Guess?, Inc.

Q3 2022 Earnings Conference Call


spk_0: hey everyone and welcome to the guess third quarter of fiscal twenty twenty two earnings conference call i would like to turn the call over to for brief and a rush vice president finance and investor relations so you may begin
spk_1: thank you very good at the movie one and thank you for joining us to the on the go to do with the of know the new kidney didn't even know and video she's been into your a political the company would be making following statements including commons with them for each of them are the even to do have television and shop and lot them including potential bucks on the go another we been companies actually that's mideast film and duty on current expedition based on respect of included included cause when he and the company's club though the annual bought side with the as he comments we also redmond self the non got on just admissions gap because he asian and descriptions of the males can be found in into their earnings before any that hundred dollars i would like to mention that will be published in and five of shut a the your morgan stanley global consumer confidence on when didn't have that at ninety five and is them the things such as we also be available via live webcast details on how to connect to the live webcast when given a book on the is that on that side i'd invest all the get dot com we hope to hear that now two goats
spk_2: take your progress good afternoon everyone and thank you for joining us today i am very pleased to report another strong performance this corner with exceeded our expectations for revenue growth operating margin expansion and bottom line results revenues increased thirteen percent for the water versus last year and adapted operating profit read seventy million dollars delivering an untested operating margin of almost eleven percent and adjusted earnings per share of sixty two cents vs fifty eight has left the and twenty two cents in the pre pandemic
spk_3: third quarter
spk_2: this performance was driven by the hard work vision of that additional power teams around the world the business transformation that we have executed on the amazing product and from momentum of the guess brent pod i want to thank our team for their strong contributions particularly during this challenging times we have very proud of our view i strongly believe our company's business and better than ever to extend it's distribution gain market share and increase profitability we have a strong balance sheet and solid cash generation power to support our business growth and return texas task to our shareholders our boards commitment is evident with the greatest me announced and to i'm used to have her me and are sharing purchase authoritative and today's approval to double our didn't we firmly believe our stock was trading be low it's intrinsic value and plan to execute share repurchases opportunistic any over the last two years we have successfully executed uphold transformation of our business and what better prove that our strategies working than our resolve this fiscal year when we are guiding to double our operating margin of profit from pretty pandemic levels the first piece of this transformation if the elevation of our brand including launching our first global nine elevating the quality of sustainability of our product up ruining our marketing and visual merchandising optimizing full price selling remodeling our starfleet and enriching the customer experience paul have bled this critical initiative and together with a product and creative teams they have been doing an incredible job the second piece of the transformation has been reset of our business model we have optimized our distribution in both retired hotel by removing unproductive stores and accounts reducing our product offering to result in a simpler business with more productive as use from our global nine we have also remained laser focused on march expansion with improvements coming from a new optimization nowhere occupancy and cost reductions including the consolidation of certain functions and euro a natural extension of this efforts during the third quarter we completed and the i'm trying to the transfer of certain intellectual property rights from the us to switzerland mark last me a line in our ip rights with our business operations we are operating in a more capital efficient way turning him into a faster with less non productive assets this transformation has repositioned this company's ability to deliver strong growth significant profitability and superior shareholder returns into the future sustainability remains a key focus for our breath and we are committed to being part of the solution to climate change we have aggressive in top targets to reduce corporate greenhouse gas emissions by fifty percent and supply chain emissions by thirty percent by twenty thirty and to achieve net zero
spk_4: by twenty fifty in fact last month we signed an open letter to g twenty leaders calling for policy well aligned with his goals we also supported the united nations conference of you to ensure our collective use voice on climate negotiations is her we are actively work
spk_2: him on a time and action roadmap that a story cincy see measures investment renewables and changes to the way that we create and produce our product i couldn't be prouder of our leaders have been this very important area let me add some color to our third quarter results our retail and wholesale businesses in north america have remarkable performance in the period with significant increases in operating profit margin expense our licensing this is also reported strong quarter all driven by the strong momentum our brand is enjoying in the marketplace our europe segment perform well positively impacted by a system business to l a y u to the timing of in into a receipt and i am proud to say that we close the spring summer order book for our your be a wholesale business is water with orders up to of pretend to l a y and our self campaign for the free fall winter season is looking promising for double digit growth as well these