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spk01: Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Express, Inc. first quarter 2022 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. I'd now like to hand the call over to Greg Johnson, Vice President of Investor Relations. Please go ahead.
spk06: Thank you, Rob. Good morning and welcome to our call. I'd like to open by reminding you of the company's safe harbor provisions. Any statements made during this conference call, except those containing historical facts, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual future results may differ materially from those suggested in forward-looking statements due to a number of risks and uncertainties, all of which are described in the company's filings with the SEC, including today's press release. Express assumes no obligation to update any forward-looking statements or information except as required by law. Our comments today will supplement the detailed information provided in both the press release and the investor presentation available on our investor relations websites. In addition, you can locate a reconciliation of any adjusted results discussed in our comments to amounts reported under GAAP on our website or in our earnings release. We will also be providing financial comparisons to prior fiscal periods, and our prepared remarks today refer to 2021 unless otherwise noted. With me today are Jim Baxter, Chief Executive Officer, and Jason Judd, Chief Financial Officer. I will now turn the call over to Tim.
spk07: Thank you, Greg. And good morning, everyone. Before I share our incredible first quarter results, I'd like to introduce and welcome our new Chief Financial Officer, Jason Judd, to his first Express, Inc. earnings call. Jason is a seasoned, well-rounded, and accomplished financial executive with a proven track record of delivering results. The breadth of his experience adds both strategic and financial weight to our extraordinary leadership team. He brings a depth of knowledge and a passion for retail that make him well-suited to lead our financial strategy and be a steward of our company. Jason joined Express almost two months ago, and his perspective is already informing our path to long-term profitable growth. I'd also like to thank our president and chief operating officer, Matt Mullering, for stepping in as interim CFO these past six months. With Jason in place, Matt will once again focus on guiding our stores, supply chain, planning and allocation, technology, and legal teams. One of the most important elements of our Expressway Forward strategy is consistent, exceptional execution, and there is no better executive to ensure that than Matt. Turning to our first quarter results, positive comparable sales, gross margin expansion, and SG&A leverage all exceeded our expectations. We delivered positive comparable sales of 31% and drove double digit positive comps in every major category and in every channel. These incredible results and the continued acceleration of our business were driven by a combination of factors. Outstanding product, a compelling brand purpose, the power of our styling community, stronger connections with our customers, and consistent exceptional execution. We drove gross margin expansion of 640 basis points despite the negative impact of $6 million of expense associated with ongoing supply chain challenges. Our average unit retail increased 20%. And for the second consecutive quarter, we recorded the highest number of active loyalty program members in our company's history. In a very difficult apparel retail environment, Express is winning. We are selling more elevated product to more loyal customers at higher margins. And our performance in the quarter is tangible evidence of the momentum that the right strategy, the right product, and the right team, all working in concert, can create. We continue to advance each one of the four foundational pillars of our Expressway Forward strategy, product, brand, customer, and execution. Let me take you through some of the results we've achieved and what is still to come. I'll start with product. We set out to bring greater balance and versatility to our assortments, reflecting a more modern approach to building a wardrobe. Our express edit design and merchandising philosophy is working. We are winning in the classifications we've long been known for and gaining market share in some of the most significant volume-driving categories. Our product has never looked better, and we achieved double-digit positive comps in every major category. We achieved a number of first-quarter bests in recent history, including our men's business in total, men's suits, men's polos, women's jackets, and women's and men's denim. Modern tailoring continued its resurgence with comps up across the board. Women's jackets were up 117%. and men's suits were up 78%. Denim had a 23% comp increase, and women's was particularly strong. The Express Essentials Body Contour women's collection generated nearly $20 million in sales, delivering its best-ever quarter. Express Essentials for men were also strong, with polos increasing 75%. Our second pillar is brand. and we delivered another exceptional quarter of increased brand tracking measures, social media engagement, and positive customer feedback. Google organic brand demand increased 20% in the first quarter and was up for the 12th consecutive month. Our first quarter brand campaign, Made to Express You, generated over 285 million impressions across all digital platforms, and our video content in the quarter drove another 215 million views across platforms. Express is transforming from being known as a store in the mall to a brand with a purpose powered by a styling community. The Express styling community is not only one of the most dynamic aspects of our brand, it is also one of the most authentic and organic ways in which our brand purpose comes to life. We create confidence, We inspire self-expression. We do it by editing the best of now for real-life versatility. And everyone in the Express styling community is a part of that. Customers, associates, style editors, content creators, influencers, and brand partners all play a role. Members of the Express styling community interact with each other in the physical and digital worlds. Our brick and mortar and online stores get over 300 million visits each year. And of course, many customers engage in both channels. Building, activating, and amplifying the express styling community is one of our key 2022 priorities, and it will help