Oxford Industries, Inc.

Good day and welcome to the Oxford Industries Inc. Fourth Quarter Fiscal 2023 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Brian Smith. Please go ahead.

Thank you and good afternoon. Before we begin, I would like to remind participants that certain statements made on today's call and in the Q&A session may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not guarantees, and actual results may differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results of operations or our financial condition to differ are discussed in our press release issued earlier today and in documents filed by us with the SEC, including the risk factors contained in our Form 10-K. We undertake no duty to update any forward-looking statements. During this call, we will be discussing certain non-GAAP financial measures. You can find a reconciliation of non-GAAP to GAAP financial measures in our press release issued earlier today, which is posted under the Investor Relations tab of our website at Oxfordinc.com. And now I'd like to introduce today's call participants. With me today are Tom Chubb, Chairman and CEO, and Scott Grassmeyer, CFO and CFO. Thank you for your attention, and now I'd like to turn the call over to Tom Chubb.

Good afternoon and thank you for joining us. We are pleased with our results for fiscal 2023, which represent the second strongest annual earnings in our 82-year history. The conclusion of FY23 also caps the end of a five-year period during which we delivered compound annual adjusted EPS growth exceeding 18%. In addition, we generated strong cash flow from operations of $244 million in fiscal 2023, allowing us to invest in both organic growth and acquisitions, return capital to our shareholders via our quarterly dividend and opportunistic share repurchases, and pay down almost all our outstanding debt. On today's call, we'll walk through our recent performance and provide an update on the initiatives we have planned for fiscal 2024 that we believe will position us to continue to deliver sustained profitable growth and drive long-term shareholder value for many years to come. In terms of how we wrapped up the fiscal year, January was a bit softer than expected, And as a result, both our fourth quarter and full year came in at the low end of our forecast with sales for fiscal 2023 totaling $1.571 billion and adjusted earnings per share coming in at $10.15. The January softness continued into the new fiscal year and February was also down, as we cycled strong double-digit comps in February of last year. In March, as comparisons eased, business has picked up, and month to date, we are comping modestly positive. We believe the toppiness we have experienced is reflective of a somewhat unusual situation where most economic indicators are actually fairly positive, and yet consumer sentiment remains materially below where it was for the four or five years prior to the pandemic. The muted consumer sentiment is manifesting itself in consumers who have the ability to spend but are being much more cautious in their spending on discretionary items such as the fashion apparel, which is the core of our business. Experience has shown us that during times like this, when near-term demand is choppy, it is best to stay focused on the long-term opportunity and strengthening the fundamentals of the business that have created our strong foundation and that is exactly what we plan to do during fiscal 2024. First, we will double down on our efforts to make sure that we have fresh new differentiated product that gives the consumer a good reason to open her wallet. Second, we will make sure we maintain the elevated happy and optimistic messaging that is representative of each of our brands. Third, we will make sure that we are being diversified and creative in the media channels that we use to try to communicate our brand messages to the customer. And finally, we will make sure that we are making our product available to our customer when and where she wants it, including our own stores, e-commerce websites, restaurants and bars, and wholesale accounts. Across all our brands, there are initiatives planned for fiscal 2024 that touch on each of these four fundamentals. In Tommy Bahama, our biggest brand, we are focused on continuing to develop and grow our hospitality business. Our hospitality business, including our new Tommy Bahama Miramonte Resort, our full-service restaurants and bars, and our unique upscale fast casual marlin bars is a key part of the success of our brand. Hospitality helps complete the dream that is Tommy Bahama in the customer's mind and in that way helps evolve the brand, acquire new customers, retain existing customers, and increases the annual spend of the brand's guests. As we have mentioned in the past, our stores that are connected to one of our restaurant and bars almost uniformly do a higher percentage of business in women's than the fleet average and have higher sales per square foot by a significant margin than the fleet average. Hospitality has been a big part of our success in growing our women's business over the last several years, so that women's has now grown to 36% of our total Tommy Bahama direct-to-consumer business. Our efforts during the 2024 calendar year include opening six new Marlin bars, including one in Winter Park Village in Florida, which opened in January, and one in La Cantera outside of San Antonio, Texas, which opened in February. Both of these new additions to the fleet are off to a terrific start. Four additional Marlin bars are planned for the second half of fiscal 2024, including one in South Park Mall in Charlotte, King of Prussia Mall, which is one of the nation's premier malls, the Oaks in Oklahoma City, and the Sarasota, Florida area's upscale Lakewood Ranch community. 