results clearly signal that we are continuing to gain market share our agent said and hadn't challenging quarter and continue to be impacted by the common situation and government restrictions in several countries including china japan and taiwan i am really encouraged by the momentum that we saw in the third quarter in our top line which of course starts with our brand and our product we have strong performance in dresses sweaters outerwear and them as well as our high and marcy on oprah north america saw pop and knit tops was europe remains strong enough these our men's business outperform in north america and an accessory self of had back and watches was solid in both region i believe the strength of we have been seen in categories like that on my see i know handbags dresses and outerwear bodes well for the future as these provide as key lovers to write and for sales growth guess is that true lifestyle brand and is poised to capitalize on current consumer trends casual is a son is here to stay which will help your continue golfing categories like them we have a diversified then i'm offering with see louis including skinny legs managing a media player and see bit of t opportunity for kids ago at the same time we see consumers returning to social activities and fashion oriented product which is beyond other key areas of our business like dresses and him regarding our starfleet we open fifty five new store so far this year most of which were puppets with new get some factories stores but also specialty concepts like accessory active were marcy i know kids and our differences concept guess original we continue to believe that we have substantial white space for new stores and many of our markets and stores are keep pillar to represent the lifestyle attributes of our brand provide a tool for new customer acquisition complete the only times things in connection with the elevation of our brand we embarked on a remotely problem that would ultimately touch roughly six hundred and thirty stores including new stores this would represent eighty percent of our entire fleet in europe and north america by the end of next year
spk_1: we continue to invest in technology including up bridge to our store infrastructure to drive efficiencies and enhance the customer experience
spk_2: our you commerce business continues to grow with sell to north america and europe in the third quarter up fifteen percent last year and thirty seven percent to alloway this is a source of both revenue profitability growth of our our brand and it represents i'm a to ago for opportunity for us come here to make for us on our customers and tweeted initiatives including on the town capabilities and about data analytics and customer segmentation in europe we are going out on a channel and sip from store tip of the in all countries and we have lost and new give cut application for the hide it regarding costs around linux we have nearly six million compatible customers in our databases and north america and europe and have added one million new customers this year so far over eighty five percent of this customers provide us with their mobile phone number and over twenty percent with their home address so we can never take him as marketing animators as part of the customer three sixty project we recently lost our crm platform which gives as a three hundred and sixty degree view of our
spk_4: as tumor and enables us to improve the way we segment and for some live our communication marketing and promotional strategies
spk_2: this is fully implement and europe and or a result of very promising the same up because will be implemented in north america next year will continue to drive innovation in this area and find investments and technology and custom out regarding inventory and to supply chain it will come as no surprise that our product development cycle has been impacted by be unprecedented challenges that the world is facing on the supply and logistics side our team is doing an incredible job litigating this challenge is to extent possible our work to consolidate our vendors going from over five hundred to around one hundred and thirty five as well the execution of the global nine which reduces to use by over forty percent as enabled that to leverage higher volumes to push through production we have order product in advance to allow for extended later and our inventory levels at the end of que three reflect this we maintain a globally diversified sourcing strategy which have helped out to limit impacts when area expanse disruptions we also movie roughly ten percent of outsourcing to look closer to the founders to be to get down and traffic passing cause as well explain some of it's like trying to run faster between china and you and we are searching for the investing in their transportation when it makes sense to get our product implanted so this year we have gone to a bath and seven percent usage of the are afraid versus a player and it a person in addition as with the rest of the industry we are experiencing increases in roma tablecloth like cotton we have contracts for certain raw materials that cover as into que three next year and simultaneously of looking at alternative option like recycled taught me of us consumer waste products all of this is obviously restart the an elevated costs which we have built into our atlas importantly we have been successful in increasing prices with a you are up fifteen to twenty percent alongside our innovation product friday to mitigate the impact of this cause increases are having on our pro definitely as of the end of killed three we had over a hundred million dollars of the military and transit representing our twenty five percent of our top ownership compared to twelve percent in pre pandemic you three a lot of this product will support our past holly the distance from rounded the service how are you a be impossible his an hour on had him into a today is completely aligned with our demand expectations for the upcoming holiday season i feel strongly about our plans for the holiday business we have a lot of new has coming to stores our assortment