us deliver the best digital and the best physical customer experiences. Our stores are the place where our community comes together. to see, try on, and style our product in real time. We hosted over 200 store events in the first quarter. At many of these, our style editors or brand ambassadors invited their followers to join them, and their ability to broaden the reach of our brand purpose through their social media platforms is evident and powerful. We also see the seamless exchange between physical and digital engagement when we simultaneously host an event in store and stream it online. These digital live stream events in the first quarter drew nearly 2 million views across all social platforms. Our stores are an essential part of our styling community and an important driver of sales growth. But they are not yet where we want them to be. And we have already begun to reimagine the customer experience through a pilot program in select stores. The initial results are encouraging. and these stores are significantly outperforming the rest of our fleet with higher sales and a better customer experience. We will refine and perfect the operating model in these stores as we expand it across our fleet, and we are already applying the most effective elements in additional stores. The combination of knowledgeable associates and consistent exceptional execution will make it possible for us to fulfill our brand purpose for every customer in every store every time. We will continue to renovate and refresh our stores to elevate the customer experience and present a more consistent brand identity across our fleet. We have already updated 20 stores and will update a total of 70 by the end of this year. These enhanced stores are achieving consistent sales increases, but there is still much more to do before all of our stores fully reflect who Express is today. Our third pillar is customer. We continue to effectively engage existing customers and acquire new ones. Total customers were up 17% and spend per customer increased 13%. Since its relaunch in Q1 of last year, our insider loyalty program helped to grow our styling community, bringing in 3.4 million new customers and reactivating 2.8 million lapsed customers. Loyalty program members are our best customers, making over two more visits and spending over twice as much per year as non-loyalty members. And as I previously mentioned, we ended the quarter with the highest number of active loyalty members in the company's history. Our fourth pillar is execution. Solid execution contributed to achieving double-digit comps across all channels, and I'll share some highlights. We drove a 21% increase in e-commerce demand, including higher traffic and an increase in average order value, and are on track to achieve our goal of $1 billion in e-commerce demand by 2024. We introduced enhancements to our online checkout process and improved our buy online, pick up in store experience to let customers more easily shop our inventory. In the coming months, we will enhance personalization and make the checkout experience even more streamlined, We will provide even more robust content across all of our digital platforms and keep improving our multi-channel execution. Our mobile app now has 2.6 million users, and we drove a 30% increase in demand and a 33% increase in traffic with these users. These are among our most engaged customers, making five more visits and spending over $300 more each year than customers who only shop on our website or in one of our stores. The majority of app users are also Express Insider members, and they drove over 90% of the app transactions. Our retail stores had an outstanding quarter, delivering a 45% comp increase. We drove a 23% increase in average unit retail, and according to our third party data, our store traffic consistently outpaced the mall apparel average by over 20%. Express Edit stores are strategically located in high traffic, opinion-maker destinations, and diversify our brick-and-mortar fleet. These stores acquire new customers, reactivate lapsed customers, and sign up Express insiders at higher rates than the balance of our fleet, and boost digital sales in the surrounding zip codes. We recently opened a women's only express edit store at Plaza Frontenac in St. Louis. And it is already our most productive of these formats to date. We plan to open stores in Soho and Flatiron in Manhattan and on Newbury Street in Boston in the coming months. And we also expect to open a men's only store this year. Our outlet channel delivered a positive 30% comp and achieved its biggest first quarter ever. With assortments fully aligned to the express edit design and merchandising philosophy, we are achieving higher average unit retails while giving the customer even more compelling value. Our UpWest brand also had a remarkable quarter with sales growth of 68%. As our digital sales continue to accelerate, we are also expanding our physical store footprint. We've already opened four new stores this year, bringing the total to 11. and we plan to open four additional stores in 2022. These stores attract new customers and accelerate digital sales and surrounding zip codes. Later this year, we will unveil a partnership with a prominent national retailer that will expand the awareness and reach of UpWest more quickly. UpWest continues to gain momentum and is well positioned to be a growth engine for our company. In addition to driving incredible results in the first quarter, we also launched our ESG mission, Express Together, to guide and set clear goals for our commitments and actions across diversity, equity, and inclusion, giving and mentoring, and sustainability. Our DE&I mission is to seek out, respect, and embrace different experiences, approaches, and points of view. A team of DE&I stewards leads the development of our content, education, discussion, and communication around a wide range of topics. Our giving and mentoring mission is to offer opportunities and resources for every generation. We accelerated our Express Dream Big project through a partnership with Big Brothers Big Sisters of America and have already surpassed our goal of raising $1 million to support their Big Futures mentorship program. Within sustainability, Our conscious sourcing and product mission is to make better choices through products and practices. As one example, we have set a goal to conserve 50 million gallons of water by 2026. Now let me turn the call over to Jason, who will provide the detail on our first quarter results and share our improved outlook for 2022.
