are changes that we made to data allowances in addition to the introduction of an unlimited data plan in October 2018. Before we launched the new rate card and increased allowances, between 10% and 20% of our customers were receiving a surprise bill any given month with average monthly overage charges of roughly $35. But at the end of the first quarter of 2021, only 2% of customers received overage charges, and over 12,000 broadband data subscribers in our incumbent cable network were on a $30 per month unlimited plan, comprising 17% of the total broadband database. In addition, 79% of broadband data subscribers are now on plans of 25 megabits per second or higher. with an average subscribed download speed of 82 megabits per second, which is well beyond the reach of our DSL competitors. Now turning to slide 18 and our rapidly expanding Glow Fiber business. Glow had approximately 7,700 total RGU's at the end of the first quarter with a 16% aggregate broadband data penetration rate across all markets comprised of just over 5,500 new Glow Fiber customer relationships. The first quarter last year was our first full quarter of selling Glow Fiber services. We're very proud to have added over 7,000 net Glow Fiber RGU's in the last year and continue to be very bullish on our residential and small business fiber edge out investment thesis. We continue to see extraordinarily low churn in our Glow Fiber broadband data product with only 86 basis points of churn in the quarter. Broadband data ARPU was down year-over-year to $74.24 in the quarter as a result of a change in accounting for deferred revenue from the account level to the product level, but importantly, not due to discounting. In fact, we continue to see a higher percentage of new subscribers electing our higher-priced $80 per month gigabit speed tier, which is our standard rate card offer. We think this clearly demonstrates the value Glow subscribers see in an all fiber based broadband data service offered by a local company with superior local customer service. In the first quarter 2021, 48% of new subs adopted that one gig speed tier comprising 43% of the overall Glow fiber customer base. Our streaming TV and voice services continue to perform very well with 25 and 16% attachment rates in the quarter respectively. At the end of the first quarter 2021, 68% of Glowfiber customers were single-play broadband data only, 25% of subs were in a double-play, and 7% were in a triple-play. Slide 19 depicts the status of our active and approved Glowfiber markets as of the end of the first quarter. Our first Glowfiber market in Harrisonburg, Virginia reached nearly 21% aggregate broadband data penetration in the quarter. with some of our most mature neighborhoods in that community already in excess of 30% broadband data penetration. As Chris pointed out at the start of the call, construction efforts for GLOW are progressing very well and exceeded our expectations again in the first quarter, with roughly 5,800 new residential and small business passings constructed and released to sales. This was particularly impressive given the ongoing pandemic headwinds and the tough weather conditions we experienced during the winter months in our mid-Atlantic region here of the country. Glow fiber now has total passings of 34,400 and the pace of our construction will be accelerating as we head into the summer months. We expect to have approximately 74,000 total glow fiber passings by the end of the year. We launched the sale in Virginia market in January in Roanoke and Lynchburg this month and we're very excited to be able to bring more choice to consumers across the state of Virginia with ultra-fast, symmetrical, low-latency, high-speed Internet service. In addition, we now have franchise approval in markets in Maryland, the panhandle of West Virginia, and central Pennsylvania. Total glow target passings have increased across all franchise-approved markets to over 170,000, as we continue to make inroads with new municipalities and surrounding counties. We're now past the halfway mark in our goal of constructing 300,000 glow fiber passings over the next several years with a healthy pipeline of new franchises across our region as we start the second quarter. On slide 20, we've highlighted our early stage results in our emerging fixed wireless broadband data service called Beam Internet. In providing this new broadband service, we're leveraging our expertise in designing, building, and operating wireless networks over the last 25 years as a Sprint affiliate. Unlike fixed wireless offerings you may read or hear about from the big three mobile operators, Beam Internet leverages professionally installed high-gain outdoor mounted equipment on the customer's home, which ensures optimal network performance and capacity. The foundation of the Beam network is a 5G ready LTE-based core that leverages secure Tier 1 European equipment vendors and licensed mid-band spectrum in both the 2.5 and 3.5 GHz bands that we acquired over the last couple of years expressly for this purpose. Beam is offered from commercial-grade towers or small cells that are predominantly fiber-fed, ensuring high reliability and low latency. Customers receive a robust indoor Wi-Fi signal, leveraging the same Eero mesh Wi-Fi technology that we use in our glow fiber markets, and for all new customers in our incumbent cable networks, too. Lastly, Beam customers will get the same great customer service that all Shentel customers have come to expect from our local call center agents and technicians. Beam subscribers totaled nearly 500 at the end of the quarter, with an impressive broadband data ARPU of $73.14. We believed that folks would pay a premium for a quality, reliable, unlimited high-speed Internet connection in areas where cable and fiber have not, and likely will not, be constructed, given the low-density nature of these areas in our footprint. But we've been pleasantly surprised to see that nearly two-thirds of customers have adopted our $80 per month, 50 megabit per second speed tier. which has exceeded our expectations and a strong validation of our rural broadband investment thesis. Penetration in this early stage investment reached 3.1% in the quarter and churn came in just under 1%, which is very encouraging to see given the fixed wireless delivery model has a number of nuances to it as compared to wireline based technology like cable and fiber. We're now servicing just over 15,000 target households and plan to construct nearly 70 new beam sites in 2021. which we expect to increase target households past to approximately 45,000 by the end of the year. Turning to slide 21, total tower tenants increased 8.6% year-over-year to 443. This includes 236 intercompany tenants, primarily for our wireless operations. We had a backlog of 144 open orders related to upgrades of existing tenants or the addition of new tenants at the end of the first quarter. Finally, slide 22 provides an update to our year-to-date capital spending results and guidance for our continuing operations for 2021. We're no longer providing wireless guidance as a result of the pending sale and discontinued operations presentation. Capital expenditures were $39 million through the first quarter compared to $23 million in the first quarter of 2020. The obvious driver of the year-over-year increase relates to the accelerating investments in our glow fiber and beam internet fixed wireless broadband initiatives. For 2021, our guidance for the full year is $157 to $168 million as we continue to invest aggressively in the expansion of our fiber cable and fixed wireless broadband networks. Of the $55 to $60 million of capital spent in our legacy broadband operations, Roughly $24 million is success-based in support of the continued growth in our commercial and wholesale fiber business and the increase in broadband data penetration we expect to achieve in our incumbent cable markets. Of the $100 to $105 million in glow fiber and beam-related capital spent in 2021, approximately $74 million is related to design and construction of new fiber and fixed wireless target passings, and $13 million is related to connecting new fiber and fixed wireless subscribers. Thank you very much, and operator, we're now ready for questions.

Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the panel key. Please stand by while we compile the Q&A roster. Our first question will come from the line of Rick Prentice from Raymond James. You may begin.

Can you guys hear me okay?

We can now.

Okay, good. I won't say can you hear me now. A little wireless humor. Down the road from you guys in D.C., lots going on. I want to know if you can talk a little bit about how you think you might be able to benefit or participate in the EBB, the Emergency Broadband Benefit, but also how you see things shaking out On the infrastructure bill, obviously the cake's not all the way baked, but how do you think it might affect you guys, both the EBB infrastructure bill and whatever else you're seeing in the D.C. area?

Yeah, thanks, Rick. Good morning. Early morning for you. You know, on the EBBP front, that's tough to say, isn't it? We applied on an expedited basis and are approved to provide that in our footprint, and It's hard to say, Rick, but we think we're going to see maybe roughly 4,000 gross activation lift this year from participating in that program, assuming that it stays funded through the fall. And so it's a nice program that we look forward to participating in. We're ready. We've just obviously received word yesterday that I think May 12th is the start of the program. So we're looking forward to jumping in there. As it relates to the infrastructure bill, we probably don't have enough time on this call to kick around all the twists and turns that that may end up taking as it makes its way through Congress. But just as a general statement, we see more opportunity than threat associated with increased spending in the sector. And so we think we're uniquely positioned to take advantage of that. A, given our relationships in D.C., given our near adjacency here in that regard, and B, just given the nature of the relationships that we have in surrounding municipalities and counties and with co-ops and so on and so forth. So we think kind of across the spectrum we're pretty uniquely positioned, particularly given our financial strength and our strong legacy in the region.