of the animated quality of our product is clearly resonating with our customers as evident by our strongest back to the point where north america traffic is gaining momentum recently and we are experiencing good conversation and strong a yours return improvement in trends in our tourist locations her death and we're getting a boost from the change in travel restrictions and limited in the u s earlier this month in europe we have also seen positive sequence a momentum himself parts of the start of the quarter driven by mature increases in traffic as a you are also remain strong as we have done all year we plan to continue to be less of than in the past especially with store wide level discounts we are increasing marketing to feel a customer acquisition were expanding the use of direct mail and cuddle up beaches planning to send out one point two million pieces june and water as well as increasing our investment in digital marketing to drive traffic to our sights we have bought keep products feature in our marketing campaign and significant that we have also added video capabilities to so product that to be more effectively when you put it all together we see top line drawing the next with obtain percent in the fourth quarter period vs last year and operating profit exceeding a hundred million dollars this represents an increase in both the top and bottom line to our previous had for the year and key will give us mark on this a few minutes looking past this year we remain confident in our longer term goal is to reach revenue of two point eight billion dollars and operating margin percent in fiscal year twenty twenty four in closing let me just say that i could not be prouder of what our team has accomplished as two and a half years since i've been back we have highly dedicated people could share an incredible passion to pursue our purpose and on this team when we commit to something we deliver we committed to elevating our brain we act on it i think paul and our product teams have done extraordinary work with it and today we have one line of products for the entire world that was all categories and our products of the best they have been in our company's history highly elevated of great quality and very consistent with the dna of the guess brand we committed to transform you into business we are delivering we have reacted market every aspect of our business model enjoying house proper foleo digital his sourcing and logistics operations and systems infrastructure we also committed to expanding our margins and we have been around here too we now expect to reach and eleven percent off a martin this year double our margin of two years ago and well ahead of our initial plan while these are all significant accomplishment i strongly believe that the best is yet to come for us we had an inflection point of gifts and i'm very confident our defences well as
spk_5: hm to generate superior returns in the future and our results will be here to prove it you have our cometh with that really bothered to catering our finances in more detail haiti they pilot that happens to everyone and excited tell you more back to the fact quarter which truly if he did i
spk_6: we or to pretend that level and everything both our top to bottom line our for the year
spk_5: the brand is showing strong momentum doesn't have the holiday and the accounting for i didn't happen
spk_6: or
spk_5: these results or again i've i've already this commitment to when flexibility to adapter and volatile
spk_7: pure
spk_5: i love being part of passion now let me take you through the details on the corner third quarter revenue were six hundred and forty three million dollars at thirteen percent the last year and up four percent compared to l l y
spk_7: depicts the or expectation as our america retail european hotel can like the thing that all outperform overall the put up with that revenue increased the previous night allied with a result of growth or european
spk_5: given by no out including shipping to fail to to do three as well as the the been partially up that i permanently closed door and negative things for sale europe excluding thousand the over one hundred and seventy story that we've closed and best hugely revenue would have been at nine percent and let me remind you that the to it i predict the operating profit by that twenty million dollars i my eighth but that's a bit about the performance by sex in america now revenue for up thirst for sapper the last year and down five percent versus l l way better than our expectation again that quarter the decline for l l y with servants entirely from the store closures which are worth roughly seven percent fail to accompli us and canada where at two percent cotton currently birth in l l y they for sale than the us remain positive by continued negative traffic jam with cause the conversion and a you are grow over twenty percent and happy to report that building are over seventy fourth and canada have improved substantially driven by a material and great emphatic in that region as an endemic there they're beginning to wane this quarter we continue to be a lot less promotional loving author the remember holiday that way but and we didn't do that here which i have on our top line but of course of that that to about i can help a point out the concrete and profitability that we have brought to it sucks that is allowing at the capitol i are positive filter operating margin and que three with over forty percent or less than one person in the prior to years and operating profit is his team time when it was in them and l l y even on lower sale what an incredible business for information in europe revenue grew up represent birth of last year and nineteen percent or than l a y the increase to l a y is primarily a riddle of wrote a novel open at the my recall from last quarter or shipments for the fall winter season were few weeks away do challenges with the fighting but we had a shift and fail from cute you and a you three but even at that the ship that didn't have positive momentum and we are gaining market area while a retail business to be pressured by endemic related topic of mine we saw a significant potential improvement and fail the last quarter to hunt for europe were down thirteen percent conflict the birth of l l y and seven percent improvement from down twenty with that last quarter as a result of improve traffic and for newt and read them in the you are in asia revenue with down eight percent the last year and thirty one percent l l y
