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spk11: Good day and thank you for standing by. Welcome to the Q3 2022 Steve Madden LTD Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Danielle McCoy. Please go ahead.
spk13: Thanks, Bella, and good morning, everyone. Thank you for joining our third quarter 2022 earnings call and webcast. Before we begin, I'd like to remind you that our remarks that follow, including answers to your questions, contain statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause actual results to materially differ from those expressed or implied by such forward-looking statements. These risks include, among others, matters that we have described in our press release issued earlier today and filings we make with the SDC. We disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all. The financial results discussed on today's call are on an adjusted basis unless otherwise noted. A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release. Joining me today on the call is Ed Rosenfeld, Chairman and Chief Executive Officer, and Zine Mouzouzi, Chief Financial Officer. With that, I'll turn the call over to Ed.
spk07: Thanks, Danielle. Good morning, everyone, and thank you for joining us to review Steve Madden's third quarter 2022 results. We delivered solid results in the third quarter despite the challenging environment, with revenue increasing 5% and earnings in line with expectations. While macro pressures increased during the quarter, consumer demand for our brands and our products remains healthy, and our team remains steadfast in its focus on executing our strategy for long-term value creation. First and foremost, our top priority, as always, is creating trend right product assortments and getting them to market ahead of the competition. Historically, our consistent success in this regard has been driven by our proven formula, which combines our talented design teams led by Steve with our test and react strategy and industry leading speed to market capabilities. Over the last year and a half, our product teams have done an outstanding job of developing on trend merchandise assortments that have resonated with consumers. But they've had to do this while working much further in advance, as supply chain disruption has extended lead times and limited our ability to test and react in season. Now, we are seeing significant improvement in transit times, positioning us to get back to what we do best in 2023. This restores a critical competitive advantage for us, particularly in an uncertain environment where our wholesale customers will be looking to place fewer orders up front and chase more in season. We also continue to support our brands and products with increased investment in marketing and consumer engagement. An important part of our strategy is connecting our brands to culture through associations with celebrities and influencers that are relevant to our core consumers. Last month, for example, we launched a global brand campaign called Maddenwood, which featured Bella Porch, a singer and social media creator with over 92 million followers on TikTok, Lotto, a rapper and winner of the Best New Artist Award at the 2022 BET Awards, and Chloe Cherry, an actress from the cast of hit TV show Euphoria. By combining outstanding product with effective marketing, we are creating deeper connections with our consumers, which in turn is enabling our success with our four key business drivers, the first of which is driving our direct-to-consumer business, led by digital technology. while DTC revenue in the third quarter declined modestly compared to the prior year. If we compare to the third quarter of 2019, DTC revenue increased 56%, including 178% growth in e-commerce, demonstrating the exceptional progress we've made in this business since the pre-COVID period. Our second key business driver is expanding our business outside of footwear, where we are focused on our largest non-footwear category of handbags, as well as our emerging apparel business. In handbags, our Steve Madden business, which has more than doubled over the last five years, continued its strong momentum in the third quarter with a 19% revenue gain compared to the prior year. In apparel, revenue grew 52% as we successfully transitioned from the BB Dakota Steve Madden co-branded label to the Steve Madden brand for the fall season. Our third key driver is expanding our international business, International has been the fastest growing part of our business over the last few years, and we believe it represents our largest long-term growth opportunity going forward. Our outstanding momentum in international markets continued in the third quarter, as international revenue grew more than 50% from the prior year period for the fourth consecutive quarter. Finally, our fourth key driver is strengthening the U.S. wholesale footwear business that remains the core of our business. In the third quarter, U.S. wholesale footwear revenue increased 3% over last year. Revenue in our branded business grew more than 20%, led by strong gains in Steve Madden and Dolce Vita. This was partially offset by a significant decline in private label. Looking ahead, we remain confident in our market-leading positioning and long-term prospects in this channel. But in the near term, many of our wholesale customers have pulled back on orders as they prioritize inventory control. and we have adjusted our overall fiscal 2022 outlook accordingly, which Zine will go into in further detail in a little bit. As we execute all these initiatives, we also embrace the opportunity and the responsibility we have to create positive change for our people, planet, and communities, and as such, seek to embed corporate social responsibility and sustainability in everything we do. In the third quarter, we published our 2021 sustainability report, which outlines our Let's Get Real sustainability strategy and our company's approach to critical issues including climate change, diversity and inclusion, and post-consumer waste management. You can find the report on the sustainability section of stevemadden.com, and I encourage you all to check it out. Overall, we are confident in our strategy and pleased with the progress we are making on our key priorities despite the increasingly challenging environment. While we expect a macroeconomic backdrop to remain unpredictable in the coming quarters, we believe we are well positioned due to our strong brands, agile business model, and proven ability to navigate difficult market conditions. Looking now further, we are confident that our unique competitive advantages will enable us to drive sustainable growth and value creation over the long term. With that, I'll turn it over to Zine to review our third quarter financial results in more detail and provide our updated outlook for the year.