2024 marks the 65th anniversary of the Lilly Pulitzer brand. Exciting plans for the brand are already underway, including a higher price more elevated capsule collection celebrating the anniversary, which has retailed extremely well and makes us believe that we have the opportunity to expand the price continuum of our assortments. We also have a number of exciting collaborations underway, several of which have already launched. On the product side, we have rolled out a Lily Pulitzer print-wrapped Mocha America Resort Cruiser, a special edition Lily Pellitzer Natalie's Juice, a line of Pottery Barn home goods, and a beautiful capsule collection done in collaboration with Badgley Mischka. Lily Pellitzer and Vogue have also partnered to produce an exciting collection of collaborative media content under Vogue's Styled by Vogue banner. On the commercial front, Lilly-Pellitzer remains focused on mixing things up to continue to delight and surprise the customer. We have changed several of the promotional events that we ran last year during the first and second quarters such that we expect Lilly-Pellitzer's first quarter to be materially smaller than last year and the second quarter to be materially larger than a year ago. We believe this decision will make for a successful first half, albeit one that lays out across the two quarters differently than it did last year. In Johnny was, we were delighted during fiscal 2023 to complete most integration activities post the acquisition. During 2024, our focus will be on enhancing the profitability of this business. The two main elements of this improvement plan are increasing store productivity and improving the effectiveness and efficiency of our marketing activities. Last year, Johnny Wise achieved a 10% operating margin, a respectable level that we believe we can expand on in 2024 and even further in the years ahead. we remain extremely enthusiastic about the Johnny Was brand and expect it to be an important part of our ongoing objective to grow long-term shareholder value. In the emerging brands group, starting with Southern Tide, during 2023, we opened a number of stores and acquired a number of our signature stores, bringing our total company-owned Southern Tide stores to 19 by the end of the year. We have plans to open several more during fiscal 2024, along with at least one store for the Buford Bonnet Company. A 2024 priority for both brands is driving performance across their newly established retail store platforms. Jack Rogers Footwear brand to the emerging brands group in late fiscal 2023. Jack Rogers is a well-known brand that is based around an iconic product. The pandemic and post-pandemic years were challenging for the Jack Rogers business. While Jack Rogers will be slightly dilutive to earnings in 2024, we are going to use this year to focus on resetting the brand, cleaning up inventory, and preparing the brand for future success and profitability. Finally, on an enterprise-wide basis, we will be working hard during fiscal 2024 on our new state-of-the-art distribution center in Lyons, Georgia, which will allow us to house and ship more of our product much closer to the markets where we do a very large portion of our business. This should allow us to get product in consumers' hands more quickly, replenish our stores faster, and ultimately allow us to do more business on less inventory. The initiative also allows us to leverage our long history in the Lions community and the excellent workforce that we have there. We believe we will be able to do all of this while maintaining highly competitive shipping costs. We also have exciting plans to explore opportunities to expand our use of artificial intelligence across the enterprise. We already employ AI in a wide variety of specific situations and believe that we will continue to find incremental use cases where we can employ AI to improve our efficiency and effectiveness. As we look to our forecast for fiscal 2024, as outlined above, we have excellent plans for each of our brands this year. That said, we expect the cautiousness of the consumer to persist throughout the course of the year. The current operating environment has led to caution among many retailers And as a result, we expect our wholesale business to be down meaningfully in the first quarter compared to a very strong first quarter for wholesale last year. We expect wholesale to be positive on a year-over-year basis for the balance of the year, which will partially but not fully offset the first quarter decline, meaning that we will be down slightly in wholesale for the full year. Scott will provide more detail in a minute, but as a result of the wholesale decline, the cadence change in Lilly Pulitzer that I mentioned a few minutes ago, and the week February, we expect the first quarter to be materially below last year's first quarter results. For the full year, we expect mid-single digit top line growth with new stores and modestly positive comps offsetting the headwinds that I have outlined. From a profitability standpoint, gross margins will be flat to up slightly, while we will experience some pressure at the SG&A line due to the effects of inflation across expense categories, as well as the new stores, Marlin bars, and other investments we are making in the future. We are very proud of the portfolio of brands that we have built, and the strong connections we've forged with our customers. Most of all, we are incredibly proud of the amazing team of people that bring them to life every day. As always, we are committed to delivering on our near-term targets while staying focused on the initiatives that will strengthen our brands and business fundamentals over the long term. I'll now turn the call over to Scott for additional color on 2023 and our plans for 2024. Scott? Thank you, Tom.