spk_6: nearly half of the decline with driven by the prominent foreclosures i saw a half were down twenty five percent fun caught the current the birth and ally five percent better than que to with negative bill compton south korea and china more moderate than other areas in the region
spk_5: this region have struggled with the resurgence of covert nineteen and well the lack of consumer confidence which is deeply impacting or personal
spk_6: our miracle bellville were up sixty four percent the last year and that the l l y driven by hired failed the us an licensing revenue continued dauber form of thirty seven percent the last year and twenty percent the l l y que three during by strong performance and shoe perfume and watch it
spk_5: hello company growth margin for the quarter with forty five point seven percent more than eight hundred basis points higher than two years ago or point of origin and greek three hundred and forty been appointed quarter birth of l l y primarily as a result of locomotion higher i am you partially offset by businessmen and greek free which with worth about one hundred baby occupancy rate increase five hundred the point driven by businessmen lower rent permanently closed doors adjusted as ne for the quarter with two hundred and twenty three million dollar compared to two hundred and six million two years ago the increase in the result of verbal costs for both the ecommerce and hotel benefit mostly in europe which grew materially the l l y and well as higher performance a compensation adjusted operating profit for the third quarter with seventy million dollars versus fifty five million last year and twenty three million two years ago this is the twenties that ever been increased the last year and in over two hundred percent increase to prevent them as well or balance sheet remain strong we added a third quarter with three hundred ninety one million dollars in cash twenty fifth million dollars higher than last year found that the end of you three are passed around with impacted by an eighty million dollar us that man made in connection with the ip transfer that parliament with back to recoup
spk_7: the mountain switzerland over the next five years
spk_5: inventory of were four hundred eighty two million dollars or twenty they were done in us dollar and twenty two percent of the currently where did last year and down eight percent in caught the currently that l l y that and create or buckthorn strategy to the cure good in advance of the holidays and he won in light of the global supply chain disruption and elongated habit your the capital editor or forty one million dollars up from twelve million in the prior year the below prepare them and well mainly driven by investment a new story remodel and technology rick astley for the first reported to the year with negative forty one million driven down by the eighty million dollar you attack thing that i previously mentioned it flitting attack the man or be passionate would have been positive billion dollars let me catch on application we're confident in our ability to generate but the animal and profitable grow an ample free cash flow as a result we have the runway not only the fund our growth initiative but also over time incremental capital to our shareholders as the recall last quarter week bad or share of verge of around the two hundred million dollars today we announced that are board of directors has approved a one hundred percent increase in our quarterly dividend from eleven and record them to twenty two and as a reminder are given with that as long before we executed the three hundred million dollar convertible know the been share of verge of it and able to them
spk_7: now let's talk about our go forward equities the arabia our for the fourth quarter and the pulpit leader for the fourth quarter we are backing robin to become lifting of it and birth and l l y driven by making our hotel business and prominent lead closed doors are fully off that by broke very common with
spk_5: and one of the note that in light of the ribbon development with the pandemic in europe we have built and more prudent assumption for revenues were european retail bit of in the fourth quarter in time for profit adjusted operating margin for the fourth quarter to the second the be about one hundred and the point better than l a y
spk_6: gross margin is expected to expand by around five hundred different ways that alloway driven primarily by businessmen lower argument the locomotion been improved i knew and and with the wrath of the industry where seeing so hot pressure particularly and free which are built into the numbers we anticipate the be adapted as in a very will
spk_5: the of around four hundred big one and cost savings or that by businessmen investment in labor and higher and than of paid compensation for the year we now expect the revenue to be down in a load mingle that at birth of l l y and adjusted operating margin to reach just over eleven percent for the year for his fight with that l l y they represent a doubling of adjusted operating margin when martin expansion of over five hundred fifty the point to apprehend benefit them despite a lower rub be to break it down for you get martin mansion on for about two hundred fifty made the point of locomotion fifty two hundred big point the i am you of frontman one hundred and fifty basis points lower abdomen
spk_7: and sooner but with one of channel nine and one nine back with a partially off bad by about one hundred and fifty bay the point of higher and bound freight and one hundred basis points of increases than indian mostly higher performance compensation for the fear we are very competent ability of a margin of group