spk01: Thanks, Ed, and good morning, everyone. Our consolidated revenue in the third quarter was $556.6 million, a 5.3 percent increase compared to 2021. Our wholesale revenue was $434.6 million, up 8.1 percent compared to the prior year. Wholesale footwear revenue was $330.8 million, an 8.7 percent increase from 2021, driven by strong growth in the branded business in both domestic and international markets, led by our largest brands, Steve Madden and Dolce Vita. This was partially offset by a decline in private label as our mass merchant customers have pulled back on orders as they seek to reduce overall inventory levels. Wholesale accessories and apparel revenue was $103.9 million, up 6.2% to last year, driven by strong gains in Steve Madden handbags and apparel. As in wholesale footwear, the branded business saw strong double-digit percentage growth in both domestic and international markets, while the private label business declined compared to the prior year. In our direct-to-consumer segment, revenue was 118.5 million, a 3.7% decline compared to 2021, driven by a decline in e-commerce. brick-and-mortar revenue was approximately flat to the prior year. We ended the quarter with 216 brick-and-mortar retail stores, including 67 outlets, as well as six e-commerce websites and 20 company-operated concessions in international markets. Turn into our licensing and first cost segments. Our licensing royalty income was $3.5 million in the quarter compared to $2.7 million last year. We are winding down our first-cost business as we transition the private label customer from a buy-in agent model to a wholesale model, and as such, third quarter first-cost revenue was de minimis compared to $1 million a year ago. Consolidated gross margin was 41.2% in the quarter compared to 41.6% in the prior year. Wholesale gross margin was 35.3%, a 170 basis point increase compared to last year, driven by a mixed shift to our higher margin branded business. Direct to consumer growth margin was 61.2% versus 65.9% in the prior year, driven by an increase in promotional activity compared to last year's exceptionally low level of promotion. Operating expenses in the quarter were $150.5 million, or 27% of revenue compared to 131.6 million or 24.9% of revenue last year. The increase was driven primarily by higher warehouse and payroll expenses. Operating income for the quarter totaled 79 million or 14.2% of revenue compared to 88.4 million or 16.7% of revenue in 2021. Our effective tax rate for the quarter was 22.9% compared to 24.4% in 2021. Finally, net income attributable to Steve Madden Limited for the quarter was $61.5 million or $0.79 per diluted share compared to $66.6 million or $0.82 per diluted share in 2021. Moving to the balance sheet, our financial foundation remains very strong. As of September 30, 2022, We had 148.2 million of cash, cash equivalents, and short-term investment, and no debt. With supply chain destruction easing and transit times declining, we were able to achieve a meaningful reduction in inventory compared to the end of the previous quarter. Q3 inventory totaled 244.3 million, or 62.2 million, or 22.3% decrease from the end of Q2. Compared to the third quarter of 2021, inventory was up 21.4%. We expect to continue to see improvement going forward and plan to end the year with inventory below the prior year level. Our capex in the quarter was $4.9 million. During the quarter, we repurchased $35.1 million of the company's common stock, which includes shares acquired through the Net Settlement of Employee Stock Awards. bringing the year-to-date total repurchases to 112.1 million. There's approximately 117 million remaining on our current share repurchase authorization. The company's board of directors approved a quarterly cash dividend of 21 cents per share. The dividend will be payable on December 30th, 2022 to stockholders of record as of the close of business on December 16th, 2022. Turning to our outlook, We are updating our full-year guidance primarily to reflect more conservative ordering from wholesale customers for the fourth quarter as they prioritize inventory control. We now expect 2022 revenue to increase 12.5% to 13.5% compared to 2021 and diluted EPS to be in the range of $2.77 to $2.82. Now I would like to turn the call over to the operator for questions. Bella?