As Tom mentioned, we are pleased to report top and adjusted bottom line results within our guidance range for both the fourth quarter and full fiscal year 2023. Despite facing headwinds from a challenging consumer environment, our operating groups focused on what they could control and delivered solid results going against positive DTC comps of 9% and 17%. for the fourth quarter and full year fiscal 22 respectively. In 2023, consolidated net sales grew 11% to 1.57 billion, including an increase of 130 million in sales for Johnny Woz, which we owned for 19 of 52 weeks during fiscal 2022. The 2023 net sales also includes an approximate 16 million benefit from the 53rd week, resulting in 10 million of additional gross profit. In the aggregate, Tommy Bahama, Lilly Pulitzer, and Emergent Brands delivered growth across most of our full-price distribution channels, with increases of 6% in restaurants that have delivered strong results all year, 3% in full-price e-commerce, and 1% growth in an especially difficult wholesale channel. Full price bricks and mortar were relatively flat compared to 2022. Additionally, we also had increases in sales in our outlets of 5% and 3% in the Lilly Pulitzer e-commerce flat sales, both benefiting from consumers looking for deals and promotions. In addition to increased sales, we're able to expand adjusted gross margin 50 basis points to 64%, while also meaningfully lowering inventory balances, The increase in adjusted gross margin was driven by a full year of higher margin sales from Johnny Woz, a decrease in inventory markdowns, and decreased freight costs. These were partially offset by increased promotional sales at both Tommy Bahama and Lilly Pulitzer. Adjusted SG&A expenses were $807 million compared to $684 million last year, with approximately $76 million, or 62% of the increase, due to a full year of SG&A from Johnny Wise. The 2023 total also includes approximately 11 million of incremental SG&A from the 53rd week. During 2023, we incurred higher costs related to increased employment costs, advertising costs, variable costs, and other expenses to support sales growth and our expanded store footprint. The result of this yielded 216 million of adjusted operating income or a 13.8% operating margin compared to $234 million or 16.6% in 2022. The decrease in adjusted operating income reflects planned growth in SG&A investments in our people and business outpacing gross and revenue. We also incurred startup losses related to the Tommy Bahama Miramonte Resort and saw modest declines in royalty income resulting from lower income from our licensing partners. Moving beyond operating income, we incurred more interest expense as a result of higher interest rates and higher average debt levels, but benefited from a slightly lower adjusted effective tax rate. With all this, we achieved $10.15 of adjusted EPS, solidly within our guidance range. In connection with our annual impairment test for goodwill and definite logged intangible assets performed in the fourth quarter fiscal 2023, we concluded that the fair values of the Johnny was goodwill and trade name did not exceed the respective carrying values, resulting in a total impairment charge of 111 million. The impairment charge reflects the macroeconomic challenges faced by all our brands subsequent to our acquisition of Johnny Woz in September of 2022, and the significant prolonged increase in interest rates. Management strongly believes in the health and long-term prospects of the Johnny Woz business despite these challenges, and are diligently looking ways to fuel growth into business and manage expenses. I'll now move on to our balance sheet, beginning with inventory. During 2023, we were able to decrease inventories by 18% or $51 million year-over-year on a FIFO basis while being able to expand adjusted gross margin as noted earlier. The decrease in inventories resulted from our continued inventory discipline as well as the reduction of incremental inventory previously built into our supply chains in 2022 to mitigate potential disruptions. that were largely resolved in 2023. From a liquidity standpoint, we used our robust cash flows to significantly repay our borrowings used to fund the Johnny West acquisition. We finished 2023 with $29 million of borrowings under our revolving credit facility, down $90 million from $119 million of borrowings at the beginning of the year. Our $244 million of cash flow from operations in 2023 compared to $126 million in 2022 allowed us to reduce outstanding debt while also funding $74 million of capital expenditures, $42 million of dividends, $20 million of share repurchases, and $12 million of acquisition-related expenditures for the acquisition of Jack Rogers and six former Southern Tide signature stores. I'll now spend some time on our outlook for 2024. For