spk_0: we realize that the current environment of the difficult the man and limitation and private they'll ability had triggered brought increases and margin in our industry
spk_8: in arcade most of our martin freeman and come from concrete changes our business model that carlos what do earlier and are not circumstantial the more prominent in nature
spk_0: this morning fashion combined with the potential for future toppling growth a gap and very powerful
spk_9: for these reason we remain confident in our longer term goal and we look forward to sharing our our for the next fiscal year with you when we report que for
spk_10: with that i will conclude the companies are mart and let's open up the call to your question
spk_9: thank you we will now begin the question and answer session if you are like to ask a question of you do so by pressing star then one and your touch turn phone if you're using answer your phone in each pick up the handset first before pressing any numbers once again ask a question please fresh start and the number one and your too stone phone
spk_11: a first question comes from susan anderson on be riley fbr in a line is now open
spk_12: hey good ending nice job and the quarter
spk_2: i guess they they did that start off i'd like to get your thoughts around the us retail growth with obviously very strong maybe if you could talk about the drivers there and term the product categories what's doing wow men versus women then author you thing new customers come into the store or that smart existing customers come back and then also just on that front you
spk_12: the art margin there was very very strong of you could talk about you know just kinda like the driver it's they are versus the more flattish up margin and two thousand and eighteen thanks
spk_2: yeah i think is is over you got america's retail or have been transformed in a briefing different it away when you think about the the makeup of our business and know most of the big levers that we have been really referring to are present in the transformation of that business you know not significant ways are starting with or margins what we have done to really improve our sourcing a and floyd a be members and that doing more with less back to of integrating a lot of the pieces that the a part of that supply chain to really deliver better martin we are sourcing from the best countries you know cause has been optimized as well
spk_13: so does the first big thing the second big thing is about to load promotions we have done a lot to reduce promotional activity and this has impacted america's return of significant way as well
spk_2: we have also increased prices and he a and we have done this very strategically ah we have an opportunity here that we see to are really deliver on the demand that the customers are having i'm showing us out of traffic has improved in the northern and that is the a big driver of our improvements in in our profitability as well ah bad job the most important thing here to is that what we have done on occupancy an hour optimization of our
spk_14: and footprint i we have closed a lot of underperforming stores we have also read negotiator lot of leases you notice in in globally the numbers like four hundred meters and we have bad we negotiated and as a result of all the pieces have doing more with less we have integrated or the db
spk_15: do business into our of factory out the business of think of them has also proven to be a very good move in your the distorts have doing significantly better am
spk_2: we eliminated the top of the integration but it all together ah us about that you know what we're seeing with the customers you know we mention that
spk_16: seen a lot of good
spk_2: the numbers that we provided were more global bathtub there's a theory
spk_12: that number that relates to north america we were both with that congress is is and how it's at integrating only ten a level with the stores they put all here we are very very happy with everything that we're seeing here and we read that
spk_2: isn't as when you think about are you know many of the end of the lever that i referred to it
spk_17: jesus or many other things that
spk_2: like been less promotional we are just see monsters so in the third would have you so psyched the fact that we expect that this will ah
spk_18: once in your eyes is ah
spk_19: even more important impact on the yeah so very very happy overall we have been a lot in me
spk_20: might as well
spk_2: and that and the biggest or the lion's share of what we're doing impacts north america yelling of of the ah one point two million pieces that i referred to about a hundred thousand or i i'm not in the rain north america so we feel that this is a great very effective way to reach the customer and also
spk_21: oop present our new lines and you know the quality the elevation of the product is all depicted in our deal a vision of the images as well so we feel that this is gonna be yeah powerpoints well ah of course before during the most profitable for of so good at are high
spk_2: one this business well and
spk_9: real bad
spk_22: ah now
spk_2: our our sights on a grub not just are we we have a great business model but this is margins but we think we can grow under a lot of places in north america where we have been before we were very successful at the time apparatus so i don't be surprised to to start same growth and in this business as well great that's really helpful thanks how they get out and i guess if i could add one follow up i'm just curious and your app how that performed at those countries opened up on a semi there and then i'll how i definitely that forward at of a that's when are you concerned that that to slow down again given some increase locked down in second country aspects yeah well so i didn't you know we have a big business in europe van dam on it's very critical for asked to when we think that the brand has an incredible momentum right now and then and the reason why we can say that with a lot of confidence is we're talking to our customers and on the hotel time i'd and that we are seeing that our growth and we're seeing growth i think that we mentioned and you know we were have to offer sand the spring summer and ah