Okay. And as you think, one of the questions we get a lot is a lot of press about low-Earth orbit satellites, LEOs as they're called, and people wondering will SpaceX, Starlink come in and disrupt rural markets like what you guys operate in. So can you share with us a little bit about what you see in the satellite competitive landscape and maybe a little bit more thought about what kind of population density areas you're serving versus where you see satellite having a success story?

Yeah, in terms of the things that keep us awake at night here, I don't think Leo's is one of them. I know that that's grabbing a lot of headlines, especially more recently. But our Beam Internet fixed wireless service, we think, is really the only product that we're offering where the densities would be consistent with those that you would expect a satellite-based offering to target. But we think that with a LTE standards-based 5G-ready network that today is capable of delivering 100 meg, but down the road is likely going to be capable of delivering 300 meg in the not-too-distant future with low latency and fiber-based backhaul that's terrestrial-based. We still think we're going to have a superior product offering there. The other thing is we're just a little bit dubious about the economic model, the underlying business model, and the cost of customer equipment. And I think we both know that there's a lot of maturing that needs to take place for that business to achieve any kind of scale where it has anything close to subscriber-level economics like we see.

Okay. And the last one for me, you guys did do a, acquisition of the cable space a few months back. How is the appetite out there, and any thought with capital gains tax on the agenda in Washington that there might shake out some people interested in selling?

Yeah, on the M&A front, Rick, we continue to be an opportunistic acquirer, and we have been and continue to be in dialogue with with a number of operators in and around our footprint. We have competed in a couple of auctions unsuccessfully. You know, the market is very frothy, and we like to be disciplined in terms of how we think about M&A as one of the tools in our toolkit. So... I would characterize us as an opportunistic acquirer of assets with all the consolidation that has occurred and continues to occur in the industry. It's probably why we're more predominantly focused on the organic growth strategy because we think the returns are exceptional. And candidly, we think generally based on where we've seen transactions progress, But with the last couple of years, it seemed to be only accelerating in this regard. We think we can create our own luck at much lower costs and much higher level of accretion to our shareholders by building on our own than buying somebody else's problems.

Great. Makes sense. And good luck closing the deal with T-Mobile. I think, last one for me then, usually T-Mobile likes to close transactions on the first day of a month, the first or second day. month of a quarter. So should we think maybe hopefully July 1 is higher probability than August 1, or how are you kind of handicapping it?

Jim, you want to field that one? Yeah, Rick, that is accurate.

T-Mobile has expressed the same to us, and we're comfortable with that. So, yeah, I would say we need to get – I think the long pole in the tent is the FCC – approval here, but I think it's likely that that will occur in the next 60 to 90 days, and if it gets done before the end of June, we plan to close July 1. I would say the outer date would likely be August 1.

Okay, makes sense, and you've got to love Charlie Ergen calling T-Mobile the Grinch, so I know you guys had quite a process to get that one over the finish line, so congrats on being almost there.

Thanks, Rick.

And once again, that's star one for questions, star one. Our next question will come from Hamed Khorasan from BWS Financial. You may begin.

Good morning. So the first question I had was, are you seeing any changes in your subscriber habits now that COVID restrictions are loosening?

Hey, good morning, Hamed. You know, not really, not yet. In the data that we look at, we continue to see a steady increase in consumption. I think, you know, last month we clocked in an average of over, you know, 400 gigs per sub consumed on our networks, and it's even a little bit higher metric on the Glow Fiber networks than that. And, you know, we're going to obviously pay close attention to that as things continue to open up here. But no, I can't say that we've seen any material change in behavior.

Yeah, I'll add one thing to that. The one thing we haven't seen change is customers switching or switching off of the higher bandwidth plans that they adopted during COVID. As you can see in our record low incumbent cable churn of below 1.3%. So we think that's here to stay.