the full year, we expect net sales to be between $1.63 billion and $1.67 billion, growth of 4% to 6%, compared to sales of $1.57 billion in 2023. The increased sales plan in 2024 includes growth in all brands, with growth in the mid-single-digit range for Tommy Bahama and Willie Pulitzer. and low double-digit range for Johnny Was and emerging brands. The growth consists of full price brick and mortar, e-commerce channel growth, growth in food and beverage and outlets. We expect wholesale sales to be challenged in 2024 with approximately 10 million in lower wholesale sales than in 2023 with reductions in the first quarter and partially offset by modest growth for the remainder of the year. We anticipate gross margins will increase slightly in 2024, including the expectation of higher proportion of full price direct-to-consumer sales and a lower proportion of wholesale and all price direct-to-consumer sales. These higher sales and improved gross margin are expected to be offset by increased SG&A, which is expected to grow at a rate higher than sales in 2024, primarily due to investments in people, information technology, and marketing, as well as investments in additional brick and mortar locations opening in 2024, including five new Marlin bars. Our net brick and mortar count is expected to increase by approximately 25 locations. As Tom mentioned, we acquired the Jack Rogers brand in the fourth quarter of 2023. We are excited to add this iconic brand with an iconic product to our portfolio and expand our presence into the footwear category. We have diligently looked for the right opportunity in this space and believe that it is a natural fit, whether stable of happy, differentiated lifestyle brands. While we believe in the potential of the brand, we do expect the brand to generate an operating loss of approximately $2 million in 2024 as we reset and refocus the business. Additionally, we anticipate lower interest expense at $3 million for the year, compared to $6 million in 2023, and higher royalty and other income, primarily from a full year of the Tommy Bahama Miramonte Resort. We also expect a higher adjusted effective tax rate of approximately 25% compared to 23% in 2023, which benefited from certain favorable items that are not expected to recur in 2024. Considering all these items, we expect that operating margin will decrease modestly from 2023 levels and expect 2024 adjusted EPS to be between $9.30 and $9.70 versus adjusted EPS of $10.15 last year, with decreases in our businesses and a higher effective tax rate being partially offset by the lower interest expense and higher royalty and other incomes. In the first quarter of 2024, we expect sales of 395 million to 415 million, compared to sales of 420 million in the first quarter of 2023. The expected decline in the first quarter is driven primarily by a decline in wholesale sales of between 15 and 20 million, compared to the first quarter of 2023. Due to continued softness in that channel, the non-anniversary of a successful 30% off promotional event and Lilly Pulitzer in the first quarter of 2023, and a slow start to the year in February in our direct-to-consumer businesses, followed by improving trends in March. Many of the other factors driving our results include flat gross margin, some SG&A deleveraging, and lower interest expense of approximately a million dollars will affect the first quarter. Although we do expect our effective tax rate to be approximately 25%, and consistent with the first quarter of 2023. We expect this to result in first quarter adjusted EPS of between $2.60 and $2.80 compared to $3.78 in the first quarter of 2023. Expanding on the investments we intend to make in 2024, I'd like to briefly discuss our capital expenditure outlook for 2024. Capital expenditures in fiscal 2024 are expected to be approximately $200 million compared to $74 million in fiscal 2023, with approximately $100 million related to the significant multi-year project to build a new distribution center in Lyons, Georgia to enhance the direct-to-consumer throughput capabilities of our brands. The remaining capital expenditures relate to the execution on our pipeline of Marlin Bars, including five expected to open in fiscal 2024. Increases in store count across Tommy Bahama, Lilly Pulitzer, Johnny Woz, and Southern Todd, and increased investments in our various direct-to-consumer technology system initiatives. We expect this elevated capital expenditure level to moderate in 2025 and beyond. We also have a positive outlook on our cash and liquidity position as well. Cash flows from operations are expected to be very strong, giving us ample room to fund the previously mentioned investments, and a 3% increase to our quarterly dividend. Thank you for your time today, and we will now turn the call for questions. Betsy?