spk11: As a reminder, to ask a question, you will request R11 on your telephone. Please stand by while we compile the Q&A roster. Our first question comes from the line of Aubrey Tienalo with BNB Power Advice. Your line is now open.
spk09: Hey, good morning, everyone. Thanks for taking the question. Good morning. I wanted to start out on the DTC side. The last quarter, you'd indicated that I think in June and July that the DTC side was comparing up about 57% versus 2019, which is kind of where it shook out for the 3Q, kind of in line with where it was 90 days ago, what you're seeing. So could you just give us maybe any color on how you saw demand progressing through the quarter and then what you're seeing so far in October into early November?
spk04: Sure.
spk07: Yeah, August actually softened. So August was the weakest month of Q3, and then we bounced back in September and October, where we've done better than August. But we're still really roughly in line with where we've been over the last several months.
spk09: Okay, got it. And then maybe just switching over, just to follow up, switching over on the wholesale side, you called out, you know, I think some softness there on the mass side or private label side. Can you maybe talk about, you know, U.S. wholesale, what you're seeing kind of across the rest of your different customer sets there, any, you know, variance between them that's worth calling out, or is it kind of more across the board? the incremental stop that you're seeing?
spk07: Yeah, it's really across the board. I would say with very few exceptions, most of our wholesale customers are prioritizing inventory control. Most of them have pulled back on orders as they seek to make sure their inventories are in line. And we're seeing that really across different channels of distribution. As you point out, the mass channel is the weakest. If you look at year over year sales growth in the back half, the mass channel is the weakest. But overall, we've seen an increase in conservatism really across the board.
spk09: Okay, got it. And then if I could just ask one last one, just maybe kind of a bigger picture kind of question. How do you think maybe the business could benefit from potential trade-down effects if we do go into a more severe economic downturn, you know, looking into next year maybe. I think Steve Madden was pretty resilient 08-09, but obviously the business has changed quite a lot since then. So how should maybe we think about the potential for some trade-down benefits?
spk07: Yeah, I think if that comes to pass, we are pretty well positioned. I think even in the core brand, Steve Madden, we potentially could get some trade-down. We really offer designer styling at accessible prices. And as you point out, the SeedMan brand and our company overall, but the brand in particular, performed very well during the Great Recession, actually demonstrated very strong growth even in 2009. So we certainly have a history of being able to navigate these kind of difficult conditions and take share. Thanks so much.
spk04: Thank you.
spk11: Your next question comes from the line of Paul Lewis with Citi. Your line is open.
spk10: Hey, thanks, guys. You mentioned the pullback on the wholesale order book. I'm curious if you can give any color as to what is happening at point of sale within your mass channel as well as the department store channel. And also, if you could give any color in terms of what you're seeing in terms of spring orders? Have you seen a similar pullback? And if so, how does that break down by the two different primary channels? Thanks.
spk07: Yeah, I would say across the board, if you look at point of sale or sell through to the end consumer, what you see is that our retail sales are well above where they were in pre-COVID or well above 19, but below what we saw in last year's fall season when they were pretty exceptional. In terms of spring order books, I'm not going to get too specific here because in keeping with our normal practice, we're going to talk about 23 on the next call and provide guidance at that point. But generally speaking, I don't think it will surprise you that wholesale customers are approaching Initial orders, conservatively, and we're seeing that across the different channels in which we operate. The good news is that given the easing of the supply chain and the fact that, as I alluded to in my prepared remarks, that we're really now in a position to get back to what we do best, which is working close to season and testing and reacting in season. So where we start with initial orders can vary pretty dramatically from where we end in the season. And many times we've started off with conservative orders and identified strong sellers and chased into a very strong season. So we'll be in a position to do that in spring 23. Thanks.
spk10: And just to follow up, what are you seeing on the cost side as you look out to 23, the first half or second half? How are you thinking about product costs?
spk07: I think on the factory side, there may be some opportunity for improvement. Obviously, as the demand environment has weakened, some of the factories are a little hungrier for business, and so the supply and demand is moving in our favor there, which enables us to negotiate some better prices. We've also got a currency benefit, particularly against the Chinese RMB, which we'll be looking to try to take advantage of in terms of our factory pricing. And, of course, you know, as everybody's aware, ocean container rates have come down dramatically. So freight, which has obviously been a source of pressure over the last couple of years, hopefully turns or should turn into a tailwind soon. So we've got some opportunities there. You know, there are places where we continue to see pressure, wages, warehousing, et cetera. But certainly from an overall cost perspective, I think 2023 should be shaping up better than 2022. Great. Thanks, Ed. Good luck. Thank you.