spk_23: line and them are now we are in the market with a free fall winter line of we're seeing that double digits or there are four at as well so when you think about okay with others lockdowns and and lower activity how can it be that that way to be up and we think that there's only one answer that as we are gaining my
spk_12: good cheer you know we have dealt with his customers in a very effective way we took care of them doing the tough times have we reserve product for them and we haven't seen cancellations which is very unusual so on so had gone back you know just we saw an uptick in our business in them
spk_2: and we were getting excited about that and we see that there is an opportunity for asked to really capitalize on the next ten weeks which are very critical in in that region as well ah yes in austria just announced another round of lockdown for three weeks but we think that were with the i'm trying to do it to really anticipate and them and really deal with a virus situation so then people they can reopen and people can shop for the holiday so we think that there may be some some movement about when the of the self take face but by we think that town this is not going to be ah that damaging for our
spk_24: of course you know is it that it's or days in austria only represents a fourteen stores
spk_25: great when found any tower
spk_0: yeah now until they didn't just to to gloat some that you know on
spk_26: we think that the are we have seen ah how things play out we have a very strong commerce business that is growing at a very fast rate and that we also have a good business is went on marketplace and so you put it all together we think that we can weathered the storm bad you know i have said katie mentioned are with did that consider this him in our avenue of you know to to have a a more moderate expectation for the business patel that we have him into a to do more business if they demanded there
spk_2: okay great thanks so much get like the toilet at thank you susan thank you as a reminder of you'd like to ask a question please try starting line and your touchdown fall or next question constantina telsey fantasy advisory group your highness how often good afternoon everyone and nice to see the problem
spk_4: collect can activate on on the global product line now that certainly seems like a thing the benefits as anything get frank how is the denim category doing and with inflation and cotton how you thinking about price increases going allied thank you
spk_2: yeah thing as mr then and maybe katie act and jump jumping on on them as so you know the global nine has been just an incredible initiative for as because not only the same thing that again
spk_12: but ah even more importantly we now in a position to opera sister consistent so many you know over the world of reasons which isn't winner
spk_2: now we have color palette there are more coordinated we have differentiation between the lines guess and marcy on marciano and die it's representation of each of those lines in a very with a lot of integrity and we have a title present vision in score
spk_12: visual merchandising we have elevated also the guts to wear expensive
spk_27: and of course have we have been able to really prize each product based on the perceived value of that power based on the competitive landscape and and with think and we have written across the board
spk_28: this has enabled that to reduce our promotional activity i think that there had been a major a balance and and and it is impacting our peril nine so it has also helped as to optimize our supply chain so we are leveraging the global nine to drug costs down
spk_12: we have doing global by that i focus on t bender so you know that it's also resulting in in an improvement in cost and time and we are sourcing from locals countries where we can but now with all the supply chain issues you know we're bringing sourcing to near countries need intention that are closer to
spk_28: the ultimate distribution of the product and them and about top ten percent of love what we're seeing how when we plan to move back into those countries do not with is better product of we are very happy with the initial that
spk_27: part of that are part of this sort by wheels and
spk_29: as visit him to twenty nine the testimony of the creating that
spk_5: looking for new as they're looking for new friends
spk_30: they're looking for new style sad
spk_5: to determine
spk_7: no have an assortment bad that there's more to so
spk_31: i feel
spk_2: yes opponents that were saying that provide that i'm in north america and europe and with the have been trying to have of a repeat of ten years
spk_32: and option i think our that have been a be a t lab are that we have to growl or things are failed along with another category that am i doing mouth outerwear on hand basket
spk_0: and then they let you off that about on inflation and how much effect me about that you know where i i'm going to way that we have you're looking for alternative for that provide an an hour at the cover up next year and now a colostomy that the on a wide that fifteen to twenty percent we thought that me a stronger you are starting out and
spk_2: we continually and by the way that the you are increase is that a combination of been less promotional where's that combined with a price increases and that about fifty fifty of bad that to you are increases coming from each of those are two components and that and you know we we are excited about that because we think that ah this changes are here to stay you know they are very fundamental to the way we are structure in the business and then yes of course in the are some ah of normal circumstances that we see today with and supply and demand on be an imbalance but that we think that that when we did things that we are
spk_33: changing and when we have changed up a lot more fundamental and down you know more more of a permit nature as that can be said to her preparing or
spk_0: thank you

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