We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from Janine Stitcher with BCIG. Please go ahead.

Hi, good afternoon, and thanks for taking my question. Thank you for all the color on the health of the consumer and the state of the consumer. I was hoping you could elaborate a little bit more on what you saw in January and February into March. I'm curious if you saw any variance by brand, and also curious if you think weather played any role in what's driving the improvement into March. Thank you.

Well, thank you for the question, Janine, and thanks for being on the call today. As we said, it was soft in January and in February. There were some variations among the brands, but really everybody saw the softness. And I think weather probably did have some impact on that, but We believe it was a little bit more just about consumer sentiment and where they are and their willingness to spend, as we outlined in the comments.

We also were going against very difficult comps from the prior year. So the January and February both had very strong comps a year ago, and so we think we're going against the toughest comps of the year, and comps started moderating in March.

forward so we're optimistic that we can still you know count positive for the year although very modestly great and then just on the wholesale side of things you talked about wholesale being down in q1 and then turning positive in q2 i just want to understand is that pretty consistent with how you had been thinking about it i'm just curious if you're seeing any change in tone from your wholesale partners or if that's similar to how you've been thinking about it before

I think they've been pretty cautious for a while now. I think maybe they've been a little more cautious than we would have thought back in the latter part of this year. But the good news, Janine, is that our performance at wholesale is actually quite strong from those accounts that we get data. Most of the majors give us pretty good feedback on how we're performing on the floor. And those numbers actually look quite good. So we believe over the longer term that we're not losing any position at all. In fact, we're outperforming our peers on the floor and that as the retailers get a little more optimistic about where they are, in their overall business that we will get rewarded for our performance currently. We also are optimistic. We don't really have this in the plan, but we might get a little bit of in-season business. And then the last thing I would tell you is that we talk about the caution a lot, but I think a lot of it, or at least a portion of what's going on, is also that retailers are getting their inventories back in line post-pandemic. There was a period where they were, because of all the supply chain issues, they were overbuying maybe a little bit, sort of just-in-case inventory, because they didn't know what they were going to get and when they were going to get it. And I think most vendors are shipping pretty much on time and complete these days. So there's less of that sort of safety stock buying going on. So we view this as a short-term blip, Janine. We don't really think we're losing ground in wholesale. And in fact, we think we're probably getting stronger in that arena.

Yeah. And last year, Janine, first quarter was a very strong wholesale quarter for us. I think we were kind of bucking the trend in the industry where we were actually up in Q1 last year. So we are, again, going against a strong wholesale period of year before for us.

Great. Thanks so much, and best of luck.

Thank you, Janine.

The next question comes from Mauricio Cerna with UBS. Please go ahead.

Great. Good afternoon. Thanks for taking my questions. Just wanted to get a little bit more detail on the quarterly trend. You mentioned, you know, February started soft, March got better. Maybe you could tell us like quarter to date, like how are the DTC comp sales trending and what is like, you know, for your, for your full year sales guidance expectations, what are the implied DTC comp sale? And then maybe you talked about the gross margin drivers, you know, being essentially like a positive sales makeshift. Anything that you can tell us about your expectations on promotions? And then just lastly, if you could elaborate a little bit more about the Jack Rogers acquisition, you know, what prompted you to buy the brand, like any, like, you know, overview about the brand, like the size of the business. You talked about the impact on the operating profit, but maybe what do you think about the top line? That would be very helpful. Thank you.