Okay. And then as you're expanding Glow Fiber and Beam, what are you learning along the way that you're incorporating into the new markets and the homes that you're passing, either from a marketing standpoint or just the customer outreach perspective?

Yeah, they're two different animals, but what we're seeing is that there's a convergence occurring as we engage at the county level where we're primarily focused with our beam fixed wireless offering. So as we move through this cycle and we think about the things three prongs of our resi and SMB broadband strategy, right? We have our hybrid-fibered coax incumbent cable networks that we continue to extend and do line extensions on. And we've got spectrum, I'm sure you've noted on the map, we've got spectrum basically surrounding all of those areas that we can do further edge out, you know, with fixed wireless to extend our franchise into areas that maybe the cable plant doesn't cover. And I think the same is really true with glow fiber, Hamed, in the sense that in the urban and suburban areas where the density is a little higher and it makes good economic sense, we're going to continue to stay focused on constructing fiber but edge out with fixed wireless. And so we're kind of pursuing a strategy at both ends and meeting in the middle, if you will. And what I mean by that is We're deploying Beam right now in pretty low-density rural areas, but what we're finding is those folks have a desire for fiber too, right? Everybody has a desire for fiber. So between an unsubsidized fiber build approach and maybe a subsidized fiber build approach, kind of back to Rick's question, in addition to the Beam fixed wireless strategy, we really feel like we've got all the bases covered here. So In terms of what we've learned in any given market, I'd say that the experience has been pretty homogeneous across our different glow fiber markets thus far in terms of any kind of – we haven't seen any kind of unique competitive response or any kind of unique customer profile or anything in that regard. I think generally speaking, everybody's very, very happy on the glow fiber side to have a choice versus cable. And, you know, there's a ton of demand, and we're happy to be able to bring, you know, consumer's choice there. And thus far, you know, we haven't had to do any discounting to win customers. So we're not leading with price. We're leading with value. And then on the Beam side, folks are just thrilled to have any viable broadband connection whatsoever. A lot of folks moving from low-speed DSL or from satellite, And it's really life-changing. If you look at some of the social media posts for Beam subs, it's really heartwarming stuff because, you know, folks finally can work or study from home when, you know, previously they haven't been able to do that effectively.

Okay. And my last question was, given the increase in free cash flow from the wireless business, any intention to accelerate your CapEx and that Homes Past plan?

The acceleration of CapEx is really more of an operational governor than it is a free cash flow governor, Hamed. So we're pushing the team very hard, and they're responding very, very, very well. As I mentioned in my scripted comments, we're going to be accelerating the pace of construction as we move through the year here, and you can expect that that will increase yet again as we move into next year. But it does take a while to get this locomotive moving down the tracks. And once it is, then it's going to take on a momentum of its own. But we're still at a place in our development here where we want to be reasonable with our expectations of what we can put on the team to go get done. Last year, roughly 25,000 passings constructed. This year, it'll be a little less than twice that, but almost twice that. And next year, we would expect to probably construct about 75,000 or so. So that's more of an operational constraint than a financial constraint. And on the beam side, But it's really the constraint there is on the site acquisition front. It takes a while to do the RF design and engineering work and then find or construct the towers or small cells, and that's really the governor there. So, Jim, I don't know if there's anything you want to add to that, but in summary, it's not a financial constraint. It's more operational in terms of how fast we can go.

Yeah, I agree. And on that, the change in free cash flow is really a result of just owning the wireless business longer. Each month we own it, it's very profitable and it's generating a lot of cash. So the small delays and the closing have generally been a net positive from a cash flow perspective.

Okay, great. Thank you.

Once again, that's star one for questions. One moment for questions. And I'm not showing any further questions in the queue.

Well, I'd like to thank everyone for joining the call this morning, and we look forward to updating you in July on our continued progress here at Chantel with Glow and Beam. Thanks, everyone, and have a good day.

This concludes today's conference call. Thank you for participating. You may now leave.