spk02: Thank you, Tim. These past two months, I have become grounded in our corporate strategy and transformation agenda. and how they connect to our financial performance. It is very clear to me that Express has a bright future. I will be refining our long range plan to best deliver on our strategy and achieve our objectives. I will be building a capital structure to strengthen our balance sheet, optimize our cost of capital, and increase our ability to drive greater shareholder value. Now, let me review our first quarter results and provide a high level outlook on the second quarter and an improved outlook on the full year. As Tim indicated, first quarter consolidated comparable sales growth, gross margin expansion, and SG&A leverage all exceeded our outlook. Net sales were $451 million, an increase of 30%, and consolidated comparable sales were up 31%. Total retail comps increased 32%, and outlet comps were up 30%. These results were achieved despite headwinds from inflation, monetary policy, geopolitical events, and ongoing supply chain challenges, and even with a significant decrease in our promotional activity. We generated gross profit of $132 million with a gross margin rate of 29.2%, an increase of 640 basis points. Merchandise margin expanded by 20 basis points. despite the negative impact of $6 million of expense associated with supply chain challenges. Without this impact, the expansion would have been 160 basis points. For the balance of the year, we expect an incremental $7 to $10 million of logistics expenses. This is built into our outlook. Buying and occupancy expenses leveraged 620 basis points. Our expenses were relatively flat and the leverage was driven by significantly higher Q1 sales. SG&A expenses were $141 million, leveraging 320 basis points. Our operating loss was $9 million compared to a loss of $41 million last year. Our diluted loss per share was 18 cents on a gap basis compared to a loss of 70 cents in 2021, excluding the impact of the $5 million resulting from the recording of a valuation allowance against our deferred tax assets, our adjusted diluted loss per share was 10 cents. Our effective tax rate was 4%, which reflects the impact of the aforementioned valuation allowance. Excluding this impact, our effective tax rate would have been approximately 44%. Turning to our balance sheet, our inventory was up 40% compared to last year. reflecting a 25% increase in unit investment. Let me walk you through the reasons for this. First, we have taken strategic action to mitigate supply chain challenges and ensure that our inventory arrives on time. Second, there are underlying cost increases due to improved quality in the product, distortion to higher price categories, and inflation. As evident in our expanding margins, we have more than offset these cost increases in our realized average unit retail. Third, we packed and held holiday products that arrived late. And because it is aligned to our outlet assortment strategy, we are confident it will sell through at regular prices in fall 2022. We continue to ensure that we are well positioned on both the newness and the composition of our inventory. Our inventory levels will remain elevated in the second quarter and move closer to parity with sales growth in the back half of the year. Our balance sheet at the end of the first quarter continues to reflect a $52 million CARES Act receivable, which we now expect to receive in 2023. Our borrowings at the end of the quarter were $211 million, of which $115 million was drawn against our existing asset-backed loan facility, and the remaining $96 million was drawn on our term loan. Before turning to our outlook, I will reiterate that we achieved a 31% comp despite the considerable headwinds we and the industry experienced. This comp, our gross margin expansion, and SG&A leverage were all above our expectations. Looking ahead, we considered our year-to-date performance and the strength of our product, brand, customer, and execution advancements. Balanced against the ongoing supply chain challenges, macroeconomic pressures, geopolitical events, and other uncertainties that may impact our business. Our outlook includes expectations for the second quarter and the full year. Let me start with Q2. Compared to the second quarter of 2021, we expect to deliver the following, comparable sales to increase mid-single digits, gross margin rate to increase approximately 100 basis points, and SG&A expenses as a percent of sales to de-lever approximately 100 basis points. This includes incremental investments in technology, higher labor costs, and inflationary pressures. Our full-year outlook has improved based on the strength of our first quarter results and the ongoing momentum in the second quarter. Compared to the full year of 2021, we expect to deliver the following. Comparable sales to increase 8% to 10%. Gross margin rate to increase at least 100 basis points. SG&A expenses as a percent of sales to be approximately flat. Adjusted diluted earnings per share of 14 cents to 20 cents and capital expenditures of 50 to 55 million dollars. We are well positioned to achieve our expectations for continued growth and significantly higher operating income in 2022. We are also on track to achieve our stated goals of a mid single-digit operating margin and over $100 million in profit by 2024. I am delighted to be here. And I'd like to thank everyone for the warm welcome and comprehensive introduction to our business. As I said at the top of my remarks, Express has a very bright future. I will now turn the call back to Jason.