spk11: Your next question comes from the line of Marnie Shapiro with the Retail Tracker. Your line is now open.
spk05: Hey, good morning, everybody. And before I dive into questions, I just want to say congrats to your team because your product assortments have been spot on, and it's stunning. Your store has continued to just be busy and filled with all the right trends. So I want to just ask a couple of quick ones. September and October, I think you said, sales rebounded a bit from August, and I hate to ask this question. In a post-COVID world where there's so many other issues, but was some of that influenced by weather? When it kicked in a little cooler, did you start to look for boots and loafers versus open-toe shoes? And could you give us a little bit of high level? Are sneakers still doing well? I know there's just a lot of fashion happening out there. I'm curious because that was a very strong business, has been a very strong business for you.
spk07: Yeah, look, on the weather, yeah. It always helps when it gets colder to flip us to more fall products. It's not something we've been talking about a lot internally. I don't think it was a huge driver, but certainly it helped. In terms of sneakers, we've still got some very good sellers in that category, but I would say there's a little bit less newness there right now. So we're still selling some Very well, we've got some all-over white sneakers doing very well, some big bottom sneakers that continue to perform. But I don't see that category on the upswing at the moment.
spk05: And then could you just also, you talked a little bit about your mass retailers pulling back orders. Can you talk a little bit about what that looks like from the off-price channel and how it looks? Are they canceling orders already into spring and summer of 23, or was this just near term? Just a little bit more clarity on that comment.
spk07: Well, I think in terms of cancellations, yes, we have dealt with some cancellations for fall here. No, we're not really seeing cancellations for spring, but we've seen conservative initial ordering for spring. Right, right.
spk05: Okay, that's great. And then, sorry, one last. I'm just curious, any update on the men's side of the business? I know it's smaller than the women's, and the women's has been killing it, but just any update on the men's side?
spk07: Yeah, men's has been a really nice story for us over the last year or so. It was a business that took a big hit during COVID, but it's bounced back very strong, and we're We've been really pleased with the progress we've made there. We've really elevated the product. We've increased AURs, but we've done it by really putting more into the shoes, improving the quality, improving the styling. That business is performing very well for us, both in terms of shipping, but also sell-through, and in better tiers of distribution, too, so performing very well at the Nordstroms, the Dillards, et cetera. Just excited about what we're seeing there. We're having a good boot season this fall. Our dress shoes are performing very well. Doing well with some real dressy stuff, special occasion type stuff. So it's a lot of good stuff there.
spk05: That's excellent. Congrats on that. And best of luck for the holiday season.
spk07: Thank you.
spk11: Your next question comes from the line of Tom Nickick with Flatbush Securities. Your line is now open.
spk02: Hey, guys. Thanks for taking my question. You mentioned in the press release and prayer remarks that you saw some increased promotional activity in Q3. I know you kind of had exceptionally low levels of promotional activity in 2021. Would you say that the promotional activity in Q3 was more just kind of like getting back to normal? I don't know if you can compare it relative to where you were in 2019. Was it kind of like better or worse than what you were seeing commercially in DTC in pre-COVID world? And then how should we think about promo activity in DTC in the fourth quarter and maybe into early 2023? Thanks.
spk07: Yeah, I think promo activity Generally speaking, it's sort of back to 2019 levels in the industry overall. I think in our own DTC right now, we're still trending less promotional than we were back in 19. In Q3, we did have to get a little bit more aggressive to move through some of the seasonal goods, the spring-summer goods that we were clearing, but as we move into Q4, we're That part is behind us, and in fact, we think that we can, on an overall basis, have DTC margins up versus last year in Q4, or in line or up to last year.
spk02: All right. Sounds good. Thanks for taking the question, and best of luck in the holiday season.
spk07: Thanks, Tom.
spk11: Your next question comes from the line of Laura Shempine with Loop Capital. Your line is now open.
spk00: Thanks for taking my question. It's about the mix comment that you make on the wholesale business and the press release that mix has improved. Are you seeing the, and I think that that was mostly just because private label has declined, but are you seeing any shift in mix within your branded goods, either for the better or for the worse?