Yeah, well, maybe I'll start in reverse order and go with Jack Rogers. It is a great brand, Mauricio. It's been around for a long time. Like Lily Pulitzer, it was born in about 1960, I believe. Lily was 59, as far as we know. Jack Rogers was, I think, 60 or so, 59, 62. Right about the same time, born in Palm Beach, was popular with Jackie Kennedy at the time, later Jackie Onassis. Very classic brand. They have a single sandal that people refer to as Jack Rogers that they're very, very well known for. And they've been sort of a staple of East Coast classic ladies dressing for a long, long time. At one time, this business was up in the $50 million plus range during the pandemic and the post-pandemic and probably even a little leading up to that. It went through sort of a rough period on with a number of changes in management and of course all the issues that happened with the pandemic but they've still held on to their sort of iconic positioning with the customer and so we bought it at a time where it needs a little bit of a reset needs to go back to its core dna go back to its roots There's some inventory that we've actually mostly got cleaned up at this point, but we need to do that, sort of reset the marketing. And we're going to take this year to do it. I think during this year, we'll do not quite $10 million in revenue, but somewhere in that range. And then as Scott outlined, we will have a little bit of an operating loss, but I think we'll be in good shape from there to build the business going forward. And then I think you had also asked about comp exemptions for the year.

Yeah, first off, February was down low double digits, but again, going against a very robust comp. Last year, we had really strong February, strong early March, and then we started seeing it weaken a bit. So we're down low double digits in February. March, we're up very modestly. We have a very modest positive comp, but March is a bigger month. So I think quarter to date, we're mid single digits down, but trending in the right direction. And so for the year, we're not expecting an overly robust comp, but we still think we can, for the year, come out slightly on the positive side.

Great. And in terms of promotions?

Yeah. As we noted in our prepared remarks, we expect gross margin for the year to be flat to up slightly. That's mostly driven by mixed change, but it also doesn't reflect, you know, a whole lot more discounting in the product. And I think that's a sign of a very healthy business.

Understood. Thank you. Very helpful.

Thank you.

The next question comes from Ashley Owen with KeyBank Capital Markets. Please go ahead.

Hi, thanks for taking the question. I guess just to start, you know, we've talked a little bit about promotions already, but I'm just curious as to how you're thinking about kind of the calendar from promotions relative. You know, we've talked a little bit about Lilly in the focus there and some of the shifts that we're seeing in 1Q and 2Q, so we'd just be curious kind of to hear how that's shaking out for your other brands and if you're planning for any material shifts.

I think Lilly's the biggest shift, and last year we did a 30 off event in the first quarter, and while it generated a lot of revenue, we believe maybe it was off everything, and we believe that it would be better not to do that because sometimes you get a little bit of a hangover after it. So we're not going to do that event this year. But we will do Lilly Flash sales, and we're going to mix them up a little bit, which, yeah, but, you know, that'll be, you know, limited, you know, prior season product as it always is. So we just have some timing changes with the biggest being between Q1 and Q2, where there'll be less events, less dollar value events in Q1 than last year, and then Q2 probably a little bit more or, Yeah, so that's the biggest change. I think everywhere else it's pretty much typical tight promo events. You know, Tommy does their friends and family twice a year, and they do their promotional cards with a flip side event a couple times a year, and then they do very limited end-of-season sales. And I think their plan is to do basically those exact things again this year.

Okay, great. And then I guess just kind of to follow up on that, again, you know, a lot of guidance and color kind of on that one cue, but also some shifts going into two cue. So just thinking about the overall guide for the top line, you know, as we move through the remainder of the year, you know, any help you could provide kind of on the shaping there when we're factoring in some of the moving pieces that we're seeing would be helpful.

Yeah, we would expect, you know, top line, you know, for this for each quarter going forward to be up anywhere from high single to right at double digits, or maybe more, at least mid-single to low double digits, where first quarter will be a bit weaker. And again, wholesale, we expect wholesale for the Qs two through four to actually be up a little, but Q1 being down, so that'll help quite a bit. And then again, not having that big negative conflict we had in February. We don't expect that to repeat as the comps we're going against for the rest of the year we think are not as difficult as the February comp. So we think we expect sales growth in every quarter going forward.

Okay, great. Thank you.

Thank you, Ashley.

As a reminder, if you have a question, please press star then 1 to be joined into the question queue. This concludes our question and answer session. I would like to turn the conference back over to Tom Chubb for any closing remarks.

Thanks to all of you for your interest and your attention today and we look forward to talking to you again in June. And until then, hope you stay well, and we'll look forward to seeing you then.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.