spk07: Thank you, Jason. We had a terrific first quarter. Positive comparable sales up 31%. Double digit positive comps in every category and in every channel. 640 basis points of gross margin expansion. AUR up 20%. The highest number of active loyalty program members in our history. Our physical and digital experiences advancing. our brand purpose taking hold, and our styling community expanding its reach and its impact. Our transformation is well underway. I am proud of what we have accomplished. I am energized by our momentum, and we have increased our annual outlook to reflect that. Thank you all, and now we'll take your questions.
spk01: At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. And your first question comes from a line of Marnie Shapiro from Retail Tracker. Your line is open.
spk00: Hey, guys. Congratulations on a fantastic quarter and start to the year. So I have one kind of baseline question and then one forward-looking question. It looks like... Walking through your stores there's a base of business that I'm guessing the inventory turns a little slower, denim, polos, men's shirts, probably parts of body contour. And then there's parts of the business that are turning very fast, the fashion. So I'm curious if I'm seeing that right and is the plan to keep that sort of baseline a little bit more in stock moving slower and then a portion of it moving much faster. And if this is the case, you've been in a situation, at least this first quarter, where there's been a lot of sellouts and disappointed customers in the store. But on the other hand, that breeds a lot of excitement and a I must have it. So how do you balance being in stock but also leaving her hungry as you look going forward?
spk07: Well, as usual, Marnie, your observation is correct. A significant part of the inventory investment that we made was in core product to ensure that we would be well positioned and in stock in core categories like denim, like men's suits, men's dress shirts, women's body contour, women's denim, men's polos. So, yes, we have made pretty significant investments to be sure that in those core categories we are in stock and serving the customer. We have turned fashion, to your point, at a very fast clip in both men's and women's and had sellouts on some of our best products. And that does create urgency. And it is part of what has allowed us to pull back so significantly on deep store-wide and site-wide promotions. In fact, in the first quarter we had zero store-wide and site-wide promotions, which is the first time in years that we have come through an entire quarter that way. So we do expect to continue to build the sort of fashion pyramid where we are in stock on our core categories, the core volume-driving categories. And fashion is – there's less depth in fashion. However, that being said, we also know that we actually can sell more depth in our key fashion products. And as we move into the back half of the year, you are going to see greater depth behind the key fashion messages so that we can really capitalize on the demand that we're seeing in our fashion product as well.
spk00: And I guess following up on that, if I think about your spring season, you have those core items that we talked about. You have the really high fashion items. So take a lavender blazer, for example. And then you have what I would call sort of the in-between fashion items, so maybe a one-shoulder ruched dress, which probably has a longer life than the lavender blazer, but not as long a life as a pair of jeans. So the items that you're putting some depth behind, does it fall in that middle lane and not the riskiest of the fashion, but sort of that mid-lane fashion?