spk07: No, you're right. The comment was related to branded versus private label, and the fact that branded is outperforming private label in the back half here. There's really no meaningful change between brands.
spk00: Got it. In the fourth quarter, obviously we can see your revenue guidance, but embedded in that, do you think there will be an improvement in the trend of your e-commerce business in the DTC market? segment?
spk07: Yes. Year over year, I do. We're still planning it down low singles in Q4, but that represents a modest improvement from where we were in Q3.
spk00: Got it. Thank you.
spk07: Thanks, Laura.
spk11: Your next question comes from the line of JASOL with UBS. Your line is now open.
spk06: Great. Thank you so much. And you mentioned increased investment in marketing and consumer engagement in kind of your opening remarks. Maybe elaborate on that a little bit. Tell us kind of what your plans are, what your goals are with that, and sort of the cost that's going to be associated with that and sort of the return that you expect in that investment.
spk07: Yeah. I mean, that's something that we've been talking about for a few years now. And so each year you've been seeing us increase the investment in marketing, you know, Part of that, obviously, or a significant part, has been performance marketing associated with driving the e-commerce growth that we've seen, which has been tremendous over the last few years. But in addition to that, we're also investing in brand campaigns like the one I mentioned earlier and top of funnel marketing. And that's going to continue to be important as we go forward. This year, it was about 50 basis points invested. increase in marketing as a percentage of sales. I think we're going to end the year around 4% of revenue. I think you'll continue to see a little bit of pressure there, but probably not to that same degree going forward.
spk06: Got it. Okay. Thank you. And then maybe if I can follow up, just if you can just maybe give a little bit more detail on exactly what drove the change in the guidance from last quarter to this quarter. I mean, it sounds like it was orders in the mass channel, but I mean, if you can sort of confirm that, that would be helpful. Thank you.
spk07: Yeah, it wasn't just the mass channel. It was really the wholesale business overall. So DTC really remained in line with our forecast that we provided at the end of Q2. But we did pull back on our estimates for the wholesale channel. And again, that's mass, but that's the other tiers of distribution as well as many of our wholesale customers got more conservative and prioritized inventory control.
spk06: Got it. And maybe just the last thing for me, it sounds like you feel pretty comfortable with the inventory that'll be sort of back in line with the sales trend at the end of the year. Can you just explain maybe what gives you confidence that, you know, the inventory that you're carrying now won't result in, you know, bigger promotions or more clearance activity that would put some pressure on gross margin?
spk07: You're talking about the inventory on our balance sheet?
spk06: Correct. Yeah.
spk07: Oh, yeah. Well, look, I think that We felt pretty comfortable with the level of inventory that we've had throughout the year. I think we went into quite a lot of detail at the end of Q2, but the fact that while it was optically high, it was really related to us adding 40 days to our production calendar because of the extended transit times. It didn't mean that we had a lot of inventory that wasn't accounted for. It just meant that we were placing those orders earlier. And so you continue to see that impact. That's obviously gotten a lot better. We shaved at least 10 days or so off that with the inventory that we have at the end of Q3. And now, as we're going forward, whereas we were building an additional 40 days of padding for the transit time, now it's really five to 10 days extra compared to normal compared to where we were pre-COVID. So you're going to start to see that inventory level come down. But more specifically addressing your question, we do feel good about where we are with the inventory levels. There's not a lot of speculative inventory here. Certainly in the wholesale channel, obviously we've got inventory for DTC. But we feel good about the amount and the composition of it. Got it.
spk06: Thank you so much.
spk11: Your next question comes from the line of Dana Telsey with Telsey Advisory Group. Your line is now open.
spk12: Hi, good morning, everyone. Given the adjustment in sales growth for the year from 12.5% to 13.5%, what are your new expectations for wholesale and DTC growth for the year? I think it had been like mid- to high-teens wholesale growth or mid-single to high-single-digit DTC growth. How do you reframe? And what are your expectations for international, and how did that do this quarter?