spk07: It depends, to be perfectly honest. I would say at the highest level, yes. However, we see the most powerful sell-throughs on the product that is featured in our windows, in our hot zones in stores. That same product is being pushed through and highlighted in all of our digital media and marketing. So those are the products that we actually see the strongest sell-throughs on. So we actually believe we can sell greater depth both the lavender blazer in the example that you gave and potentially the one-shoulder top. So I guess the answer is it depends. But the planning and allocation team has worked really closely with the merchandising team to identify those items up front and build the depth accordingly. I think we've made incredible progress on that. And you will begin to see that progress as we move further into this year.
spk04: The other thing we have done is we have focused on reducing choice count to create a much more focused assortment. And by reducing the choice count, we can then invest in more depth in the items we really believe in.
spk07: And the other thing, Marnie, is that the team has also done a great job of identifying. To your point, the ruched dress may have a longer lifespan than the lavender blazer, but the jean has the longest lifespan of all three. And the teams are actually working very closely together to identify exactly how many weeks we expect the product to be at full price before we take the markdown and move on. And so the depth is also determined by the number of weeks we expect that product to live in our full price assortments.
spk00: That makes sense. Fantastic. I'll take the rest of it offline. Best of luck for the summer season.
spk01: Great. Thanks, Marnie. Your next question comes from the line of Eric Beder from SCC Research. Your line is open.
spk03: Good morning. Congratulations on a solid start to the year. Thanks, Eric. Great. Could you talk about the opportunity here in accessories? I know you guys have done a fantastic job. Where is that slot, and where do you think that can go?
spk07: Yeah, well, one of the key strategies in our merchandising team is actually add an accessory. And we have made great progress in both men's and women's on advancing our accessories assortments to be much more in line with what we've accomplished in apparel. But to be honest, Eric, we still have work to do in that category. So we are driving growth in accessories in total. We've seen strength in certain categories in both men's and women's. and other categories have been more challenging. Categories like men's neckwear, for example, have continued to be more challenging. But we have the opportunity to really grow the accessories business because so few of our customers today are actually buying accessories from us. So we have an intense focus on the shoe category in both men's and women's. In men's, we have an intense focus on underwear. We are selling jewelry in both men's and women's and have the opportunity to both expand our assortments and drive considerably more volume within the jewelry categories. So as we look forward, we're going to begin to see even better results in accessories than we are seeing right now in our apparel businesses as we continue to focus on adding an accessory with each one of our purchases.
spk03: Great. Your men's suiting business has really been impressive. As you see people coming back from work, what are they doing in terms of suiting? You have a number of different patterns and the ability to mix and match the suiting. What have you been seeing in terms of trends with that, and where do you think that's going to go?
spk07: Well, I think, as I said in our prepared remarks, our suiting business has been explosive. And we have an extraordinarily well-balanced assortment in men's suiting. So we are very, very well positioned in core suits in navy, black, gray, in our key fabrication, modern tech. We're adding color in modern tech. So you'll continue to see us build out our core modern tech business. We're also expanding the modern tech business to include things like double-breasted jackets in black, navy, and gray, for example. So that core business is a very, very powerful part of what has driven our success. But we have also had incredible success driving fashion in men's suits. And it is that balance, I believe, that has made this such an explosive category for us. So we are servicing a guy who's coming in and looking to build a core professional wardrobe. We are serving a consumer who is looking for a suit for a specific occasion or an event. And we're serving a fashion consumer who understands the versatility that a suit provides when you can break up the pieces but also just loves to wear a suit. So there aren't many retailers that can say that they are simultaneously selling a core navy suit and a hot pink suit for men, and that is absolutely what's happening right now. We've also built within the separates component different pant blocks. So we've had great success with drawstring pants that work back to our modern tech suits. We've had fantastic success with pleated crop self-belted pants that work back to cotton suits, for example. So, you know, the breadth of the assortment in suits is certainly part of why we're winning, but we're also winning because we are appealing to such an incredibly broad range of consumers in that category.
spk03: Cool. One last one here. You know, you're anniversarying the rollout of the updated express program in terms of the customer program. You know, how are the new customers, how quickly are they ramping, and how, in terms of productivity, is it the same level of productivity you're seeing from the prior affinity program customers?
spk07: I assume you're talking about the insider program, right, Eric? Just want to be clear. I'm sorry, yes.
spk00: Yes, great. Okay.