spk07: Sure. Yeah, so in terms of the channels, DTC, we're still looking at 6%, 7% growth for the year, which is pretty similar to where we were before. In wholesale, I would say more like 15% to 16% for the year. And... Oh, international, yeah. So international has been a real bright spot for us. That's been the best performing part of the business this year, which, you know, it's now been a few years that this has been the fastest growing part of our business. But as I mentioned on the call, or on the earlier part of the call, you know, four quarters in a row of more than 50% year-over-year growth. So the momentum really continues there, and we're just very pleased about what we're seeing. And it's really across all of our businesses. of our meaningful regions we're seeing nice growth.
spk12: Got it. And then on the brick and mortar side of the business, which I think was flat, anything to what you're seeing there, urban versus suburban, outlet versus full price, and how that's performing?
spk07: Yeah. In terms of geography, New York City, yes, urban versus suburban. New York City was our top performing region in terms of Now, I think a lot of that was that it had the easiest comparisons from a year ago because that region came back later. But very strong comp growth in Q3 in New York and got back to flat to 19, which is the first time we've seen that since COVID. And then in Q3, our outlet stores did a little bit better than our full-price stores.
spk12: Got it. And then just lastly on lead times, I think you were 30 days pre-pandemic. I think you were 45 days last quarter. Where are you now and how do you see that progressing?
spk07: Yeah, we're really, when we're placing orders now, we're working on sort of 35 to 40 days as the assumption. So continuing to make progress there.
spk12: Thank you.
spk07: Thanks, Dana.
spk11: Your next question comes from the line of Samuel Poser with Williams Trading. Your line is now open.
spk03: Thanks for taking my questions. Good morning. I want to get into the weeds a little bit here. Do you think that, can you hear me? Yes. Okay. Do you believe that given the conservatism or the caution of your wholesale partners that We're thinking about it in a large picture. Last year, they did great with not a lot of inventory. They thought they could do better this year. They bought too much. Now, does this look like an overreaction, the other direction on initial orders sort of going into next year? And you're thinking of yourself as the folks that can respond to this well?
spk07: Without commenting on whether they're overreacting or not, I'll say that the initial orders are gonna be conservative, and we do feel that we have a real competitive advantage in that environment if those retailers need to chase goods. And that's, I think if you look back, for instance, at our success during the Great Recession, I think that part of that, obviously most of it was because we had great product, But a good part of that was also because of our ability to operate in this environment and to be the go-to vendor when folks want to chase in the season. Because similar to what we're seeing now, back then, many of the retailers decided they wanted to place fewer orders up front and really look to chase in season. And we are the go-to supplier in an inning like that.
spk03: So to follow up on that, given the supply chain issues that have been improving but were there, you've written a lot more, let's call it March-April orders now or February-March-April orders now are in-house than they were historically. Is that a fair statement as a percent, like you've just taken more orders for that period given the way the supply chain was working at the time?
spk07: Yeah, but we're really getting back to our normal model now. So you're seeing we're moving much more back to our normal calendar.
spk03: So a year ago in December, you were taking back-to-school orders for all practical purposes given the supply chain. This time, I assume you'll be writing – when we get to Fannie in December, you're going to be writing – march april and be able to get goods quickly if need be is that fair statement yes we'll be able to work we'll be able to work closer to season and test and react in season again that's right um okay and then uh the it was sort of asked before but the demand the demand you're seeing for product within your big wholesale partners is stronger than Is it stronger than the orders that are coming your way to replenish those or whatever?
spk07: Yes.
spk03: Thank you for the concise answer and continued success. Thanks, Sam.
spk11: Your last question comes from the line of Steve Morota with CL King. Your line is now open.
spk08: Good morning, Ed, Zine, and Danielle. Ed, you mentioned that costs in 2023 are looking better than 2022. Can you talk a little bit about whether that's absolute or relative? In other words, do you think there will be less inflation next year, or do you think that there could actually be deflation in your landed unit costs next year versus this year?
spk07: I think there is a scenario where there's actually deflation in landed costs.
spk08: That's helpful. And this is a tad bit speculative, but considering that you are very near to your normal turnaround times, maybe 5 to 10 days extra currently, at this trajectory, when do you think you would get back to fully normal, 100% normal? Oh, within... The next couple months, yeah. Excellent. By year end. Okay. Excellent. Thank you very much. Thank you.
spk11: There are no further questions at the queue. I will now turn the call back over to Ed Rosenfeld.
spk07: Great. Well, thank you, everyone, for joining us this morning, and we look forward to speaking to you on the next call. Have a great day.
spk11: This concludes today's conference call. Thank you for your participation. You may now
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