spk07: Well, we're obviously seeing phenomenal success there, and we continue to bring an extraordinary number of new customers into the program. And as I mentioned, for the second consecutive quarter, we ended the quarter with the highest number of active loyalty program members. And the answer to your question is yes, we're actually seeing – not just the same behavior that we've seen out of our loyalty customers in the past. We're actually seeing even better behavior. They are shopping more frequently. They are spending more money. So we're very excited about the number of people that we have in the program and the sustainability of that program as we go forward. We've continued to provide enhanced benefits to our insider loyalty members, and we will continue to do that. So they are our best customers, and the reason we're winning is because we're treating them like that.
spk03: Great. Thank you, and good luck for the rest of the year. Thanks, Eric.
spk01: And your next question comes from a line of Steve Marana from CL King & Associates. Your line is open.
spk05: Good morning, Tim, Matt, Jason, and Greg. I just have a couple of quick questions. First is the holdover inventory from Holiday that you mentioned, was that originally aimed at full price or was it originally aimed at outlet?
spk04: Yeah, the pack and hold was originally aimed at full price. And just to be very clear, the product that we packed and held is product that we brought in with extended selling life associated with it, but the product got delayed. So as an example, You know, if we bought a dress and we were planning on selling it for 12 weeks in stores, it only came in and allowed us for four weeks of sale in store. We packed and held full-size runs of that product, and there had to be two things that were true in order to pack and hold the product. Number one, it had to have a high sell-through for the product that did get out to the stores on the website, and number two, it had to fit into the assortment architecture for EFO next year. And we were very clear with the teams on both of those, and that's why we have high confidence we'll be able to sell that at full price next year.
spk05: Okay. That's very helpful. And, Tim, can you talk a little bit about your expectations for the balance of the year from a promotional environment standpoint? I'm sure that your plan has a very controlled plan, promotional internal plan, but can you talk about what you expect from competitors and how flexible you feel from a reactionary standpoint in the back half of the year? Thanks.
spk07: Sure. You know, obviously we are operating in a tough apparel retail environment. That's been clear over the past couple of weeks. And we have seen, an increase, a pretty dramatic increase for many of our competitors in site-wide and store-wide promotional discounts, you know, going back to sort of where we were pre-pandemic where we're starting to see 30 off your entire purchase, 40 off your entire purchase, you know, fairly regularly from some of our competitors. But we are uniquely positioned and I do not anticipate that we will stray from our promotional strategy. And our promotional strategy is to absolutely eliminate those deep store-wide and site-wide promotions. We did that very effectively and we have done that very effectively for several quarters, but the first quarter was the first quarter where we've had zero days of store-wide and site-wide promotions. And I do not anticipate straying from our promotional strategy in spite of the promotional strategy that we are seeing from some of our competitors. We are winning because our product is right and the value of our product is evident to the consumer. That's not going to change as we go forward. And so we will continue to run targeted promotions. I have said repeatedly, we are not pulling away from promotions entirely. we are going to run strategic, targeted promotions on key categories. In some cases, those promotions will be to acquire customers. In some cases, those promotions will be to drive a category where we are trying to gain significant market share and get customers into our product in that category. In some cases, it will be to move through inventory where we believe we have too much inventory. That will obviously always be the case as well. But we have stayed committed to our strategy, and we're going to continue to stay committed to our strategy. will of course react accordingly to the promotional environment if it begins to impact our anticipated results. But based on what we accomplished in the first quarter when all of this was happening around us, I don't expect that to happen.
spk04: Yeah, I think it's a really interesting point, Steve. And we do believe we have pricing power where others may not. To Tim's point, we've gotten our fashion right. And when you get the fashion right, there's very little price sensitivity. Secondly, we have added significant quality back into our products. And because we have done that, we're able to compete on value and not simply price with commodity type items. And third, we talk about versatility as value. We offer a broad array of products from denim to suiting. We have credibility with the customer in all of these categories. And when the customer can mix and match product that we offer and take quality product and mix and match with other items, it creates value for them and they're willing to pay a higher price.
spk05: Terrifically helpful. Thank you. I'll take the balance offline.
spk08: Thanks, Steve.
spk01: And there are no further questions at this time. Mr. Baxter, I turn the call back over to you for some closing remarks.
spk07: Thank you all for joining us this morning.
spk01: This concludes today's conference call. Thank you for your participation. You may now disconnect.
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